9911796707
TMI Blog2012 (4) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... digarh, for execution. 3. The assessee-Board filed its return of income for the assessment year under appeal on 30.10.2007 before the Assessing Officer (AO) returning its total income at Rs. 36,55,36,530/-. A note was appended to the return of income in which it was stated: "Chandigarh Housing Board is also working as nodal agency for the Chandigarh Government and other authorities. The Receipts and Interest received and fund utilized as per their direction and the balance amount is shown as surplus funds payable to the concerned departments in the balance sheet." The return was taken up for scrutiny pursuant to which assessment u/s 143(3) of the Income-tax Act was completed on 28.12.2009 assessing the total income of the assessee at Rs.853,02,05,450/-. Perusal of the assessment order shows that the AO has made following additions/disallowances to the income returned by the assessee: (a) Addition of Rs. 800,89,75,168/- (Receipts being Rs. 821,21,21,210 - Expenses being Rs. 20,31,46,042) on account of taxable surplus In RGCTP account on sale of development rights to M/s Parsvnath Developers Ltd., being the Developer. (b) Addition amounting to Rs. 9,01,57,799/- being i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Housing Board is acting as a Nodal Agency on behalf of the Chandigarh Administration for development of Rajiv Gandhi Chandigarh Technological Park Project. 5. That the CIT(A) had fallen in error in upholding the additions of Rs. 704,29,365/- being bank interest that accrued on funds generated from RGCTP Habitat Project. 6. That the CIT Appeals had fallen in error in disallowing the sum of Rs. 645,33,684/-being bank interest on overdrafts obtained against FDRs for earning high rate of interest." 7. Briefly stated, the facts giving rise to the aforesaid grounds of appeal are that the Chandigarh Administration had carried out a bio-metric survey of the slum areas in March 2006 during which it was found that there were several slum colonies located in different parts of the city. With a view to develop the slum areas and rehabilitate the slum dwellers, the Chandigarh Administration notified a scheme called "The Chandigarh Small Flats Scheme-2006" for allotment of one room residential flats to poor/slum dwellers on monthly licence basis. In order to generate funds for the Slum Rehabilitation Project as also to create infrastructure for development of residential, commercial and oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of his decision to tax the impugned sum in the hands of the assessee, the assessee did not, however, challenge all of them before the CIT(A), which is evident from the observations made by the CIT(A) in para 28 of her appellate order, which reads thus: "28. It is pertinent to mention here that while the assessee has made submissions only on the issue of Nodal Agency for the execution of RGCTP Project, no submission or argument was given for a number of other related issues on the basis of which the Assessing Officer built up his case." In para 30 of her appellate order, the ld. CIT(A) has observed as follows: "30. Since as already stated, the appellant submitted only with regard to whether RGCTP Project was undertaken by the appellant as an agent of Chandigarh Administration or in its own absolute ownership right, I don't feel the need to discuss other issues elaborated by the Assessing Officer in the assessment order. "Before this Tribunal also, the assessee has challenged only two issues, namely, that the CIT(A) was not justified (i) in not treating the assessee as an agent of the Chandigarh Administration; and (ii) in confirming the action of the AO in taxing the entire amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Act nor has it ever been appointed as agent of the Chandigarh Administration in respect of the projects envisaged by section 20 of the said Act. In this view of the matter, he held that the amount accruing to the assessee on sale of development rights was liable to be taxed in the hands of the assessee. (vi) After considering the plea of the assessee-Board that it has been described as "nodal agency" by the Chandigarh Administration for implementation of RGCTP projects in several of its communications/documents and therefore it should be treated as agent of the Chandigarh Administration, the AO has held that the mere use of the words "nodal agency" in the documents are not decisive of the issue. According to him, the assessee is not agent of the Chandigarh Administration for the reason that the Chandigarh Administration has neither undertaken to reimburse the expenses incurred by the assessee in respect of the said project nor to indemnify the assessee against the losses and liabilities in respect thereof and also for the reason that the elements necessary for constituting principal-agent relationship between the Chandigarh Administration and the assessee-Board in terms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard as the Administrator may deem fit for the purposes of the said Act. Relying upon the aforesaid provisions, he submitted that the Haryana Housing Board Act envisages two types of projects: one, the projects/schemes framed by the Chandigarh Administration and entrusted to the assessee-Board for implementation; and two, the projects/schemes framed as well as implemented by the assessee-Board. It was submitted that a conjoint reading of the aforesaid provisions indicated that the Chandigarh Administration could frame schemes for implementation by the assessee-Board. According to him, the schemes thus framed by the Chandigarh Administration are implemented at its instance by the assessee-Board as an agent of the Chandigarh Administration and therefore all receipts and payments in respect of such projects belong to the Chandigarh Administration and that the assessee-Board has no right to any income arising from the schemes framed by the Chandigarh Administration and implemented by the assessee-Board. He submitted that RGCTP project was a scheme which was framed by the Chandigarh Administration for implementation by the assessee-Board as its agent and therefore the surplus/profit ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance dated 9.6.2006 to the said Developer. (v) The ld. counsel for the assessee referred to the recital in Development Agreement and Lease Agreement executed simultaneously between the assessee-Board and Parsvnath Developers on 06.10.2006 in which it is stated that the Chandigarh Administration has "appointed the CHB as nodal agency for execution of the project vide Chandigarh Administration (Finance Department) Order No. Endst. No. 2689-UTFI(4)-2005/8321 dated 01.12.2005" and submitted that the aforesaid recital in the Development Agreement made it very clear that the assessee-Board was not only acting as Nodal Agency on behalf of the Chandigarh Administration for execution of RGCTP Chandigarh project but that this fact was also disclosed to the Developer. (vi) He also referred to the Development Agreement and Lease Agreement dated 06.10.2006 by which M/s Parsvnath Developers Ltd. was granted lease of land measuring 83.119 acres out of total project land measuring 123.79 acres. He submitted that no lease deed was executed for the remaining land measuring 40.671 acres, being free hold, as this land was to be used for residential units for which a separate conveyance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Chandigarh Housing Board shall be kept in a separate escrow account in the joint names of the Joint Secretary Finance, Chandigarh Administration and the chief Executive Officer, Chandigarh Housing Board and the joint account shall be jointly operated by the Joint Secretary Finance and the Chief Executive Officer, Chandigarh Housing Board. (iii) Payment towards cost of construction of multistorey flats and other projects of Chandigarh Administration specifically identified and executed by Chandigarh Housing Board shall be made from this joint account. (iv) The Chandigarh Housing Board shall be entitled to payment of entire expenditure on the construction and other projects of Chandigarh Administration. 11. In support of his plea that the assessee-Board was acting as agent of Chandigarh Administration and therefore the impugned sum was not taxable in its hands, the ld. counsel has also made the following legal submissions: (i) Assessee-Board was agent of the Chandigarh Administration for RGCTP project and hence not taxable: Referring to the sequence of events/facts as stated earlier, the ld. counsel submitted that the assessee-Board was an agent of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng from the said project belonged to the Chandigarh Administration and not to the assessee notwithstanding the fact that the assessee was the legal owner of the land. (iii) Accrual of income: Without prejudice to the submission that the assessee-Board was an agent of the Chandigarh Administration in so far as the RGCTP project was concerned and therefore the income arising from the said project was not taxable in the hands of the assessee, the ld. counsel for the assessee made an alternate submission to the effect that the amount taxed by the AO has never accrued to the assessee. He claimed that development rights granted to M/s Parsvanath Developers were subject to several conditions; namely, (i) payment of consideration as per Schedule 5 of the Development Agreement, (ii) non-creation of any encumbrance or lien on any of the assets, and (iii) fulfilment of the conditions specified in Article 3 of the Development Agreement, i.e., inability to provide bank guarantee, the developer achieving financial closure and obtaining approvals as required for the commencement of the project. He submitted that the assessee-Board had the right to terminate the agreement if the Developer f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue (CIT-DR) supported the order of assessment passed by the AO as also the appellate order passed by the CIT(A) confirming the order of the AO in this behalf. He also invited our attention to the findings recorded by the AO in the assessment order in which each of the aforesaid submissions made by the assessee has been rebutted. His submissions, in brief, were as under: (i) The land on which RGCTP was developed was purchased by the assessee-Board from the Chandigarh Administration through a registered sale deed and possession of the land was also taken from the Chandigarh Administration in pursuance thereof. Since the legal ownership as well as the possession of the land vests in the assessee, the profit arising from the commercial exploitation of the said land would, in law, belong to the assessee and not to the Chandigarh Administration. (ii) Development Agreement was executed between the assessee-Board and the Developer under which the assessee had a legally enforceable right to receive the entire bid money (Rs. 821,21,21,210/-) as also 30% share in the revenue generated from the sale of residential units. According to him, the Chandigarh Administration is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween the schemes framed by the assessee-Board and the schemes entrusted to it by the Administrator were completely irrelevant. According to him, neither the phrase "agent" nor "agency" nor 'Nodal Agency' has been used in section 20 or any other section of the Haryana Housing Board Act and therefore the submission of the assessee that it was a 'Nodal Agency' for Chandigarh Administration in respect of the schemes entrusted to it by the Administrator was completely misplaced and not supported by any provision of the said Act. He submitted that section 20 of the Haryana Housing Board Act does not say that the income of the housing schemes framed by the assessee-Board would be the income of the assessee-Board or that the income of the housing schemes entrusted by the Administrator to it would be that of the Chandigarh Administration. (viii) Referring to section 63 of the Haryana Housing Board Act relied upon by the assessee-Board, the ld. DR submitted that the Government has every right to attach conditions while transferring the property but that does not vitiate either the transfer of property or its ownership by the person to whom it is conveyed or the accrual of income aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inistration nor the Administrator could claim any rights over such property after it has been purchased by the assessee-board though they could regulate its use/disposal. According to him, sale consideration mentioned in the Deed of Conveyance is the finally determined price and not the tentative price. He further submitted that the fact that Stamp Duty as paid by the assessee-Board was finally accepted by the Sub-Registrar also shows that the sale consideration reflected market price. (xii) Referring to the provisions of Section 44 of the Haryana Housing Board Act, 1971, he submitted that the assessee-Board was fully empowered by law to dispose of any land vested in it. 13. We have heard both the parties and carefully considered their submissions. Apropos ground Nos. 2 to 4, two distinct issues arise for consideration and adjudication. They are as under: Issue No.1: Whether the CIT(A) is right in confirming the action of the AO in not treating the assessee-Board as agent of the Chandigarh Administration in respect of the RGCTP project framed by the Chandigarh Administration and implemented by the assessee-Board? Issue No. 2: Whether the CIT(A) is right in confirming the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 deals with "Sanction to programme, budget and establishment schedule", section 25 deals with "Publication of sanctioned programme", section 38 deals with "Schemes entrusted to Board by the Government" and provides that the provisions of sections 21, 23 to 29 shall not be applicable to the programmes/schemes entrusted by the Government, and section 63 deals with "transfer of assets and liabilities". While the schemes framed by the assessee-Board u/s 20 require approval/sanction, etc., of the Administrator in terms of sections 21, 23 to 29 of the said Act, the schemes entrusted by the Government/Chandigarh Administration to the assessee do not require such approval/sanction, etc., in view of the provisions of section 38 as such schemes are entrusted to the assessee-Board by the Government itself. The provisions referred to by the ld. counsel for the assessee either lay down the range of activities that can be undertaken by the assessee-Board or the procedure and the manner in which such activities can be undertaken or carried out by the assessee. Neither the aforesaid provisions nor any other provision in the said Act can be read or interpreted as appointing the assessee-Board as a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitution of a body or organization to exclusively deal with the matters entrusted to it. In the context in which the term "nodal agency" has been used in the documents referred to by the ld. counsel, the mere use of the term "nodal agency" in them is not sufficient to treat the assessee-Board as agent of the Chandigarh Administration. "Agency" in law connotes the relation which exists where one person (i.e., agent) has an authority or capacity to create legal relations between a person occupying the position of principal (i.e., Chandigarh Administration) and third parties. In the case before us, this relationship is completely absent. 17. Section 182 of the Indian Contract Act, 1972 defines 'agent' and 'principal' thus: "An 'agent' is a person employed to do any act for another or to represent another in dealings with third persons. The person for whom such act is done, or who is so represented is called a 'principal'. "Agency in law connotes the relation which exists where one person has an authority or capacity to create legal relations between a person occupying the position of principal and third parties": Halsbury's Laws of England, Fourth Edition, Reissue, Volume 1(2), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt has to look to the substance rather than the form of it. The mere fact that the word 'agent' or 'agency' is used or the words 'buyer' and 'seller' are used to describe the status of the parties concerned is not sufficient to lead to the irresistible inference that the parties did in fact intend that the said status would be conferred. Thus the mere formal description of a person as an agent or buyer is not conclusive, unless the context shows that the parties clearly intended to treat a buyer as a buyer and not as an agent. Learned counsel for the appellant relied on several circumstances to show that on a proper construction of the agreement it could not but be held to be a contract of sale. Learned counsel strongly relied on a decision of this Court in Sri Tirumala Venkateswara Timber and Bamboo Firm v. Commercial Tax Officer, Rajahmundry, 21 S.T.C. 313; 316 where this Court held the transaction to be a sale in almost similar circumstances. Speaking for the Court, Ramaswami, J., observed as follows: "As a matter of law there is a distinction between a contract of sale and a contract of agency by which the agent is authorised to sell or buy on behalf of the principal. The ess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration and thereafter granted development rights on the same to the Developer against consideration. The mere fact that it acquired that land from Chandigarh Administration would not make it an agent of Chandigarh Administration. The said land was purchased by the assessee in its own right and therefore it had a legal right to dispose off or commercially exploit the same. The assessee has commercially exploited the said land by granting leasehold rights and development rights on it to the Developer. It is thus a case where the assessee-Board has dealt with its own property and not the property of the Chandigarh Administration. If the assessee had been the agent of the Chandigarh Administration, there would have been no necessity for the assessee to purchase the land on payment of consideration from the Chandigarh Administration, for the reason that the assessee, as an agent in that case, could have directly dealt with the same on behalf of the Chandigarh Administration. 20. Turning once again to the documents referred to by the ld. counsel, the mere use of the words "nodal agency" in them is not sufficient to confer authority in the assessee-Board to bind the Chandigarh Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but a separate legal entity in its own right. It is settled by catena of decisions that the properties of a statutory corporation/board or a Government-owned company or authority established by the Government by or under law are not the properties of the Government. In the case before us, the land on which the project has been developed is owned by the assessee-Board. The land acquired by the assessee on payment of consideration has been commercially exploited by the assessee itself using its own resources. Conveyance deeds have been executed by the assessee-Board in its own right and not on behalf of the Chandigarh Administration. Proceeds flowing from commercial exploitation of land have been received by the assessee-Board and deposited in its own bank account. Besides, agency is created by contract and not unilaterally by one party. The assessee-Board and the Chandigarh Administration are not natural persons but juristic entities and hence there cannot be any oral agreement between them to create agency. The admitted position is that there is no written contract between them to create agency. After taking into account all the materials brought on record including the legal posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds the money is placed but towards a third party in whose favour and for whose benefit the title is created. Resultantly, the assessee, after the income stands diverted at source by a superior title to a third party, would no longer be concerned with that income. 24. In Sitaldas Tirathdas' case (supra), a part of income from property paid as maintenance allowance to the dependants under a decree of the court, without the maintenance allowance being charged upon the property yielding income, was held to be a case of application of income. In Sijua (Jharriah) Electric Supply Co. Ltd., 140 ITR 740 (Cal.), the Hon'ble High Court has considered the judgment in Sitaldas Tirathdas' case (supra) and held as under: "......... The concept of real income or diversion of income by an overriding title was explained by Hidayatullah, J. in the case of Sitaldas Tirathdas (supra) at pages 374-375: In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it is the nature of the obligation which is the decisive fact. There is a difference between an amount which a person is ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The income so charged must be passed on or is required to be passed or, in other words, is required to be diverted in favour of a third party before it reaches the assessee; and (iv) The assessee, after the income stands diverted at source by a superior title, is no longer concerned with that income or, in other words, the assessee must be completely divested of any kind of dominion over the income. 26. If the aforesaid tests are applied to the facts of the case, it will be seen that there is no diversion of income arising from the commercial exploitation of land owned by the assessee by an overriding title in favour of the Chandigarh Administration. The deed of conveyance by which the assessee has purchased the land from Chandigarh Administration does not contain any recital in this behalf. So is the case with the Development Agreement. None of them creates antecedent title by virtue of which the income from the said project would stand diverted to the Chandigarh Administration at source itself without reaching the assessee. Correspondence/notes exchanged between the parties merely require application of a income after it has reached the assessee. The amount in ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d leased the land on which development was to be carried out in favour of the assessee in consideration of the amount paid or promised to be paid. By Article 2 of the Development Agreement, the assessee-Board granted development rights on the said land to the Developer in consideration of Rs. 821.21 crores. It also provided that the development period would be total period of 36 months "starting from the Agreement Date". Article 3.1 of the said Agreement sets out the "Conditions Precedent" according to which the assessee-Board could at its option terminate the Development Agreement if the Developer failed (i) to provide bank guarantee as stipulated by Article 6.12; (ii) to furnish a certificate evidencing financial disclosure; (iii) to obtain approvals as required for the commencement of the Project. Article 3.2 of the said Agreement authorized the assessee-Board to extend the time period for fulfilling the "Conditions Precedent". By Article 5.1 of the said Agreement, the Developer promised to pay the agreed amount of consideration to the assessee-Board in consideration of its granting the development rights to the Developer on the said land. It is stated in Article 5.2 that the "B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire amount of consideration for transfer of development rights was inchoate and subject to several limitations. According to him, the property transferred by the assessee to the developer would revert back to it on failure of the developer to fulfil the stipulated conditions and, in that view of the matter, there was no accrual of income of Rs. 821.21 crores in the hands of the assessee. In support of his submissions, he relied upon the judgments in ED Sassoon v. CIT 26 ITR 27 (SC); CIT v. Hindustan Housing & Land Development 161 ITR 524 (SC); and CIT v. Chandigarh Industrial & General Development Corporation 319 ITR 85 (P&H). 30. We have heard both the parties and carefully considered their submissions. Facts of the case are not in dispute. Development Agreement and Lease Agreement were executed between the assessee-Board and M/s Parsvanath Developers in the year under appeal by which lease and development rights were granted by the assessee to the Developer in consideration of Rs. 821.21 crores out of which a sum of Rs. 100 crores was paid as upfront money at the time of signing the Agreement. Remaining amount was agreed to be paid in six quarterly instalments out of which first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. There must be a debt owed to him by somebody. There must be as is otherwise expressed debitum in praesenti, solvendum in futuro; see W.S. Try Ltd. v. Johnson (Inspector of Taxes) (1946) 1 All ER 532 at 539, and Webb v. Stenton & Ors., Garnishees 11 QBD 518 at 522, 527. Unless and until there is created in favour of the assessee a debt due by somebody it cannot be said that he has acquired a right to receive the income or that income has accrued to him." 33. The judicial authorities are thus consistent in the view that the transactions in the accrual system of accounting are recognised as soon as a right to receive revenue and a corresponding obligation/liability on the part of the other party to pay is created. In the case before us, the assessee-Board has granted lease of the land as also the development rights on the said land to the developer on agreed consideration of Rs. 821.21 crores. The right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is collected while the same sale on credit, in the cash method of accounting, is recorded in the books when the sale proceeds are actually received. In the case before us, the benefit of staggered payment given to the Developer is, in substance, like extending credit facility to the Developer to discharge a liability/debt that stood created by the Agreement executed in the year under appeal. Therefore the fact that the entire consideration was not actually received in the year under appeal cannot defeat the accrual in the year under appeal as the Agreement had vested a legal right in the assessee to receive the agreed amount of consideration for granting development rights to the Developer and corresponding liability/debt on the Developer to pay/discharge the same. 35. In the case before us, the assessee has not offered the impugned sum either on accrual basis in the year under appeal or on receipt basis in the years of actual receipt. It has been held that it is not open to the ITO, if income has accrued to the assessee, and is liable to be included in the total income of a particular year, to ignore the accrual and thereafter to tax it as income of another year on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the right to receive payment is admitted and the quantification only of the amount payable is left to be determined in accordance with settled or accepted principles. We are of the opinion that the High Court is right in the view taken by it and, therefore, this appeal must be dismissed." 37. As evident from the aforesaid observations that it was a case where the right to receive compensation was in dispute and that dispute was perceived to be real and substantial. It was in this context that it was held that it was on the final determination of the amount of compensation that the right to such income in the nature of compensation would arise or accrue and till then there was no liability in praesenti in respect of the additional amount of compensation claimed by the owner of the land. In the case before us, there is no dispute either with regard to the liability of the Developer to pay the agreed amount of consideration or with regard to the quantification of the amount of consideration to be paid by the Developer to the assessee. The liability to receive had crystallized upon signing of the Agreement. Perusal of the assessment order shows that substantial part of consideration h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s." 40. In the aforesaid case, the assessee had allotted industrial sheds on leasehold basis in which premium was required to be paid over 10 years period and the rights were to be transferred in favour of the allottee/lessee on the payment of final instalment. The premium was required to be paid on the basis of allotment letters and not in consequence of conveyance of the property. It was in this fact-situation that the Hon'ble High Court held that income would accrue on receipt of instalment on year to year basis and not on the allotment of land or industrial sheds. The fact-situation in the case before us is altogether different. In the case before us, the property has been conveyed to the Developer against agreed amount of consideration. The right to receive the agreed amount of consideration has accrued to the assessee upon signing of the Lease Agreement and Development Agreement by which land was leased and development rights on the said land were granted to the Developer. Liability to pay has been acknowledged by the Developer and in pursuance thereof the amount of agreed consideration has been promised to be paid. In this view of the matter, the aforesaid judgment does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid issue in paras 32 and 33 of her Order as under: "32. The issue involved in this ground is as to whether interest income of Rs. 9,01,57,799/- on FDR created from funds received from RGCTP Habitat Project and conversion of Industrial Plots to Commercial Plots belong to the Chandigarh Administration or the appellant. The appellant submitted that a sum of Rs. 7,04,29,365/- was bank interest that accrued on the funds generated from the RGCTP Habitat Project and balance Rs. 1,97,28,435/- was accrued on the funds that related to conversion fee on account of conversion of Industrial Plots to Commercial Plots. 33. Regarding the bank interest that accrued on the funds generated from RGCTP Habitat Project, the Appellant in its support submitted that these FDRs belonged to Chandigarh Administration and therefore, the income therein also belonged to Chandigarh Administration. I have already adjudicated the issue as to whether the income from RGCTP Habitat Project belonged to the Chandigarh Administration or to the Appellant in Ground No. 2. As per my findings and conclusions in Ground No. 2, I have held that the RGCTP Habitat Project belonged to the Appellant and it is the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat overdraft against FDRs was raised for utilization on various ongoing projects of the Appellant, but later changed its stand that the overdraft against the old FDRs was utilized to make fresh FDRs for earning higher rate of interest. However, the AO made a finding that the Appellant did not file any document in its support and further that the work in progress of the Appellant had increased from Rs. 76,79,01,913/- to Rs. 1,06,96,32,995/-during the year. Due to increase, the Appellant had created additional work in progress amounting to Rs. 30.17 Crores. 39. I do not find any merit in the contentions of the Appellant in the absence of any evidence or material on record. It is a fact that during the year additional work in progress amounting to Rs. 30.17 Crores was created and there would be corresponding inflow of funds to fund this additional work in progress. In view of the above this ground of Appeal is dismissed." 48. We have heard both the parties. The case of the assessee as initially made out before the Departmental authorities was that the amounts taken from the overdraft a/c were utilized to fund the on-going projects. The said stand was later changed by the assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order according to which the interest amounting to Rs. 1,97,28,435/- accrued to the assessee on fixed deposit receipts taken out of amount received by the assessee on conversion of industrial plots to commercial plots in Industrial Area, Chandigarh. It was submitted by the assessee before the AO that the FDRs as well as interest thereon belong to Chandigarh Administration and therefore it has not been offered to tax. The Assessing Officer however did not accept the explanation of the assessee in this behalf and consequently taxed the said sum in the hands of the assessee. 53. On appeal, the CIT(A) has accepted the explanation of the assessee that it was acting as an agent of the Chandigarh Administration as it received conversion fee on conversion of industrial plots into commercial plots as per directions of the Chandigarh Administration. As evident from para 24 of the appellate order passed by the CIT(A), the assessee seems to have filed a letter dated 29th October 2009 giving details of FDRs relating to conversion of industrial plots into commercial plots as per which FDRs for a sum of Rs. 54,68,48,520/- were taken by the assessee. The aforesaid letter was perceived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as agent of the Chandigarh Administration is not sufficient. In this view of the matter, the order passed by the CIT(A) in this behalf is set aside and the matter is restored to him for a fresh decision in the matter in conformity with law after giving reasonable opportunity of hearing to both the parties. Ground No.1 is treated as allowed with the aforesaid observations. 57. Ground Nos.2 and 3 taken by the Department read as under: "2. That on the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Ld. CIT(A) has erred in deleting the addition of Rs. 9,30,632/-which was made by the assessing officer on account of different on account of stock of house and booths which was pointed out by the auditors. 3. That on the facts and circumstances of the case and in law, ld. CIT(A) has erred in deleting the addition of Rs. 71,636/-which was made by the assessing officer relying upon the auditors report on account of short fall in the account of closing stock of material in hand." 58. The CIT(A) has dealt with the issues under appeal in paras 40 and 41 of the appellate order as under:- "40. There are two issues involved in this ground. One r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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