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TMI Blog2017 (3) TMI 1304X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee by : Smt. Deepa Khare Department by : Shri Hemant Kumar C. Leuva ORDER Per R. K. Panda, AM This appeal filed by the Revenue is directed against the order dated 08-02-2015 of the CIT (A) 4, Pune relating to A.Y. 2009-10. 2. The Revenue in the grounds of appeal has challenged the order of the CIT(A) in deleting the penalty of ₹ 1,78,25,925/- levied by the Assessing Officer u/s 271(1)(c) of the Income Tax Act. 3. Facts of the case in brief are that the assessee is a private limited company engaged in the business of developing and promoting real estate. It filed its return of income for the impugned assessment year on 21/10/2009 declaring total income of ₹ 1,12,21,203/- which was subsequently revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has excluded an amount of ₹ 5,89,91,145/- received from the AOP in the computation of income by claiming that the said income is already taxed in the hands of the AOP and the profits received from AOP is not taxable u/s 167B(2) of the Act. Relying on the decision of CIT(A) that what the assessee had received from the AOP was not share of profit but a consideration fixed at a certain percentage of a gross sale proceeds in lieu of transfer of development rights and therefore the amount received was chargeable to tax and not exempt from tax, the Assessing Officer levied penalty of ₹ 1,78,25,925/- under the provision of section 271(1)(c) r.w. explanation 1 thereto. 4. Before the CIT(A) the assessee submitted that full particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) and the Paper Book filed on behalf of the assessee. We find in the instant case, the assessee along with M/s. Raviraj Kothari and company (RKC) formed an AOP namely M/s. Fortaleza Developers for the purpose of developing and constructing a housing project, namely, Fortaleza' on the land situated in S.No.210 at Yerawada, Pune, the development rights of which were acquired by the assessee company from the owners of the land. Clause 7 of the AOP agreement provides the revenue sharing ratio between the two entities as per which the sales proceeds of the units were to be deposited in a joint account and would be shared at the ratio of 35% and 65% by the assessee and RKC respectively. During the year the assessee received ₹ 5,89,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The ground raised for the assessment year 2008-09 as under: 1. On the facts and circumstances of the case and in law, the learned C!T(A) erred in confirming the reduction of business income by ₹ 14,64,64,961/- being the share of profit of one the members of the appellant AOP erroneously holding that the agreement entered into between the members of the AOP is for sharing of the revenue and not for sharing of the net profit. Reduction of business income being bad in law, the same needs to be cancelled and returned business income and consequential claim u/s 80IB(10) on that amount needs to be accepted. 3. We have heard the Ld. AR as well as the Ld. DR and considered the relevant material on record. At the outset we note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and if such interpretation is adopted it will tantamount to denial of existence of AOP which is not even the case of Ld. CIT. It has already been pointed out that AOP is a separate and distinct assessable entity and is also entitled to claim the deductions permitted under the Income Tax Act provided it fulfil the conditions laid down in the section governing that deduction. The assessee AOP in the present case has been assessed as AOP and found to have fulfilled the condition laid down in section 80IB(10) and has been held to be eligible for such deduction. The quantum of deduction under section 80IB (10) will depend on the income earned from eligible project. The quantum of deduction will not depend upon the mode of distribution of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35% of the gross revenue to be shared by SPPL was in the nature of overriding title, therefore, this argument of Ld. CIT DR has to be rejected and it is to be held that 35% share received by SPPL was not in the nature of overriding title to the revenue but it is only share of profit of SPPL. 5.7 In view of above discussion it is held that the impugned assessment order is neither erroneous nor prejudicial to the interest of revenue on account of allocation of profit between members as per accounts of the assessee as allocation of profit in the accounts of the assessee is in accordance with clause-7 of the agreement and manner of allocation of profit in the account cannot alter the quantum of deduction available to AOP under section 80 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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