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TMI Blog2016 (4) TMI 1269X X X X Extracts X X X X X X X X Extracts X X X X ..... directed against the two different orders of the ld.CIT(A)-13, Bangalore, dated 6/4/2015 for the assessment years 2008-0 to 2014-15. 2. The revenue raised the following common grounds of appeal: 1. The order of CIT(A) is opposed to the facts and nature of the case on hand. 2. The Id. CIT (A) erred in holding that the assessee was not required to deduct tax at source u/s. 194C from the payments made to developer. 3. The Id. CIT (A) ought to have considered the fact , that as per the assessee's agreement with the developer, the works to be carried out like procuring the land, developing, conversion, plan approval, drainage and laying roads, chip carpeting, storm water drains, etc., clearly indicates that the contract included 'Works contract' which attracts provisions of Section 194C. 4. The Id. CIT (A) ought to have considered the fact that the agreement entered into by the assessee with the developer are in the nature of composite contracts for works for which provisions of Section 194C is clearly applicable. 5. The Id. CIT (A) erred in relying on the decision of the jurisdictional High Court in the case of M/s. Karnataka State Judicial Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to members of the respondent-cooperative society. The society was acting as a facilitator. 4. Survey operations under the provisions of sec.133A of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] were carried on in the premises of the respondent-cooperative society on 5/12/2013 by investigation wing of the department. During the course of survey, the department found that no TDS was made by the respondent-co-operative society under the provisions of 194C of the Act on the payments made to the person alleged to be a developer i.e. Shri Lakshman. When the respondent-co-operative society was called upon to explain as to why tax was not deducted at source on such payments, respondent-co-operative society contended that only developed sites were purchased from the developer and there was no contract for development of sites and therefore, the provisions of sec.194C were not applicable. In support of this contention, respondent-co-operative society relied upon the decision of the Hon'ble jurisdictional High Court in the case of CIT vs. Karnataka State Judicial Department Employees House Bldg. Co-operative Society in ITA No.1260/2006. The ITO, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore since no work has been executed by the developers, provisions of section 194C of the Act do not get attracted. Further the decision of the Hon'ble High Court of Karnataka in the case of CIT vs Karnataka State Judicial Department Employees House Building Co-operative Society in ITA 1260/2006 fortifies this stand. In the said judgment, the Hon ble High Court upheld the jurisdictional ITAT Bangalore's decision in the said case and held that if any advance is paid as consideration the assessee has no business to deduct tax at source as it is the seller of sites who has to pay capital gains. Earlier the Hon'ble ITAT Bangalore had held that the agreement between Sh. Lakhsman, and Karnataka State Judicial Department Employees House Building Co-operative Society begins to operate only after the layout is formed and so can never be construed as an agreement in the nature of a works contract. A contractor is one who undertakes to do a particular work for a price. No such contract is envisaged in this agreement. This agreement envisages purchase of specified intermediate sites at a price after Sri. Lakshman completes the job of formation of a layout either in full or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the opinion that it is a fit case for condonation of delay as the delay had occurred on account of mistaken impression that appeal was not filed against the decision of the Hon ble High Court of Karnataka in the case of Karnataka State Judicial Department Employees House Bldg. Co-operative Society (cited supra) on merit of case. Keeping in view the ratio laid down by the Hon ble Apex Court in the case of Mst. Khatiji Others (cited supra), we condone the delay of 144 days in filing the appeals and admit the appeal filed by the revenue. 8. The issue in the present appeals is whether the payments made by the respondent-co-operative society to Shri Lakshman, stated to have been paid to acquire lands are in the nature of payment made for any work contract or consideration paid for purchase of sites. It is needless to mention that the provisions of sec.194C are applicable only to works contract. Once it is established that payments made to Shri Lakshman are not in the nature of works contract, question of deducting tax at source under the provisions of sec.194C does not arise. To determine the character of payments, it is essential to look into terms of the contract. We have pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eed dated 27/8/2014 are as under: 1. The Vendor and confirming party in conformity with the facts stated above, today handed over actual vacant possession of the schedule site to the Purchaser. Pursuant to this deed of conveyance, a separate Possession Certificate issued confirming the site number, dimension and boundary. 2. The Purchaser shall be entitled to hold, possess, build upon and enjoy the schedule site hereby conveyed and the rents and profits received there from without any disturbance or interference by the Vendor/Developer/Confirming Party and/or any other person claiming through or under them. 3. The Schedule Site is one of the intermediate site formed in the private residential layout formed by the Vendor for the benefit of members of Koutilya Housing Building Co-operative Society Ltd., i.e. the Conforming Party herein and accordingly conveyed the same to the purchaser under this sale deed. A perusal of the above clauses reveals that it is a case of sale of developed sites of the developer to individual members of the cooperative society. The society was only acting as a facilitator. Therefore, it does not involve any works contract. It is a c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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