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TMI Blog2019 (1) TMI 883X X X X Extracts X X X X X X X X Extracts X X X X ..... s units on behalf of the society in the preceding years, details development fees along with TDS collected from the society, relevant clauses of development agreement entered into by the assessee and the society, while arriving at the conclusion. There is no material placed before us, which compel us to deviate from the finding of the ld. CIT(A). Therefore, considering well reasoned order of the ld. CIT(A), we do not find merit in the appeal of the Revenue. Order of the ld. CIT(A) is upheld, and the ground of appeal of the Revenue is rejected. - ITA No. 2523/Ahd/2015 - - - Dated:- 15-1-2019 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER For The Revenue : Shri Lalit P. Jain, Sr. DR For The Assessee : Shri B. K. Patel, CA ORDER PER AMARJIT SINGH, ACCOUNTANT MEMBER: This is Revenue s appeal against order of ld. CIT(A)-2, Ahmedabad dated 12. 7. 2016 passed for the assessment year 2013-14. 2. Sole issue raised in this appeal is that the ld. CIT(A) has erred in law and on facts in deleting addition of ₹ 90. 00 lakhs on account of alleged extra income reflected in the AIR. 3. Brief facts of the case are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no income in the hands of the assessee. This explanation of the assessee was not accepted by the ld. AO. The AO was of the view that as per clause -25(a) of the development agreement between the assessee and the society, all surplus/profit received from the buyers of the property shall absolutely belonging to the developer i. e. the assessee, and the amount of ₹ 90 lakhs received by the assessee was to be treated as extra income/profit earned by the assessee, and was taxed accordingly. The AO accordingly made addition of ₹ 90. 00 lakhs in the hands of the assessee. Aggrieved assessee went in appeal before the ld. CIT(A), who after considering the issue in details allowed claim of the assessee and deleted the impugned addition. The Revenue is now before the Tribunal against order of the ld. CIT(A). 4. Before us, the ld. DR supported order of the ld. AO and further submitted that as per clause-25(a) of the development agreement entered into between the assessee and the Society, whatever profits and/or surplus generated out of the sale of the property belonged to the assessee and there is no case that the assessee has received the said sum of ₹ 90 lakhs on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time of booking of shop no. 7 by the said Vanitaben Dilipkumar in the preceding years i. e. ₹ 1 crore in F. Y. 2008-09, ₹ 78 lakhs in F. Y. 2009-10 and ₹ 1. 00 lakh in F. Y. 2012-13, the same was not treated as income of the assessee in the respective years, then how the receipt of ₹ 90 lakhs could be taxed in the year of receipt i. e. A. Y. 2013-14 respectively. The ld. CIT(A) also found that the sale in the cases of other units in earlier years, by which the assessee has received sale proceeds for and on behalf of the society, has not been brought to tax in the hands of the assessee, for the simple reason that the same was not belonging to the assessee, but was received on behalf of the assessee society. This was accepted by the department. Therefore, the findings of the AO were factually as well as logically incorrect. For better conceptualization of the issue and to arrive at a just conclusion, we would quote the observation and finding of the ld. CIT(A) recorded in his order, which read as under: 2 . 3 . Decision: I have carefully considered the facts of the case, the assessment order and the written submission of the appellant . T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds of the other party does not arise at all . The AO also relied upon the clause-21 of the development agreement which states that the developer shall be entitled to receive and retain with all the monies from the persons to whom the said premises are sold or allotted as the case may be, in the scheme to be constructed by the developer on the said land to appropriate the same in such a manner as the developer may deem fit . 2 . 6 . In view of the aforesaid clauses to the development agreement, the AO observed that the amount of Rs . 90 lakhs received by the society from Kutubuddln F . Kapadia and others belonged to the appellant company towards the sale of the shop and it is not the case that the appellant company received the same on behalf of the society . Thus the addition was made as income/profit earned by it during the year under consideration from the above project . 2 . 7 . On the other side, the appellant has submitted that the society has floated the scheme namely 3rd Eye-2 on its land for which the appellant has been appointed as developer of the said scheme as per the development agreement provided to the AO in the assessment proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No . 681/6/1 and (iv) Final Plot No . 681/6/1 Paiki 1, collectively admeasuring 3084 Sq . Mtrs . ( As per revenue records and inclusive of land admeasuring 149 . 88 Sw . Mrts . for road widening) are adjoining to each other . The Ahmedabad Municipal Corporation has approved the plan for amalgamation of said lands and issued its Raja Chitthi in this behalf (Ref . Raja Chitthi No, 10790/031108/A5484/M1 dated 03/12/2009 . Full particulars of / description of the said lands are described in the FIRST SCHEDULE hereunder written and the same is hereinafter collectively referred to as the said land . Further the said land is adjoining to land of Final Plot No . 680/1 . ( F) As the party of the Second Part was desirous of having one commercial shop in the said Third Eye Two Complex, they had approached the Confirming Party hereto, for getting full information in respect of said Complex as a whole and the Confirming Party had given full information and particulars about the said Complex including the titles of the Society, approval of plans and all other permissions and sanction, alt types of building raw materials to, to be used in the comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as confirming party to the said sale deed being developer . By virtue of this sale deed appellant received Rs . 90 lakhs due as per the original registered agreement to sale dtd . 18 . 08 . 2009 and Vanitaben got the balance amount of Rs . l2 lakhs as a profit as mentioned in the sale deed . Therefore, Rs . 90 lakhs received in the year under consideration is the balance amount received for and on behalf of the society in pursuance to the right of collection as per the development agreement and it was never been the profit of the appellant . 2 . 11 . Receiving the balance amount of Rs . 90 lakhs does not amount income to the appellant as it was from the original transaction which was belonging to the society and not to the appellant . The appellant has only authorized to collect the amount for and on behalf of the said society and therefore it was not the income of the appellant . This fact was also evident from the accounting entries made by the appellant in its books of account by debiting the account of the party and crediting the account of the society . As has been mentioned in the preceding paras that the appellant had the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54030264. 00 31/03/2012 3 9680. 00 41721000. 00 2015700. 00 43736700. 00 31/03/2013 3 9473. 00 53450000. 00 297000. 00 53747000. 00 31/03/2014 3 8883. 00 44030429. 00 44030429. 00 Total 32 79815. 00 338620293. 00 9148100. 00 347768393. 00 2 . 14 . Further it has also been noticed that the appellant had received the development fee in different years from the society and offered for taxation in the profit and loss account of the respective years which had not been doubted by the A . O . Along with the development fee received from the society, the appellant had charged the service tax from the society and the society has also made the TDS upon such development fee payments to the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us /profits of the scheme and hence same is not liable to be treated as income of the appellant in view of the clauses of the development agreement as alleged by the A . O . 2 . 17 . For the sale proceeds received in respect of various units in the scheme the appellant has never credited such sale proceeds in its profit and loss account but the same have been credited to the account of the society only . In other words, the profit and loss account have never been given effect in respect of the receipts towards sale proceeds and payments made to society thereof . All these entries have been made in the personal account of the parties and society . The balances in their ledger account have been carried to the balance sheet which were in order . These accounting entries have never been challenged by the AO in the year under consideration and also in the preceding years . 2 . 18 . In view of the aforesaid discussion, the addition made by the AO in the hands of the appellant is found untenable and same is deleted . Thus the ground of appeal is allowed . 7. On perusal of the above order of the ld. CIT(A), we find that the ld. CIT(A) has ..... 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