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TMI Blog2019 (4) TMI 1791X X X X Extracts X X X X X X X X Extracts X X X X ..... me. CIT(A) has erred in law and on facts in deleting the disallowance of consultancy fees by observing that the assessee has complied with the TDS provisions. Disallowance of consultancy charges paid by the assessee - HELD THAT:- We are unable to see any merit in the appeal of the Revenue. The CIT(A) has noted that assessee has provided copy of bills for consultancy charges paid to the Consultant S. S. Baid. The assessee has deducted TDS thereon when the payments have been made through banking channel. The CIT(A) has also noted the submissions of the assessee towards nature of services. The CIT(A) in our view has taken a holistic view of the matter and accepted the claim of the assessee as bonafide. We do not see any reason to depart from the view taken by the CIT(A) - Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... td as stock in trade and the Appellant has also treated the same as stock in trade from the beginning in the books of accounts as the land being received in amalgamation as part of stock in trade. The Appellant argued that AO has erred in applying the provisions of section 2(47) while making addition as such provisions are applicable to the capital asset only and not asset held as stock in trade. In the present case even the AO has while making assessment order made addition of the profit as business profit and even considering the same the provisions of section 2(47) r.w.s 53A of the transfer of property Act, 1882 applied to stock in trade are not justified. The Appellant argued that as per terms and conditions of the development agreement the possession remains with the Appellant and merely development rights are transferred to the Appellant. Further, Appellant refers to the clause (f) of the development agreement and argued that as per the terms the developer was to collect price of land as per Jantri Rate and hand over the same to the Appellant from time to time. Further, Appellant submitted that as per condition 2 of development agreement consideration of ₹ 1 Crore is to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to decide the final sale price of flats sold was transferred to the appellant and based on that the AO contended that the appellant has transferred the capital asset. The Appellant has during the course of Appellate Proceeding explained the terms and conditions of development agreement in detail and the copy of which was available with AO while passing Assessment Order. On consideration of entire facts it is observed that the developer is given authority to construct the flats on the land and finalize the buyers for the such flat as well as authority to decide terms of sale price with the buyers. However it is pertinent to note that clause 5 of the development agreement clearly state that the sale deed is to be executed by the Appellant in favour of proposed members. Thus from this conditioned it is clear that the Appellant has merely transferred the development rights in land to Balaji Associates and not the possession of land as the final authority to sign the sale deed made with prospective buyers remains with the appellant which proves that the ownership is still remains with appellant. (ii) The AO has while passing assessment order applied provisions of section 2(47)(v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs. S.P. Real Estate Developers (P.) Ltd [2014] 47 taxmann.com 281 I. Section 5 of the Income-tax Act, 1961 - Income - Accrual of (Concept of real income) - Assessment year 2008-09 - Assessee-company engaged in business of development and sale of real estate had taken up a real estate development project - Assessing Officer treated development agreement as a transaction giving rise to accrued income of sale of future property - Commissioner (Appeals) deleted addition made by Assessing Officer on ground that there was a dispute with regard to right over land and construction and that no real income had accrued to assessee - It was observed that neither possession of property had been given to ultimate buyer, nor assesses had received any, substantial consideration • Agreement entered into by assessee herein was only for sale of piece of property and sale would take place only after completion of construction and after assessee's share of property was identified - Whether, looking at prevailing circumstances in instant case, it was not possible to hold that income had actually accrued to assessee - Held, yes - Whether when consideration was not determinable with reasonabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade would be taxed proportionately in the previous years in which the constructed properly was sold by the assessee or retained for self-use and corresponding business income was offered. (v) Thus, in view of above it is held that the Appellant has correctly recognized revenue on year to year. On perusal of details submitted by the appellant it is appreciated that appellant has duly offered the income from profit on sale land to tax which is more than the income as specified in the development agreement: Ass. Year Land Sale Profit Total Sale 2009-10 27,58,377 30,25,755 57,84,132 2010-11 6,90,060 75,69,580 14,47,010 2011-12 89,48,903 98,16,349 1,87,65,252 2012-13 12,42,866 50,44,438 62,87,304 1,36,40,206 1,86,43,492 3,22,83,698 Land Development 1,00,00,000 2,86,43,492 Thus from the above it is appreciated that appellant has duly offered sale value of land in the profit and loss account as and when the units are booked in favour of proposed buyers in view of terms of development agreement and accordingly addition of ₹ 3,13,18,468/-made in the assessment order towards unaccounted profit on sale of land applying the provisions of section 2(47)(v) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Appellant has paid the amount of ₹ 4,50,000/- as consultancy fees to S.S Baid for providing production and technical consultancy. Even during the course of assessment proceeding, appellant has provided copy of bill based on which the consultancy fees is paid to S.S Baid. Further, it Is appreciated that the payment being made through banking channel after duty complying with the provisions of TDS, no adverse inference can be drawn particularly when AO has not pointed out any instances of payment being made for other than business purpose. Thus, on consideration of entire facts of the case of the Appellant, addition of ₹ 4,50,000/- made towards consultancy charges are hereby deleted and thereby this ground of appeal of the Appellant is allowed." 11. On consideration of the rival submissions, we are unable to see any merit in the appeal of the Revenue. The CIT(A) has noted that assessee has provided copy of bills for consultancy charges paid to the Consultant S. S. Baid. The assessee has deducted TDS thereon when the payments have been made through banking channel. The CIT(A) has also noted the submissions of the assessee towards nature of services. The CIT(A) in o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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