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TMI Blog2018 (6) TMI 1847X X X X Extracts X X X X X X X X Extracts X X X X ..... T, Amritsar Bench in the case of Branch Manager, Jarnmu & Kashmir Bank Ltd., Jammu in ITA No. 206-21G(ASR)/2011, which is not binding. 2. That the facts of the case relied by the Ld. CIT(A), Chandigarh on the basis of decision of the Hon'ble ITAT, Amritsar Bench in the case of Branch Manager, Jammu & Kashmir Bank Ltd., Jammu in ITA No. 206-210(ASR)/2011 are distinguishable to the present case as the case before Hon'ble ITAT, Amritsar pertains to deduction of tax at source on the interest accrued on FDRs in the bank in the case of Jammu Development Authority, where provisions of section 194A are attracted. 3. That the GMADA is an independent legal entity and is subject to tax under the provisions of Income Tax Act, 1961. As per notification issued by the State Government, the payments received by the GMADA on account of External Development Charges (EDC) are to be utilized by the GMADA itself. As per notification the EDC is to be utilized for the connectivity as well as providing of other amenities to the concerned mega projects from whom EDC is received. 4. That the payments on account of EDC amounting to Rs. 1,90,38,000/-is in the nature of service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DA, which is a creation of Punjab Regional and Town Planning and Development Act, 1995 as per notification No. 13/52/2006-1HG2/7443 dated 14.8.2006. These payments were received by GMADA on behalf of Punjab Government, since GMADA was a nodal agency and so tax was not required to be deducted by the PR on these payments. Therefore, it is held that the Assessing officer was not right in creating demand u/s 201(1) & 201(1A) on these payments and the demand created is accordingly deleted. Grounds of assessment proceedings Nos. 2 & 3 are allowed." 6. Following the above order passed for AY 2009-10, the Ld. CIT(A) vide impugned orders deleted the identical demand raised by the Assessing officers for the assessment years under consideration also. Being aggrieved by the aforesaid orders of the CIT(A), the Revenue has come in appeals before this Tribunal. It is pertinent to mention here that the appeal of the Revenue for assessment year 2009-10 has been dismissed on the ground of low tax effect. 7. Now, in this appeal for assessment year 2010-11, the contention of the Revenue is that the GMADA is an independent authority and is subjected to income tax as an independent organization. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and that it is not an income of the GMADA and that the GMADA has shown this amount as liability in its account, in our view, any finding on this issue at this stage cannot be conclusively arrived in the case of a third party (assessee before us) as the GMADA is not a party to the present litigation/appeals. Whether the EDC charges received by the GMADA would constitute income at the hands of the GMADA is an important issue which has been strongly contested by the GMADA and even by other such authorities in other appeals, but, no specific or conclusive findings, arrived at in any of such cases either by the Tribunal or any higher authority, has been brought into our knowledge. Hence, at this stage in this case of the assessee due to lack of the adequate facts and evidences and at the back of GMADA, neither it is appropriate nor possible to give any conclusive finding as to whether the receipts of the GMADA on account of EDC charges from various developers would constitute taxable income of GMADA or not? However, after hearing the Ld. representatives of the parties at length, we are of the view that these payments made by the assessee would not attract the provisions of sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Governor of Punjab hereinafter contained. Now this indenture witnessed that it hereby agreed end declared as follows: - (i) The Company shall make an investment of Rs. 952 crore including fixed capital investment of at least Rs. 100 crore at one location, as defined by the Department of Industries under Industrial Policy 2003, by setting up of information Technology Parks projects in 125 acre of land at Mohali with an investment of about Rs. 952 crore within a period of 3 years, effective from 29.03.2006. (ii) The said project shall have to be fully implemented and brought into commercial production within the said stipulated period (iii) The company shall develop the Industrial Estate first and housing and commercial projects subsequently. Before developing or disposing off the residential and commercial pockets in any manner, the company shall not only first develop industrial pockets but also dispose off atleast 50% of the industrial plots to industrial units which will be set up in the industrial pocket and the entire project shall come up with proposed investment level in stipulated period. (iv) The project of Information Technology Park shall be furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n contiguity. However, public service which already exists such as road, canal, park etc. shall not be construed to break the unity & contiguity of the park. i. Benefits to industrial parks under industrial policy, if provided by the Government shall be withdrawn by State Government in case the park is not put up / developed in accordance with the sanctioned plan within the prescribed time period. (iv) The Government of Punjab has agreed to provide following reliefs and concessions to the company for implementation of aforesaid project:- a) As per the Industrial Policy 2003 exemption will be granted on 100% stamp duty and registration lee on sale / transfer of built up space of the units or land inside the project area. Such exemption shall extend to the project area upto first sale of developed area / plot / built up space to any party by them or to any of its affiliate. There shall be no stamp duly on lease instrument of units located in the project area. Such exemption shall remain operative till the completion of the entire project as per the agreement. b) State Government shall acquire land as per provision of the Land Acquisition Act to the extent of 10% of the to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease of connection by PSEB. This concession shall, however, be admissible only to such Industrial units which are set up within the area earmarked for industry and start production within 5 years from the date of approval of Industrial Park i.e. 27.1.2006. l) The State Government shall allow the company to connect the project area to the State Transport Network. The State Government shall also allow them to operate their own public transport system within the project area and also for connecting the project area to the main unban center nearest to the project area subject to the fulfillment of required terms and conditions in this regard. m) The State Government shall not allow hazardous industry as defined under Factories Act within 500 metres of the project area and industrial plots within the industrial part shall also not have any hazardous industry. n) Pollution Control Board shall grant NOC and consent to operate to the Green Category Industry to be located in the Industrial Park in 30 days on fulfillment of all the required terms and conditions. o) No State Agency shall erect any barrier or create hindrance in various connectivities which shall be allowed to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agar (Mohali) and some adjoining areas was entrusted to the GMADA by the Government of Punjab. However, no separate agreement was executed between the assessee and GMADA. A specific query was raised by this Tribunal vide order dated 4.1.2018 not only from the assessee but also the GMADA officials were summoned with record to reply as to whether any agreement was executed between the assessee and GMADA; whereupon, it was confirmed by them to the Tribunal that no such separate agreement was executed between the GMADA and the assessee. Under the circumstances, it cannot be said that the assessee paid the EDC charges to GMADA out of any contractual liability with the GMADA. GMADA has been authorized to collect the EDC charges as per the policy decision of the Govt. and not out of the free consent of the parties to the contract. Under such circumstances, the GMADA being not a party to the contract, the aforesaid contract can not be enforced against the assessee by the GMADA in its own rights. 12. We have come across a decision of the Hon'ble Punjab & Haryana High Court dated 16 December, 2016 in the own cases of the assesse bearing CWP No. 5213 of 2015 (O&M) & CWP No. 5620 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee proposed to set up new Technology Park in an area of 125 acres of land at Mohali with an investment of Rs. 952 cores to avail the benefits/ special package of concessions. The aforesaid agreement was executed between the assessee and the Governor of Punjab on behalf of the State Government. A perusal of the whole agreement, as reproduced above, shows that the clauses (i) to (iii) along with their sub clauses relate to the obligation of the assessee to invest and develop the stipulated amount and develop the project as per policy and guidelines of the state Government. Clause (iv) further provides for the relief and concessions for which the government of Punjab agreed to provide to the assessee as per its policy of development which included exemption of 100% of stamp duty and registration fee etc., acquisition of land to the extent of 10% of the total area of project by the state government if requested by the assessee, change of land user free of cost, permission to dig tube wells, permission to construct high rise buildings up to to 45 meters etc., concession in work contract tax on construction material, FAR allowability of 2 for industrial and commercial pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. as may be required for such purpose. In our view, it will be illogical to say that the land is acquired/agreed to be acquired by the Govt. in lieu of any work/service contract with the assessee, external work is carried out by the Govt./local authority out of its own responsibility. Merely because the developers are required to deposit EDC on account of proportionate cost of infrastructure development, would not constitute the agreement a work contract. The External Development so as to connect the residential areas or industrial project with the main roads, system, water supply, sewerage / drainage, electricity supply or any other works, so required are to be carried out by the Govt./local authority out of its own responsibility and even if the contactor does not pay the EDC charges that does not absolve the government from carrying out the development works relating to the connectivity of the project. The government has also issued notifications from time to time so as to give concessions to the developer / promoters regarding External Development charges and also to formulate a policy regarding utilization of the EDC charges not only to provide infrastructure along with the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Master plan roads. 2. It can be utilized for augmentation of water supply scheme in case the water supply is provided by the authority / Local bodies and provision to upgrade the water supply system for providing connectivity to project. No connection charges if any will be charged from the developer for providing water connectivity, however, the user charges to supply water are not included in EDC and will be charged by the authority according to the policy applicable. 3. It may also include augmentation of major sewer, if required to provide sewerage connectivity to the project, grid sewer or sewer lines for out flow of treated water from the project to the main STP of the area if required. 1. Where outfall sewer is laid by the development authority within sector grid, provision shall be made for the treated sewer to shall fall into that sewer, However for stand alone projects where no major sewer lines are laid or there is no provision to lay such lines in near future by the Local Government /special Development Authority. The promoter shall construct STP on its own cost. The licensee will also provide for the cost of outfall of the treated water into a proper outflow dr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... layout plan/grant of licence the competent authority may specify the provisions which would be made or for the external development of the infrastructure according to this policy for the project. However, in case the exact detail of all the development work is not possible to be mentioned at the time of license, it may be decided as per the requirements of the project & future needs. So that the applicant/project owner is clear on what kind of infrastructure will be provided by the Authority. 2. For the fair and optimum utilization of EDC, every local Planning and Development Authority or Local Authority should prepare an Action plan for up gradation of existing infrastructure, provision of new infrastructure and city level facilities in the periphery of approved projects and within the local planning area limits. 3. EDC collected from all the projects will not only be used for up gradation of infrastructure as explained above but for the overall development of the local planning area as per the policy. Such action program should be prepared in such a manner that the first priority should be given for the provision of infrastructure around approved projects and other city leve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , PWSS. Board Member 6. District Town Planner (concerned) Member 7. Superintendent Engineer(PSPCL) Member 8. Any other Special Invitee Member Maintenance of Separate Account. The separate account of amount received under the head of EDC should be maintained by every local planning and development authority or local authority. The expenditure incurred on various development works executed out of this account should also be maintained separately. The local authority should get this account audited every year and put up the report to the authority for its rectification." 18 A perusal of the above reproduced notifications and policies of the Govt. also clearly reveal that though, in lieu of the benefits, concessions, incentives given by the government to the promoter for the purpose of development of infrastructure, the proportionate cost at fixed rates is got deposited by the government from the promoter for external development work, yet, the development is carried out by the local authority out of its own obligations/duties. The entire discussion can be summed up in the manner that though the promoter contributes towards the proportionate cost of infrastructure developm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould like to reproduce the relevant provisions of 'Punjab Regional and Town Planning and Development Act, 1995, which reads as under:- "29 (1) Where the State Government is of opinion that the object of proper development of any area or group of areas together with such adjacent areas as may be considered necessary will be best served by entrusting the work of development or redevelopment thereof to a Special Authority, instead to the Punjab Urban Planning and Development Authority for that area and thereupon, all the powers and functions of the Punjab Urban Planning and Development Authority relating to development and redevelopment of that area under this Act, shall be exercised and performed by the Special Urban Planning and Development Authority so constituted. (2) Every notification issued under sub-section (1) shall define the limits of the area to which it relates. (3) The Special Urban Planning and Development Authority constituted under sub-section (1) shall consist of the following members to be appointed by the State Government, namely :- (i) a Chairman ; (ii) a Chief Administrator who shall be appointed from amongst the officers of the Government of Punjab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowing :- OFFICIAL MEMBERS 1 Chief Minister, Punjab Chairman. 2 Housing & Urban Development Minister Member. 3 Chief Secretary Member. 4 Principal Secretary to Chief Minister. Member. 5 Principal Secretary Finance Member. 6 Secretary, Housing & Urban Development Member. 7 Secretary, Local Government. Member. 8 Chief Town Planner, Punjab. Member. 9 Chief Administrator, GMADA. Member. 10 Three non-official members to be nominated by the Chief Minister. 1. Chief Administrator of the Authority shall be appointed by the Government. Deputy Commissioner, Sahibzada Ajit Singh Nagar District will function as Chief Administrator of the Greater Mohali Area Development Authority (GMADA) till an officer is appointed as such by the Government. 2. The Headquarters of the Authority shall be at Sahibzada Ajit Singh Nagar. 3. All the powers and functions of the Punjab Urban Planning and Development Authority relating to development and redeployment of Sahibzada Ajll Singh Nagar District and adjoining areas falling in other districts, forming part of Greater Mohali Area shall be exercised by the Greater Mohali Area Development Authority as constituted." 22. The perusal of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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