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2014 (3) TMI 1018 - AT - Income TaxAddition on account of accrued income on grant of development rights - CIT(A) deleted the addition - Held that:- CIT(A) has duly taken into consideration all the relevant articles of the Development Agreement entered into by the assessee with the developer. Now, obviously, even as per the agreement, no development right comes into existence till the licence is granted. Indisputably, till such time, the nature of the exact development is to be carried out on authorizing the assessee to do the same, is undecided. Till such time, the land purchased remains raw land only. The right under the Development Agreement, therefore, is merely a contingent right, depending on the grant of licence or approval, as provided for Article I of the Agreement. It is only from the date of grant of licence from the DTCP, the developer would actually be vested with the licence to develop the property. Prior to such development, all approvals as enumerated in Article I of the Agreement are to be obtained from DTCP and it is the responsibility of the developer to do so. It is only when the sanctioned plan and the approvals are obtained, that the developer can commence the development on the scheduled property. Moreover, this is on record by way of the assessee’s profit and loss account and balance sheet as on 31.3.2007 and for the three subsequent years, that no development work was undertaken in the said years. The necessary approvals/licence for development have also not been shown to have been granted either to the assessee or the developer during the year. Sans these approvals/licence obviously, no development could have been carried out . Without these approvals/licence , it cannot be said that any development rights came into existence at all. The contingent right under the Agreement has not been established to have been fructified into a vested right. Apropos the interest free performance deposit, this has not been shown to be representing part of sale consideration for the development rights. It cannot do so, since, as observed, no such development rights came into existence during the year. All the above facts have correctly been taken into consideration in the right perspective by the ld. CIT(A) while deciding the issue in favour of the assessee. TDS u/s 194 H - whether the amount paid to M/s Vikram Electrical Equipments P.Ltd. the consolidator appointed to acquire the land holdings is brokerage or commission or fee for professional services? - Held that:- Unless the assessee decided to procure less than 27 acres of land through Vikram ElectricEquipment P. Ltd., Vikram Electric Equipment P. Ltd., was to procure 27 acres of land for the assessee, failing which, no payment was to be made by the assessee to Vikram Electric Equipment P. Ltd. This clearly shows that Vikram Electric Equipment P. Ltd. was transacting on a principle to principle basis and it cannot be said that the payment was made by the assessee to Vikram ElectricEquipment P. Ltd. for rendering of any service.The provisions of section 194 H of the Act are, therefore, not at all applicable. - Decided in favour of the assessee.
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