TMI Blog2015 (3) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... ee no infirmity in this deletion and we decline to interfere. - Decided in favour of assessee. Development charges paid to M/s. R.M. Trust - CIT(A) deleted the addition - Held that:- So far as it relates to disallowance of ₹ 55,94,000/- for development charges after going through the documentary evidence submitted by the assessee before AO as well as Ld. CIT(A), Ld. CIT(A) has granted relief as this amount was towards the development charges paid to R&M Trust and thus, for this deletion also, we are of the opinion that there is no infirmity in the order passed by Ld. CIT(A). We decline to interfere. - Decided in favour of assessee. Option money received - According to AO such money received by the assessee represented sale consideration against sale of properties and requires to be taxed as income - CIT(A) deleted the addition - Held that:- The amount received by the assessee was against the right of option given to the respective parties and even according to the findings of Ld. CIT(A) these amounts were not received by the assessee in the year under consideration. Out of five parties, three parties refunded back the amounts. Regarding balance two parties, they still ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts circumstances of the case and in law, the CIT(A) erred in deleting the disallowance made of ₹ 8,53,l89/- made towards the administrative charges paid to sister concern without appreciating the fact that the said expenditure was a subject matter of great controversies within the members of AOP itself 5. The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 2. Though initially Ld. DR sought adjournment but it was pointed out that it is an old appeal then Ld. DR was fair enough to plead the matter and in this manner this appeal was heard today. 3. Ground No.1, relates to two additions namely ₹ 7,22,250/- and ₹ 55,94,000/-. The issue relating to a sum of ₹ 7,22,250/- is discussed in the order passed by Ld.CIT(A) in para-2 alogwith issue raised in Ground No.2, which relates to addition of ₹ 1,46,910/-. The other part of Ground No.1, which relates to disallowance of a sum of ₹ 55,94,000/- is discussed in the order passed by Ld. CIT(A) in para-6 of the order. 3.1 The facts relating to the addition of ₹ 7,22,250/- are that assessee being builder and d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd for the purpose of developing the land purchased, it entered into an agreement with R M Trust having office at Bangalore on 1/3/1995 for developing the property. As per the agreement, the developer was to carry out development work specified in the agreement and was given licence to carry out work. Subsequently, by an agreement dated 2/3/1996, after getting the possession of the property it entered into fresh deed with R M Trust for development of the property as approved by the Panchayat. The terms of development to be carried out was spelt out in the agreement. In the agreement it is mentioned that the rate to be determined for the purpose of development is with R M Trust. The entire cost of development was to be borne by R M Trust besides making deposit for carrying out the work. Subsequently, it was agreed upon by the parties that the development charges payable to R M Trust was ₹ 50/sq.ft. From the gross consideration received on sale of flats developed by the said R M Trust, ₹ 50/sq.ft. was payable and as per terms of agreement a sum of ₹ 59,94,250/- was paid to the R M Trust. This fact was also mentioned in the tri-party agreement between the purchaser o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order passed by Ld. CIT(A) should be set aside. 5. On the other hand, Ld. AR submitted that the order passed by Ld. CIT(A) is a speaking order. It was submitted that all evidences and documents were submitted to the AO and on the basis of those evidences and documents Ld. CIT(A) has arrived at a conclusion that these additions were not called for. To substantiate these submissions Ld. AR has referred to the following evidences, copies of which are filed in the paper book. (i) (a) Regarding addition of ₹ 7,22,250/-, sale agreement dated 5/2/1997 entered into by the assessee with Mr. Subash Menon Mrs. Radhika Subash, copy of agreement placed at pages 22 to 58 of the paper book. Relevant clause 11(d) relying upon which the relief has been given by Ld. CIT(A) is at page 36 of the paper book, which read as under: (d) In the event of the PURCHASER not being desirous of terminating the agreement, the VENDER/DEVELOPER shall be liable to pay the PURCHASER, for every month of delay beyond 3 months of the date of possession as contemplated in Clauses 11(a) and (b) above, upto the date that the VENDER/DEVELOPER intimates that the said Apartment is ready for possession as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books, details are described as under: Plot No. Name of the Party Area (in sq.ft.) Development charges. Jade Garden 424 Harish Bijoor 5980 299000.00 Jade Garden 50 Acres 130 Bipin Johny 12965 648250.00 139 Krishnan Advaney 9550 477500.00 140 Krishnan Advaney 9550 477500.00 Jade Garden 40 Acres 654 Sunil B. Peevekar 5325 266250.00 786 Priya Alex 5985 299250.00 714 Kishore Rao 4700 235000.00 71 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we decline to interfere. 6.2 So far as it relates to disallowance of ₹ 1,46,910/-, it is observed that in the letter written by BMP it has clearly been mentioned that is towards taxes and the contents of the said letter are reproduced in the earlier part of this order. Thus, this payment also cannot be said towards penalty or violation of any provision of the Act. It was in the nature of tax. Therefore, we see no infirmity in this deletion and we decline to interfere. 6.3 So far as it relates to disallowance of ₹ 55,94,000/-, for this also, after going through the documentary evidence submitted by the assessee before AO as well as Ld. CIT(A), Ld. CIT(A) has granted relief as this amount was towards the development charges paid to R M Trust and thus, for this deletion also, we are of the opinion that there is no infirmity in the order passed by Ld. CIT(A). We decline to interfere. 7. In the result, Ground No.1 2 are dismissed. 8. Apropos Ground No.3; this issue has been discussed by Ld. CIT(A) in para-5 of his order. The assessee had received option money of ₹ 19,56,000/- from five parties. As per option agreements these parties had given a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final agreements are signed and receives full consideration. In respect of plots of land of Jade Garden appellant has received only part amount. Balance amounts of ₹ 1,74,400/- and of ₹ 6,59,500/- are still not received by the appellant. Even otherwise this being the option agreement and party has not still opted for purchase of the plots and possession of plots are also not given so same cannot be considered for the purpose of booking the profit from property. AO has not brought anything on record to prove that the said properties are purchased by the buyers and properties are handed over to parties. In view of these facts and in light of decision of the Hon ble Supreme Court in case of DLF Universal, cited supra, in my opinion there is no tax planning device as argued by AO and there is no justification in taxing the entire deposit as income of the appellant. As a result I hereby delete the addition made by the AO . 8.1 Relying upon the order passed by AO, it was pleaded by Ld. DR that the addition was rightly made by AO and Ld. CIT(A) has wrongly deleted the same. 8.2 On the other hand, Ld. AR pleaded that it has been clearly brought out by Ld. CIT(A) that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not submitted. Comparative figures were submitted to show that there was no increase in such expenditure. It was submitted that since payment did not exceed market rate provisions of section 40A(2)(b) could not be applied. The Ld. CIT(A) has accepted such submissions of the assessee and referring to A.Y 1999-2000 it was observed that AO had disallowed 10% of the service charges on the ground that assessee failed to get its books of accounts audited and in this year the AO had disallowed 50% without giving proper reasons. It is also observed by Ld. CIT(A) that turnover for the year under consideration is higher. However, Ld. CIT(A) has held that provisions of section 40A(2)(b) will be applicable and considering the facts of the case and the figures of expenditure which is a sum of ₹ 21.32 lacs against last year s expenses of ₹ 26.39 lacs, Ld. CIT(A) has upheld the disallowance to the extent of 10% i.e. for a sum of ₹ 2,13,295/- and balance disallowance of ₹ 8,53,189/- is deleted. The Revenue is aggrieved, hence, has filed aforementioned ground of appeal. 9.1 On this issue we have heard both the parties. Ld. CIT(A) has passed a speaking order. As per sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
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