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2015 (5) TMI 762 - ITAT AHMEDABAD

2015 (5) TMI 762 - ITAT AHMEDABAD - TMI - Addition on account of profit on sale of plot of land - CIT(A) deleted the addition - Held that:- It is not in dispute that the assessee had given a plot of land to M/s.Tirupati Corporation for development. As the entire payment for this transfer was not received by the assessee, the assessee had a lien over the said plot of land and in government records, the name of the assessee continued as registered owner over the said plot of land. M/s.Tirupati Cor .....

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ds in the name of M/s.Tirupati Corporation. The entire consideration of ₹ 46,08,000/- and ₹ 72,00,000/- was received by M/s.Tirupati Corporation, and they have duly shown the same as their income in their return of income. No material has been brought on record by the Revenue to show that any part of the said consideration of ₹ 46,08,000/- and ₹ 72,00,000/- was actually received by the assessee or the assessee was the owner of the complex, in respect of which FSI was sold .....

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011 With CO No. 116/Ahd/2011 - Dated:- 29-4-2015 - Shri N. S. Saini And Shri Kul Bharat,JJ. For the Petitioner : Shri M.K. Singh, Sr. D.R. For the Respondent : Shri S.N. Soparkar & Shri P.M. Mehta, A.Rs. ORDER Per Shri N. S. Saini, Accountant Member: This is an appeal filed by the Revenue and Cross Objection filed by the assessee against the order of the Commissioner of Income-Tax (Appeals)-V, Baroda dated 14.03.2011. 2. The ground of appeal of the Revenue is that the CIT(A) erred in deletin .....

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t page no.14, the purchaser had paid consideration of ₹ 46,08,000/- by cheque No.999484 dated 09.05.2006 and ₹ 72,00,000/- by cheque No.992482 dated 09.05.2006 towards purchase of FSI. The assessee has disclosed only ₹ 45,64,000/-. Therefore, the difference of ₹ 72,44,000/- (Rs.72,00,000 + 46,08,000 - ₹ 45,64,000) was added by the A.O. 4. On appeal before the CIT(A), the assessee submitted that another group concern M/s. Aditi Construction had received ₹ 1,60, .....

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urisdiction for making the addition. The assessee also submitted copy of development agreement dated 18.07.2005 of transferring developing rights of plot no. 1 & 5 to Tirupati Corporation and also the order of the court dated 17.10.2006 regarding the understanding between M/s Aditi Construction and Hindustan Earth Movers Pvt. Ltd. 6. In the remand report the A.O. reiterated his earlier stand. It was also stated that as per M.O.U. dated 27.01.1997 M/s Aditi Construction was supposed to purcha .....

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plot no.33 in the sale deed and that in the sale deed there is no mention of apportionment of receipts. 7. In response to the remand report, it was submitted that the development right for plot nos.1 & 5 were sold to Tirupati Corporation for ₹ 1.60 crores and in view of the Court s decision, the share of Hindustan Earth Movers Pvt. Ltd. was ₹ 45,64,000/- which was reflected in its books. It was submitted that in para No.3 of the development agreement between Tirupati Corporation .....

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ill be carried out towards the land which is owned by the party of the First Part. 8. Therefore, it was submitted that Hindustan Earth Movers Pvt. Ltd. was merely a confirming party in regard to agreements for sale of FSI and not received any amount on the said transactions. It was submitted that Tirupati Construction sold the FSI to M/s. Tirupati Prime Estate Pvt. Ltd. and that both the payments of ₹ 72 lakhs and ₹ 46,08,000/- were received by Tirupati Corporation and these facts ar .....

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records and examined them. The contentions and the response of the appellant was discussed with the AO who was also present and the submissions of the appellant were verified from the assessment records. From perusal of the sale deeds and other documents, it appears that AO seems to have mixed up the facts in the assessment order. The Development Agreement dt. 18.07.05 between HEMPL & M/s Shree Tirupati Corporation stipulates that land area measuring 4548.3 sq. meter in R.S. No.33 Plot No.1 .....

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i Construction is to receive 2/3rd and HEMPL 1/3rd of the payments for sale of plot no.1 and 5. HEMPL received ₹ 4564000/- for sale of development right and M/s Aditi Construction received ₹ 11436000/- and the receipts were offered for taxation in the return for AY 07-08. It is a fact that as per para 3 of the development agreement dt. 18.07.05, HEMPL has transferred the developmental right as well s the FSI for total price of ₹ 1.6 crores. 4.3.1 By sale-deed dt. 16.5.06, HEMPL .....

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e-15 of the agreement. Similarly vide sale-deed dt. 16.5.06, HEMPL (mentioned as seller) and Shri Tirupati Corporation (mentioned as party of the second part and developer and confirming party) sold FSI rights of showroom on first floor for ₹ 72 lakhs for showroom No.101-104. The AO after perusal of return noticed receipts of only ₹ 4564000/- and thus he balance ₹ 7244000/- (11808000 - 4564000) was brought to tax by him. The AO apparently has mixed up the proceeds from sale of .....

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deed received by M/s Tirupati Corp and that ₹ 1.6 crores paid for developmental rights was also claimed as expenditure by Tirupati Corporation. 4.4 The only fact which arises for consideration is that as per sale of FSI agreement HEMPL is mentioned as the seller and that Shree Tirupati is the confirming party and that as per page 14 of sale deed (concerning FSI relating to office 105, 106, 205, 206, 305, 306, 405, 406) the purchaser has paid ₹ 4608000/- to the seller vide cheque no.9 .....

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n to develop a complex and that till complete payment of ₹ 1.6 crores was not received, Tirupati Corporation cannot be shown as seller in the agreement for sale of FSI and in any case the land was in the name of the appellant. It is argued that Tirupati Corporation is the transferor of FSI and that no amount has been received by the appellant on sale of FSI. It is also informed that similar development agreements and sale of FSI agreements are executed by builders/developers in Baroda and .....

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nd and FSI. Further in development agreement, para 3 it is mentioned that the appellant had agreed and bound himself to any sale-deed or tripartite agreement in regard to ownership of flat/shops subject to fulfillment of land payments. (ii) There is no denial that M/s Tirupati Corporation has received ₹ 4608000/- vide cheque no.99484 dt. 9.5.06 and further ₹ 72 lakhs vide cheque no.992482 dt. 9.5.06 through two sale of FSI agreements and these have also been offered for tax. (iii) Th .....

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ive d ₹ 1.6 crores towards sale of land and FSI from M/s Tirupati Corporation. (v) It is not the argument of the AO nor it is established that there is a collusion between appellant and Tirupati Corporation or that these are associate concerns to manipulate receipts in the hands of the latter. (vi) There is no apparent purpose or reason for which the sale of FSI amounts should be received by the appellant. The complex has been developed by Tirupati Corporation who has incurred the entire c .....

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upported the order of the CIT(A). 11. We have heard rival submissions and perused the orders of the lower authorities and materials available on record. In the instant case, the AO enhanced the capital gain shown by the assessee by ₹ 72,44,000/- on the ground that as per two sale deed of sale of FSI dated 16.5.2006, FSI were sold for ₹ 46,08,000/- and ₹ 72,00,000/-, and in the both the sale deeds, the assessee s name appeared as seller. The assessee has shown the sale considera .....

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of the appellant were verified from the assessment records. From perusal of the sale deeds and other documents, it appears that AO seems to have mixed up the facts in the assessment order. The Development Agreement dt. 18.07.05 between HEMPL & M/s Shree Tirupati Corporation stipulates that land area measuring 4548.3 sq. meter in R.S. No.33 Plot No.1 & 5 at village: Akota, Akota Mujmahuda Road has been sold by HEMPL to M/s Tirupati Corporation for ₹ 1,60,00,000/- and that the seller .....

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elopment right and M/s Aditi Construction received ₹ 11436000/- and the receipts were offered for taxation in the return for AY 07-08. It is a fact that as per para 3 of the development agreement dt. 18.07.05, HEMPL has transferred the developmental right as well s the FSI for total price of ₹ 1.6 crores. 4.3.1 By sale-deed dt. 16.5.06, HEMPL (mentioned as seller) and Shri Tirupati Corporation (Mentioned as party of the second part and developer and confirming party) sold FSI rights .....

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e second part and developer and confirming party) sold FSI rights of showroom on first floor for ₹ 72 lakhs for showroom No.101-104. The AO after perusal of return noticed receipts of only ₹ 4564000/- and thus he balance ₹ 7244000/- (11808000 - 4564000) was brought to tax by him. The AO apparently has mixed up the proceeds from sale of developmental right with sale of FSI in relation to plot no.1 and 5. The appellant has argued that no receipts in respect of sale of FSI have be .....

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tion. 4.4 The only fact which arises for consideration is that as per sale of FSI agreement HEMPL is mentioned as the seller and that Shree Tirupati is the confirming party and that as per page 14 of sale deed (concerning FSI relating to office 105, 106, 205, 206, 305, 306, 405, 406) the purchaser has paid ₹ 4608000/- to the seller vide cheque no.99484 dt. 9.5.06 and further vide page no.12 of second FSI deed for space of show rooms (101, 102, 103, 104), the seller is to receive ₹ 72 .....

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the agreement for sale of FSI and in any case the land was in the name of the appellant. It is argued that Tirupati Corporation is the transferor of FSI and that no amount has been received by the appellant on sale of FSI. It is also informed that similar development agreements and sale of FSI agreements are executed by builders/developers in Baroda and that this fact could be got verified. 4.6 From above undisputed facts/conclusions emerge: (i) That by virtue of development agreement the appell .....

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ite agreement in regard to ownership of flat/shops subject to fulfillment of land payments. (ii) There is no denial that M/s Tirupati Corporation has received ₹ 4608000/- vide cheque no.99484 dt. 9.5.06 and further ₹ 72 lakhs vide cheque no.992482 dt. 9.5.06 through two sale of FSI agreements and these have also been offered for tax. (iii) The contentions of the appellant that its name as seller in the FSI agreements was only with the purpose that it was the owner of land in Municipa .....

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that there is a collusion between appellant and Tirupati Corporation or that these are associate concerns to manipulate receipts in the hands of the latter. (vi) There is no apparent purpose or reason for which the sale of FSI amounts should be received by the appellant. The complex has been developed by Tirupati Corporation who has incurred the entire cost of construction and has also secured purchasers for flats/shops in the complex. There is no evidence on record that the appellant has become .....

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ati Corporation for development. As the entire payment for this transfer was not received by the assessee, the assessee had a lien over the said plot of land and in government records, the name of the assessee continued as registered owner over the said plot of land. M/s.Tirupati Corporation constructed complex which was the property of M/s.Tirupati Corporation. The FSI over the said construction also belonged to M/s.Tirupati Corporation. The said M/s.Tirupati Corporation vide two sale deeds in .....

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return of income. No material has been brought on record by the Revenue to show that any part of the said consideration of ₹ 46,08,000/- and ₹ 72,00,000/- was actually received by the assessee or the assessee was the owner of the complex, in respect of which FSI was sold. The sale consideration of ₹ 45,64,000/- which was shown by the assessee in its return of income was in respect of sale of land and had nothing to do with the sale of FSI of ₹ 46,08,000/- and ₹ 72, .....

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n facts in not deciding on merits the second ground of appeal filed before him contending that the amount of ₹ 31,00,000/- added by the Ld. AO in the case of M/s. Aditi Construction which has been offered to tax in the case of Hindustan Earth Movers Pvt. Ltd. (Respondent) has resulted into double taxation. While passing appellate order in Appeal No.CAB(A)/V/179/09-10 Dt. 27/1/11 in the case of M/s. Aditi Construction for A.Y. 2007-08 the Ld. CIT(A) has confirmed the addition of ₹ 31, .....

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s of the case the Ld. CIT(A) is not justified in not deciding the 2nd Ground of appeal on merits in the case of Respondent. 2. The respondent crave leave to add, to alter, to amend and/or withdraw the ground of cross objection either before or at the time of appeal hearing. 17. The AR of the assessee submitted that as per deed of compromise approved by the Court, M/s.Aditi Construction has given up the right of plot no.3, and that M/s. Aditi Construction was entitled to receive ₹ 31,00,000 .....

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