TMI Blog2016 (3) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the hands of the assessee. See Universal Medicare Pvt.Ltd [2010 (3) TMI 323 - BOMBAY HIGH COURT ] - Decided in favour of assessee Addition on Business income on security deposit received by the Respondent - transfer of rights of ownership by way of irrevocable covenant - Held that:- when the possession of land by way of license was given to M/s. Skyline Mansion Pvt. Ltd. The Tribunal has in the impugned order rendered a finding of fact that when the security deposit was received under the joint development agreement dated 4th April 2008, no sale took place as no conveyance was executed. Further, the land and rights in respect thereof being stock in trade and not capital assets of the Respondent Assessee, no sale under the Transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in case of CIT v/s Hill Top, 217 CTR 527(Raj), when the facts of the instant case are different from those of the latter case ? (B) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the addition of ₹ 28,41,34,500 being business income in the guise of security deposit received by the Respondent fir, as the latter had already transferred its rights of ownership by way of irrevocable covenant as also received the entire consideration by way of security deposit ? 3. Re:- Question No.(A): (a) The Respondent Assessee is a partnership firm, engaged in the business of real estate and the development of property. In the subject Assessment Year, the Respondent Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessee firm to whom the security deposit was made, is not a registered shareholder of M/s. Skyline Mansion Pvt. Ltd. nor is it the case of the Revenue that the shares of M/s Skyline Mansion Pvt.Ltd. are held by the individual partners for and on behalf of the Assessee firm. In the above view, the impugned order placed reliance upon the decision of the Rajasthan High Court in CIT Vs. Hotel Hill Top 313 ITR 116 and the Special Bench of the Tribunal in the case of CIT v/s Bhaumik Colour Pvt.Ltd., reported in (2009) 313 ITR 146 to hold that Section 2(22)(e) of the Act could not be invoked in such a case as the person who is liable to pay tax on the same is the registered shareholder of M/s. Skyline Mansion Pvt.Ltd. In the above view, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hands of the shareholder. Consequently, in the present case the payment, even assuming that it was a dividend, would have to be taxed not in the hands of the assessee but in the hands of the shareholder. The Tribunal was, in the circumstances, justified in coming to the conclusion that, in any event, the payment could not be taxed in the hands of the assessee. (emphasis supplied) (g) In the above view, the question as formulated for our consideration does not give rise to any substantial question of law. Thus, not entertained 4. Re. Question No.(B):- (a) The Respondent Assessee had during the assessment year 2009-10 entered into a joint development agreement dated 4th April, 2008 with M/s. Skyline Mansion Pvt.Ltd. which wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The difference between the amount received for business of ₹ 42.41 crores less the value of the land shown at ₹ 14 crores in balance-sheet i.e. ₹ 28.41 crores was held liable to tax as business income in A.Y. 2009-10. This amount of ₹ 28.41 crores was added to the total Income. (c) Being aggrieved, the Respondent Assessee carried the issue in appeal to the Tribunal. The Tribunal by the impugned order held that the development rights of the Respondent Assessee in its land was its stock in trade. The impugned order holds that in terms of the Agreement dated 4th April, 2008, the license to enter upon its land was to be given within 90 days of M/s. Skyline Mansion Pvt. Ltd. obtaining all requisite permissions to de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... between the parties is when did the income arise / accrue? The contesting alternatives are the subject Assessment Year as contended by the Revenue or A.Y. 2012-13 or as contended by the Assessee i.e. when the possession of land by way of license was given to M/s. Skyline Mansion Pvt. Ltd. The Tribunal has in the impugned order rendered a finding of fact that when the security deposit was received under the joint development agreement dated 4th April 2008, no sale took place as no conveyance was executed. Further, the land and rights in respect thereof being stock in trade and not capital assets of the Respondent Assessee, no sale under the Transfer of Property Act also took place in the subject Assessment Year. The impugned order holds tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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