TMI Blog2018 (1) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... ng/2017 - - - Dated:- 6-12-2017 - SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER For The Appellant : Shri B.R Ramesh, JCIT For The Respondent : Shri Ravi Shankar, Advocate ORDER PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : These are a bunch of seven appeals by the Revenue, directed against the order Commissioner of Income-tax (Appeals) 13, Bangalore dated 23/11/2016 for the assessment years 2008-09 to 2014-15. Since common issues are involved, these appeals were heard together and are being disposed off together by way of this order. 2. Briefly stated, the facts of the case are as under:- 2.1 The assessee is a co-operative society engaged in the activity of identifying suitable lands and forming a residential layout for allotment of residential sites to its members. The Assessing Officer ( AO ) called for information u/s 133(6) of the Income-tax Act, 1961 (in short the Act ) pertaining to the details of payments made to developers/contractors and tax deducted thereon. From the details filed, the AO noticed that the assessee had entered into certain agreements and MOU s, with the developer/contractor M/s Jaya Surya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) erred in holding that the assessee was not required to deduct tax at source u/s. 194C from the payments made to developer. 3 The Ld. CIT(A) erred in deleting the demand u/s. 201(1) and 201(1A). 4. The Id. CIT (A) ought to have considered the fact that as per the assessee's agreement with the developer the works to be carried out like for procuring of land, developing, conversion, plan for approval, drainage, laying roads etc. clearly attracted provisions of Section 194C. 5. The Id. CIT (A) ought to have considered the fact that the agreement entered into by the assessee with the developer are in the nature of composite contracts for works for which provisions of Section 194C is clearly applicable. 6. The Ld. CIT(A) erred in relying on the decision of the jurisdictional High Court in the case of M/s. Karnataka State Judicial Department Employees House Building Co-Operative Societies in ITA No. 1275 of 2006 and the TAT's order in the case of M/s. Kautilya House Building Co-Operative Society Limited in ITA No. 1324 to 1337/Bang/2015 dated 7.4.2016 while allowing the assessee's appeal which have been accepted by the Department only for low tax e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. On an appraisal of the material before us, we find that there is nothing therein that shows that the assessee is liable to deduct tax at source on payments made to the developers in the years under appeal. 3.5.2 Now coming to the merits of the issue in dispute, it is seen that the assessee society has entered into agreement/MOU with developer/contractor M/s Jayasurya Developers, No.2, 1st Floor, Utsav, ITI Layout, New BEL Road, Bangalore-560 054 dated 11/4/2008 and 30/4/2009 from the aforesaid agreement/MOU it is seen that the assessee society has entrusted the procurement of land and development of residential layout thereon with the conditions to execute civil works such as roads, common amenities, drainage, electrification, plan approval, conversion of lands from agriculture to non-agriculture status, etc., to the developer. However, the fact remains that the agreements essentially and basically relate to the purchase of land development and purchase of residential sites from the developer/contractors. The relevant portion of the agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he development activities from time to time and the SECOND PARTY also been acting upon the instructions and specifications of the FIRST PARTY; and I. WHERE the parties herein deem fit and desire that as lot of modifications, amendments and rectifications need to be made in respect of earlier covenants between the parties as the circumstances forced to act by the parties about rates, time bound, specifications, and availability etc., the parties herein deem fit it is expedient to reduce all the amendments and changes into writing by executing this agreement. NOW THIS AGREEMENT WITNESS AS FOLLOWS: 2. The SECOND PARTY herein agree to develop and hand over the sital area in phasewise as follows as orally agreed by both the parties in several meetings ................. 3. The SECOND PARTY hereby state and confirm that they are in process of procuring another 3 Acres of land which are adjacent to the lands being developed in PHASE - I AND PHASE -II and further they hereby assure and agree that they shall hand over sital area about 70,000 (seventy thousand) square feet to the SECOND PARY as they have agreed in their earlier agreements. 4. The SECOND ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The FIRST PARTY brought these facts before the office Bearers of the Society, time and again, and after considering the facts and inevitable circumstances the FIRST PARTY has agreed to pay the aforesaid escalated rate to the SECOND PARTY. 7. The SECOND PARTY hereby acknowledges that they have received an aggregate sum of ₹ 36,65,97,795/- (Rupees thirty six crores sixty five lakhs ninety seven thousand seven hundred and ninety five only) as at 311312008 on various dates as against the aforesaid three agreements. In order to secure the amounts advanced by the FIRST PARTY the SECOND PART has hypothecated certain lands situated in various survey numbers by executing Equitable Mortgage deeds. 3.5.4 On appeal, the ld CIT(A) on perusal of the aforesaid clauses of the agreement has arrived at the conclusion that the payments for the purchase of the sites was calculated on sq. ft. area of the property and the amount was paid for the purchases of completed property and not for development work carried out. The ld CIT(A) found that the agreements were only for purchase of sites and does not involve any works contract . In our view, the aforesaid conclusion/finding of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand has also been considered on similar fact situation, by co-ordinate benches of this Tribunal in the case of Karnataka State Co-operative Subhadranna Housing Federation Ltd. (ITA Nos.1301, 1307 to 1313/Bang/2015), Railway House Building Co-operative Society (ITA Nos.1139, 1140 1344/Bang/2015 1343/Bang/2014), and in the case of Kautilya House Building Co-operative Society Ltd., (ITA Nos. 1324 to 1337/Bang/2015 dated 7/4/2016, The ld CIT(A) has observed that in these cases (Supra) also, the contents of the agreements were similar to those of the assesee in the case on hand and the various co-ordinate benches of this Tribunal after examining the same has applied the ratio of the judgment of the Hon ble Karnataka High Court in the case of Karnataka State Judicial Department Employees House Building Co-operative Society Ltd., (Supra) and have held that there was no requirement for deduction of tax at source u/s 194C of the Act. Respectfully following the ratio of the decision of the Hon ble Karnataka High Court in the case of Karnataka State Judicial Departmental Employees House Building Society Ltd., (Supra) and of the co-ordinate benches of this Tribunal in the cases of Karnata ..... X X X X Extracts X X X X X X X X Extracts X X X X
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