TMI Blog2018 (2) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... 1211 - KARNATAKA HIGH COURT] it is held that there was no requirement for deduction of tax at source u/s 194C - Decided in favour of assessee - ITA Nos.1372 to 1377/Bang/2017 - - - Dated:- 2-2-2018 - SHRI JASON P BOAZ, ACCOUNTANT MEMBER AND SHRI LALIET KUMAR, JUDICIAL MEMBER For The Appellant : Smt. Padmameenakshi, JCIT For The Respondent : Smt. Anitha R, C.A ORDER PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : These are a bunch of six appeals by the Revenue, directed against the order Commissioner of Income-tax (Appeals) 13, Bangalore dated 30/3/2017 for the assessment years 2007-08 to 2012- 13. 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 deducte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eals before the Tribunal raising the following common grounds for the aforesaid asst. years. 1. The order of CIT(A) is opposed to the facts and nature of the case on hand. 2. The Id. CIT (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. Kaut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Ltd., in ITA Nos:219 to 225/Bang/2017. It was prayed that in the light of the above judicial precedents and facts of the case, the impugned order of the ld CIT(A) be upheld. 3.5.1 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 Lion Estates and Properties, Anekal Taluk, Bangalore District dated 1/1/2016, 20/9/2006, 1/11/2006 and 1/4/2008. From the aforesaid agreement/MOU s it is seen that the assessee society has entrusted the procurement of 100 acres of land at Adigare Kallahalli Village, Sarjapur, Anekal Taluk 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial purpose. Payment of the layout charges and other incidental expenses to be incurred in obtaining the layout plan approved by BMRDA/Competent and supervision charges if any to KPTCL (BESCOM) or any other authorities, etc., and any other expenses to be incurred for the formation of the Layouts as per approved plan. 4. It is agreed by and between the parties that in case the land proposed to be sold is acquired by any Authorities, in that even, of the Second Party is entitled for all the benefits and compensation amount to the extent of their share of the amount paid to the first party and the balance if any shall e paid by the first party. 5. Whereas in pursuance of the said offer, the party Developer has agreed to develop the lands into a residential layout in according to the terms and conditions for payment of consideration in the following manner. 6. On the execution of this M.O.0 by parties, the Second party Societies pay a sum of ₹ 25,00,000(Rupees Twenty Five Lakhs Only) to the First party Developers as first advance vide cheque bearing No.543741 dated 0110112006. This advance amount shall be adjusted at time of final settlement. 7. It is resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts to a works contract. Thus, in our considered opinion, the case of the assessee is squarely covered by the decisions of the Hon ble Karnataka High Court in the case of Karnataka State Judicial Department Employees House Building Co-operative Society Ltd., (Supra); the relevant portion of which judgment is extracted hereunder:- the short that fell for the consideration for the Assessing Officer, the Commissioner of Income-tax and the Tribunal was whether if the assessee has agreed to purchase the sites from a vendor if any sale consideration is paid on instalment basis, the assessee is required to deduct the tax at source or not. When the assessee is only a purchaser, if any advance sale consideration is paid, the assessee has no business to deduct the tax at source as it is for the seller of the sites to pay the capital gains depending upon the tax payable by him. 3.5.5 In the aforesaid case decided by the Hon ble Karnataka High Court (Supra), the co-ordinate bench of this Tribunal had rendered the following finding:- . the agreement between Sh. Lakshman, and Karnataka State .Judicial Department Employees House Building Co-operative Society begins to opera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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