TMI Blog2020 (8) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... The supplementary agreement, increasing the expected Revenue to be generated from the sale of land and remitted to the assessee, to ₹ 420 Crs was dt 01-07-2011. The second supplementary agreement did not effect any increase in the expected Revenue from sale of land. Even by the concept of taxability on accrual basis the grants did not accrue to the assessee in the impugned year. Further the facts demonstrate that except for an amount of ₹ 30 Crs .which was settled under the second supplementary tripartite agreement during the impugned year Dt.07-08-12,to be paid to the state government, all other amounts were received by the assessee in the preceding years. Therefore even by the concept of taxability on receipt of funds ,no amount was taxable in the impugned year except for ₹ 30 Crs. This amount ,we have noted from the agreement ,was stated to be paid to the state government in compliance with the amended and enlarged objectives of the assessee society for engaging with other institutions in the state for providing health care education and or facilities. The assessee had also provided a utilization certificate to this effect before the CIT(A),considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Registrar of Firm and Societies, Punjab, Chandigarh vide No. 916 dt. 10/10/1994. The assessee society was also registered as charitable society under section 12A of the Income Tax Act, having been granted registration on 01/11/2000. The CIT withdrew the registration granted under section 12A of the Act, with effect from 2004-05 ,but it was subsequently restored back by the Tribunal vide its order dt. 29/09/2015. 4. During the assessment proceedings for the impugned year the A.O. noted that the assessee had shown ₹ 156 Crores as current liability ,against receipt from Punjab Urban Development Authority(PUDA) against land. Enquiries were made relating to the same and the A.O. noticed that the impugned amount had been received on account of and by virtue of a TripartiteAgreement entered into by the assessee with Punjab Urban Development Authority and the Director Research and Medical Education, Punjab, on 30/04/2002. The A.O. noted that under the terms of the agreement, 109.49 acres of land, purchased by the assessee from Punjab Agricultural University(PAU), Ludhiana at the cost of ₹ 15 Crores vide agreement dated 30-05-2000, had been transferred to PUDA for the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the A.O. to reduce the taxable capital gain computed by the aforesaid amount. 6. Aggrieved by the order of the Ld. CIT(A) both the Assessee and the Revenue have now come up in appeal before us raising the following grounds: Grounds raised by the Assessee are as under: 1. That the worthy CIT(A) erred in facts and in law in confirming the action of the learned Assessing Officer in computing Long Term Capital gains on alleged sale of Land amounting to ₹ 420 crores by the appellant to PUDA by invoking the provisions of Section 2(47) of the Income Tax Act,1961 read with Section 53A of the Transfer of property act based on Tripartite Agreements made on 30.04.2002, as amended by agreements dated 01.07.2011 and 07.08.2012 and sustaining the addition of ₹ 102,5,22,1675/= 2. That the worthy CIT(A) failed to appreciate that he appellant society was not the owner of land in question on which the worthy CIT(A) has made additions invoking the provisions of section 2(47) r.w.s. 53A of the transfer of property act. 3. That the worthy CIT(A) erred in confirming application of section 2(47) r.w.s 53A of the Transfer of Property Act and confirming addition of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed off. 7. Before us the assessee has challenged the addition of capital gains upheld by the Ld.CIT(A),while the Revenue has challenged the benefit of utilization for charitable purposes of ₹ 130 Crs allowed by the Ld.CIT(A) u/s 11 of the Act, being amount paid to the Government under the agreement. 8. The assessee has raised the following arguments while contesting the addition made of unutilized capital gains in its hands : 1) That the land on which the assessee allegedly earned capital gain did not belong to it but to the government and therefore there arose no question of the assessee earning any capital gain. 2) That the amount received in fact represented grants from the government. 3) That in any case capital gain if any accrued in earlier year when the agreement transferring possession of land to PUDA for further development and sale was entered in 2002 . 4) That addition on account of non application/utilization of capital gain for charitable purposes could not be made u/s 11(1A) of the Act,on account of impossibility of utilization since the impugned amount had not been received by the assessee at all. 9. The Revenue on the other hand,represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... society .The said land had been purchased from PAU vide agreement dated 30-05-2000,under which the assessee had paid half of ₹ 15 Crores. Under the tripartite agreement the assessee received ₹ 156 Crs upto 31-03-2013. The Tripartite agreement was revised on 01-07-11 and the expected sale proceeds of the land revised to ₹ 420 Crs. Further an amount of ₹ 100 cr was paid to the State Government out of the proceeds of sale under this revised agreement. Another revision of the agreement was done on 07-08-12 and further payment of ₹ 30 Crs was made to the State Govt. under it. 13. Taking up first and dealing with the primary issue whether any capital gain arose to the assessee under the tripartite agreements,the contention of the Ld.Counsel for the assessee is that no capital gain arose to the assessee since it was not the owner of the land.We find that this contention relates to a matter of fact and for which purposes both the parties have referred to the tripartite agreement dt.30-04-2002 and the agreement under which land was originally purchased dt .30-05-2000 .It would be relevant to go through these agreements ,copies of which were placed before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttance of proceeds to the Institute, it is hereby, agreed and deal over between the parties as under: 1. That all the earnings from the sale of above referred land including sale proceeds and interest received from buyers, if any, shall be collected by PUDA on behalf of the Institute and the same shall be remitted to the Institute promptly, after deducting the expenses incurred by PUDA on the development of land regarding which duly audited proper accounts will be furnished to the Institute every six months. 2. That while remitting the above sums, PUDA will ensure a minimum monthly remittance of ₹ 2.5 Crores or more, if the revenues from sale of plots exceed the amount in any given month, subject to a minimum of ₹ 70 Crores for a period of 28 months commencing January 1, 2002, whichever is earlier, so as to enable the Institute to meet its financial obligations including those connected with the construction of the buildings of Hospital and Medical College. The amount of ₹ 10.50 Crores already paid shall be adjusted in the minimum guaranteed amount of ₹ 70 Crores. For removal of doubt, the remittances for the months from January to April, 2002 deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 9(8-0), 10/2(6-9), 11(8-0), 12(8-0), 13(8-0), 14(8-0), 15(7-18), 16(8-0), 17(8-0), 18(8-0), 19(6-7), 14//l(5-4), 10(4-16), 15//l(8-0), 2(8-), 3(8-0), 4(8- 0), 5(7-10), 6(8-0), 7(8-0), 8(8-0), 9(7-8), 10(8-0), 26(0-10), 27(0-12;, 16//3/2(5-10), 4(8-0), 5(5-9), 6(8-0), 7(8-0), 8/1(3-14), 5//17/2(5-15), 18/1(4-9), 19/2(1-6), 21/2(4-4), 25/1(1-13), 5//22(6-4), 23(6-4), 6//25/2(l-8),9//5/l(l-6), 5/2(5-11), 6/1(1-10), 6/2(5- 16), 7/1(2-4), 14(4-14), 9//15(8-0),16(8-0), 17(6-18), 23/2(1-1), 24(8-0), 25(8-0), 10//l(8-0), 2(8-0), 3(8-0), 4(7-0),i 5/1(5-2), 6(7-7), 7(8-0), 8(8-0), 9(8-0), 10(7-18), 11/1(2-0), 11/2(5-4), 12(8-0), ll//10/2(0-2), 11/1(1-18), 19/2(0-14), 20(7-7), 21(6-18), 22/1(5-2),5//24(6-4), ll//27(l- 2), 16//l(8-0), 2(7-18), 3/1(1-7), 8/2(1-12), 9(8-0), 10(8-0), 26(0-13); 10//13(8-0), 14(8-0), 15(6- 2), 16(8-0), 17(8-0), 18(8-0), 19(7-16),20/1(1^2), 20/2(6-6), 21(8-0), 22/1(2-12), 22/2(4-12), 23(8-0), 24(8-0), 25(8-0), 26(1-0); 27(0-18), 28(1-16), 17//l(7-0), 2/1(6-18), 2/2(0-16), 3/(7- 12),4(8-0), 5(8-0), 6(8-0), 7/1(7-7), 8/1(3-17),, 8/3(0-11), 9/1(2-9), 10/1(2-9),26(1-0), 27/1(0- 1), 18//3/2(2-6),4(8-0), 5(8-0),6/1(2-9), 7/1(2-9), 8/1(0-18) according to Jamabandi year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is approximately 29 Acre, the possession of it will be given upto 31 March 2001 and remaining rest total approximately 17 Acre land which has been shown in map in green color in means _ s possession will be given before 31/05/2002. Possession giving University have right that can take with it its display boards, fans, tubes, laboratory equipments, air conditions, cooler, tubewcll pump's motors but have to assure that will not cause any damage to super structure, electricity fitting, water supplying pipes etc. and cannot take immoveable property. From Medical research and education department, Punjab Government to P.l.M.S. Jalandhar out of ₹ 15 Crore ₹ 10 Crore half of which is Rupees Five Crore today on spot has given to the Miiak Officer of University through Cheque No. 432324 dated 24/5/2000 State Bank of India Chandigarh. The Punjab Government is bound to pay the rest amount Rupees Five Crore after executing of this sale deed within one year to Punjab Agriculture University, Ludhiana. The whole expenses etc. of his sale deed will be borne by the purchaser of this land. The seller of land will have not any objection if the purchaser get the mutation enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the three parties, mentions that the State Government intended setting up a hospital and medical college in Jalandhar, for which purpose it created the assessee society PIMS. That further to augment the resources of the assessee society, the Government made an arrangement for mobilizing funds to be made available directly to the assessee society, by selling land, which it had purchased from Punjab Agricultural University, through PUDA ,directing PUDA to remit the sale proceeds directly to the assessee society. As per the arrangement,the proceeds expected from the sale of land was ₹ 209 Crs and the expected expenditure of PUDA for developing and selling it was ₹ 26 Crs. The government expected Revenue generation of ₹ 183 Crs net from the said arrangement. Clearly The only role of the assessee society under the agreement was to receive the expected net sale proceeds of land .The tripartite agreement only outlined the modalities and manner in which funds were to be arranged by the government for granting to the assessee society to enable it to meet its objective of building a hospital and medical college at Jalandhar. Thus it was nothing but grants received by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 99 years lease. Whereas PIMS Society has to develop and upgrade health related infrastructure and promote education/training and research by managing/associating with other institutions and centres in the State of Punjab. Whereas PUDA lias already released ₹ 156 crore to PIMS Society. PIMS Society aiso requires additional kinds to the tune of ₹ 100 crores besides funds available with PIMS Society. PIMS Society also, requires funds to meet out its obligations under Concession Agreement with concessionaire. Whereas the land measuring 104 Acres 5 Kanals and 1 Maria transferred from Punjab Agriculture University, Ludhiana situated at Garha Road, Jalandhar (Sugarcane Research Station) is already in the physical possession of the PUDA. Whereas the PUDA is expected to generate ₹ 420.00 Crore by means of sale of land, interest etc. and is likely to charge ₹ 30 Crores for development and sale of land and rendering other related services. Therefore for the smooth execution of work by PUDA and undertake the projects within the objects of PI MS Society remittances of sale proceeds to the Govt, of Punjab / PI MS Society, is hereby, agreed and deal a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p a Medical College and Hospital at Jalandhar for the improvement of health services and augmenting medical education in the State of Punjab Whereas in order to implement the decision taken by the State Government to start a Medical College and Hospital at Jalandhar, a -Society under the name and style of Punjab Institute of Medical Sciences Jalandhar (hereinafter referred to as the Institute) has been incorporated. Whereas the amended objects of the Society is To set up, establish, promote, manage or associate with, any other Institution or Centre in the State of Punjab devoted to education, training, research and related infrastructure in various branches of health sciences and working for the advancement of scientific knowledge aimed at -enhancing the quality of patient care. Whereas PIMS Medical College Hospital is now being managed and 3 operated under Private Public Partnership by the concessionaire i.e. PIMS Medical Education Charitable Society, on 99 years lease. Whereas PIMS Society has to develop and upgrade health related infrastructure and promote education/training and research by managing/associating with other institutions and centres in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Government and transferred to PUDA for sale had increased to an estimated value of ₹ 420 Crores. The supplementary agreement outline that a minimum amount is to be transferred to the assessee on yearly basis to meet its recurring expenditure.Further taking note of the expanded amended objective of the assessee society to provide helath care facilty and medical education alongwith other institutions/centres, it notes that after meeting the requirement of the assessee society there was a surplus of ₹ 100 Crores remaining from the expected proceeds from the sale of land which the supplementary agreement stipulated was to be transferred to the Punjab Government immediately for the purpose of providing healthcare facilities in the state, in consonance with the amended objectives of the assessee society. The second supplementary agreement takes note of the fact that the surplus generated would be not ₹ 100 Crores but 130 Crores and directs the balance ₹ 30 crores to be paid to the Punjab Government promptly. 17. It is abundantly clear that the role of the assessee in the Tripartite agreement, and the supplementary agreements, was receiving funds arranged for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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