9911796707
TMI Blog2022 (12) TMI 845X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale was not executed and consequently neither the risk and rewards were transferred nor the possession of the plots was handed over to the buyer which requires the appellant to recognise income from sale of plots. 3. On the facts and circumstances of the case, the sum paid as commission to nonresident agents was not in nature of fees for technical services requiring the appellant firm to deduct tax at source. The appellant craves leave to add, alter, amend, edit, modify, change or delete any of the grounds of appeal at the time of or before the hearing of the appeal." Ground number 2: 3. The brief facts of the case are that the assessee is engaged in the business of land development and construction of villas. The profit and loss account, the assessee had shown sales at Nil, but disclosed work in progress (WIP) at Rs. 13,87,86,428/-. During the course of assessment, the AO was of the view that substantial work has been executed and hence the revenue have to be recognised as per AS-7. Considering 20% profit margin on projected cost, the AO worked out the net profit at Rs. 2,65,07,865/-. 4. In appeal, Ld. CIT(Appeals) partly allowed assessee's appeal and restricted the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchase the property, he had taken a calculated risk. It is also worthwhile to mention that from the date of allotment, the purchaser has become entitled to all sorts of appreciation in the property and hence the "rewards" will also go to him and appellant will not be entitled to any share in such appreciation. This view gets supports from the decision of Hon'ble ITAT, Bangalore in the case of Prestige Estate projects Ltd. Vs. DCIT (2011) 129 ITD 342 (Bang) wherein it is held that when the prospective buyers gave consent to the terms of the agreement, the assessee could naturally transferred "significant rewards" although land's ownership was to be transferred to the developer on completion of certain conditions I.e. on handing over of land owner's share in built up area. 4.2.3. The Ld. Authorized Representative has argued that the period of business commencement was very short in the year under consideration, but I find that the appellant had started receiving sale consideration from March, 2011 onwards as is evident from party wise details available on record. It is noticed that majority of the land under consideration was acquired in the month of December, 2011 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid properties with respect to whom the income has been assessed in the hands of the assessee. He further drew our attention to the allotment letter issue to two of the allottees and submitted that as per the terms of the allotment letter (refer page 76 of the paper book), it was specifically mentioned that the plans for the building have been submitted to the Government Authorities for their approval and till such time the formal sanction is obtained from the government, the amounts paid by the allottee shall be treated as interest free deposit with the assessee. He further drew our attention to page 83 of the paper book (balance sheet of the assessee as on 31st March 2012) and submitted that the entire amount received from the allottees has been reflected as "advance" in the balance sheet. Further, the counsel for the assessee submitted that during the year under consideration, effectively no construction has been done with respect to the aforesaid properties and the entire amount as mentioned was treated only as in interest free deposit/advance from the allottees by the assessee. The counsel for the assessee further submitted that the AO has incorrectly applied AS-7 since du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has not been disputed by the Department that during the year under consideration the title in respect of such property i.e. plots/villas were not transferred in favour of the allottees and same was done only in the subsequent year; fourthly, the assessee has given table stating that income from sale of the aforesaid plots/villas have been offered to tax in the subsequent years when the title in respect of the aforesaid plots/villas or transferred in the name of the allottees. In the case of Jayanikumar V. Thakkar[1990] 35 ITD 298 (AHD.), the assessee executed a sale agreement for sale of his residential house on 13-2-1982. On same day, assessee received entire consideration and delivered possession of house in question. As required under bye-laws of society, which constructed and delivered possession of aforesaid house to assessee, assessee applied to transfer its shares and outstanding loan in favour of purchaser. The Society, however, declined to approve proposed transfer. However, this approval was subsequently given on 11-10-1986, the ITAT Ahmedabad held that since conveyance deed was not executed and registered during year in question, i.e., assessment year 1982-83, no capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade. The assessee's method of accounting has no relevance in determining whether receipt of the above nature was trading receipt or income. The method of accounting, whether cash method or mercantile method, would have bearing only in respect of completed business transaction. Thus, the impugned receipt of Rs. 2,13,772 would not constitute the assessee's taxable business income in the assessment year 1971-72. In the case of Shah Doshi & Co.[1981] 6Taxman343 (Guj.), the Assessee firm, dealing in land, agreed to sale of land, which it agreed to purchase from original owner, to a third party though no sale deed had been executed in assessee's favour by original owner. The Gujarat High Court held that assessee could not treat part of profit arising from such transaction as value of its stock-in-trade in assessment year prior to execution of sale deed in favour of third party by original owner. Further, High Court held that profits arising from impugned transaction accrued to assessee only in assessment year in which sale deed was executed in favour of third party. 7.1 In view of the above facts of the case and the judicial precedents on the subject as discussed above, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia. It may be noted that in the recent case of PCIT v. Puma Sports India (P.) Ltd. [2022] 134 taxmann.com 60 (SC), the Hon'ble Supreme Court dismissed Department's SLP against impugned order of High Court holding that commission paid by assessee-company to its overseas Associated Enterprise (non-resident agent) for purchase orders outside India would not be liable to TDS under section 195 as services were rendered or utilized outside India and commission was also paid outside India. In view of the above discussion, we find no infirmity on the order of Ld. CIT(Appeals) and ground number 1 of the Department's appeal is hereby dismissed. In the case of Nova Technocast (P.) Ltd[2018] 94 taxmann.com 322 (Gujarat)[09-04-2018] the assessee made commission payments to its foreign agents for rendering sales and marketing services abroad. The Assessing Officer disallowed such commission expenditure under section 40(a)(i) for failure of assessee to deduct tax at source. The Tribunal noted that foreign agents had rendered their services abroad and moreover, the said agents did not have fixed base in India and therefore, Tribunal thus concluded that amount paid to them was not taxable in I ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
