9911796707
TMI Blog2016 (5) TMI 1602X X X X Extracts X X X X X X X X Extracts X X X X ..... the Learned Commissioner of Income Tax (Appeal) V, has erred in his justification in confirming the addition made by the Assessing Officer the sum of Rs.6,66,334/- on account of Capital Gain, without considering facts and circumstances on which I have received Rs.25,00,000/- (Rupees Twenty Five Lacs) on account of security deposit by the member of A.O.P., may please be justified and deleted from total income computed by the Assessing Officer. 2. That the Learned Commissioner of Income Tax (Appeal) V, has erred in his justification to confirm the disallowance made by Assessing Officer of Rs.50,000/- on account of transport charges paid, may please be justified i.e. allowed or reduced from total income computed by the Assessing Officer. 4. The issue raised vide ground of appeal No.1 is against the addition made on account of capital gains against the security deposit received by one member of AOP. 5. Briefly, in the facts of the case, the assessee had furnished return of income declaring total income of Rs.3,33,225/-. The Assessing Officer noted that the assessee had shown a liability of Rs.25 lakhs in the Balance Sheet and the assessee was asked to file an agreement with M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the said properties and as such, the documents were exempted from registration. The assessee states that it had taken sum of Rs.25 lakhs as security deposit to avoid any losses and the same does not become part of sale consideration. The Assessing Officer on the other on the other hand, held as under:- "10. From the facts discussed above, as per para 2 of the letter dated 23- 12-2011, the assessee has entered into Agreement with M/s Shriram Construction and assigned their Development Rights to M/s Shriram Construction. On the same date, M/s Shriram Construction and the assessee have entered into Agreement with M/s Gajanan Associates by forming AOP. Thus, the assessee has assigned his Development Rights to the extent of his share acquired from the five persons (Kate, Govind Developers & others) to M/s Shriram Construction, Pune. Therefore there is clear cut nexus between the interest free deposits accepted from M/s Shriram Constructions and assignment of Development Rights to the extent of his share. In view of the above facts, it is held that the interest free deposit received from M/s Shriram Construction is nothing but Assignment of Development Rights to the AOP through M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jute Mills Ltd., 82 ITR 363 (SC). Therefore, on the facts and circumstances of the case, I do not find any necessity for interfering with the order of the Assessing Officer and his action in adding Rs.6,66,334/- under the head Capital Gains to the total income of the appellant is upheld. The appellant has relied upon the decision of Hon'ble Supreme Court in the case of Travancore Rubbers & Tea Co. Ltd. Vs. CIT 243 ITR 158. I find that the facts of the case are different as in that case the issue pertained to taxability of earnest money and certain advances after termination of contract. Therefore, the above case law cited by the appellant cannot be said to be relevant in this particular case. Accordingly, Ground No.1 is dismissed" 7. The CIT(A) also upheld the disallowance of Rs.50,000/- out of transport expenses. 8. The assessee is in appeal against the order of CIT(A) on both the counts. 9. The learned Authorized Representative for the assessee furnished note on the joint venture transactions, which read as under:- NOTE ON JOINT VENTURE TRANSACTIONS S.No. Particulars Remark 1) Subject to Land was purchased on 07.07.2005 which is introduce in Joint Venture (Gajana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the order of Assessing Officer, the learned Authorized Representative for the assessee pointed out that as per the Assessing Officer, the land was received in lieu of transfer of development rights, whereas the case of assessee was that it was security deposit and was refundable. On the other hand, the CIT(A) held that the provisions of section 45(3) of the Act were attracted. In this regard, the learned Authorized Representative for the assessee pointed out that where no asset had been transferred to the AOP and it was the case of joint venture and where asset was not recorded in the books of AOP, therefore, provisions of section 45(3) of the Act could not be invoked. For applying the provisions of said section, two primary conditions had to be satisfied that the amount of value should be shown as asset and the credit of amount should be given to the contributor. However, in the absence of the same, the learned Authorized Representative for the assessee vehemently stated that the provisions of section 45(3) of the Act were not to be applied, where the assessee had received security deposit, the same could not be converted into consideration. He further stated that when section w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In order to implement the project of carrying out the development and construction jointly, it was decided to pool the financial strength, experience and expertise in the development and construction of said immovable properties. The agreement was to jointly implement the said business on the said properties by way of a Joint Venture without actually forming partnership firm. As per clause 3 of the said agreement, the parties agreed to jointly come together with an intention to get maximum benefit by centralization of the development activities and the moment the entire development was completed, the AOP would automatically come to an end after ascertaining and distribution of revenue share profits generated from the Venture and settlement of accounts. The party of the First Part and Second Part were under an obligation to pay the land cost to the said owners of the said properties as per the said development agreement and had to further apply to the concerned local authority for getting the building plans sanctioned. The obligations of the party of the First Part and Second Part are enlisted in clause 7 of the said Joint Venture Agreement. As per clause 8 of the said agreement, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, the amount has been received on account of transfer of property and as per the CIT(A), the said amount is assessable in the hands of assessee under section 45(3) of the Act by way of transfer of the said asset to the AOP. The perusal of Joint Venture Agreement entered into between the assessee and others reflected that the First Part had contributed certain lands and also TDR rights and the assessee had contributed the land to the AOP for development only. It was not the case of transfer of land to the AOP, but was the case of joint pooling of resources by three different parties, wherein the party of the First Part was to contribute TDR rights, the party of Second Part i.e. assessee was to make available the land, on which the development had to be undertaken and the party of Third Part had to overseas the construction and also contribute funds for the construction of the said project. In such scenario, where the asset held by the assessee has not been transferred to the AOP, there is no question of charging any income from capital gains in the hands of assessee in this regard under section 45(3) of the Act. The security deposit received by the assessee is not chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
