TMI Blog2016 (5) TMI 1602X X X X Extracts X X X X X X X X Extracts X X X X ..... d as such the document was exempted from registration under the provisions of Indian Registration Act. The issue arising before us is with regard to the amount received by the assessee pursuant to the said Joint Venture agreement. The claim of the assessee was that it had received the said security deposit from the developer of the plot in order to safeguard themselves against any charges levied for violation of any provisions. The case of the Department on the other hand, is that as per the AO, 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 u/s 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Srinivasan Tanaji S. Shelke For the Respondent : Shri Mahesh Jasnani, JCIT ORDER PER SUSHMA CHOWLA, JM: This bunch of four appeals filed by related assessees are against separate orders of CIT(A)-V, Pune, all dated 18.07.2014, relating to assessment year 2009-10 against respective orders passed under section 143(3) of the Income Tax Act, 1961 (in short the Act ). 2. This bunch of appeals are filed by the related assessees on similar issue were heard together and are being disposed of by this consolidated order for the sake of convenience. However, reference is being made to the facts in ITA No.1646/PN/2014 to adjudicate the issue. 3. The assessee The assessee in ITA No. in ITA No.1646/PN/2014 has raised the following has raised the following grounds of appeal:- 1. That 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 justifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anan Associates by Deed of Joint Venture on 26.05.2008 registered in the office of Sub-Registrar s office. In the said AOP, the assessee claimed that they had contributed their development rights and M/s. Shriram Constructions was to look after the construction work and also provide all the material required for construction and finance for all the expenses required to complete the construction work. The parties of the First and Second Part were to make available the land for joint development and the party of Third Part was to bring in the capital required for the construction of project. As per para 33 of the said agreement, the understanding was that the said joint venture was for efficient pooling of resources and it was undertaken that neither party was transferring to other, any kind of right or interest, etc. 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 let ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, association or body as the value of the capital asset shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset. The appellant claims that since value of Capital Asset was not recorded in the Books of AOP while forming AOP, provisions of Sec.45(3) of the Income-tax Act cannot be applied in the sense that all the conditions making the section workable are not satisfied. In this case, it is seen that agreement dated 26.05.2008 has been registered for Rs.2 crores out of which the appellant has got Rs.25 lacs. Thus, it cannot be said that the value of asset is not recorded in the Books. In any case, the entries in the Books of Account are not the sole criteria for deciding the taxability of income as held by Hon ble Supreme Court in the case of Kedarnath 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 Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 page No.72 Rs.41,56,089/- (Rs.54,46,495/- (-) Rs.12,90,406/-) and for the AY.2013 -2014 on page No.67 Rs.55,18,158/- and also received amount is taxes in subsequent AY.'s. 6) After completion of project I have repaid security Deposit Rs,25,00,000/- to Shriram Associate in the F.Y.2014 -2015 by account payee cheque as referred in Bank account vide page No.108 Rs.8,50,000/-and page No.110 Rs.16,50,000/-. 10. The learned Authorized Representative for the assessee pointed out that the assessee as the owner of land had entered into a Development Agreement, where the assessee had contributed the land to the AOP. Another person had contributed the TDR rights and the third person had contributed funds for development. The assessee, as per the Agreement had received security deposit of Rs.25 lakhs and the issue arising in the present bunch of appeals was whether sum of Rs.25 lakhs was chargeable to tax in the hands of assessee. He stressed that there was no transfer of land to the AOP as it was joint venture agreement, where each person was doing his part of the agreement. Referring to the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Whereas, the case of Revenue, on the other hand, was that the said amount received by the assessee was on account of cost of asset which was transferred to the AOP and hence, income from capital gains on the transfer of land. The assessee along with Parmanand A. Kriplani, Tekchand S. Kriplani, Manohar G. Kriplani and Shri Pitambar S. Kriplani entered into development agreement with various land owners as enlisted by the CIT(A) in his order at pages 2 and 3 of the appellate order. The assessee after getting the development rights transferred/assigned in his favour, formed AOP with two other parties vide Deed of Joint Venture dated 26.05.2008 under the name and style M/s. Gajanan Associates. The said Joint Venture was entered into with M/s. Estate Enterprises, who was the party of First Part, Kriplani Brothers, who were party of the Second Part and M/s. Shriram Constructions, who was the party of Third Part. The AOP was registered in the office of Sub Registrar, Pimpri Chinchwad, Pune. As per clauses of Joint Venture Agreement, the parties were desirous of developing the said properties and to construct multi-storied buildings or such other permissible constructions thereon. In ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, it was agreed between the parties hereto that the capital required for the construction of the project other than that of land should be brought in by the party of Third Part. As per clause 17, the party of the Third Part had agreed to give interest free advance of Rs.1 crore to the parties of the First and Second Part each and the said amount had to be adjusted against final payment of revenue share. Besides the other terms agreed upon between the parties, as per clause 33, it was reiterated that the agreement of Joint Venture related to efficient pooling of the resources and neither parties was transferring to other any kind of right, interest in the said properties and as such the document was exempted from registration under the provisions of Indian Registration Act. 14. The issue arising before us is with regard to the amount received by the assessee pursuant to the said Joint Venture agreement. The claim of the assessee was that it had received the said security deposit from the developer of the plot in order to safeguard themselves against any charges levied for violation of any provisions. The case of the Department on the other hand, is that as per the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew could be taken in the hands of other persons. 16. Another objection raised by the learned Departmental Representative for the Revenue was that while registering Joint Venture Agreement, the market price of the property was fixed and was taken at Rs.2 crores. We find no merit in the said claim of learned Departmental Representative for the Revenue. The assessee along with others had pooled in their resources i.e. by way of availability of land and TDR rights and finance, respectively and where the property as such has not been transferred to the AOP, there is no question of assessing the value of security deposit as gain arising on the transfer of land in the hands of assessee. Accordingly, we delete the addition of Rs.6,66,334/- made by the Assessing Officer on account of income from capital gains. The ground of appeal No.1 raised by the assessee is thus, allowed. 17. Now, coming to the issue in ground of appeal No.2 i.e. against disallowance of Rs.50,000/- out of transport charges paid by the assessee. 18. The said disallowance was made since the expenses were claimed on self made vouchers and was also paid in cash. The Assessing Officer also noted certain discrepanci ..... X X X X Extracts X X X X X X X X Extracts X X X X
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