TMI Blog2023 (6) TMI 1216X X X X Extracts X X X X X X X X Extracts X X X X ..... ely ignored the corrigendum agreement dated 29.09.2009, considering the same to be self serving ignoring that other clauses of tripartite Buyer s agreement and agreement between assessee and SHL dated 24.12.2008 were themselves clear of the fact that what assessee was getting was something in the form of refundable deposit . CIT(Appeals) has rightly concluded non-refundable security deposits received by appellant has nexus with O M services provided to the clients. However, he failed to appreciate that in the hands of assessee the same were refundable and merely as means to finance O M services. Thus, the same were not of revenue nature receipts. Apart from above, there is also force in the contention of learned AR that the Coordinate Bench in assessee s own case, [ 2019 (7) TMI 1434 - ITAT DELHI] , has considered the nature of deposits in the hands of assessee as refundable security deposits, as one of the possible view as decided in favour of assessee. - ITA Nos. 407 And 8003/Del/2019 - - - Dated:- 26-6-2023 - Sh. Anil Chaturvedi, Accountant Member And Sh. Anubhav Sharma, Judicial Member For the Assessee : Shri R. S. Singhavi, Adv., Shri Satya Jeet Goel, Adv. And S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits received in schedule 5 and no where it is mentioned that this amount has been received from M/s Silver Line Holding Pvt. (b) The assessee vide its reply dated 17.02.2016 submitted that the assessee company in the normal course of business of maintaining and operating the golf course at Tarudhan receives Security Deposit from members being Villa Owners through Silverline Holdings Pvt. Ltd. (the developer company. During the assessment proceedings when the assessee was asked to provide the copy of agreement if any with the members of villa owner. The assessee instead of furnishing copy of agreement with the Buyers of Villa owners vide submission dated 22.03.2016 submitted that the security deposit received by the assessee is refundable to M/s Silver Line Holding Pvt. Ltd. Further, there is no privity of contract between the assessee company and the Villa Owners, but have been engaged by M/s Silver Line Holding Pvt. Ltd. This statement of the assessee is contradictory with the statement given vide point no. 4 submission dated 17.02.2016 wherein the assessee itself stated that the security deposited receipts from members being villa owners through M/s Silver Line Holding Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilver Line Holding Pvt. Ltd. acted as conduit between the buyer of Villa and assessee in collecting non-refundable security deposit and making payment to the assessee only. Accordingly the addition was made. 4. Learned CIT(A) has sustained the addition and reasons of the Learned AO for which the assessee is in appeal before this Tribunal and grounds for the A.Y. 2013-14 which are common (except to the amounts involved) to the A.Y. 2015-16 are reproduced as below: 1(i) That on facts and in law the Ld. CIT(A) erred in treating the sum of Rs. 39,00,000/- received during the year as refundable maintenance security deposit from M/s. Silver Line Holdings Pvt. Ltd. in terms of agreement dated 24.12.2008 as taxable income of the appellant. (ii) That the claim of refundable maintenance security deposit amounting to Rs. 39,00,000/- considered as income chargeable to tax is not on the basis of any legal right or legal claim and same is merely for maintenance and running of Golf course for providing services to the members and accordingly presumption of any income in respect of same is highly arbitrary and misconceived. (iii) That the AO has not even specified section and head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of maintenance and operations of the Golf Course. It was submitted that the interest on security deposits from buyers were received by SHL and SHL has handed over it to the assessee. It was submitted that since it is refundable amount, it was reflected in the financials as a liability and the interest earned from same has been accounted in other incomes . It was thus submitted that tax authorities have failed to appreciate the facts in the correct perspective to treat it as nonrefundable security in the hands of assessee. 7. On the other hand, learned DR submitted that learned tax authorities have duly appreciated the fact that the transaction was between related parties and the manner in which they have drawn the terms and conditions, is such that it makes it a colourable devise to avoid showing the same as income. It was submitted that the veil needs to be removed to understand the colourable devise as the nonrefundable security received from the customers/buyers of villa owners in the hands of SHL had been shown to be refundable security deposits in the hands of assessee and SHL has merely acted as conduit. It was submitted long period of agreement shows there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed with the Buyers of units that security deposits shall be employed in suitable investment as deemed fit by SHL for generating revenue/income and the revenue income so earned from the investments shall be employed towards operation and maintenance cost of the Golf Course and in case of any shortfall in running the O M costs, after adjusting the incomes from the investments made out of the security amount the same shall be made good by raising the additional bills to the buyers for recouping the shortfall in such O M expenses of the Gold Course. 8.2 Next Clauses 3.1, 3.1.1 and 3.1.2 of agreement dated 24.12.2008 between SHL and the assessee are the relevant clauses which need to be reproduced to understand as to what was the agreed mode of revenue and income sharing between SHL and the assessee company: 3.1 SHL has collected the Interest Free Security Deposit from the Buyers and remitted/ shall remit the same to SGDCPL for due performance of its obligations towards SHL. SGDCPL shall employ the Interest Free Security Deposit in suitable investment as deem fit by SHL for generating revenue income and the revenue / income so generated from the investment shall be employed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the short fall. Remuneration of assessee company was to be determined after computing of O M charges. Thus IFSD in the hands of assessee was just a source to finance the operation and maintenance charges for development, operation and management of Golf course for which the assessee had accepted responsibility under the tripartite agreement. IFSD in the hands of assessee were not in nature of revenue receipt as considered by the Ld. CIT(A) 8.5 The Bench is of the considered opinion that there is no reason to lift the veil between assessee and SHL as revenue cannot dispute the fact that the maintenance of the Golf Course required expertise and expenditure for which the assessee company may have been separately incorporated. The tenure of the agreement of ten years and extendable thereafter in itself does not create any suspicion on the intention because it is only when the agreement is for a longer period, then only investment in purchases of equipment etc. for running of the Golf Course can be recouped. 8.6 The Bench is of the considered opinion that learned AO has fallen in error in concluding that SHL acted as a conduit between the buyers of villas and the assessee for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-10 to 2011-12, has considered the nature of deposits in the hands of assessee as refundable security deposits, as one of the possible view and para 12.1 in the form of submissions on behalf of the assessee and para 17 18 in the form of findings of Coordinate Bench are relevant and same are reproduced : 12.1 So far as the merit of the case is concerned, the Id counsel for the assessee submitted that M/s Silverline Holding Pvt. Ltd. is the owner of villas and golf course and the same were sold to the prospective buyers as per buyers agreement between M/s Silverline Holding Pvt. Ltd. and the prospective buyers. In order to provide value added services, M/s Silverline Holding Pvt. Ltd., entered into operation and maintenance agreement dated 24.12.2008 with assessee and offered use of golf course facilities. The assessee was on/y responsible for running and maintenance of golf course and scope and area of activities was defined under the said agreement. Further the security deposit collected by M/s Silverline Holding Pvt. Ltd., from the customers was transferred to the assessee for running and maintenance of golf course and not as trading receipt. The Id. counsel for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of the assessment order for assessment year 2013-14, wherein the refundable security deposit received from M/s Silverline Holding Pvt. Ltd. was considered as taxable income in the hands of the assessee, reopened the assessment by issue of notice u/s 148 of the IT Act. Rejecting the various arguments advanced by the assessee, the Assessing Officer made addition of Rs. 7,00,64,800/- on account of such security deposit received by the assessee during the year under consideration on the ground that such security deposit received by M/s Silverline Holding Pvt. Ltd., is non-refundable and has to be brought to tax. Further, the security deposit so received from M/s Silverline Holding Pvt. Ltd., has not been shown as advances in the balance sheet of M/s Silverline Holding Pvt. Ltd., and although the assessee in the balance sheet has shown such interest free security deposit but has not shown the same in the name of M/s Silverline Holding Pvt. Ltd. We find the ld.CIT(A) upheld the reassessment proceedings initiated by the Assessing Officer the reasons for which have already been reproduced in the preceding paragraphs. It is the submission of the Id. counsel for the assessee that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
