TaxTMI 
TaxTMI 
2017 (10) TMI 726
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....me-tax Act, 1961 (in short 'the Act') pertaining to the details of payments made to developers/contractors and tax deducted thereon. From the details filed, the AO noticed that the assessee had entered into certain agreements and MOU's, with the developer/contractor M/s Jaya Surya Developers, Dominion Reality Pvt. Ltd., and Nandi Buildings India Pvt. Ltd., for carrying out the above activities and had failed to deduct tax at source on payments made to these parties with whom it had entered into agreements for the acquisition of land and formation of residential layout for the benefit of its members (requiring the carrying out of civil work such as laying of roads, drainage, electrification, etc.); which were in the nature of composite work contracts. The AO, inter alia, noticed that the aforesaid layout is to be developed as per the assessee's specifications and the words procurement of land meant that the developer does not own any land as on the date of agreement. In that view of the matter, the AO held that the aforesaid work, carried out by the developer/contractor on behalf of the assessee, is the nature of works contract and therefore the provisions of Sec. 194C of the Act wa....
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....n the case of M/s. Karnataka State Judicial Department Employees House Building Co-Operative Societies in ITA No. 1275 of 2006 and the TAT's order in the case of M/s. Kautilya House Building Co-Operative Society Limited in ITA No. 1324 to 1337/Bang/2015 dated 7.4.2016 while allowing the assessee's appeal which have been accepted by the Department only for low tax effect and not in principle. 7. The appeals have been filed for all the assessment years including the assessment years where the tax effect is below the prescribed minimum since a composite order has been passed by the CIT(A) and therefore para 5 of the CBDT's Circular No. 21 of 2015 dated 10.12.2015 is applicable in this case. For these and other grounds that may be raised during the course of appeal and actual hearing it is prayed that the order passed by the AO u/s. 201(1) and 201(1A) be upheld and the order of the learned Commissioner of Income Tax (Appeals) may be set aside and cancelled." 3.2 The grounds raised (Supra) relates to the single issue pertaining to the deletion of the demands raised u/s 201(1) and 201(1A) of the Act by the ld CIT(A) by following the decision of the co-ord....
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....rs/contractors on various dates as per the details extracted hereunder:- 3.5.3 From the aforesaid agreements/MOU's it is seen that the assessee society has entrusted the procurement of land and development of residential layout thereon with the conditions to execute civil works such as road cutting, drainage, electrification, plan approval, conversion of lands from agriculture to non-agriculture status, etc., to the developer. However, the fact remains that the agreements essentially and basically relate to the purchase of land development and purchase of residential sites from the developer/contractors. The relevant portion of the agreement of the assessee society with M/s Jayasurya Developers Pvt. Ltd., i.e; developmental contractor is as under:- "1. Whereas the First Party, intending to form a residential layout in and around Banglore to cater the need of its Members, was on the look out for a suitable land developers who could offer the lands in and around Bangalore City and form the residential layout according to its specifications and after obtaining approvals from the competent authorities. 2. Whereas the Second Party who is the developers of Agricultur....
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.... Yelahanka and the rules in force meeting all the expenditure including the payment of fees, Betterment charges, cess etc. required to be made for that purpose out of the agreed amount paid by the First Party under the terms of this agreement. (d) The parties hereby agree that the Second Party shall obtain all requisite sanctions and approvals for the said layout from the competent authorities such as the CMC, Yelahanka KPTCL, BWSSB and other competent authorities in favour of the First Party by paying all the fee, cess, deposits by itself out of the agreed amount. (e) The Second Party shall form the residential lay-out after paying the Betterment cha-ges to C.M.0 Yelahanka and develop the layout on par with the BDA layout by providing all facilities as provided by BDA in its layout. (f) The parties hereby agree that after complying with all the above requirements and completing the said works, the Second Party shall take up the developmental works of the layout including the following items of work as per the specification given by the First Party: (1) Formation of Roads including asphalting as per the approved plan with water bound finishing an....
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.... property and the amount was paid for the purchases of completed property and not for development work carried out. The ld CIT(A) found that the agreements were only for purchase of sites and does not involve any 'works contract'. In our view, the aforesaid conclusion/finding of the ld CIT(A) cannot be faulted and the same is a correct reading of the scope of the agreements; which has to be treated as a whole and not in piece meal manner. The mere fact that the contractors/developers were required to lay'out roads and undertake other activities before the delivery of the completed sites cannot be either determinative of the facts or need to mean that the agreements entered into by the assessee society is a composite contract and amounts to a works contract. Thus, in our considered opinion, the case of the assessee is squarely covered by the decisions of the Hon'ble Karnataka High Court in the case of Karnataka State Judicial Department Employees House Building Co-operative Society Ltd., (Supra); the relevant portion of which judgment is extracted hereunder:- "the short that fell for the consideration for the Assessing Officer, the Commissioner of Income-tax and the Tribuna....