TaxTMI 
TaxTMI 
2017 (5) TMI 1599
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....ing the undisputed facts that the assessee has failed to maintain quantitative and qualitative stock registers and vouch the expenses incurred by it and 'on money' received by it has not been disclosed? 2. Whether the Tribunal was justified in rejecting the application of percentage completion method adopted by the AO, when this rejection means acceptance of loss returns of the assessee engaged in construction and sale of residential/commercial projects in contravention of Accounting Standard-7 and Accounting Standard-9 issued by ICAT? 3. Whether the Tribunal was justified in ignoring the fact that the two brothers who are partners either themselves or through their sons and their families and actively engaged jointly in the business of the sister concerns of the assessee firm and thus acceptance of 'on money' and specific seized documents cannot be ignored for intervention? 4. Whether the Tribunal was justified in deleting the addition of Rs. 29.95 crore confirmed by CIT(A)(c), Jaipur ignoring that the assessee transferred all its rights, control and interest in the first parcel of land (measuring 114.985 acres) in the garb of Security deposit through De....
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....the assessee on 8-02-2008 entered into 06 agreements as part of arrangements of funds through FDI / private equity funding as under:- (i) Shareholders Agreement (ii) Shares Subscription Agreement (iii) Brand Name & Licensing Agreement (iv) Development Agreement (registered on 25-03-2008) (v) Project Management Agreement (vi) Supplemental Agreement to Shares Sub-scription Agreement/ Shareholders Agreement 30.2. The ld. AR submitted that on 25-03-2008, a Tripartite Development Agreement was executed on 8- 2-2008 between the assessee, UAHPL and RIL, Mauritius and was registered. He submitted that under the said agreement dated 25-03-2008 assessee continued to be land owner, though development of project was taken over and required 60 to be carried out by UAHPL. He submitted that the said development agreement could not be considered as sale deed because at the time of registration the stamp duty paid is 1% and on the other hand on the sale deed, stamp duty payable is @ 11% The ld. AR at the time of hearing also filed the Schedule of Rajasthan Stamp Act, 1998 to substantiate his above submission. He further submitted that said devel....
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....ated 11-06-2008 considering it as a bogus document as it was neither registered nor notorized and therefore, considered the security deposit payable under development agreement dated 25-03-2008 of Rs. 105.85 crores as business receipts. 30.3 The ld. AR submitted that the AO erroneously considered that the provision of Section 53A of Transfer of Properties Act is applicable. He submitted that such land is stock in trade and not capital assets. Therefore, the provision of Section 53A of Transfer of Properties Act cannot be extended to stock in trade as Section 2(47) of the I.T. Act is artificially extended to the definition of capital assets only. He further referred to the provision of Section 54 of the Transfer of Property Act, 1882 and submitted that land being an immovable property and 'sale' is governed by Transfer of Property Act. Section 54 of the said Act defines sale as under:- "Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and partpromised. He further submitted that it further defines how the sale is made and the same is as under:- ''Sale how made: Such transfer, in the case of tangible immovable p....
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....scretion of the developer, the developer shall sell or shall cause to sell the project land to a third party at the prevailing market price and for consideration acceptable to the developers and the interested entities. The ld. AR further referred to clause 12.3 of the agreement and submitted that the assessee would be bound to refund all proceeds to the developers pursuant to the sale of the project land including but not limited to an amount equivalent to the security deposit. He submitted that in the event of breach of contract, the land has to be sold by the assessee and not by the developer as the land is owned by the assessee only. The ld. AR further submitted that the AO misunderstood the development agreement because as per buyer's agreement, the copies of which were also filed before the authorities below as well as placed in the paper book filed before the us, it provides that sale of flat has to be executed by the owner and developer jointly. He submitted that until, unit is sold, the assessee i.e. owner of the land shall remain the owner of the land and developer shall remain the owner of the development of the land. He submitted that the said development agreement is o....
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....onfirmed by the ld. CIT(A) by deleting the balance amount of Rs. 52.74 crores out of total addition of Rs. 82.69 crores made by the AO is not justified. He submitted that not only the ground of appeal taken by the Department be rejected, ground no.4 of appeal taken by the assessee may be allowed by deleting addition sustained by the ld. CIT(A) 31.1 We have carefully considered the submissions of ld. representatives of the parties, orders of the authorities below and have also considered the cases cited before us by the authorities below as well as ld. representatives of the parties. We have also gone through carefully the relevant clauses of the development agreement as well as Supplemental Agreement. We observe that under said development agreement dated 25-03-2008, the assessee has permitted the developer not only to develop the land and complete the project, but also to sell the same to which assessee would also be a party to the sale. At the time of execution of the said development agreement, the assessee was to receive a sum of Rs. 105.85 crores but the assessee received Rs. 39,55,95,900/- as security deposit. It is a fact that due to initiation of acquisition procee....
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....greement according to us cannot be considered as an agreement to sell in view of the specific provision of Stamp Act. It is not in dispute that development agreement is registered and the stamp duty has been paid as a memorandum of agreement under Article 5 (bbbb)and not stamped as deed of conveyance as per Article 21(i) of the Rajasthan Stamp Act. On perusal of relevant clauses of the Development Agreement, we are of the considered view that this agreement is entered into only for the purpose of protecting the respective rights of the parties and to ensure smooth development of the project and thereafter to sell to the prospective buyers of the developed project. We agree with the ld. AR that provision of Section 53A of the Transfer of Property Act cannot be made applicable to the land under consideration as undisputedly the said land is stock in trade of the assessee and not a capital asset. . We observe that authorities below have considered the said development agreement which amount to transfer of land particularly in view of clause 4.1 thereof as it gives an irrevocable and exclusive license and permission to use the project land to the developer. But we are of the considered....