AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2020 (12) TMI 116
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....tances of the case and in law, the Ld. CIT(A) has erred in appreciating the fact that the assessee shows in the Balance Sheet, the construction expenditure incurred as the Capital Work in Progress. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in appreciating the fact that the assessee cannot escape from offering its profits for taxation merely if it shows the said activity by different nomenclature in the books. 4. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in appreciating the fact that the assessee company had made major changes in the Articles of Association by attaching the space in building to be sold to the shares of the company, the action on the part of the assessee company is ultra-virus of the Company's Act, 1956. 5. On the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in directing the AO to delete the addition of Rs. 3,49,23,699/- on account income from sale of Lodha Supremus Building without appreciating the fact that as per AIR information during the year under consideration the assessee company has sold units worth Rs. 32,81,74,835/-for....
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.... entitle the buyer of the shares to possess and occupy the designated constructed area. The sale proceeds of shares of the assessee shall be accounted as business receipts by SNCML. In view of the above arrangement, the assessee-company was left with no right to occupy or sale or lease or deal in any manner with the units of "Lodha Supremus" as their rights were attached to the shares of the assessee-company and total shareholding of the assessee was with SNCML. Hence, SNCML being holder of the shares of the assessee, carrying right to premises, had entered into an agreement with the third party buyers for transfer of equity shares of KHL as a result of which rights in the units in "Lodha Supremus" stood transferred. During the financial year (FY) 2010-11, the SNCML has recorded a sales consideration of Rs. 32,81,74,835/- and resultant income thereof was offered to tax. Therefore, the assessee submitted that in absence of transfer of units in "Lodha Supremus", neither a sale can be recorded in the books of the assessee nor any income can be said to have arisen in the hands of the assessee and consequently, no income can be brought to tax in the hands of the assessee. However, the....
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....n behalf of its members out of the cost met by them. Therefore, the transactions entered into between the SNCML and Appellant are not sham transaction as alleged by the AO. Under such circumstances no profit could arise in the hand of SPV. Thus, I am of the view that the addition of profit made in the hand of the Appellant is unjustified; therefore, the addition made by the AO is deleted." 5. Before us, the Ld. Departmental Representative (DR) submits that the assessee was constructing the building as a Contractor/Developer and it entered into the contribution with its shareholders i.e. SNCML an agreement dated 31.03.2011 whereby it was agreed that the assessee shall construct a building "Lodha Supremus" on the land owned by SNCML including godown right of assessee-company by way of shareholders contribution for which cost shall be borne by SNCML. Therefore, the Ld. DR submits that the addition of Rs. 3,49,23,699/- made by the AO be restored. On the other hand, the Ld. counsel for the assessee relies on the order of the Ld. CIT(A) and the order of the Tribunal dated 23.08.2018 in assessee's own case for AY 2012-13 (ITA No. 377/Mum/2016). 6. We have heard the rival submissions a....
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....o an agreement with the third party buyers for transfer of equity shares as a result of which occupancy rights in the units in "Lodha Supremus" was transferred. During the FY 2010-11, the SNCML has recorded a sales consideration of Rs. 32,81,74,835/-. Thus in absence of transfer of units in "Lodha Supremus", neither a sale can be recorded in the books of the assessee nor any income can be said to have arises in the hands of the assessee and consequently no income can be brought to tax in the hands of the assessee. It is relevant to mention here that the above issue which also arose in AY 2012-13 has been decided in favour of the assessee by the ITAT 'H' Bench, Mumbai in assessee's own case in ITA No. 377/Mum/2016, which reads as under : "After having gone through the orders passed by revenue authorities, we find that Ld. CIT(A) while deciding these issues has taken into consideration the facts of the present case that the income taxed by the AO in the assessee's hand has already assessed and taxed in the hand of SNCML, therefore taxing the same again in the hand of the assessee will result into double taxation of the said income. While reaching to the conclusion, Ld. CIT(A) appr....
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....w this ground No. 12." 9. Before us, the Ld. DR supports the order passed by the AO. On the other hand, the Ld. counsel for the assessee relies on the order passed by the Ld. CIT(A). 10. We have heard the rival submissions and perused the relevant materials on record. In the instant case the AO presumed that the assessee acted as a contractor and estimated profit @ 8% of cost. There is nothing on record that the assessee acted as a "work contractor" on behalf of SNCML to construct the building. The contribution agreement referred to by the AO is nothing but assigning the supervision of the construction to the assessee by SNCML as per section 10 of MOFA. The said agreement unlike that of any work contract, does not assign any contractual profit or commission to the assesseecompany. The assessee received contribution from the prospective unit buyers. The said contribution is entirely taken into account by SNCML for determining profit from the project. It offered the entire profit to tax. The said profit has been taxed in the hands of SNCML (assessee's holding company) even by the Income Tax Settlement Commission (ITSC). No part of the profit has been assigned to the assessee. Furt....