TaxTMI 
TaxTMI 
2024 (2) TMI 872
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....ed for deciding this Appeal are:- The Respondent Company owned land in Village Sanganer and Khokhawas, Tehsil Sanganer, situated in Sanganer District, Jaipur which as per Jaipur Development Authority is a land earmarked for group housing project. Total land owned by the Respondent Company was 73585 sq.m. part of which was sold to one Vedanta Properties and another part of housing scheme which is underway and further 36,402 sq.m. was available which was owned by the Respondent. A Memorandum of Understanding between Respondent as First Party and the Appellant as Second Party was entered on 28.02.2019 under which First Party agreed to sell area 36,402 sq.m. The Second Party was interesting in buying the same. Consideration stated was Rs. 21,000 per sq. m. Total amount was Rs. 91,42,95,850/- out of which Rs. 7,51,00,000/- was received as advance. The parties agreed that First Party will get sub-division done in the manner and approved by the Jaipur Development Authority and Second Party shall pay 25% of the total amount of consideration within 7 days of the approval of the map and balance 75% will be paid within period of 6 months from the date of map approval. The Agreement furt....
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....Rs. 13,48,07,556/- against the Respondent which according to Part-IV of Section 7 Application was balance amount which was required to be paid by the Respondent. In the said application, Reply was filed by the Respondent refuting the claim. It was pleaded by the Respondent that there is no financial debt owed by the Respondent, money was transferred to the Respondent as sale consideration for 17,314.85 sq.m. in the project in favour of the persons nominated by the Appellant and not as a commercial borrowing or a debt which needed to be repaid by the Respondent in any given amount of time. Agreement between the parties contains a payment schedule, to be paid by the Appellant to the Respondent and not vice versa. Appellant is neither Financial Creditor nor an allottee under Section 5(8) of the Code. It was pleaded that Respondent does not owe any amount. The Adjudicating Authority heard both the parties and by the Impugned Order has dismissed Section 7 Application holding that the Appellant cannot be treated to be allottee under Section 5(8) of the Code and MoU/Agreement to Sale/Addendum is essentially an arrangement of certain marketing, promoting and bringing prospective allottee t....
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....n his Reply that Appellant is not Real Estate Allottee nor he can be considered as a Financial Creditor under Section 5(8)(f) of the Code. It is submitted that nature of transaction between the parties was transaction of sale of plot of land to the final allottee as nominated by the Appellant. The Order of RERA dated 18th July, 2022 where Appellant has been held to be allottee has been stayed by the Real Estate Appellate Tribunal by order dated 02.09.2022 which stay is still effective hence reliance on the order dated 18th July, 2022 by the Appellant is erroneous. It is submitted that Appellant cannot be said to be allottee of the land, the responsibility of promoting, marketing the project and bringing the final allottee for sale of plots was of the Appellant and any excess amount paid above the rate agreed between the Appellant and Respondent by the allottee for the plot, was required to be transferred to the Appellant as its commission and for any deficit amount paid by the allottees to Respondent, Appellant was required to issue debit note asking the Respondent to deduct the amount from security lying with the Respondent, no plot was allotted or transferred to the Appellant. Th....
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.... It is determined in this agreement by both the parties that any economic transaction on account of execution of this agreement will be subject to deduction of the TDS for that the second party of the agreement will transferred the funds to first party after deduction of the TDS." 10. The agreement contemplated that after approval from the Jaipur Development Authority of plotting project, Second Party of the Agreement (Appellant herein) shall have the right of booking of the plots to prospective buyer on any price on the approved map. The agreement further contemplated in clauses 17 to the following effect: "That, if in case the second party will make accesse payment to the first party which is received through booking of plots which is access to the agreed amount between both the party for execution of the agreement then in that situation the access amount will be treated as commission of the second party. The first party will transferred the accesse amount to second party or representative of the second party and the applicable taxes will bear by the second party at sole." 11. Subsequent to above agreement dated 28.02.2019, an agreement to sale was entered between the parti....
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....emaining sale consideration by the agreed time period otherwise will get it paid through the persons nominated by it. If amount of sale consideration to be paid to the First Party Landowner by the Second Party Buyer or the persons nominated by the Second Party Buyer before the agreed time period, then First Party shall pay the interest at the rate of 18 percent per annum on the received amount to the Second Party Buyer, otherwise amount of interest will be adjusted in the upcoming installment. If Second Party Buyer fails to pay the amount of installments within the agreed time period to the First Party Landowner or commits delay in paying it, then Second Party by adding the interest at the rate of 18 percent per annum in the principal amount of that installment for the delayed period, will pay it to the First Party- Landowner, and total period of delay in all the installments should not be more than 60 days and in case total delay period goes over 60 days and in case total delay period goes over 60 days, this agreement shall stand terminated, thereafter, First Party Landowner shall acquire the right to sell out etc. the above Estate to some other person etc." 12. The first issue ....
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..... Explanation. -For the purposes of this sub-clause,- .......... (ii) the expressions, "allottee" and "real estate project" shall have the meanings respectively assigned to them in clauses (d) and (zn) of section 2 of the Real Estate (Regulation and Development) Act, 2016 (16 of 2016); ........" 16. When we look into the MoU and Agreement to Sale, the parties agreed that lease/allotment shall be issued in favour of nominees of the Appellant thus actual allotment were issued by the Respondent in favour of allottees. With regard to initiation of Corporate Insolvency Resolution Process by Financial Creditor, Section 7 has been amended by Act 1/2020 by inserting proviso which is as follows: "Section 7 : Initiation of corporate insolvency resolution process by financial creditor. *7. (1) A financial creditor either by itself or jointly with 1[other financial creditors, or any other person on behalf of the financial creditor, as may be notified by the Central Government] may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority when a default has occurred. [Provided that for the financ....
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....cannot be admitted and was liable to be rejected due to non-compliance of Section 7(1) of the Code. 18. It is relevant to notice that said issues were not gone into before the Adjudicating Authority nor raised by the Appellant hence the Adjudicating Authority had no occasion to consider the claim of the Appellant as an allottee in the Impugned Order. Bare perusal of the Impugned Order indicates that the case was not pleaded by the Appellant as Financial Creditor being an allottee of the Real Estate Project. The submission of the Appellant that application was maintainable under Section 7 as Appellant being Real Estate Allottee cannot be accepted and deserves to be rejected. 19. Now we come to the submission of the Appellant that transaction in question falls within the definition of Section 5(8)(f) of the Code. All transactions which are covered under Section 5(8) which has to be treated as a financial debt, has to be necessarily disbursal against the consideration for the time value of money. Agreement entered between the parties was for sale and purchase of the land on consideration fixed in the agreement i.e. 21,000 per sq. m. The Appellant who was to bring allottees in whose ....