TaxTMI 
TaxTMI 
2025 (3) TMI 1493
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....case of M/s CHD Developers Ltd on 23-11-2012 at SF 1617, BhikajiCama Bhawan, BhikajiCama Place, Delhi. During the course of search proceedings, a collaboration agreement dated 13.02.2010 was found and seized. A survey action under Section 133 A of Income Tax Act, 1961 was conducted on the office premise of M/s Root Developers Pvt. Ltd, on 19-03-2013 at F17, Central Plaza, Golf Course Road, Gurgaon. During the course of survey action under Section 133A of the Income Tax Act, 1961 on the premises of M/s Root Developers Pvt. Ltd., another collaboration agreement dated 17.7.2006 was found and seized. Relevant to mention that M/s Roots Developers Pvt. Itd. was carrying on the activity of real estate development projects in the capacities of both as developer and collaborator. The company was incorporated on 04-03-2008. The directors of company are Sh.Surender Yadav, Sh. Narender Yadav, Sh. Jitender Yadav and Sh. Devender Yadav.The company was also developing a project in the name of "Courtyard Project" at Sector-48, Gurgaon.The owners of land, measuring 1646 acres situated at village-Fazilpur-Jharsa, Sector 70, Gurgaon pertaining to the agreements are Dharampal Singh HUF through Karta S....
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....er referred the matter to the Addl. CIT under section 144A of the Act. The Addl. CIT gave an opportunity to the assessee. The assessee submitted that the land under reference was basically 8 Km. away from the municipality limit of Gurgaon when it was given in collaboration to M/s Roots Developer Company in 2006. The assessee also submitted the details of area of land and year wise receipts by the land owners from M/s Roots Developer Pvt. Ltd. The Addl. CIT after considering the assessee's submissions referred to the survey proceedings and post survey enquiry and pointed out that the assessee had failed to submit any evidence regarding the existence of M/s Roots Developers Company. The Addl. CIT pointed out that the assessee was asked to produce original partnership deed, balance sheet, books of accounts and other supporting evidence. However, the assessee failed to produce either the original or photocopy of the partnership deed. The Addl. CIT further pointed out that as per the balance sheet as on 31/03/2007 there was no partner's capital, no cash in hand and no bank account of the firm. Further, as per the agreement. dated 17/07/2006 M/s Roots Developers Company had made adva....
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....e AO accordingly completed the assessment proceedings by holding that the income arising on account of conversion of land into stock in trade on 13/02/2010 i.e. the date of signing of collaboration agreement with M/s CHD Developers as income under the head capital gains and the remaining income received on account of collaboration agreement with M/s CHD Developers Pvt. Ltd. as business income.For computing the capital gains on account of conversion into stock in trade on 13/02/2010, the AO issued notice u/s 133(6) to the Sub-Registrar, Gurgaon. From the information received from Tehsildar, the AO adopted the rate of Rs. 85 lakhs per acre as the fair market value in the FY 2010-11 and accordingly computed the capital gains and the business income. 6. Aggrieved by the aforesaid order passed by the AO the assessee preferred appeal before the Ld. CIT(A) who in turn partly allowed the appeal of the assessee by holding that M/s Roots Developers Pvt. Ltd, is an independent company doing its own independent development work in addition to the income from collaboration agreement referred to above. He further noted that the income arising from these independent business activities is in add....
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....As per the Written Submissions filed by the Appellant, total amount of Rs. 63,01,71,700/- has been paid by M/s Roots Developers Pvt. Ltd. to the land owners out of their share of Rs. 75 crores. iv. As per Written Submissions filed by the Appellant, M/s Roots Developers Pvt. Ltd. was liable to pay Rs. 75 crores to the land owners towards the cost of land and the balance amount received by M/s Roots Developers Pvt Ltd. was its income from business which M/s Roots Developers Pvt. Ltd. had claimed to have shown as business income in the return filed by it, on POCM basis. v. Land owners have not claimed any right in the proceeds of sale of 34.5% of the saleable area under the Agreement dated 13.02.2010 other than the amount of Rs. 75 crores referred to above. vi. Land owners had not shown any business income or any income under any other head on account of any share in the sale proceeds of 34.5% of the saleable area in any of the years in which they had received various amounts from M/s Roots Developers Pvt. Ltd. vii. M/s Roots Developers Pvt. Ltd. has claimed that the amounts received from M/s CHD Developers as per the term of the Agreement dated 13.02.2010had been shown as....
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....lex is concerned. it was a business venture for M/s Roots Developers Pvt Ltd, the payments received by Me Roots Developers Pvt Ltd are revenue in nature and such a receipt is taxable in the year of receipt. M/s Root Developers Pvt Ltd, had received Rs. 13 crores and Rs. 12 crores in the AY 2010-11 and 2011-12 respectively on this account. These amounts are accordingly held to be taxable in the respective year in the hand of M/s Root Developers Pvt. Ltd, in view of the decision of the Hon'ble Supreme Court in the case of G.S Homes & Hotels (P) Ltd. V/s CIT 141DTR 201 (SC) wherein the Hon'ble Supreme Court confirmed the order of the Hon'ble Karnataka High Court in Dy. CIT v. G.S. Homes & Hotels (P.) Lid. [IT Appeal No. 16/2003 and ITA CR No. 1/2009, dated 16-9-201 1] holding that maintenance deposit received by the assessee is taxable. 9. Accordingly, Ld. CIT(A) directed the AO to recompute the incomes in the hands of the land owners and M/s Roots Developers Pvt. Ltd. for the aforesaid AYs. In this regard, as the incomes assessed by the AO in the case of land owners in AY 2011-12, AY 2012-13 and AY 201314 have been held to be assessable in the AY 2010-11, as provided in ....
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.... business income from this project has been offered on POCM basis on the lines as offered by co-developer namely M/s CHD. He further submitted that without prejudice to the above, if the said amount of Rs. 13,00,00,000/- is to be taxed in AY 2010-11 and Rs. 12,00,00,000/- in AY 2011-12, there are following two prayers of the Appellant: (i) That aggregate expenses of the project of Rs. 15.88Cr and payment to land owners of Rs. 75Cr. Paid by the appellant may be allowed.(ii) Income already offered by the assessee in AY 2012-13, 2013-14 and 2014-15 by including the said sum of Rs. 13 crores and Rs. 12 crores may suitably be adjusted so that double taxation may be eliminated. 11. On the other hand the ld. DR relied upon the orders of the authorities below. The submitted that as per the contentions of the land owners, they were entitled to a total amount of Rs. 75 crores proportionate to their share of land, in lieu of the value of land and the amount of Rs. 75 crores was to be paid to them by M/s Roots Developers Pvt. Ltd. It was submitted that as per the version of the Ld.AR the total amount of Rs. 63,01,71,700/- has been paid by M/s Roots Developers Pvt. Ltd. to the land owners out ....
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....he collaboration agreement dated 13.02.2010 was signed (F.Y. 2009-10) i.e. AY 2010-11. It was further submitted that the lower authorities below that the balance amounts, over and above the amount of Rs. 75 crores referred to above, received by M/s Roots Developers Pvt. Ltd., the assessee has contended that these amounts were to be considered as business income in the hands of M/s Root Developers Pvt. Ltd. on POCM basis, which was not agreeable. He further submitted that although, the profits over and above, the amount of Rs. 75 crores, received by M/s Roots Developers Pvt. Ltd. are taxable as business profits in the hands of M/s Roots Developers Pvt. Ltd., there is no justification for the assessee's claim that these profits are taxable on the basis of POCM. It was the further contended that in view of the collaboration agreement that M/s Roots Developers Pvt. Ltd had no role in the development of the project. As per the provisions of the agreement, the development of the project was to be carried out by M/s CHD Developers Pvt. Ltd. from their own sources. Further, there is no evidence on record that any expenditure had been incurred by M/s Roots Developers Pvt. Ltd. with regard t....
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.... the assessee is not a developer rather the CHD Developer is the developer. In terms of the agreement Rs. 25 cr. is the security deposit to be kept with the assessee. According to the assessee Rs. 25 crore is included in the entire sale proceeds of Rs. 115 cr. This Rs. 25 cr. Is independent of Rs. 115 cr and cannot be construed as security deposit per se and therefore, to be added in the hands of the assessee as unexplained cash as was the case made out by the revenue. 13. On the other hand, it appears from the records that the assessee spent development charges expenditure appearing at page no. 18 of the paper book 1. Though permission was obtained by the land owner, it was agreed upon between the land owners and the assessee before us that the project is to be developed or get it developed by Root Developers which is why bank guarantee was also given for payment of external development charges which proves that assessee is not other than a developer. In fact page No. 50 of the paper book being the balance sheet as on the date on 31.3.2010 is clearly depicted that the assessee incurred cost of Rs. 158892504.18 as the cost of the project. Initially the agreement was made between t....