TaxTMI 
TaxTMI 
2026 (2) TMI 860
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....uted Sale Deeds which included 2 Flats fell to the share of the Developer Mis Sai Pragathi Estates & Constructions Private Limited vide Doc No 673 and 699 of 2009 dt. 05.03 2009 4. In the above facts and circumstances the Ld CIT (Appeals) erred in sustaining the order U/sec.161 of the Act, holding the appellant as the Agent of Smt. C Anita 5. The Ld CIT(A) ought to have thus noted, under the Development Agreement, Sale of aforesaid flats related to the share of Appellant company and income from said flats was admitted as business income and therefore Order u/s. 163 of the Act holding the Appellant as Agent is Bad in Law 6. Without prejudice to the above the Appellant contends in respect of solitary isolated transaction of Sale of Property the appellant under law cannot be held as the agent Us 163 of the Act for levy of tax on Capital Gains 7. Without prejudice to the above the Ld CIT (Appeals) ought to have noted the subject flats sold by the Vendor Firm of 5 Partners through GPA Sn. Poornachandra Rao income if any arising to the Share of NRI works out to 1/5 only assessment of Entire Capital Gains in the hands of the Appellant Company is unwarra....
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....is bad in law and the appellant contends the deeming Provisions have to be strictly interpreted 17. The Ld CIT (Appeals) ought to have noted in the facts of the case, the Sale Deed since was executed by the father of NRI Under a registered GPA and the subject Flats related to the Share of the appellant and therefore the appellant cannot be held as the agent 18. For these and other grounds that maybe urged before the disposal of the appeal the Orders of the lower authorities holding the appellant as the Agent of NRI be cancelled and vacated." 3. The assessee is a private limited company and engaged in the business of real estate. The assessee entered into the development agreement dated 17.05.2000 with M/s. Vijay Tiles & Cement Products, a partnership firm represented by its partners. Out of the 05 partners, one partner Smt. Anitha Chalasani is a Non-Resident Indian [in short "NRI"] and was represented by her father and GPA Holder Sri Poorna Chandra Rao who is also a partner in the said Firm. As per the Development Agreement and Supplementary Agreement, the assessee got its share of Flats/constructed area in the project and thereafter the flats/units were sold i....
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....ssee entered into the Development Agreement dated 17.05.2000 with the said partnership firm to develop the said land owned by the partnership firm on 50% - 50% sharing of the developed area. He has pointed out that the Assessing Officer has made the addition in the hand of the assessee by treating the assessee as representative of the NRI u/sec.163(1)(c) of the Act in respect of two transactions of sales of Unit Nos.602 and 602A in the project. He has referred to the Sale Deeds dated 05.03.2009 whereby the assessee along with partnership firm sold the said properties. The learned Authorised Representative of the Assessee has then pointed out that these units are in the share of the assessee as per the details of the units given at Page nos.67 and 68 of the paper book. Further, he has pointed out that even in the sale deed itself these units are stated to be in the share of the assessee company who is the developer and the payments for the sale consideration were also made by the buyer in the name of the assessee company. Thus, the learned Authorised Representative of the Assessee has submitted that when these two transactions of sales are in respect of the two units of the assessee....
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....Development Agreement between the assessee company and M/s. Vijay Tiles & Cement Products, a partnership firm, the assessee company has developed the property in question bearing Nos.6-11 and 6-11A, Survey Nos.573 and 574, Kukatpally, Hyderabad. As per the Development Agreement registered on 13.06.2000 the assessee and the owner of the land-partnership firm have agreed to share 50%-50% of the constructed area which was worked out at 2523.94 sq. yards of total area of 5047.89 sq. yards. The subject matter of the dispute is the transfer of the unit Nos.602 and 602A vide two Sale Deeds both dated 05.03.2009 placed at Page nos.32 to 46 and 48 to 63 of the paper book, respectively. Thus, two sales deeds are singed by the assessee as well as the Managing Partner and GPA Holder Sri Poorna Chandra Rao, of M/s. Vijay Tiles & Cement Products. As per the recital of the Sale Deeds, they are identically worded which is stated as under: "WHEREAS as per the supplemental Agreement dated: 8-11- 2003, Second Supplemental Agron dated: 6-1-2006, and third supplemental Agreement dated 12th January, 2007 entered between the owners and Developer, Office Unit No.602, admeasuring 5371 Sq. Feet in ....
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....d by the NRI through the assessee company does not arise. 6.3. Even otherwise, as per the provisions of sec.163(1)(c), an assessee can be treated as an Agent of the NRI only when the conditions provided in the said section are satisfied. For ready reference sec.163(1) is reproduced as under: "163. (1) For the purposes of this Act, "agent", in relation to a non-resident, includes any person in India- a) who is employed by or on behalf of the non-resident; or b) who has any business connection with the non-resident; or c) from or through whom the non-resident is in receipt of any income, whether directly or indirectly; or d) who is the trustee of the non-resident; and includes also any other person who, whether a resident or non-resident, has acquired by means of a transfer, a capital asset in India : Provided that a broker in India who, in respect of any transactions, does not deal directly with or on behalf of a non-resident principal but deals with or through a non-resident broker shall not be deemed to be an agent under this section in respect of such transactions, if the following conditions are fulfilled, namely:....
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....sessing Officer in the hand of the assessee by invoking the provisions of sec.163(1)(c) of the Act is not sustainable in law as well as on facts and accordingly, the same is deleted. 7. In the result, appeal of the Assessee is allowed. Order pronounced in the open Court on 21.01.2026. ============= Document 1 SAI PRAGATHI ESTATES & CONSTRUCTIONS PRIVATE LIMITED Flat No.207, Sai Pragathi Towers, 3-6-519, Himayathnagar, Hyderabad. Schedule - IV Statement showing amount received for construction of Flats in respect of VIJAY SAI TOWERS Project as on 31.03.2009 S.No. in respect of VIJAY SAI TOWERS Name Project as on Office Unit No Amount in Rs. 1 K.Pratap Reddy Shop No.1 (Lr Gr) 2075000 2 Bhanu Automobiles Shop No.001 17500000 3 M.Lakshmi W/o. K N Reddy Shop No.002 4250000 4 Ruchika Devi & Others Shop No.003 838900 5 Sharada Bai & Others Shop No.004 1031100 6 Muralidhar Rao U, Ramesh M & Others Shop No. 101 4548000 7 Ashok Reddy & Padma Somireddy Shop No.102 10200000 8 K.Pratap Reddy 102/A, 105 & 214 2611800 9 T.Sudhakar & Nirmala Kumar P 201 1944000 10 I. Rama Devi 202 & 203 2995800 11 K.Srinivas 204 1814400 12 Donthi Nandhika 2....