Itxa/1679/2016 Of Pr. Commissioner Of Income Tax-14 v. Trendsetter Construction Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1673 OF 2016WITH INCOME TAX APPEAL NO.1679 OF 2016WITH INCOME TAX APPEAL NO.1681 OF 2016WITH INCOME TAX APPEAL NO.1691 OF 2016 Pr. Commissioner of Income Tax-14.. Appellant v/s. M/s. Trendsetter Construction Pvt. Ltd. .. Respondent Mr. Sursh Kumar for the appellant None for the respondent CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. P.C. DATED : 4[th] FEBRUARY, 2019 1.The Revenue is in appeals against the common judgment of theIncome Tax Appellate Tribunal ("the Tribunal" for short), raisingfollowing question for our consideration :- (i)Whether on the facts and circumstances of the case and inlaw, the Tribunal was correct in holding that payment received bythe assessee is not in the form of professional fees covered u/s 194Jof the I.T. Act, 1961, the assessee is acting as a consultant andgetting the fees for work? 2.The respondent assessee is a private limited company. The issuebeing common, we may record the facts from Income Tax AppealNo.1673 of 2016. The issue concerns for Assessment Year 2006-07.The assessee had earned income out of its engagement, claimed to be asa consultant in development of housing project. The Assessing Officerwas of the opinion that the income was assessee's business income. Theassessee carried the matter in appeal before the Commissioner ofIncome Tax (Appeals) [“CIT(A)” for short], who held that the assesseewas acting merely as a consultant and accordingly reversed the decisionof the Assessing Officer. The Revenue carried the matter in appealbefore the Tribunal. The Tribunal by the impugned judgmentconfirmed the decision of CIT(A) making following observations :- “8.We have considered the rival contentions and have alsogone through the records. We find that the Ld. CIT(A) haspassed a very detailed and elaborative order wherein afterverification of the records it has been pointed out that theamount received by the assessee was including the expenditureincurred by the assessee which was paid by M/s. A.A. Estate Pvt.Ltd. The amount paid to the assessee has not been claimed bythe M/s. A.A. Estate Pvt. Ltd. as expenditure but has only beenshown as work in progress. So there was a consistency in theaccounts of both the payer and the payeee. The services rendered 3. by the assessee were also relating to the activities of the buildersand developers and as per the MOU, the quantification of theremuneration of the assessee was dependent on the completion ofthe project and under such circumstances, the assessee wasjustified to follow the project completion method of accounting.On the completion of the project, the amount quantified as theremuneration of the assessee was offered by the assessee fortaxation and the same was accordingly claimed as expenditure bythe builder. Till the completion of the project, the amount wasnot claimed by the builder as expenditure. The Ld. CIT(A) hasalso taken into consideration the accounting method in relationto different projects and it was found that wherein there was aresultant loss, no income was offered by the assessee; and wherethere was a profit, the assessee had shown income being theremuneration received by him on certain fixed percentage out ofthe profits of the project. There was no discrepancy either in theaccounts of the assessee nor of the builder. The Ld. CIT(A)therefore after proper appreciation of the evidence on the file hasconcluded that the amount received by the assessee during theyear was an advance and the actual remuneration was to bequantified at the completion of the project. The assesseetherefore was justified in not offering the said amount as incomefor the year. He therefore upheld the additions so made by theAO. We do not find any infirmity in the above well reasonedorder of the Ld. CIT(A) and the same is accordingly upheld.” A perusal of the material on record would show that the CIT(A) A perusal of the material on record would show that the CIT(A) and the Tribunal on the basis of evidence on record came to theconclusion that the assessee had not engaged in the business ofdeveloping real estate. The assessee had engaged itself, may be, as aconsultant out of which activity, the assessee would earn commission atpre-decided rate. The amounts received by the assessee beforecompletion of the project were in the nature of deposits to be adjustedtowards alternate payment to be made upon completion of the project.We do not find any error in the view of the Tribunal. 4.The tax appeals are dismissed. (M.S. SANKLECHA, J.) (AKIL KURESHI, J.)