By TIOL News Service

MUMBAI, JUNE 09, 2017: THIS is a Revenue appeal.

A SCN dated 25.10.2011 was issued to the respondent alleging that the activities of the respondent would fall under the category of “Real estate agent service/Real estate consultant service”.

The appellant contended that they did not act as 'real estate agent' or 'real estate consultant' but in fact had purchased the land and Transferable Development Rights (TDR) and sold the same for a premium/profit.

Nevertheless, the adjudicating authority held against appellant and confirmed the demands with interest and penalties.

The Commissioner(A) set aside the o-in-o and, therefore, Revenue is aggrieved.

In the 'grounds of appeal' it is contended that since the land is not in the name of the respondent and they did not hold the title to the property, the consideration received by them cannot be called as sale proceeds as one cannot sell something which one does not own or has title to.To substantiate this, Revenue relies upon the services rendered by the respondent which according to them is receiving the right of the development of the land and prepared Group Housing Plan and got it approved by the Municipal Corporation, declared (verified) that the said land is free, clear and marketable and free form encumbrances, made development agreement with consenting party, permission under Urban Ceiling and Regulations Act. Inasmuch as since all the activities carried out by respondent are in relation to the sale of land (from owners of the land) to the buyers of the land and if not covered under 'real estate agent' service they are covered under 'real estate consultant' because they have rendered technical assistance with respect to some of the ingredients mentioned therein.

The respondent placed reliance on the decisions in the case of Sarjan Realties Ltd. = 2014-TIOL-1334-CESTAT-MUM and Binlasduplux Ltd. = 2007-TIOL-691-CESTAT-DEL wherein the bench held that sale and purchase of the land by assessee will not fall under the category of 'real estate agent' services.

After considering the submissions, the Bench viewed that Revenue's appeal is devoid of merits because -

+ In the impugned order, Commissioner(A) has gone into four agreements/transactions entered into by respondent from time to time and after analyzing the said clauses in the agreement came to a conclusion that these are of in respect of sale and purchase of land and TDR.

+ As against the above said factual findings, Revenue has not come out with contrary evidence to show that the respondent's services would get covered under the definition of 'real estate agent' services or 'real estate consultant' services. The first appellate authority was correct in coming to such a conclusion that the activities as undertaken by the respondent would not fall under the category of 'real estate agent' services or 'real estate consultant' services.

Noting that similar/identical issue was before the Bench in the case of Sarjan Realties Ltd. (supra) and wherein it was held that the activities of purchase and sale of the land and the amount received by them, and the difference between purchase price and sale price cannot be held as 'commission' so as to be taxed under real estate services.

The impugned order was held as correct and legal and the Revenue appeal was rejected.

(See 2017-TIOL-1948-CESTAT-MUM)