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2012 (7) TMI 456 - AT - Income TaxAddition is made on the ground that there is under-recovery of sale proceeds on an inference that there is a sale Held that - Once the agreement is not doubted and the income has been disclosed in the hands of one of the co developers, it would be not correct for the Revenue to step in and decide what should be the share of each party - When the income on this area has been offered to tax by the sister concern - it is not proper for the Assessing Officer to sit in the judgment as to which firm is entitled to the revenue on this area of 1628.21 sq.ft. There is no loss to the Revenue as one of the sister concerns has offered the income in question to tax - addition would amount to taxing the same amount in the hands of two assessees which would be bad in law.
Issues Involved:
1. Under-recovery of sale proceeds. 2. Obligation to provide accommodation to tenants. 3. Double taxation of the same income. 4. Admission of additional evidence by the Revenue. 5. Interpretation of the agreement dated 08.08.2000. Issue-wise Detailed Analysis: 1. Under-recovery of Sale Proceeds: The Assessing Officer (AO) added Rs. 2,38,16,545 to the assessee's income, treating it as undisclosed income due to under-recovery of sale proceeds. This was based on the inference that 1628.21 sq.ft. of area was sold without proper recovery. The AO calculated the sale consideration for the area and treated the difference as undisclosed income. The Commissioner (Appeals) upheld this addition, stating that the assessee should have accounted for 20% of the saleable area before any allocation to tenants. The Tribunal, however, found that there was no evidence of actual sale of the 1628.21 sq.ft. area and ruled that income cannot be taxed on a notional basis. 2. Obligation to Provide Accommodation to Tenants: The AO and Commissioner (Appeals) concluded that the obligation to provide accommodation to tenants was solely on M/s. Akta Real Estate Pvt. Ltd. (AREPL) and not on the assessee. The Tribunal noted that the AO had never doubted the claim that AREPL was required to provide certain areas to the old tenants. The Tribunal emphasized that the understanding between the co-developers should be the basis unless something contrary is found. The Tribunal ruled that it is not proper for the Revenue to step in and decide the share of each party in such agreements. 3. Double Taxation of the Same Income: The assessee argued that taxing the same income in its hands would result in double taxation since AREPL had already paid tax on the income. The Tribunal agreed, stating that there was no loss to the Revenue as one of the sister concerns had offered the income to tax. The Tribunal held that taxing the same amount in the hands of two assessees would be bad-in-law. 4. Admission of Additional Evidence by the Revenue: The Revenue sought to admit additional evidence to prove that neither the assessee nor AREPL had an obligation to provide accommodation to the tenants. The Tribunal rejected this plea, stating that the additional evidence was already part of the assessment record of AREPL and had been examined by the AO in that case. The Tribunal ruled that the scope of the AO's examination was restricted to the directions given in the section 263 proceedings and could not be expanded to a denovo assessment. 5. Interpretation of the Agreement Dated 08.08.2000: The Tribunal examined the agreement between the assessee and AREPL and found that the understanding of the parties should be the basis for determining the share of revenue. The Tribunal noted that the agreement was not found false, and the bonafide intention of the assessee was not questioned. The Tribunal ruled that the AO cannot step into the shoes of businessmen and decide what should be the revenue of each party in such agreements. Conclusion: The Tribunal allowed the assessee's appeal, ruling that the addition of Rs. 2,38,16,545 as undisclosed income was not justified. The Tribunal emphasized that income cannot be taxed on a notional basis and that the understanding between the co-developers should be respected. The Tribunal also rejected the Revenue's plea for admitting additional evidence and ruled against double taxation of the same income.
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