9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (9) TMI 129 - AT - Income TaxSale of TDR rights business income or income from other sources - Held that - The TDRs have not been recognized as capital asset in the books of account of the assessee - the treatment given by the assessee in the books of accounts when TDRs were sold clearly show that the same were considered as business asset of the assessee - The other circumstances brought out by the AO in the order of assessment, that income on sale of TDRs was in the normal course of business and had to be considered as income from business - the assessee is not in the business of dealing in TDRs and therefore income from sale of TDRs cannot be regarded as income from business - the property was treated as business asset and on its transfer, the assessee derived TDRs - When such TDRs were sold, it cannot be said that the sale proceeds of TDRs are not income from business - the TDRs have a direct nexus with the business of the assessee and cannot be treated as any other source of income Decided against assessee. Reimbursement of interest free refundable deposit payable under the principal lease deed Details not furnished - Held that - The non-resident was an architect and engaged by the assessee for the purpose of carrying out the architectural study for development of the property obtained on lease - A payment equivalent to US 10,000 was allowed by the AO as there was a supporting invoice from the non-resident - the assessee made three payments to the non-resident of US 10,000, US 7500 and US 10,000 as second, third and fourth instalments - While making remittances of these payments to the non-resident, the assessee did not deduct tax at source and in this regard filed a certificate of CA for non- deduction of tax at source - the fact that the payment was second, third and fourth instalment has been duly recorded - the payment was for architectural fee and had to be allowed as a deduction to the assessee - the assessee be allowed a further deduction as expenditure in the matter of determination of income from such lease of the property Decided in favour of assessee.
Issues Involved:
1. Charging of interest under sections 234A and 234B of the Income Tax Act. 2. Taxability of consideration received on the sale of Transferable Development Rights (TDRs). 3. Addition of Rs. 4,00,00,000 as reimbursement of interest-free refundable deposit. 4. Addition of Rs. 34,85,870 due to lack of furnished details. 5. Admission of appeal under section 249(4)(a) of the Income Tax Act due to non-payment of taxes on returned income. Detailed Analysis: 1. Charging of Interest under Sections 234A and 234B: The assessee raised grounds related to the charging of interest under sections 234A and 234B of the Income Tax Act for the assessment years 2007-08 and 2009-10. The Tribunal noted that the prayer of the assessee was for consequential relief, and it directed the Assessing Officer (AO) to give consequential relief in the matter of charging interest while giving effect to the Tribunal's order. 2. Taxability of Consideration Received on Sale of TDRs: The assessee, a company engaged in property development, argued that the consideration received from the sale of TDRs should not be taxable under the provisions of the Income Tax Act as it gives rise to capital gains. The AO, however, treated the difference between the sale value and the cost recorded in the books as business income. The AO's reasoning included the assessee's business activities, the treatment of TDRs in the books, and the fact that the property was acquired and commercially exploited in the normal course of business. The CIT(A) upheld the AO's decision, concluding that the profit from the sale of TDRs was liable to tax as business income. The Tribunal confirmed this view, stating that the TDRs had a direct nexus with the business of the assessee and were rightly considered as business income. 3. Addition of Rs. 4,00,00,000 as Reimbursement of Interest-Free Refundable Deposit: The AO added Rs. 4,00,00,000 to the income of the assessee, which was reimbursed by M/s. Sobha Developers Ltd. as part of a sub-lease agreement. The assessee contended that this amount was refundable and should not be treated as income. However, the Tribunal found no evidence to support the claim that the amount was refundable and upheld the revenue authorities' decision to treat it as income. 4. Addition of Rs. 34,85,870 Due to Lack of Furnished Details: The AO disallowed Rs. 34,85,870 out of the expenditure claimed by the assessee due to insufficient evidence. This included Rs. 13,00,000 for payments to unauthorized occupants and slum dwellers, and Rs. 13,90,900 for feasibility study reports. The Tribunal upheld the disallowance of Rs. 13,00,000 due to lack of supporting evidence but allowed the deduction of Rs. 13,90,900 for feasibility study expenses based on the certificate of the CA and other supporting documents. 5. Admission of Appeal under Section 249(4)(a) Due to Non-Payment of Taxes on Returned Income: For the assessment year 2010-11, the CIT(A) refused to admit the assessee's appeal due to non-payment of taxes on the returned income, invoking section 249(4)(a) of the Income Tax Act. The Tribunal, considering the Karnataka High Court decision in D. Komalakshi v. DCIT, directed the CIT(A) to admit the appeal for adjudication on merits after verifying the payment of taxes, including TDS and subsequent payments made by the assessee. Conclusion: - ITA No. 149/Bang/2014 was partly allowed. - ITA No. 150/Bang/2014 was dismissed. - ITA No. 151/Bang/2014 was allowed. The judgment was pronounced in the open court on August 28, 2014.
|
