9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (4) TMI 1565 - AT - Income TaxAcquisition of lands for purposes of real estate development - since there is no revenue earned during the relevant previous year as well as in the past the expenditure claimed in the profit and loss account should not be allowed as a deduction - Held that - In the case of the Assessee the AO has accepted the fact that the Assessee has acquired properties for the purpose of development. Therefore the business of the Assessee ought to have been considered as having been set up. All revenue expenses have therefore to be allowed as deduction in computing income from business. Thus held that the acquisition of lands for purposes of real estate development would amount to setting up and commencement of business and the expenses claimed by the appellant are allowable. We find no grounds to interfere with the order of the CIT(A). The appeal for AY 13-14 is dismissed.
Issues Involved:
1. Maintainability of appeals based on the tax effect threshold as per CBDT Circular No.21/2015. 2. Determination of whether the assessee's business was "set up" for the purpose of allowing revenue expenditure deductions. Issue-Wise Detailed Analysis: 1. Maintainability of Appeals: The first issue pertains to the maintainability of appeals filed by the Revenue for assessment years 2009-10 to 2014-15. The tax effect involved in ITA Nos. 2648 to 2652 was less than ?10 lakhs. According to CBDT Circular No.21/2015 dated 10/12/2015, appeals with a tax effect below ?10 lakhs are not maintainable. The Revenue argued that if a composite order involves multiple assessment years and the tax effect in one of the years exceeds ?10 lakhs, then appeals for all years should be maintainable. The Tribunal referenced the Karnataka High Court decision in CIT, Central Circular Vs. PSI Hydraulics (2014) 226 Taxman 34 (Kar), which held that tax effect should be considered separately for each assessment year, even if the CIT(A) passed a consolidated order. The Tribunal concluded that since the tax effect for assessment years 2009-10 to 2012-13 and 2014-15 was less than ?10 lakhs, the appeals for these years were dismissed as not maintainable. 2. Determination of Business "Set Up": The second issue relates to whether the assessee's business was "set up" for the purpose of allowing revenue expenditure deductions. The assessee, engaged in real estate development and trading of Transfer Development Rights (TDR), did not derive any income during the financial year 2012-13 but incurred various expenses. The AO disallowed these expenses, arguing that the business was not "set up" as there was no revenue earned. The assessee contended that the business was set up upon acquiring land and incurring operational and administrative expenses, which should be allowed as deductions. The CIT(A) ruled in favor of the assessee, stating that the business was set up when properties were acquired, and all revenue expenses should be allowed as deductions. The Tribunal upheld the CIT(A)'s decision, referencing the ITAT Bangalore Bench's decision in Bangalore Goa Estate Pvt. Ltd. and the Delhi High Court's decision in Dhoomketu Builders and Development Pvt. Ltd., which supported the view that the acquisition of land signifies the setting up of a real estate business. Conclusion: The Tribunal dismissed the appeals for assessment years 2009-10 to 2012-13 and 2014-15 due to the tax effect being less than ?10 lakhs. For assessment year 2013-14, the Tribunal upheld the CIT(A)'s decision that the assessee's business was set up upon acquiring land, allowing the deduction of revenue expenses. All appeals by the Revenue were dismissed.
|
