2021 (9) TMI 99 - AT - Income Tax

Income in hands of assessee - transfer of land to SPV - assessee was used as a SPV (Special Purpose Vehicle) for the construction of LodhaSupremus‟ on its own land - HELD THAT - As relying on assessee's own case 2020 (12) TMI 116 - ITAT MUMBAI and 2018 (8) TMI 2006 - ITAT MUMBAI assessee was used as a SPV (Special Purpose Vehicle) by SNCML for the construction of LodhaSupremus , which is more likely a Cooperative Society carrying out work for and on behalf of its members out of the cost met by them and no profit could arise in the hands of SPV. Thus, the additions were rightly deleted by Ld. CIT(A) Addition on account of capital gain - sale of godown - HELD THAT - As relying on assessee's own case 2020 (12) TMI 116 - ITAT MUMBAI and 2018 (8) TMI 2006 - ITAT MUMBAI assessee was merely holding the godown right as an investment in its books of accounts, the cost of such right was in fact forming part of the project cost (Inventory) in the books of SNCML since the project Lodha Supremus was owned and developed by SNCML.assessee was merely holding the godown right as an investment in its books of accounts, the cost of such right was in fact forming part of the project cost (Inventory) in the books of SNCML since the project Lodha Supremus was owned and developed by SNCML - Since, there is no conversion of capital asset into stock-in-trade and there is no transfer of such right by the assessee-company since it has not sold any units of Lodha Supremus , as all the sales is recognized and taxed in SNCML, there is no question of any taxability in the hands of the assessee. - Decided against revenue.

Summary

Issues:
1. Appeal against order under section 143(1) of the Income Tax Act, 1961
2. Appeal against order under section 154 r/w section 250 of the Act

Issue 1: Appeal against order under section 143(1) of the Income Tax Act, 1961

The Revenue filed two appeals challenging orders related to the assessment year 2015-16. The first appeal, ITA no.3858/Mum./2019, contested the assessment under section 143(1) of the Act. The grounds of appeal included contentions regarding the treatment of land development and construction activities, capital work in progress, and profits from the sale of commercial premises. The Tribunal upheld the CIT(A)'s decision based on precedents and findings that the income was already assessed and taxed in the hands of another entity, preventing double taxation. The Tribunal dismissed the Revenue's appeal based on the established legal principles and lack of new evidence or contrary judgments.

Issue 2: Appeal against order under section 154 r/w section 250 of the Act

The second appeal, ITA no.3859/Mum./2019, challenged an order under section 154 of the Act regarding capital gains. The dispute centered on the ownership of project land and the treatment of a godown right held by the assessee company. The Tribunal, referring to previous decisions, concluded that the godown right was an investment and not converted into stock-in-trade, as it was part of the project cost owned by another entity. Since the assessee did not sell any units directly and the sales were recognized and taxed by the entity owning the project, the Tribunal dismissed the Revenue's appeal. The decision was based on established legal interpretations and the absence of evidence supporting the Revenue's claim.

In both appeals, the Tribunal upheld the decisions of the CIT(A) based on established legal principles, precedents, and the absence of new evidence or contrary judgments. The Tribunal dismissed the Revenue's appeals in both cases, emphasizing the consistent application of tax laws and the lack of grounds to overturn the lower authorities' decisions.