2017 (3) TMI 334 - AT - Income Tax

Incentive from property broker on original booking of a residential flat in a Developers project - Nature of receipt - revenue or capital - Held that - We find considerable cogency in the case law cited by the Ld. Counsel of the assessee of the Hon ble Supreme Court of India in the case of CIT vs. Saurashtra Cement Ltd.(2010 (7) TMI 11 - SUPREME COURT ), has held that any receipt directly and intimately linked with the procurement of capital asset is in the nature of capital receipt and not a revenue receipt. - Decided in favour of assessee

Summary

Issues:
1. Barred by limitation - Assessment order served after the limitation period.
2. Addition to income on account of incentive from property broker.
3. Consideration of reducing cost of acquisition and absence of Principal & Agent relationship.
4. Grounds of appeal without prejudice to one another.
5. Right to add, alter, amend, substitute, withdraw any ground of appeal before the hearing date.

Issue 1: The appeal was filed against the Order dated 15.6.2016 of Ld. CIT(A), Noida for assessment year 2012-13, contending that the assessment order passed under section 143(3) on 20.3.2015 was served after the limitation period, thus seeking its quashing.

Issue 2: The dispute involved the addition of ?1,81,497 to the assessee's income on account of an incentive received from a property broker on the original booking of a residential flat in a Developer's project. The Ld. CIT(A) confirmed this addition, leading to the appeal.

Issue 3: The appellant argued that the flat was booked to reduce the cost of acquisition, denying any Principal & Agent relationship with the broker. The appellant asserted that the incentive received was to minimize the cost, relying on previous case laws and decisions.

Issue 4: The grounds of appeal were stated to be without prejudice to one another, with the appellant reserving the right to modify them before the hearing date.

Issue 5: The ITAT, Delhi analyzed the case, considering the nature of the income received by the assessee and the absence of a Principal & Agent relationship. The Tribunal referred to relevant case laws, including CIT vs. Saurashtra Cement Ltd. and DCIT vs. Surendra Mohan Mukhija, to support its decision. Ultimately, the Tribunal allowed the appeal, deleting the addition in dispute and rendering the other grounds academic.

The judgment highlighted the importance of the nature of income received, the absence of a Principal & Agent relationship, and the applicability of relevant case laws in determining the taxability of the incentive received from the property broker. The decision to delete the addition in dispute was based on the similarity of facts to previous cases, emphasizing the significance of legal precedents in tax matters.