2018 (3) TMI 1086 - HC - Income Tax

Unaccounted income disclosed by the respondent assessee during survey proceedings under Section 133A - business income OR undisclosed income under Section 69 - Held that - Tribunal noted that the assessee was engaged in the business of development of housing projects. The amount in question was received by way of bookingamount for Vraj Dham Housing Scheme which was duly reflected in the assessee s audited accounts. The assessee followed the project completion method for income recognition and the Assessing Officer was therefore not right in taxing such amount under Section 69 of the Income-tax Act 1961. Since the view of the Tribunal is based on materials on record and in consonance with the legal principles and accounting standards no question of law arises. Allowability of the deduction under Section 80IB 10 - ITAT concurring with the CIT A in holding the issue relating to allowability of the deduction under Section 80IB 10 of the Income Tax Act as premature - Held that - The Tribunal was of the opinion that the allowability of such deduction would be considered by the Assessing Officer when such receipt by the assessee on completion of the project comes up for consideration. - Decided against revenue

Summary

Issues:
1. Whether unaccounted income disclosed during survey proceedings should be considered as business income or undisclosed income.
2. Whether the issue of deduction under Section 80IB [10] of the Income Tax Act was premature.

Analysis:

Issue 1:
The first issue revolves around the addition of a sum of &8377; 1 Crore made by the Assessing Officer for the Assessment Year 2009-2010. The basis for this addition was the statement of the partner of the assessee-firm recorded during a survey operation. Upon appeal, the CIT [A] deleted the addition, a decision upheld by the Tribunal. The Tribunal observed that the assessee was involved in the development of housing projects and the amount in question was received as a booking amount for a specific housing scheme. This amount was properly reflected in the audited accounts of the assessee. The Tribunal further noted that the assessee followed the project completion method for income recognition, making the Assessing Officer's decision to tax the amount under Section 69 of the Income-tax Act incorrect. The Tribunal's decision was based on factual evidence and in line with legal principles and accounting standards, thus no legal question arose from this issue.

Issue 2:
The second issue concerns the deduction under Section 80IB [10] of the Income Tax Act. The Tribunal opined that the Assessing Officer should consider the allowability of this deduction when the receipt by the assessee upon project completion is under review. This indicates that the issue of deduction under Section 80IB [10] was deemed premature at the time of the appeal. Consequently, the Tax Appeal was dismissed by the High Court.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the proper application of legal principles and accounting standards in determining the treatment of income and deductions under the Income Tax Act.