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2019 (1) TMI 883 - AT - Income TaxAddition of extra income reflected in the AIR - amount received by assessee on behalf of the society which was duly reflected in accounts of the society - Held that - As observed that the impugned amount of ₹ 90 lakhs generated from the original transactions was belonged to the society and not the assessee. The assessee was only authorized to collect the amount on behalf of the society and therefore, it was not the income of the assessee. CIT(A) also made a logical conclusion that when the assessee had received an amount from ₹ 179 lakhs at the time of booking of shop no. 7 by the said Vanitaben Dilipkumar in the preceding years i. e. ₹ 1 crore in F. Y. 2008-09, ₹ 78 lakhs in F. Y. 2009-10 and ₹ 1. 00 lakh in F. Y. 2012-13, the same was not treated as income of the assessee in the respective years, then how the receipt of ₹ 90 lakhs could be taxed in the year of receipt i. e. A. Y. 2013-14 respectively. CIT(A) has analyzed all materials viz. books of accounts of the assessee, receipts collected by the assessee towards sale of various units on behalf of the society in the preceding years, details development fees along with TDS collected from the society, relevant clauses of development agreement entered into by the assessee and the society, while arriving at the conclusion. There is no material placed before us, which compel us to deviate from the finding of the ld. CIT(A). Therefore, considering well reasoned order of the ld. CIT(A), we do not find merit in the appeal of the Revenue. Order of the ld. CIT(A) is upheld, and the ground of appeal of the Revenue is rejected.
Issues Involved:
1. Whether the addition of ?90 lakhs as extra income in the hands of the assessee was justified. Issue-wise Detailed Analysis: 1. Addition of ?90 lakhs as Extra Income: The sole issue in this appeal is whether the CIT(A) erred in deleting the addition of ?90 lakhs, which the AO considered as extra income for the assessee. The case revolves around the sale of an immovable property (Shop No. 7) and the interpretation of the development agreement between the assessee and Subhratna Co-op. Housing Society. Facts and Arguments: - The assessee, engaged in real estate development, filed a return showing a loss of ?10,92,481. During scrutiny, the AO noticed that the assessee, along with the society and another individual, sold Shop No. 7 for ?281 lakhs, out of which ?90 lakhs was paid to the assessee. - The AO argued that as per clause 25(a) of the development agreement, any surplus/profit from the sale should belong to the developer (assessee). Thus, the ?90 lakhs was treated as the assessee's income and taxed accordingly. - The assessee contended that the ?90 lakhs was received on behalf of the society and credited to the society's account, not as profit or surplus for the assessee. CIT(A) Findings: - The CIT(A) examined the development agreement and accounting records, concluding that the ?90 lakhs was received on behalf of the society and was not the assessee's profit. - The CIT(A) noted that the ?179 lakhs received earlier from Vanitaben Dilipkumar (the initial buyer) was not treated as the assessee's income in previous years. Thus, the ?90 lakhs received in the current year should also not be taxed as the assessee's income. - The CIT(A) observed that the assessee had consistently received and accounted for sale proceeds on behalf of the society in previous years without being taxed, which was accepted by the department. Tribunal’s Analysis: - The Tribunal upheld the CIT(A)'s decision, agreeing that the ?90 lakhs was received on behalf of the society and not as the assessee's income. - The Tribunal found no compelling evidence to deviate from the CIT(A)'s well-reasoned order, which thoroughly analyzed the development agreement, books of accounts, and the nature of receipts. - The Tribunal dismissed the Revenue's appeal, confirming that the addition of ?90 lakhs to the assessee's income was unjustified. Conclusion: The Tribunal concluded that the ?90 lakhs received by the assessee was not its income but was collected on behalf of the society as per the development agreement. The CIT(A)'s deletion of the addition was upheld, and the Revenue's appeal was dismissed. The order was pronounced on January 15, 2019, at Ahmedabad.
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