9911796707
TMI Blog2014 (5) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... or verification of the claim – Decided in favour of Assessee. Amount added on account of security deposits adjusted - Surrender of constructed area /allotted flats to the builder – Held that:- CIT(A) himself took note of the fact that the security deposit was received by assessee in lieu of 1950 sq. ft. area – he overlooked the fact that the amount of security deposit received by the assessee was adjusted against the sale consideration receivable against the area of 5270 sq.ftl including the area of 1950 sq. ft surrendered during the year under consideration and what the assessee actually received was only Rs.49,86,500 - The assessee thus had not received the amount of security deposit over and above constructed area of 8635 sq ft. and since the said security deposit was adjusted against the area of 1950 surrendered by the assessee, the consideration received by the assessee was only to the extent of 8435 sq. ft built up area, the value of which was already declared by the assessee while computing the LTCG arising from the sale of land - the addition made by CIT(A) by way of enhancement is not sustainable – Decided in favour of Assessee. Enhancement of amount – Held that:- CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee from the developer was in the nature of capital asset in the hands of assessee and the income arising from transfer of the said asset was chargeable to tax as capital gains and not business income. He, therefore, brought to tax such income computed at Rs.28,12,500/-, after reducing the cost of the flats sold amounting to Rs.46,76,000/- from the sale consideration of Rs.74,88,500/-, in the hands of the assessee as Short Term Capital Gains (STCG) in the assessment completed u/s 143(3) of the Income Tax Act, 1961 (the Act) vide order dated 28.12.2007. 4. Against the order passed by the Assessing Officer u/s 143(3) of the Act, appeal was preferred by the assessee before the ld. CIT(A) and the following submissions were made on its behalf before the ld. CIT(A) on the issues in disputes: 1. The appellant is a partnership firm which was engaged in the business of dyeing, processing and finishing of Art Silk Fabrics since 1972, at its manufacturing unit at N C Chopra Industrial Estate , Kanjurmarg, Mumbai-18. This property was taken on tenancy basis from Landlord Shri Nihalchand Chopra; 2. The appellant entered into an agreement dated 13th May 1994 to purchase this property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest to bank 7283 3 Telephone expenses 2918 4 Bank charges 447 5 Travelling expenses 68500 6 Stamp duty 106410 7 salary 180000 8 Interest to partner 785133 Expenses as mentioned above are very much necessary to carry out the work just to approach to the lawyer, advocate and chartered accountant. Interest to partners is given on capital balance account, which is clearly mentioned in the balance sheet filed along with return of income. The expenses are admissible under the IT Act to earn the income shown in the income tax return of the assessee; Even the AO is himself considering he cot of flats sold after adjusting the closing stock valued as per normal business principles; The AO has wrongly taken the value of sale of flats at Rs.74,88,500/- by ignoring the fact that Rs.25,00,000/- was added to the assessee s income for AY 2004-05. Please refer to our letter dated 1.12.2007, addressed to AO copy enclosed. The aforesa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2004 and also on the basis of letter given by M/s Chintamani Enterprises, the builder. It is also seen from para No.4 of the said order the assessee has exercised not to refund the interest free deposit and instead had requested the developer to deduct and area of 1950 sq. ft. from their share of 37% of total permissible built up area i.e. 8435 sq. ft. to which appellant was entitled in terms of clause 3 of the development agreement entered by the appellant with the developer; (iii) However, the appellant has finally received total 8635 sq. ft area in toto which he has sold also in the assessment year 2005-06 and 2006-07. The appellant sold 5270 sq. ft in AY 2005-06 and balance 3165 sq. ft in assessment year 2006-07 which are reflected in detail given by appellant itself in the ground of appeal No.7; (iv) Then it is also a matter of record that the appellant has not refunded Rs.25,00,000/- received as security deposit till the AY 2006-07 when the appellant claimed that the project is finally complete and sold out the complete built up area; (v) The security deposit of Rs.25,00,000/- was in lieu of 1950 sq. ft area thus giving a rate of Rs.1282/- per sq. ft. whereas the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eating the income arising from the sale of constructed area/allotted flats as STCG of the assessee and consequently confirmed the disallowance made by AO on account of various expenses claimed by assessee under the head Profit and Gains of the Business or Profession . 7. Aggrieved by the order of ld. CIT(A), the assessee has preferred this appeal before the Tribunal on the following grounds : 1. On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in confirming the order of ITO and in treating the business income of the appellant as a short term capital gain; 2. On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in not allowing the expenses incurred wholly and exclusively by the appellant was the purpose of this business and in earning the said income; 3. On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in confirming the order of ITO and in taking the consideration of the sale of facts at Rs.74,88,500/- by ignoring the fact that a sum of Rs.25,00,000/- was already offered to tax in the assessment year 2005- 06 itself; 4. On the facts and in the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TCG, the deduction on account of expenses incurred by the assessee on cost of improvement of the assets sold or in connection with the transfer of capital assets only can be allowed. In this regard, the ld. counsel for the assessee has contended that some of the expenses claimed by the assessee are falling in this category. We, therefore, restore this issue to the file of AO with a direction to verify the claim of assessee on this issue and decide the same in accordance with law. Ground No.2 of assessee s appeal is accordingly treated as partly allowed for statistical purposes. 10. As regards the issue involved in Ground Nos.3 and 4, it is observed that although the amount of Rs.25 lakhs on account of security deposits adjusted against the surrender of constructed area /allotted flats to the builder was offered by the assessee as its income in the return of income for assessment year 2005-06, the same was added to its total income by the AO for AY 2004-05 also. This issue therefore was raised by assessee in its appeal for assessment year 2004-05 and vide its order dated 27.7.2009 passed in ITA No.6518/Mum/2007 , the Co-ordinate Bench of the Tribunal upheld the stand of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration. We, therefore, delete the addition made by ld. CIT(A) on this issue by way of enhancement and allow Ground No.5 of the assessee s appeal. 12. Ground No.6 raised by the assessee in its appeal for the assessment year 2005- 06 is not pressed for by the ld. counsel for the assessee at the time of hearing before us. The same is accordingly dismissed as not pressed. I.T.A.No.8090/Mum/2010( AY:2006-07) This appeal is directed against the order of ld. CIT(A)-33, Mumbai dated 17.9.20210. Grounds of appeal raised by the assessee in this appeal read as under : 1. On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in confirming the order of ITO and in treating the business income of the appellant as a short term capital gain; 2. On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in not allowing the expenses incurred wholly and exclusively by the appellant was the purpose of this business and in earning the said income; 3. On the facts and in the circumstances of the case and in law, the CIT(A) was not justified in confirming the order of AO in treating the income as short term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
