9911796707
TMI Blog2016 (3) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... That learned Commissioner of Income Tax (Appeals) XXI, New Delhi has grossly erred both in law and on facts in sustaining a disallowance of sum of ₹ 6,73,76,070/- representing expenditure incurred on licence fees, external development charges and conversion charges of land and held to be not forming part of cost of land for computing the profit on sale of commercial block by the appellant company. 1.1 That the learned Commissioner of Income Tax (Appeals) has overlooked the contention of the appellant that consideration for purchase of licence land of ₹ 10.94 crores had been paid by demand drafts in the immediately preceding year i.e. Assessment Year 2008-09 and therefore addition sustained by adopting the cost of land at ₹ 4,20,27,377/- instead of ₹ 10,94,10,9107- was without jurisdiction. 1.2 That the learned Commissioner of Income Tax (Appeals) has further failed to appreciate the factual and legal position that once an expenditure had been incurred, the same necessarily had to be adopted as part of cost of land of the appellant company and allowed as necessary deduction while computing the profit on sale of commercial block by the appellant co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.4 That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in failing to appreciate the written submissions and. judicial pronouncements relied upon by the appellant company 3 That the learned Commissioner of Income Tax (Appeals) has erred both hi law and on facts in confirming the levy of interest u/s 234B of the Act of ₹ 2,15,34,711/- which is not leviable at all on the facts of the appellant company. 2. Brief facts of the case are that the assessee is a limited company which derived its income from property development. For the year it filed its return of income on 21.03.2011 declaring a loss of ₹ 2,86,91,730/- and assessment u/s 143(3) was completed on 30th December 2011 by making two adjustments i.e. (1) disallowance of ₹ 6,73,76,070/- being difference between the cost adopted by the assessee and determined by the AO to be deducted from sale of land and (2) disallowance of an amount of ₹ 1753 lacs being expenditure as deduction on land because it is found to have been incurred prior to the date of the sale deed. Against both the additions the assessee in appeal before learned Commissioner of Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said land and paid an amount ₹ 13,67,23,723/- pertaining to licence fees, conversion charges and external development charges. This amount was paid by the seller to the Director, country planning Haryana on 25.03.2008. The sale deed was executed of the land in favour of the appellant for ₹ 716 lacs on which stamp duty of ₹ 1,40,12,280/- was paid and assessee incurred the cost of land of ₹ 8,56,12,280/- and development charges of ₹ 13,67,23,723/-making total cost of property of ₹ 22,23,51,205/-. On the said property comprising of 3.398 acre Assessee constructed two complex consisting of 1.393 and 2.005 acres being Block No. A and Block No. B respectively. The total expenses incurred for the construction is ₹ 75.50 crores. This cost was bifurcated by the assessee having been incurred in two year i.e. Assessment Year 2008-09 and 2009-10 for Block A of ₹ 54.04 crores and for Block B ₹ 21.46 cores. As during FY 2008-09 i.e. AY 2009-10, Block A was sold for ₹ 61.76 acres against this the assessee deducted cost of land of ₹ 10.94 based on the total built up area and cost of building of ₹ 54.04 crores and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development of commercial complex shall be transferred and accounted for in the books of assessee. ld AO has overlooked MOU dated 01.04.2007 which is submitted before us at Page 84 to 88 of the PB. b. As assessee has shown the above cost of the property as inventory as at 31.3.2008, It was argued that AO was bound to accept the opening cost of such land which is already incurred and accounted for in the books of the earlier years. It was further submitted such cost of land should be granted as deduction even if such cost was not paid by the appellant. He specifically relied on the decision of Hon ble Supreme Court 318 ITR 204 in case of VKJ Builders and contractors Pvt. Ltd. Vs. CIT. For this he took us to the balance-sheet of the company filed at Page No.97 PB before us wherein the opening balance of capital work in progress was stated to be ₹ 22,70,96,065/- and closing balance was stated ₹ 21,46,28,942/- and therefore he submitted that cost of land taken by the assessee should be granted as deduction. 5. The ld DR vehemently supported the order of AO as well as learned Commissioner of Income-tax (Appeals). 6. We have carefully considered the rival contention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. That hereafter the VENDOR Company is not left with any right, lien or claim of any nature whatsoever in the said land/plot of land shall henceforth be owned and developed by the VENDEE requirements, per its own requirements. 4. That the VENDOR simultaneously with the execution of this Deed of Sale has handed over the vacant physical possession of the said land/plot to the VENDEE. 5. That all taxes, levies,- assessments, demands or charges, which are levied in respect of the said plot of Land upto the date of execution of this Deed of Sale are paid by the VENDOR. However, the said assessment, charges, rates etc., which may be levied in future shall be borne and paid by the VENDEE. 6. That all expenses, incurred on registration of this Sale Deed including Stamp Duty and other charges have been borne and paid by the Vendee. 7. According to paragraph No.5 of that sale deed of tax levies assessment demand or charges which are levied in respect of the said plot of land paid up to the date of Sale deed are to be paid by the vendor and after that by the assessee. Contrary to the statement made by the assessee according to the sale deed in Para No.1 of the sale dee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and on perusal of the sale deed AO has stated that sale consideration is inclusive of all rights. Therefore in this case AO is disputing the closing stock of the earlier years also. In view of the above facts and circumstances of the case we are of the view that learned Commissioner of Income-tax (Appeals) has rightly confirmed that disallowance of ₹ 6,73,76,070/- towards the cost of land , we confirm the order of learned Commissioner of Income-tax (Appeals) and dismiss the ground No.1 of the appeal of the assessee. 8. The second ground of appeal is against the disallowance of ₹ 1753 lacs representing the expenditure incurred on development of the property. The brief reasons for disallowance by the assessee that the assessee was required to prove the genuineness of the expenditure incurred on construction of building between the 28th March 2008 to 31St March 2008 i.e. within four days this amount of expenditure is incurred. On reply filed by the assessee explaining the expenditure incurred during this period of ₹ 17.53 lacs it was also observed by AO that all these expenses are incurred prior to the purchase of the land by the assessee. The AO furt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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