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TMI Blog2021 (1) TMI 910X X X X Extracts X X X X X X X X Extracts X X X X ..... ith and dispose off all the grounds of appeal on the basis of which the impugned order has been contested by the assessee before him. We, thus, in all fairness and in the interest of justice, and in order to avoid multiplicity of litigation are of the considered view that the matter requires to be revisited by the CIT(A) for adjudicating the aforesaid alternative ground of appeal which was raised by the assessee in unequivocal terms before him, but had not been adjudicated by him - matter requires to be restored to the file of the CIT(A), with a direction to dispose off the aforesaid alternative ground of appeal that was raised by the assessee before him. - ITA No.2816/Mum/2016 - - - Dated:- 19-1-2021 - Shri Shamim Yahya, Accountant Member And Shri Ravish Sood, Judicial Member For the Appellant : Shri Vijay Kumar Menon, D.R For the Respondent : Shri Niraj Sheth, A.R ORDER PER RAVISH SOOD, JM The present appeal filed by the revenue is directed against the order passed by the CIT(A)-6, Mumbai, dated 19.01.2016, which in turn arises from the order passed by the A.O under Sec.143(3) of the Income Tax Act, 1961 (for short Act ), dated 27.02.2014 for A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company. On a perusal of the records, it was observed by the A.O that the aforesaid transaction was adopted by the assessee for all the 27 allottees/purchasers of the houses/units in the two buildings as on the date of commencement of the respective projects. On November, 2013, it was observed by the A.O that there were 70 share holders with different share holding and debentures issued to them. As per the balance sheet, the buildings were shown by the assessee company as its investments. In the backdrop of the aforesaid method of accounting adopted by the assessee, it was noticed by the A.O that during the year under consideration i.e A.Y. 2011-12 the assessee had issued similar debentures of ₹ 4.20 crores towards the sale of certain units/spaces. 4. After deliberating at length on the aforesaid modus operandi that was followed by the assessee, the A.O held a conviction that the assessee had been accounting the sale proceeds of its stock as a liability in its balance sheet instead of sales in the profit and loss account. On the basis of his aforesaid observations, the A.O was of the view that the assessee by accounting the sale receipts as a liability in its ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed in the Board of Directors meeting held on 04.10.2010 AND the resolution passed by the shareholders in the Extraordinary General Meeting held on 29.10.2010. Further, it was stated by the assessee that the aforesaid 60 debentures had thereafter been redeemed by the assessee company on 18th October, 2013 on the request of IEEA. In order to support its aforesaid claim the copy of the resolution passed in the meeting of the Board of Directors on 7th October, 2013 and the copy of the bank statement evidencing the payment of the redemption amount by the assessee company to IEEA was filed with the A.O. In the backdrop of the aforesaid facts, it was stated by the assessee that the right to use, possess and occupy the 60 basement parking spaces was currently with the assessee company. Accordingly, on the basis of the aforesaid facts, it was therein claimed that the assessee company had at no stage sold any car parking spaces to IEEA. In order to fortify its claim that the car parking spaces had not been sold by the assessee to IEEA reliance was placed by the assessee on the judgment of the Hon ble Supreme Court in the case of Nahalchand Laloochand Pvt. ltd. Vs. Panchali Co-operati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and were issued in the name of the new purchaser. It was observed by the A.O, that though in effect the net liability remained the same in the books of the assessee, but, there was a change in actual ownership of the basement space of the buildings sold by the assessee. Insofar, the claim of the assessee that as under law sale of parking space was prohibited, thus, the amount received on allotment of debentures towards basement space could not be treated as sale receipts, the same, did not find favour with the A.O. Observing, that as the assessee had created/presented its accounts in such a way so as to bend rules and avoid income tax and sales tax, the A.O was of the view that the aforesaid transaction of the assessee clearly fell within the realm of tax evasion. Observing, that the assessee had sold the units/houses in the aforesaid buildings to the share holders/debentures holders who were the actual owners of the said properties, the A.O was of the view that the claim of the assessee that it was the owner of the building and the debentures/shares were issued for raising funds was clearly a sham transaction that was carried out with an intent to evade taxes. To sum up, the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntaining the constructed building has been accepted. In the said appellate order, the expenses which were disallowed in the assessment order were allowed on the ground that the expenses so disallowed were necessary not only for the business of the appellant of maintenance of the existing building but also for the corporate existence of the assessee. The appellant has stated that the Department has accepted the order of Ld. CIT(A).Therefore, the Department has accepted the fact that the appellant is the owner of the buildings and is not engaged in any trading activity for earning profits from construction of building. 6.2 The appellant had issued debentures during the subject year to one of its Shareholders, IEEA, in respect of its parking area for use by IEEA. The basement space is appellant's assets and by virtue of holding the required number of shares and debentures, Clauses 6A and 6B to the Articles of Association confer a member the right to occupy units/parking space. IEEA was allotted sixty Debentures vide resolution of Board of Directors dated 04.10.2010 and resolution of shareholders in Extraordinary General Meeting held on 29.10.2010. The debentures were issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear as well. 6.4 The appellant has explained that upon transfer of shares/debentures by share holders/debenture holders, they pay tax on gains on such transfers, if any. The appellant has filed copies of income tax returns of two individuals in support of the claim. Hence, taxing debentures in the hands of appellant will lead to double taxation, which is not permissible. 6.5 From the facts of the case and details submit ted by the appellant , it is observed that the debenture money has been utilized for development of land and buildings as well as for providing various facilities to the residents. The table below may be seen for ready reference: Sr. No. Description of Fixed Assets Amount (Rs.) Type of Unsecured Debentures Amount (Rs.) 1. Land 20,80,09,400 3240 No. of 1% debentures 32,36,76,000 2. Building I 40,20,57,072 180 No. of 1% debentures 8,09,82,000 3. Building II 20,63,47,65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicable. The action of the AO in treating the denture money as income from sale of parking space is not correct and the same is therefore, deleted and the ground is aIlowed. 7. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, and also considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Before proceeding any further, we may herein observe that the assessee had raised an alternative claim before the CIT(A), which reads as under: Without prejudice to Ground No. 1 Not allowing business expenditure incurred against the business income 1. On the facts and circumstances of the case and in law, the A.O erred in not allowing cost of construction against the amount of ₹ 4.20 crore treated by him as business income. 2. The appellant, without prejudice to Ground No.1 above, prays that cost of construction to be allowed against the amount received on issue of debentures. By raising the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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