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TMI Blog2021 (5) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has already taken the cost of the plot as a deduction u/s 37 (1) or u/s 28 of the income tax act. By providing the plot of land assessee has incurred a cost of the project for providing the parking space to the shop owners, which was a commercial obligation on the assessee, the above cost is required to be granted as deduction to the assessee. Whether there was any legal obligation on the assessee for providing a parking spaces is also established as the assessee was granted permission to construct shopping mall only if it had a proper parking facility as per HUDA Rules. Thus assessee has also legal obligation to provide parking spaces to buyers of shopping complex. In view of this, we direct the assessing officer to delete disallowance on account of parking space provided to shop owners/office owners of the mall. Therefore, we reverse the orders of the lower authorities and allow the appeal of the assessee. - ITA. No. 2531/Del/2019 - - - Dated:- 18-5-2021 - SHRI BHAVNESH SAINI, JUDICIAL MEMBER SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER Assessee by : Shri V K Shabarwal Adv alongwith Shri Ashok Babbar Adv , Rakesh Chaddha CA Department by : Shri Mahesh Thakur SR D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the shopping mall and also the green area in front of the shopping mall. The assessee s SLP before the honourable Supreme Court was dismissed which was preferred against the order of the honourable Punjab and Haryana High Court s order. The assessee received a compensation of ₹ 9 crores in respect of the said acquisition of car parking area, which has been offered for taxation as business income. Against the said receipts, assessee has claimed expenditure of ₹ 37,909,943/ for using another land for the parking for shops and commercial areas sold. The claim of the assessee was that it is under an obligation to provide parking space to shop owners and the matter was contested before the land acquisition collector and other forums by the assessee as well as shop owners Association. Since the assessee has sold a commercial space to the various buyers, it was under a commercial obligation to provide them parking area. Therefore the assessee had an adjoining plot which was of slightly larger size, which was converted by the assessee into the parking area and debited cost of the said land to profit and loss account and assessee has claimed as an expenditure for the same. As t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee is not in position to sell the land as on the date. The learned assessing officer construed the above explanation of the assessee holding that land is considered as a non-depreciable asset, the assessee is in fact utilizing a capital asset for his business purpose. He further held that the title of the land has not been transferred at all and still lies with the assessee thus as long as the rights of the land lie with the assessee its value cannot be considered zero. He therefore held that the land in question is still capital in the nature as the expenses cannot be booked in the profit and loss account and therefore he disallowed the same. 05. Accordingly the total income of the assessee was determined at ₹ 109,441,360/ against the returned income of the assessee of ₹ 71,531,420 by passing an order u/s 143 (3) of the income tax act on 30 December 2016. 06. The assessee aggrieved with the assessment order preferred an appeal before the learned CIT A. Before the learned CIT A assessee contested the claim on the basis of the commercial expediency however, the learned CIT A confirmed the disallowance for the reason that assessee was not under and le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, which is now used for the parking. The assessee has given an undertaking to the shop owners for the above plot to be used as a parking area. On that pretext, the assessee debited the cost of this plot of land to the project cost and claimed as expenditure or the project cost. The assessee has also received a compensation of ₹ 9 crores on acquisition/surrender of the parking area originally sanctioned by them . The above sum of ₹ 9 crores is offered for taxation by the assessee. He submitted that though the assessee has not transferred the above plot of land by any legal document in the favour of shop/mall owners, the commercial liability of the assessee does not change. He further submitted that reasoning of learned CIT A that assessee is free to sale the above plot of land though it is earmarked as a parking area for the shop owners is also devoid of any merit because assessee is Under a commercial obligation with those shop owners to provide them this facility for their use. Assuming meanwhile denying, the above plot of land is sold by the assessee for any reason, which has not happened even after so many years, the assessee would be offering the profit on sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Commissioner Faridabad issued a sanction u/s 254 of the Haryana Municipal Corporation act 1994 placed at page number 44 47 of the paper book as per para number 16 directed the assessee to make arrangement for sufficient parking inside the premises as per rules prevalent. Further the direction was issued by senior town planner for provision for additional parking space for 168 cars units within the premises as per norms already intimated to the assessee. Therefore the assessee was under an obligation to provide parking space to the shop buyers and general public for shopping mall. Assessee di provide the same. Unfortunately, for the assessee near the shopping mall of the assessee a Metro station was required to be set up. Therefore, the parking area of the assessee was acquired by DMRC, consequently the assessee was granted a compensation of ₹ 9 crores, which was offered for taxation by the assessee. Now the original obligation of the assessee remained to provide a parking space to the shop owners in terms of HUDA rules and as per approved plan based on which assessee entered into agreement for sale of the property with various buyers, to provide parking space . For this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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