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TMI Blog2022 (12) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... g before us. 3. With the consent of both the parties, the case of the Assessee in ITA No. 469/Chd/2016 in the case of Karnail Singh Vs. The Asst. DIT is taken as the lead case wherein the grounds of appeal read as under: 1. "That the notice issued under section 153A and the assessment completed under section 153A are illegal, bad in law and without jurisdiction. The additions made are also illegal, bad in law, as the same are not based on any material found during the alleged search. 2. That Ld. Commissioner of Income Tax (Appeals) has, in view of facts and circumstances of the case, grossly erred in law in upholding A.O.'s action in issuing notice and framing assessment u/S.153A. The alleged authorization U/s.132 and the notice issued U/s.l53A was unauthorized, illegal and unlawful and therefore, the assessment made U/s.l53A is also unjust, unlawful and bad in law and the same has been wrongly upheld by the Ld C.I.T (Appeals). 3. That alleged warrant of authorization U/s.132 was unauthorized, illegal and unlawful. The alleged execution on 09.03.2012 in case of Sh. Karnail Singh, Joginder Singh Nijjar and Investac Ltd. was also unauthorized, illegal and unlawful. The pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the Appellant have been wrongly disallowed. The observation made by the Ld. A.O. are against facts and are based on surmises & conjectures and do not afford legal justification to the income assessed. That the explanations filed and the evidence placed on record have not been properly considered and judicially interpreted and the deductions have been wrongly disallowed. The Ld. C.I.T. (A) has wrongly upheld the same. 12. That in any case, the income has been wrongly computed and wrongly assessed at higher amount than the income declared and the same has been wrongly upheld by the Ld. C.I.T. (A). 13. That the Interest U/s.234A, 234B & 234C have been wrongly charged." 4. Briefly the facts of the case are that the assessee is a non-resident and during the financial year relevant to the impugned Assessment Year the assessee has booked certain units in M/s Omaxe Ltd. Novelty Mall, Amritsar. The assessee has made payment of 95% of the basic sale price at the time of booking the said units and has been provisionally allotted these units and in lieu of 95% payment of the basis sale price, M/s Omaxe Ltd. was to pay monthly assured return to the assessee till the time of possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions made before the AO were reiterated. It was submitted that the AO has failed to appreciate the nature of income received by way of assured return before allotment of the property. It was submitted that under Article-12 of the Indo-UK DTAA, the term "interest" means income from debt claims of every kind. It was submitted that the amount given by the assessee to M/s Omaxe Ltd. was in the nature of debt claim till the possession of the property was actually handed over to the assessee and in this regard reference was drawn to the contents of the allotment letter dt. 12/06/2007. 5.1 The Ld. CIT considered the submissions of the assessee however the same were not found acceptable. As per the Ld. CIT(A), the payments are in the nature of return on investment as held by the Hon'ble Delhi High Court in case of M/s Omaxe Ltd. Vs. Vikas Malhotra and others vide order dt. 28/07/2014 in ITA FAO(OS) 191/2014. It was further held by the Ld. CIT(A) that payment from M/s Omaxe Ltd. are not in the nature of damages for late delivery of the asset. The payments were merely assured returns of a fixed amount per month. The word "interest" has not been used in the agreement. It was accordingly hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s used in Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtors profits, and in particular, income from Government Securities and income from bonds and debentures, including premiums and prizes attaching to such securities, bonds or debentures but, subject to the provisions of paragraph 9 of this Article, shall not include any item which is treated as a distribution under the provisions of Article 11 (Dividends) of this convention." 10. The Assessing officer has also referred to the clause 23 of the allotment letter issued by the Omaxe Ltd to the assessee, which reads as under- "23. Unless a conveyance deed is executed and registered, the company shall continue to have full authority over the said Unit and all amounts paid by the Allottee (s) under this allotment shall merely be a token payment for purchase of the allotted unit and shall not give him any lien or interest in the said Unit until he has complied with all the terms and conditions of this Allotment and Conveyance of the said Unit has been executed and registered in his favour." A perusal of the above clause 23 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn has also treated the said receipts as interest income. However, subsequently, the assessee changed his stand and come with a plea that the assured return is only in the nature of capital receipt. The assessee in this respect has placed reliance on several decisions of the High Courts and Supreme Court. Without referring to each of the decision, we may point out that the decisions referred to by the assessee are not applicable to the facts and circumstances of the case e.g. in the case of 'CIT Vs. Saurashtra Cement Ltd (2010) 325 ITR 042 (SC) : 192 taxman 300 (SC), the assessee in that case had received liquidated damages for delay in supply of plant and machinery. The Hon'ble Supreme Court held that the damages were directly and intrinsically linked with the procurement of the capital assets i.e. cement plant. 12. Similarly in the other case laws relied upon by the Ld. Counsel for the assessee, it was held that if any expenditure is incurred such as interest paid for acquiring assets, the same will be added to the cost of the assets. However, none of the case laws relied upon by the assessee as discussed above, are applicable to the facts and circumstances of this case. ..... 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