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TMI Blog2018 (9) TMI 2113X X X X Extracts X X X X X X X X Extracts X X X X ..... to 371/Chd/2016) & dated 8.2.2016 (in ITA Nos. 372 to 374/Chd/2016). 2. Since common issue is involved in the captioned appeals, hence, the same have been heard together and are being disposed of by this common order. For the sake of conveniences, ITA No. 372/Chd/2016 in the case of Jatinder Singh Chatta is taken as a lead case for narration of facts. 3. The brief facts of the case are that assessee is a tax resident of United Kingdom (U.K). During the financial year 2007-08, assessee invested in an upcoming project of Omaxe Ltd. along with four other investors. The assessee made payment of 95% of the sale price and was provisionally allotted fourth and fifth floors in a proposed commercial complex. In lieu of such 95% advance payment, Om ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave heard the rival contentions. Ld. Counsel for the assessee has stressed upon three points. Firstly, that the reopening in this case was bad in law. Secondly, the amount of assured return received by the assessee was a capital receipt which goes on to reduce the cost of the asset and thirdly that the assessee had rightly returned the same as interest income and paid tax @ 15% as per article 12 of the India - U.K. DTAA. 6. The Ld. DR, on the other hand has relied on the findings of the lower authorities. 7. We have considered the rival submissions and have also gone through the record. Admittedly, the assessee booked the commercial floors in the proposed upcoming commercial complex to be built by Omaxe Ltd. The assessee paid 95% of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening cannot be done just to verify the source of investment in the absence of any information or reasons to believe of escapement of income. That the assessment cannot be reopened for making fishing and roving inquiries. Further, that the second reason recorded that the assessee had not filed the return, was not tenable as the assessee as per the provisions of the Income Tax Act was not necessarily require to file the return of income as discussed above. 8. We are not convinced with the above arguments of the Ld. Counsel for the assessee. A perusal of the copy of the reasons recorded reveals that the Assessing officer has not used the word 'interest income' rather he mentioned that he had the information that the assessee had been rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the Allotment letter reveals that as per the terms and conditions of the allotment letter, unless and until the Conveyance deed is executed and registered, the company i.e. Omaxe Ltd will continue to have full author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of debt against the Omaxe Ltd, which means the assessee had advanced money to the Omaxe Ltd. which was nothing but a debt claim till the proposed property is constructed, possession handed over to the assessee and the conveyance deed executed and registered. In our view, it was a financial transaction and the assured money return received by the assessee was nothing else than the interest received by the assessee on the finances made by the assessee to the Omaxe Ltd to be used for the construction of the property. Therefore, the Omaxe Ltd had rightly deducted the tax @ 15% of the interest / assured return paid to the assessee. Even the assessee on being asked to file the return has also treated the said receipts as interest income. Howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee did not get right or lien in the property and as discussed above, this was a financial transaction between the assessee and Omaxe Ltd. In view of this, we hold that the assured return received by the assessee was in the nature of interest and the assessee has rightly returned / offered the same as interest income. 13. In view of this, we do not find any justification on the part of the lower authorities in treating the receipts of the assessee as 'income from other sources'. We, accordingly, set aside the impugned order and direct that the assessee in this case has rightly paid the taxes as India - U.K. DTAA. No further addition is warranted. However, the claim of the assessee that it is a capital receipt not liable for taxation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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