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TMI Blog2024 (11) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... fy its claim of cost of construction / Work-in-Progress by submitting necessary documentary evidences and the Assessing Officer is directed to examine / verify the same and decide the issue afresh after affording reasonable and adequate opportunity of being heard to the assessee. The contention that some of the sales are illegal and since no sale consideration has been received the same should be excluded from the business receipts of the assessee need to be verified in the light of the decision of this Tribunal in the case of M/s. Sagar Developer [ 2014 (8) TMI 1253 - ITAT MUMBAI] .The assessee has filed copies of FIR filed with Enforcement Department, CBI etc., as additional evidences, which are admitted and the Assessing Officer is expected to consider the same while deciding the issue afresh. Disallowance of business loss - this essentially comprises of certain expenses debited to the profit and loss account and the major expenses was on account of building maintenance charges - HELD THAT:- CIT(A) has erred in as much as it relied upon the provisions brought into statute by Finance Act, 2017 and we are in A.Y.2012-13 and section 23(5) has not been held to have a retrospective e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sinha Shri Yash Varmani And Shri Utkarsh Mittal For the Department : Ms. Sanyogita Nagpal ORDER PER NARENDRA KUMAR BILLAIYA (AM) 1. These two appeals are separate appeals by the assessee preferred against two separate orders dated 22.03.2023 and 23.03.2023 by National Faceless Appeal Centre, Delhi [hereinafter in short Ld. CIT(A) ] pertaining to A.Ys. 2012-13 and 2014-15 respectively. 2. Both these appeals were heard together and are disposed off by the common order for the sake of convenience and brevity. 3. We will first take up the appeal in ITA No. 1709/MUM/2023 for the A.Y. 2012-13. The grievance of the assessee read as under: - 1. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances in upholding the assessment order dated 30.03.2015 in relation to the disputed items under challenge and agitated in this appeal. Merits 2. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in disallowing the costs and expenses incurred by the Appellant in relation to the commercial building Kaledonia constructed by it while computing the loss i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord in the light of Rule 18(6) of ITAT Rules. 5. The assessee also moved an application dated 09.11.2023 for admission of additional evidences. 6. Briefly stated the facts of the case are that the, assessee is a real estate company and a joint venture between the foreign investor, Ocean Deity Investment Holdings Limited PCC and certain companies owned by the promoters of HDIL Group. Return for the year was electronically filed on 29.09.2012 declaring loss of ₹.121,25,18,852/-. The return was selected for scrutiny assessment and accordingly, statutory notices were served upon the assessee. 7. The assessee company is stated to be engaged in the business of building construction activity since last several years. For the year under consideration total receipts credited to the profit and loss account include lease rental of ₹.8,98,83,457/- and sale receipt of tenancy rights of ₹.33 lakhs. While scrutinizing the return of income the Assessing Officer noticed that the assessee has shown short term capital loss of ₹.118,40,32,101/-which is claimed to be carried forward to subsequent assessment year. The assessee was asked to furnish copies of purchase agreements ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee took steps to modify the object clause of the memorandum of association as under: - To carry on in India or abroad the business as builders, real estate developers, contractors, designers, architects, decorators, interior decorators, constructors, consultants, engineers of all types of buildings and structures including houses, flats, apartments, offices, godowns, warehouses, shops, factories, sheds, hospitals, clubs, hotels, holiday resorts, shopping and/or residential complexes, malls, schools, colleges and to develop, erect, install, alter, improve, add, establish, renovate, recondition, protect, enlarge, repair, demolish, replace, maintain, manage, lease, let on hire, fabricate all such buildings and structures and to purchase, sell or deal in all types of movable or immovable properties for development including Transferable Development Rights and also to invest or otherwise deal in all types of real estate properties and also to carry on in India or abroad the business to undertake development of infrastructure work on build, operate and transfer basis or otherwise and to develop, construct, run, repair, maintain, decorate, improve, remodel, build, operate and manage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in assessment order is framed under section 143(3) r.w.s. 147 of the Act wherein the Assessing Officer at Para No. 6.5 has observed as under: - 6.5 During the course of assessment proceedings the assessee was asked to provide the details of the expenses incurred during the year on the project Kaledonia , The AR has submitted the ledger account of expenses of Rs. 9,63,85,96,3697- added to Investments/work in progress. As per the above discussion, the project Kaledonia being considered as Stock in trade, the expenses incurred on the same have to be considered as work-in-progress and thus capitalized. Thus the amount of Rs. 9,63,85,96,369/- is considered as work-in-progress and thus capitalized. 13. Thus the observations of the Assessing Officer that the assessee has not filed any details to substantiate its cost of construction is not acceptable, since the Assessing Officer himself has assessed the Work-in-Progress as mentioned hereinabove. Since the business activities in Kaledonia Project is common from A.Y. 2008-09, therefore, it becomes imperative to determine the cost of construction shown by the assessee in its books of accounts. Therefore, in the interest of justice, we deem i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same and decide the claim as per the provisions of law. 17. While scrutinizing the return of income and the details of the immovable property as on 31.03.2012 the Assessing Officer noticed that out of total 45 units of the project, 8 units were sold as on 31.03.2012 26 units are vacant and 11 units are given on leave and licence. The Assessing Officer found that the assessee has not offered any rental income in respect of 26 vacant units. Since the commercial project Kaledonia has been completed during the year under consideration and the assessee has in fact earned lease rental of ₹.8,98,83,457/- invoking provisions of section 23(4) of the Act. The Assessing Officer went on to determine the deemed rent in respect of vacant units in Kaledonia Project and made addition of ₹.26,98,74,180/-. 18. After giving thoughtful consideration to the findings of the Assessing Officer we find that the Assessing Officer has drawn support from the decision of the Hon ble Delhi High Court in the case of CIT v. Ansal Housing finance leasing Co. Ltd., [(2013) 29 taxmann.com 303] whereas while confirming the assessment the Ld. CIT(A) drew support from specific provision inserted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... costs and expenses incurred by the Appellant in relation to the commercial building Kaledonia was accepted by the AO in AYs 2010-11 and during the AY under consideration as well, i.e., AY 2014-15. 4. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in upholding the action of the AO wherein the sale consideration of units sold during AY 2014-15 was revised upwards without any evidence of suppression of income. 5. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in not appreciating that if the units in Kaledonia were sold at a value exceeding the stamp duty ready reckoner rate, such sale consideration cannot be revised sans any evidence that the actual consideration was suppressed. 6. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in disallowing the interest under Section 36 (1) (iii) of the Income Tax Act, 1961 (IT Act) to the tune of INK 3,84,38,821 on the loan taken from Yes Bank Limited. 7. The Commissioner of Income Tax (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the reserves and surplus of the assessee company are negative and was of the opinion that the assessee has forwarded the borrowed loan bearing interest to M/s. Sapphire Land Development Pvt Ltd., interest free without justifying the commercial expediency and disallowed the same. Since the assessee itself has disallowed the sum of ₹.2,40,17,212/- the Assessing Officer disallowed balance of ₹.3,84,38,821/-. 25. We have carefully considered the order of the authorities below. It is true that the assessee has provided interest free loans and advances to its sister concern M/s. Sapphire Land Development Pvt Ltd., amounting to ₹.40,44,27,517/- as on 01.04.2013. During the year under consideration the assessee provided further loan amounting to ₹.51,14,95,856/- and received back ₹.20,88,03,927/-, thus leaving a closing balance of ₹.70,71,19,446/-, we find that the details of this transaction was furnished to the Assessing Officer vide submission dated 19.08.2016. 26. It is equally true that during the year under consideration the assessee has availed term loan of ₹.43,39,90,306/- from Yes Bank on which it paid interest of ₹.6,24,56,032/-. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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