2011 (7) TMI 1237 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition on account of 'on money' received on sale of flats.
2. Deletion of addition on account of disallowance of deduction u/s 80IB(10).

Summary:

Issue 1: Deletion of Addition on Account of 'On Money' Received on Sale of Flats

The Revenue appealed against the order of the CIT(A) which deleted the addition of Rs. 1,52,53,128/- made by the AO on account of 'on money' received on the sale of flats. The AO based the addition on a search conducted on 18.06.2003, which falls in A.Y. 2004-05. The CIT(A) deleted the addition, following the order for A.Y. 2004-05, where similar addition was deleted. The Revenue argued that the income earned is from the same project where 'on money' was found in the earlier year, thus justifying extrapolation. The Tribunal, referencing its earlier decision in the assessee's own case, held that in the absence of cogent evidence, there was no scope for extrapolation. Consequently, the Tribunal upheld the CIT(A)'s deletion of the addition.

Issue 2: Deletion of Addition on Account of Disallowance of Deduction u/s 80IB(10)

The Revenue contested the CIT(A)'s deletion of Rs. 16,79,144/- disallowed by the AO under section 80IB(10). The Revenue argued that the facts of the case did not align with the precedent set by Radhe Developers. The Tribunal noted that the issue required re-verification in light of the Supreme Court's judgment in Faqir Chand Gulati and the ITAT's principles in Shakti Corporation. The Tribunal set aside the CIT(A)'s order and remanded the issue for re-adjudication, directing the AO to verify the agreements and determine whether the assessee acted as a developer or a contractor.

Conclusion:

The Tribunal upheld the CIT(A)'s deletion of the addition on account of 'on money' but remanded the issue of disallowance of deduction u/s 80IB(10) for re-verification. The appeal was treated as partly allowed for statistical purposes.