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2019 (11) TMI 747 - AT - Income TaxUndisclosed interest income - ownership of deposits in the hands of Developer of society - Co-operative society had not come into existence - Deduction u/s 80 IB(10) in respect of its residential project - AO disallowed assessee’s entire claim of deduction u/s 80 IB(10) on account of certain violations and further made additions on account of undisclosed interest income - AO while disallowing assessee’s claim of deduction u/s 80 IB (10) observed that the assessee is not eligible for claiming deduction in respect of sale of car parking and also on resale of flat - HELD THAT:- From the reading of meaning of fiduciary relationship as defined in legal dictionaries referred above, it can be safely construed that it is a relationship between the two parties . Thus, existence of two parties whether real or juristic is a pre-condition to have fiduciary relationship. In the absence of second party, there cannot be any fiduciary relationship. In the instant case it is an undisputed position that Co-operative society had not come into existence till the end of relevant previous year. Therefore, the assessee cannot hold the amount in fiduciary capacity of a non-existent entity. The argument of assessee, ‘holding funds of society in fiduciary capacity, thus fails. If arguments forwarded by assessee are accepted, then the interest income on fixed deposits would escape taxnet. If it is held that the interest is not income of the assessee, the same would obviously not be taxable in the hands of the assessee. Since, residents Co-operative society has not come into existence during the previous year when the interest income had accrued, the interest income cannot be taxed in the hands of non-existent entity. Hence, interest income would neither be taxable in the hands of the assessee nor in the hands of Co-operative society. The proposition put-forth by the ld.Authorized Representative of the assessee is hence, unacceptable. Income could not be earned in vacuum and it should accrue to certain beneficiary. In the present case, it is not the collection of corpus fund but the interest on alleged corpus fund , which is subject matter of dispute. Corpus fund and interest on corpus fund are on different footing. Corpus fund is capital in nature, whereas, interest earned on corpus fund is revenue receipt. We concur with the findings of the CIT(A) in confirming the addition on account of undisclosed interest income in the hands of assessee. The grounds raised by the assessee in appeal are de-void of any merit and, hence, the same are dismissed. Deduction u/s 80 IB(10) in respect of sale of car parking - HELD THAT:- We find that this issue is squarely covered in favour of the assessee by various decisions of the Tribunal. The Hon’ble Jurisdictional High Court in the case of Puravankara Projects Ltd.(2011 (7) TMI 1352 - BOMBAY HIGH COURT) has affirmed the findings of Tribunal in holding that car parking space forms part & parcel of housing project and the assessee is entitled to deduction under section 80 IB(10) in respect of sale of parking area. The CIT(A) granted relief to the assessee by following the decisions of the Tribunal and the Hon’ble High Court. We find no reason to interfere with the well reasoned finding of CIT(A). Thus, ground No.1 of the appeal of Revenue is dismissed. Deduction u/s 80 IB(10) in respect of flat which has been allegedly resold - HELD THAT:- A perusal of records reveal that Flat No.K/1204 on which Revenue is disputing the claim of deduction under section 80 IB(10) was initially sold to Shri Jailesh Oebroi & Smt. Vimla Oberoi. They had paid initial token amount of ₹ 2,50,000/- at the time of booking flat. Thereafter, they defaulted the terms of payment and the assessee had to cancel the booking. After cancellation of the initial sale agreement, the flat was resold to other party. The assessee claimed deduction under section 80 IB(10) of the Act in respect of profits arising from resale of said flat. It is not a case where the assessee has indulged in any trading/broking of the same flat twice. It was under peculiar facts that the first agreement was cancelled and the flat was resold. We do not find any error in the findings of CIT(A) in allowing deduction under section 80 IB(10) of the Act on the profits arising from sale of said flat. No infirmity in the findings of CIT(A) in allowing proportionate deduction on the eligible flats of the housing project. The concept of allowing proportionate deduction on eligible flats have been approved by Hon’ble Jurisdictional High Court in the case of Vandana Properties (2012 (4) TMI 54 - BOMBAY HIGH COURT). The ground No.3 of the appeal is dismissed being devoid of any merit. Appeal of the Revenue is dismissed.
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