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2020 (11) TMI 808 - AT - Income TaxProfit chargeable to tax under section 41 - case was selected for scrutiny under CASS - Reading of the comments of the auditor at clause no. 20 of form no.3CD, being tax audit report, with regards to computation of miscellaneous income - HELD THAT:- We notice from the record that the tax auditor has disclosed certain details of information in Clause 20 of tax audit report, but he did not elaborate what those information are.When analyzing those information, it says other deduction (income) and other information rebates and settlement. When we deduct the income and settlement amount, the difference which matches with the Miscellenous income declared by the assessee in its financial statement. When the assessee tries to explain the tax authorities they did not believe and also not verified the same by calling for explanation from the tax auditors. In our considered view that tax authorities should have called for clarification from the tax auditor and completed assessment based on the clarification.The information matches with the submissions of the assessee therefore we are inclined to accept the submissions of the assessee therefore the addition made by the assessing officer is accordingly deleted. Hence, the ground No. 1 raised by the assessee is allowed. Income received from letting out of property - ‘Income from house property’ and not under the head ‘Income from business’ - HELD THAT:- Even though one of the object of the assessee to give the property developed by them as on lease. But as per the above facts, it is clear that it is only an arrangement between NRPL and assessee to explore the option of finding a large multinational company and construct the commercial property and then transfer the same to NRPL as per the MOU entered with them. By the time, assessee completed the total project and received a considerable sale consideration from NRPL, which clearly indicates that assessee has carried on its main object of construction and giving the IT Park on lease, is only an arrangement and not the main objective of the assessee company. Therefore, relying on the decision of Hon’ble Supreme Court in the case of Chennai Properties and Investment Ltd Vrs. CIT [2015 (5) TMI 46 - SUPREME COURT] is farfetched and as per this, the income received from letting out of property is the main objective of the above company of which the main objective as per the MOU of the company is to earn the rental income and maintaining the same is the main objective. In the present case, the main objective of the assessee company is only to construct and complete the turnkey projects and letting out the commercial property is only an arrangement with that party(assignor) based on the MOU. Therefore, the rental income earned by the assessee can only be taxed under the head ‘Income from house property’ and not under the head ‘Income from business’. Accordingly, ground no. 2 raised by the assessee is dismissed. Addition u/s 40(a)(ia) - HELD THAT:- By relying on the decision of Hon’ble Delhi High Court in the case of CIT vs. Rajinder Kumar [2013 (7) TMI 454 - DELHI HIGH COURT], CIT vrs. Ansal Land Mark Township (P) Ltd, [2015 (9) TMI 79 - DELHI HIGH COURT] and various case law in this respect and also as per the confirmation received from the company that bank has already declared the income in the return of income, we are of the considered view that section 40(a)(ia) of the Act cannot be invoked in this regard. Accordingly, ground no. 4 raised by the assessee is allowed. Short term capital gain arising on transfer of premises - appellant having transferred the building premises used for business, the consideration for sale would have to be reduced from the block of assets, as provided u/s 43(6) and computation of short term capital gams separately was not correct by law - HELD THAT:- Assessee is in the business of construction and it has constructed IT park based on the MOU with NRPL and accordingly, developed the IT park and gave the building on rent to LIPL, therefore we cannot accept the contention of the assessee and moreover, we notice that assessee has completed the construction of building during this assessment year and assessee has collected all the sale consideration based on the stages of completion of milestones of the construction from NRPL, therefore the transfer of right on the land of building is not part of the fixed assets, but it is a commercial transaction of the assessee company. Hence, the sale consideration can only be treated as transfer of lease hold rights in the land and building. Therefore, it will be assessed under the head ‘Income from capital gains’ and AO has assessed the same by following the provisions of capital gains. Accordingly, ground no. 1 raised by the assessee is dismissed. Applicability of section 50C to the transfer of leasehold rights in a plot of land with structure constructed thereon - AO rejected the contention of the assessee by invoking the provision of section 50C and brought to tax the difference between stamp duty valuation and sale consideration.- assessee was asked as to why the stamp duty valuation cannot be assessed - HELD THAT:- Coordinate Bench of ITAT in the case of ACIT vs. Greenfield Hotels and Estates Pvt. Ltd [2013 (10) TMI 1544 - ITAT MUMBAI] has passed its order in favour of the assessee by determining that the provision of section 50C are not attracted to transfer of leasehold rights. - Decided in favour of assessee. Non-deduction of TDS on interest paid to Kotak Mahindra Prime - addition u/s 36(1)(va) r.w.s. 2(24)(x) of the I.T Act 1961 towards delayed deposit of ESIC contribution of employees - HELD THAT:- Coordinate Bench of ITAT in the case of CIT vs. Rajinder Kumar [2013 (7) TMI 454 - DELHI HIGH COURT] and CIT vs. Ghatge Patil Transport Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT] respectively, has passed its order in favour of the assessee. Therefore, respectfully following the decision of Coordinate Bench of ITAT, which is applicable mutatis mutandis to the present case - Decided in favour of assessee. Allowable deduction during this assessment year - HELD THAT:- Since assessee has not claimed deduction in the AY 2014-15 as prior to that extent and assessee has made the above claim only in the assessment proceedings and as per the judicial proceedings we know that AO cannot allow the above said claim, however the appellate authority can only allow the said claim as per the decision of High Court in the case of CIT vs Pruthvi Brokers & Shareholders Pvt. Ltd.[2012 (7) TMI 158 - BOMBAY HIGH COURT]
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