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2023 (8) TMI 215 - ITAT MUMBAIAddition of amounts recoverable from members - cost of construction towards the redevelopment of the area of FSI acquired from the members and Marwah family - Assessee acquired development rights in property - main reasons for the revenue in the first round of appellate proceedings to disallow the expenses is that the cost of construction which is to be borne by the members should have been received by the assessee and that without showing the receipts the assessee is not entitled to claim the cost of construction towards development of the property as a deduction - HELD THAT:- It is important to understand the way income and expenditure is earned / incurred in a redevelopment project. In assessee’s case here the income to the assessee is arising out of two sources i.e. one consideration received from the additional space allotted to the existing members and second from the sale of 6 flats which the assessee got as part of the redevelopment. The expenditure towards the entire redevelopment should be borne by the assessee including for those flats to be allotted to the members because that is the consideration paid to the members for transferring the rights in the flats. Therefore we are unable to agree with the contention that the cost of construction should be borne by the members. Revenue to the assessee is from sale of additional space to existing members and from the sale of the additional flats assessee received from the development project. Real test for allowing the cost of construction is whether the assessee has accounted for both these revenues in the profit and loss account - From the perusal of materials submitted before us and also from the findings given by the CIT(A) after verification of details, it is clear that the assessee has accounted the revenue from the redevelopment project on completion of contract method and has claimed the expenses accordingly. No infirmity in the findings given by the CIT(A) while allowing the claim of the assessee. Assessee has correctly claimed the cost of construction towards the redevelopment of the area of FSI acquired from the members and Marwah family. No reason to interfere with the decision of the CIT(A) - Decided against revenue.
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