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DLF Info City Devp. (Chennai) Ltd. Versus Addl. CIT, Range-1, Gurgaon

2017 (11) TMI 325 - ITAT DELHI

Disallowance of the office expenses - Held that:- The profit and loss account clearly shows that the assessee derived income from rentals profit on sale of property rights and interest income to a tune of ₹ 9,06,827/-, as such, it is not correct on the part of the AO to conclude without any basis that there was no business activity during the year. On a careful consideration of this matter with reference to the details furnished by the assessee, we are of the considered opinion that the AO .....

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he balance of ₹ 18 lacs was received by one G.K.S. Holdings and on this aspect it is the submission of the Ld. AR that whatever may be the consideration receivable by the vendors under the sale deed had to be apportioned between the assessee and GKS Holdings and the entire ₹ 53,98,763/- cannot be thrown to the share of the assessee. Further the documents indicate that the assessee held the property for more than three years and the acquisition of the property was for the purpose of t .....

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f ₹ 53,98,763/- could be attributed to the assessee. While working out the amounts received or receivable by the assessee the liquidated damages have to be taken into consideration for the purpose of reducing the cost of acquisition. For this purpose, we deem it just and proper to set aside the matter to the file of the AO and AO will consider the questions of the sale consideration attributable to the assessee while taking into consideration the liquidated damages and the period of holdin .....

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ggrieved by the order dated 02.01.2014 in appeal no. 117/13- 14(A)-V passed by the Ld. Commissioner of Income Tax (Appeals)-V, Chennai (hereinafter for short called as the Ld. CIT (A) ) assessee preferred this appeal on the following grounds: 1. That the impugned order dated 02.01.2014 passed by the Ld. Commissioner of Income Tax (Appeals) is bad in law and wrong on facts. 2. That the Ld. Commissioner of Income Tax (Appeals), erred in law, in upholding the order of the Assessing Officer in disal .....

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at ₹ 35,744/-. 3. That the Commissioner of Income Tax (Appeals), erred in law, in upholding the order of the Assessing Officer, in assessing the liquidated damages amounting ₹ 9,34,500/- under the head Income from Other Sources as against treated by the appellant as Capital Receipt . 3.1 That alternatively, without prejudice to the above, the liquidated damages could only be assessed as Capital Gains and not as Income from Other Sources . 4. That the Ld. Commissioner of Income Tax (A .....

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his appeal is concerned was one Road Tech Construction Pvt. Limited. They were engaged in the business of development of buildings and money lending. For the AY 2004-05 they have filed their return of income declaring a total income as per Income Tax Act as Nil and book profit u/s 115JB at ₹ 7,09,831/-. The assessee company through its incidental objects in the memorandum of association carried on the business of money lending and received a sum of ₹ 32,710/- as interest. During the .....

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xtra expense of ₹ 2,99,683/- towards cost of Genset and Air conditioner, but since the assessee found the said accommodation as insufficient for their office, they sold the same to one M/s Vaishnavi Associates for a consideration of ₹ 60,46,840/- during the previous year relevant to the AY 2004-05, i.e. holding it for more than 36 months after the acquisition of the property and treated the loss as capital loss of ₹ 2,39,912/-. According to the assessee M/s Chaitanya Builders a .....

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om taxable income holding it as capital receipt. The assessee also claimed the business expenditure at 1,96,996/-. However, the Ld. AO held that since there was no business activity during the year, the business expenditure claimed had to be restricted to the amount pertaining to other sources i.e. ₹ 35,744/- and allowed deduction to that extent only. In so far as the alleged liquidated damages is concerned, AO treated the same as Revenue expenditure and made an addition of ₹ 9,34,50 .....

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; 28,78,693/- as short term capital gains. Assessee is challenging the disallowance of the business expenses to an extent of ₹ 1,64,286/- and also the method of calculation of gains as well as the treatment given to the gains as short term capital gains instead of long term capital gains, in view of the fact that the property was acquired on 19.01.2001 and was sold on 27.03.2004 i.e. after holding the same for more than 36 months. Ld. CIT (A) dismissed the appeal of the assessee and confir .....

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4 of the Paper Book and to the details of the expenditure enumerated therein. He further submitted that the assessee derived income from interest as well as rentals from property and profit on sale of property rights, which is evident from the books of accounts. The profit and loss account at page no. 14 of the Paper Book clearly shows that the assessee derived income from rentals profit on sale of property rights and interest income to a tune of ₹ 9,06,827/-, as such, it is not correct on .....

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rgument of the Ld. AR that the property was sought to be acquired for the purpose of office space of the assessee and this fact is evident that the assessee held the same for more than three years after getting the office space constructed by entering into the agreement dated 19.01.2001 and 27.01.2002, and by spending ₹ 30,29,612/- for construction. Spending ₹ 2,99,683/- for Genset and Air conditioner establishes that they wanted to use it as their office, but because the space was n .....

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onstruction. Assessee submits that the assessee had purchased only a right in respect of 4.431% on eight grounds and 843 sq.ft of undivided land and the sale deed dated 27.03.2004 clearly shows that the assessee has not received the entire sale consideration of ₹ 48,31,250/- but they have received only a part thereof as is mentioned at page Nos. 12, 13 i.e. a sum of ₹ 24,15,625/- whereas the balance was paid to one G.K.S. Holdings, as such, out of the guideline value of ₹ 53,98 .....

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ne, but not short term one. Basing on this it is the submission of the assessee that the gains of the assessee have to be reworked out on the apportionment of the guideline value and also by reducing the cost of acquisition by the liquidated damages received and whatever the figure that the AO reaches on this exercise, he has to treat it as long term capital gains. 5. We have gone through the record, and the decisions in Rita Sunil Manaktala vs. Income Tax Officer (Mumbai) (In ITA No. 255/Mum/20 .....

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It is clearly mentioned therein that out of 48,31,250/- the assessee received only a sum of ₹ 24,15,625/- and the balance of ₹ 18 lacs was received by one G.K.S. Holdings and on this aspect it is the submission of the Ld. AR that whatever may be the consideration receivable by the vendors under the sale deed had to be apportioned between the assessee and GKS Holdings and the entire ₹ 53,98,763/- cannot be thrown to the share of the assessee. Further the documents indicate that .....

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