Feedback   New User   Login      
Tax Management India. Com TMI - Tax Management India. Com
Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Case Laws Manuals Short Notes Articles SMS News Highlights
        Home        
Extracts
Home List
← Previous Next →

M/s Singhania Merlin Estate Versus ACIT, Circle 31, Kolkata

2017 (12) TMI 304 - ITAT KOLKATA

Revision u/s 263 - entitled to deduction u/s 80IB - Held that:- Electrical installation charges and club membership fees were received by the assessee from the flat holders of the project on account of common facilities and amenities provided to the flat holders in the housing project developed by it. In the case of CIT vs Omaxe Buildhome (P) Ltd. (2016 (9) TMI 295 - DELHI HIGH COURT) has held that housing schemes are not only consisted of built up residential building, but also separate common .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

llation charges and club membership fees received by the assessee, we are of the view that that there was no error in the order of the A.O. in allowing the claim of the assessee for deduction under section 80IB in respect of electrical installation charges and club membership fees received from the flat holders of the project. - As regards the other error allegedly pointed out by the Ld. CIT in the order of the A.O, we find merit in the contention of the learned counsel for the assessee that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e were thus no errors in the order of assessment made by the A.O. under section 143(3) as alleged by the Ld. CIT warranting revision under section 263. Thus we set aside the impugned order passed by the Ld. CIT under section 263 and restore that of the A.O. passed under section 143(3). - Decided in favour of assessee. - I.T.A. No. 628/Kol/2017 - Dated:- 30-11-2017 - Shri P.M. Jagtap, AM And Shri S.S. Viswanethra Ravi, JM For The Assessee : Shri Rakesh Jain, FCA For The Revenue : Md. Usman, CIT ( .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

80IB of the Act. In the assessment completed under section 143(3) vide an order dated 26.03.2015, the total income of the assessee as declared in the return of income at nil was accepted by the A.O. thereby allowing its claim under section 80IB fully. The records of the said assessment subsequently came to be examined by the Ld. Principal CIT and on such examination, he found that the assessment made by the A.O. under section 143(3) was suffering from the following errors which were prejudicial .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

her installations etc.). In the instant case, the assessee firm booked the other income along with the sale value of the Flats and expenditure for earning other income along with the expenditure for construction of the flats in the P & L A/c for getting deduction u/s 80IB. In practice, as the other income from Club Membership & Electric Installation are received from some of the selective allotees as per their additional requirement for alteration & modernization work other than mand .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing 3,57,600 sq.ft. built up area for 1BHK, 2BHK and 3BHK flats other than 555 saleable parking space covering area 1,07,507 sq.ft. (4,65,107 sq.ft. - 3,57,600 sq.ft). On verification of the list of the allottees, it was observed that in many cases more than one flat (like 1BHK, 2BHK and 3BHK measuring more than 1500 sq.ft.) had been allotted to the same person / related person(s). It is also seen that though the flats were booked in the year 2008 i.e. prior to 2009-10, the assessee firm was req .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

idual, no other unit in the said housing project should be allotted to the same individual and / or any of the persons as mentioned in the section Non-adherence to the above condition would make the assessee not eligible for deduction under section 80IB(10) of the Act. The sale value of more than one flat to one person measuring more than 1500 sq.ft. comes to ₹ 4,25,32,878/-. Therefore, the profit component, derived from selling of these flats to one person measuring more than 1500 sq.ft. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of the assessment order u/s 143(3) of the I.T. Act dated 26.03.2015. 3. A show cause notice under section 263 accordingly was issued by the Ld. CIT (A) to the assessee pointing out the above errors and seeking the explanation of the assessee thereto. In reply, the following explanation was offered by the assessee in writing: (i) The buyers of the flat were given an incentive to have the club membership which was an incentive for promotional sale. Both the above items part and parcel of collecti .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ious year relevant to any assessment year from such housing project . Club and electrical installation are the part of the housing project. Accordingly club membership fees and electrical installation charges are the receipts from such housing project only. It is found that Hon ble Bombay High Court in the case of CIT vs Vandana Properties (2012) has observed as under: 17. The first question to be considered herein is, whether, in the facts of the present case, construction of E building constit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

learned Senior Advocate appearing on behalf of the assessee and Mr. Mistri, learned Senior Advocate and Mr. Joshi, learned Advocate appearing on behalf of the interveners, the expression housing project in common parlance would mean constructing a building or group of buildings consisting of several residential units. In fact, the Explanation in section 80IB(10) supports the contention of the assessee that the approval granted to a building plan constitutes approval granted to a housing project. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e the same are capital receipts and not liable to taxable as income in view of the various judicial pronouncements. The firm had to incur expenses for the club and electric installation expenses and part of the same has been recovered from the buyers of the flats under different nomenclature. The receipts under the two heads are not income but gross receipts and substantial expenditure has been incurred for the same. Without prejudice, this is to submit that the ld. A.O. while completing the ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The clause (e) and clause (f) enumerating the condition restricting allotment of 1(one) Flat admeasuring 1500 sq.ft. against 1)one) individual / company has been inserted by the Finance No. 2 Act, 2009, w.e.f 1.4.2010 i.e. relevant to AY 2010-11. The aforesaid clause does not restricts sale of 1(one) Flat admeasuring 1500 sq.ft. against 1(one) individual / company during the relevant previous year when allotment was made. Thus it may be stated that the assessee did not fail to fulfil the condit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

anction of plan. When the plan was sanctioned, there was no restriction regarding sale of flats to same individual or his relative/s. Hence the law relating to allotment of flat to any related person could not be applied in the year under appeal as the project was sanctioned long before the new law reg. The same came into force. The project had started well before the date. The definition of area of the flat - built up area has been defined in the act:: the agreements by the company has been ent .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he individual referred to in your query is not a flat at all. Considering the aforesaid, the Ld. A.O. has lawfully and correctly allowed deduction u/s 80IB(10) and the same should be reviewed u/s 263. (iii) The credit balance in partners a/c is much more than the nominal debit balance. As interest free funds are available from the partners themselves, the question of any disallowance u/s 36(1)(iii) was not to be made. More so in view of the terms of deed of partnership, where no interest is prov .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nnection with the project, the assessee was not entitled for deduction under section 80IB. He also held that even though the housing project of the assessee had started well before the restriction regarding sale flat to the same individual or his relatives came into force by way of the condition laid down in clause (f) of sub-section (10) of section 80IB w.e.f. 01.04.2010, the deduction under section 80IB was allowed by the A.O. without verifying the fulfilment of the condition laid down therein .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

5. At the outset, it is noted there is delay of 3 days on the part of the assessee in filing this appeal before the Tribunal. In this regard, the assessee has filed an application seeking condonation of the said delay and keeping in view the reasons given therein which are duly supported by an affidavit filed by the authorised representatives of the assessee, we are satisfied that there was a sufficient cause for the delay of 3 days on the part of the assessee in filing this appeal before the Tr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

greement placed at page no 57 to 59 of the Paper Book and submitted that electrical installation as well as club was the integral part of the project developed and constructed by the assessee. Relying on the decision of the Hon ble Delhi High Court in the case of Principal CIT vs Omaxe Buildhome (P) Ltd. 76 taxman.com 104 (Delhi), he contended that infrastructural facilities and amenities are to be treated as part of the housing project for allowing deduction under section 80IB. He also took us .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessee submitted that the housing project of the assessee was sanctioned on 30.03.2007 whereas restriction regarding sale of flat of having more than 1500 sq.ft. area to the same individual was imposed by way of amendment made with effect from A.Y. 2012-13. Relying on the decision of the Hon ble supreme Court in the case of CIT vs Sarkar Builders 57 taxman.com 313, he contended that the said amendment thus was not applicable in the case of the assessee and there was no question of any error in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n-application of mind. He contended that the assessee is entitled for deduction under section 80IB only in respect of profit derived from the housing project and the issue as to whether the electrical installation charges and club membership fees received by the assessee can be treated as profit derived from the project was not at all considered or examined by the A.O. during the course of assessment proceedings. He submitted that the issue of ownership of club, whether it remained with the asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the issue relating to the applicability of the said amendment to the year under consideration was not examined by the A.O as rightly pointed out by the Ld. CIT in his impugned order passed under section 263. He contended that the assessment order passed by the A.O. under section 143(3) thus was erroneous as well as prejudicial to the interest of the revenue and the Ld. CIT was fully justified in revising the same by exercising the power conferred upon him under section 263. 9. In the rejoinder, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed by the A.O. He contended that the order of assessment made by the A.O., in these facts and circumstances of the case, therefore, cannot be said to be erroneous merely because the same does not contain any specific discussion on the issue. 10. We have considered the rival submissions and also perused the relevant material available on record. It is observed from the sample copy of agreement entered into by the assessee with the flat purchases of project as placed at page no 56 to 59 of the Pap .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

377; 20,000/- plus service tax (one family). 11. It is thus clear that electrical installation charges and club membership fees were received by the assessee from the flat holders of the project on account of common facilities and amenities provided to the flat holders in the housing project developed by it. In the case of CIT vs Omaxe Buildhome (P) Ltd. (supra) cited by the learned counsel for the assessee, Hon ble Delhi High Court has held that housing schemes are not only consisted of built u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

Discussion Forum
what is new what is new
 


Share:            

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version