TMI Blog2019 (7) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... ble explanation for registering the vehicle in the name of the individual director to reduce the incidence of indirect taxes , levies etc. This does not hinder in any way to allow the claim of depreciation in the hands of the assessee company, as the motor car was reflected in the balance sheet of the assessee company and that the vehicle loan was also borrowed for the same by the assessee - See M/S. BANGLORE SHIRT COMPANY PVT. LTD., [ 2018 (8) TMI 1849 - ITAT MUMBAI] company. - Decided in favour of assessee Addition u/s 43CA on account of suppression of sales - difference between agreement value and stamp duty value - allotment had been made prior to 31.3.2013 - section 43CA of the Act are applicable only from Asst Year 2014-15 - HELD THAT:- We are conscious of the fact that the provisions of section 43CA of the Act are applicable only when there is transfer of land or building or both. All the documentary evidences clearly go to prove that the assessee had not completed the construction of the office during the relevant year. It could also be inferred that pursuant to registration of agreement with the stamp duty valuation authorities, a right is created in favour of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the interest paid to those parties are not allowable. Accordingly, the ld AO disallowed the interest paid on loans to aforesaid parties in the sums of ₹ 2,85,041/- and ₹ 4,03,726/-. This action of the ld AO was upheld by the ld CITA. We find that this tribunal in assessee s own case for the Asst Year 2013-14 in ITA No. 6557/Mum/2017 dated 3.5.2019 had held the loans received from aforesaid parties to be genuine and deleted the additions made u/s 68 of the Act. We hold that once the loans were held to be genuine, the interest paid on such loans are also allowable expenditure. It is not the case of the revenue that the borrowed funds from aforesaid parties were diverted by the assessee for non-business purposes. The assessee is a builder and developer and deriving business income from such projects. The borrowings were utilized only for the purpose of business which fact remain undisputed by the revenue and hence the interest paid on such loans, which were treated as genuine in Asst Year 2013-14 by the order of this tribunal dated 3.5.2019 supra, becomes an allowable deduction. Hence we direct the ld AO to grant deduction of interest pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company and that the vehicle loan was also borrowed for the same by the assessee company. We find that the similar issue had been addressed by the co-ordinate bench of this tribunal in the case of ITO vs Banglore Shirt Company Pvt Ltd in ITA No. 6042/Mum/2016 for Asst Year 2012-13 dated 8.8.2018 . 4.2. We find that this tribunal in Asst Year 2013-14 in assessee s own case in ITA No. 6557/Mum/2017 dated 3.5.2019 had adjudicated this issue and directed the ld AO to allow the depreciation on motor car. Respectfully following the said decision, we direct the ld AO to allow depreciation for Asst Year 2014-15 also in the sum of ₹ 10,80,912/-. Accordingly, the Ground No. 4 raised by the assessee is allowed. 5. The Ground No. 5 raised by the assessee is with regard to the action of the ld CITA in confirming the addition made u/s 43CA of the Act in the sum of ₹ 3,41,41,270/- on account of suppression of sales. The inter connected issue involved therein is that the ld CITA erred in not considering the additional evidences filed by the assessee before him while deciding the appeal. 5.1. The brief facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 42,14,500 303 47,75,000 76,52,000 28,77,000 304 38,00,000 49,95,270 95,270 203 62,07,500 76,52,000 74,44,500 Total 3,41,41,270 Out of the above 14 properties, 7 were allotted to the parties prior to 31.3.2013. The details of the same are as under:- Unit No. Agreement Value Stamp Duty Value Difference Date of allotment 302 77,25,000 7,23,69,500 46,44,500 22.06.2012 206 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 504 61,87,500 69,38,500 7,51,000 10,09.2013 503 71,62,500 80,34,000 8,71,500 10.09.2013 203 62,07,500 76,52,000 14,44/500 01.07.2013 Total 4,24,47,500 5,18,91,000 94,43,500 5.2. The ld AO asked the assessee to explain the difference between agreement value and stamp duty value. The assessee submitted that the registration authorities charged stamp duty based on the village / area which is different from the area in which the assessee project is situated. Due to change in the village / area, the value of stamp duty also changed. The assessee also pleaded that in respect of 7 properties wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pressed sales by the assessee and the same is to be brought to tax in Asst Year 2014-15. 5.5. The assessee submitted before the ld CITA that the provisions of section 43CA of the Act are applicable only from Asst Year 2014-15 and that the same could not be applied in any case in respect of units that were allotted to the parties prior to 31.3.2013. The assessee also pleaded that in any case that any addition on account of discrepancy should be made in the year of completion of project i.e Asst Year 2015-16 and not in the year of appeal i.e Asst Year 2014-15. The assessee before the ld CITA vide submission dated 3.8.2017 submitted additional evidences under Rule 46A of the Rules , the copy of letter from Town Planning and Valuation Department Mumbai Region (Valuation) , Mumbai, in English and Marathi language, and the ready reckoner rate for FYs 2011-12, 2012-13 and 2013-14. The assessee submitted that these documents are to be produced in the year of completion of project i.e Asst Year 2015-16 and hence the same were not furnished before the ld AO at the time of assessment proceedings. The ld CITA admitted these additional evidences under Rule 46A of the Rules in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 43CA of the Act are to be made applicable to the facts of the instant case, then the difference in value cannot be treated as suppressed sale in as much as the difference in value is to be brought to tax only pursuant to deeming fiction created in the statute in terms of section 43CA of the Act. The deeming fiction is in respect of treating the stamp duty value value as full value of consideration for the purpose of computing the profits of the assessee in respect of real estate projects / development projects. Though we agree with this argument of the ld AR in principle, but , in our considered opinion, it does not in any way change the computation of total income of the assessee as ultimately the difference between the agreement value and the stamp duty value is to be brought to tax in terms of section 43CA of the Act. Hence we hold that the expression suppressed sales used by the ld AO and upheld by the ld CITA is totally unwarranted as the addition is only made by applying the deeming fiction provided in section 43CA of the Act. 5.7.1. It is not in dispute that the assessee had not reported any sales from sale of units during the year un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due to amendment in the plan etc and in case of variation of the area, the value of the office shall be proportionately adjusted. All these documentary evidences clearly go to prove that the assessee had not completed the construction of the office during the relevant year. It could also be inferred that pursuant to registration of agreement with the stamp duty valuation authorities, a right is created in favour of the flat buyer. Hence what the assessee had transferred pursuant to registration of the agreement was only the rights in the flat/ office (which is under construction) and not the property per se. Hence it could be safely concluded that there was no transfer of any land or building or both by the assessee in favour of the flat buyers pursuant to registration of the agreement in the year under appeal. Hence we hold that the provisions of section 43CA of the Act cannot be made applicable to the same. Reliance in this regard is placed on the following decisions of co-ordinate benches of tribunals :- a) Ahmedabad Tribunal in the case of ITO vs Yasin Moosa Godil in ITA No. 2519/Ahd/2009 dated 13.4.2012 wherein it was held as under:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne through the MOU dated 22.12.2004 and shall agree with the contents thereof. Further, what has been physically handed over to the buyer of the property is the original MOU as well as the original payment receipt issued by the developer M/s. Global Heal (P) Ltd. On a combined reading of all these clauses which are mutually agreed upon between both the parties, it is clear that what has been transferred is a right of allotment in the property which was under construction and possession thereof was not taken by the assessee and hence, there is no question of transfer of the possession of the said property. Further, other than these agreements and MOU, there is nothing in terms of any positive tangible evidence which has been brought on record by the Revenue to support its position that it is the flat which has been transferred by the assessee. After the assessee has submitted to the AO vide its letter dated 12.03.2014 that the property was under consideration at the time of the sale and no sale deed was executed, the AO has not carried out any further investigation with the developer to refute the contentions raised by the assessee. In result, on perusal of the documents available o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xty years. The relevant finding of the Coordinate Bench contain at para 11.4 of its order is reproduced as under: In view of the aforenoted judgements rendered by the Hon'ble Apex Court and that of the Hon'ble Jurisdictional High Court, it is clear that a deeming provision can be applied only in respect of the situation specifically given and hence cannot go beyond the explicit mandate of the section. Turning to S. 50C, it is seen that the deeming fiction of substituting adopted or assessed or assessable value by the stamp valuation authority as full value of consideration is applicable only in respect of land or building or both . If the capital asset under transfer cannot be described as 'land or building or both', then s. 50C will cease to apply. From the facts of this case narrated above, it is seen that the assessee was allotted lease right in the plot for a period of sixty years, which right was further assigned to M/s. Pathik Construction in the year in question. It is axiomatic that the lease rights in a plot of land are neither 'land or building or both' as such nor can be included within the scope of 'land or building or bo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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