TMI Blog2019 (11) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... to existence till the end of relevant previous year. Therefore, the assessee cannot hold the amount in fiduciary capacity of a non-existent entity. The argument of assessee, holding funds of society in fiduciary capacity, thus fails. If arguments forwarded by assessee are accepted, then the interest income on fixed deposits would escape taxnet. If it is held that the interest is not income of the assessee, the same would obviously not be taxable in the hands of the assessee. Since, residents Co-operative society has not come into existence during the previous year when the interest income had accrued, the interest income cannot be taxed in the hands of non-existent entity. Hence, interest income would neither be taxable in the hands of the assessee nor in the hands of Co-operative society. The proposition put-forth by the ld.Authorized Representative of the assessee is hence, unacceptable. Income could not be earned in vacuum and it should accrue to certain beneficiary. In the present case, it is not the collection of corpus fund but the interest on alleged corpus fund , which is subject matter of dispute. Corpus fund and interest on corpus fund are on different footing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2012 (4) TMI 54 - BOMBAY HIGH COURT ) . The ground No.3 of the appeal is dismissed being devoid of any merit. Appeal of the Revenue is dismissed. - ITA NO.3654/MUM/2017, ITA NO.4114/MUM/2017 - - - Dated:- 31-10-2019 - Shri Vikas Awasthy, Judicial Member And Shri Rajesh Kumar, Accountant Member For the Assessee : Shri Mahaveer Jain For the Revenue : Shri Ajay Mallik ORDER PER VIKAS AWASTHY, JM: These cross appeals by the assessee and Revenue are directed against the order of CIT(A) -41, Mumbai dated 29/03/2017 for the assessment year 2011-12. 2. In brief, the facts of the case as available from records are: The assessee is a builder and developer. The assessee(AOP) filed its return of income for the impugned assessment year on 30/09/2011 declaring total income of ₹ 32,01,092/-. The assessee claimed deduction under section 80 IB(10) of the Income Tax Act, 1961 ( in short the Act ) of ₹ 5,92,49,118/- in respect of its residential project Bhoomi Park at Marve Road, Malad(W), Mumbai. In scrutiny assessment proceedings, the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n fiduciary capacity. Neither the fixed deposits nor the interest thereon belongs to the assessee. Hence, the same were neither reflected in the books of account of the assessee nor the interest income on fixed deposits of Society s corpus funds was declared in the return of income. The ld.Authorized Representative of the assessee further pointed that similar addition on account of interest income was made in assessment year 2012-13. The addition was sustained by the CIT(A). The assessee carried the issue in appeal before the Tribunal in ITA No.2315/Mum/2018. The Tribunal vide order dated 12/04/2019 deleted the addition after placing reliance on the order in the case of ACIT vs. Evershine Builders Pvt. in ITA No.2827/Mum/2008 decided on 01/02/2010 5. On the other hand, Shri Ajay Malik, representing the Department vehemently defended the impugned order confirming the addition of ₹ 18,82,023/- in respect of undisclosed interest income. The ld. Departmental Representative submitted that the residents Co-operative Society had not come into existence till the end of 31/03/2011. The fixed deposits in the bank were made in the name of the assessee. TDS on interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore, the assessee cannot hold the amount in fiduciary capacity of a non-existent entity. The argument of assessee, holding funds of society in fiduciary capacity, thus fails. 8. We are of further view that if arguments forwarded by ld.Authorized Representative of the assessee are accepted, then the interest income on fixed deposits would escape taxnet. If it is held that the interest is not income of the assessee, the same would obviously not be taxable in the hands of the assessee. Since, residents Co-operative society has not come into existence during the previous year when the interest income had accrued, the interest income cannot be taxed in the hands of non-existent entity. Hence, interest income would neither be taxable in the hands of the assessee nor in the hands of Co-operative society. The proposition put-forth by the ld.Authorized Representative of the assessee is hence, unacceptable. Income could not be earned in vacuum and it should accrue to certain beneficiary. 9. In so far assessee s reliance on the order of Tribunal in assessee s own case for assessment year 2012-13 is concerned, we find that the Tribunal has allowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reciating the facts that buy-back and re-sale is a trading activity in the context of the case and provisions of section 80IB(10) of the Income Tax Act, 1961 in its right perspective and true meaning. 3. On the facts and in circumstances of the case and in law, the Ld.CIT(A) erred in appreciating the violation of provisions of clause (e) and (f) of section 80IB(10) of the Income Tax Act, 1961 in its right perspective and true meaning. 11. The ld.Authorized Representative of the assessee vehemently defended the finding of CIT(A) in allowing deduction under section 80 IB(10) of the Act on pro-rata basis and also allowing the said deduction in respect of sale of car parking and resale of flat. The ld. Authorized Representative for the assessee submitted that the issue of allowing deduction under section 80 IB(10) of the Act on car parking is squarely covered by the decision of Hon'ble Bombay High Court in the case of Puravankara Projects Ltd. in Income Tax Appeal No.4975 of 2010 decided on 25/07/2011. 11.1 The other issue raised in the appeal by the Revenue is in respect of assessee s claim of deduction under section 80- IB( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of CIT(A). Thus, ground No.1 of the appeal of Revenue is dismissed. 14. In ground No.2 of the appeal, Revenue has assailed allowing of deduction under section 80 IB(10) of the Act in respect of flat which has been allegedly resold. A perusal of records reveal that Flat No.K/1204 on which Revenue is disputing the claim of deduction under section 80 IB(10) was initially sold to Shri Jailesh Oebroi Smt. Vimla Oberoi. They had paid initial token amount of ₹ 2,50,000/- at the time of booking flat. Thereafter, they defaulted the terms of payment and the assessee had to cancel the booking. After cancellation of the initial sale agreement, the flat was resold to other party. The assessee claimed deduction under section 80 IB(10) of the Act in respect of profits arising from resale of said flat. It is not a case where the assessee has indulged in any trading/broking of the same flat twice. It was under peculiar facts that the first agreement was cancelled and the flat was resold. We do not find any error in the findings of CIT(A) in allowing deduction under section 80 IB(10) of the Act on the profits arising from sale of said flat. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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