9911796707
TMI Blog2021 (5) TMI 590X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of real estate and renting of properties. The total income of the assessee comprises of income from business and profession. Assessee has filed its return of income declaring income of Rs. 71,531,420/- on 31/11/2014. The case of the assessee was selected for limited scrutiny to examine mismatch in profit before tax as per profit and loss account and schedule BP, high interest expenditure against capital shown in the working progress et cetera. 03. On issue of various statutory notices by the learned assessing officer and details filed by the assessee, the learned AO noted that assessee has debited expense of Rs. 37,909,943/- in the profit and loss account on account of assets transferred to work in progress. In fact, on looking at the accounting treatment assessee has claimed this amount as deductible expenses. The facts stated that assessee has constructed a shopping mall on a plot having an area of 13,129 yd². It had an open area of 65% i.e. 8534 yd² and the remaining area was constructed portion. The FAR was 145.57 and the construction consisted of ground floor +5 floors besides basement. The basement was permitted to be used only as storage. The assessee has origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and offices sale price is credited to profit and loss and the cost of constructing area including land cost for sold area is reduced from stock in trade. The assessee submitted the details of the opening stock as on 1 April 2014 which is Rs. 35,535,139 being stock in trade as unsold shops and offices. In assessment year 2014 - 15 are some of Rs. 54,157,061/- being cost of a vacant plot number 6A sector 15 A, Faridabad has been transferred to the inventory on 1/4/2014 to be used for parking purposes. Assessee submitted that actual use of the land permanently for parking area is only 4023 yd² costing Rs. 37,909,942/- which now cannot be used for any other purposes permanently, thus the market value of this land is zero and accordingly the closing work in progress is reduced by the above sum. Assessee submitted that the closing stock has been valued at cost or market price, which was lower and as the proportionate cost of land used for parking is just Rs. 37,909,942/- therefore same is not shown in the work in progress. In nutshell, the assessee conveyed that the cost of the land used for parking amounting to Rs. 37,909,942/- is not carried in the working progress as it represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issed as per order dated 14/1/2019. Assessee is aggrieved with that and has preferred this appeal before us. 07. The learned authorised representative narrated the facts as above and therefore submitted that the provision of plot of land, which is now used for parking space, has been allotted to the shop owners and offices of the mall for parking. The cost of the plot, which was given for the parking now has become the cost of the project and therefore it is required to be allowed to the assessee as a deduction. He further submitted the various documents and the various photographs to show that impugned plot of land is used by the shop owners for parking space. He referred to the original shop/space buyers agreement entered into in the month of January 2004 with the shop owners and referred to paragraph number 2 of the agreement stating that the owner i.e. assessee is constructing a commercial complex Under the name and style of Crown Plaza plan of which is duly sanctioned by the appropriate authority. He submitted that in the sanction plan there was proper parking and therefore the same was sanctioned in the municipal area and on that promise, the buyers have bought the office co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ownership of the plot remains with the assessee and is entitled to sell it off in absence of any legal obligation towards the shop owners, cost of the above plot cannot be granted to the assessee as a deduction. The learned departmental representative vehemently read the shop/space buyer's agreement entered into by the assessee with various shop owners wherein there was no requirement of providing any parking space to them. Thus, it was submitted that the order of the lower authorities are correct and in accordance with the law and therefore should be upheld. 09. We have carefully considered the rival contention and perused the orders of the lower authorities. We have also perused the three paper books submitted by the learned authorised representative. The issue is in a narrow compass. The assessee being a builder developed a mall and sold office spaces along with shops et cetera to various buyers. At the time of approval of the plan for the mall, assessee has a parking space also part of the mall. Based on this assessee sold office space and shops to the various buyers by entering into shop's/space buyers agreement. There is no dispute that when the permission was granted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has not transferred this plot of land in the name of any society or association but is still in the name of the assessee. The revenue also contends that the assessee has right to sale this plot. Though the assessee may not have a legal obligation to transfer the plot of land used for parking space by the shop owners, the commercial obligation is established that assessee has given that plot, handed over to the operating agency, which is maintaining the shopping mall to be used for parking space. When assessee has sold the shops/ offices of mall real estate by making a promise to buyer to provide facilities as per the approved plan and based on which the buyer has purchased the property, no doubt there is a commercial obligation on the assessee to provide those facilities to those shop owners who purchased those properties. Parking space is one of such condition based on which the approval was granted to the shopping mall constructed by the assessee. Therefore, it is apparent that the assessee has met its obligation by providing a plot of land to be used as a parking space by the shop owners and therefore the assessee is entitled to claim deduction of the cost of land given for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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