TMI Blog2023 (3) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... ion from these buyers. The assessee has also given details of the new buyers of the said flat, bank statement, Sale Deed as well as the amount upon which the new transaction has taken into consideration. In fact, the flat was booked for Rs.35,50,000/- and the new transaction shows that the flat was sold for Rs.37,50,000/- by paying only Rs.18,00,000/- to the original buyer as the booking amount paid by the original buyer was Rs.16,00,000/- only. Thus, the assessee has made profit and it was business strategy for earning the profit. Assessing Officer as well as the CIT(A) never disputed the new transactions which has earned profit to the assessee. Therefore, the Assessing Officer as well as the CIT(A) was not justified in making the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear breach of law and principles of natural justice and therefore deserves to be quashed. 4. The learned CIT(A) has erred in law and on facts of the case in confirming action of the ld. AO in levying interest u/s.234A/B/C of the Act. 3. The return of income was filed on 01.09.2013 declaring loss at Rs.23,490/-. The assessee is engaged in the business of construction of Residential Complex. The return of income was processed under Section 143(1) of the Income Tax Act, 1961. Notice under Section 143(2) of the Act was issued on 08.09.2014. The Assessing Officer observed that the assessee debited compensation against booking cancelled of Rs.10,15,000/- in the Profit Loss Account for the year under consideration. The assessee submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .10,15,000/- relating to compensation for cancellation of booking of residential complex, the Ld. AR submitted that during the year under consideration the assessee was engaged in the business of construction of residential complex. In F.Y. 2009-10 three customers booked three flats in residential project constructed by the assessee and the booking was for the purpose of investment and with the intension of reselling the flats in future. Certain booking amounts were also received from those three customers. During the F.Y. 2012-13 i.e. the year under consideration, those customers approached the assessee for cancellation of booking, the assessee bought back the flats from them at the prevailing market rate. The market rate would take into a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... builder to erstwhile buyers upon cancellation of booking/buyback of property would be a business expenditure in the hands of the builder and needs to be allowed while computing income of such builder. In this case, assessee paid compensation of Rs.10,15,000/- upon cancellation of booking/buyback of flats as per normal business practice and hence such expenditure is an allowable business expenditure. The Ld. AR submitted details relating to original buyers and new buyers. Other documentary evidences which were produced indicates compensation to original buyers of flats is equivalent to the difference between consideration for flat a in both the transactions. Confirmation, PAN and Aadhar Card of original buyers are on record, transactions are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new transactions. Thus, the assessee made profit after paying minimum compensation to these three parties. The assessee has already given all the documentary evidences with respect to original buyers in respect of bank statement, Aadhar Card, PAN and confirmation from these buyers. The assessee has also given details of the new buyers of the said flat, bank statement, Sale Deed as well as the amount upon which the new transaction has taken into consideration. In fact, the flat was booked for Rs.35,50,000/- and the new transaction shows that the flat was sold for Rs.37,50,000/- by paying only Rs.18,00,000/- to the original buyer as the booking amount paid by the original buyer was Rs.16,00,000/- only. Thus, the assessee has made profit and i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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