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TMI Blog2024 (11) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... in upholding the assessment order dated 30.03.2015 in relation to the disputed items under challenge and agitated in this appeal. Merits 2. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in disallowing the costs and expenses incurred by the Appellant in relation to the commercial building Kaledonia constructed by it while computing the loss incurred by it upon sale of units during AY 2012-13. 3. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in not appreciating that the costs and expenses incurred by the Appellant in relation to the commercial building Kaledonia was accepted by the AO in AYs 2010-11 and 2014-15. 4. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in disallowing the business loss incurred during the year to the tune of INR 3,26,01,606 and holding that no supporting details pertaining to maintenance expenses have been filed by the Appellant without providing an opportunity to the Appellant to provide s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration total receipts credited to the profit and loss account include lease rental of Rs..8,98,83,457/- and sale receipt of tenancy rights of Rs..33 lakhs. While scrutinizing the return of income the Assessing Officer noticed that the assessee has shown short term capital loss of Rs..118,40,32,101/-which is claimed to be carried forward to subsequent assessment year. The assessee was asked to furnish copies of purchase agreements and sale agreements of office premises sold. Assessee filed the requisite details and on perusal of the same the Assessing Officer noticed that the assessee had started construction of project "Kaledonia" situated at Sahar road, Andheri (East) during the F.Y. 2007-08 and the same was completed during the previous year under consideration. The Assessing Officer observed that the instead of declaring this activity as business the assessee has shown it under the head "investments". From the financial statements, the Assessing Officer found the total cost of the commercial project Kaledonia at Rs..1107,10,38,584/- as on 31.03.2012. Considering the nature of business of the assessee, the Assessing Officer out rightly rejected the claim of investments an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all types of movable or immovable properties for development including Transferable Development Rights and also to invest or otherwise deal in all types of real estate properties and also to carry on in India or abroad the business to undertake development of infrastructure work on build, operate and transfer basis or otherwise and to develop, construct, run, repair, maintain, decorate, improve, remodel, build, operate and manage roads, bridges, highways, railways, waterways, gas lines, airports, townships, IT Parks, Industrial Parks, SEZs, docks, ports, jetties, gardens, public places, buildings and other structures, developments, utilities and to operate and transfer the same as per the agreements with the respective authorities, companies or concerns." 10. The counsel fairly considered that the short term capital loss disallowed by the Assessing Officer is correct in as much as the Kaledonia Project is the business activity of the assessee and not investment. However, at the same time it has been strongly claimed that once the activities of the assessee has been accepted as business activities then the income / loss should have been computed as per the relevant provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer that the assessee has not filed any details to substantiate its cost of construction is not acceptable, since the Assessing Officer himself has assessed the Work-in-Progress as mentioned hereinabove. Since the business activities in Kaledonia Project is common from A.Y. 2008-09, therefore, it becomes imperative to determine the cost of construction shown by the assessee in its books of accounts. Therefore, in the interest of justice, we deem it fit to send the matter back to the file of the Assessing Officer. 14. Since there is no dispute that the assessee is engaged in the business, therefore, the Assessing Officer is directed to decide the impugned quarrel afresh in the light of the fact that the assessee is engaged in business activities. The assessee is directed to justify its claim of cost of construction / Work-in-Progress by submitting necessary documentary evidences and the Assessing Officer is directed to examine / verify the same and decide the issue afresh after affording reasonable and adequate opportunity of being heard to the assessee. 15. The contention that some of the sales are illegal and since no sale consideration has been received the same should be excl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect and made addition of Rs..26,98,74,180/-. 18. After giving thoughtful consideration to the findings of the Assessing Officer we find that the Assessing Officer has drawn support from the decision of the Hon'ble Delhi High Court in the case of CIT v. Ansal Housing finance & leasing Co. Ltd., [(2013) 29 taxmann.com 303] whereas while confirming the assessment the Ld. CIT(A) drew support from specific provision inserted by the Finance Act, 2017 in section 23(5) of the Act. 19. We are of the considered view that both the Assessing Officer and Ld. CIT(A) erred. The Ld. CIT(A) has erred in as much as it relied upon the provisions brought into statute by Finance Act, 2017 and we are in A.Y.2012-13 and section 23(5) has not been held to have a retrospective effect. Assessing Officer has erred in drawing the support from the decision of the Hon'ble Delhi High Court (supra) in as much as the decision of the Hon'ble Delhi High Court is for the provisions prior to the year 2001 and after introduction of section 23(1)(c) of the Act the assessee is eligible for vacancy allowance. Therefore, if the rental income has been taxed then the assessee is equally eligible for the vacancy allowance a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, such sale consideration cannot be revised sans any evidence that the actual consideration was suppressed. 6. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in disallowing the interest under Section 36 (1) (iii) of the Income Tax Act, 1961 (IT Act) to the tune of INK 3,84,38,821 on the loan taken from Yes Bank Limited. 7. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in making addition on account of deemed rent of INR 26,46,57,172 under Section 23 (5) of the IT Act. 8. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in not appreciating that Section 23 (5) applies only prospectively from AY 2018-19. 9. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre erred in law and on the facts and circumstances of the case in disallowing the prior period expenses to the tune of INR 52,35,842. Principles of Natural Justice 10. The Commissioner of Income Tax (Appeals) / National Faceless Appeal Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther loan amounting to Rs..51,14,95,856/- and received back Rs..20,88,03,927/-, thus leaving a closing balance of Rs..70,71,19,446/-, we find that the details of this transaction was furnished to the Assessing Officer vide submission dated 19.08.2016. 26. It is equally true that during the year under consideration the assessee has availed term loan of Rs..43,39,90,306/- from Yes Bank on which it paid interest of Rs..6,24,56,032/-. We find that out of this interest expenditure the assessee has suomoto disallowed Rs..2,40,17,217/- as not attributable to business purpose. The undisputed fact is that the sister concern M/s. Sapphire Land Development Pvt Ltd., is also engaged in the business of real-estate development and has utilized this amount towards development of the real estate business. Therefore, it cannot be said that the assessee has failed to justify the business necessity of these advances. Considering the fact that the assessee has suo-moto disallowed the interest of Rs..2,40,17,212/- we are of the opinion that this should suffice any necessity for the disallowance. Therefore, the Assessing Officer is directed to delete the addition of the balance amount of Rs..3,84,38,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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