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TMI Blog2025 (3) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... 132 of the Act was conducted at Srinivasa Trust on 06-08-2012, during which a Joint Development Agreement (JDA) dated 05-02-2005 between the assessee (Chaitanya Properties Pvt. Ltd.) and M/s Prestige Estate Projects Ltd. was found and marked as Annexure 14/ST/132. Additionally, the loan sanction details pertaining to the assessee, also marked as Annexure 14/ST/132, were discovered. Consequently, a notice under section 153C of the Act was issued to the assessee on 30-08-2013. 5. Finally, the assessment order under section 143(3) read with section 153C was completed through an order dated 30-03-2015, wherein the Assessing Officer (AO) made the following additions to the total income of the assessee: 1. Business income. Rs. 325,32,46,980/- 2. STCG Rs. 84,92,10,510/- 3. LCTG Rs. 71,90,45,278/- 4. Disallowances u/s 14A Rs. 7,91,031/- 6. The aggrieved assessee filed an appeal before the learned CIT(A) who vide order dated 29-12-2016, allowed the appeal in favor of the assessee. 7. Being dissatisfied with the decision of the ld. CIT-A, the Revenue preferred an appeal before the Tribunal in ITA No. 618/Bang/2017. The Bench, vide order dated 23-05-2022, reversed the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of litigation in ITA No. 618/Bang/2017, dated 23-05-2022. The findings of the Hon'ble Bench in the first round of litigation are extracted as follows: On merits 18. Further, the ld. DR submitted that in view of ground No.9, he may be permitted to argue that the issue on merits may be remitted to the CIT(Appeals) to decide each issue independently, after going through the earlier order of the Tribunal in ITA Nos.52 & 125/Bang/2013 dated 27.3.2015. As the CIT(Appeals) has failed to adjudicate each ground independently on merits by identifying similarity of facts on the additions in the present year under consideration vis-à-vis the preceding assessment year relied on by him in his order. 19. The ld. AR submitted that the additions made in the order of assessment with respect to the JDA entered into with Prestige Estates Pvt Ltd are as under:- 1) A.Y. 2010-11 (i) Rs. 75,83,01,870/- made to Income from Business; (ii) Rs. 75,83,01,870/- made to Income from Business; (iii) Rs. 9,92,46,023/- made to Income from Long term Capital Gains (LTCG); (iv) Disallowance u/s 14 A Rs. 6,33,414/-. 2) A.Y. 2011-12 (i) Rs. 325,32,46,980/- made to Income from Business; (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refundable Deposit till such time the Developer completes his part of the contract. In the event the Developer is not able to perform & is forced to abandon the contract for any reason what so ever the Non-Refundable Deposit would then remain with the assessee & would partake the nature of a Capital Receipt. The same will fructify into income only upon the developer performing his part of the contract & will become converted into income on a proportionate basis as and when the Developer hands over the Respondent's share of the built-up area to the Respondent. In other words, the Respondent is to receive total built up commercial space of 6,99,469 sft from PEPL. The Non-Refundable deposit of Rs100 crores is in respect of this entire agreed area of 6,99,469 sft of built up area. If the developer were to hand over 69,947 sft being 10% of the agreed built up area in a particular financial year, then Rs10 crores would be transferred to income from the Non-Refundable deposit of Rs. 100 crores & the Non-Refundable Deposit as on 31st March of the said financial year would stand reduced to Rs. 90 crores. 25. As a natural corollary since no built-up area is received by us during A.Y. 2010- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f stock in trade, the sale of the same will have to be recognised only when the same is actually conveyed by a registered sale deed. This principle which is applicable to stock in trade has been upheld by the Jurisdictional Bangalore Bench of the ITAT in the assessee's own case for the A.Y. 2009-10 wherein the Tribunal, confirming the decision of the CIT(A) has held categorically in its order that "When an immoveable property is held as Stock in Trade, the same is to be considered as sold only when the sale is conveyed by means of a registered sale deed and not before that." 29. Further on the issue of Non Refundable Deposit, the ITAT, again confirming the decision of the CIT(A), held that "The Non Refundable Deposit would partake the character of sale consideration only upon the ownership of the undivided interest in land being transferred by a sale deed and not before that and then only to the extent of the amount proportionately applicable to the extent of land so transferred." 30. Thus, from the above brief submissions made above as regard to the merits of the matter, it is submitted that the additions made in the order of assessment is not warranted and further the binding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an important aspect & hence an addition u/s 14A cannot be made in the absence of incriminating material. 35. There is no proper satisfaction arrived at by the AO to come a conclusion that disallowance of expenses is indeed warranted. Several Appellate authorities have held that application of the provisions of section 14A cannot be done without application of mind and that a proper satisfaction is essential to proceed with disallowance. The following decisions are in support of this proposition:- 36. Reliance is placed on the assessee's own case in ITA No.52/Bang/2013 for the A.Y. 2009-10 in favour of the assessee and the case of DCIT vs Subramanya Constructions & Development Co. Ltd 154 ITD 303, ITAT Bangalore Bench. 37. Further it is now a settled law that any disallowance of expenditure u/s section 14A by applying rule 8D (2)(ii) & (iii) cannot exceed the income earned from the said investment. In the present case the income earned is NIL and hence no expenditure can be disallowed. The assessee relies upon the following decisions in support of the above said proposition:- CIT vs Cortech Energy Pvt Ltd 372 ITR 97, (Guj); CIT vs Lakhani Marketing 272 CTR 265, (P&H) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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