Ramani Realtors Pvt Ltd., CHENNAI v. DCIT, CHENNAI

ITA 882/CHNY/2014 | 2009-2010
Pronouncement Date: 31-07-2015

Appeal Details

RSA Number 88221714 RSA 2014
Assessee PAN AAACR2683K
Bench Chennai
Appeal Number ITA 882/CHNY/2014
Duration Of Justice 1 year(s) 3 month(s) 23 day(s)
Appellant Ramani Realtors Pvt Ltd., CHENNAI
Respondent DCIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2015
Appeal Filed By Assessee
Bench Allotted D
Assessment Year 2009-2010
Appeal Filed On 07-04-2014
Judgment Text
IN THE INCOME-TAX APPELLATE TRIBUNAL D BENCH CHE NNAI . !' !' !' !' # # # # $% $% $% $% BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER & SHRI V. DURGA RAO JUDICIAL MEMBER I.T.A.NO.882/MDS/2014 ASSESSMENT YEAR : 2009-10 RAMANI REALTORS PVT. LTD. C/O SRI T.N. SEETHARAMAN ADVOCATE # 384 (OLD NO. 196) LLOYDS ROAD CHENNAI 600 086. [PAN: AAACR2683K] VS. THE COMMISSIONER OF INCOME TAX V CHENNAI. ( &' &' &' &' /APPELLANT ) ( ()&' ()&' ()&' ()&' / RESPONDENT ) &' * + / APPELLANT BY : SHRI T.N. SEETHARAMAN ADVOCATE ()&' * + / RESPONDENT BY : SHRI M. KRISHNAMURTHY CIT * / DATE OF HEARING : 08.06.2015 -./ * /DATE OF PRONOUNCEMENT : 31.07.2015 0 0 0 0 / O R D E R PER V. DURGA RAO JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX -V CHENNAI DATED 1 3.03.2014 RELEVANT TO THE ASSESSMENT YEAR 2009-10 PASSED UNDER SECTION 26 3 OF THE INCOME TAX ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A BUILDER AND FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF .33 92 260/-. THE ASSESSING OFFICER AFTER COMPLETING DUE PROCESS ASSESSMENT W AS COMPLETED UNDER I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .882/M/14 882/M/14 882/M/14 882/M/14 2 SECTION 143(3) OF THE ACT. THEREAFTER THE LD. CIT WHILE EXERCISING POWER UNDER SECTION 263 OF THE ACT AFTER VERIFYING THE A SSESSMENT FOUND THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND OBSERVED THAT AS PER THE SU PPLEMENTARY DEED OF AGREEMENT DATED 10.02.2008 BETWEEN THE ASSESSEE AND THE THREE LAND OWNERS NAMELY SMT. J. GANDHIAMMAL SHRI J. UMAPATH Y AND SHRI J. MURUGESAN THE TOTAL SUPER BUILD-UP AREA AND SHARE OF EACH PERSONS ARE AS UNDER: TOTAL BUILT-UP AREA LAND OWNERS SHARE BUILDERS SHARE RESIDENTIAL : 76 900 32670 44 230 COMMERCIAL : 10 120 6 330 3 790 IN LIEU OF LAND OWNERS' SHARE THE LAND OWNERS WERE ALLOTTED 25 RESIDENTIAL FLATS MEASURING 29 190 SQ.FT. OF SUPER BUILT-UP ARE A AND THE BALANCE 3 480 SQ.FT. WERE SETTLED BY WAY OF PAYMENT BY BUILDERS T O THE LAND OWNERS. THE LAND OWNERS RETAINED 8 FLATS OUT OF THE 25 FLATS AN D HANDED OVER THE BALANCE 17 FLATS TO THE BUILDER FOR SALE AT THE RATE OF .2 800 PER SQ.FT. OF THE SUPER BUILD-UP AREA. THE TOTAL SALE CONSIDERATION RECEIVE D BY THE LAND OWNERS FOR THE 17 FLATS WAS .5 44 18 000/- BY WAY OF CHEQUE FROM THE BUILDER. HOWEVER THE LD. CIT HAS FOUND THAT THE ASSESSEE HA S CLAIMED THE COST OF PURCHASE OF 17 FLATS AS .6 00 00 000/- AS AGAINST THE PURCHASE COST OF .5 44 18 000/-. ACCORDING TO THE LD. CIT THE ASSES SMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE SINCE THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIR Y WITH REGARD TO THE COST I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .882/M/14 882/M/14 882/M/14 882/M/14 3 OF 17 FLATS AND ACCEPTED THE CLAIM OF THE ASSESSEE OF .6 00 00 000/- INSTEAD OF .5 44 18 000/-. THEREFORE THE LD. CIT ISSUED NOTIC E AND CALLED EXPLANATION FROM THE ASSESSEE AND THE ASSESSEE HAS FILED ITS WRITTEN SUBMISSION AS UNDER: 1) THE ALLEGED DIFFERENCE IN THE PURCHASE COST OF .55 82 000/- (RS.6 00 00 000/- MINUS RS.5 44 18 000/-) WITH REGA RD TO THE PURCHASE OF 17 FLATS IS NOT THERE. WE ENCLOSE A COPY OF THE DEED OF AGREEMENT DATED 10.02.2008 BETWEEN THE ASSESSEE AND THE THREE LAND OWNERS NAMELY SMT. J. GANDHIAMMAL SHRI J. UMAPATHY AND S HRI J. MURUGESAN. THE COST OF THE 17 FLATS MEASURING 19425 SQ.FT. OF SUPER BUILT-UP AREA CALCULATED AT THE RATE OF RS.2 800/- PER SQ.FT. WOR KS OUT TO RS.5 44 18 000/-. THIS AMOUNT IS SUBJECT TO ADJUSTM ENT IN RESPECT OF BALANCE SUPER BUILT-UP AREA OF 3480 SQFT. CALCULAT ED FOR 1750 SQ.FT. SUPER BUILT-UP AREA AT THE RATE OF RS.2 300/- AND 1 730 SQ.FT. OF SUPER BUILT-UP AREA AT THE RATE OF RS.2 800/- PER SQ.FT.. THIS WORKS OUT TO RS.88 69 000/-. THUS THE TOTAL CONSIDERATION WORKS OUT TO RS.6 32 87 000/- (RS.5 44 18 000/- PLUS RS.88 69 00 0/-). AFTER ADJUSTMENT OF ADVANCE OF RS.23 00 000/- ALREADY PAI D AND THE SHARE OF MARKETING EXPENSES OF RS.9 87 000/- THE TOTAL COST OF PURCHASE OF 17 FLATS FROM THE LAND OWNERS WORKS OUT TO RS.6 00 00 000/-. THE COST OF PURCHASE OF 17 FLATS IS CLEARLY MENTION ED IN THE DEED OF AGREEMENT DATED 10.02.2008 ITSELF. HENCE THERE IS NO DIFFERENCE IN THE PURCHASE COST FOR THE PURPOSE OF DISALLOWANCE AS ME NTIONED IN THE SHOW-CAUSE NOTICE AND THERE IS NO ERROR OR PREJUDIC E TO REVENUE IN THE ASSESSMENT ORDER DATED 27.12.2011. 3. AFTER CONSIDERING THE EXPLANATION OF THE ASSESS EE THE LD. CIT HAS PASSED A DETAILED ORDER WHICH IS REPRODUCED AS UND ER: 4. I HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF TH E COUNSELS FOR THE ASSESSEE. AS REGARDS THE FIRST ISSUE OF ADOPTIN G HIGHER COST OF PURCHASE OF 17 FLATS AT RS.6 00 00 000/- AS AGAINST .5 44 18 000/- THE ARGUMENTS OF THE COUNSELS FOR THE ASSESSEE ARE DEVO ID OF MERIT AND ARE REJECTED. THE DEED OF AGREEMENT DATED 10.02.2008 FI LED BY THE ASSESSEE CLEARLY SHOWS THE COST OF 17 FLATS MEASURING 19425 SQ.FT. AT I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .882/M/14 882/M/14 882/M/14 882/M/14 4 .5 44 18 000/- AT THE RATE OF .2 800/- PER SQ.FT. THIS IS CLEARLY MENTIONED IN PAGE NO.4 OF THE JOINT DEVELOPMENT AGR EEMENT DATED 10.02.2008. THE ARGUMENTS OF THE COUNSEL THAT THIS COST IS SUBJECT TO ADJUSTMENT IN RESPECT OF THE BALANCE SUPER BUILT-UP AREA OF 3480 SG.FT. TO BE PAID TO THE LAND OWNERS IS SEPARATELY MENTION ED IN THE AGREEMENT AND IS DEVOID OF ANY MERIT AND IS REJECTED. THE COS T OF THE BALANCE SUPER BUILT-UP AREA OF 3480 SQ.FT. IS PART OF THE TOTAL C ONSIDERATION TO BE PAID TO THE LAND OWNERS FOR THE LAND CONTRIBUTED BY THEM AND NOT IN RELATION TO THE 17 FLATS. 4.1 IN FACT AS PER THE DEED OF AGREEMENT THE LAN D OWNERS HAVE BEEN GIVEN 32670 SQ. FT. OF RESIDENTIAL AREA WHICH HAS B E GIVEN BY WAY OF 25 FLATS MEASURING 29190 SQ.FT. OF SUPER BUILT-UP AREA AND THE BALANCE 3480 SQ.FT. TO BE PAID IN CASH. THE LAND OWNERS RET AINED 8 FLATS AND HANDED OVER 17 FLATS TO THE ASSESSEE FOR FURTHER SA LE AT THE RATE OF .2 800 PER SQ.FT. OR MORE. THE TOTAL CONSIDERATION PAID TO THE LAND OWNERS BY THE ASSESSEE IN LIEU OF THE LAND PROVIDED BY THEM IS RESIDENTIAL FLATS MEASURING SUPER BUILT-UP AREA OF 32670 SQ.FT. AND COMMERCIAL SUPER BUILT-UP AREA OF 6330 SQ FT. HENCE THE COST OF THE RESIDENTIAL SUPER BUILT-UP AREA OF 3480 SQ.FT. IS P ART OF THE TOTAL CONSIDERATION PAID BY THE ASSESSEE TO THE LAND OWNE RS AND NOT PART OF THE COST OF 17 FLATS HANDED OVER TO THE ASSESSEE BY THE LAND OWNERS. THE COST OF THE 17 FLATS HANDED OVER FOR SALE BY THE LA ND OWNERS IS .5 44 18 000/- ONLY AND NOT .6 00 00 000/- AS ADOPTED BY THE ASSESSEE. THEREFORE THERE IS A DIFFERENCE IN THE C OST OF 17 FLATS TO THE EXTENT OF .55 82 000/-. THE ASSESSING OFFICER ADOPTED THE COS T OF 17 FLATS AT .6 00 00 000/- INSTEAD OF .5 44 18 000/-. THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICE R IS ERRONEOUS IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF REVENUE SINCE THERE IS INCORRECT ASSUMPTION OF FACTS BY THE ASSESSING OFFICER. THE H ON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS . CIT REPORTED IN 243 ITR 83 HAS SPELT OUT VARIOUS GROUNDS ON WHICH T HE PROVISIONS OF SECTION 263 OF THE IT ACT CAN BE INVOKED. INCORRECT ASSUMPTION OF FACTS BY THE ASSESSING OFFICER HAS BEEN SPELT OUT AS ONE OF THE GROUNDS BY THE HON'BLE SUPREME COURT FOR INVOKING SECTION 263 OF T HE IT ACT. THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS MODIFIED AND THE ASSESSED INCOME OF THE ASSESSEE IS ENHANCED BY .55 82 000/- ON ACCOUNT OF COST OF PURCHASE OF 17 FLATS. 4. ON BEING AGGRIEVED THE ASSESSEE IS IN APPEAL B EFORE THE TRIBUNAL. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .882/M/14 882/M/14 882/M/14 882/M/14 5 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LD. CIT WITHOUT CONSIDERING THE EXPLANATION GIVEN BY THE AS SESSEE AND WITHOUT ANY BASIS CAME TO A CONCLUSION THAT THE COST OF THE CO NSTRUCTION OF FLATS IS .5 44 18 000/- BUT ACTUALLY THE COST INCURRED BY THE ASSESSEE WAS .6 00 00 000/-. THEREFORE HE HAS SUBMITTED THAT TH E ORDER PASSED BY THE LD. CIT MAY BE QUASHED. 6. ON THE OTHER HAND THE LD. DR HAS SUPPORTED THE ORDER PASSED BY THE LD. CIT. 7. WE HAVE HEARD BOTH SIDES PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESS EE IS A BUILDER AND DEVELOPER AND AS PER RECORDS THE ASSESSEE HAD ENTE RED INTO AN AGREEMENT WITH THE LAND OWNERS. ACCORDING TO THE AGREEMENT T HE ASSESSEE HAS TO PART A SHARE WITH THE LAND OWNERS. 32 670 SQ.FT. IS IN L IEU OF LAND OWNERS SHARE. THE ASSESSEE HAS ALLOTTED TO THE LAND OWNERS 25 RES IDENTIAL FLATS MEASURING 29 190 SQ.FT. OF SUPER BUILT-UP AREA AND THE BALANC E 3 480 SQ.FT. HAVE TO BE SETTLED BY WAY OF PAYMENT BY BUILDERS TO THE LAND O WNERS. THE LAND OWNERS RETAINED 8 FLATS OUT OF THE 25 FLATS AND HANDED OVE R THE BALANCE 17 FLATS TO THE BUILDER FOR SALE AT THE RATE OF .2 800/- PER SQ.FT. OF THE SUPER BUILT-UP AREA. THE ASSESSEE HAS PAID .5 44 18 000/- TOWARDS SALE CONSIDERATION OF 17 FLATS TO THE LAND OWNERS BY WAY OF CHEQUES. HOWE VER THE ASSESSEE IN ITS RECORDS HAS RECORDED THE COST OF PURCHASE OF 17 FLA TS AT .6 00 00 000/-. I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .882/M/14 882/M/14 882/M/14 882/M/14 6 WHEN ASKED THE ASSESSEE HAS GIVEN A DETAILED REPLY AND THE SAME IS EXTRACTED AS ABOVE. FROM THE REPLY GIVEN BY THE ASS ESSEE IT IS NOT CLEAR AS TO WHAT WAS THE BASIS FOR THE ASSESSEE TO CLAIM THE COST AT .6 00 00 000/-. FROM THE ORDER OF THE LD. CIT IT IS NOT CLEAR THAT AS TO HOW THE COST OF 17 FLATS WAS WORKED OUT TO .5 44 18 000/-. THE FACTS ARE NOT CLEAR EITHER FROM THE EXPLANATION GIVEN BY THE ASSESSEE OR FROM THE LD. C IT. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION TH AT ALL THE FACTS ARE NECESSARILY TO BE EXAMINED IN DETAIL. THEREFORE WE MODIFY THE ORDER PASSED BY THE LD. CIT AND DIRECT THE ASSESSING OFFICER TO CONDUCT DETAILED ENQUIRY/ INVESTIGATION AND THEREAFTER PASS A DETAILED ASSESS MENT ORDER IN ACCORDANCE WITH LAW. 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY THE 31 ST OF JULY 2015 AT CHENNAI. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER CHENNAI DATED THE 31.07.2015 VM/- 0 * (# 12 32/ /COPY TO: 1. &' / APPELLANT 2. ()&' / RESPONDENT 3. 4 ( ) /CIT(A) 4. 4 /CIT 5. 25! (# # /DR & 6. ! ' 6 /GF.