Bombay High Court
Pr. Commissioner Of Income Tax 31 vs Gundecha Builders on 17 December, 2018
Bench: Akil Kureshi, M.S. Sanklecha
12. os itxa 833-16.doc
R.M. AMBERKAR
(Private Secretary)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O.O.C.J.
INCOME TAX APPEAL NO. 833 OF 2016
Principal Commissioner of Income Tax-31 .. Appellant
Versus
Gundecha Builders .. Respondent
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Mr. Arvind Pinto for the Appellant
Ms. Aasifa Khan for the Respondent
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CORAM : AKIL KURESHI &
M.S. SANKLECHA, JJ.
DATE : DECEMBER 17, 2018.
P.C.:
1. Heard.
2. The appeal is admitted for consideration of following substantial question of law:-
"(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that receipts from the sale of stilt parking as part of the residential unit and therefore, also eligible for a deduction u/S. 80IB(10)?
3. To be heard with Income Tax Appeal No. 347 of 2016.
4. We noticed that the Revenue has presented several additional questions which read as under:-
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12. os itxa 833-16.doc "(a) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in treating the income received on letting out as house property income, ignoring the legal position in the case of Indian City Properties Ltd Vs. CIT 55 ITR 262 (Cal) wherein it was held that rental income is not business income if the property is an investment asset; therefore conversely where a business asset is let out the income is to be considered as business receipt?
(b) Whether on the facts and in the circumstances of the case, the Tribunal was in error in not appreciating the reallocation made by the AO of expenditure of the various projects to ensure that taxable eligible units are not loaded with expenditure, from the exempt units for working out the income of the various projects?
(c) Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in allowing the appeal of the assessee and deleting the disallowance u/S. 80IB on common expenses relatable to Poisor project & Sakinaka project, which were debited to Sakinaka Project with clear cut intention to suppress the profit of Sakinaka project, which is fully taxable thereby increasing the profit of the Poisar Project?
(d) Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in allowing the appeal of the assessee and deleting the addition on account of the forfeiture of earnest money as it has no relevance with the income derived from industrial undertaking eligible for production u/S. 80IB(10) as per the decision of Hon'ble Supreme Court in the case of Pandian Chemical Ltd., 129 Taxman 539?
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(e) Whether in law and on the facts of the instant case, the Tribunal justified in deleting the addition on account of Court fees stamps since this expenditure is capital in nature as per the decision of the Apex Court in Dalmia Jain & Co. Vs. CIT 81 ITR 754 (SC)?
5. It is not in dispute that Question Nos. (a) (b) and (c) (which are part of the same issue) have been concluded against the Revenue by order dated 31.7.2018 in Income Tax Appeal No. 347 of 2016 in case of this very assessee. Under the circumstances, without recording separate reasons, these questions are not considered.
6. Question No. (d) pertains to Revenue's objection to the grant of deduction to the respondent - assessee under Section 80IB(10) of the Income Tax Act, 1961 ("the Act" for short) in relation to the amount of forfeiture of earnest money. In this context, the Tribunal held and observed that the earnest money is not a deposit but money given by the proposed buyer as token money to the assessee for purchase of flat. We find that after having booked the flat and having paid the earnest money, eventually, the deal did not go through. The assessee retained the part of earnest money 3 of 5 ::: Uploaded on - 20/12/2018 ::: Downloaded on - 27/12/2018 08:55:19 :::
12. os itxa 833-16.doc and returned the rest. It was in this context, the Tribunal held that the said retention of earnest money had direct nexus with the assessee's business of housing development. We do not find any error in the view of the Tribunal. No question arises.
7. Question No. (e) arose out of the Revenue's objection to the deduction of stamp duty expenses. According to the assessing officer, while such expense was incurred, no housing development project had commenced. This expenditure, therefore, was pre-commencement expenditure. The CIT(A) however examined the issue further and came to the conclusion that the stamp duty was paid on a legal proceedings to get the title of the land clear. In his opinion, the expenditure incurred was towards settling the dispute in the land which was wholly and exclusively for the purpose of assessee's business. The Tribunal confirmed this view of the CIT(A), however, on somewhat different grounds. We do not find any error in the view of the CIT(A). The expenditure was in the nature of business expenditure since it was expended for perfecting the title of the land in question. This question, therefore, is not entertained.
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8. In the result, admission of this Tax Appeal is confined to only one question noted above.
9. Ms. Aasifan Khan waives service on admission. [ M.S. SANKLECHA, J. ] [ AKIL KURESHI, J ] 5 of 5 ::: Uploaded on - 20/12/2018 ::: Downloaded on - 27/12/2018 08:55:19 :::