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Showing contexts for: DDA flat allotment in Delhi Development Authority vs Income-Tax Officer on 24 January, 1995Matching Fragments
9. The aforesaid submissions did not find favour with the CIT (Appeals), who proceeded to uphold the action of the Income-tax Officer with reference to the provisions of Sections 194A, 201(1) and 2O1(1A), of the Income-tax Act, 1961. The CIT (Appeals) also referred to the "terms and conditions" pertaining to the allotment of flats under the SFS scheme of the DDA arriving at the ultimate conclusion that the amount adjusted/credited in the accounts of the allottees was covered under the definition of "interest" vis-a-vis Section 2(28A) of the Income-tax Act and was not in the nature of a reduction or variation in the price of the dwelling unit.
(1) The amount in question was a compensation to the allottee due to the non-fulfillment of the "contract" by the DDA in allotting and handing over the physical possession of the flat within the stipulated period.
(2) The agreement between the parties represented a transaction on capital account and not revenue account.
(3) The terms and conditions stipulating payment of interest by the allottee to the DDA for delay in the payment of instalments as also the payment of interest by the DDA to the allottees for the delay in the allotment and handing over of the flats was in fact a "variation" in the purchase price.
(2) Under Section 4 there were three methods of recovering tax, namely, by assessment, by payment of advance tax and lastly by deduction of tax at source by the payer.
(3) That the case of the allottee did not fall under Section 2(24) as he had made a payment for acquiring a flat and due to unforeseen intervening circumstances there was a delay on the part of the DDA in allotting and handing over the physical possession of the flat necessitating thereby a suitable modification in future instalments to be paid by the allottee.
15. The learned Departmental Representative, on the other hand, supported the order passed by the CIT (Appeals) and subsequent arguments advanced by her were a reiteration of the reasons recorded both by the Income-tax Officer as also by the CIT (Appeals) in rejecting the view-point canvassed on behalf of DDA. It was urged that the meaning of the term "interest" was much wider in Section 2(28A) than it was understood with reference to provisions of Section 36(1). According to her, the interest emanating from the agreement between the DDA and the allottees could safely be brought under the term "obligation" appearing in Section 2(28A). For the aforesaid line of argument she referred to the commentary of the learned Author, Sampath Iyengar, 8th Edition Volume I, page 440. The learned Departmental Representative, thereafter took us through the relevant clauses of the terms and conditions offered by the DDA with reference to the "SFS" flats contending in the process that DDA was obliged to pay interest if the flats were not allotted within a stipulated period and correspondingly the said terms and conditions also provided for payment of interest by the allottees in case there was a delay in the payment of instalments. The further stand taken on behalf of the Revenue was to the effect that on the facts of the present case the amount of interest adjusted in the accounts of the allottees was not for any breach of contract but the same was necessitated due to the delay on the part of DDA in allotting and handing over physical possession of the flats to the allottees. It was further submitted that the principle of res judicata did not apply and it was immaterial that in none of the earlier assessment years the Department had raised the question of Tax Deduction at Source on the amount of interest adjusted in the accounts of the allottees. The learned Departmental Representative also went to the extent of contending that the nature of the receipt in the hands of the allottees was not a relevant factor to decide whether the amount in question was interest insofar as DDA was concerned. At this stage the learned Departmental Representative referred to the orders of the tax authorities in the case of the allottee, namely, Shri A. K. Mahadevan vehemently supporting the action of the said tax authorities in subjecting to tax the amount of interest under the head "Income from other sources".