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Documents citing Trehan Promoters And Builders Pvt. ... vs Acit, Circle-25(2), New Delhi on 19 October, 2022

Dev Anand Bhatt,Haldwani vs Ddit/Adit Intl Lkn, Lucknow on 28 August, 2025

6. We have duly considered the facts and circumstances of the case. The common areas are intrinsic to any part of the building and their cost is almost always loaded on to the cost of the flats being sold, as the purchasers are common owners of the common area. The question that arises is how the profit on the sale of a flat is to be determined. The ld. AO is of the opinion that the total cost of the building has to be divided by the total area (including the common areas) and then multiplied by the area being sold. The assessee, on the other hand, is of the view that the total cost of the building (including the cost of the common areas) has to be divided into the area of the flats actually being sold and then multiplied by the area of the individual flat. This would allow for the common areas to be included in the cost of the flat whereas if the formula adopted by the ld. AO was taken, then the common areas would not be included in the cost of the flat and since there was no evidence to indicate that the common buyers had purchased them separately or that they had not been sold, that valuation could not be accepted. For the same, the assessee has placed reliance on the judgment of the ITAT in the case of Trehan Promoters and Builders Private Limited vs. ACIT in ITA No.9872/Del/2019 and CO No.9/Del/2020 dated 19.10.2022. After considering the issues, we are in agreement with the assessee. The cost of constructing the entire 21,845.66 Sq. Ft., has to be loaded onto the overall area of the seventeen flats i.e. 18,932 6 ITA No.1/LKW/2025 Dev Anand Bhatt A.Y. 2019-20 Sq. Ft. as only then will those expenses incurred on the common areas be accounted for while computing the cost to the assessee in constructing the building. Subsequently, the per unit gross price is to be arrived at by multiplying the per unit area so computed, into the overall area of the flat. That would enable a proper computation of the profit from the sale of each flat. Accordingly, we feel that the ld. AO is not correct in the approach taken by him as it amounts to a situation where the common areas remained unsold in the hands of the builder, which is not the way projects are sold. In the circumstances, the addition made does not appear to be based on sound footing and it is accordingly deleted.
Income Tax Appellate Tribunal - Lucknow Cites 6 - Cited by 0 - Full Document

Panjit Basak, Kolkata vs Ito, Kolkata on 18 July, 2023

Considering the facts of the assessee's case and also the ratio laid down drawn in the above decisions and also the CBDT Instruction No. 5/2016, we are of the considered view that the AO has exceeded his jurisdiction in enquiring into those issues beyond the scope of limited scrutiny even prior to the date of conversion which is in clear violation of mandate given by CBDT in the said Circular and has been held by the Co-ordinate Bench of Delhi in the case of Dev Milk Foods Pvt. Ltd. (supra) to be bad in law. We note that CBDT has in para 4 of the said instruction clarified that in a limited scrutiny, the scrutiny assessment proceedings would initially be confined only to issues and questionnaire, enquiry, investigation etc. would be restricted to such issues in the limited scrutiny. Only upon conversion of such case to complete scrutiny after following the procedure laid down as stated, the AO may examine the issues other than the issues involved in the limited scrutiny but in the present case the procedures were not followed and assessment was conducted in violation of this Instruction. In our opinion, the order passed by the AO is bad in law and cannot be sustained for the said reason. Accordingly we quash the assessment order as nullity and bad in law. Issue raised by the assessee in ground no. 1 is allowed."
Income Tax Appellate Tribunal - Kolkata Cites 12 - Cited by 0 - Full Document

Sanjay Lunia,Ajmer vs Ito Wd-2(1), Ajmer on 19 February, 2025

Eventually no addition was made on any of the above issues and assessment was completed after making addition by invoking provisions of section 50C and also by disallowing cost of acquisition of other land sold by assessee. Appeal of assessee in this regard was allowed by holding the action of ld.AO as beyond jurisdiction." ACIT vs Trehan Promoters and Builders Pvt. Ltd. in CO No.9/Del/2020 "Additions made by ld.AO beyond the scope of Limited Scrutiny held to be beyond jurisdiction and deleted."
Income Tax Appellate Tribunal - Jaipur Cites 27 - Cited by 0 - Full Document
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