THE PR. COMMISSIONER OF INCOME TAX -18 vs. SANDEEP CHONA

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ITA/584/2018HC DelhiDLHC01100387201815 May 2018Bench: HON'BLE MR. JUSTICE S. RAVINDRA BHAT,HON'BLE MR. JUSTICE A. K. CHAWLA2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the findings of the ITAT were essentially on facts. The Court was of the opinion that no substantial question of law arose from the ITAT's order. Consequently, the appeal filed by the Revenue was dismissed. The operative direction was the dismissal of the appeal. No specific issue was left undecided; the court found no substantial question of law to decide.

What were the facts?

The assessee, Sandeep Chona, had his income tax returns taken up for scrutiny. The Assessing Officer (AO) determined the total income by adding ₹1,24,46,249/- under Section 41(1) of the Income Tax Act. The Income Tax Appellate Tribunal (ITAT) noted that the assessee had received amounts as consideration for the sale of an immovable property, which did not materialize. The assessee was a facilitator for the purchase of land in a transaction that never matured. The ITAT allowed the claim under Section 41(1) in these circumstances. The Principal Commissioner of Income Tax -18 (the Revenue) appealed this decision.

What were the issues?

1. Whether the Income Tax Appellate Tribunal (ITAT) erred in allowing the claim for cessation of trading liability under Section 41(1) of the Income Tax Act, 1961, when the amounts received by the assessee were in relation to a property transaction that did not materialize? The Revenue contended that the ITAT's decision was incorrect. The assessee argued that he was a facilitator for a land purchase transaction that never matured, and the amounts received were not in the nature of income that could be taxed under Section 41(1). The ITAT's finding was that the assessee was not the vendor but a facilitator, and the transaction did not materialize.

Which sections of the Income-tax Act were involved?

Section 41(1)

AI-generated summary — verify with the full judgment below

$~70 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 584/2018

THE PR. COMMISSIONER OF INCOME TAX -18 ..... Appellant

Through Mr. Puneet Rai, Adv.

versus

SANDEEP CHONA

..... Respondent Through Mr. Sandeep Sapra and Mr. Manu K. Giri, Advs.

CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA

O R D E R %

15.05.2018

The question sought to be urged is with respect to the relief given by the Income Tax Appellate Tribunal (ITAT) in regard to the claim for cessation of trading liability under Section 41(1) of the Income Tax Act (‘the Act’ ).

The assessee at the relevant time derived income from house property and had filed his returns which were taken up for scrutiny. The Assessing Officer (AO) determined the total income by adding `1,24,46,249/- under Section 41(1) of the Act. The ITAT noted that the assessee had received the amounts towards consideration for sale of an immovable property which did not materialize. In other words, the assessee was not the vendor but was the facilitator for purchase of land in respect of transaction, which never matured. In these

circumstances, the claim under Section 41(1) of the Act was allowed by the ITAT.

Having considered the submissions of the Revenue as well as the material on record, this court is of the opinion that the findings are essentially on facts. No substantial question of law arises. The appeal is dismissed.

S. RAVINDRA BHAT, J

A. K. CHAWLA, J MAY 15, 2018 rc

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