ESSAE SUHAGRAJA PRIVATE LIMITED,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), BANGALORE
Income Tax Appellate Tribunal, “A” BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY
Per Prashant Maharishi, Vice President 1. ITA No. 590/Bangalore/2025 is filed by Essae Suhagraja Private Limited [assessee/appellant] for assessment year 2018 – 19 against the appellate order passed by the Commissioner of Income Tax (A) – 15, Bangalore (the learned CIT – A) dated 31 January 2025 wherein the appeal filed by the assessee against the assessment order passed u/s. 143 (3) read with section 147 of the Income Tax Act (the Act) on 3
ITA Nos.590 to 592/Bang/2025
Page 2 of 19
March 2023 assessing the total income of the assessee at ₹
69,843,018/– against the return filed by the assessee on 30 September
2018 at Rs. Nil, was dismissed.
2. The assessee has raised the following grounds of appeal:-
“ 1. The learned Commissioner of Income-tax (Appeals) 45,
Bengaluru has erred in confirming the impugned order passed by the Assessing officer. The orders passed being bad in law and are liable to be quashed.
Without prejudice:
2. The condition precedent for issue of notice u/s 148 of the Act being absent, mandatory procedures under law not having been followed and the requisite approvals from the specified authority not having been taken, reopening of assessment in the appellant's case is bad in law. Consequently, the reassessment order as passed being also bad in law is required to be quashed.
Without further prejudice:
3.1. The learned C1T(A) has erred in confirming the denial of deduction of Rs. 5.54 crores with respect to cost of TDR without appreciating that the tax treatment of cost of TDR having attained finality in the assessment order for AY 20-21, the learned assessing officer, for the assessment of income for AY 18-19
ought to have followed the same tax treatment. The action of the learned assessing officer in the reassessment order being inconsistent with the concluded position on the same matter is bad law hence the denial of deduction as made/confirmed is to be allowed.
3.2. The learned CIT(A) has erred in not appreciating the fact that the assessing officer himself having concluded, in the assessment order for AY 20-21, that the cost of TDR is allowable as deduction in the income computation for AY 18-19 and has erred in disallowing the claim of TDR. On proper appreciation of facts of the case and the law applicable, the cost of TDR is ought to have been allowed as deduction in the hands of the appellant.
ITA Nos.590 to 592/Bang/2025
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The disallowance being in violation of principles of consistency and fairness in tax proceedings is erroneous, bad in law and liable to be deleted. The learned CIT(A) has failed to appreciate this ground and has erred in confirming the disallowance made by the AO.
3.3
In any case, the appellant's claim for deduction of TDR costs is also allowable on merits of the appellant's case.
(Tax Effect of above ground: 2,12,70,100/-)
4. The appellant also denies liability to pay interests. The interests having been levied erroneously have to be deleted.
5. In view of the above and on other grounds to be adduced at the time of hearing, it is requested that the impugned assessment order be quashed or at least a.
Entire cost of TDR be allowed as deduction and b.
Interest levied be deleted.
(Tax Effect of above ground: 2,12,70,100/)”
The brief fact of the case shows that assessee is a company engaged in the business of real estate, filed its return of income u/s. 139 of the Act on 30 September 2018 at a total income of ₹ 693,860/–. In response to a notice u/s. 148 of the Act the assessee filed its return of income declaring a total income of Rs.1,53,04,240. The assessee has claimed the cost of Transferable Development Rights (TDER) allowable in assessment year 2018 – 19 of ₹ 54,538,780/– as expense under the head business and profession. The case of the assessee was reopened by issue of notice u/s. 148 of the Act stating that assessee failed to declare proportionate capital gain on the transfer of capital gains during the financial year 2017 – 18. Based on this, after taking the approval of the ITA Nos.590 to 592/Bang/2025 Page 4 of 19
Principal Commissioner of Income Tax, Bangalore on 22 March 2022, a show cause notice u/s. 148A (b) of the Act was issued on 23 March
2022. The same was replied on 29th of March 2022 and accordingly notice u/s. 148A (b) was issued to the assessee on 31st of March 2022
disposing off the objections. Notice u/s. 148 was issued on 31st of March 2022 which was responded to by filing the return in response to that on 11 May 2022. 4. The issue in the appeal is that assessee has purchased the land to the extent of ₹ 1,96,020 sq.ft. and building to the extent of 21,350 sq.ft. in the financial year 2005 – 06. This asset was rented out by the assessee and income from house property was declared in the return of income.
The capital asset was converted into stock in trade in the financial year
2011 – 12 upon conversion of land it was held as a capital asset converted into stock in trade and the capital gain of ₹ 191,622,660/–
was computed u/s. 45 (2) of the Act which was liable to be subjected to tax in the year of sale or otherwise transfer of the stock in trade.
Assessee entered into a joint development agreement with a builder in financial year 2013 – 14 as per agreement dated 2 August 2013
registered as document with Sub-