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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SRI MAHAVIR SINGH
AadoSa / O R D E R भहावीय स िंह, उऩाध्मक्ष के द्वाया / PER MAHAVIR SINGH, VP: This appeal of the assessee is arising out of order of the Commissioner of Income Tax (Appeals)]-21, Mumbai [in short CIT(A)], in Appeal No. CIT(A)-21/IT-600/ITO-12(3)(2)/2014-15 vide dated 30.09.2019. The Assessment was framed by the Dy. Commissioner of Income Tax, Ward-9(2) Mumbai (in short DCIT/ AO) for the A.Y. 2008-09 vide order dated 01.12.2010 under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
The first issue in this appeal of assessee is as regards to the order of CIT(A) confirming the action of the Assessing Officer in making addition of ₹29,83,800/- being suppressed sale on account of difference between stamp Duty value & 2 Koradia Construction Pvt. ltd. ; AY 10-11 agreement value under section 68 of the Act. For this, assessee has raised the following ground No.1: -
1. On the facts and circumstances of the case the Ld. CIT(A) erred in confirming the addition of rS.29,83,800/- being suppressed sales on account of difference between stamp Duty value & agreement value of Galas Sold.”
Brief facts are that the Assessing Officer made addition being difference between the stamp Duty value and agreement value of the property sold during the year amounting to ₹29,83,800/- treating the same as suppressed sale and added as unaccounted receipt not disclosed in the books under section 68 of the Act. The relevant finding given by Assessing Officer in Para 4.5 (xi) as under:-
As worked out in the above Para the difference between the Stamp duty value and agreement value of the properties sold during the year amounting to ₹29,83,800/0 is treated as assessee’s suppressed sale and added to the total income of the assessee as unaccounted receipts but not disclosed in books under section 68 of the Act. With regard to the differences pointed out in Market value and agreement values in respect of agreement made in earlier years, the necessary remedial action will be taken accordingly in the respective assessment years.
Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) also confirmed the action of the Assessing Officer on various grounds raised
by assessee for this issue. The CIT(A) also confirmed the action of the Assessing Officer vide Para 10 as under: -
3. Koradia Construction Pvt. ltd. ; AY 10-11 “10. Decision I have considered the facts of the case and submissions made by the appellant. GOA-3 relates to the addition of ₹29,83,800/- made under section 68 of the Income Tax Act, 1961 (hereinafter referred to as 'Act'), 1961 with reference to the difference in price charged from the purchasers of industrial gals at Vasai Virar and the market price adopted by the stamp duty authority while registering the sale agreements in respect of the sale of industrial galas on the ground that the difference between the two in all the cases of documents registered during the year represented undisclosed income/ receipts of the assessee under section 68 of the Income Tax Act, 1961 (hereinafter referred to as 'Act'), 1961. Assessing Officer appears to have referred to the difference between two prices in all the cases as a reference point for making the additions under section 68 of the Income Tax Act, 1961 (hereinafter referred to as 'Act'), 1961. It has been submitted that section 50C of the Income Tax Act, 1961 (hereinafter referred to as 'Act'), 1961 applies to the case of capital assets only and not to the case of stock in trade as was the case of the assessee. However, the Assessing Officer has not referred to the provisions of section 50C at all but has made additions under section 68 of the Income Tax Act, 1961 (hereinafter referred to as 'Act'), 1961 and hence the reference to section 50C is erroneous and is rejected. Another issue raised by the assessee in appeal is that there was likely to be the difference in market prices on the date of booking of the galas since the gals were booked for sale 10/20/30 months back at old prices whereas agreements were made and registered during the previous year was likely to be higher than the booking rate and hence the difference between the two rates existed and it
4. Koradia Construction Pvt. ltd. ; AY 10-11 should not be taxed as income from undisclosed receipts/ income under section 68 of the Income Tax Act, 1961 (hereinafter referred to as 'Act'), 1961. Be that as it may, the assessee has not been able to substantiate its submissions with the evidence and hence, the additions of ₹29,83,800/- made under section 68 of the Income Tax Act, 1961 (hereinafter referred to as 'Act'), 1961 are justified and upheld and its GOA-3 is rejected.”
Aggrieved, now assessee is in appeal before Tribunal.
I have heard the rival contentions and gone through the facts and circumstances of the case. First of all, it is seen from the assessment year the differential amount being difference in stamp duty value and agreement value of the closing stock sold during the year is being an amount of ₹29,83,800/- treated as suppressed sales but added under section 68 of the Act. Secondly, it seems that the Assessing Officer has practically tried to apply the provision of section 50(C) of the Act which deals with capital asset. We noted that the assessee is a builder dealing in real estate development and construction of industrial galas under the name and style of Koradia Construction Pvt. Ltd., a partnership firm. I noted that even the CIT(A) has applied provision of section 68 of the Act to this addition. I noted that the provision of Section 50C will not apply nor the provision of Section 68 of the Act but to this the provision of Section 43CA of the Act are applicable which deals with determination of full value of consideration for assets other than capital asset. But the Provision of Section 40CA was brought into force while Finance Act, 2013 and accordingly, this will be applicable for and from 01.04.2014 i.e. Assessment Year 2014- 5 Koradia Construction Pvt. ltd. ; AY 10-11 15. Hence, this addition made by Assessing Officer and confirmed by CIT(A), need to be deleted on the short issue. Hence, I delete the addition and allow this appeal of assessee. This issue of assessee’s appeal is allowed.
The second issue in this appeal of assessee is as regards to the order of CIT(A) confirming the addition made by Assessing Officer of suppression on monthly maintenance receipts to the extent of ₹3,45,298/-. For this, assessee has raised the following ground No.2: - “2. On the facts and circumstances of the case the Ld. CIT(A) erred in confirming the addition of ₹3,45,298/- being unexplained receipts towards maintenance charges collected.”
7. I have heard the rival contentions and gone through the facts and circumstances of the case. The AO noted that the assessee is not charging monthly maintenance charges uniformly and hence, he worked the maintenance charges for industrial area sold to Samkit at ₹5,51,530/- as against disclosed by assessee of ₹2,06,232/-. The Assessing Officer applied the uniform rate to unsold gala also at 221.80 per sq. mts. The Assessing Officer computed on unsold galas also of receipt of maintenance charges. The CIT(A) confirmed the addition by observing in Para 17 as under:-
17. Decision I have considered the facts and submissions made by the appellant. GOA-6 relates to the taxability of additional amount of maintenance charges of ₹3,45,298/- as income from other sources on the ground that the assessee had not charged 6 Koradia Construction Pvt. ltd. ; AY 10-11 uniform amounts from all the gala holders and hence a sum of ₹3,45,298 (55130-206232) representing the difference between what should have been charged from all the gala holders (₹5,51,530/- and what was charged from them (₹2,06,232/-) represented undisclosed receipts/ income of the assessee. Assessee has not furnished any explanation and/ or the evidence in this regard and hence, this GOA-6 is rejected.
Aggrieved, now assessee is in appeal before Tribunal.
I noted from the arguments of both the sides and case records that the maintenance charges were charged depending upon the date when possession was given and also maintenance of charges were not based on type of size of each gala sold by the assessee. The assessee has accounted for receipt of maintenance charges exactly on actual receipt basis and whatever unsold stock remains on which no receipt charges are received are not accounted for. The Assessing Officer has purely estimated the maintenance charges and accordingly added the same. I find that the addition is without any basis and purely on adhoc basis. Hence, I delete the addition and allow this issue of assessee’s appeal.
In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 28.09.2021. (भहावीय स िंह /MAHAVIR SINGH) (उऩाध्मक्ष / VICE PRESIDENT) भ िंफई, ददनािंक/ Mumbai, Dated: 28.09.2021 सुदीप सरकार, व.निजी सचिव / Sudip Sarkar, Sr.PS