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Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: Shri Shamim Yahya
O R D E R This appeal by the assessee is directed against order of learned CIT(A) dated 31.08.2016 and pertains to assessment year 2008-2009.
Grounds of appeal
read as under:- “1. The learned Commissioner of Income Tax erred in law & on facts in confirming the order of the Assessing Officer in disallowing deduction u/s 80IB(1O) of the I.T.Act, 1961 in respect of the corpus fund charges of Rs.12,70,245/- included in Miscellaneous income of Rs.29,76,380/-.
2. The appellant prays that the order passed u/s 143(3) / 251 / 254 of I.T.Act, 1961 by disallowing deduction u/s 80IB(10) of the I.T.Act, 1961 in respect of the corpus fund charges of Rs.12,70,245/- include in Miscellaneous income of Rs.29,76,380/- is bad in law & should be quashed.”
. M/s.Atul Resorts & Hospitality India Pvt.Ltd.
In this case the issue raised pertains to treatment of corpus fund charges of Rs.12,70,245. The issue is whether the same is to be treated as income eligible for deduction u/s 80IB. In this regard it is noted that Tribunal had earlier remitted the issue to the file of the Assessing Officer. In the said order, Tribunal had followed another order of the Tribunal in M/s.Pathara & Associates and remitted the issue to the file of the A.O. to decide the issue afresh in the light of the above direction given by the Tribunal in the said case. In the said order in case of M/s.Pathare & Associates, the Tribunal had dealt with the issue of corpus fund as under:-
“Ordinarily the corpus fund represents the amount collected by the builder of the housing society which is handed over to society when all the flats are sold. In essence the corpus fund represents a liability which has eventually to be repaid to the society. The learned A.R. contended that the entire amount is not of that nature which was handed over to society at any stage. From the facts it is not clearly emerging as to what is the real nature of the corpus fund in the present case, which is relevant for rendering decision on the eligibility or otherwise of the amount in full or part for deduction under section 80IB(10). We, therefore, set aside the impugned order on this issue and restore the matter to the file of A.O. with a direction to decide this issue afresh as per law after allowing a reasonable opportunity of being heard to the assessee. It is made clear that if such amount of Corpus fund, in full or in part, is subsequently paid by the assessee to the Society or its occupants individually or jointly or in any other way, then such amount cannot be considered as income of this year. Meaning thereby that if a liability is attached to this receipt, to be discharged at a subsequent date, then to that extent the assessee will not be entitled to deduction for the reason that the said amount will not be income at all.”
From the above, it is clear that Tribunal had directed the issue to be examined. That if amount of corpus fund is subsequently paid by the society or its occupants, then such amount cannot be considered as income for this . M/s.Atul Resorts & Hospitality India Pvt.Ltd. year. That than a liability was attached to this receipt and hence assessee will not be entitled to deduction as the said amount will not be income.
When this aspect was examined by the A.O. in the fresh proceedings, the A.O. noted the assessee submission that the said amount was not payable to the society and the assessee has transferred the same as miscellaneous income. The A.O. did not give any finding that the said averment of the assessee is wrong or that on enquiry the A.O. has found that the said amount was payable. Instead the A.O. gave his own exposition for the legal treatment of corpus fund. He referred to the some Court decisions and came to the conclusion that the assessee was not eligible for deduction u/s. 80IB for the sums received as corpus fund. Upon assessee’s appeal, the learned CIT(A) has upheld the A.O.’s action without pointing out as to why the A.O. should depart from the Tribunal’s directions as above. I find that the Tribunal had given a direction in this case earlier. The said directions have not been challenged by the Revenue, hence, it was incumbent upon the authorities below to follow the above direction of the Tribunal. The Tribunal had directed that the issue to be examined and if the amount involved was payable then it could not be treated as income qualifying for deduction. I find that there is no finding whatsoever that the said amount is payable, but the A.O. upon his own exposition of law has proceeded to deny deduction of the said amount. In such situation, I find that the orders of the authorities below are liable to be reversed. Hence, I set aside the orders of the authorities below and hold that in view of the earlier directions of the ITAT and in accordance with the material produced before me and the findings of the A.O., the amount involved being corpus fund received is not payable. Hence
. M/s.Atul Resorts & Hospitality India Pvt.Ltd. as per the Tribunal directions earlier, the said amount qualified for deduction u/s 80IB.