A.C.I.T., Agra V. M/s Global Heritage Venture Ltd,6-C, Gulmohar, New Delhi

ITA 262/AGR/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4454 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 15-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Assessee Lawyers: APPELLA
• Keywords: Capital asset; Business income
• Section: 143(3); 153C

Judgement Text

1 ITA NOS. 387/DEL/2017 & 262/D EL/2016 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER (THROUGH VIDEO CON FERENCING) I.T.A. NO. 262/AGRA/20 16 (A.Y 2012-13) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(1), AGRA (APPELLANT) VS GLOBAL HERITAGE VENTURE LTD. 6-C,GULMOHAR, 6C MIDDLETOWN STREET, WARD-63, KOLKATA, WEST BENGAL OR 12, RING ROAD, LAJPAT NAGAR- IV, NEW DELHI-110024 AACCK9842M (RESPONDENT) AND I.T.A. NO. 387/AGRA/20 17 (A.Y 2013-14) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2(1), AGRA (APPELLANT) VS M/S GLOBAL HERITAGE VENTURE LTD. 12, RING ROAD, LAJPAT NAGAR- IV, NEW DELHI AACCK9842M (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE REVENUE AGAINST ORDER DATED 31.05.2016 PASSED BY CIT(A)-23, NEW DELHI FOR ASSES SMENT YEAR 2012-13 AND APPELLANT BY MS. SUNITA SINGH, CIT DR RESPONDENT BY SH. SUDESH GARG, ADV DATE OF HEARING 06.09.2021 DATE OF PRONOUNCEMENT 01.10.2021 2 ITA NOS. 387/DEL/2017 & 262/D EL/2016 ORDER DATED 30.05.2017 PASSED BY CIT(A)-24, NEW DEL HI FOR ASSESSMENT YEAR 2013-14. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A. NO. 262/AGRA/2016 (A.Y 2012-13) 1. THAT THE ID. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 1,54,29,06,058/- MADE BY AO TREATING THE CAP ITAL ASSET AS STOCK IN TRADE WITHOUT APPRECIATING THE FACT THAT THE ASSESS ES IS A REAL ESTATE COMPANY AND NO ADDITION IN WIP WAS MADE DURING THE YEAR. TH E AO HAS RIGHTLY WORKED OUT THE BUSINESS PROFIT ON THIS TRANSACTION TREATIN G THE SAME AS STOCK IN TRADE. 2. THAT THE OF LD. CIT (A)-II, AGRA, HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 8,57,25,871/- MADE BY AO, IGNOR ING THE FACT THAT THE ASSESSES HAS SHOWN INTEREST OF RS. 8,57,25,871/- IN THE CASH FLOW STATEMENT WHEREAS IN THE P & L ACCOUNT ONLY RS. 38,31,079/- H AS BEEN SHOWN. THE AO HAS RIGHTLY ADDED THE INTEREST AMOUNT IN THE INCOME OF THE ASSESSEE AS SHARE OF THE DISPUTED PARTIES IN THE INTEREST WILL ARISE ONLY. 3. THAT THE ORDER OF LD. COMMISSIONER OF INCOME TAX ( APPEALS) BEING ERRONEOUS IN LAW AND ON FACTS DESERVES TO BE QUASHE D AND THAT OF THE ASSESSING OFFICER DESERVES TO BE RESTORED. I.T.A. NO. 387/AGRA/2017 (A.Y 2013-14) 1. THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.16,15,54,801/- MADE BY AO, IGNORING THE FACT THA T THE ASSESSEE HAS SHOWN INTEREST ON FDR OF RS.1,21,74,561/- ONLY WHER EAS THE INTEREST OF RS.16,15,54,801/- RECEIVED ON FDR WITH PNB HAS NOT BEEN SHOWN. THE AO HAS RIGHTLY ADDED THE INTEREST AMOUNT IN THE INCOME OF THE ASSESSEE AS SHARE OF THE DISPUTED PARTIES IN THE INTEREST WILL ARISE ONLY AFTER PAYMENT OF DUE TAXES. 2. THAT THE ORDER OF LD. COMMISSIONER OF INCOME TAX (A PPEALS) BEING 3 ITA NOS. 387/DEL/2017 & 262/D EL/2016 ERRONEOUS IN LAW AND ON FACTS DESERVES TO BE QUASHE D AND THAT OF THE ASSESSING OFFICER DESERVES TO BE RESTORED. 3. FIRSTLY, WE ARE TAKING UP THE APPEAL FOR A.Y. 20 12-13. THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2012-13 ON 31 /3/2014 DECLARING THE TOTAL INCOME OF RS. 38,31,080/-. THE ORIGINAL ASSE SSMENT WAS FRAMED U/S 143(3) OF THE INCOME TAX ACT VIDE ORDER DATED 27/3/ 2015 THEREBY ASSESSING TOTAL INCOME AT RS.121,70,39,930/- 4. BEING AGGRIEVED BY THE PENALTY ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT (A) ALLOWED THE APPEAL OF THE ASSE SSEE. 5. AS REGARDS TO GROUND NO.1, THE LD. DR SUBMITTED THAT THE CIT(A) WAS NOT RIGHT IN DELETING THE ADDITION OF RS. 154,29,06,058 /-MADE BY THE ASSESSING OFFICER TREATING THE CAPITAL ASSET AS STOCK IN TRA DE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE IS A REAL ESTATE COMPANY AND NO A DDITION IN WIP WAS MADE DURING THE YEAR. THE LD. DR SUBMITTED THAT THE ASS ESSING OFFICER HAS RIGHTLY WORKED OUT THE BUSINESS PROFIT ON THIS TRANSACTION TREATING THE SAME AS STOCK IN TRADE. 6. THE LD. AR RELIED UPON THE DECISION OF THE CIT(A ). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE RELEVANT MATERIALS AVAILABLE ON RECORD. THE CIT(A) HAS GIVEN A CLEAR FINDING THAT THE CONSTRUCTION OF HOTEL AS CAPITAL WORK IN PROGRESS WAS ACCEPTED B Y THE REVENUE FOR ASSESSMENT YEAR MADE U/S 153C READ WITH SECTION 143 (3) OF THE ACT FOR ASSESSMENT YEAR 2007-08 TO 2009-10 AS WELL AS FOR A SSESSMENT YEAR 2010-11 AND 2011-12. THUS, THE CONTINUOUS STAND OF THE REV ENUE WAS THESE ARE WORK IN PROGRESS TREATED TO BE AS CAPITAL ASSET AND NOT AS STOCK-IN- TRADE. THE TRANSFER OF THE HOTEL ON SALE CANNOT BE TERMED AS S HORT TERM CAPITAL GAIN OR 4 ITA NOS. 387/DEL/2017 & 262/D EL/2016 EVEN BUSINESS INCOME AND THUS, THE ASSESSEE HAS RIG HTLY COMPUTED THE SAME AS LONG TERM CAPITAL GAIN ON SALE WHICH WAS REFLECT ED IN PROFIT AND LOSS ACCOUNT AND WAS SUBSEQUENTLY ALSO DONE. THUS, THE DELETION OF THE ADDITION BY THE CIT(A) WAS RIGHT AND THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CIT(A). HENCE, GROUND NO. 1 OF REVENUES APPEAL IS DISMISSED. 8. AS REGARDS GROUND NO. 2, THE LD. DR SUBMITTED TH AT THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.8,57,25,871/- IGNORING THE FACT THAT THE ASSESSEE HAS SHOWN INTEREST OF RS. 8,57,25,871/- IN THE CASH FLOW STATEMENT WHEREAS IN THE PROFIT AND LOSS ACCOUNT ONLY RS.38,31,079/- HAS BEEN SHOWN. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS RIGHTLY AD DED THE INTEREST ACCOUNT IN THE INCOME OF THE ASSESSEE AS SHARE OF THE DISPUTES PARTIES IN THE INTEREST. 9. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE INTEREST INCOME ON FIXED DEPOSIT IN RE SPECT OF ARBITRATION PROCEEDING AND THE SAME CANNOT BE TAXABLE DURING TH E YEAR UNDER CONSIDERATION AS THE YEAR OF TAXABILITY OF THE SAME WAS CONTINGENT UPON THE FINAL DECISION OF THE ARBITRARY TRIBUNAL. DURING T HE COURSE OF HEARING, THE LD. AR SUBMITTED THAT IN SUBSEQUENT YEAR THE INTEREST W AS OFFERED TO TAX BY THE ASSESSEE. THEREFORE, THE CIT(A) HAS RIGHTLY DELETE D THE SAID ADDITION AND THERE IS NO NEED TO INTERFERE WITH THE FINDINGS OF THE CI T(A). HENCE, GROUND NO. 2 OF THE REVENUES APPEAL IS DISMISSED. 11. HENCE, APPEAL BEING ITA NO. 262/AGRA/2016 FOR A.Y. 2012-13 FILED BY THE REVENUE IS DISMISSED. 12. AS RELATES TO APPEAL BEING ITA NO.387/AGRA/2017 FOR ASSESSMENT YEAR 2013-14, THERE IS ONLY ONE ISSUE REGARDING THE INTE REST WHICH IS IDENTICAL TO 5 ITA NOS. 387/DEL/2017 & 262/D EL/2016 GROUND NO. 2 OF THE APPEAL FILED BY THE REVENUE FOR ASSESSMENT YEAR 2012-13 AND THE AFORESAID FINDINGS WILL BE APPLICABLE IN TH IS YEAR. NO DISTINGUISHING FACT WERE POINTED OUT BY THE LD. DR, HENCE, ITA NO. 387/AGRA/2017 IS DISMISSED. 13. IN RESULT, BOTH THE APPEAL OF THE REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 01 ST DAY OF OCTOBER, 2021 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 01/10/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NOS. 387/DEL/2017 & 262/D EL/2016