Housing & Urban Development Corporation Ltd. (HUDCO), New Delhi V. Addl. CIT, Range-12, New Delhi

ITA 687/DEL/2006

• Counselvise Citation: 68720114 RSA 2006
• Duration Of Justice: 8 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 25-09-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 01-03-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S MEENA
• Assessee Lawyers: K D DWIVEDI
• Keywords: Depreciation
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H NEW DELHI BEFORE SHRI H.S.SIDHU, J.M. AND SHRI J.SUDHAKAR REDDY, AM ITA NO: 687 /DEL/20 06 AY : - 200 3 - 04 HOUSING & URBAN DEVELOPMENT VS. ACIT, CIRCLE 12(1) (HUDCO) NEW DELHI HUDCO BHAWAN, INDIA HABITAT CENTRE LODHI ROAD NEW DELHI 110 003 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.D.DWIVEDI, ADV. RESPONDENT BY : SH. R.S.MEENA, CIT, D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE LD.CIT(APPEALS) - XV, NEW DELHI DATED 31.01.2006 PERTAINING TO THE AY 2003 - 04. 2. FACTS IN BRIEF : - THE ASSESSEE IS IN THE BUSINESS OF PROVIDING CONSULTANCY FOR HOUSING AND INFRASTRUCTURE PROJECTS. IT FILED ITS RETURN OF INCOME ON 28.11.2003 DECLARING TOTAL INCOME OF RS.332,35,33, 463/ - . THE AO COMPLETED THE ASSESSMENT U/S 143(3) ON 28.2.2005 DETERMINING THE TOTAL INCOME AT RS.386,00,47,520/ - . AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. LD.CIT(A) - XV, NEW DELHI GRANTED PART RELIEF. ITA NO. 687/DEL/2006 AY 2003 - 04 HOUSING & URBAN DEVELOPMENT CORPORATION LTD. 2 3. FURTHER AGGRIEVED, THE ASSESSEE IS I N APPEAL BEFORE US ON THE FOLLOWING GROUNDS. 1. THE LD.AO HAS ERRED IN FACT IN DISALLOWING A SUM OF RS.34,35,000/ - BEING ADMINISTRATIVE CHARGES INCOME ON ANDREWS GANJ PROJECT. 2. THE LD.AO HAS ERRED IN FACT IN DISALLOWING A SUM OF RS.13,39,55,935/ - AS P RIOR PERIOD EXPENDITURE. 3. THE LD.AO HAS ERRED IN FACT IN DISALLOWING A SUM OF 163106071/ - BEING INTEREST ACCRUED BUT NOT DUE ON FOREIGN LOANS. 4. THE LD.AO HAS ERRED IN FACT IN DISALLOWING A SUM OF RS.10,42,43,077/ - BEING FINANCIAL CHARGES WRITTEN OFF . 5. THE LD.AO HAS ERRED IN FACT IN DISALLOWING A SUM OF RS.37,40,546/ - BEING DEPRECIATION ON ESTIMATED INCREASE IN COST OF PROPERTIES. 6. THE LD.AO HAS ERRED IN FACT IN ADDING A SUM OF RS.2,45,280/ - BEING LOWER INCOME BOOKED ON BHIKAJI CAMA PLACE. 7. THE LD.AO HAS ERRED IN FACT IN DISALLOWING A SUM OF RS.9,05,73,353/ - BEING REVERSAL OF INCOME OF BHIKAJI CAMA PLACE. 8. THE APPELLANT CRAVES TO ADD, DELETE OR MODIFY ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 4. WE HAVE HEARD SHRI K.D.DWIVEDI, THE LD.COUNSEL FOR THE ASSESSEE AND SHRI R.S.MEENA, LD.CIT, DR ON BEHALF OF THE REVENUE. 5. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ON PERUSAL OF MATERIAL ON RECORD, ORDERS OF THE AUTHORITIES BELOW, CASE LAWS CITED, WE HOLD AS FOLLOWS. 6. ADMITTEDLY GROUND NOS. 1 TO 6 ARE NO MORE RES INTEGRA AS IDENTICAL ISSUES HAVE BEEN ADJUDICATED BY THE DELHI H BENCH OF THE TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE AY 2002 - 03 IN ITA 686/DEL/2006 VIDE ORDER DT. 20 TH DECEMBER,2013. 6.1. NE VERTHELESS, THE LD.COUNSEL FOR THE ASSESSEE SRI K.D.DWIVEDI WHILE ADMITTING THAT GROUND NO.1 HAS BEEN ADJUDICATED BY THE TRIBUNAL AGAINST THE ITA NO. 687/DEL/2006 AY 2003 - 04 HOUSING & URBAN DEVELOPMENT CORPORATION LTD. 3 ASSESSEE, SUBMITTED THAT QUANTIFICATION OF THE INCOME CAN BE DONE ONLY ON QUA NTIFI CATION OF THE COST, WHICH CAN BE DONE ONLY WITH THE APPROVAL OF GOVERNMENT OF INDIA. H E SUBMIT TED THAT : (A) ADDING NOTIONAL INCOME IS BAD IN LAW; (B) THE QUANTIFICATION IS ALSO BAD IN LAW 6.2. THE LD.D.R. SUBMITTED THAT IN THE EARLIER YEAR IT WAS A CASE OF REVERSAL OF NOTIONAL INCOME WHICH WAS DISALLOWED AND WHEREAS THIS YEAR THE ASSESSEE CLAIMS DELETION OF NOTIONAL INCOME, WHICH WOULD AMOUNT TO THE SAME. HE CONTENDED THAT THE TRIBUNAL CONSIDERED ALL THE ISSUES AND ADJUDICATED THE MATTER AGAINST THE ASSESSEE. 7. AFTER HEARING RIVAL CONTENTIONS , WE HOLD THAT, ON THE PRINCIPLE AS TO WHETHER THE INCOME HAS TO BE TAXED OR NOT, THE ISSUE IS NO MORE RES INTEGRA AS THE TRIBUNAL HAS DECIDED THE ISSUE AGAINST THE ASSESSEE. CONSISTENT WITH THE VIEW TAKEN THEREIN WE HOLD THAT THE INCOME IN QUESTION IS TA XABLE IN THE HANDS OF THE ASSESSEE. NEVERTHELESS ON ISSUES OF QUANTIFICATION WE ARE OF THE CONSIDERED VIEW THAT THE MATTER SHOULD BE REMITTED BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW, AFTER CONSIDERING THE COST AS APPROVED BY GOVERNMENT OF INDIA. IN THE RESULT THIS GROUND IS ALLOWED IN PART. 8. GROUND NO.2 IS ON THE DISALLOWANCE OF PRIOR PERIOD EXPENDITURE. CONSISTENT WITH THE VIEW TAKEN AT PARA 10 PAGE 4 OF THE ORDER OF THE TRIBUNAL FOR THE AY 2002 - 03 IN THE ASSESSEE S OWN CASE, WE SET ASIDE THE ISSUE TO THE FILE ITA NO. 687/DEL/2006 AY 2003 - 04 HOUSING & URBAN DEVELOPMENT CORPORATION LTD. 4 OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. IN THE RESULT THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO.3 IS ON THE DISALLOWANCE OF INTEREST ACCRUED BUT NOT DUE ON FOREIGN LOANS. CONSIST ENT WITH THE VIEW TAKEN AT PARAS 11 AND 13 PAGE S 4 AND 5 OF THE ORDER OF THE TRIBUNAL FOR THE AY 2002 - 03 IN THE ASSESSEE S OWN CASE, WE DIRECT THE AO TO ALLOW DEDUCTION OF INTEREST ACCRUED ON SUCH FOREIGN LOANS. IN THE RESULT THIS GROUND IS ALLOWED. 1 0. GROUND NO.4 IS ON THE DISALLOWANCE OF FINANCIAL CHARGES WRITTEN OFF. THE TRIBUNAL AT PARA 16 FOLLOWED AN EARLIER ORDER AND HAD SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION. CONSISTENT WITH THE VIEW TAKEN AT PARA 16 PAGE 7 OF THE O RDER OF THE TRIBUNAL FOR THE AY 2002 - 03 IN THE ASSESSEE S OWN CASE, WE SET ASIDE THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. IN THE RESULT THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 11. GROUND NO.5 IS ON THE ISSUE OF DISALLOWANCE OF DEPRECIATION ON ESTIMATED INCREASE IN THE COST OF PROPERTIES. CONSISTENT WITH THE VIEW TAKEN BY THE TRIBUNAL IN THE ASSESSEE S OWN CASE IN THE EARLIER AYS, WE DISMISS THIS GROUND OF THE ASSESSEE FOR THE REASON THAT DEPRECIATION IS TO BE ALLOWED ONLY ON THE ACTUAL COST OF THE ASSETS AND NOT ON ESTIMATION BASIS. IN THE RESULT THIS GROUND OF THE ASSESSEE IS DISMISSED. 12. GROUND NO.6 IS AGAINST ADDITION OF RS.2,45,280/ - BEING LOAN ON THE INCOME BOOKED AT BHIKAJI CAMA PALACE. THE AO DEALT WITH THIS ISSUE AT PARA 9.3 PAGE 15 OF HIS ORDER, WHICH IS EXTRACTED BELOW FOR READY REFERENCE. 9.3. FROM THE DETAILS SUBMITTED THE COST OF THE PROJECT, EXCLUDING THE ESTIMATED EXPENDITURE OF RS.26,25,000/ - IS SHOWN AT RS.31,99,76,545/ - . THE AREA SOLD DURING THE YEAR IS 9.344% OF THE TOTAL AREA TO WHICH THE COST RELATES, AND THE PROPORTIONATE COST WORKS OUT TO RS.2,98,98,608/ - . THE SALE CONSIDERATION IS ITA NO. 687/DEL/2006 AY 2003 - 04 HOUSING & URBAN DEVELOPMENT CORPORATION LTD. 5 RS.18,58,43,150/ - LEAVING OUT A SURPLUS PROFIT OF RS.15,59,44,542/ - . THE PROFIT BOOKED IS RS.15,56, 99,262/ - , WHICH IS SHORT OF THE ACTUAL PROFIT BY RS.2,45,280/ - . THIS IS ADDED TO THE TOTAL INCOME. THE TOTAL OF THE EXCESS PROFIT BOOKED IN EARLIER YEARS IS RS.32,88,03,942/ - AND 9.344% OF THIS WORKS OUT TO RS.3,07,23,440/ - . THIS IS ON AN ESTIMATE BASIS , CAN BE SAID TO BE THE PROFIT RELATING TO THE AREA SOLD DURING THE RELEVANT PY WHICH HAD BEEN BOOKED AS INCOME ON NOTIONAL BASIS IN EARLIER YEARS. HOWEVER, AS HELD BY THE CIT, DELHI IV IN HER ORDER U/S 263 SUCH POSITION HAS TO BE CONSIDERED ONLY WHEN THE PROJECT WAS FINALLY SOLD. IN THE PRESENT AY ONLY A PORTION OF THE PROPERTY HAS BEEN SOLD. HENCE, DEDUCTION ON THIS ACCOUNT IS NOT ALLOWED TO THE ASSESSEE. THE EXCESS WRITTEN BACK BY THE ASSESSEE AMOUNTING TO RS.9,05,73,353/ - IS ADDED BACK TO THE TOTAL INCOME. 13. A PERUSAL OF THE SAME DEMONSTRATES THAT THE AO WAS OF THE VIEW THAT THE AMOUNT IN QUESTION CANNOT BE ADDED IN VIEW OF THE ORDER OF THE LD.CIT(A) - VI, NEW DELHI PASSED U/S 263 OF THE ACT. WHILE COMING TO SUCH A CONCLUSION, THE AO SURPRISINGLY ADDED THE AMOUNT WHILE COMPUTING THE INCOME. IN OUR VIEW THIS IS AN ERROR. THUS THIS GROUND OF THE ASSESSEE IS ALLOWED. 14. GROUND NO.7 IS DISMISSED AS NOT PRESSED . GROUND NO. 8 IS GENERAL IN NATU R E. 15. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED IN PA RT. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH OCTOBER ,2014. SD/ - SD/ - ( H.S.SIDHU ) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: THE 17 TH OCTOBER , ,2014 *MANGA ITA NO. 687/DEL/2006 AY 2003 - 04 HOUSING & URBAN DEVELOPMENT CORPORATION LTD. 6 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FI LE BY ORDER ASST. REGISTRAR