Tribunal modifies tax assessment, resolves double taxation issue in favor of assessee.

The Tribunal partly allowed the appeals, deleting the addition made by the AO and upheld by the CIT(A) regarding the 14% share in the project sale consideration. The Tribunal modified the CIT(A)'s direction on taxing the profit on unsold units, specifying that only the actual profit related to the assessee should be considered. It resolved the issue of double taxation in favor of the assessee, concluding that the AO's addition resulted in unwarranted double taxation. The appeals were partly allowed, with the order pronounced on 07-12-2018.

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Issues Involved:
1. Addition based on co-ownership share in the project.
2. Addition of 14% share in unsold units in the income of the assessee in the year of actual sale.
3. Double taxation of the same income in the hands of the appellant and respective co-owners.

Issue-wise Analysis:

1. Addition based on co-ownership share in the project:

The primary issue in this appeal concerns the addition made by the CIT(A) on the grounds that the assessee, being a co-owner with a 14% share in the project, should have earned 14% of the entire sale consideration realized on the sale of all units, rather than the actual sale consideration realized by the assessee. The assessee argued that each co-owner was allotted interest in the built-up areas proportional to their shareholding as per the Deed of Declaration dated 02.02.2008. The AO noted that the total consideration of the project, including unsold stock, was Rs. 50,89,08,000, and the assessee's share of consideration should be Rs. 7,12,47,120 instead of the disclosed Rs. 6,45,84,500, leading to an addition of Rs. 66,62,620. The CIT(A) upheld the AO's addition but directed the AO to exclude the profit of unsold units from the current year's income and tax it in the year of actual sale.

The Tribunal found that the AO's allocation of 14% of the total consideration realized on the sale of all units was incorrect and contrary to the Deed of Declaration. The Tribunal emphasized that each co-owner had the autonomy to decide the sale price and timing of their allocated units, and the sale consideration realized by other co-owners should not determine the assessee's profit. Consequently, the Tribunal deleted the addition made by the AO and confirmed by the CIT(A).

2. Addition of 14% share in unsold units in the income of the assessee in the year of actual sale:

The CIT(A) directed the AO to exclude the profit of unsold units from the current year's income and bring it to tax in the year of actual sale, to the extent of the assessee's 14% share. The assessee contended that it had no right or interest in the unsold units as per the Deed of Declaration. The Tribunal modified the CIT(A)'s direction, stating that only the actual profit on the share of the sale of unsold units relating to the assessee, as per the Deed of Declaration, should be considered. If the unsold units did not relate to the assessee, no addition should be made.

3. Double taxation of the same income in the hands of the appellant and respective co-owners:

The assessee raised the issue of double taxation, arguing that the addition made and upheld by the CIT(A) resulted in double taxation of the same income in the hands of the appellant and the respective co-owners. The Tribunal had already addressed this issue while adjudicating the first ground, concluding that the addition made by the AO amounted to double taxation and was unwarranted.

Judgment Summary:

The Tribunal allowed the appeals of the assessees partly. It deleted the addition made by the AO and confirmed by the CIT(A) regarding the 14% share in the project sale consideration. The Tribunal also modified the CIT(A)'s direction concerning the taxation of the profit on unsold units, stating that only the actual profit on the share of the sale of unsold units relating to the assessee should be considered. The issue of double taxation was resolved in favor of the assessee, as the Tribunal found that the addition made by the AO resulted in double taxation. The appeals were partly allowed, and the order was pronounced in the open court on 07-12-2018.

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