2023 (7) TMI 676 - AT - Income Tax

Revenue's appeals dismissed for additions based on website rates for AYs 2012-13, 2013-14. ITAT upholds CIT(A)'s decision.

DCIT Central Circle-28 New Delhi Versus E.T. Infra Developers Pvt. Ltd.

DCIT Central Circle-28 New Delhi Versus E.T. Infra Developers Pvt. Ltd. - TMI Issues Involved:1. Addition based on website rates for Assessment Years 2012-13 and 2013-14.2. Deletion of addition on account of notional interest.Summary:Issue 1: Addition based on website rates for Assessment Years 2012-13 and 2013-14ITA No.5963/Del/2016 and 3306/Del/2016 are two separate appeals by the revenue preferred against two separate orders of the CIT(A)-29, New Delhi dated 18.08.2016 and 23.02.2017 pertaining to A.Y. 2012-13 and 2013-14 respectively. Since common grievance is involved in both the appeals, they were heard together and are disposed of by this common order for the sake of convenience and brevity though the quantum may differ.In Assessment Year 2011-12, the Assessing Officer applied Rs. 9,500/- per sq foot being rate available on the website, out of which 15% rebate had been allowed as discount and the net rate applied by the Assessing Officer was worked out at Rs. 8,075/- per sq foot. The CIT (Appeals) deleted the addition, and the ITAT affirmed this decision.In Assessment Year 2012-13, the Assessing Officer made the addition on similar grounds after relying upon the papers/evidences discussed in Assessment Year 2011-12. In Assessment Year 2013-14, the Assessing Officer again proceeded on the similar basis as was done in Assessment Years 2011-12 and 2012-13.The ITAT found that the Assessing Officer made an addition of Rs. 54,80,94,533/- to the total income of the assessee on the ground that the assessee has shown the rate of booking in the range of Rs. 5000/- per sq. ft. to 6500/- per sq. ft whereas, the website of the assessee quoted the rate @9,500/- sq. ft. The CIT(A) deleted the addition on several grounds, including the fact that no cash, valuables, or any kind of unexplained investment was found during the search, and all the buyers confirmed the amount recorded in the books of the appellant.The ITAT upheld the CIT(A)'s decision, stating that the addition made by the Assessing Officer was purely based on presumptions and surmises and not based on any cogent or corroborative evidence. The website rates were not sacrosanct, and no corroborative evidence was found during the search to substantiate the receipt of 'on money' from any of the buyers. The buyers confirmed the rate as declared by the assessee in its books of accounts, and no addition was made in the hands of those buyers.The ITAT also noted that the Assessing Officer was not justified in assuming that the whole amount is taxable in the year under consideration, as the assessee had booked less than 25% of the area during the year and had not realized 10% of the project cost. The entire addition was based on surmises, conjectures, and presumption, and therefore, the ITAT upheld the CIT(A)'s order deleting the addition of Rs. 54,74,44,533/-.Issue 2: Deletion of addition on account of notional interestThe CIT(A) found that the advances made by the assessee are in the ordinary course of its business and are given in compliance with its business objective. The CIT(A) also noted that no interest expenditure has been incurred towards the payment of any unsecured loans, and the only interest payment has been made towards the acquisition of land and paid to the Noida authorities, which is capitalized towards work in progress.The ITAT did not find any reason to interfere with the findings of the CIT(A) on this issue and dismissed the ground raised by the revenue.Conclusion:In the result, both the appeals by the revenue are dismissed.