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.

The appeals by the revenue, relating to addition based on website rates for Assessment Years 2012-13 and 2013-14, were dismissed. The ITAT upheld the ... Difference in rate of booking price - sale / booking of flats - different rates have been quoted/booked for the same area and the same project - On money paid by investor - 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. - HELD THAT:- Revenue cannot force the assessee to sell its space at a particular rate and the department cannot dictate terms to the assessee to sell at a particular rate. The whole addition made by the Assessing Officer in the instant case, in our opinion is purely based on presumptions and surmises and not based on any cogent or corroborative evidence. Since, the buyers to whom the space have been sold have admitted to have purchased at the price shown by the assessee in the books of account and since no addition has been made in the hands of those buyers and the basis of entire addition is on account of the price quoted in website, therefore, we find force in the arguments of the learned counsel for the assessee that such addition made by the AO merely on presumptions and surmises is not sustainable. We find the website does not give the rate as to whether it is carpet area or built up area or super built up area or the amenities, the quality of construction, special locational benefits and other value added facilities, etc. Nothing has been mentioned about the responsible person for contact or any address, as per the snapshot shown in the assessment order. Even the post search enquiry also does not reveal any “on money” paid by any of the investor. Assessee has already demonstrated that these are two independent units sold to two different persons and in fact the assessee has sold the above two flats @ Rs. 6000/- per sq. ft. Whereas the average price of the two flats comes to Rs. 5000/- per sq. ft. We, therefore, find merit in the argument of the assessee that the same cannot be the basis for making huge addition by adopting the rate of Rs. 8,075/- per sq. ft. Since, there is no iota of evidence that the assessee has received any extra money over and above the booking rate shown by the assessee in the books of account, addition in our opinion is based on surmises, conjectures and presumption. Decided in favour of assessee. Addition on account of notional interest - As we find that the CIT(A) has given a categorical finding that the advances made by the assessee are in the ordinary course of its business and are given in compliance of its business objective. We also find that the CIT(A) has given a finding that no interest expenditure has been incurred towards the payment of any unsecured loans the only interest payment has been made towards the acquisition of land and paid to the Noida authorities which is also capitalized towards work in progress. No reason to interfere with the findings of the CIT(A). Ground dismissed. Appeals by the revenue are dismissed. 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.