TaxTMI 
TaxTMI 
2019 (7) TMI 796
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....ith regard to disallowance of interest paid to M/s Casper Entertainment Pvt Ltd , Pragati Gems Pvt Ltd and Duke Business Pvt Ltd in the sums of Rs. 1,64,384/- ; Rs. 1,57,151/- and Rs. 82,191/- respectively totaling to Rs. 4,03,726/-. 3.1. We have heard the rival submissions. The ld AO observed that the loans borrowed from aforesaid parties in Asst Year 2013-14 were treated to be ingenuine and hence the interest paid to those parties are not allowable. Accordingly, the ld AO disallowed the interest paid on loans to aforesaid parties in the sums of Rs. 2,85,041/- and Rs. 4,03,726/-. This action of the ld AO was upheld by the ld CITA. We find that this tribunal in assessee's own case for the Asst Year 2013-14 in ITA No. 6557/Mum/2017 dated 3.5.2019 had held the loans received from aforesaid parties to be genuine and deleted the additions made u/s 68 of the Act. We hold that once the loans were held to be genuine, the interest paid on such loans are also allowable expenditure. It is not the case of the revenue that the borrowed funds from aforesaid parties were diverted by the assessee for non-business purposes. The assessee is a builder and developer and deriving business income fr....
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....any had given reasonable explanation for registering the vehicle in the name of the individual director to reduce the incidence of indirect taxes , levies etc. This does not hinder in any way to allow the claim of depreciation in the hands of the assessee company, as the motor car was reflected in the balance sheet of the assessee company and that the vehicle loan was also borrowed for the same by the assessee company. We find that the similar issue had been addressed by the co-ordinate bench of this tribunal in the case of ITO vs Banglore Shirt Company Pvt Ltd in ITA No. 6042/Mum/2016 for Asst Year 2012-13 dated 8.8.2018 . 4.2. We find that this tribunal in Asst Year 2013-14 in assessee's own case in ITA No. 6557/Mum/2017 dated 3.5.2019 had adjudicated this issue and directed the ld AO to allow the depreciation on motor car. Respectfully following the said decision, we direct the ld AO to allow depreciation for Asst Year 2014-15 also in the sum of Rs. 10,80,912/-. Accordingly, the Ground No. 4 raised by the assessee is allowed. 5. The Ground No. 5 raised by the assessee is with regard to the action of the ld CITA in confirming the addition made u/s 43CA of the Act in the ....
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....amp Duty Value Difference Date of allotment 505 47,40,000 66,47,000 19,07,000 22.06.2013 506 64,50,000 90,34,000 25,84,000 22.06.2013 605 59,25,ooo 66,47,000 7,22,000 30.07.2013 604 57,75,ooo 69,38,500 11,63,500 22.08.2013 504 61,87,500 69,38,500 7,51,000 10,09.2013 503 71,62,500 80,34,000 8,71,500 10.09.2013 203 62,07,500 76,52,000 14,44/500 01.07.2013 Total 4,24,47,500 5,18,91,000 94,43,500 5.2. The ld AO asked the assessee to explain the difference between agreement value and stamp duty value. The assessee submitted that the registration authorities charged stamp duty based on the village / area which is different from the area in which the assessee project is situated. Due to change in the village / area, the value of stamp duty also changed. The assessee also pleaded that in respect of 7 properties where allotment had been made prior to 31.3.2013, the registration of those properties were completed during the Asst Year 2014-15 and hence there is difference in stamp duty value and agreement value. The assessee also pleaded that sale value....
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....spect of units that were allotted to the parties prior to 31.3.2013. The assessee also pleaded that in any case that any addition on account of discrepancy should be made in the year of completion of project i.e Asst Year 2015-16 and not in the year of appeal i.e Asst Year 2014-15. The assessee before the ld CITA vide submission dated 3.8.2017 submitted additional evidences under Rule 46A of the Rules , the copy of letter from Town Planning and Valuation Department Mumbai Region (Valuation) , Mumbai, in English and Marathi language, and the ready reckoner rate for FYs 2011-12, 2012-13 and 2013-14. The assessee submitted that these documents are to be produced in the year of completion of project i.e Asst Year 2015-16 and hence the same were not furnished before the ld AO at the time of assessment proceedings. The ld CITA admitted these additional evidences under Rule 46A of the Rules in the appellate proceedings which is mentioned in page 10 of his order. The ld CITA on analyzing the provisions of section 43CA of the Act admitted the fact that the said provisions are applicable only from Asst Year 2014-15 onwards, but observed that in case, transfer of immovable property takes plac....
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....ing fiction is in respect of treating the stamp duty value value as full value of consideration for the purpose of computing the profits of the assessee in respect of real estate projects / development projects. Though we agree with this argument of the ld AR in principle, but , in our considered opinion, it does not in any way change the computation of total income of the assessee as ultimately the difference between the agreement value and the stamp duty value is to be brought to tax in terms of section 43CA of the Act. Hence we hold that the expression 'suppressed sales' used by the ld AO and upheld by the ld CITA is totally unwarranted as the addition is only made by applying the deeming fiction provided in section 43CA of the Act. 5.7.1. It is not in dispute that the assessee had not reported any sales from sale of units during the year under appeal in view of the fact that it is following project completion method and since the project was completed in Asst Year 2015-16, the assessee had reported the sale of units as its turnover in Asst Year 2015-16 by declaring the agreement value as the full value of consideration. It is not in dispute that the assessee had not sold any....
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....tamp duty valuation authorities, a right is created in favour of the flat buyer. Hence what the assessee had transferred pursuant to registration of the agreement was only the rights in the flat/ office (which is under construction) and not the property per se. Hence it could be safely concluded that there was no transfer of any land or building or both by the assessee in favour of the flat buyers pursuant to registration of the agreement in the year under appeal. Hence we hold that the provisions of section 43CA of the Act cannot be made applicable to the same. Reliance in this regard is placed on the following decisions of co-ordinate benches of tribunals :- a) Ahmedabad Tribunal in the case of ITO vs Yasin Moosa Godil in ITA No. 2519/Ahd/2009 dated 13.4.2012 wherein it was held as under:- "16. From the reading of Sec. 50C, it is evident that Sec. 50C is a deeming provision and it extends to only to land or building or both. Section 50C can come into play only in a situation where the consideration received or accruing as a result of the transfer by an appellant of a capital asset, being land or building or both is less than the value adopted or assessed or a....
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....right of allotment in the property which was under construction and possession thereof was not taken by the assessee and hence, there is no question of transfer of the possession of the said property. Further, other than these agreements and MOU, there is nothing in terms of any positive tangible evidence which has been brought on record by the Revenue to support its position that it is the flat which has been transferred by the assessee. After the assessee has submitted to the AO vide its letter dated 12.03.2014 that the property was under consideration at the time of the sale and no sale deed was executed, the AO has not carried out any further investigation with the developer to refute the contentions raised by the assessee. In result, on perusal of the documents available on record, the contention of the assessee remains uncontroverted. It is the right in the property by way of right of allotment which has been assigned by the assessee in favour of the buyer and not the property itself. 2.10 The next question that arises for consideration now is whether the provisions of section 50C are applicable in respect of right of allotment in the property. In this regard, we ref....
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....it is seen that the deeming fiction of substituting adopted or assessed or assessable value by the stamp valuation authority as full value of consideration is applicable only in respect of "land or building or both". If the capital asset under transfer cannot be described as 'land or building or both', then s. 50C will cease to apply. From the facts of this case narrated above, it is seen that the assessee was allotted lease right in the plot for a period of sixty years, which right was further assigned to M/s. Pathik Construction in the year in question. It is axiomatic that the lease rights in a plot of land are neither 'land or building or both' as such nor can be included within the scope of 'land or building or both'. The distinction between a capital asset being 'land or building or both' and any 'right in land or building or both' is well recognized under the IT Act. Sec. 54D deals with certain cases in which capital gain on compulsory acquisition of land and building is charged. Sub-s. (1) of S. 54D opens with 'subject to the provisions of sub-s. (2), where the capital asset, being land or building or any right in land or building....