TaxTMI 
TaxTMI 
2019 (9) TMI 37
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....appeal filed for assessment year 2014-15. The first issue contested therein relates to the treatment of interest income received by the assessee. The AO noticed that the assessee has received interest income of Rs. 69,78,859/- and it had set it off the same against the interest expenditure and accordingly the net interest expenditure was included in the Work in Progress. The AO took the view that the interest income is earned on parking of funds with banks and hence the same is taxable as income from other sources u/s 56 of the Act. Accordingly he assessed the same as income of the assessee. 4. The Ld CIT(A) noticed that the assessee has received interest from banks to the tune of Rs. 3,86,678/- only. It has received major amount of Rs. 53,23,206/- from a related party named M/s SPL Properties (BNE) Private Limited and balance amounts were received from some other persons. The Ld CIT(A) noticed that the assessee has not explained the nature of deposits/loans given to related party and other persons. The Ld CIT(A) also noticed that the assessee has failed to show the loans so given or deposits so made are interconnected with the borrowings and inextricably connected with the carry....
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....see should demonstrate that there was business compulsion to make the deposits or advance loans to support its claim that the interest income forms part of its business profits. Admittedly, the assessee herein has not demonstrated that such kinds of business compulsions did exist. As rightly pointed out by Ld D.R, the decision in the case of Hewlett Packard Global Soft Ltd (supra) has been rendered by Hon'ble Karnataka High Court on the basis of facts prevailing in that case and since the Hon'ble High Court found that the parking of funds in banks and advancing of staff loans are integral part of carrying on of export activities, it was held that the interest income cannot be de-linked from Profits and gains derived from export of articles. No such facts prevail in the instant case. Accordingly we are of the view that the assessee cannot take support from the above said decision. In the instant case, the assessee is engaged in the business of constructing residential complexes and the assessee has failed to demonstrate any business compulsion nor did it show that the advancing of loans or depositing of money in fixed deposits are integral part of its business activities. Hence we a....
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....overnment. It paid 'nomination charges' @ 10% of the turnover of granite blocks, which was a special levy imposed by the Government for allotment of land for quarrying granite on nomination basis. The outstanding nomination charges was disallowed u/s 43B of the Act. The Hon'ble Madras High Court held that the nomination charges cannot be disallowed u/s 43B of the Act. The Ld A.R further placed his reliance on the decision rendered by Hon'ble Supreme Court in the case of CIT vs. Mcdowell and Co. (2009)(10 SCC 755), wherein the Hon'ble Supreme Court has observed that the expressions "tax", "duty", "cess" or "fee" constituting a class denotes to various kinds of imposts by State in its sovereign power of taxation to raise revenue for the State. It further held that the term "tax" under Article 265 read with Article 366(28) includes imposts of every kind viz., tax, duty, cess or fees. He submitted that the Hon'ble Supreme Court also observed that, as per Article 265 which uses expression "tax", states that no tax shall be levied and collected except authorized by law. The Hon'ble Supreme Court has also observed that "Law" in the context of Article 265 means an Act of legislature and ca....
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....n'ble Madras High Court noticed that it was simply a contractual payment of least rental specified by the State Government being the Lessor for which both the Lessor and Lessee had agreed at a prior point of time to fix and pay the said prescription of nomination charges. The said lease deed was held to be non-statutory contract between the parties. Further the quantum of nomination charges depended upon the quantum of land and the commercial exploitation of the minerals by the Assessee and hence the same was in the nature of non-statutory contractual payment. Accordingly it was held that the "nomination charges" would not fall under the category of "fees" specified in sec.43B of the Act. The other decisions relied upon by the Ld A.R, in our view, have been rendered in different context. 14. In the instant case, the assessee has made provision in the books of accounts for the Approval fee payable to the VUDA, which was the authority constituted by the State Government to regulate the development of City and large scale construction projects. It should be according its approval to the construction plans on the basis of parameters, rules and regulations prescribed by the State Gove....
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....the buyers have not met the conditions, i.e., the buyer would have defaulted in paying instalments. The AO took the view that the assessee cannot so derecognize the sales, as the assessee, in any way, will sell the flats to some other person. Accordingly, the AO held that the assessee was not right in derecognizing sales and cost. The net amount so derecognized worked out to Rs. 2,11,79,659/-. The AO added the same to the total income of the assessee. The Ld CIT(A) also confirmed the same. 17. We heard the parties and perused the record. We notice that the assessee has placed its reliance on the Guidance note on Accounting for Real Estate transactions (Revised 2012) issued by the Institute of Chartered Accountants of India (ICAI) in support of its action for de-recognising sales and cost. The Ld CIT(A) took the view that the above said guidelines would apply to the projects commenced on or after 01-04-2012 only. He also noticed that the AO has observed in the succeeding year that many customers are regularly paying the instalments and the assessee has not returned back money to the defaulters. Accordingly he has held that the AO was justified in making the addition. 18. The Ld ....
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.... cannot be said to have been accrued, since the Hon'ble Supreme Court has held in the case of Excel Industries Ltd (supra) that the probability of realization by the assessee should be seen from practical point of view. 22. Hence we are of the view that the assessee was justified in following revised guidance note. However we notice that the AO did not have occasion to examine the quantum of de-recognised income, since he had rejected the same. We have noticed that the Ld CIT(A) has observed that the AO has mentioned in the assessment order of succeeding year that the claim of the assessee that it was not receiving payments in relation to the derecognized income was found to be incorrect. Hence, we are of the view that the quantum of de-recognised income claimed by the assessee requires verification at the end of the AO. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and restore this issue to the file of the AO for the limited purpose of verifying the quantum of deduction claimed by the assessee towards de-recognising of sales and cost. 23. We shall now take up the appeal filed for AY 2015-16. The first issue relates to the treatment of interest income re....