TaxTMI 
TaxTMI 
2014 (1) TMI 1895
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....s. 19,22,065/- on the sale of flats at 17, NK Towers, Gurgaon. The assessee furnished provisional allotment letter for sale of flats as evidence of sale of flats. The flats were not registered in the name of the parties sold. The AO asked the assessee to furnish the justification of the prices and asked as to why the rates as prescribed by the Registrar Office, Gurgaon, should not be applied. Assessee submitted that circle rate @ Rs. 4000 per sqft is for those building, which have got licensed from Government and have unrestricted use in the form of area, elevation etc. they are not entitled to pay any lease money or other periodic charges to the government. In the case of the assessee building the rate of Rs. 1600/- per sqft. Is applicable. Since the same was purchased from HSIDC which has various restrictions and annual lease money is payable. Therefore, the current sale was reasonable and comparable to circle rate. But, the AO was not satisfied with the above. He observed that the property under consideration was a commercial building and flats were in fact office. The AO proceeded to refer to the circle rate obtained from the Registrar of property. He applied the rate of Rs. 40....
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....e hold property and has not been registered. Under such circumstances, the provision of section 50C are not applicable. He further pointed out that even if section 50C is invoked the Circle rate in this case was Rs. 3000 per sqft on the date of sale. The assessee has shown Rs. 3500 per sqft as the rate of sale of property. Hence, it was contended that AO has totally erred in applying the rate of 4000/- per sqft which was applicable from a subsequent date. 7.1 Ld. DR on the other hand could not dispute the submission of the Ld. Counsel of the assessee that the property was lease hold property and it was not registered. Furthermore, he also could not dispute the submission that circle rate on the date of sale was Rs. 3000 per sqft., however, the assessee has shown Rs. 3500 per sqft. 8. We have carefully considered the submissions and perused the records. We find that as per the extant provisions of section 50C(1) it was provided that :- "Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in....
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....However as per the terms of contract it is providing maintenance services to them as well. AO observed that thus area owned by the assessee worked out to 34.72% and 65.28% of the area is owned by others. In computation of income furnished by the assessee it has shown income from house property at Rs. 4,54,10,619/- and had claimed deduction of 30% on the same u/s. 24 of the Act besides interest expense of Rs. 41,752/- related to it. The income from maintenance and other services including reimbursements have been shown as income from business and profession and had claimed all the expenses against such income. The income broadly falls under the following heads: - i) Maintenance income Rs. 2,74,58,525/- ii) Reimbursement (Air Conditioner) Rs. 42,79,053/- iii) Reimbursement (Maintenance) Rs. 2,07,493/- iv) Housekeeping Charges Rs. 4,84,245/- Total Rs. 3,24,29,316/- AO observed that the income of Rs. 3,24,29,316/- is from the property which are owned by assessee as well from others. AO opined that the maintenance income and other reimbursement like air conditioners, housekeeping, maintenance are in the nature of rental income....
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....dded the above amount of Rs. 78,84,115/- to the business income of the assessee as per return. 15. Against the above order the Assessee appealed before the Ld. CIT(A). Ld. CIT(A) noted that these maintenance receipts have been treated as business income from Asstt. Year 2001-02 and it was approved by the ITAT vide its order dated 30.5.2008 in ITA No. 4530/Del/2004 for Asstt. Year 2001-02. The observation of the ITAT was as under:- "3.3 We have perused the records and considered the matter carefully. The issue raised in this ground is whether the brokerage paid by the assessee in connection with renting out of the premises can be allowed as deduction from the income received by the assessee from maintenance and furnishing charges. The assessee had entered into the agreement with the tenants as per which in addition to the rent payable for the use of the property, the tenants were also required to pay separately for the maintenance and furnishing of the property. The assessee has paid oneKmonth rent in respect of rent of the property and one month charges receivable in respect of maintenance and furnishing to the brokers, who had introduced the tenants. The income receive....
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....tenance receipt were actually house property income and hence expense in relation thereto has been rightly restricted by the AO to 30%. Hence, he pleaded that the order of the AO may be sustained. 18. Ld. Counsel of the assessee on the other hand submitted that without any cogent basis, the AO has treated the business income in the shape of maintenance and other services including reimbursement as income from house property. He claimed that in the assessment order in the concluding computation the AO has treated the entire income as business income. Still he has proceeded to disallow expenditures in this regard by treating the certain portion of the income as income from house property. Ld. Counsel of assessee submitted that assessee has receipts from maintenance and other services including reimbursement. In this regard, proper agreement with the tenants and the recipients of the services are there on record. He claimed that these agreements were in the existence from preceding number of years and in all these years, this income has been treated as income from business and no disallowance has been made. Ld. Counsel of the assessee further referred to the Tribunal decision in as....
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....bove he has allowed 30% as standard deduction and has thereafter arrived at disallowance of Rs. 78,84,115/-. 22. We find that the above working out of disallowance by the AO is not comprehendible. AO has done some theoretical exercise by bifurcating maintenance receipts in the ratio of property owned vis-avis the total property and accordingly, out of the income in this regard assessee has made disallowance amounting to 70% of income thereof. We find that the above disallowance by the AO is devoid of cogency and the same is not sustainable. 23. We find that the assessee has entered into the maintenance agreement with various parties. These parties included those which are assessee's tenants as well as those to whom the flats had been sold out. As per the maintenance agreement in this regard, the assessee is receiving maintenance charges for building, reimbursement of A/C maintenance and house keeping etc. The assessee is also providing services like running and operation of lifts, cleaning of floors, window panes, white washing etc. Now the above contracts are separate contracts, they are over and above the tenancy contracts. These contracts are in existence from preceding ma....