TaxTMI 
TaxTMI 
2025 (6) TMI 314
X X X X Extracts X X X X
X X X X Extracts X X X X
....res of industrial land from M/s Pfizer Ltd. in Chandigarh. The company has obtained approval from Chandigarh Housing Board (CHB) vide letter No. CHB/CEO/land-use/2006/4855 dated 26.03.2007 for conversion of land from industrial use. It was required to pay Conversion Fee of Rs. 1,85,45,47,440/-. Out of above conversion fees, 10% was to be paid as down payment and remaining over a period of nine years in equated annual instalments with interest at 8.25%. The assessee has developed a shopping mall over this land. It has entered into an Agreement for sale of shops A-501, 502 and 503, B-408 and 409. The Agreement to Sell for unit No. 501 to 503 was executed on 25.01.2011. The schedule of payment was decided as under : PAYMENT PLANT At the Time of Booking 25 % of Sale Price 30.04.2011 15 % of Sale Price On 31.07.2011 15 % of Sale Price On 31.10.2011 15 % of Sale Price On 31.01.2012 15 % of Sale Price On Intimation for Possession 15 % of Sale Price + Stamp Duty & Registration Charges 3.1 The Vendee has made a payment of Rs. 2,60,00,000/- vide cheque No. 023655 on 25.01.2011. There was some dispute between the assessee and the vendee and ultimately Sale Deed was executed duri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ollectorate rates available are for commercial space and not specifically for office space. According to the DVO, the general trend available, commercial space such as shop, malls etc. are considered as compared to the office space. In other words, ld. DVO has not made reference to any collectorate rate in the DVO's Report. 5.2 In his next fold of submission, it has been contended that assessee has received an interest of Rs. 6.19 Cr from the vendees for the period during which a dispute remained between the parties. Thus, this interest is part and parcel of the sale consideration. In other words, the sale proceeds is also revenue receipt for the assessee because it has sold stock-in-trade and this interest income would also partake character of business receipt. Therefore, if both these amounts are being added together, then the difference between the sale proceeds disclosed by the assessee vis-à-vis one determined by the DVO is less than 6.51% and the assessee is protected by proviso attached to Section 43CA sub- clause (1). This proviso contemplates that if value is more than 110%, only them addition is to be made. The working made by the ld. counsel for the assessee rea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he words "one hundred and twenty per cent" had been substituted, if the following conditions are satisfied, namely :- (i)the transfer of such residential unit takes place during the period beginning from the 12th day of November, 2020 and ending on the 30th day of June, 2021; (ii)such transfer is by way of first time allotment of the residential unit to any person; and (iii)the consideration received or accruing as a result of such transfer does not exceed two crore rupees.] (2) The provisions of sub-section (2) and sub-section (3) of section 50C shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section (1). (3) Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement. (4) The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s a condition that payment in furtherance of Sale Agreement is to be made by banking channel. 7.2 In the present case, Sale Agreement was executed on 25.01.2011. Payment was made through account payee cheque and such payments have been made according to the schedule reproduced above. The balance, which was not paid due to the dispute, the vendee has paid the interest. Therefore, the appointed date in this case is 25.01.2011 and the collectorate rate for charging the stamp duty on that day ought to have been adopted. Neither the AO nor the DVO could lay their hands on the correct rate of stamp valuation authority on that day. Thus, the value declared by the assessee in the Sale Deed on which stamp duty has been paid is to be construed as the correct value and no addition was required to be made 8. Apart from that, if we looked at from another angle also, we find that alleged interest charged by the assessee from the vendee would partake character of sale proceeds because it is an interest on delayed realization of sale proceeds for registration of the Sale Deed. We have seen this aspect while computing the profit eligible for grant of 80-I wherein it has been held that if sale pro....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orward (-) Rs. 25,86,97,917/- Total Addition Rs. 3,49,95,778/- Loss of Rs. 25,86,97,917/- shall be carried forward. Issue necessary forms, charge interest as per law. The penalty proceedings u/s 271 (1) (c) of the I.T. Act are being initiated separately for furnishing inaccurate particulars of income. Assessed. Issue demand notice. (Abhinav Agnihotri) Asstt. Commissioner of Income Tax, Circle- 2(1), Chandigarh 11.1 A perusal of the above would indicate that the difference in the value for the purpose of deemed sale consideration is Rs. 10,13,136/-. It's difference is less than 10% of the total sale consideration disclosed by the assessee vis-à-vis determined by the DVO, therefore, as per first proviso of Section 43(1), addition does not call for. Accordingly, this addition is also deleted and we allow the appeal of the assessee. 12. Now we proceed to take both the appeals of the Revenue together. The Revenue has taken four grounds of appeal in each assessment year. Its grievance revolves around a single issue, namely, CIT(A) has erred in deleting the addition of Rs. 4,91,74,146/- and Rs. 3,39,82,642/- made on account of treating the interest ex....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpany has capitalized the interest upto 15-03-2013 i.e. till the date on which asset was put to use. Interest upto 14-03-2013 after getting Completion Certificate on 22-01-2013 was capitalized as pre-operative expenses as per proviso to section 36(1) (iii) and w.e.f. 15.03.2013 was claimed as revenue expenditure as per section 36(1) (iii) of Act being assets put to use. This position was accepted by the AO in the assessment made u/s 143(3) of the Act for AY 2013-14. In the present financial year, interest on conversion fee was Rs. 5,69, 00, 665/-, out of this Rs. 4,91,74,146/- pertains to Assets put to use (Mall, Office & Service building) is claimed as revenue expenditure as per section 36(1) (iii) of Act and Rs. 77,26,519/- pertains to Hotel Building was capitalized under pre-operative expenditure as per proviso to section 36(1) (iii) of Act. AO has held that even interest expenditure incurred towards payment of conversion fee paid by the appellant would give enduring benefit in all the subsequent years and has treated the same as capital expenditure. 5.2.1. In 2005 the Chandigarh Administration notified that the business on the industrial site should be the same for which the ....