Facts
The assessee is a dealer and developer of lands, real estates, Hotel Business Operations including Restaurant and Banquet facilities. For the Assessment Year 2013-14, the assessee filed its Return of Income on 28-09- 2013 declaring income of Rs.50,00,379/-. The return was taken up for scrutiny assessment, after detailed enquiry, the Assessing Officer made the disallowances/additions.
The cross appeals are filed by the Assessee and the Revenue as against appellate order dated 24.08.2018 passed by the Commissioner of Income Tax (Appeals)-8, Ahmedabad arising out of the assessment order passed u/s.143(3) of the Income Tax Act, 1961 relating to the Assessment Year (A.Y) 2013-14.
Submissions
Counsel Sudir Metha for the assessee submitted that all the direct expenditures incurred on a particular project are debited to the cost of that project, irrespective of the year to which it pertains to current year or prior year.
Decision
The division bench of Waseem Ahmed, Accountant Member and T.R. Senthil Kumar, Judicial Member found that the basic condition for charging income under section 22 of the Act is that the assessee should be ‘owner’ of the house property, it is immaterial whether the owner is in possession and enjoyment of house property or has been let out to third person.
The bench said that merely because income in respect of said units has not been recognized during the year on account of NON-Execution of Sale Deed, it cannot be held that units are vacant and owned by the assessee for the purpose of taxing notional income u/s.22 of the Act.
The bench observed that the assessee is in business of real estate & flats in question are the part of the “stock in trade. Therefore the ALV computed by the lower authorities at 8% and 4% are against the provisions of section 22 and the addition made on this account is illegal.
The Tribunal held that the assessee is eligible for deduction u/s.80IB [10] of the Act on the Takshshila Coloneal project.
Case title: Takshashila Realities Pvt. Ltd. v/s The DCIT
Citation: ITA Nos: 2060 & 2194/Ahd/2018
