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II. Direct Taxes Case Laws:
1. M/s Aarti Projects and Constructions Vs. DCIT, I.T.A. No. 4190/Mum/2016, Date of Order: 05.01.2017, ITAT - Mumbai
Issue:
Whether the profits realised from the sale of the Floor Space
Index (FSI) awarded as consideration for the construction activities,
qualify for deduction u/s. 80-IB(10) of the Act?
Held: Yes
Brief facts:
During the year under consideration, the assessee undertook
construction of tenements under Slum Rehabilitation Scheme of
Maharashtra for which consideration was paid in the form of FSI. The FSI
thus awarded as consideration for the construction activities
undertaken under the said Scheme could either be utilized for
construction of sale buildings on situ (on the same plot), or sold in
open market as such, or in the form of TDRs. During the year the
assessee had claimed deduction u/s, 80-IB(10) of the act which was
arrived at after reducing the cost involved in the construction of
rehabilitation buildings from the consideration received for the FSI
granted by the State and which was sold to third parties as permitted
under the said scheme.
However,
AO declined assessee’s claim of deduction on the plea that the profit
claimed as deduction was not derived from the housing project but from
sale of unutilized FSI. AO further observed that since the FSI sold
formed part of the project under development, the project could not be
said to be completed. Moreover, AO objected that FSI sold to each of the
person was in excess of 1000 sq.ft & that the FSI sold was at
inflated rates to associated parties. and, therefore, deduction u/s.
80-IB(10) of the Act was not allowable. CIT(A) confirmed the action of
the AO.
Held:
The tribunal held that consideration received for sale of unutilized
FSI is eligible for claim of deduction u/s.80IB(10). The provisions of
S. 80-IB(10) of the Act did not mandate that for the purpose of availing
the benefit, the assessee should construct the tenements on the
strength of the FSI received as consideration, however the assessee has a
liberty to sell them off for monetary value and then find out the
profit so as to make it 'derived from' the housing project.
Now
coming to the objections of the AO to the effect that FSI sold to each
of the person was in excess of 1000 sq.ft was misconceived as this
limitation is for the constructed tenements and not for sale of FSI.
Also, none of the parties was closely associated with the assessee, as
assumed by AO and with regards to the observation that FSI sold was at
inflated rates, it was found that all the sales were at ‘arm’s length’.
Hence, such profits are eligible for deduction u/s.80IB(10).
Therefore, the appeal of the assessee is allowed.
(Please click here for judgment)
2. Chander Bhan Vs. ITO, I.T.A .No. 1895/Del/2016, Date of Order: 01.02.2017, ITAT - Delhi
Issue:
Whether onus to prove that notice u/s 148 of the Income Tax Act,
1961 is served to assessee is on Assessing officer not on Assessee?
Held: Yes, the burden to prove that notice was issued in accordance with law is on the authority.
Brief of facts:
The assessee had deposited an amount of Rs.20 lakhs in cash on
various dates in Saving Bank Account Number. 02501000071202 OF the HDFC
Bank Ltd, Rewari in the year under consideration. Accordingly, as per
the assessment order, notice u/s 148 of the Income Tax Act, 1961 was
issued to the assessee after recording of reasons on 16.03.2012. In
response, thereto, the assessee filed its return of income on 18.02.2013
declaring a total income of Rs.4,426/-. After issuance of notices under
section 143(2)/142(1) along with questionnaire etc. rejecting the
explanation offered the assessment was concluded at an income of
Rs.25,50,000/-. The Assessee challenged the jurisdiction of ld. AO to
pass the order before CIT(A). The said ground of appeal was submitted,
accordingly dismissed requiring the assessee to produce negative
evidence. Being aggrieved by that assessee preferred an appeal before
ITAT.
Held:
The Hon’ble ITAT held that the conclusion drawn by the CIT(A) on
facts cannot be upheld. The factum of issuance of notice within time is
to be proved on query by the authority whose jurisdiction is challenged
for want of notice. The aggrieved party cannot be asked to lead
negative evidence in support of its claim. When service of notice is
challenged by a party then the burden to prove that notice was issued in
accordance with law is on the authority whose jurisdiction in the
absence of notice is under challenge. The dismissal of assessee’s
ground requiring the assessee to produce evidence in support of its
contention is beyond the cognizance of law. The impugned order
accordingly in view of this blatant misconception which is against all
common sense and logic, is set aside and the issue is restored back to
the file of the CIT(Appeals) with a direction to first decide the
jurisdictional issue on facts in accordance with law and thereafter to
proceed to consider the issue on merits if so warranted on facts.
Therefore, the appeal of the assessee is allowed for statistical purposes.
(Please click here for judgment)
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