1.  CIT Vs. Sambhaji Nagar Co­op. Hsg. Society Ltd., I.T.A. No. 1356 of 2012, Date of Order: 11.12.2014, Bombay High Court

In brief, the assessee is a Co­operative Housing Society planned a reconstruction of the building without involving any builder. In the year 1995, the construction of the new building was in execution and the Society was eligible for a Floor Space Index (FSI) of 2.

The   construction   was   carried   out   and completed. Thereafter, FSI of 0.5 was generated by the Society's property/plot and it decided to sell it. The AO has contended that the gains derived from the sale of transferable development right (TDR) of Co­operative Housing Society which is a property by itself. The Hon’ble High Court up held the decision of the tribunal which concluded that the Assessee had not incurred any cost of acquisition in respect of the right which emanated from 1991 Rules, making the Assessee eligible to additional FSI. The land and building earlier in the possession of the Assessee continued to remain with it. Even after the transfer of the right or the additional FSI, the position did not undergo any change. The revenue could not point out any particular asset as specified in sub­section (2) of section 55. Thus the appeal of the revenue is dismissed.

Case referred: New Shilaja Co­operative Housing Society Ltd., CIT vs. B. C. Srinivasa Shetty (1981) 128 ITR 294 (SC)

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2.  ITO Vs. M/s Royal Health Care Pvt. Ltd., I.T.A. No. 119/Mum/2013, Date of Pronouncement: 10.12.2014, ITAT Mumbai

Whether the books of accounts of the assessee is treated defective in case defect found in audit report.

Held_No

The assessee being a private limited company, got its accounts audited under the provisions of Companies Act, 1956. The assessee was following cash system of accounting, of which there was no mention in the Audit Report. The A.O. rejected the books of account. The contention of A.O. was rejected as he couldn’t find any defect in the books of account and assessee did not change its method of accounting since inception and under the provisions of Income Tax Law, the assessee can maintain its books of accounts either on Cash Basis or Mercantile basis. Therefore, the appeal of revenue is dismissed.

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