Glittering Apartments Private Limited Vs CIT (Appeal) (ITAT, Mumbai)
Emaar Rights Lost Their Business Shine: ITAT Treats ₹7.46-Crore Loss as Capital, Reopens Cost Working
Summary: In Glittering Apartments Private Limited v. Commissioner of Income Tax(Appeal), CIT(A) – 48, Mumbai, the Mumbai Bench of the Income Tax Appellate Tribunal considered the assessee’s appeal for AY 2018-19 concerning the tax treatment of a loss arising from transfer of allotment rights in 18 units of an Emaar MGF project.
The assessee was engaged in the business of purchase, sale and letting of immovable properties. During FY 2010-11, it booked 18 under-construction units with Emaar MGF Land Ltd. Payments were made in instalments and other expenditure, including interest, was incurred. As possession had not been taken and the purchase documents had not been registered, the assessee reflected the amounts under “Short term loans and advances” rather than inventory or stock-in-trade.
Before possession and execution of the conveyance documents, the assessee transferred the allotment rights to third-party buyers on an “as is where is” basis. The assessee stated that the total cost incurred was ₹25,34,82,377 and that consideration of ₹17,89,06,842 was received, resulting in a loss of ₹7,45,75,535. The assessee claimed the loss as a business loss under Section 37 of the Act.
