Brigade Enterprises Ltd Vs Additional Commissioner Income Tax (Karnataka High Court)
The assessee, Brigade Enterprises Ltd, a public limited company engaged in construction and sale of residential and commercial buildings, filed an appeal under Section 260-A of the Income Tax Act, 1961concerning Assessment Year 2010-11. The appeal raised three substantial questions of law concerning determination of annual value for an under-construction building, treatment of regularization fees as penalty, and allowability of such regularization fee as business loss.
The Assessing Authority, by order dated 26.02.2013, observed that the assessee had rented out part of a building to M/s. Brigade Foundation. Although the assessee had not admitted rental income for the relevant assessment year, the Assessing Authority held that the building had been completed in part and brought to tax 50% of the annual letting value admitted for the subsequent Assessment Year 2011-12. The resulting net income of Rs.10,50,000/- was assessed as income from house property, and a demand of Rs.9,73,14,776/- was raised.
The Commissioner of Income Tax (Appeals), by order dated 09.06.2014, partly allowed the assessee’s appeal. The Tribunal also partly allowed the appeal by order dated 16.10.2014, but maintained the determination of annual letting value at Rs.15,00,000/- for computing income from house property. The assessee therefore approached the Karnataka High Court.
