HIGH COURT OF DELHI
Commissioner of Income-tax
Versus
Discovery Estates (P.) Ltd.
IT APPEAL NOS. 1089, 1090 & 1097 OF 2011
FEBRUARY 18, 2013
JUDGMENT
R.V. Easwar, J.
These three appeals relating to two different assessees were heard together since common issues are involved and, therefore, a single order is passed for the sake of convenience.
2. The appeals are by the Revenue. ITA Nos.1089/2011 and 1090/2011 relate to the same assessee i.e. Discovery Estates Pvt. Ltd. and ITA No.1097/2011 relates to another company of the same group by name Discovery Holdings Pvt. Ltd. On 13.02.2012, the following substantial questions of law were framed by this Court in all the three appeals:
“(i) Whether the Income Tax Appellate Tribunal was right in holding that the rental income should be assessed under the head “income from business” and not under the head “income from house property”?
(ii) Whether the Income Tax Appellate Tribunal was right in holding that the sale consideration disclosed by the assessee on sale of shops should be accepted?
(iii) Whether the findings recorded by the Income Tax Appellate Tribunal in respect of the question number (ii) are perverse?”
3. It is common ground that the first substantial question of law is to be answered in the negative, in favour of the Revenue and against the assessee in view of the judgment of this Court in CIT v. Ansal Housing Finance & Leasing Co. Ltd. [2013] 29 taxmann.com 303.
4. So far as the other two substantial questions of law are concerned, they are connected with each other. The brief facts in this connection may be noticed. We are taking up first the facts in ITA No.1089/2011. The assessee is engaged in the business of construction of commercial complexes. In the accounting year ended on 31.03.2006 relevant to the assessment year 2006-07, it had constructed 67081 sq. ft. area of a shopping mall called City Square Mall. The construction cost including the land cost amounted to Rs. 5,456/- per sq. ft. The shops in the complex were sold. In respect of 7 shops, the Assessing Officer noticed that the assessee had booked sales at Rs. 6,000/- per sq. ft. in the ground floor in the year 2003 whereas in the year 2005, shops in the same floor were booked at the rate of Rs. 3,390/- per sq. ft. One of the shops was even found to have been sold at the rate of Rs. 2,300/- per sq. ft. which was even less than the land cost of Rs. 2,332/- per sq. ft. The AO further noted that even in respect of the same floor, different rates were being charged from different customers. The following table sets out the relevant details:-
