Case Law Details
Crown International Vs ACIT (ITAT Delhi)
There is no dispute on the amount as well as of the fact that the adjacent plot was used for parking space by the shop orders. The only reason is that there was no legal obligation on the assessee to provide a parking space to the shop owners and assessee has not transferred this plot of land in the name of any society or association but is still in the name of the assessee. The revenue also contends that the assessee has right to sale this plot. Though the assessee may not have a legal obligation to transfer the plot of land used for parking space by the shop owners, the commercial obligation is established that assessee has given that plot, handed over to the operating agency, which is maintaining the shopping mall to be used for parking space. When assessee has sold the shops/ offices of mall real estate by making a promise to buyer to provide facilities as per the approved plan and based on which the buyer has purchased the property, no doubt there is a commercial obligation on the assessee to provide those facilities to those shop owners who purchased those properties. Parking space is one of such condition based on which the approval was granted to the shopping mall constructed by the assessee. Therefore, it is apparent that the assessee has met its obligation by providing a plot of land to be used as a parking space by the shop owners and therefore the assessee is entitled to claim deduction of the cost of land given for parking space. Even after passing of almost a decade, the assessee has not sold that plot of land, which was used as a parking space by the shop owners. Even if it would be sold at any later point of time by the assessee, as assessee is a legal owner, the necessary profit is required to be charged to tax. In fact in the present case the full consideration received by the assessee would be income of the assessee as assessee has already taken the cost of the plot as a deduction u/s 37 (1) or u/s 28 of the income tax act. By providing the plot of land assessee has incurred a cost of the project for providing the parking space to the shop owners, which was a commercial obligation on the assessee, the above cost is required to be granted as deduction to the assessee. Whether there was any legal obligation on the assessee for providing a parking spaces is also established as the assessee was granted permission to construct shopping mall only if it had a proper parking facility as per HUDA Rules. Thus assessee has also legal obligation to provide parking spaces to buyers of shopping complex. In view of this, we direct the assessing officer to delete disallowance of Rs. 3,79,09,943/– on account of parking space provided to shop owners/office owners of the mall. Therefore, we reverse the orders of the lower authorities and allow the appeal of the assessee.
FULL TEXT OF THE ORDER OF ITAT DELHI
01. This appeal is filed by M/s Crown international, assessee- Appellant for assessment year 2014 – 15 against the order passed by THE COMMISSIONER OF INCOME TAX (A) – 14, New Delhi [ The ld CIT (A) ] dated 14/01/2019 wherein the addition made by the learned The Assistant Commissioner of Income tax , Circle 41(1), New Delhi [ the ld AO] of ₹ 37,909,943/– is confirmed. Though assessee has raised a very argumentative and detailed grounds of appeal however the solitary issue remains is a disallowance of expenditure of ₹ 37,909,943/– made by the learned assessing officer and confirmed by the learned CIT – A.
02. Brief facts of the case shows that assessee is a partnership firm engaged in the business of real estate and renting of properties. The total income of the assessee comprises of income from business and profession. Assessee has filed its return of income declaring income of ₹ 71,531,420/– on 31/11/2014. The case of the assessee was selected for limited scrutiny to examine mismatch in profit before tax as per profit and loss account and schedule BP, high interest expenditure against capital shown in the working progress et cetera.
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