Lahoti India Ltd Vs ITO (ITAT Kolkata)
Income Tax Appellate Tribunal (ITAT), Kolkata Bench, has sided with Lahoti India Ltd., deleting an addition of ₹1,00,02,000 made by the Assessing Officer (AO) and upheld by the National Faceless Appeal Centre (NFAC), or CIT(A). The ruling establishes that advances received for contracts, which are subsequently refunded, cannot be treated as taxable income.
The case pertains to the Assessment Year 2009-10 and revolves around a significant sum of cash advances received by Lahoti India Ltd. for proposed land sales, which were later refunded to the contracting parties.
Background of the Case
Lahoti India Ltd. had filed its return of income on September 18, 2019, which was initially processed under Section 143(1) of the Income Tax Act, 1961, accepting the declared income. However, the case was subsequently selected for scrutiny through Computer Assisted Scrutiny Selection (CASS).
During the financial year, Lahoti India Ltd., whose primary income was from rent and maintenance, entered into agreements with four companies for the sale of plots of land after levelling and filling. These companies were Sushil Marketing Pvt. Ltd., Orbitral Contractors & Financiers Pvt. Ltd., Welspun Sales Pvt. Ltd., and Rainy Trading Pvt. Ltd. The assessee received a total cash advance of ₹1,00,02,000 from these entities.
