No Addition shall be made on basis of AIR information when Profit has already been booked by Another and offered to Tax: ITAT [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that no addition shall be made on the basis of Annual Information Return (AIR) information when the profit has already been booked by another and has also been offered to tax.

The assessee is a resident corporate entity stated to be engaged in the business of purchasing land, and immovable property and undertaking the development and construction of real estate projects. The assessee filed its return of income declaring a loss of Rs.51,287.

The Assessing Officer (AO) noted that the assessee has not offered any revenue from business operations. The opening Work in Progress (WIP) amounts to Rs.1,46,43,770 and has been shown as a transfer to the developer company and WIP has been shown as nil. He also called upon the assessee to furnish copies of deeds and details of the property transferred under the direction of the developer.

It was further observed that the assessee has stated that all the rights relating to the land such as development, marketing, and sales have been given to M/s. Parsvnath Developers Ltd. and the assessee have received advances of Rs.1,50,00,000 against the sale of land in earlier years.

Thus, he observed that the total cost of land as per fair market value works out to Rs.60,24,56,800. Therefore, after reducing the cost of land to Rs.46,43,770, he added an amount of Rs.58,78,13,030.

The Commissioner of Income Tax (Appeal) [CIT(A)] held that the real owner of the land is M/s. Parsvnath Developers Ltd. and not the assessee. The income from the sale of land would not accrue to the assessee. It was further found that the income arising from the sale of land has been accounted for in the books of account of M/s. Parsavnath Developers Ltd. and offered to tax. Accordingly, while deleting the major part of an addition, the CIT(A) sustained the addition of Rs.78,510. 

The Two-member bench comprising of Saktijit Dey (Vice-President) and B.R.R. Kumar (Accountant member) upheld the order of the CIT(A) and the appeal of the revenue was dismissed.

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