No Addition can be Made on Different Rates Booked By Real Estate Broker for Selling Property between Different Buyers: ITAT [Read Order]

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that addition should not be made on different rates booked by real estate brokers for selling property between the different buyers.

The assessee, E.T. Infra Developers Pvt is in the business of Real Estate and is developing World Trade Tower. When a search action conducted on the premises of assessee no no incriminating material, unexplained cash or unexplained jewellery was found. 

In the Assessment Year 2011-12, one of the brokers launched a website relating to sale of property. In the website shows the launched price at Rs.9,500/- per sq foot irrespective of the floor size and location of the area.

However, in the book of account of assessee for the Assessment Year 2011-12  assessee stated that majority of the area was sold at different rates through one broker Naresh Grover of Nagpur and the difference in amount was paid to the said Naresh Grover.

Thereafter, during the assessment proceedings the AO made the addition in the hands of the assessee due to the different rate of sq. foot.

Aggrieved, the order assesee filed an objection before the Commissioner of Income Tax (Appeals) [CIT(A)] Who deleted the addition. Therefore, the revenue filed an appeal before the tribunal.

T. Jamesh Singson,for assessee submitted that these are two independent units sold to two different persons and in fact the assessee has sold the above two flats @ Rs.6000/- per sq. ft. Whereas the average price of the two flats comes to Rs. 5000/- per sq. ft.

Further, the counsel argued that During the course of post-search proceedings, all the buyers from whom the enquiries were made have confirmed to have given the amount as duly recorded in the books of the assessee.

Relating to the websites, websites are only indicating and are on higher side for the purpose of advertisement so that the same can be negotiated to the satisfaction of both parties and is a usual practice in the business of real estate.

M.P. Rastogi, Counsel for Revenue, supported the decision of assessing officers.

The tribunal observed that rates are already recorded in the books of account and there is no discrepancy.

The Tribunal also considered the submission of assessee that Revenue could not force the assessee to sell its space at a particular rate and the department could not dictate terms to the assessee to sell at a particular rate.

Thus, the addition made by the AO merely on presumptions and surmises is not sustainable.

After reviewing the facts and submissions of both parties, the two-member bench of N. K. Billaiya (account member) and Anubhav Sharma (Judicial Member) observed that there is no iota of evidence that the assessee has received any extra money over and above the booking rate shown by the assessee in the books of account and the entire addition is based on surmises, conjectures and presumption.

Therefore, the addition should not be made on different rates booked by real estate brokers for selling property between the different buyers.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates