No Addition shall be imposed on Assessee when AO has failed to consider payment made towards Amenities included in Basic Cost of flat: ITAT [Read Order]

The Surat bench of the Income Tax Appellate Tribunal (ITAT) held that no addition shall be imposed on the assessee when the Assessing Officer has failed to consider the payment made towards the amenities included in the basic cost of the flat.

The assessee is a firm, engaged in the business of buying and selling real estate properties. The assessee filed its return of income declaring NIL income. The case was selected for scrutiny.

During the assessment, the Assessing Officer noted that the assessee has purchased two flats i.e. flats No. 103 and 307 in Sunstone Project at Shastri Nagar, Bandra (E), Mumbai. The assessee filed its reply and submitted that they made a booking @ Rs. 11,000/- per square feet. The Assessing Officer worked out the difference of the alleged excess payment of Rs. 85,72,204/- and added it to the income of the assessee.

The assessee submitted that flat No. 103 was purchased for Rs. 2.66 crore and flat No. 307 at Rs. 1.96 crore, such fact can be verified from the allotment letters and the Assessing Officer without giving regard to the real estate norms and regulations, applied the rate of Rs. 11,000/- per square feet to build up area and determined cost of both the flats at Rs. 3.37 crores.

During the assessment, the assessee explained the basic cost of the flat and the other many extra amounts for water connection, electricity connection, society charges, and clubhouse charges which are in addition to the basic cost.

The Two-member bench comprising of Pawan Singh (Judicial member) and Arjun Lal Saini (Accountant member) held that the Assessing Officer while making the addition had not considered the payments made on account of various amenities like electricity connection, water connection, common facilities of various amenities provider by the builder/developer.

The Commissioner of Income Tax (Appeal) was right in deleting the addition by appreciating the facts in a proper way and by taking a correct view. Thus, the appeal for revenue was dismissed.

To Read the full text of the Order CLICK HERE

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