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November, 21st 2014
+                  INCOME TAX APPEAL NO. 339/2014
                                         Date of decision: 27th October, 2014
        LIMITED                                   ..... Appellant
                    Through Mr. Gagan Kumar & Ms. Niyati
                    Chanana, Advocates.


                                            ..... Respondent
                            Through Ms. Suruchi Aggarwal, Sr. Standing


          Having heard learned counsel for the parties, we frame the

following substantial question of law:

             "Whether Income Tax Appellate Tribunal was right in
             holding that in terms of minutes of meeting held on 7 th
             September, 1995 administrative expenses of 1.5% had
             accrued in respect of residential quarters at Andrews Ganj
             and were taxable as income?"

2.      With the consent of the parties and as a short issue arises for

consideration, we have taken up the appeal for hearing and the same is

disposed of by this judgment.

3.      The appellant-assessee is a company and a Public Sector

Undertaking. For the Assessment Year 2002-03, return of income of the

ITA No. 339/2014                                                     Page 1 of 5
assessee declaring total income of Rs.111,25,85,609/- filed on 23rd January,

2003 was taken up for scrutiny assessment. In the assessment order dated

19th March, 2004 several additions including addition of Rs.35,57,615/- on

account of 1.5% overhead and administrative charges relating to Andrews

Ganj project were made. The assessee had undertaken construction of the

Andrews Ganj project awarded to them by the Government of India. The

Assessing Officer relied upon the minutes of meeting held on 7th

September, 1995, to hold that the assessee was entitled to overhead charges

of 1.5% not only in respect of cost of construction of the community centre

but also on the cost of construction of the residential flats. This, as noticed,

resulted in the addition of Rs.35,57,615/-. The assessment order further

records that in the books of accounts this amount had been reversed.

4.      The Commissioner of Income Tax (Appeals) affirmed the finding

that as per minutes of meeting held on 7th September, 1995 with Ministry of

Urban Development, overhead administrative expenses were payable not

only in respect of the community centre but in respect of residential

quarters also.

5.      The Income Tax Appellate Tribunal (Tribunal, for short) by the

impugned order dated 20th December, 2013 has dismissed the appeal filed

by the assessee, recording as under:-

                   "5. At the time of hearing before us, the learned
                   counsel for the assessee reiterated the same argument as
                   was raised before the Assessing Officer that the

ITA No. 339/2014                                                              Page 2 of 5
                   overhead charges were not leviable on general pool
                   accommodation. However, we find that the Assessing
                   Officer has reproduced the relevant portion of the
                   minutes from which it is evident that the assessee is
                   entitled to overhead charges of one and half percent on
                   the computed cost of the project. The computed cost of
                   the project would include cost of the entire project
                   including general pool accommodation. In view of the
                   above, we do not find any justification to interfere with
                   the orders of lower authorities in this regard.
                   Accordingly, ground No.1 of the assessee's appeal is

6.      Along with the grounds of appeal, the appellant before us has filed

copy of minutes of the meeting held on 7th September, 1995 and after

making reference to the same has pointed out that the said minutes have

been misread and misunderstood by the Assessing Officer and the appellate

authorities, including the Tribunal. The said minutes specifically make

reference to the community centre complex at Andrews Ganj, New Delhi as

is clear from the very first paragraph.               The subsequent paragraphs,

including the paragraph quoted by the Assessing Officer entailing payment

of administrative expenses @ 1.5% relate to the development of community

centre complex at Andrews Ganj, New Delhi and not to residential quarters

which was not the subject matter of the said meeting and the recorded


7.      Having read the said record of minutes of meeting, we felt that there

was merit in the submission made as the recorded minutes specifically refer

to    the position with reference to development of community centre

ITA No. 339/2014                                                               Page 3 of 5
complex at Andrews Ganj, New Delhi and not to the residential quarters

under construction at Andrews Ganj.

8.      In light of the aforesaid submissions and noting the minutes of the

meeting, while issuing notice on 11th July, 2014, we had asked the counsel

for the Revenue to verify the factual position and inform the Court whether

the assessee had at any time received administrative expenses @ 1.5% in

relation to the residential quarters from the Government of India. We had

also recorded the submission of the assessee that the assessee never

received 1.5% as administrative expenses for construction of the residential


9.      During the hearing today, learned counsel for the respondent-

Revenue has filed before us a letter dated 25th September, 2014 of the

Assessing Officer, accepting and admitting that on verification it has been

ascertained that overhead charges were leviable by the assessee only in

respect of Andrews Ganj community centre and not on the development of

residential flats at the Andrews Ganj project. The said letter has been kept

on record.

10.     Normally, we would have remanded the case to the Tribunal for fresh

decision in the light of the minutes of meeting held on 7 th September, 1995,

but in view of the facts now elucidated and accepted by the Revenue, we

are not inclined to pass an order of remit. It would be a formality. It is an

accepted position that the appellant-assessee had never received 1.5%

ITA No. 339/2014                                                    Page 4 of 5
administrative expenses in respect of the residential quarters in Andrews

Ganj project. Clearly, therefore, the stand of the appellant-assessee that the

notes of the meeting held on 7th September, 1995 related to the

development of community centre complex at Andrews Ganj, New Delhi

and not to residential quarters is correct. The aforesaid document has been

misread. There was no accrual of income in case the Government of India

had not agreed to pay any overhead expenses or administrative charges @

1.5% in respect of residential quarters at Andrews Ganj Complex, New


11.      The question of law is accordingly answered in favour of the

appellant-assessee and against the Revenue. Addition of Rs. 35,57,615/- is

deleted. The appeal is disposed of. In the facts of the case, there is no

order as to costs.

                                       SANJIV KHANNA, J.

                                       V. KAMESWAR RAO, J.
         OCTOBER 27, 2014

ITA No. 339/2014                                                     Page 5 of 5
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