Shanti Prime Publication Pvt. Ltd.
Sec. 36(1) of Income Tax Act, 1961— Business Disallowance — The assessee was a registered company and was engaged in the business of construction and development of real estate. It had entered into facilitation agreement with its holding company HPGPL for development of project in Chennai on the land holdings belonging to the assessee as well as other group companies. In 2008, the said HPGPL was sanctioned loan of Rs. 550 crores as construction loan from HDFC to be disbursed, subsequently on the basis of development of the construction of the project. The assessee’s land was also given as mortgage . There was also an amended facilitation agreement. As per this agreement the assessee company was entitled to 5% of sale proceeds of the project developed by HPGPL. There was some development of the project and some sales were also accounted for. The assessee company got 5% as agreed.
The Assessing Officer took adverse inference as the construction was not done by the assessee and the same was not appearing in assessee’s books. The Assessing Officer proceeded to hold that the entire Rs. 296 crores belonged to the assessee. He also opined that there was no need by the assessee to mortgage the said property. Assessee appealed before CIT(A). It was quite evident that the receipt of e-auction by the HDFC against its finance to HPGPL did not belong to the assessee in its entirety as the same was of project as it stood as on that date. It comprised of the constructions there on as well receivable by HPGPL. CIT(A) was correct in his appreciation that the assessee can be entitled to 5% which was agreed upon in the facilitation agreement between the assessee and its developer holding company i.e. HPGPL.
Accordingly, in the aforesaid discussion and precedent in considered opinion there was no infirmity in the order of CIT(A). Accordingly, tribunal upheld the same, therefore, these appeals stand dismissed. --- GREEN HABITATS PVT. LTD. vs. Deputy CIT. 23 ITCD Online 57 (MUM)