Can the assessee claim deduction of the cost of land, which is now given as a parking space to shop owners?

The Income Tax Appellate Tribunal (ITAT) Delhi addressed an appeal concerning the deductibility of land costs. The assessee, a real estate firm, had debited a significant amount related to assets transferred to work-in-progress in its profit and loss account. This expense related to land used for parking facilities provided to shop owners within a constructed mall. The Assessing Officer and CIT(A) had disallowed this expense, a decision that the assessee appealed.

INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “B”
NEW DELHI

BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
&
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
(Through Video Conferencing)

ITA. No. 2531/Del/2019
(Assessment Year: 2014-15)

M/s. Crown International
C-99 Ekta Vihar
Jaitpur Extension
Part -1
Delhi 14
PAN :- AADFC 1985B
(Appellant) 

Vs.

The Assistant
Commissioner of Income Tax
Circle 41 (1)
New Delhi
(Respondent)

Assessee by : Shri V K Shabarwal Adv
alongwith Shri Ashok Babbar
Adv ,
Rakesh Chaddha CA
Department by: Shri Mahesh Thakur SR DR

Date of Hearing : 12/05/2021
Date of pronouncement : 18/05/2021

O R D E R

PER PRASHANT MAHARISHI, A. M.

01. This appeal is filed by M/s Crown international, assessee- Appellant for assessment year 2014 – 15 against the order passed by THE COMMISSIONER OF INCOME TAX (A) – 14, New Delhi [ The ld CIT (A) ] dated 14/01/2019 wherein the addition made by the learned The Assistant Commissioner of Income tax , Circle 41(1), New Delhi [ the ld AO] of ₹ 37,909,943/– is confirmed. Though assessee has raised a very argumentative and detailed grounds of appeal however the solitary issue remains is a disallowance of expenditure of ₹ 37,909,943/– made by the learned assessing officer and confirmed by the learned CIT – A.

02. Brief facts of the case shows that assessee is a partnership firm engaged in the business of real estate and renting of properties. The total income of the assessee comprises of income from business and profession. Assessee has filed its return of income declaring income of ₹ 71,531,420/– on 31/11/2014. The case of the assessee was selected for limited scrutiny to examine mismatch in profit before tax as per profit and loss account and schedule BP, high interest expenditure against capital shown in the working progress et cetera.

03. On issue of various statutory notices by the learned assessing officer and details filed by the assessee, the learned AO noted that assessee has debited expense of ₹ 37,909,943/– in the profit and loss account on account of assets transferred to work in progress. In fact, on looking at the accounting treatment assessee has claimed this amount as deductible expenses. The facts stated that assessee has constructed a shopping mall on a plot having an area of 13,129 yd². It had an open area of 65% i.e. 8534 yd² and the remaining area was constructed portion. 

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