While allowing a departmental appeal against the Delhi State Industrial Infrastructure Development Corp. Ltd, a division bench of the Delhi High Court held that ground rent received by the assesse-Company forms part of its’ income.
A bench of Justices Muralidhar and Prathibha M Singh further observed that the maintenance charges and ground rent cannot be treated alike.
Assessee is awarded projects by Delhi Government for relocation of industries, common effluent treatment plants and development works of the Narela Industrial Complex Scheme. Assessing Officer held that the ground rent and maintenance charges collected by the Assessee from the allottees in the low cost housing scheme must be treated as the income of the Assessee. However, the Assessee denied the tax liability and maintained that they do not form part of its income.
The first appellate authority, in view of earlier decisions of the ITAT in the own case of the assessee, observed that the said amount had been “received in trust for a specific performance and, therefore, should not be treated as an income in the hands of the Assessee”. Although the said observation pertained only to the maintenance charges, the CIT (A) directed the deletion of the entire sum which represented both the maintenance charges as well as the ground rent.
The Appellate Tribunal, on second appeal, confirmed the above order.
While deleting the order, the bench of observed that “the Court finds that this issue was not examined in depth with reference to the accounts of the Assessee either by the AO or the CIT (A) or even the ITAT. They appear to have treated both the maintenance charges and ground rent alike whereas the decisions of the ITAT in favour of the Assessee, even for the earlier AYs, were specific to the issue of maintenance charges and not ground rent. Consequently, the impugned orders of the ITAT, the CIT (A) as well as the AO on the issue of ground rent for this AY 2008-09 is hereby set aside and the said issue is remanded to the file of the AO for re-determination in accordance with law after examining the accounts of the Assessee and any further evidence that may be led on this issue by the parties.”
Read the full text of the Order below.
