$ 12 * IN HIGH COURT OF DELHI AT NEW DELHI + INCOME TAX APPEAL NO. 339/2014 Date of decision: 27th October, 2014 HOUSING & URBAN DEVELOPMENT CORPORATION LIMITED ..... Appellant Through Mr. Gagan Kumar & Ms. Niyati Chanana, Advocates. versus ADDITIONAL COMMISSIONER OF INCOME TAX ..... Respondent Through Ms. Suruchi Aggarwal, Sr. Standing Counsel. CORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE V. KAMESWAR RAO SANJIV KHANNA, J. (ORAL): Having heard learned counsel for parties, we frame 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 consent of parties and as short issue arises for consideration, we have taken up appeal for hearing and same is disposed of by this judgment. 3. appellant-assessee is company and Public Sector Undertaking. For Assessment Year 2002-03, return of income of 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 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. assessee had undertaken construction of Andrews Ganj project awarded to them by Government of India. Assessing Officer relied upon minutes of meeting held on 7th September, 1995, to hold that assessee was entitled to overhead charges of 1.5% not only in respect of cost of construction of community centre but also on cost of construction of residential flats. This, as noticed, resulted in addition of Rs.35,57,615/-. assessment order further records that in books of accounts this amount had been reversed. 4. Commissioner of Income Tax (Appeals) affirmed 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 community centre but in respect of residential quarters also. 5. Income Tax Appellate Tribunal (Tribunal, for short) by impugned order dated 20th December, 2013 has dismissed appeal filed by assessee, recording as under:- 5. At time of hearing before us, learned counsel for assessee reiterated same argument as was raised before Assessing Officer that ITA No. 339/2014 Page 2 of 5 overhead charges were not leviable on general pool accommodation. However, we find that Assessing Officer has reproduced relevant portion of minutes from which it is evident that assessee is entitled to overhead charges of one and half percent on computed cost of project. computed cost of project would include cost of entire project including general pool accommodation. In view of above, we do not find any justification to interfere with orders of lower authorities in this regard. Accordingly, ground No.1 of assessee's appeal is rejected. 6. Along with grounds of appeal, appellant before us has filed copy of minutes of meeting held on 7th September, 1995 and after making reference to same has pointed out that said minutes have been misread and misunderstood by Assessing Officer and appellate authorities, including Tribunal. said minutes specifically make reference to community centre complex at Andrews Ganj, New Delhi as is clear from very first paragraph. subsequent paragraphs, including paragraph quoted by Assessing Officer entailing payment of administrative expenses @ 1.5% relate to development of community centre complex at Andrews Ganj, New Delhi and not to residential quarters which was not subject matter of said meeting and recorded memorandum. 7. Having read said record of minutes of meeting, we felt that there was merit in submission made as recorded minutes specifically refer to 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 residential quarters under construction at Andrews Ganj. 8. In light of aforesaid submissions and noting minutes of meeting, while issuing notice on 11th July, 2014, we had asked counsel for Revenue to verify factual position and inform Court whether assessee had at any time received administrative expenses @ 1.5% in relation to residential quarters from Government of India. We had also recorded submission of assessee that assessee never received 1.5% as administrative expenses for construction of residential quarters. 9. During hearing today, learned counsel for respondent- Revenue has filed before us letter dated 25th September, 2014 of Assessing Officer, accepting and admitting that on verification it has been ascertained that overhead charges were leviable by assessee only in respect of Andrews Ganj community centre and not on development of residential flats at Andrews Ganj project. said letter has been kept on record. 10. Normally, we would have remanded case to Tribunal for fresh decision in light of minutes of meeting held on 7 th September, 1995, but in view of facts now elucidated and accepted by Revenue, we are not inclined to pass order of remit. It would be formality. It is accepted position that appellant-assessee had never received 1.5% ITA No. 339/2014 Page 4 of 5 administrative expenses in respect of residential quarters in Andrews Ganj project. Clearly, therefore, stand of appellant-assessee that notes of meeting held on 7th September, 1995 related to development of community centre complex at Andrews Ganj, New Delhi and not to residential quarters is correct. aforesaid document has been misread. There was no accrual of income in case 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 Delhi. 11. question of law is accordingly answered in favour of appellant-assessee and against Revenue. Addition of Rs. 35,57,615/- is deleted. appeal is disposed of. In facts of case, there is no order as to costs. SANJIV KHANNA, J. V. KAMESWAR RAO, J. OCTOBER 27, 2014 VKR ITA No. 339/2014 Page 5 of 5 Housing & Urban Development Corporation Limited v. Additional Commissioner of Income-tax