Commissioner of Income Tax vs Gujral Estates P. Ltd.

The Revenue is aggrieved by an order dated June 30, 2005, passed by the Income Tax Appellate Tribunal, Delhi Bench "D", in I.T.A. No. 2056/Delhi/2003, relevant to the assessment year 1991-92.

It appears that the assessee is a builder and had sold some flats to several purchasers. On behalf of these purchasers, the assessee used to collect the house tax and pay it to the municipal corporation.

For the relevant assessment year, though the house tax liability on the purchasers was to the extent of Rs. 13,61,747, the Commissioner of Income Tax (Appeals) has noted that the assessee actually collected Rs. 3,98,421 which was paid to the municipal corporation. Over and above this, the assessee appears to have paid an amount of Rs. 3,281 which was debited in the profit and loss account.

The liability of house tax due from the purchasers was initially shown as liability in the balance-sheet of the assessee and was, therefore, taken as the income of the assessee by the Assessing Officer. The appeal filed by the assessee against this assessment was rejected by the Commissioner of Income Tax (Appeals) but on further appeal to the Income Tax Appellate Tribunal, the matter was remanded back to the file of the Commissioner of Income Tax (Appeals) with the direction that the issue should be decided after ascertaining correct facts.

In the second round, the Commissioner of Income Tax (Appeals) found that no debit was made in the profit and loss account of the assessee in respect of house tax liability of the purchasers. It was noted that the total amount of Rs. 13,62,000 was actually a liability on behalf of the purchasers and was not the liability of the business of the assessee. On this basis, the Commissioner of Income Tax (Appeals) in his order dated January 13, 2003, deleted the addition made by the Assessing Officer and allowed the appeal of the assessee.

The Revenue then took up the matter before the Tribunal which dismissed the appeal by the impugned order dated June 13, 2005.

After hearing learned Counsel for the parties, we find that the assessee had only collected an amount of Rs. 3,98,421 from the house owners which was to be paid to the municipal corporation. As per the facts found by the Commissioner of Income Tax (Appeals) the balance of Rs. 9,63,327 towards house tax was not collected by the assessee. As such, it cannot be said under any circumstances that this amount was the income of the assessee or should be the liability of the assessee. The assessee paid the amount collected over and above this, an amount of Rs. 3,281 was paid in excess and only this excess amount was debited in the profit and loss account. There is no debit in the profit and loss account in respect of house tax liability of the purchasers.

On these facts, we find that no substantial question of law has arisen for our consideration.

We find no error in the view taken both by the Commissioner of Income Tax (Appeals) in the second round as well as by the Tribunal in the impugned order. Dismissed.