Cost of land purchased by Co. to provide parking space to shop owners of its mall eligible for deduction: ITAT

Case details: Crown International v. ACIT - [2021] 128 taxmann.com 421 (Delhi - Trib.)

Judiciary and Counsel Details

• • Bhavnesh Saini, Judicial Member and Prashant Maharishi, Accountant Member
  • V.K. Shabarwal, Adv., Ashok Babbar, Adv. and Rakesh Chaddha, CA for the Appellant.
  • Mahesh Thakur, Sr. DR for the Respondent.

Facts of the Case

Assessee was engaged in the business of real estate and renting properties. It developed a mall and sold office spaces along with shops to various buyers. At the time of approval of the plan, assessee had a parking space as a part of the mall. At the time of approval, assessee was supposed to provide adequate parking space as per Huda norms. However, near the shopping mall, a metro station was required to be set up. Therefore, the parking area of assessee was acquired by DMRC. Now the original obligation of assessee remained to provide a parking space to the shop owners in terms of HUDA rules.

For this purpose, assessee assigned an adjacent plot for parking space to the shop owners. Assessee demonstrated this by showing various photographs and letters to shop owners. Therefore, assessee asked for a deduction of the cost of the land, which is now given as a parking space to shop owners. Assessing Officer (AO) and CIT (A) both denied the deduction.

ITAT held

On appeal, the Delhi ITAT held that by providing the plot of land, assessee had incurred a cost of the project for providing the parking space to the shop owners, which was a commercial obligation on assessee. Assessee was granted permission to construct a shopping mall only if it had a proper parking facility as per HUDA Rules. Assessee was under a legal obligation to provide a parking space. Thus, AO was directed to delete disallowance on account of the parking space provided to the mall’s shop owners/office owners.