Question And Answer
Subject: Addition on account of one time deposit for maintenance
Querist: prakash
Answered by:
Tags: , ,
Date: November 21, 2023
Query asked by prakash

Assessee is promoter and Developers. During the course of its business accepted the one time maintenance from the  unit purchaser and disclosed as deposit liability in the audited financial statement. on the completion of project the amount is handed  over to society or apartment .This policy and method has been followed by the assessee since last 10 years and also accepted in the assessment U/SEc. 143(3) of the Act.  Under the Service Tax Act as well as under GST Act this amount is accepted as deposit and no tax has been levied. Assessee submitted that it is not business receipts and assessee is just a custodian . Assessee also submitted that if One central Act like Service TAx and  GST  has accepted as it as deposit there is no reason for the AO to treat it as business receipts and  therefore no addition be made, however the AO has not appreciated the submission and made the addition . Is the Action of the AO is justified and whether the contention of assesee is legally correct? pl guide

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Answer given by

Addition is not justified . One time deposit cannot be assessed as income . The assessee may have to give the name and address of the depositors . If the Assessing Officer had any doubt he could have verified by issuing notice u/s 133(6) or summons under section 131 of the Act . In PCIT v. Agson Global (P) Ltd. (2022) 441 ITR 550 / 210 DTR 225/ 325 CTR 1/ 286 Taxman 519 (Delhi)(HC) held that if the burden is discharged addition cannot be made . ITO v. Shanti Enterprise (2016) 240 taxman 698 (Guj.)(HC), where deposits was made with assessee represented booking amount received toward construction and same was done through banking channel and copies of account of depositor were duly filed, section 68 would not apply.

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