Real Estate bill passed in RS: Five ways it will benefit homebuyers

The much awaited Real Estate Bill, which aims to protect the interests of buyers and bring more transparency to the sector was on Thursday passed in Rajya Sabha.

The much awaited Real Estate Bill, which aims to protect the interests of buyers and bring more transparency to the sector was on Thursday passed in Rajya Sabha. The bill was first introduced in 2013 and amendments have been made to it by the present government. - 

The Finance Ministry in 2012 paper on black money had pointed out that the real estate sector is vulnerable to black money because of under-reporting of transactions.

Homebuyers struggling with inordinate project delays, poor construction quality and others whims of builders will heave a huge sigh of relief. The Rajya Sabha has cleared the the Real Estate (Regulation and Development) Bill after it was introduced by the government in the Upper House today.

The bill, which seeks to protect the interest of buyers and also bring transparency to the real estate sector in India, was first introduced by the erstwhile UPA government in 2013 and the government has brought to the floor of the parliament after some amendments.

Here, we bring you five ways that the new legislation will benefit homebuyers:

Setting up of a regulatory authority

The real estate sector, unorganised so far, has been functioning largely unregulated where buyers are often left at the whims of the developer. The bill seeks to fix this by proposing to set up state-level Real Estate Regulatory Authorities (RERAs) which will regulate transactions related to both residential and commercial projects. The authority will also grade projects in order to facilitate more informed decisions for buyers.

Tackling delayed possession woes

Delayed possession of flats has been the single biggest problem for buyers in today’s market. Builders rarely stick to possession dates and the penalties promised in the Builder-Buyer Agreements on account of delays in construction. Want of funds is also cited as one of the reasons behind delays. The bill mandates builders to keep aside 70 per cent of the money received from buyers in a separate account. This amount can only be used for the project that the money has been paid to the builder. Often, builders deploy the funds received for one project into another.


Making builders accountable

Builders offering delayed possession of projects, sometimes running into years, can no longer shirk accountability. The new bill mandates builders to shell out an equal payment of interest for delayed possessions as compared to the interest it charges buyers on account of delayed payments. Currently, builders pay only 2-3 per cent interest in case of default and delays, while the buyer has to shell out anywhere between 15-18 per cent for defaults. The bill increases the time period a developer can be held accountable for structural defects to 5 years from the existing two year timeframe.

Transparency in information

The builder can no longer take buyers for a ride by promising a particular area and delivering something much lesser. The developers have for long exploited the concept of ‘super area’ to mislead customers. The bill seeks to set this right by disallowing sale of a property on the basis of ‘super area’ which includes both flat area and common area. Violation of this norm can lead to a three-year term for the developer.

More power to the buyer


Contrary to the current practice, the new bill makes it compulsory for developers or builders to muster the consent of two-thirds of the buyers to bring about any changes to the original plan. Builders often resort to tweaking the construction and layout plan of a particular society without the knowledge of buyers. Introduction or modification of any new element in a project which is different from what was shown to the buyer at the time (new tower, school, temple etc) of booking will not be allowed without the consent from two-thirds of the buyers’.Source:http://indianexpress.com

PALAKKARAN BANKERS & CHIT FUNDS vs.DEPUTY COMMISSIONER OF INCOME TAX

PALAKKARAN BANKERS & CHIT FUNDS vs.DEPUTY COMMISSIONER OF INCOME TAX

COCHIN TRIBUNAL

B P JAIN AM & GEORGE GEORGE.K, JM.

IT(SS)A No. 03/Coch/2014

Mar 2, 2016

(2016) 46 cch 0221 CochinTrib

Legislation Referred to

Section 158BFA(2), 273B, 271

Case pertains to

Asst. Year

Decision in favour of:

Assessee

Search and seizure—Suppression of Income—Penalty u/s 158BFA(2)—Assessee was partnership firm consisting of three partners, engaged in business of money lending and chit fund business—Search was conducted in premises of assessee—Subsequently notice was issued to assessee and on basis of statement given by one of partners u/s 132(4) and material seized during course of search, AO determined undisclosed income at Rs.31,00,724—AO observed from books of account seized during course of search that it was clear that unaccounted transactions were carried out— It was further observed that entries recorded were 1/100th of real figures—AO multiplied figures by 100 and arrived at addition of Rs.37,51,374/- on account of unaccounted business—Penalty proceedings were initiated against assessee by issuance of notice u/s 158BFA(2)—AO   imposed penalty of Rs.18,60,043/- u/s. 158BF(2) on ground that there was clear case of suppression of income by assessee—CIT(A) dismissed appeal of assessee holding that language of section 158BFA(2) makes it obligatory upon AO to impose penalty on portion of undisclosed income determined—CIT(A) confirmed penalty imposed on assessee—Held, in CIT vs. Becharbhai Parmar (Supra) Guj. High Court held that “Sub-section(2) of Section 158BFA makes it clear that it is well within discretion of AO while framing assessment for block period, whether or not to impose any penalty or not— Words, “may direct” have to be given its normal meaning, leaving discretion to officer— In absence of any special reason word “may” could not be read as “shall”—It was, of course, true that upon satisfying such conditions, that in assessee would get immunity from penalty—Nevertheless, this was not thing as to suggest that in no other case, or on no other ground AO may at his discretion, not impose penalty moment additions under clause (c) of section 158BC were sustained—Penalty u/s 158BFA(2) was not mandatory in nature— It was true that Section 273B which provides that penalty should not be imposed in certain cases on assessee proving that there was reasonable cause for failure to pay tax refers to several provisions such as sections 271, 271A etc., made no mention of Section 158BFA(2)—AO was directed to cancel penalty imposed u/s 158BFA(2) and order of CIT(A) was reversed—Assessee’s Appeal allowed

Held

In the case of CIT vs. Becharbhai Parmar (Supra) the Hon’ble Guj. High Court has held as “Sub-section(2) of Section 158BFA makes it clear that it is well within the discretion of the Assessing Officer while framing the assessment for the block period, whether or not to impose any penalty or not. The words, “may direct” have to be given its normal meaning, leaving discretion to the officer. In absence of any special reason the word “may” cannot be read as “shall”. The contention of the counsel for the Revenue that only upon satisfaction of the conditions contained in proviso to sub-section (2) that the assessee, in case of the block assessment can be spared of the penalty cannot be accepted. It is, of course, true that upon satisfying such conditions that in assessee would get immunity from penalty. Nevertheless, this is not a thing as to suggest that in no other case, or on no other ground the AO may at his discretion, not impose penalty the moment additions under clause (c) of section 158BC are sustained. In other words, the penalty u/s. 158BFA(2) is not mandatory in nature. It is true that Section 273B which provides that penalty shall not be imposed in certain cases on the assessee proving that there was reasonable cause for failure to pay tax refers to several provisions such as sections 271, 271A etc., makes no mention of Section 158BFA(2). This still does not mean that penalty u/s. 158BFA(2) is mandatory.” Considering the totality of the facts more so in view of the fact that additions have been upheld on estimation basis and in view of the decision of the co- ordinate Bench cited hereinabove, ITAT are of the view that no penalty is leviable in the present case. ITAT accordingly direct the AO to delete the penalty.

(Para 14.9)

V.S. CAPITAL SERVICES PVT. LTD. vs.INCOME TAX OFFICER

V.S. CAPITAL SERVICES PVT. LTD. vs.INCOME TAX OFFICER

DELHI TRIBUNAL

H. S. SIDHU, JM & L.P. SAHU, AM.

ITA No. 6162/Del./2012

Mar 3, 2016

(2016) 46 cch 0224 DelTrib

Legislation Referred to

Section 68, 143(3)

Case pertains to

Asst. Year 2002-03

Decision in favour of:

Assessee

Reassessment—Income Escaping assessment—Validity—Reason to believe—Assessee filed return of income declaring income of Rs.3,811—Return was processed u/s 143(1)—Information had been received from DIT(Investigation) that assessee company had received accommodation entries from various companies/parties to tune of Rs. 2,00,000—Those entries were in nature of accommodation entries and in reality it was assessee’s own unaccounted money which had been shown in books of accounts as receipt from parties/companies—Accordingly, case was reopened u/s 147 after recording reasons—Notice u/s 148 was issued and was served upon assessee—In response to said notice, assessee company stated that “return filed by assessee was considered as return filed in response to notice u/s 148—During assessment proceedings AO noticed that accommodation entries were of Rs. 11,10,000/- and not of Rs.2,00,000/- as mentioned in reasons recorded—AO further noticed that assessee had raised share application money/share capital from various companies/parties—Assessee companies furnished required details in respect of share application/share capital raised during year— AO held that in terms of section 68 burden was on assessee to offer satisfactory explanation about nature and source of amount found credited in books of assessee and it further held that it was clear that mere furnishing of particulars was not enough—AO had reason to believe that income of assessee had escaped assessment hence he completed assessment u/s. 143(3)/148—CIT(A) dismissed appeal of assesse filed against validity of reassessment Order passed by AO—Held, after going through reasons recorded by AO and finding given by CIT(A), it viewed that AO had not applied his mind so as to come to independent conclusion that he had reason to believe that income had escaped during year—In Tribunals view reasons were vague and not based on any tangible material as well as same were not acceptable in eyes of law—AO had mechanically issued notice u/s 148 on basis of information allegedly received by him from Directorate of Income Tax (Investigation)—In CIT vs. G&G Pharma India Ltd. it was held that once date on which so called accommodation entries were provided was known, it would not have been difficult for AO, if he had in fact undertaken exercise, to make reference to manner in which those very entries were provided in accounts of Assessee, which must have been tendered along with return, which was filed on 14th November 2004 and was processed u/s 143(3)—Without forming prima facie opinion, on basis of such material, it was not possible for AO to have simply concluded that assessee company had introduced its own unaccounted money in its bank by way of accommodation entries"—Basic requirement that AO must apply his mind to materials in order to have reasons to believe that income of Assessee escaped assessment and same was missing in present case—While CIT(A) might have proceeded on basis that reopening of assessment was valid, this did not satisfy requirement of law that prior to reopening of assessment, AO applied his mind to materials, to conclude that he had reason to believe that income of Assessee had escaped assessment— Unless basic jurisdictional requirement was satisfied post mortem exercise of analysing materials produced subsequent to reopening would not rescue inherently defective reopening order from invalidity—Assessee’s Appeal allowed

Held

After going through the reasons recorded by the AO and the finding given by the Ld. CIT(A) in para 4.2 to 4.4 of pages 5 to 7 of the impugned order, the court was of the view that AO has not applied his mind so as to come to an independent conclusion that he has reason to believe that income has escaped during the year. The court observed that the reasons are vague and are not based on any tangible material as well as are not acceptable in the eyes of law. The AO has mechanically issued notice u/s. 148 of the Act, on the basis of information allegedly received by him from the Directorate of Income Tax (Investigation), New Delhi. Keeping in view of the facts and circumstances of the present case and the case law applicable in the case of the assessee, ITAT are of the considered view that the reopening in the case of the assessee for the asstt. Year in dispute is bad in law and deserves to be quashed.

NOTIFICATION NO. 12/2016, DATED: 2-03-2016

NOTIFICATION NO. 12/2016, DATED: 2-03-2016

Mar 2, 2016

CENTRAL GOVERNMENT NOTIFIES STATE LOAD DESPATCH CENTRE UNSCHEDULED INTERCHANGE FUND-BENGAL STATE ELECTRICITY TRANSMISSION COMPANY LIMITED, IN RESPECT OF THE CERTAIN SPECIFIED INCOME ARISING TO THE SAID TRUST

SECTION 10(46)

S.O. 639(E).—In exercise of the powers conferred by clause (46) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies for the purposes of the said clause, the State Load Despatch Centre Unscheduled Interchange Fund-West Bengal State Electricity Transmission Company Limited (PAN AAIAS0980J), a trust constituted under the Electricity Act, 2003 (36 of 2003) in respect of the following specified income arising to that trust, namely :-

(a)  residual money in the unscheduled interchange pool balance account;

(b)  interest on fixed deposits and auto-sweep accounts; and

(c)  income incidental to or related to unscheduled interchange.

2. The notification shall be subject to the following conditions, namely that the State Load Despatch Centre Unscheduled Interchange Fund - West Bengal State Electricity Transmission Company Limited,-

(a)  shall not engage in any commercial activity;

(b)  shall not change its activities and the nature of the specified income shall remain unchanged throughout the financial years; and

(c)  shall file return of income in accordance with the provision of clause (g) of sub-section (4C) section 139 of the said Act.

3. This notification shall be deemed to be applicable for the financial years 2012-2013, 2013-2014, 2014-2015 and applicable for the financial years 2015-2016 and 2016-2017.

[F. No. 196/51/2012-ITA.I]

DEEPSHIKHA SHARMA, Director

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