I-T dismisses appeal in Parsvnath deal, tells CHB to pay up Rs 270 cr
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In a big blow to the Chandigarh Housing Board (CHB), the Income Tax Department has dismissed an appeal filed by the CHB challenging the levy of a whopping "penalty" of nearly Rs 270 crore on it. The penalty was slapped for not disclosing as "income" the money received from a deal with realtor Parsvnath.
Aggrieved, the CHB had challenged the order in October before an Income Tax Commissioner, the appellate authority in the case. Crying foul, the board had submitted that the penalty slapped by the I-T Department was grossly unfair since the original demand, made by the department, stood stayed by the Punjab and Haryana High Court.
Finding no force in the contentions raised by the CHB, the I-T Department has dismissed the board's appeal and directed it to pay the penalty. Left with no option, the CHB filed an appeal in the Punjab and Haryana High Court on Saturday. It will come up for hearing next week.
It was in May this year that the High Court had stayed recovery of over Rs 300 crore by the I-T Department. In June 2010, the department had slapped notices on the CHB to cough up over Rs 300 crore as income tax on the amount it received from the deal with realtor Parsvnath.
The stay was granted by the High Court on an appeal filed by the CHB. The appeal was admitted and the recovery notices were stayed by the High Court till further orders. New Delhi-based realtor Parsvnath Developers Ltd's Pride Asia project in Chandigarh is stuck in arbitration with the CHB.
The project, which was expected to generate a revenue of Rs 4,500 crore, allegedly did not receive a portion of the 123-acre land committed by the CHB for the development of residential and commercial property. As per available information, Parsvnath had paid Rs 516 crore to the housing board between 2006 and 2008 as per the schedule in their agreement. The company had also invested close to Rs 300 crore on publicity and building of sample flats.