Pride Asia row: Income Tax slaps ‘penalty’ of Rs 270 cr on CHB
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The Income Tax Department has slapped a whopping "penalty" of nearly Rs 270 crore on the Chandigarh Housing Board (CHB) for not disclosing as "income" the money received from a deal with realtor Parsvnath.
Aggrieved, the CHB has challenged the order before an Income Tax Commissioner, the appellate authority in the case. Crying foul, the CHB has submitted that the penalty slapped by the Income Tax Department is grossly unfair since the original demand, made by the department, stands stayed by the Punjab and Haryana High Court.
It was in May this year that the High Court had stayed recovery of over Rs 300 crore by the Income Tax Department. In June 2010, the Income Tax 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.
At Rs 7,150 per square feet, the cost of flats ranged from around Rs 50 lakh to Rs 2 crore. The project also offered penthouses and villas ranging from Rs 2 crore and Rs 6 crore. However, construction could not be taken up due to arbitration even as the buyer-seller agreements were signed in 2008.