In A relief for the Chandigarh Housing Board (CHB), the Punjab and Haryana High Court on Wednesda stayed orders of the Income Tax Department which had levied a whopping penalty of nearly Rs 270 crore on the Board. The penalty was slapped by the Income Tax Department on CHB 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 which had dismissed the same. The Court today stayed the recovery of the penalty and issued notices to the Income Tax Department to file its response.
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 Ltds Pride Asia project in Chandigarh is stuck in arbitration with the CHB.
The project, which was expected to generate 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 Rs 50 lakh to Rs 2 crore. Pride Asia went into arbitration in 2009 as the amount that Parsvnath had put in an escrow account was frozen by CHB. Additionally, CHB also imposed penalty on the developer for allegedly violating the terms of the agreement. In June 2010, the Income Tax department had issued notices to CHB to pay up Rs 300 crore as the income tax on the amount it received from the deal with Parsavnath
Out of the land deal, the CHB got Rs 514 crore but the Income Tax Department slapped a notice on it asking for Rs 300 crore as tax. Though the board had deposited