M/s. Shrinathji Corporation, Ahmedabad V. The ACIT.,Cent.Circle-1(3), Ahmedabad

CO 194/AHD/2010

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7889 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-11-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 19-07-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P M MEHTA
• Assessee Lawyers: D C PATWARI
• Keywords: Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, AHMEDABAD BEFORE SHRI G. C. GUPTA, HONBLE VICE PRESIDENT AN D SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO. 480, 481/ AHD/2010 (ASSESSMENT YEAR 2006-07, 2007-08) ACIT, CENTRAL CIRCLE 1(3), AHMEDABAD VS. M/S. SHRINATHJI CORPORATION F/1, TRIMURTI COMPLEX, THAKKAR BAPA NAGAR, BAPUNAGAR, AHMEDABAD PAN/GIR NO. : ABAFS9813N C.O. NO.194, 195/AHD/2010 (ASSESSMENT YEAR 2006-07 AND 2007-08) M/S. SHRINATHJI CORPORATION VS. ACIT, CC-4, F/1, TRIMURTI COMPLEX, AHMEDABAD THAKKAR BAPA NAGAR, BAPUNAGAR, AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI D C PATWARI, CIT DR RESPONDENT BY: SHRI P M MEHTA, AR DATE OF HEARING: 25.10.2012 DATE OF PRONOUNCEMENT: 09.11.2012 O R D E R PER SHRI A. K. GARODIA, AM:- THESE TWO APPEALS ARE FILED BY THE REVENUE AND CRO SS OBJECTIONS ARE FILED BY THE ASSESSEE WHICH ARE DIRECTED AGAINST A COMBINED ORDER OF LD. CIT(A) I, AHMEDABAD DATED 17.03.2010. FOR THE SAKE OF CONVENIENCE, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DIS POSED OF BY WAY OF THIS COMMON ORDER. I.T.A.NO.480,481 /AHD/2010 C.O.NO.194.195/AHD/2010 2 2. FIRST, WE TAKE UP THE APPEALS FILED BY THE REVEN UE. IN BOTH THE YEARS, THE ONLY GRIEVANCE OF THE REVENUE IS THE ADD ITION DELETED BY LD. CIT(A) HAVING BEEN MADE BY THE A.O. BY WAY OF ESTIM ATING PROFITS ON W.I.P. OF RS.3,12,920/- IN ASSESSMENT YEAR 2006-07 AND RS.13,27,740/- IN ASSESSMENT YEAR 2007-08. 3. LD. D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS, LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. WE FIND THAT THIS ISSUE WAS DECIDED BY LD. CIT(A) AS PER PA RA 5.4 OF HIS ORDER WHICH IS REPRODUCED BELOW FOR THE SAKE OF READY REF ERENCE: 5.4 I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND SUBMISSION MADE ON BEHALF OF THE APPELLANT. IT IS F ACT THAT THE APPELLANT IS A DEVELOPER CUM BUILDER ENGAGED IN CON STRUCTION AND SALE OF IMMOVABLE PROPERTIES AND NOT IN CARRYING OU T CONSTRUCTION CONTRACTS AND HENCE THE REVISED ACCOUNTING STANDARD 7 AS WELL AS THE DECISION OF TIRTHRAM AHUJA PVT LTD. 186 ITR 428 , HEAVILY RELIED UPON BY THE AO WAS NOT APPLICABLE TO THE FAC TS OF THE CASE OF THE APPELLANT FIRM. HENCE THE ADDITION MADE WHILE P LACING THE RELIANCE ON THE SAME CANNOT BE UPHELD. I ALSO FIND FORCE IN THE ARGUMENTS OF THE LEARNED COUNSEL FOR THE APPELLANT, THAT AS THE APPELLANT WAS FOLLOWING THE PROJECT COMPLETION METH OD OF ACCOUNTING CONSISTENTLY AND THE INCOME ARISING FROM THE SAME IS ASSESSED IN THE HANDS OF THE APPELLANT IN THE A.Y 2 008-09, , THERE IS NO JUSTIFICATION IN MAKING ADDITION OF ESTIMATED PR OFIT WITHOUT GIVING ANY CONTRARY OBSERVATION TO THE EFFECT THAT THE METHOD ADOPTED BY THE APPELLANT HAS RESULTED INTO UNDER AS SESSMENT OF THE REAL INCOME OF THE APPELLANT. I HAVE ALSO OBSERVED THAT SIMILAR ADDITION WAS MADE IN GROUP CONCERN BEING M/S VAUDEV DEVELOPERS FOR A.Y. 2006-07 & 07-08, WHEREIN I VIDE ORDER DATE D 30/11/2009 IN APPEAL NO CIT(A)-L/CC1(3)/532 & 533/2008-09 HAS DELETED ADDITION MADE BY AO. ACCORDINGLY ON APPRECIATION OF THE FACTS OF THE CASE OF THE APPELLANT AND IN LIGHT OF THE VARIO US JUDICIAL RULINGS RELIED ON BY THE APPELLANT, I HOLD THAT THE ADDITIO N MADE IN BOTH THE ASSESSMENT YEARS BY WAY OF ESTIMATED PROFIT ON WORK IN PROGRESS, WAS UNWARRANTED AND ACCORDINGLY THE A.O. IS DIRECTE D TO DELETE THE SAID ADDITION. I.T.A.NO.480,481 /AHD/2010 C.O.NO.194.195/AHD/2010 3 5. WE FIND FROM THE ABOVE PARA OF THE ORDER OF LD. CIT(A) THAT THIS DECISION OF LD. CIT(A) IS ON THE BASIS THAT THE ASS ESSEE WAS FOLLOWING THE PROJECT COMPLETION METHOD OF ACCOUNTING CONSISTENTL Y AND THE INCOME ARISING FROM THE SAME IS ASSESSED IN THE HANDS OF T HE ASSESSEE IN ASSESSMENT YEAR 2008-09 AND, THEREFORE, THERE IS NO JUSTIFICATION OF MAKING ADDITION ON ESTIMATED PROFIT WITHOUT GIVING ANY CONTRARY OBSERVATION TO THE EFFECT THAT THE METHOD ADOPTED B Y THE ASSESSEE HAS RESULTED INTO UNDER ASSESSMENT OF REAL INCOME OF TH E ASSESSEE. BEFORE US ALSO, NOTHING COULD BE BROUGHT ON RECORD BY THE LD. D.R. TO SHOW THAT THE REAL INCOME OF THE ASSESSEE WAS UNDER ASSESSED. HE HAS ALSO FAILED TO DEMONSTRATE THAT THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IN THESE TWO ASSESSMENT YEARS IS NOT BEING FOLLOWED BY THE ASSESSEE CONSISTENTLY AND IT IS ALSO OBSERVED BY US THAT THI S METHOD OF ACCOUNTING I.E. PROJECT COMPLETION METHOD IS AN ACCEPTED METHO D OF ACCOUNTING. REGARDING THE BUSINESS OF THE ASSESSEE, WE FIND THA T IT IS NOTED BY THE A.O. ON 1 ST PAGE OF THE ASSESSMENT ORDER THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION OF HOU SING PROJECTS AND HENCE, THE ASSESSEE IS NOT A CONTRACTOR BUT A DEVEL OPER AND, THEREFORE, IT CANNOT BE SAID THAT THE METHOD OF ACCOUNTING FOLLOW ED BY THE ASSESSEE IS NOT PROPER. IT IS ALSO NOTED BY LD. CIT(A) IN PARA 5.2 OF HIS ORDER THAT THE ASSESSEE IS A DEVELOPER AND NOT CARRYING OUT CONSTR UCTION CONTRACT AND HENCE, THE REVISED ACCOUNTING STANDARD 7 RELIED UPO N BY THE A.O. IS NOT APPLICABLE TO THE CASE OF THE ASSESSEE AND AS A CON SEQUENCE, THE JUDGMENT OF HONBLE APEX COURT FOLLOWED BY THE A.O. HAVING B EEN RENDERED IN THE CASE OF TIRTHRAM AHUJA PVT. LTD. VS CIT AS REPORTED IN 186 ITR428 IS ALSO NOT APPLICABLE TO THE PRESENT CASE. CONSIDERI NG ALL THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD . CIT(A) ON THIS ISSUE AND HENCE, WE DECLINE TO INTERFERE IN THE SAME. I.T.A.NO.480,481 /AHD/2010 C.O.NO.194.195/AHD/2010 4 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. 7. NOW, WE TAKE UP THE CROSS OBJECTIONS FILED BY TH E ASSESSEE. IN BOTH THESE YEARS, THE ONLY GROUND OF THE ASSESSEE IS THI S THAT THE ASSESSEE WAS ENTITLED TO THE BENEFIT OF DEDUCTION U/S 80-IB. IN ASSESSMENT YEAR 2007- 08, THEE IS ONE MORE GROUND RAISED BY THE ASSESSEE TO THE EFFECT THAT IN ASSESSMENT YEAR 2007-08, SECTION 153A/153B ARE NOT APPLICABLE BECAUSE THE SEARCH AND SEIZURE HAD TAKEN PLACE ON 10.05.200 6. 8. REGARDING THE 1 ST ASPECT, WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LD. CIT(A) ON THIS BASIS THAT SINCE THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD FOR DISCLOSING THE PROFIT AND THE ADDITION MADE BY THE A.O. BY ESTIMATING THE INCOME OF W.I.P. HAS BEEN DE LETED BY HIM, THIS ISSUE REGARDING DEDUCTION U/S 80-IB HAS BECOME REDU NDANT AND, THEREFORE, THE SAME IS NOT BEING ADJUDICATED. WHILE DECIDING THE APPEAL OF THE REVENUE, WE HAVE DECIDED THIS ISSUE IN FAVOUR OF TH E ASSESSEE AND, THEREFORE, WE FEEL THAT THIS ISSUE REGARDING ALLOWA BILITY OF DEDUCTION U/S 80-IB IS REDUNDANT IN THESE TWO YEARS BECAUSE NO IN COME IN THIS RESPECT HAS BEEN DECLARED BY THE ASSESSEE AND THE ADDITION MADE BY THE A.O. HAVING BEEN DELETED BY LD. CIT(A) AND SUCH DELETIO N HAVING BEEN CONFIRMED BY US, NO INCOME OF THE ASSESSEE IN RESPE CT OF ANY HOUSING PROJECT REMAINED INCLUDED IN THE ASSESSED INCOME OF THE ASSESSEE AND, THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTI ON U/S 80-IB IN THESE TWO YEARS. HENCE, THIS ISSUE IS DECIDED AGAINST THE AS SESSEE IN BOTH THESE YEARS. 9. REGARDING THE 2 ND ASPECT I.E. GROUND NO.1 OF THE C.O. IN ASSESSMENT YEAR 2007-08, WE FIND THAT THIS ISSUE HAS BECOME OF ACADEMIC INTEREST BECAUSE THE ONLY ONE ADDITION WAS MADE BY THE A.O. IN THIS YEAR OF RS.13,27,740/-, WHICH HAS BEEN DELETED BY LD. CIT(A ) AND WHILE DECIDING THE APPEAL OF THE REVENUE, WE HAVE CONFIRM ED THE ORDER OF LD. I.T.A.NO.480,481 /AHD/2010 C.O.NO.194.195/AHD/2010 5 CIT(A) AND DISMISSED THE APPEAL OF THE REVENUE. HE NCE, THERE IS NO ASSESSED INCOME IN THIS YEAR AND THEREFORE, THIS IS SUE HAS BECOME ACADEMIC AND HENCE, IN OUR CONSIDERED OPINION, NO A DJUDICATION IS CALLED FOR ON SUCH AN ACADEMIC ISSUE IN THE PRESENT CASE. 10. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AND BOTH THE CROSS OBJECTIONS OF THE ASSESSEE ARE DISMISSED. 11. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (G. C. GUPTA) (A. K. GARODIA) VICE PRESIDENT ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 07/11/2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 08/11/2012.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 09/11/2012 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.9/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09/11/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. .