GALAXY DEVELOPERS,AHMEDABAD V. THE ACIT., CIRCLE-7(2), AHMEDABAD

ITA 1445/AHD/2024

AI Insights

The case involves Galaxy Developers, a partnership firm engaged in real estate development, which appealed against the order of the Commissioner of Income Tax (Appeals) - Additional/Joint CIT - 8, Delhi. The primary issues were the addition of notional rent on unsold flats as income under 'Income from House Property' and the disallowance of certain expenses related to land purchases. The Assessing Officer had treated the unsold flats as taxable under 'Income from House Property' and disallowed certain expenses due to lack of documentary evidence. The Tribunal found that the flats were held as stock-in-trade and not as investment properties, and thus, the notional rent addition was incorrect. It also held that the disallowed expenses were legitimate business costs.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396283 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: Chennai Properties & Investments Ltd. v. CIT, CIT v. Neha Builders Pvt. Ltd., Pegasus Properties (P.) Ltd. v. DCIT, Varun Developers v. ACIT, DCIT v. Neepa Real Estates (P.) Ltd., Vyapti Infrabuild Pvt. Ltd. v. DCIT, Ganga Developers v. DCIT, Othello Developers v. Pr. CIT, Zen Matrix (P) Ltd. v. DCIT, Takshashila Realities (P) Ltd. v. DCIT, CIT v. Ansal Housing & Construction Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.P. SRIVASTAVA
• Assessee Lawyers: KARAN SHAH
• Keywords: Additional evidence; Business expenditure; Cost of acquisition; Block assessment
• Section: 143(3); 142(1); 11

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘A’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD ] ] BEFORE S/SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER AND MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.1445/Ahd/2024 Asstt.Year : 2017-18 Galaxy Developers D/4, Galaxy Avenue Opp: Galaxy Cinema Naroda, Ahmedabad. PAN : AAHFG 3294 M Vs The ACIT, Cir.7(2) Ahmedabad. (Applicant) (Responent) Assessee by : Shri Karan Shah, AR Revenue by : Shri B.P. Srivastava, Sr.DR सुनवाई क तारीख/Date of Hearing : 27/03/2025 घोषणा क तारीख /Date of Pronouncement: 26/05/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: This appeal by the assessee is directed against the order dated 30.06.2024 passed by the Office of the Learned Commissioner of Income Tax (Appeals) - Additional/Joint CIT - 8, Delhi [hereinafter referred to as “Ld. CIT(A)”], under section 250 of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] for the assessment year 2017–18, whereby the Ld. CIT(A) upheld the assessment order passed by the Assistant Commissioner of Income Tax, Circle-7(2), Ahmedabad [hereinafter referred to as “the AO”] under section 143(3) of the Act dated 23.12.2019. ITA No.1445/Ahd/2024 2 Facts of the Case 2. The assessee, a partnership firm engaged in the business of real estate development and land trading, filed its return of income for Asst.Year. 2017–18 on 07.10.2017 declaring a total income of Rs.2,98,27,567/-. The return was selected for complete scrutiny under CASS, and notice under section 143(2) of the Act was issued on 09.08.2018. The case was subsequently transferred on change of jurisdiction, and further notices under section 142(1) along with detailed questionnaires were issued from time to time, calling for various details including explanation for valuation of land purchases and justification for not disclosing any income under the head “Income from House Property” in respect of unsold flats held as stock- in-trade. During the course of assessment proceedings, the AO observed that the assessee was carrying unsold finished flats forming part of closing stock valued at Rs.2,23,24,485/- in respect of its project “Galaxy Opal”. The building use (BU) permission in respect of the said project had been obtained in the financial year 2011–12. It was noted that 16 flats remained unsold as on 31.03.2017 and continued to be reflected as stock-in-trade in the books of the assessee. The AO issued a show cause notice proposing to treat notional rental value on such unsold flats as taxable under the head “Income from House Property” in terms of the conditions laid down in section 22 of the Act. In absence of any fair rental value provided by the assessee, the AO computed annual letting value (ALV) at 7% of the closing stock value, aggregating to Rs. 15,62,713/-, and after allowing standard deduction of 30%, made an addition of Rs.10,93,898/- to the total income under the head “Income from House Property”. ITA No.1445/Ahd/2024 3 3. In response, the assessee submitted that the unsold flats were held as stock-in-trade in its regular course of business as a builder and developer, and no income could be imputed under the head “Income from House Property” on notional basis. The assessee contended that the charging of notional rent on such business stock was unwarranted in law and relied upon the scheme of taxation under the Act, judicial pronouncements including the decision of the Hon’ble Supreme Court in the case of Chennai Properties & Investments Ltd. v. CIT (2015) 373 ITR 673 (SC), and further argued that section 23(5), which specifically brings such notional rent within the tax net, was inserted only with effect from A.Y. 2018–19 and is prospective in nature. 4. The AO, however, rejected the contentions of the assessee and proceeded to hold that the deeming fiction under section 22 of the Act would be attracted even in case of stock-in-trade, as the property satisfied all three conditions laid down therein - namely, (i) it consisted of a building or land appurtenant thereto, (ii) was owned by the assessee, and (iii) was not put to use for business or profession. 5. The AO observed that prior to insertion of section 23(5), there was no express exclusion for stock-in-trade and the notional income from unsold flats had always been chargeable as income from house property. The AO accordingly added Rs.10,93,898/- under that head and also initiated penalty proceedings under section 270A for misreporting of income. ITA No.1445/Ahd/2024 4 6. Apart from the aforesaid issue, the AO also examined the purchases of land shown in the trading account for the year under the head “Land Trading” and noticed a mismatch in the purchase price reflected in the ledger and that supported by the corresponding non-registered “banakhat” (agreement to purchase) in respect of two survey numbers - 779 and 780 paiki. In both cases, the AO observed that the ledger values were higher by Rs.4,99,320/- and Rs.5,31,260/- respectively, which the assessee explained as attributable to stamp duty, registration and vakil fees incurred for perfecting title and execution of special Power of Attorney in favour of its partner. However, in absence of any external documentary evidence such as stamp duty receipts, registration slips or vakil fee vouchers and further noting that the said transactions pertained to F.Y. 2010–11 and were included in the purchases for F.Y. 2016–17, the AO held that the explanation lacked evidentiary support and disallowed the differential amount of Rs.10,30,580/- by treating it as unverifiable expenditure. 7. The assessee carried the matter in appeal before the Ld. CIT(A) and reiterated its objections both in respect of the addition of notional rent and the disallowance of purchase-related expenses. It was submitted that since the property constituted trading stock, any notional income could not be brought to tax under the head “Income from House Property”, particularly when section 23(5) was made effective only from A.Y. 2018–19. It was also submitted that the expenses disallowed had been incurred in earlier years and duly accounted for during block assessment under section 153A, and the corresponding purchase had been accepted. ITA No.1445/Ahd/2024 5 8. The Ld. CIT(A), however, did not find merit in the submissions of the assessee. After extracting the detailed order of the AO and the rebuttals filed by the assessee, the Ld. CIT(A) upheld the addition of Rs.10,93,898/- relying on the decision of the Hon’ble Delhi High Court in Ansal Housing & Construction Ltd. v. ACIT (2013) 354 ITR 180 (Del) and held that the deeming fiction under section 22 of the Act was attracted to unsold stock-in-trade, as the legislative intent of section 23(5) was only to provide limited relief and not to create a new charge. As regards the disallowance of Rs. 10,30,580/-, the Ld. CIT(A) held that no credible evidence was produced either before the AO or during appellate proceedings under Rule 46A to substantiate the claim. The ledger entries by themselves were not treated as conclusive proof, and hence the disallowance was confirmed. The appeal was accordingly dismissed in toto. 9. Being further aggrieved, the assessee is in appeal before us and has raised the following grounds: 1. The Ld. CIT (A) has grossly erred in law and on facts in dismissing the appeal. He ought to have allowed the appeal fully in accordance with the grounds of appeal raised by the appellant before him. I. ADDITION OF RS. 10,93,898/- AS NOTIONAL RENT ON UNSOLD UNITS OF THE APPELLANT FIRM 1. The Ld. CIT (A) has erred in law and on facts in confirming the addition of Rs. 10,93,898/ - as made by the Ld. AQ as notional rent on unsold units of the appellant firm without appreciating the arguments and facts placed on record. 2. The Ld. CIT (A) has erred in law and on facts in not properly considering the written submission filed by the appellant firm during the course of appeal proceedings as well as various judicial pronouncements relied upon by the appellant firm. 3. The Ld. CIT(A) has erred in law and on facts in not appreciating the fact that appellant firm is a developer / builder and it has used the unsold property as stock-in-trade' then the said ITA No.1445/Ahd/2024 6 property would become or partake the character of the stock, and any income derived from the stock, would be income from the business, and not income from the property and any income derived from such stocks cannot be termed as income from property. II. Disallowance of expenses made towards Stamp Duty, Registration Fees and Vakils fees Rs.10,30,580/- 1. The Ld. CIT(A) has erred in law and on facts in confirming the disallowance of expenses incurred by the appellant firm towards Stamp Duty, Registration Fees and Vakils fees of Rs.10,30,580/- merely on surmises and conjectures. 2. The Ld. CIT(A) has erred in law and on facts in making an observation that during the course of appeal proceedings, the appellant did not provide any credible documentary evidence which can be relied upon regarding the allowability of these expenses. The appellant humbly submits that as the payment for purchase was done in F.Y. 2010-11, the appellant had submitted the ledger copy from the books, of said land. Said expense was incurred while executing special Power of Attorney (POA) in favour of one of the partner of the firm to carry out all the work related to these parcel of land and the same was also duly scrutinized U/s 143(3) r.w.s. 153A, by the then DCIT, Central Circle of Income, Tax and the assessment order was also rendered. 3. The Ld. CIT (A) has erred in law and on facts in not properly considering the written submission filed by the appellant during the course of appeal proceedings wherein the appellant has already submitted the relevant details in respect difference due to Stamp Duty, Registration Fees and Vakil. Fees totalling to Rs.10,30,580/- in the form of additional evidence under Rule 46A of the Income Tax Rules, 2. The appellant firm reserves its right to add, amend, alter or modify any of the grounds stated hereinabove either before or at the time of hearing. PRAYER 1. The appellant therefore respectfully prays that: 1. The addition of Rs.10,93,898/- on account of notional rent confirmed by the Ld. CIT(A) may kindly be deleted. ITA No.1445/Ahd/2024 7 2. Disallowance on account of expenses incurred by the appellant firm towards Stamp Duty, Registration Fees and Vakil Fees amounting to Rs.10,30,580/-may kindly be deleted. 3. Such and further relief as the nature and circumstances of the case may justify. 10. During the course of hearing before us, the learned Authorised Representative (AR) for the assessee reiterated the factual matrix as recorded in the orders of the lower authorities and advanced detailed submissions challenging the additions sustained by the CIT(A). Regarding addition of Rs. 10,93,898/- as Notional Rent on Unsold Flats, the AR submitted that the assessee is a real estate developer engaged in the business of constructing and selling residential flats. The unsold flats, forming part of the closing stock, were held as stock- in-trade and not as investment properties. The AR emphasised that Section 23(5) of the Act which specifically addresses the taxation of notional rent on unsold stock-in-trade, was introduced with effect from AY 2018–19. Prior to this amendment, there was no provision in the Act that mandated the taxation of notional rent on properties held as stock-in-trade. Therefore, for AY 2017–18, the addition made by the AO lacks statutory backing and is unsustainable. In support of this contention, the AR relied on the decision of the Hon'ble Gujarat High Court in the case of CIT v. Neha Builders Pvt. Ltd. [(2008) 296 ITR 661 (Guj)], wherein it was held that if a property is held as stock- in-trade, any income derived from it should be assessed under the head \"Profits and Gains of Business or Profession\" and not under \"Income from House Property.\" Apart from this the AR also placed reliance on following judicial precedents: i. Pegasus Properties (P.) Ltd. v. DCIT - [2022] 135 taxmann.com 294 (ITAT Mumbai - Trib.) ITA No.1445/Ahd/2024 8 ii. Varun Developers v. ACIT - [2024] 167 taxmann.com 413 (ITAT Pune - Trib.) iii. DCIT v. Neepa Real Estates (P.) Ltd. [2025] 717 taxmann.com 56 (Mumbai-Trib.) iv. Vyapti Infrabuild Pvt. Ltd. v. DCIT, Central Circle-4(1)(2), Ahmedabad - ITA Nos. 2120, 2505/Ahd/2017 (AYs 2013–14 & 2014–15) and ITA No. 2688 & CO No. 22/Ahd/2017 (AY 2014–15) v. DCIT v. Ganga Developers - [2022] 145 taxmann.com 515 (ITAT Mumbai - Trib.) vi. Othello Developers v. Pr. CIT - [2023] 151 taxmann.com 519 (ITAT Ahmedabad - Trib.) vii. DCIT v. Zen Matrix (P) Ltd. - [2023] 152 taxmann.com 395 (ITAT Ahmedabad - Trib.) viii. Takshashila Realities (P) Ltd. v. DCIT - [2023] 156 taxmann.com 175 (ITAT Ahmedabad - Trib.) 11. Regarding Disallowance of Rs.10,30,580/- towards Stamp Duty, Registration Fees, and Vakil Fees, the AR submitted that while the banakhat (agreement to purchase) was executed in respect of both survey numbers, formal registered sale deeds could not be executed due to certain defects in title which remained uncured by the sellers. As a result, the assessee executed a Special Power of Attorney (POA) in favour of its partner to act and transact on behalf of the firm with respect to these land parcels. In support of the above, the AR made detailed reference to the paper book. The AR referred to pages the paper book (P.B.) as detailed below: a. For Land at Survey No. 779 – Total amount paid in cash - Rs.4,99,220/- as per ledger on P.B. Page No. 148 ITA No.1445/Ahd/2024 9 a. Amount of Rs. 4,63,700/- paid in cash towards the stamp duty supported by noting on Special Power of Attorney on P.B. Page No. 551 b. Amount of Rs. 30,520/- paid in cash towards registration fees supported by noting on Special Power of Attorney on P.B. Page No. 597 c. Amount of Rs. 5,000/- paid in cash towards the Vakil Fees supported by voucher signed by Adv. Hiren Rajput on P.B. Page No. 600 b. For Land at Survey No. 780 – Total amount paid in cash - Rs.5,31,260/- as per ledger on P.B. Page No. 421 a. Amount of Rs. 4,93,800/- paid in cash towards the stamp duty supported by noting on Special Power of Attorney on P.B. Page No. 500 b. Amount of Rs. 32,460/- paid in cash towards registration fees supported by noting on Special Power of Attorney on P.B. Page No. 546 c. Amount of Rs. 5,000/- paid in cash towards the Vakil Fees supported by voucher signed by Adv. Hiren Rajput on P.B. Page No. 601 12. It was the contention of the AR that although the payments related to a prior year, namely FY 2010–11, they were ultimately reflected and claimed in the year under appeal due to their accounting treatment as part of the overall land acquisition cost. 13. The Learned Departmental Representative (DR) strongly supported the findings recorded by the lower authorities in relation to the addition of Rs.10,93,898/- towards notional rent on unsold flats. The DR further contended that the introduction of section 23(5) by the Finance Act, 2017 with effect from A.Y. 2018-19 was not to carve out a new charge of tax, but rather to strengthen and clarify the existing powers of the Assessing Officer under section 22. It was argued that even prior to the insertion of section 23(5), the legal position was clear that annual value of any property not used for ITA No.1445/Ahd/2024 10 business or profession and owned by the assessee was taxable under section 22, and the newly inserted provision under section 23(5) only codified the exemption relief for a limited period of one- year post- completion. However, in relation to ground regarding the disallowance of Rs.10,30,580/- on account of stamp duty, registration charges and vakil fees, the DR fairly conceded that the basic factual contentions raised by the assessee could not be denied. 14. We have carefully considered the rival submissions, perused the assessment order, the impugned appellate order, the paper book placed on record, and the extensive judicial authorities cited on both sides. The dispute in this ground is centred around the addition of Rs.10,93,898/- made by the Assessing Officer and confirmed by the CIT(A), being deemed rental income attributed to 16 flats held by the assessee as unsold closing stock in its real estate project “Galaxy Opal.” The core question that arises is whether notional income can be brought to tax under the head \"Income from House Property\" under section 22 of the Act in respect of flats held as stock-in-trade by a real estate developer for A.Y. 2017–18. 15. Section 22 provides the charging provision for \"Income from House Property\" and reads: “The annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the purposes of any business or profession carried on by him the profits of which are chargeable to income-tax, shall be chargeable to income-tax under the head ‘Income from house property.” ITA No.1445/Ahd/2024 11 To invoke section 22, the following three conditions must be cumulatively satisfied: 1. The property must consist of a building or land appurtenant thereto 2. The assessee must be the owner of the said property 3. The property must not be used for the purposes of business or profession carried on by the assessee 16. The Assessing Officer treated the unsold flats as taxable on the reasoning that the assessee is the owner of the flats, they are complete and capable of being let out and they were not used for any business or professional purposes during the relevant year. The AO thus proceeded to apply a notional Annual Letting Value (ALV) at 7% of the book value of the unsold units and taxed the resulting figure under section 22, allowing standard deduction of 30% u/s 24. 17. It is an admitted position that the assessee is a real estate developer, the 16 flats in question were constructed in earlier years and remained unsold as on 31.03.2017. These flats were consistently shown in the balance sheet as part of “stock-in-trade” and not as capital or investment assets. The assessee had not earned any actual rental income from the said flats and the assessee’s business is to construct and sell flats, not to hold and let out properties. Therefore, the flats form part of circulating capital employed in the business of real estate development and represent inventory in the normal course of trade. This aspect is crucial in interpreting the scope of section 22 vis-à-vis business use. 18. The third condition of section 22 that the property is “not used for the purposes of business or profession” is not satisfied in the present case. Though the flats were not sold during the year, they ITA No.1445/Ahd/2024 12 were retained in the business stock and intended for sale, which constitutes active business use. In this regard, the Hon’ble Gujarat High Court in CIT v. Neha Builders (P.) Ltd. (supra) held that if the property is used as ‘stock-in-trade’, then the said property would partake the character of stock, and any income derived from the stock would be income from the business and not income from the property. This binding judgment squarely covers the present case. Even if no income arises in the year, the underlying asset is employed in business and hence section 22 is inapplicable. 19. The Finance Act, 2017 inserted section 23(5) with effect from 01.04.2018 (i.e., A.Y. 2018–19). This insertion of section 23(5) by Parliament clearly indicates that prior to A.Y. 2018–19, the legislature did not treat such unsold stock-in-trade as taxable under the head 'Income from House Property'. The provision is prospective in nature, and its very introduction signals that no such tax charge existed in earlier years. This view is fortified by several decisions of coordinate benches as relied on by the assessee. 20. The Revenue has placed reliance on the decision of the Hon’ble Delhi High Court in CIT v. Ansal Housing & Construction Ltd. [(2016) 389 ITR 373 (Del)], where it was held that the ALV of unsold flats held by a construction company is taxable under section 22. However, that decision is clearly distinguishable as the facts involved treatment of unsold flats as fixed assets, not stock-in-trade and the judgment does not consider or discuss the Gujarat High Court's binding decision in Neha Builders (P.) Ltd. Subsequent legislative clarification by insertion of section 23(5) postdates that ruling and effectively limits its reach. Accordingly, the reliance on the judicial precedent in case of Ansal Housing(supra) does not override the ITA No.1445/Ahd/2024 13 jurisdictional binding authority of Hon’ble jurisdictional High Court in case of Neha Builders(supra), which must prevail. 21. In view of the above analysis of the statutory provisions of section 22 and 23, the legislative scheme, the nature of the asset as stock-in-trade, and the binding and persuasive judicial precedents, the addition made by the Assessing Officer and sustained by the CIT(A) is directed to be deleted. Related grounds of the assessee are allowed. 22. In case of disallowance of Rs.10,30,580/- on Account of Stamp Duty, Registration and Vakil Fees, we have carefully considered the rival submissions, and the documents placed on record by the assessee, including those forming part of the paper book. The Assessing Officer disallowed a sum of Rs.10,30,580/- from the cost of two land parcels acquired by the assessee under unregistered banakhat agreements in respect of Survey Nos. 779 and 780 paiki. The AO noted that there was a difference between the amount shown in the purchase banakhat and the value recorded in the assessee’s books. For Survey No. 779, the purchase price as per banakhat was Rs.30,01,198/-, whereas the assessee had booked Rs.35,00,518/- in its ledger. Similarly, for Survey No. 780 paiki, the banakhat value was Rs.31,95,921/- and the book entry stood at Rs.37,27,181/-. Thus, the AO found a total differential of Rs.10,30,580/-, which the assessee explained was on account of stamp duty, registration expenses, vakil fees, and Power of Attorney charges incurred for formalising title and safeguarding rights in favour of the firm. The AO rejected the assessee’s claim on the ground that no documentary evidence such as original receipts, registration challans, or vouchers, was furnished ITA No.1445/Ahd/2024 14 to substantiate the claim, and therefore, the expenditure was held to be unverified and disallowed. 23. During the course of hearing before us, the learned Authorised Representative (AR) submitted that the differential amount represented genuine business expenditure forming part of the capitalised cost of land acquisition, which was duly recorded in the assessee’s books in Financial Year 2010–11, although it was reflected again as part of stock valuation in A.Y. 2017–18. The learned AR explained with reference to the paper book that the amounts incurred towards stamp duty and registration fees are directly reflected in the registered Power of Attorney (POA) instruments executed in favour of the partner of the firm, copies of which were placed on record, the vakil fees, though paid in cash, are substantiated by signed internal vouchers, and the entries were contemporaneously recorded in the ledger account of the respective land parcels. The AR further explained that the entire set of entries were accounted for in the books during the course of F.Y. 2010–11, and no contrary finding was ever made during the assessment proceedings of the related year. 24. On the basis of the materials placed before us, we find merit in the explanation offered by the assessee. The expenses in question form part of the cost of acquiring trading stock, and in the business of real estate development, such incidental costs incurred for legal formalities, title documentation, and POA registration constitute allowable additions to the book value of inventory. The stamp duty and registration fees were admittedly incurred in connection with a registered Power of Attorney, which is a public document. In commercial transactions, especially where the seller cannot deliver formal title due to pending issues, the execution of a POA backed by ITA No.1445/Ahd/2024 15 registration and statutory fees is a standard and legally valid mechanism for transacting and securing possession. As regards the vakil fees, the entries are substantiated by signed vouchers and are not of a nature where external proof would ordinarily be preserved over a decade later. No finding has been recorded by the AO that the vouchers were fabricated or implausible. In such cases, the principle of business realism and book-based corroboration must be applied in determining the allowability of such costs. Moreover, it is well settled that once the assessee has recorded such expenses in its books in the normal course and explains the business purpose thereof, the onus shifts to the Department to establish that the same are fictitious, excessive, or unrelated to business. Mere non-availability of third- party receipts, particularly when the underlying legal transaction is supported by a registered instrument, is not a valid basis to disallow a capital expense that is otherwise explained and evidenced. 25. In view of the above factual findings and legal analysis, we hold that the stamp duty and registration charges incurred by the assessee for execution of the registered Power of Attorney are genuine, incurred in the normal course of business, and directly relatable to the acquisition of land parcels. The vakil fees, though paid in cash, are nominal in nature and supported by signed internal vouchers, and such legal expenses are consistent with standard commercial practices in real estate transactions. The Assessing Officer, in our view, erred in disallowing the entire differential cost solely for want of external vouchers, without appreciating the nature of the documents, the purpose of the transaction, and the consistency in accounting treatment. The Ld. CIT(A), too, fell in error in mechanically sustaining the disallowance without due consideration of the contemporaneous evidence placed on record through the paper book. We therefore direct ITA No.1445/Ahd/2024 16 that the disallowance of Rs.10,30,580/- be deleted in full. Related grounds are accordingly allowed. In the combined result the appeal filed by the assessee is allowed. 26. In the result, the Appeal of the assessee is allowed. Order pronounced in the Court on 26th May, 2025 at Ahmedabad. Sd/- Sd/- (T.R. SENTHIL KUMAR) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 26/05/2025 "