PADMA B. MATTA, MUMBAI V. ITO WD 19(2)(4), MUMBAI

ITA 106/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2258 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 25-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 06-01-2011
• Court: TRIBUNAL
• Department Lawyers: BHARTI SINGH
• Assessee Lawyers: CHANDER MATTA
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) I.T.A. NO. 106 /MUM/ 2011 (ASSESSMENT YEAR 200 7 - 0 8 ) MRS. PADMA B. MATTA 204, MARINE APARTMENT JUHU ROAD SANTACRUZ (WEST) MUMBAI - 400 054. ITO WA RD 19(2)4 PIRAMAL CHAMBERS LALBAUG, PAREL MUMBAI - 400 012. ( APPELLANT ) ( RESPONDENT ) PAN NO . AABPM2173R ASSESSEE BY SHRI CHANDER MATTA DEPARTMENT BY MS. BHARTI SINGH DATE OF HEARING 2 5 .10 . 201 6 DATE OF PRONOUNCEMENT 25 .10. 201 6 O R D E R PER B.R. BASKARAN (AM) : - THE APP E AL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 28.10.2010 PASSED BY THE LEARNED CIT(A) - 30, MUMBAI AND IT RELATES TO A.Y. 2007 - 08. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CO NFIRMING THE BUSINESS INCOME COMPUTED BY THE ASSESSING OFFICER. 3. THE ASSESSEE IS A BUILDER. SHE WAS OFFERING INCOME UNDER THE PERCENTAGE COMPLETION METHOD. IN A.Y. 2005 - 06 THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS NOT COMPLETED PROJECT FOR QUITE A LONG TIME AND ACCORDINGLY PROCEEDED TO COMPUTE THE INCOME AS UNDER : - PERCEPT FINSERVE P. LTD. 2 DIFFERENCE BETWEEN ADVANCE AND WIP AS ON 31.3.2005 75,58,750 LESS : EXP. INCURRED FOR A.Y. 2006 - 07 A.Y. 2007 - 08 COST OF PLOT COMPENSATION PAID EXP. TO BE INCURRED A.Y. 2008 - 09 3,75,000 10,50,000 9,65,000 4,07,038 16,67,962 44,65,000 BALANCE NET PROFIT 30,93,750 THE ASSESSEE ACCEPTED THE ABOVE METHOD AND ACCORDINGLY PAID THE TAX DEMAND RAISED BY THE AO IN AY 2005 - 06. THE AO FOLLOWED SAME METHOD TO COMPUTE INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION , I.E., IN AY 2007 - 08. A CCORDINGLY T HE AO COMPUTED INCOME AS UNDER: - DIFFERENCE BETWEEN RECEIPTS AND WIP AS DISCUSSED ABOVE 75,37,500/ - LESS : COST OF LAND A MOUNT OF EXPENDITURE INCURRED FOR A.Y. 2006 - 07 COMPENSATION PAID TO FLAT OWNERS TOTAL ADDITIONAL PROFIT LESS : ADDITIONAL PROFIT ASSESSED FOR A.Y. 2005 - 06 ADDITIONAL PROFIT FOR A.Y. 2007 - 0 8 9,65,000 3,75,000 4,07,038 17,47,038/ - 61,90,462/ - 30,39,75 0/ - 31,50,712/ - WE NOTICE THAT THE AO HAS ASSESSED A SUM OF RS.30,39,750/ - ONLY IN AY 2005 - 06 AS AGAINST THE COMPUTED AMOUNT OF RS.30,93,750/ - . HENCE THE AO GAVE CREDIT OF RS.30,39,750/ - ONLY IN AY 2007 - 08. ACCORDINGLY THE AO ASSESSED THE ABOVE SAID I NCOME OF RS.31,50,712/ - IN AY 2007 - 08. THE LD CIT(A) ALSO CONFIRMED THE SAME. 4. THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD RECEIVED ADVANCES TO THE TUNE OF RS.1,94,13,750/ - UPTO 31.3.2005 AND HAD INCURRED EXPENSES (WIP) OF RS.1,18,55,000/ - UPTO THA T DATE. ACCORDINGLY THE AO ADOPTED THE DIFFERENCE AMOUNT OF RS.75,58,750/ - FOR COMPUTING INCOME IN AY 2005 - 06. BETWEEN AY 2005 - 06 AND AY 2007 - 08, THE ASSESSEE HAD RECEIVED ADDITIONAL ADVANCE OF RS.18,03,750/ - AND INCURRED ADDITIONAL EXPENSES OF RS.14,25, 000/ - . HENCE THE AO COMPUTED THE DIFFERENCE IN AY 2007 - 08 AS UNDER: - PERCEPT FINSERVE P. LTD. 3 ADVANCE RECEIVED (1,94,13,750/ - + 18,03,750/ - ) 2,12,17,500 LESS: - WIP (1,18,55,000/ - + 14,25,000/ - ) 1,32,80,000 ---------------- 79,37,500 =========== 5. THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS OFFERED THE ADDITIONAL ADVANCE AMOUNT OF RS.18,03,750/ - AS HER INCOME IN AY 2008 - 09 AND HENCE INCLUSION OF THE SAME IN AY 2007 - 08 WOULD LEAD TO DOUBLE A SSESSMENT OF SAME INCOME. HE FURTHER SUBMITTED THAT THE AO HAS ALLOWED A SUM OF RS.16,67,962/ - , BEING THE ADDITIONAL EXPENSES TO BE INCURRED IN AY 2008 - 09, WHILE COMPUTING THE INCOME IN AY 2005 - 06. HOWEVER THE AO REFUSED TO ALLOW THE SAME WHILE COMPUTING INCOME FOR AY 200 7 - 08. 6. ON THE CONTRARY, THE LD D.R SUPPORTED THE ORDERS PASSED BY LD CIT(A). 7. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. IT IS THE SUBMISSION OF THE ASSESSEE THAT THE ADDITIONAL ADVANCE OF RS.18,03,750/ - HAS BEEN OFFERED BY HER IN AY 2008 - 09. HOWEVER, WE NOTICE THAT THE ABOVE SAID AMOUNT WAS RECEIVED BY THE ASSESSEE IN THE YEARS RELEVANT TO AY 2006 - 07 AND 2007 - 08. HENCE, WE ARE OF THE VIEW THAT THE TAX AUTHORITIES HAVE RIGHTLY TAKEN THE ABOVE SAID AMOUNT IN COMPUTING THE INCOME FOR A Y 2007 - 08. IN OUR VIEW, THE ASSESSEE MAY NOT BE RIGHT IN OFFERING THE ABOVE SAID ADVANCE AMOUNT IN AY 2008 - 09. IT IS ALSO WELL SETTLED PROPOSITION THAT DOUBLE ASSESSMENT OF SAME RECEIPT IS NOT PERMISSIBLE UNDER THE ACT . 8. WE NOTICE THAT THE AO HAS C OMPUTED THE INCOME OF AY 2005 - 06 BY COMPUTING THE PROFIT FROM THE PROJECT ON THE BASIS OF ADVANCE AMOUNT RECEIVED AND ALSO BY DEDUCTING THERE FROM ALL EXPENSES INCLUDING ESTIMATED EXPENDITURE THAT MAY BE INCURRED IN THE YEAR RELEVANT TO AY 2008 - 09. HOWEVE R, WHILE COMPUTING THE INCOME FOR AY 2007 - 08, THE AO HAS REFUSED TO GIVE SUCH KIND OF DEDUCTION. WE NOTICE THAT THE ASSESSEE HAS BEEN RECEIVING ADDITIONAL ADVANCE AMOUNT FROM FLAT BUYERS AND ALSO INCURRING ADDITIONAL EXPENDITURE. WE NOTICE THAT THE METHO D ADOPTED BY THE AO TO DETERMINE THE INCOME IN AY 2005 - 06 TOOK INTO CONSIDERATION THE ADDITIONAL EXPENDITURE THAT MAY BE INCURRED. PERCEPT FINSERVE P. LTD. 4 HENCE WE ARE OF THE VIEW THAT THE AO SHOULD HAVE ALLOWED THE EXPENDITURE THAT HAS ACTUALLY BEEN INCURRED IN AY 2008 - 09 FOR T HE PURPOSE OF COMPUTING INCOME FOR AY 2007 - 08, SINCE THE PURPOSE OF THE EXERCISE WAS TO ASCERTAIN THE INCOME FROM THE PROJECT AND TO ASSESS THE INCREMENTAL INCOME. SINCE THE BOOKS OF ACCOUNTS RELATING TO AY 2008 - 09 SHOULD BE AVAILABLE BY NOW, WE DIRECT TH E AO TO CONSIDER THE PROJECT EXPENSES ACTUALLY INCURRED BY THE ASSESSEE IN THE YEAR RELEVANT TO AY 2008 - 09 FOR THE PURPOSE OF COMPUTING THE INCOME FOR AY 2007 - 08. 9. WE HAVE NOTICED THAT THE AO HAS FOLLOWED THE METHOD OF ASCERTAINING INCREMENTAL INCOM E FROM THE PROJECT EVERY YEAR, THE SAME METHOD SHOULD HAVE BE EN ADOPTED BY THE ASSESSEE FOR ASCERTAINING THE INCOME FOR AY 2008 - 09 , UNDER THE PRINCIPLES OF CONSISTENCY. IT APPEARS THAT THE ASSESSEE HAS NOT FOLLOWED THE SAID METHOD AND ACCORDINGLY OFFERED THE ADDITIONAL ADVANCE AMOUNT OF RS.18,03,750/ - , REFERRED ABOVE, AS INCOME FOR AY 2008 - 09. SINCE THE DOUBLE TAXATION OF SAME RECEIPT IS NOT PERMISSIBLE, THE ASSESSEE MAY MOVE APPROPRIATE PETITION BEFORE THE TAX AUTHORITIES IN THIS REGARD, WHICH MAY BE CON SIDERED BY THEM LIBERALLY. 10 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 5 .10 .2016 SD/ - SD/ - (PAWAN SINGH) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 5 / 10 / 20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI PS