SANJEEV CONSTRUCTION, THANE V. ITO 24(3)(3), MUMBAI

ITA 1084/MUM/2009

• Counselvise Citation: 108419914 RSA 2009
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 07-06-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 17-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Assessee Lawyers: SAMEER G DALAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E : MUMBAI BEFORE SHRI R.S. PADVEKAR,(JM) AND SHRI RAJENDRA S INGH ,(AM) ITA NO.1084/MUM/2009 ASSESSMENT YEAR :2005-06 M/S. SANJEEV CONSTRUCTION 59/5, JAWAHAR NAGAR ROAD NO.4 GOREGAON(W) MUMBAI-400 062. ..( APPELLANT ) P.A. NO. (AARFS 9950 N) VS. INCOME TAX OFFICER WARD 24(3)(3) PRATYAKSHAKAR BHAVAN BANDRA (E) MUMBAI-400 050. ..( RESPONDENT ) APPELLANT BY : SHRI SAMEER G. DALAL RESPONDENT BY : SHRI G .P. TRIVEDI O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 15.12.2008 OF CIT(A) FOR THE ASSESSMENT YEAR 2005-0 6. THE ASSESSEE IN THIS APPEAL HAS RAISED DISPUTES ON TWO GROUNDS. 2. THE FIRST DISPUTE IS REGARDING ADDITION OF RS.4, 05,295/- ON ACCOUNT OF EXCESS SALE PROCEEDS RECEIVED BY THE ASSESSEE FROM SALE OF LAND. THE ASSESSEE WHO WAS IN THE REAL ESTATE BUSINESS WAS PU RCHASING PLOTS AND AFTER INCURRING EXPENSES SUCH AS REGISTRATION CHARGES, ST AMP DUTY, ARCHITECT FEE ETC. USED TO SELL THEM TO DEVELOPERS. THE ASSESSEE HAD PURCHASED A PLOT NO.68/5 AT NALLASOPARA ON 31.7.1990 FOR A SUM OF RS. 9,58,000/- AND HAD CAPITALIZED FUTURE EXPENSES OF RS .6,31,488/- INCURRED FROM ASSESSMENT YEAR 1990-91 TO 2003-04. THE PLOT HAD BEEN EARLIER SOLD VIDE AGREEMENT DATED 27.1.1998 TO M/S. ANANTH ASHRAY CONSTRUCTION CO. FO R A SUM OF ITA NO.1084/M/09 A.Y:05-06 2 RS.26,41,000/-. THEREAFTER A SUPPLEMENTARY AGREEME NT DATED 30.4.2001 WAS DRAWN AS PER WHICH THE ASSESSEE HAD ALREADY REC EIVED A SUM OF RS.11,65,000/- AND THE REMAINING AMOUNT OF RS.14,76 ,000/- WAS INCREASED TO RS.18.00 LACS. IN RELATION TO THE SAID OUTSTANDI NG SUM, THE DEVELOPER GAVE FOUR FLATS TO THE ASSESSEE VALUED AT RS .18,81,295/- IN THE ASSESSMENT YEAR 2005-06. THE ASSESSEE IN THE P&L ACCOUNT FOR THE A SSESSMENT YEAR 2005-06 CREDITED THE SUM OF RS .26,41,000 AS SALE CONSIDERATION OF THE PLOT. 2.1. THE ASSESSING OFFICER HOWEVER OBSERVED THAT T HE SALE CONSIDERATION OF THE PLOT WAS RS.30,46,209/- CONSISTING OF THE ADVAN CE PAYMENT OF RS.11,65,000/- AND VALUE OF FOUR FLATS AT RS.18,81, 295/-. HE THEREFORE ADDED THE DIFFERENCE OF RS.4,04,295/- TO THE TOTAL INCOME . IN APPEAL ASSESSEE SUBMITTED THAT AFTER THE AGREEMENT DATED 27.1.1998 WAS SIGNED, THE DEVELOPER DEFAULTED IN MAKING THE PAYMENTS AND THE TOTAL AMOUNT RECEIVED IN CASH WAS ONLY RS.7,41,000/- AND NOT RS.11,65,550 /-. THE CIT(A) HOWEVER DID NOT ACCEPT THE CONTENTION RAISED. IT WAS OBSERV ED BY HIM THAT THE SUPPLEMENTARY AGREEMENT CLEARLY MENTIONED THAT THE ASSESSEE HAD RECEIVED A SUM OF RS.1,65,000/-. HE THEREFORE, CONFIRMED TH E ADDITION MADE BY THE ASSESSING OFFICER, AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE US. 2.2. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD RECEIVED THE ADVANCE OF RS.7,41,000/- AND NOT 11,65,000/- AN D THE ADDITION MADE BY THE ASSESSING OFFICER WITHOUT ANY VERIFICATION WAS NOT PROPER. THE LD. DR PLACED RELIANCE ON THE FINDINGS OF THE AUTHORITIES BELOW. 2.3. WE HAVE PERUSED THE RECORDS AND CONSIDERED TH E MATERIAL CAREFULLY. THE DISPUTE IS WITH REGARD TO ADDITION ON ACCOUNT O F DIFFERENCE IN SALE CONSIDERATION IN RESPECT OF SALE OF PLOT. THE ASSE SSEE HAD RECEIVED CERTAIN AMOUNT IN ADVANCE IN ADDITION TO FOUR FLATS VALUED AT RS.18,81,295/- AS SALE CONSIDERATION. THE DISPUTE IS REGARDING THE SUM RE CEIVED IN ADVANCE. AS PER AUTHORITIES BELOW, THE SUPPLEMENTARY AGREEMENT MENT IONED THAT THE ASSESSEE HAD RECEIVED AN ADVANCE OF RS.11,65,550/-. THE CLAIM OF THE ITA NO.1084/M/09 A.Y:05-06 3 ASSESSEE IS THAT THE ACTUAL AMOUNT RECEIVED WAS RS. 7,41,000/-. THEREFORE, IN OUR VIEW THE MATTER REQUIRES VERIFICATION WITH T HE BUILDER. BOTH THE PARTIES HAD NO OBJECTION IF THE ISSUE WAS REFERRED BACK TO THE ASSESSING OFFICER FOR VERIFICATION AND FRESH ORDER. WE, THEREFORE, SET A SIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER BACK TO HIM FOR PASSING A FR ESH ORDER AFTER NECESSARY VERIFICATION AND AFTER ALLOWING OPPORTUNITY OF HEAR ING TO THE ASSESSEE. 3. THE SECOND DISPUTE IS REGARDING DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF ARCHITECTS FEE PAID BY THE ASSESSEE AMOU NTING TO RS.3,15,000/-. THE ASSESSING OFFICER OBSERVED THAT NO BUSINESS HAD BEEN DONE DURING THE YEAR AND NO EXPENSES HAD BEEN INCURRED BY THE ASSES SEE AND THEREFORE, HE DISALLOWED CLAIM OF DEDUCTION OF ARCHITECTURE FEES OF RS.3,15,000/-. IN APPEAL CIT(A) AGREED WITH THE ASSESSING OFFICER AND CONFIRMED THE DISALLOWANCE MADE, AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3.1. BEFORE US THE LD. AR FOR THE ASSESSEE SUBMITTE D THAT THE ASSESSEE HAD INCURRED ARCHITECT FEE IN RELATION TO THE PLOT SOLD DURING THE YEAR, INCOME FROM WHICH HAD BEEN DECLARED AND THEREFORE DISALLOWANCE OF EXPENDITURE WAS NOT JUSTIFIED. THE LD. DR PLACED RELIANCE ON THE ORDER S OF AUTHORITIES BELOW. 3.2. WE HAVE PERUSED RECORDS AND CONSIDERED THE MAT TER CAREFULLY. THE DISPUTE IS REGARDING DISALLOWANCE OF EXPENDITURE ON ACCOUNT OF ARCHITECTURE FEES AMOUNT TO RS.3,15,000/-. THE AUTHORITIES BELO W HAVE DISALLOWED THE CLAIM ON THE GROUND THAT NO BUSINESS WAS DONE DURIN G THE YEAR AND THEREFORE THERE WAS NO QUESTION OF ALLOWING ANY EXPENDITURE. THE CASE OF THE ASSESSEE IS THAT ARCHITECTURE FEE HAD BEEN INCURRED IN RELAT ION TO THE PLOT SOLD BY THE ASSESSEE, INCOME FROM WHICH HAS ALSO BEEN DECLARED AND ASSESSED. THEREFORE, EXPENDITURE COULD NOT BE DISALLOWED. IN OUR VIEW MATTER REQUIRES VERIFICATION. THERE IS NO DISPUTE THAT INCOME FROM THE PLOT SOLD HAS BEEN ASSESSED, AND THEREFORE IN CASE ARCHITECTURE FEES H AD BEEN PAID IN RELATION TO THE PLOT SOLD, THE EXPENDITURE HAS TO BE ALLOWED. WE THEREFORE, RESTORE THIS ITA NO.1084/M/09 A.Y:05-06 4 ISSUE ALSO TO THE ASSESSING OFFICER FOR PASSING FRE SH ORDER AFTER NECESSARY VERIFICATION AND AFTER ALLOWING OPPORTUNITY OF HEAR ING TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17.6.2011. SD/- SD/- (R.S. PADVEKAR) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 17.6.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.