ACIT, New Delhi V. M/s Griha Pravesh Buildteck Pvt. Ltd., New Delhi

ITA 1209/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6162 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Valuation report
• Section: 143(3); 142(1); 37(1)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 1209/DEL/2016 A.Y. : 2012-13 ACIT, CIRCLE 10(2), NEW DELHI VS. GRIHA PRAVESH BUILDTECK PVT. LTD. A-410, ANSAL CHAMBER-1, BHIKAJI CAMA PLACE, NEW DELHI (PAN: AADCG6532D) (ASSESSEE) (RESPONDENT) REVENUE BY : MS. RINKU SINGH, SR. DR. ASSESSEE BY : NONE ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THIS APPEAL AGAINST THE IMPUGN ED ORDER OF THE LD. CIT(A)-4, NEW DELHI RELEVANT TO ASSESSMENT YEAR 2012-13. 2. THE GROUNDS RAISED IN THE APPEAL READ AS UNDER:- I) THE CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF ASSESSEE AS THE BASE OF VALUATION REPORT OF AN 2 ARCHITECT INQUIRY THE FINDING OF AO THAT TOO REMANDING BACK THE MATTER. II) THE APPELLANT CRAVES LEAVE, TO ADD, ALTER OR AMEN D ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE FILED INCOME TAX RETURN, DECLARING LOSS OF RS. 64,65,667/- ON 19.9.20 12. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UND ER SECTION 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERR ED AS ACT) WAS ISSUED ON 6.8.2013. AGAIN NOTICE U/S. 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE WAS ISSUED ON 21.5.2014. DU E TO CHANGE IN THE INCUMBENCY OF JURISDICTION A FRESH NOTICE U/S. 1 42(1) OF THE ACT WAS ISSUED ON 9.12.2014. IN RESPONSE TO NOTICES, THE A R APPEARED FROM TIME TO TIME AND FILED THE REQUISITE DETAILS. BOOKS OF ACCOUNT WERE PRODUCED. DURING THE YEAR UNDER CONSIDERATIO N THE ASSESSEE COMPANY WAS DOING BUSINESS AS BUILDERS AND PROPERTY DEVELOPERS. THE AO AGAINST THE RETURNED LOSS OF RS. 64,65,667/- H AS ASSESSED THE INCOME OF ASSESSEE AT RS. 8,11,12,730/-, AFTER MA KING DISALLOWANCE OF EXPENSES OF RS. 16,53,396/- AND PRO FIT AS PER PERCENTAGE OF COMPLETION METHOD (AS-7 OF ICAI) AMOUN TING TO RS. 8,59,25,000/- VIDE HIS ORDER DATED 05.03.2015 PASSED U/S. 143(3) OF THE INCOME TAX ACT, 1961. AGAINST THE ASSESSMENT O RDER DATED 05.03.2015, ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO 3 VIDE HIS IMPUGNED ORDER DATED 18.12.2015 HAS DELE TED THE ADDITIONS IN DISPUTE. AGGRIEVED WITH THE ORDER OF TH E LD. CIT(A), NEW DELHI THE REVENUE IS IN APPEAL BEFORE THE TRIBU NAL. 4. LD. CIT(DR) RELIED UPON THE ORDER OF THE AO AND REITERATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 5. IN THIS CASE, NOTICE OF HEARING TO THE ASSESSEE W AS SENT BY THE REGISTERED AD POST, IN SPITE OF THE SAME, ASSESSEE, NOR ITS AUTHORIZED REPRESENTATIVE APPEARED TO PROSECUTE THE MATTE R IN DISPUTE, NOR FILED ANY APPLICATION FOR ADJOURNMENT. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND T HE ISSUE INVOLVED IN THE PRESENT APPEAL, WE ARE OF THE VIEW THA T NO USEFUL PURPOSE WOULD BE SERVED TO ISSUE NOTICE AGAIN AND A GAIN TO THE ASSESSEE, THEREFORE, WE ARE DECIDING THE PRESENT AP PEAL EXPARTE QUA ASSESSEE, AFTER HEARING THE LD. DR AND PERUSING THE RECORDS. 6. WE HAVE HEARD THE LD. DR AND PERUSED THE RECOR DS, ESPECIALLY THE IMPUGNED ORDER. WITH REGARD TO ADDITION OF RS.8,59,25,000/- IS CONCERNED, WE FIND THAT THE MAIN ISSUE IS WITH REFERENCE TO THE ESTIMATED COST OF PROJECT AND CONSEQUE NTIAL APPLICATION OF ACCOUNTING STANDARD-7 FOR RECOGNITION OF THE PROJECT REVENUE, PROJECT COST AND PROJECT INCOME. AS ESTIMATE D BY THE ASSESSING OFFICER THE COST OF THE PROJECT SHOULD BE A T RS 200 CRORES WHEREAS THE ASSESSEE ESTIMATE COMES TO RS 305 CRORES. THE AO'S ESTIMATE IS NOT BASED ON ANY MATERIAL ON RECORD WHER EAS THE 4 ASSESSEE HAS SUBMITTED A CERTIFICATE FROM THE ARCHITEC T. DURING THE YEAR, SIGNIFICANT CONSTRUCTION HAS NOT TAKEN PLACE AS IT APPEARS FROM THE EXPENSES INCURRED. THEREFORE, THE CLAIM OF THE A O THAT THE PROJECT IS COMPLETE AND THE ASSESSEE HAS ALLOTTED THE FLATS TO THE BUYERS IS NOT ACCEPTABLE. HENCE, THE COST OF THE PROJECT AS ESTIMATED BY THE ARCHITECT APPEARS TO BE CORRECT. THE FLATS WERE N OT HANDED OVER THE BUYERS AS THE ASSESSEE WAS NOT ALLOWED TO D O SO BY NOIDA. THE ASSESSEE COULD SELL ONLY 44% OF THE TOTAL PROJECT AREA AND THE ASSESSEE HAD ENTERED INTO INDIVIDUAL CONTRACT S WITH THE BUYERS WHICH ARE LEGALLY ENFORCEABLE. THE SIGNIFICA NT PERFORMANCE W.R.T. THE REMAINING COMPONENT OF THE PROJECT IS PENDIN G AND THE REVENUE IN RESPECT OF SUCH INDIVIDUAL CONTRACT CANNO T BE RECOGNIZED UNTIL THE REMAINING COMPONENTS ARE COMPLETED. AFTER CO NSIDERING THE ESTIMATED COST OF THE PROJECT AS PER THE ARCHITECT, T HE ASSESSEE HAD ONLY INCURRED 16.42% OF THE EXPENDITURE ON THE CO NSTRUCTION. THEREFORE, LD. CIT(A) HAS RIGHTLY ALLOWED THE CLAI M OF THE ASSESSEE AND REJECT THE ESTIMATE OF COST OF THE PROJECT BY THE A O AND ACCORDINGLY DELETED THE ADDITION OF RS, 8,59,25,000/- , WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, THEREFORE, WE U PHOLD THE ACTION OF THE LD. CIT(A) ON THE ISSUE IN DISPUTE AND RE JECT THE GROUND RAISED BY THE REVENUE. 6.1 FURTHER, WE NOTE THAT ASSESSING OFFICER HAS ALSO DI SALLOWED THE DEVELOPMENT EXPENSES OF RS 4,00,000/-, COMMISSION EX PENSES OF RS 9,50,000/-, AND TRAVELING EXPENSES OF RS 3,03,39 6/-. AS PER THE ASSESSING OFFICER THESE EXPENSES ARE NOT ALLOWABLE A S THESE HAVE NOT BEEN ESTIMATED BY THE APPELLANT IN ITS PROJECT CO ST. INFACT THESE EXPENSES ARE NOT PART OF THE PROJECT COST BUT ARE IN THE NATURE OF OVERHEAD EXPENSES. THE ASSESSING OFFICER ALSO HAS N OT DECLARED THESE EXPENSES TO BE UNJUSTIFIED OR BOGUS AND HENCE, LD. CIT(A) HAS 5 RIGHTLY ALLOWED THESE EXPENSES TOTALING TO RS 16,53,39 6/- U/S 37(1) AND DELETED THE ADDITION IN DISPUTE AND RIGHTLY DIRECTE D THE AO TO ALLOW THE CARRY FORWARD OF LOSSES OF PREVIOUS YEAR AMOUNTING TO RS. 9,67,732/-, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART, THEREFORE, WE UPHOLD THE ACTION OF THE LD. CIT(A) ON TH E ISSUE IN DISPUTE AND REJECT THE GROUND RAISED BY THE REVENUE. 7. IN THE RESULT, THE REVENUES APPEAL STANDS DISMI SSED ORDER PRONOUNCED ON 24/01/2019. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 24/01/2019 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENC HES