Assistant Commissioner of Income-tax, V. M/s. Mangalmurti Developers, Kolhapur

ITA 1220/PUN/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9441 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 03-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1220/PUN/2015 / ASSESSMENT YEAR : 2011-12 ACIT, ICHALKARANJI CIRCLE, ICHALKARANJI . /APPELLANT VS. M/S. MANGALMURTY DEVELOPERS, 14/30M, HULGESHWARI ROAD, NEAR LIC BUILDING, ICHALKARANJI, DIST. KOLHAPUR 416 115 PAN : AANFM9728L . / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI AJAY MODI, JCIT / DATE OF HEARING : 25.01.2018 / DATE OF PRONOUNCEMENT: 25.01.2018 / ORDER PER D. KARUNAKARA RAO, AM : THIS IS THE APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)-1&2, KOLHAPUR, DATED 10-06-2015 FOR THE A.Y. 2011-12. 2. THE ONLY GROUND RAISED BY THE REVENUE IN THIS APPE AL RELATES TO THE RELIEF GRANTED BY THE CIT(A) IN RESPECT OF THE ADDITION MADE BY THE AO. 3. WHEN THE CASE IS COMING UP FOR HEARING, THERE IS NONE TO REPRESENT THE ASSESSEE DESPITE SERVICE OF NOTICE BY THE TRIBUNAL. ACKNOWLEDGEMENT OF THE SAID SERVICE OF NOTICE IS PLACED O N RECORD. CONSIDERING THE AVAILABILITY OF THE ASSISTANCE OF LD. DR AND THE FAIR ITA NO.1220/PUN/2015 M/S. MANGALMURTY DEVELOPERS 2 DECISION OF CIT(A), WE PROCEED TO ADJUDICATE THE APPEAL AFT ER HEARING THE LD. DR FOR THE REVENUE. 4. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE IS A DEALER IN REAL ESTATE AND DECIDED TO JOIN ITS PLOT OF LAND WITH THAT OF M/S. SHRIRAM DEVELOPERS. SUBSEQUENTLY, BOTH THE PARTIES SOLD THE JOINED LAND TO M/S.AVENUE SUPER MARTS PVT. LTD. FOR A CONSIDE RATION OF RS.4.56 CRORES (ROUNDED OFF). THE DEED OF CONVEYANCE DATE D 25-10-2010 EVIDENCES THE SAID TRANSACTION. ASSESSEES SHARE, B EING , WORKS OUT TO RS.2.28 CRORES (ROUNDED OFF). IN THE RETURN OF INCOME, ASSESSEE CLAIMED EXPENDITURE ON THE MAINTENANCE OF THE S AID PLOT OF LAND AND EXPLAINED THAT SAME WERE INCURRED ON THE CONS TRUCTION ACTIVITY AS WELL. IN THE RETURN, ASSESSEE CLAIMED RS.85,21,73 5/- TOWARDS HIS SHARE OF EXPENDITURE ON MAINTENANCE/CONSTRU CTION. ON THE OTHER HAND, OTHER PARTNER - M/S. SHRIRAM DEVELOPER S CLAIMED THE EXPENDITURE OF ONLY RS.45,64,699/-. CONSIDERING THE INEQUA LITY OF CLAIM OF EXPENDITURE BETWEEN THE TWO PARTNERS IN THEIR RE SPECTIVE INCOME-TAX RETURNS, AO PROCEEDED TO DISTURB THE SAME AND RESTRICTED THE CLAIM TO RS.45,64,699/- IN ASSESSEES CASE TOO. THE ASSESSED INCOME IS DETERMINED AT RS.1.56 CRORES (ROUNDED OFF) AGAINST THE RETURNED INCOME OF RS.1,02,12,860/-. 5. THE ABOVE ADDITION WAS SUBJECT MATTER OF THE LITIGATION BEFORE THE FIRST APPELLATE AUTHORITY. BEFORE THE CIT(A) ASSESSEE SUBM ITTED THAT THE DISALLOWANCE MADE BY THE AO, I.E. RESTRICTING THE CLAIM O F EXPENDITURE TO RS.45,64,699/-, AS AGAINST THE ORIGINAL CLAIM O F RS.85,21,735/-, IS NOT PROPER IN VIEW OF THE FACT THAT AO FAILE D TO IDENTIFY ANY IRREGULARITIES IN THE BOOKS OF ACCOUNT MAINTAINE D BY THE ASSESSEE. EVENTUALLY, THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE AS PER THE DISCUSSION GIVEN IN PARA NO.8 AND 9 OF THE ORDER. ITA NO.1220/PUN/2015 M/S. MANGALMURTY DEVELOPERS 3 6. BEFORE US, LD. DR FOR THE REVENUE FAIRLY SUBMITTED THAT THERE IS NO DISPUTE ABOUT THE GENUINENESS OF THE EXPENDITURE OF RS.85,21,735/- CLAIMED BY THE ASSESSEE. LD. DR READ OUT T HE CONTENTS OF PARA NO.8 AND OF THE ORDER OF CIT(A) WHICH BASICALLY CON TAINS THE DISCUSSION ON THE GENUINENESS OF EXPENDITURE AND THE DET AILS OF BREAKUP OF THE EXPENDITURE OF RS.85,21,735/-. 7. AFTER HEARING THE LD. DR AND ON PERUSING THE ORDER O F CIT(A) ON THIS SOLITARY ISSUE, WE PROCEED TO EXTRACT THE FINDINGS GIVE N BY THE CIT(A) IN PARA NOS. 8 AND 9 OF HIS ORDER. THE SAME READS AS UNDER : 8. FROM THE ABOVE FACTS IT IS SEEN THAT THE ASSESS ING OFFICER HAS DENIED CLAIM OF APPELLANT ON THE GROUND THAT SINCE THE CO-OWNER HAS SHOWN LESSER EXPENSES ON IMPROVEMENT, SAME AMOUNT S HOULD BE ALLOWED IN THE CASE OF THE APPELLANT. HOWEVER, WE HAVE TO EXAMINE FACTS OF THE CASE. EARLIER BOTH THE PLOTS WERE SEP ARATE AND ADJOINING. THE TWO OWNERS DECIDED TO DEVELOP THE TWO PLOTS TOG ETHER AND OBTAINED NECESSARY PERMISSION FOR VILINIKARAN OR AMALGAMATIO N. SOME CONSTRUCTION WAS ALSO MADE. LATER ON THE CO-OWNERS DECIDED TO EXECUTE A LUCRATIVE OFFER AND SALE WAS MADE. ASSESSING OFF ICER HAS NOT POINTED OUT THAT THE EXPENSES AS CLAIMED BY THE ASSESSEE WE RE NOT INCURRED BY HIM IN THE IMPROVEMENT OF HIS PART OF LAND. ASSESS ING OFFICER HAS TAKEN DEPOSITION OF CONTRACTOR, SHRI GHAT AND HIMSELF MEN TIONED AT PARAGRAPH 8.2 THAT ON VERIFICATION OF DOCUMENTARY EVIDENCE AN D IN VIEW OF THE DEPOSITION MADE BY SHRI GHAT, THE CONTENTION OF THE ASSESSEE THAT CONSTRUCTION WORK WAS CARRIED OUT PRIOR TO ITS SALE WAS FOUND TO BE IN ORDER. SINCE SOME WORK WAS ALREADY DONE IN A PORTI ON OF THE PLOT OWNED BY THE APPELLANT, THERE IS NO REASON TO DISAL LOW THE CLAIM OF EXPENSES. 9. COMING TO THE NATURE OF EXPENSES, THE ASSESSEES CLAIM INCLUDES RS.63,28,200/- AS PER CONTRACTORS BILL, RS.2,42,600 /- CEMENT PURCHASE, RS.6,28,553/- STEEL PURCHASE, RS.63,000/- CEMENT PU RCHASE, RS.9,60,000/- PARTNERS SALARY, RS.3,95,607/- MURUM , PURCHASE AND RS.1,79,374/- CERAMIC PURCHASE. ASSESSING OFFICER HAS NOT POINTED OUT SPECIFICALLY WHICH OF THESE EXPENSES ARE NOT ALLOWA BLE. WHEN THE EXPENSES HAVE BEEN DULY VERIFIED, JUST BECAUSE THE CO-OWNER HAS CLAIMED LESSER EXPENSES THE DISALLOWANCE CANNOT BE MADE BY THE ASSESSING OFFICER. THEREFORE, THE DISALLOWANCE IS HEREBY DELETED AND GROUNDS TAKEN BY THE APPELLANT ARE ALLOWED. 8. FROM THE ABOVE, IT IS THE FINDING OF FACT THAT THE AO HA S NOT MADE OUT ANY CASE ABOUT THE GENUINENESS OF THE EXPEN DITURE, PERSONAL/CAPITAL NATURE OF THE EXPENDITURE INVOLVED. EXPEN DITURE DETAILS PROVIDED IN PARA NO.9 OF THE CIT(A)S ORDER INDICATE THAT AN ITA NO.1220/PUN/2015 M/S. MANGALMURTY DEVELOPERS 4 AMOUNT OF RS.63,28,600/- CONSTITUTES THE CONTRACT BILL AND OTHER PAYMENTS ARE INCURRED ON PURCHASE OF CEMENT/STEEL, PAYM ENT OF SALARY OF THE PARTNERS, MURUM PURCHASES, CERAMIC PURCHAS ES ETC. ALL THESE EXPENSES PRIMA-FACIE SUGGEST THAT ASSESSEE INCURR ED THE SAME TOWARDS THE CONSTRUCTION ACTIVITY ON THE LAND BEFORE THE SAME WAS SOLD TO THE AVENUE MARTS PVT. LTD. (SUPRA). 9. THEREFORE, IN OUR CONSIDERED VIEW, THE ORDER OF CIT(A) DE LETING THE ADDITION IN THE HANDS OF THE ASSESSEE IS FAIR AND REAS ONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROU NDS RAISED BY THE REVENUE ARE DISMISSED. 10. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF JANUARY, 2018. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 25 TH JANUARY, 2018. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT(A) - 1 &2, KOLHAPUR 4 . 5. CIT - 1 &2, KOLHAPUR % , , A BENCH PUNE; 6 . / GUARD FILE.