GSR Hotels & Estates Pvt. Ltd., Hyderabad V. Dy. Commissioner of Income Tax, Hyderabad

ITA 1254/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74693 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-09-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 06-09-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: I RAMA RAO
• Keywords: Reopening of assessment; Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 148; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1254 /HYD/13 : ASSESSMENT YEAR 2004 - 05 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD ( PAN - AAACG 7386 C) V/S. DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(2), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI I.RAMA RAO RESPONDENT BY : SHRI JEEVAN LAL LAVIDIYA DR DATE OF HEARING 9.1.2014 DATE OF PRONOUNCEMENT 7.3.2014 O R D E R PER SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) III, HYDERABAD DATED 9 TH JULY, 2013 FOR THE ASSESSMENT YEAR 2004 - 05 . 2. F ACTS OF THE CASE IN BRIEF LEADING TO THE FILING OF THE PRESENT APPEAL BY THE ASSESSEE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF CONSTRUCTION ACTIVITY. IT HAD FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2004 - 05 ON 01/11/2004 DECLARING LOSS OF RS. 13,65,397/ - . THE RETURN WAS PROCESSED U/S 143(1) ON 17/03/2005 ACCEPTING THE LOSS DECLARED. THEREAFTER, A NOTICE DATED 25/02/2011 WAS ISSUED U/S 148 REQUIRING THE ASSESSEE TO FILE ITS RETURN OF INCOME STATING THAT INCOME OF THE ASSESSEE CHARGEABLE TO TAX FOR ABOVE ASSESSMENT YEAR HAD ESCAPED ASSESSMENT. IN RESPONSE TO ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 2 THE SAID NOTICE THE ASSESSEE FILED ITS RETURN OF INCOME ON 14/03/2011. THEREAFTER, NOTICES U/S 143(2) WERE ISSUED FROM TIME TO TIME AND THE ASSESSMENT WAS COMPLETED ON 30 . 11 . 2011 U/S 143(3) R.W.S. 147 DETERMINING THE TOTAL ASSESSEES INCOME AT RS. 53,21,175/ - . 3. THE REASONS FOR REOPENING OF ASSESS MENT U/S 148 OF THE IT ACT ARE FURNISHED AS UNDER: DURING THE YEAR OF ACCOUNT, THE ASSESSEE COMPANY WHICH IS ENGAGED IN CONSTRUCTION ACTIVITY HAS CONSTRUCTED A PROPERTY KNOWN AS QUEENS PLAZA AT BEGUMPET, HYDERABAD ON THE LAND BELONGING TO SIX CO - OWNERS UNDER A DEVELOPMENT AGREEMENT ON 50:50 BASIS. AS PER THE DEVELOPMENT AGREEMENT, THE ASSESSEE HAS RECEIVED 90,000/ - SFT. THE TOTAL COST OF THE CONSTRUCTION WAS RS.8,20,52,329/ - ARRIVED AT A RATE OF RS.911.69 PER SFT. INSTEAD OF DEBITING COST OF CONSTRUCTIO N PER SFT. AT THE RATE FOR THE YEARS ENDING 31/03/2004 AND 31/03/2005, HOWEVER THE ASSESSEE HAS ADOPTED A RATE OF RS.1131.40 PER SFT (RS.8,20,52,329/ - DIVIDED BY 72,523 SFT), WHICH WAS INCORRECT AS THE ASSESSEE SHOULD HAVE DEBITED AT RS.911.70 PER SFT. ON LY FOR THE AREA SOLD OF 38,082 SFT. AS ON 31/03/2005. HENCE THE COST OF BUILT UP AREA OF 38,082/ - SFT. SOLD IN THE YEAR 2005 - 06 WORKS OUT TO RS.3,47,19,459/ - (RS.911.70 X 38,082 SFT) INSTEAD OF RS.4,32,20,009/ - (RS.1131.40 X 38,082 SFT) DEBITED TO THE PRO FIT AND LOSS ACCOUNT WHICH RESULTED IN EXCESS CLAIM OF EXPENDITURE TO A TUNE OF RS.85,00,650/ - (RSA,32.,20,009 MINUS RS.3,47,19,359) WHICH HAS TO BE BROUGHT TO TAX. 4. THE ASSESSING OFFICER A FTER BRUSHING ASIDE THE SUBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE O F THE ASSESSEE, DISALLOWED THE EXCESS EXPENDITURE DEBITED TO PROFIT & LOSS ACCOUNT TOWARDS COST OF CONSTRUCTION AMOUNTING TO RS. 66,86,572/ - , AND ADDED THE SAME TO THE LOSS RETURNED BY THE ASSESSEE, GIVING THE FOLLOWING REASONS: ANY CONSTRUCTION ACTIVITY IS DONE, USUALLY THE COST OF CONSTRUCTION WOULD BE WORKED OUT DIVIDING THE CONSTRUCTION VALUE BY TOTAL CONSTRUCTED AREA INCLUDING THE COMMON AREA AND PARKING AREA. THIS TYPE OF WORKING IS DONE PARTICULARLY IN THE CASE OF ASSESSE S ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 3 ENGAGED IN REAL ESTATE BUSINESS. THE A.R'S CONTENTION IS THAT THE SALEABLE CONSTRUCTED AREA FOR FLATS WOULD COME TO ONLY 72,523 SQ.FT FROM OUT OF 90,000 SQ. FT AND THE REMAINING AREA I.E, 17,477 WOULD BE TREATED AS COMMON AREA REPRESENTING ELECTRICAL AND DG ROOM, MAINTENANCE OFFICE, DRIVEWAY, AND PARKING AREAS FOR 2 WHEELERS AND CAR. HENCE BY EXCLUDING THIS COMMON AREA, THE COST OF CONSTRUCTION WAS ARRIVED AT RS. 1,131/ - . IT IS PERTINENT TO MENTION HERE THAT ANY APARTMENT CANNOT BE CONSTRUCTED WITHOUT INCURRING EXPENDITURE ON COMMON AREA AND NO PRUDENT BUSINESSMAN CAN AFFORD TO SELL THE FLATS BY EXCLUDING THE AMOUNTS INCURRED ON THE COMMON AREAS. IT HAS A/WAYS BEEN THE PRAC TICE THAT THE FLATS ARE SOLD INCLUDING COMMON AREAS. THUS THE ARGUMENT OF THE ASSESSEE THAT THE COST OF CONSTRUCTION IS TO BE RESTRICTED TO SALEABLE AREA IS NOT CORRECT. IT IS THE COMMON PRACTICE THAT THE ASSESSEE RECOVERS THE TOTAL EXPENDITURE INCURRED FROM THE CUSTOMERS INCLUDING THE EXPENDITURE ON THE COMMON AREA. THIS BEING THE CASE, THE ASSESSEE'S CONTENTION THAT ONLY THE COST OF CONSTRUCTION IN RELATION TO 72,523 SQ.FT TO BE TAKEN INTO CONSIDERATION DOES NOT SOUND LOGICAL. FOR THE DETAILED REASONS DISCUSSED ABOVE, THE COST OF CONSTRUCTION HAS TO BE WORKED OUT KEEPING IN - VIEW THE ENTIRE EXPENDITURE RELATABLE TO 90,000 SQ.FT. THEREFORE, THE COST OF CONSTRUCTION PER SQ.FT IS REWORKED OUT AS UNDER: I) II) III) OUT OF TOTAL CONSTRUCTION AREA, THE % REC EIV - ED BY THE ASSESSEE COMPANY AS DEVELOPER COST OF CONSTRUCTION FOR 90,000 SQ.FT. COST OF CONSTRUCTION PER SQ.FT (RS. 8,20,52,329/90,000) THUS, THE EXCESS EXPENDITURE CLAIMED BY THE ASSESSEE COMPANY IS COMPUTED AS UNDER: I) COST OF 31,484 SQ.FT. @ 1,131 AS WORKED OUT BY ASSESSEE COMPANY II) COST OF 31,484 SQ.FT @ 912 AS WORKED OUT ABOVE 90,000 SFT. RS. 8,20,52, 329 RS. 912 RS. 3,53,99,980 RS. 2,87,13,408 ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 4 EXCESS EXPENDITURE DEBITED TO P& L A/C RS. 66,86,572 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A) THE APPELLANT STATED THAT IT HAD ENTERED INTO A DEVELOPMENT AGREEMENT WITH THE BUILDERS FOR DEVELOPMENT OF 4638 SQ.YDS. OF SITE OWNED BY THEM IN SECUNDERABAD. THE AP PELLANT AGREED WITH THE DEVELOPERS TO CONSTRUCT 1,80,000 SQ. FT. OF BUILT UP AREA AND DIVIDE THE SAME IN THE RATIO OF 50:50 BETWEEN THE APPELLANT AND OTHERS. 'THEREFORE, THE APPELLANT RECEIVED 90,000 SQ. FT. AREA. HOWEVER, IT WAS STATED BY THE APPELLANT THAT THE ACTUAL BUILT - UP AREA FOR OFFICE SPACE WAS ONLY 72,523 SQ. FT. AND THE BALANCE PERTAINS TO CAR PARKING, ELECTRICAL ROOM, MAINTENANCE OFFICE AND OTHER COMMON AREAS. IT WAS CONTENDED THAT IF AN AREA OF ONLY 72,523 SQ. FT. WAS TAKEN THE COST OF CONSTR UCTION WOULD BE RS. 1131/ - . THEREFORE, THE APPELLANT ARGUED THAT ITS CONTENTION SHOULD BE ACCEPTED THE APPELLANT ALSO STATED THAT IT HAD ENTERED INTO A SUPPLEMENTARY AGREEMENT ON 26.11.1999 WITH THE OWNERS REGARDING THE AFOREMENTIONED ISSUE. IMPORTANT PORT IONS OF THE WRITTEN SUBMISSIONS OF THE APPELLANT WERE EXTRACTED BY THE CIT(A) IN HIS ORDER, WHICH ARE AS FOLLOWS: IN THIS REGARD, THE APPELLANT AT THE OUTSET SUBMITS THAT IT HAD TAKEN A SITE FROM MI5. MOGUL HOTELS PRIVATE LIMITED, 2) DIAMOND BUILDERS, 3) M/S ESTATE BUILDERS 4) M/S AIWAN ESTATES, 5) MR. MANSOOR BABUKHAN AND 6) MR.MUSTAFA MOD.BABUKHAN OF 4.6381 - SQ. YARDS OF SITE OWNED BY THEM JOINTLY IN MUNICIPAL NO.I - 8 - 382 (PART), 1 - 8 - 386 (PART), 1 - 8 - 388, 1 - 8 - 389, 1 - 8 - 436 (PART) AND 1 - 8 - 443 IN S.P.ROAD , BEGUMPET, SECUNDERABAD FOR DEVELOPMENT BY AGREEING TO SHARE THE CONSTRUCTED AREA IN 50:50 RATIO. THE APPELLANT ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 5 CONSTRUCTED TOTAL AREA OF 1,80,000 SQ.FT CONSISTING OF SQ.FT 1,45,046 OF SALEABLE AREA AND 34954 SQ.FT OF CAR PARKING AREA AT GROUND LEVEL INCL UDING CONCERNED AREA, GENERATOR ROOM AND OFFICE ROOM. THE SAID AREA WAS DIVIDED BETWEEN THE LAND OWNERS AND THE DEVELOPER, IE., THE APPELLANT IN 50:50 RATIO FLOOR WISE IN AN AGREEMENT DT.18.06.2003. AS COULD BE SEEN FROM THE SAID AGREEMENT THE APPELLANT GO T SALEABLE AREA OF 72523 SQ. FT AND 48 CAR PARKINGS. I) APPELLANT THEREFORE ARRIVED AT COST PER SQ. FT TAKING INTO ACCOUNT SALEABLE CONSTRUCTED AREA OF 72523 SQ. FT. THE APPELLANT DID NOT TAKE INTO ACCOUNT THE PARKING AREA INTO ACCOUNT FOR ARRIVING AT COS T OF CONSTRUCTION PER SQ. F T . SINCE APPELLANT'S SELLING PRICE INCLUDED AREA OF CAR PARKING ALSO. HENCE THE ASSESSING OFFICER IS NOT JUSTIFIED IN ARRIVING AT THE COST PER SQ.FT BY DIVIDING THE COST BY TOTAL AREA OF SQ. FT 1,80,000 INCLUSIVE OF PARKING AREA. ON THIS ISSUE IT IS TO BE NOTED THAT THE ASSESSING OFFICER DID NOT BRING ON RECORD ANY EVIDENCE ESTABLISHING THAT THE APPELLANT HAD COLLECTED MONEY FOR SUCH PARKING AREA SEPARATELY 2) THE ASSESSING OFFICER FURTHER OUGHT TO HAVE SEEN THAT PARKING SPACE IS PROVIDED BY THE APPELLANT AT THE GROUND LEVEL ONLY AND THE EXPENDITURE INCURRED FOR PARKING AREA WAS ONLY ROOF SLAB PUT UPTO COVER THE PARKING AREA WHICH IS ANYWAY TO BE DONE TO BE UTILIZED AS FLOOR FOR 1ST FLOOR AREA. APART FROM THIS ONLY FLOORING COST WAS INCURRED WHICH WAS ONLY LAYING CEMENT CONCRETE AND NOTHING ELSE. THUS THE COST INCURRED FOR PARKING AREA IS VERY LITTLE COMPARED TO AREA USED AS OFFICE I RESIDENTIAL AREA FOR WHICH COST FOR PLASTERING OF W ALLS, FIXING DOORS, WINDOWS, ELECTRICAL FITTINGS, SANITARY FITTINGS, PIPELINES, LIFTS, STAIRS ETC., IS TO BE INCURRED WHICH IS MAJOR PART OF THE EXPENDITURE. 3) HENCE THE ASSESSING OFFICER IS NOT JUSTIFIED IN STATING THAT THE COST OF CONSTRUCTION HAS TO B E WORKED OUT DIVIDING THE EXPENDITURE BY THE TOTAL AREA OF 90000 SQ.FT INCLUDING CAR PARKING AREA, GENERATOR AREA AND OFFICE AREA AND ARRIVING AT COST OF CONSTRUCTION PER SQ. FT AT R S .912/ - . 6. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE C IT(A) OBSERVED THOUGH THE EXPENDITURE INVOLVED IN DEVELOPING KITCHEN IS MUCH MORE WHEN COMPARED TO TH W EXPENDITURE INVOLVED IN DEVELOPING OTHER ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 6 AREAS, IT IS NEITHER PRACTICAL NOR FEASIBLE TO BREAK UP THE COST OF CONSTRUCTION AND THE SALE PRICE INTO INDIVIDUAL ELEMENTS LIKE FITTINGS, BEDROOMS ETC AND TO CALCULATE CAPITAL GAINS IN RESPECT OF EACH SUCH INDIVIDUAL ELEMENTS. FURTHER, HE OBSERVED THAT THE FLAT CONSI STS OF ALL AREAS WHICH BELONG TO THE PURCHASER INCLUDING COMMON AREAS WHICH ARE USED BY THE VARIOUS PURCHASES. A LOT OF DEVELOPERS INCORPORATE COMMON SWIMMING POOLS, CLUBS AND A HOST OF COMMON FACILITIES IN THEIR INTEGRATED DEVELOPMENT. THE CIT(A) ALSO OB SERVED THAT THEY CHARGE EACH FLAT OWNER A CORRESPONDING PRICE AND IT IS ONLY A MATTER OF ADVERTISEMENT OR SELLING WHERE THE BUILDER WILL STATE THAT CERTAIN PORTION IS FREE WHILE THE OTHER IS BEING CHARGED FOR. THE FACT OF THE MATTER IS THE PRICE OF EVEN TH E SO - CALLED FREE AREAS IS INCORPORATED IN THE ACTUAL SALE PRICE. IN VIEW OF THE ABOVE OBSERVATIONS, THE CIT(A) CONFIRMED THE FINDINGS OF THE ASSESSING OFFICER THAT THE COST OF CONSTRUCTION HAS TO BE TAKEN AS A WHOLE INCLUSIVE OF ALL THE COMMON AREAS AND U PHELD THE CALCULATION OF ASSESSING OFFICER AND ADDITION MADE IN THIS REGARD. 7 . AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE CIT(A) IS AGAINST LAW AND FACTS OF THE CASE. 2. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THERE WERE NO REASONS TO BELIEVE THAT INCOME GOT ESCAPED THE ASSESSMENT AND CONSEQUENTLY, THE REASSESSMENT PROCEEDINGS OUGHT TO HAVE BEEN DECLARED AS NULL AND VOID. 3. THE LEARNED CIT(A) OUGHT TO HAVE APPR ECIATED THAT THERE WAS NO ALLEGATION AGAINST THE APPELLANT THAT IT HAS FAILED TO DISCLOSE ALL MATERIAL FACTS THAT WERE NECESSARY FOR THE PURPOSE OF ASSESSMENT AND THEREFORE THE LEARNED CIT(A) OUGHT TO HAVE QUASHED THE REASSESSMENT PROCEEDINGS. 4. THE LEAR NED CIT(A) OUGHT TO HAVE APPRECIATED THAT ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 7 THERE WAS NO TANGIBLE NEW MATERIAL BROUGHT ON RECORD SUGGESTING THE ESCAPEMENT OF INCOME FROM ASSESSMENT AND, THEREFORE, THE REASSESSMENT PROCEEDINGS WERE PROMPTED BY MERE CHANGE OF OPINION AND THEREFORE, THE CIT(A ) OUGHT TO HAVE DECLARED THE REASSESSMENT PROCEEDINGS NULL AND VOID. 5. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THAT THE COST OF THE CONSTRUCTION PER SQ.FT. WORKS OUT TO RS. 1131/ - ONLY AFTER LOADING THE COST I NCURRED ON THE COMMON AREA AND PARKING AREA ETC. OVER THE SALEABLE AREA AND, THEREFORE, THE ADDITION OF RS. 66,86,572/ - OUGHT TO HAVE BEEN DELETED. 8 . BEFORE US, THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THERE WAS NO REASON FOR THE ASSESSING OFFICER TO BELIEVE THAT THE INCOME OF THE ASSESSEE HAS ESCAPED ASSESSMENT, AND AS SUCH THE REOPENING OF THE ASSESSMENT WAS ILLEGAL AND INVALID. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS DISCLOSED ALL THE MATERIAL FACTS TH AT WERE NECESSARY FOR THE PURPOSE OF ASSESSMENT, AND IN THIS BEHALF, THERE WAS NOT EVEN AN ALLEGATION BY THE REVENUE TO THE CONTRARY ATTRIBUTING ANY NON - DISCLOSURE OF MATERIAL FACTS BY THE ASSESSEE. THE ASSESSEE HAD FILED BALANCE SHEET, PROFIT AND LOSS ACC OUNT ALONGWITH THE RETURN, AND THE PROFIT AND LOSS ACCOUNT SHOWED CLEARLY THE COST OF SOLD AREA DEBITED. THIS INFORMATION IS VERY MUCH AVAILABLE WITH THE RETURN OF INCOME. I T WAS FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY N EW TANGIBLE MATERIAL TO SUGGEST THAT INCOME HAS ESCAPED ASSESSMENT, MUCH LESS TO JUSTI FY ANY BELIEF OF ESCAPEMENT OF INCOME ASSESSABLE IN THE HANDS OF THE ASSESSEE. THE PROCEEDINGS FOR REOPENING THE ASSESSMENT WERE INITIATED MERELY ON A FRESH APPLICATION O F MIND BY THE ASSESSING OFFICER TO THE VERY SAME SET OF FACTS AND TO THE SAME MATERIAL ON RECORD, AS WAS AVAILABLE AT THE TIME OF ACCEPTING THE RETURN OF INCOME UNDER ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 8 S.143(1) OF THE ACT. IT IS FURTHER SUBMITTED THAT IT IS SETTLED POSITION OF LAW THAT EVE N IN RESPECT OF ASSESSMENT UNDER S.143(1), RE - ASSESSMENT PROCEEDINGS CANNOT BE INITIATED IN THE ABSENCE OF ANY TANGIBLE FRESH MATERIAL COMING TO POSSESSION OF THE ASSESSING OFFICER SUGGESTING ESCAPEMENT OF INCOME FROM TAX. IN SUPPORT OF THESE CONTENTION S, HE RELIED ON THE FOLLOWING DECISIONS - (A) CIT V/S. KELVINATOR OF INDIA LTD. (320 ITR 561) - SC (B) CIT V/S. U SHA I NTERNATIONAL LTD. (348 ITR 485) - DEL. (C) CIT V/S. ORIENT CRAFT LTD. (354 ITR 536) - DEL. (D) BALKRISHNA HIRALAL WANI V/S. ITO (321 IGTR 519) - B O M. (E) INDUCTOTHERM (INDIA) (P) L T D. V/S. M.GOPALAN DCIT (356 ITR 481) - GUJ. (F) M/S. T ELCO DADAJEE DHACKJEE LTD., MUMBAI V/S. DCIT (ITA NO.4613/MUM/2005) - MUMBAI ITAT (G) DELTA AIR LINES INC V/S. ITO(INTERNATIONAL TAXATION ) (59 SOT 46) - MUM. (H) S.RANJIT REDDY V /S . DCIT (35 TAXMANN.COM. 415) (HYD) EVEN FROM THE REASONS RECORDED, IT CANNOT BE CONCLUDED THAT THE INCOME GOT ESCAPED FROM ASSESSMENT AND CAN BY NO STRETCH OF LOGIC LEAD A PRUDENT PERSON TO FORM A REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSES SMENT. THUS, ACCORDING TO HIM, THERE ARE NO JURISDICTIONAL CONDITIONS PRECEDENT PRIOR TO EXERCISE OF POWER TO REOPEN THE ASSESSMENT UNDER S.147 OF THE ACT. HE FURTHER SUBMITTED TH A T IT IS NO T CLEAR FROM THE RECORDS WHETHER THE SAME ASSESSING OFFICER WHO R ECORDED THE REASONS, ISSUED THE NOTICE UNDER S.148 OF TH E ACT OR NOT. IF A DIFFERENT ASSESSING OFFICER ISSUED NOTICE, TH E NOTICE IS LIABLE TO BE DECLARED NULL AND VOID AND DESERVES TO BE QUASHED. IN SUPPORT OF THIS PROPOSITION RELIANCE IS PALCED ON TH E F OLLOWIN G DECI S ION S - ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 9 ( I ) HYOUP FOOD AND OIL INDUSTRIES LTD. V/S. ACIT(307 ITR 115 ) - GUJ. ( II ) CIT & ANR. V/S. ASLAM ULLAKHAN (321 ITR 150) - KAR. FURTHER, IT IS POINTED OU T THAT IT IS NO T SHOWN FROM TH E REASONS WHETHER NECESSARY SANCTION OF TH E CONCERNED CIT WAS O BTAIN E D OR NO T AS MANDATED BY THE P R OVIS I ON S OF S.151 OF THE ACT. IF SUCH SANCTION IS OBTAINED, IT IS THE DUTY OF TH E ASSESSING OFFICER TO ESTABLISH TH A T TH E CIT HAD ACCORDED TH E APP R O V AL AFTER DUE APPLICATION OF MIND FAILING WHICH, THE NO T I C E UNDER S.14 8 D ESERVES TO BE QUASHED. IN THIS BEHALF, RELI A N C E IS PL A CED ON TH E FOLLOWING DECISION S - ( A ) GE RMAN REMEDIES LTD. V / S. DY. CIT (287 ITR 494) - BOM. ( B ) CIT V /S. SUMAN WAMAN CHADUAHRY(321 I TR 495) - BOM. SLP DISMISSED ON 12.2.2008(2009)312 ITR 339(ST.) ( C ) UNITED ELECTRICAL COMPANY (P) LTD V/S. CIT (258 ITR 317) - DEL. ( D ) CENTRAL INDIA ELECTRIC SUPPLY CO. LTD. V.S. ITO 2011 (51 DTR 51) - DEL. HE THEREFORE, SUBMITTED THAT IN THE FACTS OF THE PRESENT CASE, REOPENING OF THE ASSESSMENT ITSELF IS ILLEGAL AND INVALID. 9. IN ANY EVENT, HE SUBMITTED THAT THE REVENUE AUTHORITIES ARE NOT JUSTIFIED IN DISALLOWING RS.6,86,572/ - OUT OF COST OF CONSTRUCTION STATING THAT THE TOTAL COST OF CONSTRUCTION IS TO BE DIVIDED BY 90,000 SQ. FT. OF GROSS BUILT - UP AREA AND ARRIVING AT COST OF CONSTRUCTION AT RS. 912/ - PER SQ. FT. AS AGAINST RS.1131/ - ARRIVED AT BY THE ASSESSEE DIVIDING COST OF CONSTRUCTION BY 72,573 SQ. FT. OF BUILT UP AREA WHICH ONLY CAN BE SOLD. THE ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 10 LEARNED AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE REVENUE OUGHT TO HAVE SEEN THAT THOUGH THE GROSS BUILT - UP AREA IS 90,000 SQ. FT. SALEABLE/OCCUPIABLE AREA WAS ONLY 72523 SQ. FT. AND THE BALANCE AREA REPRESENTS COMMON AREAS WHICH CANNOT BE SOLD AND PARKING AREA WHICH WAS GIVEN TO THE BUYERS OF THE CONSTRUCTED AREA ALON G WITH THE OFFICE AREA. HE, THEREFORE, CONTENDED THAT THE COST OF CONSTRUCTION IS TO BE DIVIDED BY 72523 SQ. FT. ONLY AND NOT BY 90000 SQ. FT. , WHICH CONSISTS OF SEVERAL OTHER AREAS WHICH CANNOT BE SOLD. 10 . ON THE OTHER HAND, THE LEARNED DEPARTMENTAL RE PRESENTATIVE, STRONGLY SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES AND SUBMITTED THAT THE REOPENING OF THE ASSESSMENT IS VERY MUCH LEGAL AND VALID. HE SUBMITTED THAT THE TOTAL SALEABLE AREA IS NOT ON RECORD AND THEREFORE, INITIATION OF REOPENING OF ASS ESSMENT IS VALID, AS THE INCOME HAS ESCAPED ASSESSMENT. HE SUBMITTED THAT VALUATION CANNOT BE DONE IN RESPECT OF EACH OF THE AREAS, WHICH TOGETHER MAKES THE SALEABLE UNIT CONSTRUCTED. IN SUPPORT OF HIS CONTENTIONS, RELIANCE IS PLACED ON THE ON THE FOLLOWI NG DECISIONS : 1. CIT V/S . USHA INTERNATIONAL LTD. ( 348 ITR 483 ) - SC 2 . DR.AMINS PATHOLOGY LABORATORY V/S. JCIT ( 252 ITR 673 ) - BOM. 3 . SOM DATT BUILDERS (P) LTD. V/S. DCIT ( 98 ITD 78 ) - KOL. 11 . WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES, PERUSED THE MATERIAL ON RECORD . WE HAVE ALSO GONE THROUGH THE WRITTEN SUBMISSIONS OF THE PARTIES AND THE CASE - LAW RELIED UPON BEFORE US. ASSESSMENT IN THIS CASE HAS ORIGINALLY BEEN COMPLETED UNDER S.143(1) OF THE ACT. THEREAFTER, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS ARRIVED AT THE COST OF CONSTRUCTION PER SFT AT RS.1131.40, BY DIVIDING TOTAL ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 11 COST OF RS.8,20,52,329, BY 72523 SFT ONLY , AND NOT 90000 SFT WHICH IS THE TOTAL CONSTRUCTED AREA WHICH CAME TO THE SHARE OF THE ASSESSEE, OUT OF THE TOTAL AREA CONSTRUCTED BY THE DEVELOPER, IN TERMS OF THE DEVELOPMENT AGREEMENT . ACCORDING TO THE ASSESSING OFFICER, COST OF CONSTRUCTION PER SFT SHOULD BE ARRIVED AT RS.911.69 PER SFT., BY DIVIDING THE TOTAL COST OF RS.8,20,52,329 BY 90,000 SFT. WHICH IS THE TOTAL AREA WHICH CAME TO THE SHARE OF THE ASSESSEE AS PER THE DEVELOPMENT AGREEMENT. CONSEQUENTLY, ACCORDING TO THE ASSESSING OFFICER, THERE WAS DEBITING OF EXCES S EXPENDITURE TO THE TUNE OF RS.85,00,650, IN RELATION TO THE CONSTRUCTED AREA SOLD DURING THE YEAR. CONVERSELY, ASSESSING OFFICER WAS OF THE VIEW TH AT PROFIT ON SALE OF THE CONSTRUCTED AREA DURING THE YEAR WAS SHORT BY RS.85,00,650. IT IS TO BRING TO TA X THIS AMOUNT OF INCOME WHICH ACCORDING TO THE ASSESSING OFFICER ESCAPED ASSESSMENT, THE PRESENT PROCEEDINGS HAVE BEEN INITIATED UNDER S.147 OF THE ACT. APART FROM TH E FACTUAL ASPECTS TO BE ADJUDICATED UPON, WHICH RELATE S TO THE CORRECT AREA WHICH HAS TO B E TAKEN INTO ACCOUNT, TO ARRIVE AT THE ACTUAL COST OF CONSTRUCTION, VIZ. WHETHER THE TOTAL AREA WHICH CAME TO THE SHARE OF THE ASSESSEE WOUL D BE CONSIDERED AS SALEABLE AREA FOR ADOPTING AS DENOMINATOR FOR ARRIVING AT THE COST OF CONSTRUCTION PER SFT., OR THE SALEABLE AREA AS PER THE ASSESSEE, VIZ. EXCLUDING COMMON AREAS OR AREAS CONTAINING COMMON FACILITIES, WHICH CAME TO THE SHARE OF THE ASSESSEE, THE LEGAL ASPECT WHICH HAS TO BE CONSIDERED IS WHETHER THERE WAS ANY ESCAPEMENT OF INCOME IN THE PRESENT CASE ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE IN DISCLOSING TRULY AND COMPLETELY ALL THE MATERIAL FACTS NECESSARY FOR COMPLETION OF ASSESSMENT. 8. TAKING UP THE LEGAL ISSUE FIRST, WE ARE OF THE VIEW THAT THE ASSESSEE , IN THE PRESENT CASE, HAS NOT DISCLOSED TRULY AND COMPLETELY ALL TH E MATERIAL FACTS N ECE SSARY FOR THE COMPLETION OF TH E ASSESSMENT IN I T S CASE. BY WORKING OUT THE COST OF CONSTRUCTION PER SFT. ON AN INCORRECT ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 12 BASIS, ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, AND CON S EQU E NTLY, THE PROVISION S OF S.147 ARE CLEARLY APPLICABLE. UNDER THE PROVISIONS OF S.143(1) , WHAT THE ASSESSING OFFICER CARRIES OUT IS ONLY A SUMMARY ASSESSMENT. THEREFORE, ON THAT BASIS, IT CANNOT BE SAID THAT THE ASSESSING OFFICER HAS APPLIED HIS MIND, AND T HE REOPENING OF ASSESSMENT IS BASED ON MERE CHANGE OF OPINION. IT IS ONLY IN A REGULAR ASSESSMENT, THAT THE ASSESSING OFFICER CAN BE SAID TO HAVE APPLIE D HIS MIND TO THE MATERIAL ON RECORD AND AFTER DETAILED SCRUTINY THE R EOF MA D E THE ASSESSMENT. IN A SUM MARY ASSESSMENT UNDER S.143(1), ASSESSING OFFICER CANNOT B E SAID TO HAVE TAKEN ANY VIEW FOR OR AGAINST THE ASSESSEE, ON THE BASIS OF MATERIAL FURNISHED WITH THE RETURN. WE ARE SUPPORTED IN THIS BEHALF BY THE RECENT DECISION OF THE APEX COURT IN THE CASE O F ASST. CIT V/S. RAJESH JHAVERI STOCK BROKERS (P) LTD (291 ITR 500), WHEREIN AFTER CONSIDERING THE PROVISIONS OF SECTION 143(1)(A), IT WAS HELD THAT WHEN THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME - TAX ACT, IT CANNOT BE SAID THAT THE ASSES SING OFFICER HAS TAKEN ANY VIEW ON THE CLAIM MADE BY AN ASSESSEE AND, CONSEQUENTLY, I N SUCH CIRCUMSTANCES, IT MAY NOT BE CORRECT TO SAY THAT THE ASSESSING OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEWS. IT HAS BEEN HELD BY THE APEX COURT IN THAT CASE AS FO LLOWS - 16. SECTION 147 AUTHORISES AND PERMITS THE ASSESSING OFFICER TO ASSESS OR REASSESS INCOME CHARGEABLE TO TAX IF HE HAS REASON TO BELIEVE THAT INCOME FOR ANY ASSESSMENT YEAR HAS ESCAPED ASSESSMENT. THE WORD REASON IN THE PHRASE REASON TO BELIEVE WOULD MEAN CAUSE OR JUSTIFICATION. IF THE ASSESSING OFFICER HAS CAUSE OR JUSTIFICATION TO KNOW OR SUPPOSE THAT INCOME HAD ESCAPED ASSESSMENT, IT CAN BE SAID TO HAVE REASON TO BELIEVE THAT AN INCOME HAD ESCAPED ASSESSMENT. THE EXPRESSION CANNOT BE READ TO M EAN THAT THE ASSESSING OFFICER SHOULD HAVE FINALLY ASCERTAINED THE FACT BY LEGAL EVIDENCE OR CONCLUSION. THE FUNCTION OF THE ASSESSING OFFICER IS TO ADMINISTER THE STATUTE WITH SOLICITUDE FOR THE PUBLIC EXCHEQUER WITH AN INBUILT IDEA OF FAIRNESS TO TAXPAYE RS. AS OBSERVED BY THE SUPREME COURT IN CENTRAL PROVINCES MANGANESE ORE CO. LTD. V. ITO [1991] 191 ITR 662, FOR INITIATION OF ACTION UNDER SECTION 147( A ) (AS THE PROVISION STOOD AT THE RELEVANT TIME) FULFILMENT OF THE TWO REQUISITE CONDITIONS IN THAT REGARD IS ESSENTIAL. AT THAT STAGE, THE FINAL OUTCOME OF THE PROCEEDING IS NOT RELEVANT. IN OTHER ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 13 WORDS, AT THE INITIATION STAGE, WHAT IS REQUIRED IS REASON TO BELIEVE, BUT NOT THE ESTABLISHED FACT OF ESCAPEMENT O F INCOME. AT THE STAGE OF ISSUE OF NOTICE, THE ONLY QUESTION IS WHETHER THERE WAS RELEVANT MATERIAL ON WHICH A REASONABLE PERSON COULD HAVE FORMED A REQUISITE BELIEF. WHETHER THE MATERIALS WOULD CONCLUSIVELY PROVE THE ESCAPEMENT IS NOT THE CONCERN AT THAT STAGE. THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION ITO V. SELECTED DALURBAND COAL CO. (P.) LTD. [1996] 217 ITR 597 (SC); RAYMOND WOOLLEN MILLS LTD. V. ITO [1999] 236 ITR 34 (SC). 17. T HE SCOPE AND EFFECT OF SECTION 147 AS SUBSTITUTED WITH EFFECT FROM 1 - 4 - 1989, AS ALSO SECTIONS 148 TO 152 ARE SUBSTANTIALLY DIFFERENT FROM THE PROVISIONS AS THEY STOOD PRIOR TO SUCH SUBSTITUTION. UNDER THE OLD PROVISIONS OF SECTION 147, SEPARATE CLAUSES ( A ) AND ( B ) LAID DOWN THE CIRCUMSTANCES UNDER WHICH INCOME ESCAPING ASSESSMENT FOR THE PAST ASSESSMENT YEARS COULD BE ASSESSED OR REASSESSED. TO CONFER JURISDICTION UNDER SECTION 147( A ) TWO CONDITIONS WERE REQUIRED TO BE SATISFIED FIRSTLY THE ASSESSING OFFICE R MUST HAVE REASON TO BELIEVE THAT INCOME PROFITS OR GAINS CHARGEABLE TO INCOME TAX HAVE ESCAPED ASSESSMENT, AND SECONDLY HE MUST ALSO HAVE REASON TO BELIEVE THAT SUCH ESCAPEMENT HAS OCCURRED BY REASON OF EITHER ( I ) OMISSION OR FAILURE ON THE PART OF THE A SSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT OF THAT YEAR. BOTH THESE CONDITIONS WERE CONDITIONS PRECEDENT TO BE SATISFIED BEFORE THE ASSESSING OFFICER COULD HAVE JURISDICTION TO ISSUE NOTICE UNDER SECTION 148 READ WIT H SECTION 147( A ). BUT UNDER THE SUBSTITUTED SECTION 147 EXISTENCE OF ONLY THE FIRST CONDITION SUFFICES. IN OTHER WORDS IF THE ASSESSING OFFICER FOR WHATEVER REASON HAS REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT IT CONFERS JURISDICTION TO REOPEN T HE ASSESSMENT. IT IS HOWEVER TO BE NOTED THAT BOTH THE CONDITIONS MUST BE FULFILLED IF THE CASE FALLS WITHIN THE AMBIT OF THE PROVISO TO SECTION 147. THE CASE AT HAND IS COVERED BY THE MAIN PROVISION AND NOT THE PROVISO. 18. SO LONG AS THE INGREDIENTS OF SECTION 147 ARE FULFILLED, THE ASSESSING OFFICER IS FREE TO INITIATE PROCEEDING UNDER SECTION 147 AND FAILURE TO TAKE STEPS UNDER SECTION 143(3) WILL NOT RENDER THE ASSESSING OFFICER POWERLESS TO INITIATE REASSESSMENT PROCEEDINGS EVEN WHEN INTIMATION UNDER SECTION 143(1) HAD BEEN ISSUED. 9. AS AGAINST THE ABOVE POSITION, THE CASE - LAW RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE IS DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF THE MATTER, S INCE ORIGINAL ASSESSMENT IN THIS CAS E HAS BEEN DONE ONLY UNDER S.143(1) OF THE ACT, R ESPECTFULLY FOLLOWING THE ABOVE DECISION OF TH E APEX COURT IN THE CASE OF RAJESH ZHAVERI STOCK ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 14 BROKERS (SUPRA) , WE HOLD THAT MERELY BECAUSE SUMMARY ASSESSMENT HAS BEEN DONE EARLIER IN TERMS OF S.143(1), IT C ANNOT BE SAID THAT THE ASSESSING OFFICER, HAS ALREADY APPLIED HIS MIND TO THE MATERIAL FURNISHED BY THE ASSESSEE ALONGWITH THE RETURN, AND IT IS ONLY ON THE BASIS OF MERE CHANGE OF OPINION, THAT HE HAS INVOKED THE PROVISIONS OF S.147 OF THE ACT. WE ARE OF THE VIEW THAT THE REOPENING OF ASSESSMENT IN THIS CASE IS VERY MUCH LEGAL AND VALID, AND THE CONTENTIONS OF THE ASSESSEE ON THIS ISSUE, BEING DEVOID OF MERIT, ARE LIABLE TO BE REJECTED. WE DO SO ACCORDINGLY. 10. AS FOR THE QUESTION ON THE FACTUAL ASPECT , VIZ. THE CORRECT AREA THAT HAS TO BE TAKEN INTO ACCOUNT FOR ARRIVING AT THE COST OF CONSTRUCTION PER SFT., THE CASE OF THE REVENUE IS THAT IT IS THE ENTIRE EXTENT OF THE AREA, VIZ. 90,000 SFT. THAT CAME TO THE SHARE OF THE ASSESSEE, WHICH IS TO BE ADOPTE D FOR DIVIDING THE TOTAL COST OF CONSTRUCTION, TO ARRIVE AT THE COST OF CONSTRUCTION PER SFT. AS AGAINST THIS, IT IS THE CASE OF THE ASSESSEE THAT IT IS ONLY THE EXTENT OF NET SALEABLE AREA OF 72,523 THAT HAS TO BE TAKEN INTO ACCOUNT FOR DIVIDING THE TOTA L COST OF CONSTRUCTION. 1 1 . WE HEARD BOT H SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES, AND OTHER MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT IN TERMS OF DEVELOPMENT AGREEMENT, THE EXTENT OF TOTAL CONSTRUCTED AREA THAT CAME TO THE SHAR E OF THE ASSESSEE IS 90,000 SQ. FT. OUT OF IT, CERTAIN AREAS HAVE BEEN DEVELOPED FOR PROVISION OF COMMON FACILITIES FOR THE ENTIRE COMPLEX , AND EXCLUDING ASSESSEES SHARE IN SUCH AREAS, WHICH CANNOT BE INDEPENDENTLY SOLD, THE NET SALEABLE AREA THAT CAME T O THE SHARE OF THE ASSESSEE IN TERMS OF DEVELOPMENT AGREEMENT IS 72,523 SFT. THERE IS NO DISPUTE WITH REGARD TO THE TOTAL COST OF CONSTRUCTION ATTRIBUTABLE TO 90,000 SFT. OF CONSTRUCTED AREA WHICH CAME TO THE SHARE OF THE ASSESSEE, WHICH WORKED OUT TO RS. 8,20,52,329. BY DIVIDING THIS TOTAL COST OF RS.8,20,52,329 BY 72,523 SFT., ASSESSEE ARRIVED AT THE COST OF ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 15 CONSTRUCTION PER SFT. AT RS.1,131, WHEREAS THE ASSESSING OFFICER ARRIVED AT SUCH COST OF CONSTRUCTION PER SFT. AT RS.911.69 BY DIVIDING THE TOTAL CO ST BY 90,000 SFT. ACCORDING TO THE ASSESSING OFFICER, COST OF CONSTRUCTION CANNOT BE DETERMINED SEPARATELY FOR DIFFERENT AREAS OF COMPONENTS/FACILITIES AND IT IS THE ENTIRE AREA OF 90,000 THAT SHOULD BE TAKEN FOR ARRIVING AT THE COST OF CONSTRUCTION PER S FT. 12. ON CAREFUL CONSIDERATION OF THE MATTER, WE DO NOT FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE. COST OF CONSTRUCTION PER SFT HAS TO BE DETERMINED BY DIVIDING THE TOTAL AREA RECEIVED BY IT IN TERMS OF THE DEVELOPMENT AGREEMENT, AND THERE IS NO J USTIFICATION FOR ADOPTING ONLY THE AREA WHICH THE ASSESSEE IS CLAIMING TO BE THE SALEABLE AREA. AS OBSERVED BY THE CIT(A) IN THE IMPUGNED ORDER, AFTER DEVELOPMENT, ASSESSEE HAS SOLD VARIOUS FLATS AND ALSO SOLD THE PARKING AREAS TO THE FLAT OWNERS AND AS SU CH IT IS NOT CORRECT TO SAY THAT THERE IS LESS EXPENDITURE IN DEVELOPING A PARKING AREA AND A LOT MORE EXPENDITURE IN DEVELOPING THE KITCHEN. IN ANY EVENT, AS OBSERVED BY THE CIT(A), IT IS NEITHER PRACTICAL NOR FEASIBLE TO BREAK UP THE COST OF CONSTRUCTIO N AND THE SALE PRICE INTO INDIVIDUAL ELEMENTS LIKE FITTINGS, BEDROOMS ETC. AND TO CALCULATE CAPITAL GAINS ON SUCH INDIVIDUAL ELEMENTS. SUCH AN EXERCISE WOULD ALSO BE REDUNDANT, SINCE A FLAT CONSIST OF ALL AREAS WHICH BELONG TO THE PURCHASER INCLUDING COM MON AREAS WHICH ARE USED BY VARIOUS PURCHASERS. A LOT OF DEVELOPERS INCORPORATE COMMON SWIMMING POOLS, CLUBS AND MANY OTHER FACILITIES IN THEIR INTEGRATED DEVELOPMENT AND CHARGE EACH FLAT OWNER A CORRESPONDING PRICE, EVEN THOUGH BY WAY OF ADVERTISEMENT OR SELLING T ECHNIQUE, A BUILDER WOULD STATE THAT CERTAIN PORTIONS ARE FREE, WHILE OTHER IS BEING CHARGED. THE REASONS DISCUSSED BY THE REVENUE AUTHORITIES IN THE IMPUGNED ORDERS FOR MAKING THE IMPUGNED ADDITION OF RS. 66,86,572 ARE SOUND AN VALID AND WE ARE IN AGREEMENT WITH THE SAME. WE ACCORDINGLY UPHOLD THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE, AND ITA NO. 1254 / HYD/20 13 M/S. GSR HOTELS & ESTATES PVT. LTD., HYDERABAD 16 REJECT THE GROUNDS OF THE ASSESSEE IN THIS APPEAL. 13. IN THEY RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 07.03.2014 SD/ - SD/ - (CHANDRA POOJARI ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/ - 7 TH MARCH , 2014 COPY FORWARDED TO: 1. M/S. GSR HOTELS & ESTATES PVT. LTD., M/S. BRAHMAYYA & CO., CHARTERED ACCOUNTANTS, FLAT NOS.403 & 404, GOLDEN GREEN APARTMENTS, ERRAMANZIL COLONY, HYDERABAD 500 082. 2 . DY. COMMISSIONER OF INCOME - TAX CIRCLE 2(2), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) III HYDERABAD 4. COMMISSIONER OF INCOME - TAX II , HYDERABAD 5 DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S