Tanvee Housing Development Pvt. Ltd., Durgapur V. ACIT, CIR-2, DURGAPUR, Durgapur

ITA 1256/KOL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8841 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-09-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 30-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: S M SURANA
• Section: 143(3); 205; 201

Judgement Text

ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 1204/KOL/2017 ASSESSMENT YEAR: 2012-2013 ASSISTANT COMMISSIONER OF INCOME TAX,.............. .....................APPELLANT CIRCLE-2, DURGAPUR, AAYAKAR BHAWAN, ANNEXE BUILDING, 3 RD FLOOR, CITY CENTRE, DURGAPUR-713216 -VS.- TANVEE HOUSING DEVELOPMENT PVT. LIMITED,........... .................RESPONDENT 9 NO. PUNJABI GALI, SUBHASH PALLY, BENACHITY, DURGAPUR-713213 [PAN:AADCT1742Q] -AND- I.T.A. NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 TANVEE HOUSING DEVELOPMENT PVT. LIMITED,........... .................APPELLANT 9 NO. PUNJABI GALI, SUBHASH PALLY, BENACHITY, DURGAPUR-713213 [PAN:AADCT1742Q] -VS.- DEPUTY COMMISSIONER OF INCOME TAX,................. .....................RESPONDENT CIRCLE-2, DURGAPUR, AAYAKAR BHAWAN, ANNEXE BUILDING, 3 RD FLOOR, CITY CENTRE, DURGAPUR-713216 APPEARANCES BY: SMT. RANU BISWAS, SR. D.R., FOR THE REVENUE SHRI S.M. SURANA, ADVOCATE & SHRI SUNIL SURANA, FCA , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : SEPTEMBER 24, 201 9 DATE OF PRONOUNCING THE ORDER : NOVEMBER 22, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT :- THESE TWO APPEALS, ONE FILED BY THE REVENUE BEING I.T.A. NO. 1204/KOL/2017 AND THE OTHER BY THE ASSESSEE BEING I .T.A. NO. ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 2 1256/KOL/2017, ARE CROSS APPEALS, WHICH ARE DIRECTE D AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), DURGA PUR DATED 27.02.2017. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH ESE APPEALS ARE AS FOLLOW:- THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, WHIC H IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 30.09.2 012 DECLARING TOTAL INCOME OF RS.32,96,440/-. IN THE BALANCE-SHEET FILE D ALONG WITH THE SAID RETURN, CLOSING WORK-IN-PROGRESS WAS SHOWN BY THE A SSESSEE AT RS.17,49,74,365/-. SINCE THE OPENING WORK-IN-PROGRE SS SHOWN BY THE ASSESSEE WAS RS.18,02,20,356/-, THE ASSESSING OFFIC ER REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE CLOSING WORK-IN-P ROGRESS SHOWN AS ON 31.03.2012 WAS SO LOW. IN REPLY, IT WAS SUBMITTED B Y THE ASSESSEE THAT THE TWO PROJECTS, NAMELY PARIJAT AND PRATYEE WERE C OMPLETED DURING THE YEAR UNDER CONSIDERATION. IT WAS ALSO SUBMITTED THA T THE TOTAL AREA OF FLATS CONSTRUCTED IN THE SAID TWO PROJECTS WAS 80,141 SQ, FT, AND 1,36,470 SQ.FT., OUT OF WHICH FLAT AREA OF 73,912 SQ.FT. AND 64,610 SQ.FT. WAS SOLD OUT OF PARIJAT AND PRATYEE PROJECTS RESPECTIVELY. IT W AS FURTHER SUBMITTED THAT THE TOTAL COST OF CONSTRUCTION AND OTHER EXPENSES I NCURRED DURING THE YEAR UNDER CONSIDERATION WERE RS.12,57,23,965/- AND AFTE R ADDING THE SAME TO THE OPENING WORK-IN-PROGRESS, THE TOTAL VALUE OF CL OSING WORK-IN-PROGRESS AS ON 31.03.2012 BECAME RS.30,59,49,321/-. IT WAS S UBMITTED THAT THE TOTAL COST ATTRIBUTABLE TO PARIJAT PROJECT AND P RATYEE PROJECT COMPLETED DURING THE YEAR UNDER CONSIDERATION WAS RS.6,53,15, 103/- AND RS.14,67,04,701/- RESPECTIVELY AND THE SAME ATTRIBU TABLE TO THE FLAT AREA SOLD TO THE EXTENT OF RS.6,02,38,280/- AND RS.6,94, 55,750/- WAS DEBITED TO THE PROFIT & LOSS ACCOUNT. IT WAS SUBMITTED THAT AFTER REDUCING THE SAID AMOUNTS FROM THE TOTAL VALUE OF WORK-IN-PROGRESS, T HE BALANCE AMOUNT OF RS.17,49,74,365/- WAS SHOWN AS CLOSING WORK-IN-PROG RESS. THIS ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 3 EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND A CCEPTABLE BY THE ASSESSING OFFICER FOR THE FOLLOWING REASONS GIVEN I N HIS ORDER:- (A). IT IS EVIDENT FROM THE AFORESAID SUBMISSION O F THE ASSESSEE THAT IT FAILED TO EXPLAIN LOW VALUE OF CLOSING WORK -IN-PROGRESS AMOUNTING TO RS.17,49,74,365/-. ALSO IN COURSE OF H EARING THE ASSESSEE WAS CATEGORICALLY ASKED TO PRODUCE PROJECT WISE DETAILS OF ENTIRE PROJECT AREA, BUILT UP AREA, SUPE R BUILT AREA, DATE OF COMMENCEMENT OF CONSTRUCTIONS OF WHICH PROJ ECT, YEAR WISE COMPLETION(EXPENSES INCURRED FOR EACH PROJECT) , ESTIMATED REVENUE OF EACH PROJECT. BUT THE ASSESSEE FAILED TO FURNISH DETAILS OF PROJECT AREA, FLAT AREA IN COURSE OF HEA RING INITIALLY. IT FURNISHED ONLY AREA OF FLATS ON 30.03.2015. (B). OUT OF TOTAL COST INCURRED ONLY COST APPORTION ED TO THE PROJECTS NAMELY PARIJAT AND PRATYEE ARE RS.6,53,15, 103.00 AND RS.14,67,04,701.00 RESPECTIVELY. THE SUMMATION OF A FORESAID TWO AMOUNT RESULTS IN RS.21,20,19,8041- WHICH DOES NOT AGREE WITH THE TOTAL COST INCURRED DURING THE YEAR INCLUD ING OPENING WORK IN PROGRESS THAT IS RS.30,59.,49,321/-. (C). COST APPORTIONED TO PROJECTS NAMELY PARIJAT AN D PRATYEE AMOUNTING TO RS.6,53,15,103.00 AND RS.14,67,04,701. 00 RESPECTIVELY COULD NOT BE VERIFIED. IN COURSE OF HE ARING ASSESSEE WAS ASKED CATEGORICALLY COST OF EACH PROJECT BUT IT FAILED TO DO SO. NOW WHEN ASSESSEE WAS ASKED TO SUBSTANTIATE LOW VALUE OF CLOSING WORKING PROGRESS UNSUBSTANTIATED PROJECT CO ST HAS BEEN PRODUCED. (D). THE AUDITED BALANCE SHEET SHOWS ADVANCE FROM C USTOMER RECEIVED AMOUNTING TO RS.22,77,07,4241- NOBODY WILL GIVE ADVANCE UNLESS THE WORK IS COMPLETED SUBSTANTIALLY. HENCE, THE VALUE OF CLOSING WORK-IN-PROGRESS OUGHT TO BE MORE THAN THE ADVANCE FROM CUSTOMER RECEIVED. BUT IN THIS CASE CL OSING WORK- IN-PROGRESS SHOWN IS ONLY RS.17,49,74,365/-. 3. FOR THE REASONS GIVEN ABOVE AND KEEPING IN VIEW THE FAILURE OF THE ASSESSEE TO FURNISH THE RELEVANT DETAILS OF AGREEME NT VALUES, THE ASSESSING OFFICER REJECTED THE VALUE OF WORK-IN-PRO GRESS SHOWN BY THE ASSESSEE. HE ESTIMATED THE AREA OF UNSOLD FLATS COM PLETED BY THE ASSESSEE AT 35% AND WORKED OUT THE VALUE OF CLOSING WORK-IN- PROGRESS AT RS.19,08,87,526/- AS AGAINST THE VALUE OF CLOSING W ORK-IN-PROGRESS SHOWN BY THE ASSESSEE AT RS.17,49,74,365/-. ACCORDINGLY T HE DIFFERENCE OF RS.1,59,13,161/- WAS ADDED BY THE ASSESSING OFFICER TO THE TOTAL INCOME ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 4 OF THE ASSESSEE ON ACCOUNT OF UNDER-VALUATION OF C LOSING WORK-IN- PROGRESS. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS ALSO NOTED BY THE ASSESSING OFFICER THAT CONSTRUCTION MATERIAL WO RTH RS.70,15,063/- WAS PURCHASED BY THE ASSESSEE AT THE FAG END OF THE YEAR. ACCORDING TO THE ASSESSING OFFICER, THE SAID MATERIAL SHOULD HAVE BE EN DISCLOSED BY THE ASSESSEE AS CLOSING STOCK AND SINCE THE ASSESSEE HA D FAILED TO DISCLOSE THE SAME IN THE BALANCE-SHEET, THE ASSESSING OFFICER RE QUIRED THE ASSESSEE TO OFFER ITS EXPLANATION IN THE MATTER. IN REPLY, IT W AS SUBMITTED BY THE ASSESSEE THAT THE SAID PURCHASES MADE AT THE FAG EN D OF THE YEAR WERE INCLUDED IN THE COST OF CONSTRUCTION AND THE SAME W ERE DULY REFLECTED IN THE CLOSING WORK-IN-PROGRESS. IT WAS SUBMITTED THAT THE CLOSING STOCK OF MATERIAL THUS WAS DULY DISCLOSED IN THE FORM OF CLO SING WORK-IN-PROGRESS AND THE SAME WAS NOT DISCLOSED SEPARATELY IN THE BA LANCE-SHEET. THIS EXPLANATION OF THE ASSESSEE WAS ALSO NOT FOUND ACCE PTABLE BY THE ASSESSING OFFICER. ACCORDING TO HIM, THE BUILDING M ATERIALS PURCHASED BY THE ASSESSEE TO THE EXTENT NOT UTILIZED FOR CONSTRU CTION COULD NOT BE INCORPORATED IN THE CLOSING WORK-IN-PROGRESS AND IN THE ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE TO SHOW THAT THE BUILDING MATERIAL IN QUESTION PURCHASED AT THE FAG END OF TH E YEAR WAS IMMEDIATELY USED FOR THE CONSTRUCTION, HE TREATED THE CLOSING S TOCK OF RS.70,15,063/- AS UNDISCLOSED AND ADDITION TO THAT EXTENT WAS MADE BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASS ESSEE THUS WAS DETERMINED BY THE ASSESSING OFFICER FOR THE YEAR UN DER CONSIDERATION AT RS.2,62,24,664/- IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 31.03.2015. 5. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) CHALLENGING BOTH THE ADDITIONS MADE BY THE ASSESSING ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 5 OFFICER ON ACCOUNT OF ALLEGED UNDER-VALUATION OF CL OSING WORK-IN-PROGRESS AND UNDISCLOSED CLOSING STOCK. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(APPEALS), IT WAS EXPLAINED ON BE HALF OF THE ASSESSEE- COMPANY THAT THE REVENUE OF ITS BUSINESS OF REAL ES TATE DEVELOPMENT WAS RECOGNIZED BY FOLLOWING THE PROJECT COMPLETION METH OD AS PRESCRIBED BY ACCOUNTING STANDARD-9. IT WAS SUBMITTED THAT TILL T HE REVENUE IS NOT RECOGNIZED AS PER THE PROJECT COMPLETION METHOD FOL LOWED BY IT, THE AMOUNT, WHICH WAS INCURRED ON THE CONSTRUCTION OF I NCOMPLETE PROJECT WAS SHOWN AS CLOSING WORK-IN-PROGRESS IN THE BALANC E-SHEET AND THE CORRESPONDING AMOUNT RECEIVED FROM CUSTOMERS HAD BE EN SHOWN AS ADVANCES UNDER THE HEAD LIABILITIES. IT WAS SUBMI TTED THAT THE TWO PROJECTS, NAMELY PARIJAT AND PRATYEE WERE COMPL ETED DURING THE YEAR UNDER CONSIDERATION AND REVENUE OF THE SAID TWO PRO JECTS WAS RECOGNIZED TO THE EXTENT OF FLATS OF THE SAID TWO PROJECTS SOL D ON PROPORTIONATE BASIS. IT WAS ALSO SUBMITTED THAT THE CORRESPONDING COST O F THE SAID TWO PROJECTS REFLECTED IN THE WORK-IN-PROGRESS WAS TRANSFERRED T O THE PROFIT & LOSS ACCOUNT AND THE BALANCE AMOUNT WAS SHOWN AS CLOSING WORK-IN-PROGRESS. THE RELEVANT PROJECT-WISE DETAILS SHOWING OPENING W ORK-IN-PROGRESS, WORK DONE DURING THE YEAR, GENERAL EXPENSES APPORTI ONED TO THE PROJECT, COST OF COMPLETED PROJECTS TRANSFERRED TO P&L A/C. ON PROPORTIONATE BASIS AND THE BALANCE CLOSING WORK-IN-PROGRESS WERE ALSO PREPARED AND FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT(APPEAL S) AS UNDER:- NAME OF THE PROJECT OPENING(A) WORK DONE DURING THE YEAR(B) GENERAL EXPENSES(C) COST TRANSFERRED TO P/L A/C.(D) BALANCE (A+B+C)- (D) GENERAL EXPENSES FOR ALL PROJECT 12,53,324 12,53,324 NIL GOPALPUR 300479 100800 401279 PANAGARH 55690 509278 654968 PARIJAT 48464768 15597011 1253324 60238280 5076823.20 PRABORTAK 24521262 23358957 2506648 0 50386867.40 PRTAYAYEE 89612867 51451876 5639958 .90 69455750 77248951.90 PURULIA 47468 0 47468 PUSPAK 79327 71900 151227 ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 6 SANTINIKETAN 8454961 4316175 12771136 TAPOBAN 8688234 17757426 1879986 .30 28325646 TOTAL 180225056 113163423 12533241.20 130947354 174974366 6. AS REGARDS THE OBJECTIONS RAISED BY THE ASSESSIN G OFFICER IN THE ASSESSMENT ORDER WHILE REJECTING THE CLOSING WORK-I N-PROGRESS SHOWN IN THE BALANCE-SHEET, A DETAILED SUBMISSION WAS ALSO F ILED BY THE ASSESSEE TO MEET THE SAID OBJECTIONS AS UNDER:- PARA NO 3A OF THE ASSESSMENT ORDER:- SIR, THE LD. DCIT IN THE PARA NO.3A OF THE ASSESSME NT ORDER HAS MENTION THAT, THE ASSESSEE HAS FAILED TO EXPLAIN TH E LOW VALUE OF CLOSING STOCK IS NOT CORRECT, IN THE COURSE OF ASSE SSMENT THE ASSESSEE HAS SUBMITTED THE DETAILS OF COMPUTATION C LOSING STOCK, SIR FOR YOUR KIND PERUSAL HERE I AM AGAIN SUBMITTIN G THE SAME WHICH SHOWS ACTUAL CLOSING WORK IN PROGRESS AS PER ACTUAL FIGURE AND HIS OBSERVATION SHOWING LOW CLOSING STOCK IS WI THOUT ANY JUSTIFICATION. PARA NO.3B OF ASSESSMENT ORDER:- SIR, IN THIS PARA THE LD. DCIT HAS SAID THAT 'OUT O F THE TOTAL COST INCURRED ONLY COST APPORTIONED TO THE PROJECTS NAME LY PARIJAT AND PRATAYAEE ARE RS. 6,53,15,103.00 AND 14,67,04,7 01.00 RESPECTIVELY. THE SUMMATION OF AFORESAID TWO AMOUNT S RESULTS IN RS.21,20,19,804.00 WHICH DOES NOT AGREE WITH THE TO TAL COST INCURRED DURING THE YEAR INCLUDING OPENING WORK IN PROGRESS THAT IS RS.30,59,49,321.00. SIR, IN THE ABOVE PARA IT IS VERY DIFFICULT TO UNDE RSTAND WHAT THE LD. DCIT WANTS TO SAY, IT SEEMS THAT THE LD. DCIT H AS TOTALLY CONFUSED REGARDING THE ACCOUNTING TREATMENT. SIR, THE LD. DCIT HAS FAILED TO APPRECIATE THE FACT THAT ALL AMOUNTS WHICH IS EXPENSED IN ANY REAL ESTATE BUILDI NG WILL BE INCLUDED IN THE CLOSING WORK IN PROGRESS AND IT REM AINS IN CLOSING WORK IN PROGRESS UNTIL THE REGISTRATION OF FLATS IN THE NAME OF CUSTOMER, AND DURING THE YEAR UNDER CONSIDE RATION THE ASSESSEE WAS ENGAGED IN DEVELOPING NINE REAL ESTATE PROJECTS(DETAILS OF WHICH IS ENCLOSED HEREWITH) AND CLOSING WORK IN PROGRESS IS CONSOLIDATED FIGURES OF ALL THE AMOU NTS EXPENSED ON ALL THESE PROJECTS, THEREFORE HIS OBSERVATION OF THE TOTAL COST INCURRED WAS FAR FROM THE FACT AND JUSTIFICATION. BUT, AS PER PARA NO-3B OF THE ASSESSMENT ORDER IT S EEMS THAT THE LD. DCIT WAS OF OPINION THAT ONLY THE EXPENSES RELA TED TO PROJECT PARIJAT AND PRATYAYEE SHOULD BE INCLUDED IN CLOSING WORK IN PROGRESS, BUT HERE I WOULD LIKE TO STATE THAT THE C ONTENTION OF LD. ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 7 DCIT IS NOT CORRECT AS IN THE YEAR UNDER CONSIDERAT ION THERE WAS NINE (9) ONGOING PROJECTS AND WORK IN PROGRESS WILL BE THE CONSOLIDATED FIGURE OF THE EXPENSES OF ALL THE PROJ ECTS, IF COST CANNOT BE INCREASED WITHOUT ANY ACTUAL EXPENDITURE WHICH TANTAMOUNT TO REDUCTION OF PROFIT ONLY, THE A.O HAS FAILED TO PROVE THAT THE ASSESSEE INFLATED EXPENDITURE OR UND ER REPORTED THE SALES REVENUE. PARA NO-3C OF THE ASSESSMENT ORDER:- IN THIS PARA THE LD. DCIT HAS MENTION THAT, THE COS T APPORTIONED TO THE PROJECTS PARIJAT AND PRATYAYEE IS RS.6,53,15 ,103.00 AND RS.14,67,04,701.00 RESPECTIVELY IS NOT CORRECT. SIR, AS PER OUR SUBMISSION (WHICH WAS GIVEN AT THE TIME OF SCRUTINY) IT WAS AMPLE CLEAR THAT RS.6,02,38,280.00 WAS APPORTIONED TO THE PROJECT PARIJAT AND RS.6,94,55,7 50.00 WAS APPORTIONED TO THE PROJECT PRATYAYEE. SIR, THE LD. DCIT WAS TOTALLY CONFUSED-IN FRAMING T HE ASSESSMENT ORDER, MOREOVER VIE HAVE SUBMITTED THE ENTIRE BOOKS OF ACCOUNTS TO THE LD. DCIT, SO HIS CONTENTION IS NOT TENABLE T HAT HE COULD NOT VERIFIED THE EXPENSES. PARA NO-3D OF THE ASSESSMENT ORDER:- IN THIS PARA THE LD. DCIT HAS SAID THAT 'THE AUDITE D BALANCE SHEET SHOWS ADVANCE FROM CUSTOMER RECEIVED AMOUNTIN G TO RS.22,77,07,424.00 NOBODY WILL GIVE ADVANCE UNLESS THE WORK IS COMPLETED SUBSTANTIALLY. HENCE THE VALUE OF CLOSING WORK IN PROGRESS OUGHT TO BE MORE THAN THE ADVANCE FROM CUS TOMER. SIR, HERE I WOULD LIKE TO STATE THAT, IT IS TOTALLY A HYPOTHETICAL ASSUMPTION BY THE LD. DCIT AND IT IS NOT BASED ON A NY FACT OF MATERIAL AVAILABLE ON RECORD. SIR, THE LD. DCIT HAS ALSO MENTIONED THAT THE CLOSI NG WIP OF PRABARTAK PROJECT IS NIL IS ALSO NOT CORRECT, THE A CTUAL CLOSING WIP OF THE PRABARTAK PROJECT WAS RS.5,03,86,867.00 (COMPUTATION SHEET IS ATTACHED). DURING THE COURSE OF SCRUTINY THE LD. DCIT HAS HIS OBJECTION REGARDING NON-DISCLOSURE OF VARIOUS PURCHASE AMOUNT ING TO RS.70,15,063.00, IN THIS RESPECT I WOULD LIKE TO BR ING YOUR KIND ATTENTION TO THE FACT AS ALREADY DESCRIBED ABOVE TH AT ANY AMOUNT WHICH IS EXPENSED TOWARDS THE PROJECT WILL FORM THE PART OF CLOSING WORK IN PROGRESS AND THE SAME TREATMENT IS ALSO GIVEN TO THE ABOVE PURCHASE. ALL THE ABOVE PURCHASES ARE ALREADY INCLUDED IN THE VALUE OF CLOSING WORK-IN-PROGRESS HENCE IT ALREADY DISCLOSED AND THERE IS NO UNDERVALUATION/UNDISCLOSED PURCHASE. ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 8 7. THE LD. CIT(APPEALS) FOUND MERIT IN THE SUBMISSI ONS MADE BY THE ASSESSEE AND DELETED THE ADDITION OF RS.1,59,13,161 /- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE ALLEGED UNDER-V ALUATION OF CLOSING WORK-IN-PROGRESS FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- I HAVE PERUSED THE ASSESSMENT ORDER AND THE SUBMIS SION OF THE APPELLANT WHICH HAVE BEEN SUMMARISED ABOVE. PER USAL OF A.O'S ORDER SHOWS THAT A.O DID NOT CONSIDER THE SAL E OF THE FLATS WHICH ARE REDUCED FROM WORK IN PROGRESS AND O NLY THEN CLOSING STOCK HAS BEEN ARRIVED AT. THE OBSERVATION OF THE A.O THAT ADVANCES RECEIVED AGAINST PARIJAT & PRATYEE WE RE AT RS.22,77,07,424/- IS ALSO FACTUALLY IS INCORRECT. T HE APPELLANT HAS SUBMITTED BEFORE THE A.O. THAT RESPECTIVE ADVAN CES ARE OF RS.6,02,38,280/- FOR PARIJAT AND RS.6,94,55,750/- A GAINST PRATYEE. IT IS FURTHER SEEN THAT THE PROJECT WISE W ORK IN PROGRESS ALONG WITH THE SALE IS SUBMITTED BEFORE TH E A.O, BUT THE A.O. DID NOT CONSIDER THE SAME WHILE PROCESSING THE ASSESSMENT ORDER. THE CASE WAS SENT FOR REMAND REPO RT WITH THE SUBMISSION OF THE APPELLANT WHERE THE APPELLANT HAS RESUBMITTED THE FACTS WHICH WERE ENDORSED BY THE A. O BUT IN HIS REMAND REPORT THE A.O TRIED TO JUSTIFY THE ADDI TION MADE BY THE THEN A.O WITHOUT NARRATING ANY REASONS. IN T HIS CASE, IT IS SEEN THAT THE A.O MADE FACTUAL ERRORS WHILE ASCE RTAINING CLOSING STOCK. THE CHART NARRATED IN THE ABOVE PARA PROJECT WISE CLEARLY SHOWS THE OPENING CLOSING, AND SALE PR OJECT WISE. THE AFORESAID FACTS WERE NEITHER CONTROVERTED BY TH E A.O. NOR CONSIDERING THE SAME WHILE FRAMING THE ASSESSMENT O RDER IF THE SALE PART AND GENERAL EXPENSES ARE IGNORED THEN THE APPELLANT HAS SHOWN ITS WIP TO THE EXTENT OF RS.3,0 5,92,179/-. IT IS FURTHER TO POINT OUT THAT SUBSEQUENTLY IN THI S CASE SURVEY WAS ALSO CONDUCTED. THE CERTAIN BOOKS OF ACCOUNT WE RE IMPOUNDED. THE A.O. WAS ASKED TO INFORM IF ANY INCR IMINATORY MATERIAL HAS BEEN FOUND DURING THE COURSE OF THE SU RVEY WHICH SHOWS SUPPRESSION OF SALE OR COST OF CONSTRUCTION. THE A.O DID NOT REPORT ANY SUCH FACT. CONSIDERING THE FACT THAT THE APPELLANT WAS MAINTAINING PROJECT WISE COST AND CORRESPONDING SALE AND ITS CLOSING BALANCE THE A.O' S ACTION FOR ESTIMATING CLOSING AT THE RATE OF 35% WITHOUT ANY B ASIS IS NOT TENABLE HENCE, ASSESSMENT MADE BY THE A.O ON THIS A CCOUNT IS HEREBY DELETED. THE GROUND OF APPEAL IS ALLOWED. 8. AS REGARDS THE ADDITION OF RS.70,15,063/- MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF THE ALLEGED UNDISCLOSED CLOSI NG STOCK, THE ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 9 SUBMISSION AS MADE ON BEHALF OF THE ASSESSEE BEFORE THE ASSESSING OFFICER AND REITERATED BEFORE HIM WAS FOUND ACCEPTABLE BY T HE LD. CIT(APPALS) AND HE DELETED THE SAID ADDITION FOR THE FOLLOWING REASONS GIVEN IN HIS IMPUGNED ORDER:- IN THIS CASE, IT IS SEEN THAT A.O. HAS SIMPLY STAN D RAW MATERIAL PURCHASE FOR THE WORK IN PROGRESS AND WAS OF THE OPINION THAT WHEN THE MATERIAL WAS NOT UTILISED THE N IT CANNOT BE THE PART OF WORK IN PROGRESS. EVEN IF THE CONTENTION OF THE A.O. IS ACCEPTED THERE WOULD BE N O MATERIAL CHANGE BECAUSE ONLY THE FIGURE WILL REMAIN SAME AS THE ENTIRE VALUE OF AFORESAID CLOSING STOCK HAS ALREADY BEEN SHOWN IN THE PART OF WORK IN PROGRESS. IF THE SAME IS SHOWN AS CLOSING STOCK THEN THE FIGURE OF WORK IN PROGRES S HAS TO BE REDUCED WHICH MAKES NO CHANGE. THE A.O. HAS NOT PRO VED THAT THIS WAS THE CASE OF INFLATION OF COST. IN THE CONSTRUCTION BUSINESS AS PER ACCOUNTING SYSTEM ENTIRE PURCHASE R ELATING TO THE CONSTRUCTION IS ADDED IN THE WORK IN PROGRES S WHEN THE RAW MATERIAL PURCHASED AT THE END OF MARCH IS A DDED IN THE WORK IN PROGRESS. THE ADDITION MADE BY THE A.O FURTHER TANTAMOUNT TO DOUBLE DEDUCTION. THEREFORE, THE ADDI TION MADE BY THE A.O. IS UNWANTED AND MISCONCEIVED HENCE , DELETED, THE GROUND OF APPEAL IS ALLOWED. 9. HAVING DELETED BOTH THE ADDITIONS MADE BY THE AS SESSING OFFICER ON ACCOUNT OF THE ALLEGED UNDERVALUATION OF CLOSING WO RK-IN-PROGRESS AND UNDISCLOSED CLOSING STOCK, THE LD. CIT(APPEALS) WAS OF THE VIEW THAT THE ASSESSEE HAVING COMPLETED TWO PROJECTS, NAMELY PAR IJAT AND PRATYEE DURING THE YEAR UNDER CONSIDERATION AND HAVING MADE SUBSTANTIAL SALE OF THE FLATS OF THE SAID TWO PROJECTS, WAS REQUIRED TO RECOGNIZE THE ENTIRE INCOME OF THE SAID TWO PROJECTS GOING BY THE PROJEC T COMPLETION METHOD FOLLOWED BY IT. IN THIS REGARD, HE NOTED THAT OUT O F THE 256 FLATS OF THE SAID TWO PROJECTS CONSTRUCTED BY THE ASSESSEE-COMPANY, S ALE OF 205 FLATS WAS BOOKED AND THE REMAINING 51 FLATS HAD REMAINED UNSO LD. HE ALSO NOTED THAT OUT OF THE SAID 51 FLATS, 39 FLATS WERE SOLD B Y THE ASSESSEE DURING THE IMMEDIATELY SUCCEEDING THREE YEARS FOR THE TOTAL CO NSIDERATION OF RS.5,00,72,375/-, WHILE SIX FLATS WERE TO BE GIVEN TO THE LAND-OWNERS IN LIEU OF LAND AS CLAIMED BY THE ASSESSEE AND THE REM AINING SIX FLATS WERE UNSOLD. THE VALUE OF THE SAID SIX UNSOLD FLATS WAS WORKED OUT BY THE LD. ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 10 CIT(APPEALS) AT RS.49,42,602/- BY APPLYING THE AVER AGE SELLING RATE AND BY ADDING THE SAME TO THE VALUE OF RS.5,00,72,375/- OF THE FLATS SOLD , THE INCOME WHICH THE ASSESSEE-COMPANY OUGHT TO HAVE REC OGNIZED DURING THE YEAR UNDER CONSIDERATION IN RESPECT OF TWO COMPLETE D PROJECTS WAS WORKED OUT BY THE LD. CIT(APPALS) AT RS.5,50,14,977 /-. BY APPLYING THE NET PROFIT RATE OF 5%, THE UNDISCLOSED INCOME OF TH E ASSESSEE FROM THE COMPLETED TWO PROJECTS WAS WORKED OUT BY THE LD. CI T(APPALS) AT RS.27,50,748/- AND THE ASSESSING OFFICER WAS DIRECT ED BY HIM TO MAKE THE ADDITION TO THE TOTAL INCOME OF THE ASSESSEE TO THA T EXTENT. 10. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE AND ASSESSEE BOTH ARE IN APPEALS BEFORE THE TRIBUNAL ON THE FOLLOWING GROUNDS: REVENUES APPEAL IN ITA NO. 1204/KOL/2017 (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) DURGAPUR HAS ERRED BY DELETING ADDITION OF RS.L,59, 13,1611- BY ACCEPTING THE CONTENTION OF THE ASSESSEE WITHOUT CO NSIDERING THE FACT THAT CLAIM OF THE ASSESSEE OF RECEIVING OF ADV ANCES AGAINST THE PROJECTS WERE NOT SUPPORTED BY AGREEMENTS. (2) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF LD. CIT (APPEALS) DURGAPUR IS ERRONEOUS AS HE REDUCED ADDIT ION OF RS.70,84,7211- TO RS.27,50,748/- ON ESTIMATION BASI S BY TAKING 5% OF SALE NEXT YEAR IGNORING THE FACT THAT THIS UNDIS CLOSED STOCK WAS FOUND AS NOT DISCLOSED IN AUDITED BALANCE SHEET. (3) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (APPEALS) DURGAPUR HAS ERRED BY DELETING ADDITION OF RS.43,33 ,973/- BY ARRIVING AT THE VALUE OF CLOSING STOCK OF MATERIALS ON ESTIMATE BASIS BY TAKING INTO ACCOUNT THE FLATS SOLD IN THE SUBSEQ UENT YEARS. ASSESSEES APPEAL IN ITA NO. 1256/KOL/2017 (1) THAT THE ORDER PASSED BY THE CIT (A), DURGAPUR U/S 143(3) OF THE INCOME TAX ACT 1961 IS NOT TENABLE AS THE ADDITION OF RS.27,50,748.00 IS BAD IN LAW AND WITHOUT ANY BASIS . (2) THE LD. CIT (A) HAS ERRED IN ASSUMING 5% AS PRO FIT MARGIN, AND IS ALSO NOT BACKED BY ANY DOCUMENTARY EVIDENCE WHICH P ROVES THAT THE APPELLANT HAS NOT FOLLOWED PROPER ACCOUNTING POLICI ES. ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 11 (3) FURTHER THE APPELLANT HAS PROVIDED ALL DOCUMEN TARY EVIDENCE, MATERIALS AND BOOKS OF ACCOUNTS AS AND WHEN REQUIRE D DURING THE COURSE OF HEARING, STILL THESE BOOKS WERE NOT CONSI DERED DURING HEARING AND PASSED AN INADEQUATE ORDER. 11. AT THE TIME OF HEARING BEFORE THE TRIBUNAL, THE LD. D.R. HAS NOT PRESSED GROUND NO. 3 RAISED IN THE REVENUES APPEAL . THE SAME IS ACCORDINGLY DISMISSED AS NOT PRESSED. 12. AS REGARDS THE GROUNDS NO. 1 & 2 OF THE REVENUE S APPEAL, THE LD. D.R. STRONGLY RELIED ON THE ORDER OF THE ASSESSING OFFICER IN SUPPORT OF THE REVENUES CASE ON THE ISSUES RAISED THEREIN. HE HAS CONTENDED THAT THE FINDINGS/OBSERVATIONS RECORDED BY THE ASSESSING OFF ICER IN THE ASSESSMENT ORDER WHILE MAKING THE ADDITIONS ON ACCO UNT OF UNDER- VALUATION OF CLOSING WORK-IN-PROGRESS AND UNDISCLOS ED CLOSING STOCK COULD NOT BE PROPERLY APPRECIATED BY THE LD. CIT(APPEALS) AND THE RELIEF WAS GIVEN BY HIM TO THE ASSESSEE BY DELETING THE SAID T WO ADDITIONS BY SIMPLY ACCEPTING THE ASSESSEES CONTENTION. 13. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, STRONGLY SUPPORTED THE IMPUGNED ORDER OF THE LD. CIT(APPEALS ) GIVING RELIEF TO THE ASSESSEE ON BOTH THESE ISSUES. HE CONTENDED THAT TH E VALUE OF CLOSING WORK-IN-PROGRESS SHOWN BY THE ASSESSEE WAS FOUND TO BE CORRECT BY THE LD. CIT(APPEALS) AFTER UNDERSTANDING THE METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED BY THE ASSESSEE. HE INVITED O UR ATTENTION TO THE DETAILED SUBMISSION MADE ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(APPEALS) IN THIS REGARD AS REPRODUCED IN THE IM PUGNED ORDER OF THE LD. CIT(APPEALS) AND STRONGLY RELIED ON THE SAME. H E FURTHER SUBMITTED THAT THE CONSTRUCTION MATERIAL PURCHASED AT THE FAG END OF THE YEAR WAS INCLUDED IN THE COST OF CONSTRUCTION BY THE ASSESSE E AND SINCE THE ENTIRE COST OF CONSTRUCTION WAS REFLECTED IN THE WORK-IN-P ROGRESS, THE ASSESSEE WAS NOT REQUIRED TO DISCLOSE SEPARATELY THE CLOSING STOCK OF MATERIAL IN ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 12 THE BALANCE-SHEET AND IT WAS NOT A CASE OF UNDISCLO SED CLOSING STOCK AS ALLEGED BY THE ASSESSING OFFICER. 14. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, WHICH IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. AS CLAIMED BEFORE THE AUTHORITIES BELOW AS WELL AS BEFORE THE TRIBUNAL, THE INCOME OF THE SAID BUSINESS WAS RECOGNIZED BY T HE ASSESEE-COMPANY AS PER THE PROJECT COMPLETION METHOD FOLLOWED CONSI STENTLY. IT IS OBSERVED THAT THERE WERE SEVERAL PROJECTS THAT WERE UNDERTAKEN BY THE ASSESSEE-COMPANY OF REAL ESTATE DEVELOPMENT, OUT OF WHICH TWO PROJECTS, NAMELY PARIJAT AND PRATYEE WERE COMPLETED DURIN G THE YEAR UNDER CONSIDERATION. THE INCOME OF THE SAID PROJECTS COMP LETED DURING THE YEAR UNDER CONSIDERATION WAS ACCORDINGLY RECOGNIZED BY T HE ASSESSEE TO THE EXTENT OF FLATS SOLD DURING THE YEAR UNDER CONSIDER ATION AS PER THE METHOD OF ACCOUNTING FOLLOWED BY IT AND CORRESPONDING EXPE NSES PROPORTIONATE TO SUCH SALE BOOKED UNDER WORK-IN-PROGRESS WERE DEBITE D TO THE PROFIT & LOSS ACCOUNT. IN PARIJAT PROJECT, THE ASSESSEE-CO MPANY HAD CONSTRUCTED 150 FLATS HAVING TOTAL AREA OF 80141 SQ.FT., OUT OF WHICH 138 FLATS HAVING AREA OF 70912 SQ.FT. WERE SOLD DURING THE YEAR UNDE R CONSIDERATION. THE TOTAL SALE CONSIDERATION OF THE 138 FLATS SOLD WAS RECOGNIZED BY THE ASSESSEE-COMPANY AS ITS INCOME DURING THE YEAR UNDE R CONSIDERATION AND THE CORRESPONDING COST ATTRIBUTABLE TO THE SAID SAL E AMOUNTING TO RS.6,02,38,280/- OUT OF THE TOTAL COST OF RS.6,53,1 5,103/- ON PROPORTIONATE BASIS WAS TRANSFERRED FROM WORK-IN-PR OGRESS AND DEBITED TO THE PROFIT & LOSS ACCOUNT. SIMILARLY 64,610 SQ.F T. OF THE TOTAL CONSTRUCTED AREA OF PRATYEE PROJECT HAVING BEEN S OLD DURING THE YEAR UNDER CONSIDERATION, THE SALE CONSIDERATION OF 64,6 10 SQ.FT. WAS RECOGNIZED BY THE ASSESSEE-COMPANY AS ITS INCOME OF THE SAID PROJECT AND CORRESPONDING COST OF RS.6,94,55,750/- OUT OF THE T OTAL COST OF THE SAID PROJECT OF RS.14,67,04,702/- WAS TRANSFERRED FROM T HE WORK-IN-PROGRESS ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 13 AND DEBITED TO THE PROFIT & LOSS ACCOUNT. AS EVIDEN T FROM THE DETAILS FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER AS WELL AS BEFORE THE LD. CIT(APPEALS), COST OF CONSTRUCTION INCURRED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION ON ALL THE PROJECTS WA S RS.11,31,63,423/- WHILE THE GENERAL EXPENSES INCURRED WERE RS.1,25,33 ,241/-. THESE TWO AMOUNTS WERE ADDED TO THE OPENING WORK-IN-PROGRESS AND AFTER TRANSFERRING THE GENERAL EXPENSES TO THE EXTENT OF 10% AMOUNTING TO RS.12,53,324/- AND THE CORRESPONDING COST ATTRIBUTA BLE TO THE SALE OF FLATS OF THE COMPLETED TWO PROJECTS AMOUNTING TO RS.6,02, 38,280/- AND RS.6,94,55,750/-, THE BALANCE AMOUNT OF RS.17,49,74 ,366/- WAS SHOWN AS CLOSING WORK-IN-PROGRESS. THE AMOUNT OF CLOSING WOR K-IN-PROGRESS REFLECTED IN THE BALANCE-SHEET OF THE ASSESSEE-COMP ANY AT RS.17,49,74,366/- THUS WAS CORRECTLY SHOWN AS PER T HE METHOD OF ACCOUNTING CONSISTENTLY FOLLOWED BY THE ASSESSEE TO RECOGNIZE THE INCOME OF ITS REAL ESTATE DEVELOPMENT BUSINESS. IT APPEARS THAT THE ASSESSING OFFICER DID NOT APPRECIATE THE WORKING OF CLOSING W ORK-IN-PROGRESS AS DONE BY THE ASSESSEE-COMPANY BY FOLLOWING THE METHO D OF ACCOUNTING CONSISTENTLY FOLLOWED AND PROCEEDED TO DETERMINE TH E CLOSING WORK-IN- PROGRESS BY TAKING THE UNSOLD FLATS TO THE EXTENT O F 35% ON ADHOC BASIS, WHICH AS RIGHTLY HELD BY THE LD. CIT(APPEALS) WAS T OTALLY UNTENABLE. THE LD. CIT(APPEALS), IN OUR OPINION, PROPERLY UNDERSTO OD THE WORKING OF CLOSING WORK-IN-PROGRESS AS MADE BY THE ASSESSEE AN D DELETED THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F THE ALLEGED UNDER- VALUATION OF CLOSING WORK-IN-PROGRESS. WE, THEREFOR E, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) GIVING RELIE F TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO. 1 OF THE REVENUE S APPEAL. 15. AS REGARDS THE ISSUE RELATING TO THE ADDITION O F RS.70,84,721/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF THE ALLEGED UNDISCLOSED CLOSING STOCK, WE HAVE ALREADY NOTED THAT THE TOTAL COST OF CONSTRUCTION INCURRED DURING THE YEAR UNDER CONSIDERATION WAS INCLUDED BY THE ASSESSEE- ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 14 COMPANY IN WORK-IN-PROGRESS. SINCE THE ENTIRE MATER IAL PURCHASED FOR THE CONSTRUCTION WAS INCLUDED IN THE COST OF CONSTRUCTI ON AND THEREBY IN THE WORK-IN-PROGRESS, THERE WAS NO QUESTION OF SHOWING ANY MATERIAL PURCHASED AT THE FAG END OF THE YEAR WHICH WAS NOT UTILIZED FOR CONSTRUCTION IN THE CLOSING STOCK SEPARATELY. AS RI GHTLY CONTENDED ON BEHALF OF THE ASSESSEE AND ACCEPTED BY THE LD. CIT( APPEALS), THE MATERIAL PURCHASED AT THE FAG END OF THE YEAR, WHICH HAD REM AINED UN-UTILIZED FOR CONSTRUCTION WAS DULY REFLECTED IN THE VALUE OF CLO SING WORK-IN-PROGRESS AND THERE WAS NO CASE OF ANY CLOSING STOCK OF MATER IAL THAT HAD REMAINED TO BE DISCLOSED BY THE ASSESSEE AS ALLEGED BY THE A SSESSING OFFICER. THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT O F SUCH ALLEGED UNDISCLOSED CLOSING STOCK THUS WAS NOT SUSTAINABLE AND THE LD. CIT(APPEALS), IN OUR OPINION, WAS FULLY JUSTIFIED I N DELETING THE SAME. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER OF THE LD. CIT (APPEALS) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS GROUND NO . 2 OF THE REVENUES APPEAL. 16. AS REGARDS THE SOLITARY ISSUE INVOLVED IN THE A SSESSEES APPEAL RELATING TO THE ADDITION OF RS.27,50,748/- MADE BY THE LD. CIT(APPEALS) ON ACCOUNT OF THE PROFIT OF THE ASSESSEE ATTRIBUTABLE TO THE UNSOLD FLATS OF THE COMPLETED TWO PROJECTS, WE HAVE ALREADY DISCUSSED T HE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE TO RECOGNIZE TH E INCOME FROM ITS REAL ESTATE DEVELOPMENT BUSINESS, WHEREBY THE INCOME WAS RECOGNIZED IN RESPECT OF THE COMPLETED PROJECTS TO THE EXTENT OF AREA SOLD DURING THE RELEVANT YEAR. SINCE THE SAID METHOD OF ACCOUNTING WAS CONSISTENTLY FOLLOWED BY THE ASSESSEE-COMPANY, THE INCOME ATTRIB UTABLE TO THE FLATS SOLD OF THE COMPLETED TWO PROJECTS WAS RECOGNIZED B Y THE ASSESSEE- COMPANY DURING THE YEAR UNDER CONSIDERATION, WHILE THE INCOME FROM UNSOLD FLATS OF THE SAID PROJECTS WAS RECOGNIZED IN THE SUBSEQUENT YEARS AS AND WHEN THE SAID FLATS WERE SOLD. THIS POSITION WAS ACCEPTED BY THE LD. CIT(APPEALS) HIMSELF AND THE DETAILS OF SALE OF SUCH UNSOLD FLATS DURING ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 15 THE SUBSEQUENT YEARS AS FURNISHED BY THE ASSESSEE W ERE ALSO TAKEN NOTE OF BY THE LD. CIT(APPEALS) ON PAGE NO. 28 OF HIS IMPUG NED ORDER. HE, HOWEVER, STILL HELD THAT THE PROFIT ATTRIBUTABLE TO THE SAID SALE OUGHT TO HAVE RECOGNIZED BY THE ASSESSEE AS INCOME OF THE YE AR UNDER CONSIDERATION AS THE CORRESPONDING PROJECTS WERE CO MPLETED BY THE ASSESSEE-COMPANY DURING THE YEAR UNDER CONSIDERATIO N. WE ARE UNABLE TO SUBSCRIBE TO THIS VIEW TAKEN BY THE LD. CIT(APPEALS ). FIRST OF ALL, AS PER THE ACCOUNTING METHOD FOLLOWED BY THE ASSESSEE, THE INCOME FROM THE REAL ESTATE DEVELOPMENT WAS RECOGNIZED ON PROJECT COMPLE TION METHOD TO THE EXTENT OF SALE OF THE COMPLETED PROJECT AND THERE W AS NO JUSTIFICATION TO DISTURB THIS METHOD FOLLOWED BY THE ASSESSEE TO REC OGNIZE THE INCOME FROM THE REAL ESTATE DEVELOPMENT BUSINESS CONSISTEN TLY. SECONDLY, SINCE THE FLATS HAD REMAINED UNSOLD DURING THE YEAR UNDER CONSIDERATION, THE PROFIT ATTRIBUTABLE TO THE SAID FLATS COULD NOT BE SAID TO BE REALIZED OR ACCRUED TO THE ASSESSEE DURING THE YEAR UNDER CONSI DERATION SO AS TO BRING IT TO TAX DURING THE YEAR UNDER CONSIDERATION . THIRDLY, THE SALE PRICE OF THE UNSOLD FLATS WAS ASCERTAINABLE ONLY ON THE A CTUAL SALE, WHICH HAPPENED IN THE SUBSEQUENT YEAR AND, THEREFORE, DET ERMINATION OF PROFIT OF THE SAID FLATS DURING THE YEAR UNDER CONSIDERATI ON ON ANY ESTIMATE BASIS INVOLVED ASSUMPTIONS AND PRESUMPTIONS. MOREOV ER, THE PROFIT OF SUCH UNSOLD FLATS OF THE COMPLETED PROJECT WAS OFFE RED TO TAX BY THE ASSESSEE IN THE SUBSEQUENT YEAR AS AND WHEN THE SAM E WERE SOLD ON ACTUAL BASIS BY FOLLOWING THE METHOD OF ACCOUNTING CONSISTENTLY ADOPTED BY IT AND ADDITION OF SUCH PROFIT FROM THE SAID FLA TS ON ESTIMATED BASIS BY THE LD. CIT(APPEALS) DURING THE YEAR UNDER CONSIDER ATION CLEARLY RESULTED INTO DOUBLE ADDITION. KEEPING IN VIEW ALL THESE FAC TS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ADDITION OF R S.27,50,748/- MADE BY THE LD. CIT(APPEALS) ON ACCOUNT OF ESTIMATED PROFIT ON THE ESTIMATED SALE OF UNSOLD FLATS OF THE COMPLETED PROJECTS IS NOT SU STAINABLE AND THE SAME IS LIABLE TO BE DELETED. WE ACCORDINGLY DELETE THE SAID ADDITION MADE BY THE LD. CIT(APPEALS) AND ALLOW THE APPEAL OF THE AS SESSEE. ITA NO. 1204/KOL/2017 & ITA NO. 1256/KOL/2017 ASSESSMENT YEAR: 2012-2013 M/S. T ANVEE HOUSING DEVELOPMENT PVT. LIMITED 16 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED, WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON NOVEMBER22, 2 019. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTA P) JUDICIAL MEMBER VICE-PRESIDENT) KOLKATA, THE 22 ND DAY OF NOVEMBER, 2019 COPIES TO : (1) ASSISTANT /DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, DURGAPUR, AAYAKAR BHAWAN, ANNEXE BUILDING, 3 RD FLOOR, CITY CENTRE, DURGAPUR-713216 (2) M/S. TANVEE HOUSING DEVELOPMENT PVT. LIMITED, 9 NO. PUNJABI GALI, SUBHASH PALLY, BENACHITY, DURGAPUR-713213 (3) COMMISSIONER OF INCOME TAX (APPEALS), DURGAPUR , (4) COMMISSIONER OF INCOME TAX, KOLKATA- , KOLKATA; (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.