ACIT, New Delhi V. M/s. DLF Garden City Indore Pvt. Ltd., New Delhi

ITA 1302/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97167 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Diversion of income; Revenue expenditure
• Section: 145

Judgement Text

ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.1302/DEL/2013 ASSESSMENT YEAR : 2008-09 ACIT, VS DLF GARDEN CITY INDORE PVT. LTD., CIRCLE 10(1), (FORMERLY AYUSHI BUILDERS & DEVELOPERS NEW DELHI. PVT. LTD.) 1-E, NAAZ CINEMA COMPLEX, JHANDEWALAN EXTN. NEW DELHI. (PAN: AAFCA5034N) (APPELLANT) (RESPONDENT) APPELLANT B Y: SMT. PARWINDER KAUR, SR. DR RESPONDENT BY : SHRI R.S. SINGVI, CA DATE OF HEARING: 31.07.2015 DATE OF PRONOUNCEMENT: 04.09.2015 O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAINS T THE ORDER OF CIT(A)- XIII, NEW DELHI DATED 14.12.2012 IN APPEAL NO. 68/1 2-13 FOR AY 2008-09. 2. GROUND NO. 4 OF THE REVENUE BEING GENERAL REQUIR ES NO ADJUDICATION. REMAINING GROUNDS OF THE REVENUE READ AS UNDER:- 1. WHETHER THE CIT(A) UNDER THE FACTS AND CIRCUMS TANCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE D ISALLOWANCE TO RS. 43,26,000/- ON A/C OF DISALLOWANCE OF LEGAL & P ROFESSIONAL EXPENSES MADE BY THE ASSESSING OFFICER? 2. WHETHER THE CIT(A) UNDER THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE DISAL LOWANCE ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 2 80,53,7431- ON A/C OF DISALLOWANCE OF INTERNAL DEVE LOPMENT COST EXPENSES MADE BY THE ASSESSING OFFICER? 3. WHETHER THE CIT(A) UNDER THE FACTS AND CIRCUMSTA NCES OF THE CASE AND IN LAW WAS JUSTIFIED IN DELETING THE ADDIT IONS OF RS. 10,00,000/- ON A/C OF DISALLOWANCE U/S 40(A)(IA) OF THE I.T. ACT, 1961 MADE BY THE ASSESSING OFFICER? GROUND NO.1 3. APROPOS GROUND NO.1, WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON R ECORD. LD. DR HAS ALSO DRAWN OUR ATTENTION TOWARDS ASSESSMENT ORDER PARA 4.5 AT PAGE 3 AND SUBMITTED THAT IT WAS OBSERVED BY THE AO THAT THE ASSESSEE HAS DEBITE D AN AMOUNT OF RS.43,26,000 TOWARDS PROFESSIONAL EXPENSES IN THE N AME OF M/S DLF HOME DEVELOPERS LTD. UNDER THE HEAD OF ARCHITECTURAL AND CONSULTANCY FEE WHO IS ALSO THE HOLDING COMPANY OF THE ASSESSEE COMPANY HAVING 51% SHARE OF THE ASSESSEE COMPANY. LD. DR FURTHER SUBMITTED THAT THE AMOUNT OF PROFESSIONAL CHARGES CLAIMED IN RESPECT OF SAID PAYMENT, THE ASSESSEE CO MPANY COULD NOT BRING ON RECORD THE BENEFITS DERIVED BY IT BY PAYING THIS PR OFESSIONAL FEE TO M/S DLF HOME DEVELOPERS LTD. AND HENCE, THE AO WAS CORRECT IN DISALLOWING THE SAME WHICH WAS IN CORRECTLY DELETED BY THE CIT(A). LD. AR SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT THE ISSUE IS SQUARELY COV ERED IN FAVOUR OF THE ASSESSEE BY THE RECENT DECISION OF HONBLE SUPREME COURT IN THE CASE OF ASHISH PLASTIC INDUSTRIES VS ACIT (2015) 373 ITR 45 (SC) LD. AR HAS ALSO DRAWN OUR ATTENTION TOWARDS ASSESSEES PAPER BOOK PAGE NO . 28 AND 29 AND SUBMITTED ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 3 THAT THE ASSESSEE SUBMITTED COPIES OF THE BILLS RAI SED BY PAYEE M/S DLF HOME DEVELOPERS LTD. ALONG WITH DETAILS OF ARCHITECTURA L AND CONSULTANCY SERVICES RECEIVED BY THE AND FEES PAID IN THIS REGARD. 4. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, A T THE VERY OUTSET, WE RESPECTFULLY NOTE THE RATIO OF THE JUDGEMENT OF HON BLE SUPREME COURT IN THE CASE OF ASHISH PLASTIC INDUSTRIES VS ACIT (SUPRA) W HEREIN IT WAS HELD THAT IF THE APPELLANT ASSESSEE IS ABLE TO PROVE THAT THE TAX ON THE PENALTY FROM SALE OF MATERIAL HAS BEEN PAID BY THE PAYEE, THEN THE BENEF IT THEREOF SHOULD BE EXTENDED TO THE APPELLANT ASSESSEE. LD. CIT(A) FURTHER NOTE D THAT THE IMPUGNED AMOUNT HAS BEEN OFFERED TO TAX BY THE PAYER M/S DLF HOME D EVELOPERS LTD. AS ITS INCOME AND HAS PAID TAXES THEREON AND BOTH THE COMP ANIES VIZ. THE ASSESSEE COMPANY AND THE PAYEE COMPANY ARE ASSESSED TO TAX A ND PAYING TAXES ON THE SAME RATE, THEREFORE, THERE WAS NO CASE OF EVASION OF TAX OR DIVERSION OF INCOME BY THE PAYER ASSESSEE COMPANY. ON CAREFUL CONSIDER ATION OF AFORESAID OBSERVATIONS AND CONCLUSION OF THE CIT(A), WE ARE O F THE OPINION THAT THE VIEW TAKEN BY THE FIRST APPELLATE AUTHORITY FINDS SUPPOR T FROM THE RATIO OF THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF ASHISH PLA STIC (SUPRA) HENCE THE LEGAL PREPOSITION ADOPTED AND FOLLOWED BY THE CIT(A) IS C ORRECT AND UPHOLD THE SAME. HOWEVER, WE FIND IT APPROPRIATE THAT THIS ISSUE REQ UIRES EXAMINATION AND VERIFICATION AT THE END OF THE AO AS TO WHETHER THE PAYEE RECIPIENT CO. M/S DLF ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 4 HOME DEVELOPERS LTD. HAD PAID TAX ON THE RECEIPTS. THE ISSUE IS RESTORED TO THE FILE OF THE AO FOR LIMITED PURPOSE AS INDICATED ABO VE. ACCORDINGLY, GROUND NO. 1 OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. GROUND NO. 2 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. LD. DR POINTED OUT OPERATIVE PART OF THE ASSESSMENT ORDER IN PARA 5.1 TO 5.7 AT PAGES 4 & 5 AND SUBMITTED THAT THE AO WAS CORRECT IN MAKING DISALLOWANCE OF INTERNAL DEVE LOPMENT COST (IDC) EXPENSES BY HOLDING THAT IN ABSENCE OF ANY SUPPORTI NG EVIDENCE, IT COULD NOT BE OBSERVED WHETHER THE EXPENSES CLAIMED BY THE ASSESS EE UNDER THE HEAD OF EXTERNAL DEVELOPMENT COST AND INTERNAL DEVELOPMENT COST IN THE POCM CHART WERE ACTUALLY INCURRED OR NOT. LD. DR FURTHER CONT ENDED THAT THE ASSESSEE IN ITS P&L ACCOUNT HAS DEBITED ONLY THE AMOUNT OF RS.80,53 ,742 TOWARDS IDC, THEREFORE, THIS AMOUNT WAS RIGHTLY DISALLOWED AND A DDED BACK TO THE TOTAL INCOME DECLARED BY THE ASSESSEE IN THE ASSESSMENT ORDER. LD. DR FURTHER TOOK US THROUGH OPERATIVE PARA 7.2 AT PAGE 10 OF THE FIRST APPELLATE IMPUGNED ORDER AND ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 5 SUBMITTED THAT THE INFRASTRUCTURE EXPENSES CANNOT B E ALLOWED AS REVENUE EXPENDITURE AND THE CLAIM OF THE CIT(A) IS NOT SUST AINABLE AND IN ACCORDANCE WITH LAW, THEREFORE, THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. LD. AR SUPPORTED THE IMPUGNED ORDER AND SUBMIT TED THAT THE DISALLOWANCE MADE BY THE AO WITHOUT ANY BASIS WAS RIGHTLY DELETE D BY THE CIT(A) AS THE IDC HAS TO BE CHARGED FROM THE CUSTOMERS. LD. AR HAS A LSO DRAWN OUR ATTENTION TOWARDS ORDER OF ITAT B BENCH DELHI IN ASSESSEES GROUP COMPANYS CASE IN ITA NO. 3561/D/2013 FOR AY 2005-06 IN THE CASE OF D CIT VS DLF LIMITED AND SUBMITTED THAT WHEN THE ASSESSEE IS CLAIMING DEDUCT ION IN RESPECT OF INTERNAL DEVELOPMENT COST/EXPENDITURE OF THE AMOUNT IN PROPO RTION TO THE AREA CONVEYANCED IN RESPECT OF PROPERTIES DURING THE YEA R, THEN THE EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT WHICH ARE IN PROPORTION TO THE PROPERTIES CONVEYANCED ARE ALLOWABLE AS REVENUE EXPENDITURE. LD. AR HAS F URTHER DRAWN OUR ATTENTION TOWARDS ASSESSEES PAPER BOOK PAGE NO. 35 AND SUBMI TTED THAT THE ASSESSEE CLAIMED INTERNAL DEVELOPMENT CHARGES ON THE BASIS O F COST WRITTEN OFF ON THE BASIS OF POCM TILL THE END OF THE FINANCIAL PERIOD. LD. AR HAS SPECIALLY DRAWN OUR ATTENTION TOWARDS PARA NO. 8 AND 9 OF THE ORDER OF THE TRIBUNAL (SUPRA) IN ASSESSEES GROUP COMPANYS CASE AND SUBMITTED THAT IN THE SUBSEQUENT ASSESSMENT YEAR, THE CLAIM OF IDC HAS BEEN ALLOWED TO THE ASSESSEE BY THE AO. LD. DR PLACED A REJOINDER AND SUBMITTED THAT EXPENS ES ON INFRASTRUCTURE DEVELOPMENT WHETHER INTERNAL OR EXTERNAL CANNOT BE ALLOWED AS REVENUE EXPENDITURE. HOWEVER, LD. DR FAIRLY ACCEPTED THAT IN THE CASE OF DCIT VS DLF ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 6 LIMITED (SUPRA), THE TRIBUNAL ALLOWED INTERNAL DEVE LOPMENT COST IN PROPORTION TO THE AREA CONVEYANCED IN RESPECT OF PROPERTIES DURIN G THE YEAR. LD. DR HAS ALSO NOT DISPUTED THIS FACT THAT SIMILAR CLAIM OF THE AS SESSEE WAS ALLOWED BY THE AO IN SUBSEQUENT ASSESSMENT YEAR AND IN THE PRESENT YE AR, THE CLAIM OF THE ASSESSEE WAS IN PROPORTION TO THE AREA CONVEYANCED IN RESPE CT OF PROPERTIES DURING THE YEAR WHICH IS VIVID FROM THE OBSERVATIONS OF THE AO IN PARA NO. 5.54, 5.5 AND 5.6 WHEREIN IT HAS BEEN NOTED BY THE AO THAT THE INTERN AL DEVELOPMENT COST OF POCM CHART WAS RS. 13,04,80,000 AND THE ASSESSEE HA S DEBITED ONLY THE AMOUNT OF RS.80,53,742 TOWARDS INTERNAL DEVELOPMENT COST ( IDC). 6. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS OF BOTH THE PARTIES, FIRSTLY WE NOTE THAT IN THE SIMILAR SET OF FACTS AND CIRCUM STANCES IN THE CASE OF ASSESSEES GROUP COMPANY I.E. DCIT VS DLF LTD. (SUP RA), THE TRIBUNAL HELD AS UNDER:- 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE, IS E NGAGED IN THE BUSINESS OF REAL ESTATE AND DEVELOPMENT. DURING THE YEAR THE ASSESSING OFFICER MADE SEVERAL DISALLOWANCES OUT OF WHICH RS.15,05,000/- WAS DISALLOWED BY THE ASSESSING OFFI CER ON ACCOUNT OF INTERNAL DEVELOPMENT EXPENDITURE NOT CLA IMED IN THE PROFIT AND LOSS ACCOUNT. THE CONTENT ION OF THE ASS ESSEE REMAINED THAT THIS EXPENDITURE WAS NOT CLAIMED BY THE ASSESS EE IN THE PROFIT AND LOSS ACCOUNT BUT THE SAME WAS INCLUDED IN THE W ORK-IN- PROGRESS. IT WAS SUBMITTED THAT THE CLAIMED DEVELO PMENT EXPENDITURE WAS ACTUALLY INCURRED DURING THE YEAR. IT WAS RELATING TO SECURITY CHARGES, CONVERSION CHARGES, R OAD WORK ETC. THE LD. CIT (A) HAS DELETED THESES DISALLOWANC E WHICH HAS BEEN QUESTIONED BY THE REVENUE IN THIS GROUND. ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 7 4. AT THE OUT SET, THE LD. AR SUBMITTED THAT THE IS SUE RAISED IS FULLY COVERED BY THE DECISION OF THE TRIBUNAL IN TH E CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEARS 1994-95, 2 000-01, 2002- 03 & 2004-05 UNDER THE SIMILAR SET OF FACTS AND CIR CUMSTANCES. 5. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND BASICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER. HE SUBMITTED THAT THE EXPENDITURE WAS NOT CLAIMED BY THE ASSESSE E IN ITS PROFIT AND LOSS ACCOUNT. 6. THE LD. AR SUBMITTED THAT THE LD. CIT (A) HAS PA SSED DETAIL ORDER AFTER DISCUSSING THE CASE OF THE PARTIES AND FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE ITSEL F ON AN IDENTICAL ISSUE UNDER SIMILAR SET OF FACTS AND CIRCUMSTANCES FOR THE ASSESSMENT YEARS 1994-95, 2000-01, 2001-02,2002-03 & 2003- 04. 7. HAVING GONE THROUGH THE ORDERS OF THE AUTHORITIE S BELOW, WE FIND THAT THE ASSESSING OFFICER HAD DISALLOWED THE CLAIMED EXPENDITURE WITH THIS OBSERVATION THAT OUT OF THE T OTAL DEVELOPMENT EXPENDITURE INCURRED ON INTERNAL DEVELO PMENT, EXPENDITURE ON THE MAINTENANCE, BILLING SERVICES CO ULD NOT BE TREATED AS EXPENSES FOR CONSTRUCTION AND DEVELOPMEN T. WE FIND THAT IN THE ABOVE CITED ASSESSMENT YEARS AN IDENTIC AL ISSUE WAS RAISED, WHEREIN ASSESSING OFFICER WAS DIRECTED TO D ELETE SUCH DISALLOWANCE WITH FURTHER DIRECTION TO CONSIDER THE SAME AS PART OF WORK-IN-PROGRESS. 8. THE LD. CIT (A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE DURING THE YEAR FOLLOWING THE ORDERS OF THE TRIBUNA L IN THE ABOVE CITED ASSESSMENT YEARS IN THE CASE OF ASSESSEE ITSE LF. FOR A READY REFERENCE, WE ARE REPRODUCING CONTENTS OF PARA 5.9 OF THE FIRST APPELLATE ORDER: 5.9 I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT, OBSERVATIONS OF THE ASSESSING OFFICER, REMAND REPOR T AND REJOINDER TO THE REMAND REPORT. I HAVE ALSO CONSIDERED THE DECISION OF CIT (A) AS WELL AS HONB LE ITAT IN APPELLANTS OWN CASE FOR EARLIER YEARS. IT IS SEEN THAT THIS ISSUE IS COVERED IN FAVOUR OF THE APPELLANT BY THE ORDERS OF HONBLE ITAT IN APPELLANTS OWN CASE FOR AY 1994-95, 2000-2001 T O 2002-03 AND 2004-05. IT IS OBSERVED THAT THE ASSESSING OFFI CER NOTED THAT THE APPELLANT IS CLAIMING DEDUCTION IN RESPECT OF I NTERNAL ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 8 DEVELOPMENT EXPENDITURE OF THE AMOUNT IN PROPORTION TO THE AREA CONVEYANCED IN RESPECT OF PROPERTIES DURING THE YEA R. THE APPELLANT WAS ASKED TO GIVE DETAILS OF SUCH EXPENDI TURE INCURRED. THE ASSESSING OFFICER OBSERVED THAT THE EXPENDITURE UNDER THE HEAD INTERNAL DEVELOPMENT CHARGES, ROAD WORKS ETC. IT WAS ALSO OBSERVED BY THE ASSESSING OFFICER THAT OUT OF THE T OTAL DEVELOPMENT EXPENDITURE INCURRED ON INTERNAL DEVELO PMENT, EXPENDITURE ON THE MAINTENANCE BILLING SERVICES COU LD NOT BE TREATED AS EXPENSES FOR CONSTRUCTION AND DEVELOPMEN T AND HENCE WAS NOT ALLOWABLE. SIMILAR ISSUE AROSE IN APPEALS O F THE APPELLANT FOR EARLIER YEARS AND IN TERMS OF APPELLA TE ORDERS, THE ASSESSING OFFICER HAD BEEN DIRECTED TO DELETE SUCH DISALLOWANCE AND THE ASSESSING OFFICER WAS DIRECTED TO CONSIDER THE SAME AS PART OF WORK IN PROGRESS. THE HONBLE ITAT B BENC H VIDE ITS RECENT ORDER DATED 09.04.2009 IN ITA NO.93/DEL/2008 FOR A. Y 2004-05 IN APPELLANTS OWN CASE DECIDED THIS ISSUE IN FAVOUR OF THE APPELLANT. RELEVANT EXTRACTS FROM THE SAID ORDE R IS REPRODUCED AS UNDER: 5. AFTER CONSIDERING RIVAL SUBMISSIONS, WE FIND THA T THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBU NAL IN APPEAL FOR ASSESSMENT YEAR 1994-95. THIS FACT HAS BEEN CONFIRMED BY BOTH THE COUNSELS. SINCE THE INTERNAL DEVELOPMENT EXPENSES ARE DEBITED TO WORK I N PROGRESS ACCOUNT AND THE EXPENSES DEBITED TO PROFIT AND LOSS ACCOUNT ARE IN PROPORTION TO PROPER TIES CONVEYANCED IS ALLOWAB LE. THE TRIBUNAL IN APPEAL FOR ASSESSMENT YEAR 1994-95 OBSE RVED AS UNDER: 13. THE NEXT ISSUE IS WITH REGARD TO 30% OF SALE VA LUE WHICH, PER SECTION 5(1) OF HDRUA ACT HAS TO BE DEPOSITED IN A SEPARATE BANK ACCOUNT UNDER THE CONTROL OF DIRECTOR, TOWN & COUNTRY PLANNING, HARYANA. THE ASSESSEE DEBITS ON YEARLY BA SIS ALL DIRECT EXPENSES FOR DEVELOPMENT OF THIS COLONY, INTO THE W ORK-IN PROGRESS ACCOUNT. ON SALE OF THE LAND OR UNITS, IT CREDITS WORK-IN- PROGRESS: ACCOUNT BY 30% OF SALE VALUE AND DEBITS T HE SAME TO PROFIT & LOSS ACCOUNT AS INTERNAL DEVELOPMENT CHARG ES. THIS, IT HAS DONE CONSISTENTLY, RIGHT FROM 1981 TILL DATE. T HE CIT (A) HAS DISCUSSED THIS ISSUE IN PARA 24 OF PAGE 23 ONWARDS. HIS FINDING GIVEN AT PAGE 28 PARA (V) OF HIS ORDER. NOW, HERE A GAIN THE CIT(A) VARIES THE METHOD OF ACCOUNTING REGULARLY FO LLOWED AND EMPLOYED BY THE ASSESSEE AND ACCEPTED BY ALL CONCER NED AUTHORITIES RIGHT FROM ASSESSMENT YEAR 1982-83 TO 1 993-94. ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 9 HAVING VERIFIED THE DETAILS AS PER DIRECTIONS OF TH E CIT(A); 30% HAS BEEN ACCEPTED AS THE FAIR VALUE OF INTERNAL DEV ELOPMENT EXPENSES BY A.O. IN FACT, WHEN THE MATTER WENT BAC K IN REMAND, CIT(A) FOUND THAT THE ACTUAL EXPENDITURE INCURRED I N THE YEAR WAS MORE THAN 30% OF THE SALE BOOKED IN THE YEAR. T HEREFORE, METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE WAS F AIR AND CORRECT AND IN ACCORDANCE WITH HDR UA ACT. IT IS ON LY WHEN THE PROJECT COMES TO A CLOSE, THAT THE CLOSING ENTRIES WOULD NEED TO BE PUT TO THE BALANCE, IF ANY, IN THE WORK-IN PROGR ESS ACCOUNT. 13.1 WE ALSO FIND THAT THE FINDING OF CIT(A) THAT T HIS IS NOT THE ANNUAL EXPENDITURE, IS ACTUALLY INCORRECT. IT IS ON LY EXPENDITURE WHICH IS WRITTEN OFF, BUT WHAT PERCENTAGE THEREOF I S THE QUESTION, - ALL OF IT BE WRITTEN OFF OR SOME PART OF IT BE WRIT TEN OFF 'THIS WOULD DEPEND ON THE VARIOUS FACTORS, SUCH AS, DEVEL OPMENT OF THE COLONY AND AS THE ASSESSEE FOLLOWS THE PROJECT COMP LETION METHOD, INCOME ON REGISTRATION OF SALE, THEN IT HAS TO BE NECESSARILY PERCENTAGE OF THE SALE VALUE. THERE CAN BE NO BETTER METHOD THAN THIS WHICH GIVES THE CORRECT PROFIT OR LOSS ON A PARTICULAR SALE. IT IS DUE TO THIS REASON THAT IN S PITE OF THIS ORDER OF CIT(A), THIS WAS NEVER FOLLOWED BY THE DEPARTMEN T, NOR WAS IT AGITATED UPON IN THE EXECUTION PROCEEDINGS OR IN AP PEALS IN SUBSEQUENT YEARS. THIS HAS NOT RESULTED IN ANY PROF IT TO THE REVENUE, BUT HAS ONLY INCREASED THE ADMINISTRATIVE WORK, BOTH FOR THE REVENUE, AS WELL AS, FOR THE ASSESSEE. THIS IS EVIDENT FROM THE FACT THAT, IN REMAND PROCEEDINGS, THE ACTUAL IN COME FROM BUSINESS (LOSS) HAS BEEN INCREASED TO RS. 79,82,516 1-. THE RELEVANT PARA IS LAST SUB PARA OF PARA 3 AT PAGE NO .7 OF THE AOS ORDER DATED 24.03.2000 WHICH IS REPRODUCED HEREUNDE R: THE ASSESSEE COMPANY HAS SUBMITTED THE DETAILS IN R ESPECT OF THE TOTAL AREA OF LAND OF THE COLONY KNOWN AS DLF QUTAB ENCLAVE, TOTAL LICENSED AREA OF THE COLONY, AREA UNDER PLOTS . GROUP HOUSING, AREA UNDER COMMERCIAL USE, AREA UNDER ROAD S, PARK AND AREA UNDER COMMUNITY SITES, TOTAL EXPENSES FOR INTE RNAL DEVELOPMENT OF THE COLONY ACTUALLY INCURRED AND DEB ITED TO THE PROFIT & LOSS ACCOUNT. THE ASSESSEE COMPANY HAS ALS O SUBMITTED THE WORKING OF THE PROFITS/LOSS ON CONSTRUCTED PROP ERTIES ON POSSESSION BASIS AS ALSO THE REVISED WORKING OF THE TRADING ACCOUNT AS PER THE FINDINGS OF THE LEARNED CIT(A)-2 3 FOR ASSTT. YEAR 1994-95. ACCORDING TO THE REVISED WORKING, THE G.P. WILL GO DOWN BY A FIGURE OF RS. 79,82,516/- AND THE SAME IS REDUCED FROM THE, TOTAL INCOME OF THE ASSESSEE COMPANY. A COPY O F THE REVISED ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 10 TRADING ACCOUNT DULY SIGNED BY THE ASSESSEE IS ENCL OSED HEREWITH. ' THEREFORE, THIS TINKERING OF THE METHOD OF ACCOUNTI NG OF THE ASSESSEE HAS NOT RESULTED IN ANY GAIN TO THE REVENU E IN THE YEAR UNDER APPEAL. FURTHER, COLLECTIVELY, IF ALL THE YEA RS ARE TAKEN INTO CONSIDERATION, THERE IS NO GAIN TO THE REVENUE. IN FACT, THERE IS LOSS TO THE REVENUE, IF THE EFFECT OF ORDER OF CIT IS GIVEN IN ALL THESE PREVIOUS YEARS AND SUBSEQUENT TO THE YEAR UND ER APPEAL. A CHART HAS BEEN FILED BY THE ASSESSEE IN RE-ASSESSME NT APPELLATE PROCEEDINGS IN ITAT WHICH WERE ALSO HEARD TOGETHER ALONG WITH THIS APPEAL. SINCE IN ULTIMATE ANALYSIS, WE HAVE HE LD THAT THE RECOURSE TO PROVISO TO SECTION 145 OF THE ACT IS UN CALLED FOR, THE BOOK RESULTS ARE TO BE ACCEPTED SINCE THERE IS NO D ISPUTE TO THE INCOME OFFERED AND EXPENSES CLAIMED, THESE DIRECTIO NS GIVEN BY CIT(A), IN HIS ORDER, ARE INCORRECT AND THE ORDER O F THE AD AND THE CIT, DELHI (CENTRAL), NEW DELHI, ON THIS GROUND FOR APPLYING SECTION 145 OF THE ACT NEEDS TO BE OVER-RULED AND T HE RETURN OF THE ASSESSEE ON THIS POINT NEEDS TO BE RESTORED THE INCOME OF THE ASSESSEE, AS RETURNED, BE ACCEPTED AS SUCH.' 6. IN VIEW OF THE ABOVE, LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE. IT IS SEEN THAT THERE IS NO CHANGE IN THE FACTS OF THE APPELLANT'S CASE AS COMPARED TO EARLIER YEARS. THEREFORE, RESPE CTFULLY FOLLOWING THE ORDERS OF HON'BLE ITAT IN APPELLANTS OWN CASE (SUPRA), THE ADDITION OF RS. 15,05,000/- MADE BY TH E ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF INTERNAL DEVE LOPMENT EXPENDITURE IS DELETED AND THE SAID AMOUNT IS HEREB Y ALLOWED TO BE DEBITED TO WORK IN PROGRESS ACCOUNT.' 9. WE FIND THAT THE FIRST APPELLATE ORDER ON THE I SSUE IS COMPRESSIVE AND REASONED ONE, HENCE, WE ARE NOT INC LINED TO INTERFERE THEREWITH ESPECIALLY WHEN THERE IS NO CHA NGE IN THE FACTS IN THE ASSESSEE'S CASE IN COMPARISON TO ABOVE CITED ASSESSMENT YEARS. THE GROUND NO.1 IS ACCORDINGLY RE JECTED. 7. IN VIEW OF ABOVE OBSERVATIONS OF THE TRIBUNAL, W E NOTE THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE SIMILAR AND T HE CIT(A) WAS RIGHT IN HOLDING THAT THE ASSESSEE HAS INCURRED IMPUGNED AMO UNT ON IDC AND THE SAME ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 11 HAS BEEN CLAIMED IN THE P&L ACCOUNT AS ACTUAL EXPEN DITURE INCURRED. WE ARE ALSO IN AGREEMENT WITH THE OBSERVATIONS OF THE CIT( A) THAT WHERE ONE FOLLOWS PROJECT COMPLETION METHOD OR PERCENTAGE OF COMPLETI ON METHOD, THE ELEMENT OF COST CANNOT CHANGE AND ONCE IDC IS ACCEPTED TO BE A N ELEMENT OF COST, THEN WHICHEVER METHOD ONE APPLIES, IT HAS TO BE ALLOWED AS A COST OF THE PROJECT FOR WORKING OUT THE TRUE PROFIT AND LOSS ACCOUNT IN RES PECT THEREOF. UNDER ABOVE NOTED FACTS AND CIRCUMSTANCES, WE ARE INCLINED TO H OLD THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE IDC COST INCURRED DURI NG THE YEAR FOR CARRYING OUT FACILITIES LIKE ROADS, SEWAGE, LIGHTING, PARK, WATE R SUPPLY LINE ETC. THE BUDGETED IDC WAS A PART OF COST AND THE SAME HAS TO BE ACCEP TED FOR RECOGNIZING REVENUE AS PER POCM METHOD WHICH WAS CONSISTENTLY ACCEPTED BY THE DEPARTMENT IN THE ASSESSEES CASE. WE CANNOT IGNORE THAT SIMILAR CLA IM OF THE ASSESSEE GROUP COMPANY IN SIMILAR FACTS AND CIRCUMSTANCES WAS ACCE PTED BY THE TRIBUNAL AND IN THE PRESENT ASSESSEES OWN CASE, ASSESSEE ALSO ALLO WED SIMILAR CLAIM FOR SUBSEQUENT ASSESSMENT YEARS AND THE RULE OF CONSIST ENCY REQUIRES TO BE FOLLOWED UNLESS THERE ARE SUBSTANTIAL CHANGES IN THE FACTS A ND CIRCUMSTANCES AND IN LAW POSITION FOR TAKING A DEVIATED OR DIFFERENT VIEW. ACCORDINGLY, WE HOLD THAT THE CIT(A) WAS RIGHT IN ALLOWING RELIEF FOR THE ASSESSE E AND DELETING THE IMPUGNED ADDITION MADE BY THE AO WITHOUT ANY REASONABLE AND JUSTIFIED BASIS. ACCORDINGLY, GROUND NO. 2 OF THE REVENUE BEING DEVO ID OF MERITS IS DISMISSED. ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 12 GROUND NO.3 8. WE HAVE HEARD ARGUMENTS OF BOTH THE PARTIES INTE R ALIA THE IMPUGNED ORDER OF THE CIT(A) AND RELEVANT PART OF ASSESSMENT ORDER ON THIS ISSUE. 9. LD. DR SUPPORTED THE ORDER OF THE AO AND SUBMITT ED THAT THE CIT(A) WAS NOT JUSTIFIED IN GRANTING RELIEF TO THE ASSESSEE AN D DELETING THE ADDITION MADE BY THE AO U/S 40(A)(IA) OF THE ACT. LD. AR SUPPORTING THE CONCLUSION OF THE CIT(A) SUBMITTED THAT IN PARA 8.3 AT PAGE 14 OF THE IMPUGNED ORDER, THERE IS ELABORATE DISCUSSION ON THE ISSUE AND INCORRECT DIS ALLOWANCE MADE BY THE AO WAS RIGHTLY DELETED BY THE CIT(A) IN HOLDING THAT T HE ASESSEE HAS ESTABLISHED THAT THE BROKERAGE EXPENSES HAVE ACTUALLY BEEN CLAIMED B Y THE ASSESSEE IN P&L ACCOUNT AND THE SAME HAVE BEEN DISALLOWED IN COMPUT ATION OF INCOME ON THE GROUND THAT THE TDS WAS NOT PAID ON THE SAME. HENC E, ADDITION U/S 40(A)(IA) OF THE ACT IS NOT JUSTIFIED. 10. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE NOTE THAT THE CIT(A) GRANTED RELIEF FOR THE ASSESSEE WITH FOLLOWING CONC LUSION AND OBSERVATIONS:- 8.2 I HAVE CONSIDERED THE SUBMISSION OF THE APPEL LANT AND OBSERVATION OF THE ASSESSING OFFICER. IT IS SEEN TH AT ASSESSING OFFICER HAS DISALLOWED BROKERAGE AMOUNT OF RS.10,00 ,000/- ON THE GROUND THAT APPELLANT HAS NOT DISALLOWED THE BR OKERAGE AMOUNT OF RS.L,15,90,431/-AND HAS DISALLOWED ONLY RS.1,05,90,431/-OF THE BROKERAGE CLAIMED IN THE COM PUTATION OF INCOME. THIS DISALLOWANCE HAS BEEN MADE BY THE ASSE SSING OFFICER ON THE GROUND THAT BROKERAGE AMOUNT HAS BEE N TREATED BY THE ASSESSING OFFICER AT RS. L,15,90,431/- BASED ON THE ATTACHEMENT-4 FOR CLAUSE -27(B )(IV) OF THE AUDIT R EPORT FILED AT PAGE -72 OF THE PAPER BOOK. THE APPELLANT HAS CLAIM ED THAT DURING THE YEAR THE BROKERAGE AMOUNT OF RS.L,05,90, 431/-HAS BEEN CLAIMED IN THE PROFIT AND LOSS ACCOUNT AND SAM E HAS BEEN ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 13 DISALLOWED IN THE COMPUTATION OF INCOME FILED AT PA GE -74 OF THE PAPER BOOK. THE APPELLANT CLAIMS THAT THE AMOUNT OF RS.1, 15,90,431/-HAS BEEN WRONGLY TYPED IN ATTACHMENT-4 O F CLAUSE 27(B )(IV) OF THE AUDIT REPORT. IN SUPPORT OF ITS C ONTENTION THE APPELLANT HAS FILED 3CD AUDIT REPORT WHEREIN UNDER CLAUSE -17 SUB-CLAUSE -(F) THE AMOUNT INADMISSIBLE U/S 40(A)(I A) HAS BEEN SHOWN AT RS.L,05,90,431/- AND REFERENCE HAS BEEN MA DE TO ATTACHMENT-4. THE APPELLANT HAS ALSO FILED COPY OF PROFIT AND LOSS ACCOUNT AT PAGE-42 OF THE PAPER BOOK WHEREIN BROKER AGE EXPENSES HAVE BEEN CLAIMED AT RS. 1,05,90,431/-IN S CHEDULE-12 UNDER THE HEAD OPERATING AND OTHER EXPENSES. IN VIEW OF THE ABOVE IT IS ESTABLISHED THAT BROKERA GE EXPENSES OF RS.1,05,90,431/- HAVE ACTUALLY BEEN CLA IMED BY THE APPELLANT IN THE PROFIT AND LOSS ACCOUNT AND SAME H AVE BEEN DISALLOWED IN THE COMPUTATION OF INCOME ON THE GROU ND THAT TDS WAS NOT PAID ON THE SAME. HENCE, THE ADDITION OF RS . 10,00,000/- WAS NOT JUSTIFIED AND SAME IS DELETED. 11. IN VIEW OF ABOVE, WE ARE IN AGREEMENT WITH THE VIEW TAKEN BY THE CIT(A) THAT WHEN IT IS ESTABLISHED THAT THE BROKERAGE EXP ENSES OF RS.1,15,90,431 HAVE ACTUALLY BEEN CLAIMED BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT AND THE SAME AMOUNT WAS DISALLOWED IN THE COMPUTATION OF INCOME ON THE GROUND THAT THE TDS WAS NOT PAID ON THE SAME, THEN FURTHER ADDITION OF RS.10 LAKH WAS NOT JUSTIFIED AND THE SAME WAS RIGHTLY DELETED BY THE C IT(A). ACCORDINGLY, GROUND NO. 3 OF THE REVENUE IS ALSO DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES ON GROUND NO. 1 ORDER PRONOUNCED IN THE OPEN COURT ON 04.09.2015. SD/- SD/- (N.K. SAINI) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO. 1302/DEL/2013 ASSTT.YEAR: 2008-09 14 DT. 04TH SEPTEMBER 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR