Smt. Aditi Ravindra Dharmadhikari, Kolhapur V. ACIT, Kolhapur

ITA 1395/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85180 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 11-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 02-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Cost of acquisition
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.1395/PN/2013 (ASSESSMENT YEAR : 2009-10) SMT. ADITI RAVINDRA DHARMADHIKARI, CTS. NO.19-D WARD GUJARI TO RANKALA STAND ROAD, OPP. KUMBHI KASARI BANK, KOLAHAPUR. PAN : ABNPD6562G . APPELLANT VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE- 1, KOLHAPUR. . RESPONDENT ASSESSEE BY : MR. M. K. KULKARNI DEPARTMENT BY : MR. P. S. NAIK DATE OF HEARING : 11-11-2014 DATE OF PRONOUNCEMENT : 26-11-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR DATED 06.05.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 30.1 2.2011 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. IN THIS APPEAL, ASSESSEE HAS RAISED THE FOLLOWIN G GROUNDS OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A)-KOLHAPUR ERRED IN NOT PASSING THE APPEAL ORD ER AS MANDATED BY S. 250(6) WHICH MUST BE A 'SPEAKING ORD ER' TAKING INTO CONSIDERATION ALL THE SUBMISSIONS MADE BEFORE HIM ORALLY AND ALSO IN WRITING. THE ORDER BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CU(A)-KOLHAPUR ERRED IN CONFIRMING THE ORDER OF THE A. 0. WHO MADE ADDITION OF RS.36,52,400/- TO THE TOTAL INCOME RETURNED AS INFLATED OPENING WIP WHICH WAS CORRECTLY ADOPTED BY ASSESSEE TAKING INTO ACCOUNT THE PRICES OF LANDS ACQUIRED FO R THE BUSINESS SUPPORTED BY AGREEMENTS AND PARTICULARLY TAKING INT O ACCOUNT THE LIABILITY OF NAZRANA AMOUNT PAYABLE TO GOVERNME NT EQUAL TO ITA NO.1395/PN/2013 50% ON INAMI LANDS ACQUIRED. THE ORDER OF LD. CIT(A ) BEING ERRONEOUS IN LAW BE QUASHED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) OUGHT TO HAVE CONSIDERED THE IMMINENT FACTS PLACED BEFORE HIM THAT THE ADDITION OF RS.36,52,000/- MADE BY A. 0. EXACTLY TALLIES WITH THE NAZRANA AMOUNT PAID TO GOVT. OF MAHARASHTRA WHICH IS REQUIRED TO BE CONSIDERED IN W ORK-IN- PROGRESS IN VIEW OF IT ATTRIBUTABLE TO PURCHASE PRI CE OF LANDS. THEREFORE, OP. WIP COMPUTED BY ASSESSEE OF RS.46,16 ,000/- BEING CORRECT CANNOT BE SAID TO BE INFLATED ONE. TH E ADDITION BEING ILLEGAL AND WITHOUT JURISDICTION BE DELETED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ADDITION MADE BY A. 0. AND CONFIRMED BY LD. CIT(A) IS ILLEGAL AND WITHOUT JURISDICTION AS THE AUDITED ACCOUNTS WERE NOT REJEC TED U/S 145(3) OF THE ACT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LEVY OF INTEREST U/S 234B AND 234C IS NOT JUSTIFIED. THE LEVY OF INTEREST BE QUASHED. 3. AT THE TIME OF HEARING, THE CAPTIONED APPEAL WAS HEARD WITH RESPECT TO THE PRELIMINARY OBJECTION OF THE APPELLANT CONTAINE D IN GROUND OF APPEAL NO.1, ACCORDING TO WHICH, THE ORDER PASSED BY THE CIT(A) IS A NON-SPEAKING ORDER AS IT HAS BEEN PASSED WITHOUT TAKING INTO CONSIDERATIO N ALL THE SUBMISSIONS PUT- FORTH BY THE ASSESSEE BEFORE HIM. THE LD. REPRESEN TATIVE FOR THE ASSESSEE HAS CONTENDED THAT FOR THE AFORESAID REASONS, THE O RDER OF THE CIT(A) BE SET- ASIDE AND THE MATTER BE RESTORED BACK TO THE FILE O F THE CIT(A) FOR A FRESH ADJUDICATION. 4. IN ORDER TO APPRECIATE THE AFORESAID, A BRIEF DI SCUSSION IS RELEVANT. THE APPELLANT BEFORE US, IS AN INDIVIDUAL WHO IS ENGAGE D IN THE BUSINESS OF BUILDERS AND DEVELOPERS THROUGH TWO PROPRIETARY CONCERNS UND ER THE NAME AND STYLE OF M/S DECON CONSTRUCTION AND PANCHARATNA DEVELOPERS. THE DISPUTE BEFORE US IS WITH RESPECT TO AN ADDITION OF RS.36,52,400/- MA DE BY THE ASSESSING OFFICER TOWARDS THE AMOUNT OF OPENING WORK-IN-PROGRESS (WIP ) CONSIDERED BY THE ASSESSEE. THE TOTAL OPENING WIP SHOWN BY THE ASSES SEE IN M/S PANCHARATNA DEVELOPERS AND DECON CONSTRUCTION WAS RS.1,03,38,64 1/-. ON VERIFICATION OF DETAILS, IT WAS FOUND THAT OPENING WIP COMPRISED OF PART CONSIDERATION FOR ACQUIRING LAND PAID BY CHEQUE AND PART CONSIDERATIO N PAID IN KIND I.E. LAND ITA NO.1395/PN/2013 GIVEN AS SALE CONSIDERATION FOR EFFECTING THE PURCH ASE OF LAND. FOR THE LATTER PART OF THE CONSIDERATION, ASSESSEE ADOPTED THE NOT IONAL MARKET VALUE FOR CONSIDERING THE CLOSING WIP IN RESPECTIVE YEARS. W ITH RESPECT TO THE OPENING WIP, IT WAS NOTED THAT ASSESSEE HAD PAID RS.31,90,0 00/- AGAINST PURCHASE OF DEVELOPMENT RIGHTS AND A SUM OF RS.40,16,000/- WAS DEBITED AGAINST CONSIDERATION PAYABLE IN KIND. THE AFORESAID CONSI DERATION PAYABLE IN KIND OF RS.40,16,000/- ADOPTED BY THE ASSESSEE HAS NOT BEEN ACCEPTED BY THE ASSESSING OFFICER AS ACCORDING TO HIM, THE COST OF ACQUISITION OF THE LANDS IN QUESTION WOULD ONLY COME TO RS.3,63,600/-. NOTABLY , A SUM OF RS.40,16,000/- WAS CONSIDERED BY THE ASSESSEE ON THE BASIS OF THE MARKET VALUE OF LANDS WHICH WERE GIVEN AS CONSIDERATION AGAINST PURCHASE OF LAND. THE ASSESSING OFFICER HELD THAT AT BEST, THE VALUE OF SUCH LANDS BE TAKEN AT 3,63,600/- AND ACCORDINGLY THE EXCESS PURCHASE COST DEBITED IN THE OPENING WIP OF RS.36,52,400/- (I.E. RS.40,16,000/- MINUS RS.3,63,600/-) WAS DISALLOWED. 5. THE AFORESAID ADDITION WAS CARRIED IN APPEAL BEF ORE THE CIT(A). THE CIT(A) HAS SUSTAINED THE ADDITION ON THE GROUND THA T THERE WAS NO SPECIFIC EXPLANATION FURNISHED BY THE ASSESSEE EXCEPT FOR A GENERAL REPLY. ACCORDINGLY, THE APPEAL OF THE ASSESSEE WAS DISMISS ED. 6. BEFORE US, THE LD. REPRESENTATIVE HAS REFERRED T O THE GROUNDS OF APPEAL RAISED IN TERMS OF WHICH, IT IS POINTED OUT THAT THE ADJUSTMENT IN THE OPENING WIP MADE BY THE ASSESSING OFFICER WAS UNJUS TIFIED BECAUSE ASSESSEE HAS ADOPTED THE VALUE OF LAND ACQUIRED FOR THE BUSINESS WHICH WERE SUPPORTED BY AGREEMENT AND IT WAS POINTED OUT THAT THE NAZRANA AMOUNT PAID TO THE GOVERNMENT OF MAHARASHTRA WAS WITH RESPECT T O THE VALUE OF LAND CONSIDERED BY THE ASSESSEE AS THE OPENING WIP. THE LD. REPRESENTATIVE HAS EMPHASIZED THAT THE ARGUMENTS HAVE NOT BEEN ADJUDIC ATED BY THE CIT(A) AND ITA NO.1395/PN/2013 THEREFORE IT IS SUBMITTED THAT THE MATTER BE SET-AS IDE TO HIS FILE FOR A FRESH ADJUDICATION. 7. ALTHOUGH, THE LD. DEPARTMENTAL REPRESENTATIVE HA S RELIED ON THE ORDERS OF THE AUTHORITIES BELOW, HOWEVER, HE HAS NOT SERIO USLY DISPUTED THE PLEA OF THE ASSESSEE THAT THE MATTER TO BE REMANDED BACK TO THE FILE OF THE CIT(A) FOR ADJUDICATION AFRESH FOR THE REASON EXPLAINED ABOVE. 8. IN VIEW OF THE AFORESAID DISCUSSION, IN OUR VIEW , THE MATTER DESERVES TO BE REVISITED BY THE CIT(A) IN THE LIGHT OF THE SUBM ISSIONS PUT-FORTH BY THE ASSESSEE. THE MATTER IS REMITTED BACK TO THE FILE OF THE CIT(A), WHO SHALL PASS A SPEAKING ORDER AFTER TAKING INTO CONSIDERATION TH E SUBMISSIONS AND MATERIAL PUT-FORTH BY THE ASSESSEE BEFORE HIM IN ACCORDANCE WITH LAW. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER, 2014. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 26 TH NOVEMBER, 2014. SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT, KOLHAPUR; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE