M/s. Global Heritage Venture Ltd., New Delhi V. DCIT, New Delhi

ITA 1410/DEL/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3475 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 11-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDIC IAL MEMBER AN D SHRI A.N.MISSHRA, ACCOUNTANT ME MBER ITA NO.1410/DEL./2015, A.Y. :2010-11 GLOBAL HERITAGE VENTURE LTD. VS. DCIT (FORMERLY KNOWN AS KRISHNA BUILDWELL CENTRAL CI RCLE-7, AND DEVELOPERS PVTG. LTD.) ARA CENTRE, JHANDEWALAN EXTN. NEW DELHI NEW DELHI (PAN : AACCK9842M) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. SUDESH GARG, ADV. REVENUE BY : SMT. APARNA KARAN, CIT- D R DATE OF HEARING : 19.02.2019 DATE OF ORDER : 25 .02.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT GLOBAL HERITAGE VENTURE LTD. (HEREINAFTER REFERRED TO AS 'THE ASSESSEE') BY FILING THE AFORESAID APPEA L, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 22/12/2014 PASSED BY LD. COMMISSIONER OF INCOME TAX(A)-XXIV, NEW DELHI QUA THE ASSESSMENT Y EAR 2010-11 ON THE GROUNDS INTER ALIA THAT : ITA NO. 1410/DEL./2015 2 1. THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOL DING THAT THE CAPITAL WORK IN PROGRESS TO THE EXTENT OF RS. 6,54, 85,016/- WOULD BE REDUCED WHENEVER ANY DEPRECIATION IS CLAIMED ON THE ASSET TO BE CREATED OR WHENEVER THE ASSET IS ULTIMATELY TRAN SFERRED. 2. THE LD. CIT(A) HAS ERRED IN GIVING CREDENCE TO T HE OBSERVATIONS OF THE ASSESSING OFFICER IN SPITE OF GRAVE NON APPL ICATION OF MIND POINTED OUT BY THE APPELLANT IN ITS SUBMISSIONS. 3. THE LD. CIT(A) HAS ERRED IN UPHOLDING DISALLOWAN CE OF 1/5 TH OF THE EXPENSES MADE BY THE ASSESSING OFFICER ON ESTIM ATE BASIS WHOLLY ON ASSUMPTIONS & PRESUMPTIONS WITHOUT POINTI NG OUT ANY MISTAKE WHATSOEVER IN THE BOOKS OF ACCOUNTS MAINTAI NED BY THE APPELLANT WHICH WERE DULY AUDITED. 4. THE APPELLANT CRAVES FOR LIBERTY TO ADD FRESH GR OUND(S) OF APPEAL AND ALSO TO AMEND, ALTER, MODIFY ANY OF THE GROUNDS OF APPEAL. 2. BRIEFLY STATED THAT FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE COMPANY IS INTO THE BUSINESS OF CONSTRUCTION OF FIVE STAR HOTEL. IT IS THE CASE OF THE ASSESSEE THAT DUE TO SLOWDOWN IN THE CONSTRUCTION ACTIVITIES BECAUSE OF RECESSION IN THE REAL ESTATE MARKET, THE CONSTRUCTION ACTIVITIES WAS CON TINUED AND EXPENSES OF RS. 32.74 CRORE INCURRED IN RESPECT OF DEVELOPM ENT OF PROJECT HAS BEEN CAPITALIZED AS CAPITAL WORK IN PROGRESS. ON FA ILURE OF THE ASSESSEE TO FURNISH DETAIL OF EXPENSES I.E. BILLS, VOUCHERS, PU RCHASE BOOK, LEDGER A/C ETC. TO PROVE THE EXPENSES CAPITALIZED DURING THE Y EAR UNDER ASSESSMENT AO DISALLOWED 1/5 TH OF SUCH EXPENSES ON ESTIMATED BASIS AND THEREBY ITA NO. 1410/DEL./2015 3 MADE AN ADDITION OF RS. 6,54,85,016/- AND ASSESSED THE TOTAL INCOME F RS. 6,69,3,140/-. 3. ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A) BY WAY OF FILING THE APPEAL WHO HAS GIVEN PART RELIEF BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED THE ASSESSEE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. DR FOR THE REVENUE AND GON E THROUGH THE ORDER PASSED BY THE LOWER REVENUE AUTHORITY. 5. UNDISPUTEDLY THE ASSESSEE HAS CAPITALIZED RS. 32 .74 CRORE OUT OF EXPENSES DEBITED TO P & L ACCOUNT UNDER THE HEAD LESS EXPENSES TRANSFERRED TO CAPITAL WORK IN PROGRESS. HOWEVER, THE AO HAS DISALLOWED 1/5 TH OF SUCH EXPENSES ON FAILURE OF THE ASSESSEE TO FUR NISH DETAILS OF SUCH EXPENSES WHICH BILL, VOUCHERS PURCHASE BOOKS L EDGER ACCOUNT ETC. ON ESTIMATED BASIS. 6. HOWEVER, IT IS CASE OF THE ASSESSEE THAT THE ENT IRE DETAIL OF FINANCIAL BREAK UP WAS THERE IN THE SCHEDULE FORMIN G PART OF THE P & L ACCOUNT AS ON 31.03.2011 AVAILABLE AT PAGE 21 OF TH E PAPER BOOK. PERUSAL OF THE ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER PASSED BY THE LD. CIT (A) GO TO PROVE THAT THE ASSESSING OFFI CER HAS NOT DISPUTED THE EXPENSES OTHERWISE CAPITALIZED BY THE ASSESSEE DURING THE YEAR ITA NO. 1410/DEL./2015 4 UNDER ASSESSMENT BUT HAS DISALLOWED 1/5 TH THEREOF FOR WANT OF FURNISHING THE BILLS, VOUCHERS, PURCHASE BOOKS, LED GER ACCOUNT ETC. 7. WHEN WE EXAMINE THIS FACTS IN THE LIGHT OF THE F ACT THAT THE ASSESSEE INITIALLY APPEARED BEFORE THE AO AND FILED CERTAIN DETAILS WITH THE AO BUT SUBSEQUENTLY NONE-APPEARED ON BEHALF OF THE ASSESSEE TO ASSIST THE AO TO REACH THE LOGICAL CONCLUSION. SO I N THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT WHEN CLAIM OF TH E EXPENSES CAPITALIZED BY THE ASSESSEE HAS OTHERWISE NOT BEE N DISPUTED BY THE AO WHO HAS PROCEEDED TO DISALLOW 1/5 TH THEREOF ON THE BASIS OF ESTIMATION, OPPORTUNITY IS REQUIRED TO BE GIVEN TO THE ASSESSEE TO PRODUCE THE BILLS, VOUCHERS, PURCHASE BOOKS, LEDGER ACCOUNT ETC. TO PR OVE THE EXPENSES CAPITALIZED IN THE INTEREST OF JUSTICE. 8. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, IMPUGN ED ORDER PASSED BY AO/LD. CIT(A) IS SET ASIDE AND REMANDED BACK TO THE ASSESSING OFFICER TO DECIDE AFRESH AFTER PROVIDING OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. CONSEQUENTLY APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH FEBRUARY, 2019. SD/- SD/- (A.N.MISSHRA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 25.02.2019 ITA NO. 1410/DEL./2015 5 *BR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXVI, NEW DELHI. 5. CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI DATE OF DICTATION 18.02.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.02.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 25.02.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 25.02.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 25.02.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER