NEBULLA COMMERCIAL SERVICES P. LTD, MUMBAI V. I.T.O.10(2)(4), MUMBAI

ITA 1596/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92342 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 20-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 24-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORADR
• Assessee Lawyers: REEPAL TRALSHAWALA

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NOS.1592, 1594 AND 1596/MUM/2011 ASSESSMENT YEARS: 2003-04 TO 2006-07 M/S NEBULLA COMMERCIAL SERVICES P. LTD. 5, GR. FLOOR, K.K. SMRUTI, S.N. MEHTA ROAD, GHATKOPAR (W), MUMBAI-400080 / VS. ACIT-10(2), ROOM NO.474, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ( !' /ASSESSEE) ( # / REVENUE) P.A. NO. AAACI3124N !' / ASSESSEE BY SHRI REEPAL TRALSHAWALA # / REVENUE BY SHRI VIJAY KUMAR BORA-DR $ #% & '' / DATE OF HEARING 20/04/2015 & '' / DATE OF ORDER: 01/05/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) ALL THESE THREE APPEALS ARE BY THE ASSESSEE FOR AY 2003-04, 2005-06 AND 2006-07 AGAINST THE RESPECTIVE ORDER OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI, ALL M/S NEBULLA COMMERCIAL SERVICES P. LTD. 2 DATED 23/12/2010. FOR AY 2003-04 (ITA NO.1592/MUM /2011) GROUNDS NOS. 1 TO 3 PERTAINS TO NOT ACCEPTIN G THE PROJECT COMPLETION METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IN SUBSEQUENT YEARS AND INSTEAD ADOPTING PERCENTAGE COMPLETION METHOD OF ACCOUNTING AND CONSEQUENT, ESTIMATING GROSS PROFIT OF THE PROJECT, WITHOUT APPRECIATING THE FACT THAT THE PROJECT COMPRISES TW ELVE BUILDINGS AND THE PROFITS WERE BASED ON ESTIMATION. WITHOUT PREJUDICE (GROUND NOS.4 AND 5) THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF DEDUCTION U/S 80IB(10) O F THE ACT. IN ITA NO.1594/MUM/2011 (AY 2005-06) AND ITA NO.1596/MUM/2011 (AY 2006-07) IDENTICAL GROUNDS HAV E BEEN RAISED. 2. DURING HEARING OF THESE APPEALS, THE LD. COUNSE L FOR THE ASSESSEE, SHRI REEPAL TRALSHWALA, ADVANCED HIS ARGUMENTS, WHICH ARE IDENTICAL TO THE GROUND RAISED BY INVITING OUR ATTENTION TO PAGE 157 OF THE PAPER BOO K, CONTAINING REMAND REPORT. IT WAS ALSO PLEADED THAT AREA OF THE PROPERTY IS MORE THAN ONE ACRES AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFI ED IN NOT FOLLOWING THE DECISION IN THE CASE OF BANDANA PROPERTIES VS ACIT 128 TTJ 89 (MUMBAI TRIBUNAL), WHEREIN IT WAS HELD THAT EACH BUILDING IS A HOUSING PROJECT IN ITSELF, MORE SPECIFICALLY, WHEN THE FACTS OF THE PRESENT APPEAL ARE IDENTICAL. ON THE OTHER HAND, SHRI VIJA Y KUMAR BORA, LD. DR, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDERS BY SUPPORTING THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). M/S NEBULLA COMMERCIAL SERVICES P. LTD. 3 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE IS IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL PROJECTS. THE ASSESSEE CLAIMED DEDUCTION U/S 80IB(10) OF THE ACT. THE LD. ASSESSIN G OFFICER DENIED THE DEDUCTION ON THE GROUND THAT THE ASSESSEE CHANGED THE SYSTEM OF ACCOUNTING FROM PERCENTAGE COMPLETION METHOD TO PROJECT COMPLETION METHOD. THE STAND OF THE ASSESSEE, BEFORE THE ASSE SSING OFFICER, WAS THAT IT WAS DUE TO CHANGES IN ACCOUNTI NG STANDARD 7 AS THE SAME WAS MANDATORY FOR THE ASSESS EE BY VIRTUE OF SECTION 211 OF THE COMPANIES ACT, 1956 . THE ASSESSING OFFICER ASSESSED THE INCOME AT RS.30,82,7 09/- (AY 2003-04) CONSIDERING BROUGHT FORWARD LOSSES. T HE LD. ASSESSING OFFICER, PLACING RELIANCE ON SECTION 145A DID NOT ACCEPT THE CHANGE IN THE ACCOUNTING SYSTEM FROM PERCENTAGE TO PROJECT COMPLETION METHOD. DUE TO CH ANGE IN THE SYSTEM, THE AUDITOR IN HIS REPORT IN FORM NO .3CD, EXPRESSED HIS VIEW THAT IF THERE WAS NO CHANGE IN M ETHOD, THE GROSS PROFIT WOULD HAVE BEEN RS.29,39,245/-. THE STAND OF THE ASSESSEE WAS THAT THE ASSESSING OFFICE R LOST SIGHT THAT ITEM THOSE SPECIFIED IN 3CD IS NOT THE P ROFIT EARNED BY THE ASSESSEE. WE HAVE PERUSED THE RECORD AND FIND THAT (PAGES 95 AND 96 OF THE PAPER-BOOK), ASSE SSEE HAS NOT OFFERED ANY INCOME FOR AY 2005-06 AND FROM PAGE 111 (AY 2006-07), NO GROSS PROFIT WAS DECLARED. LI KEWISE, AY 2006-07 (TRADING ACCOUNT AT PAGE 113) THERE IS N O QUANTIFICATION BY THE AUDITOR AND NO GP WAS MENTION ED, M/S NEBULLA COMMERCIAL SERVICES P. LTD. 4 THUS, WE FIND MERIT IN THE ARGUMENTS OF THE ASSESSE E, CONSEQUENTLY, ALL THESE FILES ARE REMANDED BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF TH E ASSESSEE AND DECIDE THE APPEALS AFRESH IN ACCORDANC E WITH LAW. THE ASSESSEE BE GIVEN OPPORTUNITY OF BEING HE ARD WITH FURTHER LIBERTY TO FURNISH EVIDENCE, IF ANY, T O SUBSTANTIATE ITS CLAIM. THUS, ALL THE APPEALS OF T HE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES ONLY. FINALLY, THE APPEALS OF THE ASSESSEE ARE ALLOWED FO R STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE OF BOTH SIDES, AT TH E CONCLUSION OF HEARING ON 20/04/2015. SD/- SD/- ( R.C.SHARMA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER $ % MUMBAI; ) DATED : 01/05/2015 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. +,-. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. $ 1' ( +, ) / THE CIT, MUMBAI. P4. $ 1' / CIT(A)- , MUMBAI 5. 3# 4 /' , +,' + 5 , $ % / DR, ITAT, MUMBAI 6. 6 7% / GUARD FILE. / BY ORDER, 03,' /' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI