DCIT, Circle - 8(1), KOLKATA, Kolkata V. M/s. Ashiana Homes Pvt. Ltd., Kolkata

ITA 1677/KOL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4775 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 03-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Assessee Lawyers: ARVIND AGARWAL
• Section: 143(3); 115JB; 201; 13; 22; 145; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI S.S.GODARA, JM &DR. A.L.SAINI, AM ./ITA NO.1677/KOL/2018 ( / ASSESSMENT YEAR:2011-12) DCIT, CIRCLE-8(1), KOLKATA VS. M/S ASHIANA HOMES PVT. LTD. 5F, EVEREST 46C, J.L. NEHRU ROAD, KOLKATA-71. ./ ./PAN/GIR NO.: AACCA 1100 E (APPELLANT) .. (RESPONDENT) APPELLANT BY : SHRI RADHEY SHYAM, CIT RESPONDENT BY :SHRI ARVIND AGARWAL, ADVOCATE & SHRI RAJAT AGARWAL, FCA / DATE OF HEARING : 17/12/2019 /DATE OF PRONOUNCEMENT : 21/02/2020 / O R D E R PER DR. A.L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERT AINING TO ASSESSMENT YEAR 2011-12, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-3, KOLKATA IN APPEAL NO. CIT(A), KOLKATA-3 /10990/16-17, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASS ESSING OFFICER U/S 263 / 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 23/12/2016. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: 1.THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN ALLOWING THE FUTURE DEVELOPMENT EXPENSE AM OUNTING TO RS. 3,00,00,000/- BY IGNORING THE FACT THAT THE SAID EX PENSE WAS PROVISION FOR UNASCERTAINED LIABILITY. M/S ASHIANA HOMES PVT. LTD. ITA NO.1677/KOL/2018 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 2 22 2 2. THAT THE APPELLANT RESERVES THE RIGHT TO AMEND, ALTER OR ADD TO ANY GROUND(S) OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE A PPEAL. 3. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE SC RUTINY PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD CLAIMED EXPENSES IN ITS PROFIT AND LOSS ACCOUNT OF RS. 3,00,00,000/- ON ACCOUNT OF FUTURE DEVELOPMENT EXPENSESWHICH IS IN THE NATURE OF PROVISION. THE A SSESSING OFFICER WAS OF THE VIEW THAT FURTHER DEVELOPMENT EXPENSES ARE IN THE NATURE OF PROVISION AND UNASCERTAINED LIABILITY THEREFORE IT SHOULD BE DISA LLOWED. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH EXPLANATION. IN RESPO NSE, THE ASSESSEE SUBMITTED THE BREAK UP OF RS. 3,00,00,000/- AS PROVIDED FOR I N THE ACCOUNTS IN AY 2011- 12 AND THE CORRESPONDING COST INCURRED IN THE FUTUR E YEARS AGAINST SUCH PROVISIONS WHICH WAS AMOUNTING TO RS. 3,84,81,000. THE ASSESSEE FURTHER SUBMITTED THAT THE COSTS ARE ALWAYS ASCERTAINED IN NATURE AND NOT UNASCERTAINED. THE ASSESSEE FURTHER SUBMITTED THAT WHERE THE SALES FOR A PARTICULAR PHASE IS ACCOUNTED FOR IN 2 YEARS, IF SUCH PREVISIONS ARE NO T MADE FOR THE ASCERTAINED COSTS TO BE INCURRED IN FUTURE, THE COST OF SALES C ANNOT BE RIGHTLY WORKED OUT FOR SALES OFFERED IN THE FIRST YEAR. 4. HOWEVER, ASSESSING OFFICER REJECTED THE CONTENTI ON OF THE ASSESSEE AND OBSERVED THAT THE EXPENSES HAVE NOT BEEN CRYSTALLIZED DURING THE YEAR. THE PROVISION FOR FUTURE DEVELOPMENT AMOUNTING TO RS. 3,00,00,000/- WAS MADE BY THE ASSESSEE RELATING TO THE PROJECT 'PALM COURT'. THE ASSESSEE IS FOLLOWING MER CANTILE SYSTEM OF ACCOUNTING. IN THIS SYSTEM OF ACCOUNTING, ONLY CRYSTALLIZED LIABIL ITY IS ALLOWABLE AND UNASCERTAINED LIABILITY COULD NOT BE ALLOWED. THE PROVISION MADE BY THE ASSESSEE DURING THE YEAR IS JUST AN ESTIMATE WHICH COULD NOT BE TERMED AS ASCER TAINED LIABILITY. THEREFORE, THE PROVISION FOR UNASCERTAINED LIABILITY AMOUNTING TO RS. 3,00,00,000/- WAS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE UNDER THE NORMAL PROVISIONS AS WELL AS UNDER SECTION 115JB OF THE ACT. 5 . AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE AD DITION MADE BY THE ASSESSING OFFICER OBSERVING THE FOLLO I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE C AREFULLY. THE ONLY ISSUE IN THIS APPEAL IS DISALLOWANCE OF RS. 3.00,00.000/ DEVELOPMENT EXPENSES BY TREATING THEM AS CONTINGENT IN NATURE. THE MAIN CONTENTION O F THE AO WAS THAT THE APPELLANT IS FOLLOWING MERCAN TILE SYSTEM OF ACCOUNTING AND UNDER THIS SYSTEM ONLY THOSE LIABILITY WHICH HAD CR YSTALLIZED WERE ALLOWABLE AS AN EXPENSE. THE AO WAS OF THE OPINION THAT THE ESTIMAT ED LIABILITY CANNOT BE TREATED AS AN ASCE RTAINED LIABILITY AS THE EXPENDITURE TREATED THE FUTURE DEVELOPMENT EXPENSES AS UNASCERT AINED LIABILITY AND DISALLOWED THE SAME. IT HAS SUBMITTED BEFORE ME THAT FUTURE DEVELOPMENT EXPENSES COMPRISES OF COSTS WHICH ARE DULY ASCERTAINED BUT NOT INCURRED AT THE TIME OF HANDING OVER POSSESSION OF THE COMPLETED FLATS CONTRACTU AL BASED ON THE AGREEMENT SIGNED WITH THE BUYERS. S UCH EXPENSES MOSTLY RELATE TO COMMON FACILITIES LIKE ELECTRIC WORK. COM MON FLOORING. PAINTING WORK. CLUB HOUSE. SEWERAGE TREATMENT PLANT, AND FIRE FIGHTING EQUIPMENTS ETC. IT WAS FURTHER SUBMITTED AS THE R EVENUE WITH RESPECT TO THE SOLD FLATS HAVE ALREADY BEEN REALIZED AND BOOKED IN THE SALES ACCOUNT: THESE COSTS NEED TO BE ALLOCATED AMONGST ALL THE FLATS THE POSSESSION OF WHICH IS HANDED OVER DURING THE FINAN CIAL YEAR. IT WAS FURTHER SUBMITTED THAT THE EX NATURE. THE COST OF SUCH UNFINISHED WORK IS ASCERTA INED ON THE BASIS OF PURCHASE ORDERS PLACED ON VENDORS AND ORDERS PLACED ON SERVI CE SUPPLIERS. THE COMPUTATION OF SUCH EXPENSES IS SUPPORTED BY SANCTION PLAN, REQUIREMENTS OF MATERIALS & MADE FOR FUTURE EXPENSES IS IN ACCORDANCE WITH THE AS CONTAINED IN ICDS ASSESSEE HAS CONSISTENTLY BEEN FOLLOWING THE SAME M ETHOD O OF YEARS. IT IS SUBMITTED THAT NO SUCH DISALLOWANCE OUT OF FUTURE DEVELOPMENT EXPENSES WERE MADE IN THE SCRUTINY ORDERS PASSED BY THE 14-15 . THE A/R OF THE APPELLANT PLACED RELIANCE ON THE DEC ISION IN THE CASE OF CONSULTING ENGINEERING SERVICES (INDIA) LIMITED. 25 0 ITR 849 (DELH PROPOSITION THAT 'WHERE A SYSTEM OF ACCOUNTIN EXPENSES) IS CONSISTENTLY ADOPTED AND /ALLOWED THE SAME CANNOT HE ALTERED IN SUBSEQUENT YEARS'. IN THIS CASE BEFORE ANALYZING THE ISSUE THE METHODO LOGY ADOPTED FOR COMPUTING THE FUTURE DEVELOPMENT EXPENSES REQUIRES TO PROPORTIONATE AMOUNT OF FUTURE EXPENSES DEBITED TO THE P/L ACCOUNT IS BASED ON THE PERCENTAGE OF INVENTORY SOLD DURING THE YEAR. IN TH IS RESPECT THE COMPUTATION, PROJECT WISE IS DEPICTED IN THE TABLE BELOW: ASSESSMENT YEAR: . AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE AD DITION MADE BY THE ASSESSING OFFICER OBSERVING THE FOLLO WING: I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE C AREFULLY. THE ONLY ISSUE IN THIS APPEAL IS DISALLOWANCE OF RS. 3.00,00.000/ - MADE BY THE AO ON ACCOUNT OF FUTURE DEVELOPMENT EXPENSES BY TREATING THEM AS CONTINGENT IN NATURE. THE MAIN CONTENTION F THE AO WAS THAT THE APPELLANT IS FOLLOWING MERCAN TILE SYSTEM OF ACCOUNTING AND UNDER THIS SYSTEM ONLY THOSE LIABILITY WHICH HAD CR YSTALLIZED WERE ALLOWABLE AS AN EXPENSE. THE AO WAS OF THE OPINION THAT THE ESTIMAT ED LIABILITY CANNOT BE TREATED AS AN RTAINED LIABILITY AS THE EXPENDITURE H AS NOT ACTUALLY BEEN INCURRED. HE THEREFORE TREATED THE FUTURE DEVELOPMENT EXPENSES AS UNASCERT AINED LIABILITY AND DISALLOWED THE IT HAS SUBMITTED BEFORE ME THAT FUTURE DEVELOPMENT EXPENSES COMPRISES OF COSTS WHICH ARE DULY ASCERTAINED BUT NOT INCURRED AT THE TIME OF HANDING OVER POSSESSION OF FLATS TO THE BUYERS. HOWEVER THE LIABILITIES FOR THESE EX PENSES ARE AL BASED ON THE AGREEMENT SIGNED WITH THE BUYERS. S UCH EXPENSES MOSTLY RELATE TO COMMON FACILITIES LIKE ELECTRIC WORK. COM MON FLOORING. PAINTING WORK. CLUB HOUSE. SEWERAGE TREATMENT PLANT, AND FIRE FIGHTING EQUIPMENTS ETC. IT WAS FURTHER EVENUE WITH RESPECT TO THE SOLD FLATS HAVE ALREADY BEEN REALIZED AND BOOKED IN THE SALES ACCOUNT: THESE COSTS NEED TO BE ALLOCATED AMONGST ALL THE FLATS THE POSSESSION OF WHICH IS HANDED OVER DURING THE FINAN CIAL YEAR. IT WAS FURTHER SUBMITTED THAT THE EX PENSES ARE NOT UNASCERTAINED AND CONTINGENT IN NATURE. THE COST OF SUCH UNFINISHED WORK IS ASCERTA INED ON THE BASIS OF PURCHASE ORDERS PLACED ON VENDORS AND ORDERS PLACED ON SERVI CE SUPPLIERS. THE COMPUTATION OF SUCH EXPENSES IS SUPPORTED BY SANCTION PLAN, PROJECT ENGINEERS' DRAWINGS AND REQUIREMENTS OF MATERIALS & LABOUR ETC. ACCORDINGLY IT WAS STATED THAT THE PROV ISION MADE FOR FUTURE EXPENSES IS IN ACCORDANCE WITH THE AS - 29 AND SIMILAR PROVISIONS ICDS -X UNDER SEC 145 OF THE ACT.IT WAS FURTHE ASSESSEE HAS CONSISTENTLY BEEN FOLLOWING THE SAME M ETHOD O F ACCOUNTING OF YEARS. IT IS SUBMITTED THAT NO SUCH DISALLOWANCE OUT OF FUTURE DEVELOPMENT EXPENSES WERE MADE IN THE SCRUTINY ORDERS PASSED BY THE AO FOR ASST. YR. THE A/R OF THE APPELLANT PLACED RELIANCE ON THE DEC ISION IN THE CASE OF CONSULTING ENGINEERING SERVICES (INDIA) LIMITED. 25 0 ITR 849 (DELH 'WHERE A SYSTEM OF ACCOUNTIN G (WHICH INCLUDES ALLOCATION OF INDIRECT EXPENSES) IS CONSISTENTLY ADOPTED AND /ALLOWED THE SAME CANNOT HE ALTERED IN IN THIS CASE BEFORE ANALYZING THE ISSUE THE METHODO LOGY ADOPTED FOR COMPUTING THE FUTURE DEVELOPMENT EXPENSES REQUIRES TO BE SEEN, IT WAS STATED THAT PROPORTIONATE AMOUNT OF FUTURE EXPENSES DEBITED TO THE P/L ACCOUNT IS BASED ON THE PERCENTAGE OF INVENTORY SOLD DURING THE YEAR. IN TH IS RESPECT THE COMPUTATION, PROJECT WISE IS DEPICTED IN THE TABLE BELOW: M/S ASHIANA HOMES PVT. LTD. ITA NO.1677/KOL/2018 ASSESSMENT YEAR: 2011-12 P PP PA AA AG GG GE EE E | || | 3 33 3 . AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE AD DITION MADE BY THE ASSESSING I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESSEE C AREFULLY. THE ONLY ISSUE IN THIS MADE BY THE AO ON ACCOUNT OF FUTURE DEVELOPMENT EXPENSES BY TREATING THEM AS CONTINGENT IN NATURE. THE MAIN CONTENTION F THE AO WAS THAT THE APPELLANT IS FOLLOWING MERCAN TILE SYSTEM OF ACCOUNTING AND UNDER THIS SYSTEM ONLY THOSE LIABILITY WHICH HAD CR YSTALLIZED WERE ALLOWABLE AS AN EXPENSE. THE AO WAS OF THE OPINION THAT THE ESTIMAT ED LIABILITY CANNOT BE TREATED AS AN AS NOT ACTUALLY BEEN INCURRED. HE THEREFORE TREATED THE FUTURE DEVELOPMENT EXPENSES AS UNASCERT AINED LIABILITY AND DISALLOWED THE IT HAS SUBMITTED BEFORE ME THAT FUTURE DEVELOPMENT EXPENSES COMPRISES OF COSTS WHICH ARE DULY ASCERTAINED BUT NOT INCURRED AT THE TIME OF HANDING OVER POSSESSION OF TO THE BUYERS. HOWEVER THE LIABILITIES FOR THESE EX PENSES ARE AL BASED ON THE AGREEMENT SIGNED WITH THE BUYERS. S UCH EXPENSES MOSTLY RELATE TO COMMON FACILITIES LIKE ELECTRIC WORK. COM MON FLOORING. PAINTING WORK. CLUB HOUSE. SEWERAGE TREATMENT PLANT, AND FIRE FIGHTING EQUIPMENTS ETC. IT WAS FURTHER EVENUE WITH RESPECT TO THE SOLD FLATS HAVE ALREADY BEEN REALIZED AND BOOKED IN THE SALES ACCOUNT: THESE COSTS NEED TO BE ALLOCATED AMONGST ALL THE FLATS THE PENSES ARE NOT UNASCERTAINED AND CONTINGENT IN NATURE. THE COST OF SUCH UNFINISHED WORK IS ASCERTA INED ON THE BASIS OF PURCHASE ORDERS PLACED ON VENDORS AND ORDERS PLACED ON SERVI CE SUPPLIERS. THE COMPUTATION OF PROJECT ENGINEERS' DRAWINGS AND LABOUR ETC. ACCORDINGLY IT WAS STATED THAT THE PROV ISION 29 AND SIMILAR PROVISIONS 145 OF THE ACT.IT WAS FURTHE R SUBMITTED THAT THE ACCOUNTING FOR A NUMBER OF YEARS. IT IS SUBMITTED THAT NO SUCH DISALLOWANCE OUT OF FUTURE DEVELOPMENT EXPENSES FOR ASST. YR. 20 12-13. 13- 14 AND THE A/R OF THE APPELLANT PLACED RELIANCE ON THE DEC ISION IN THE CASE OF CONSULTING ENGINEERING SERVICES (INDIA) LIMITED. 25 0 ITR 849 (DELH I) FOR THE (WHICH INCLUDES ALLOCATION OF INDIRECT EXPENSES) IS CONSISTENTLY ADOPTED AND /ALLOWED THE SAME CANNOT HE ALTERED IN IN THIS CASE BEFORE ANALYZING THE ISSUE THE METHODO LOGY ADOPTED FOR BE SEEN, IT WAS STATED THAT PROPORTIONATE AMOUNT OF FUTURE EXPENSES DEBITED TO THE P/L ACCOUNT IS BASED ON THE PERCENTAGE OF INVENTORY SOLD DURING THE YEAR. IN TH IS RESPECT THE COMPUTATION, PROJECT THE ALLOCATION OF ABOVE EXPENSE IS DEBITED TO P/L A CCOUNT ON THE BASIS OF SALES MADE IS SHOWN BELOW: FROM THE ABOVE TABLE IT CAN BE SEEN THAT ONLY AN AM OUNT OF RS. 76 DEBITED TO THE P/L ACCOUNT. THE EXPENSES WITH RESPE CT TO VILLAGE C CHARGED TO THE P/L ACCOUNT AS IT HAS BEEN REFLECTED AS AN INVESTMENT. THEREFORE THE FUTURE DEVELOPMENT EXPENSES CAPITALIZED DURING THE YEAR IS RS. 2.22.62.626 WHICH IS PROPORTIONATE TO THE INVENTORY OF UNSOLD FLATS. ONL Y TO THE EXTENT THE F SOLD, THE REVENUE REALIZED, THERE BEING A CONTRACTU AL LIABILITY THE PROPORTIONATE EXPENSES HAVE BEEN CHARGED TO THE PROFIT AND LOSS A CCOUNT. THIS HAS BEEN CONSISTENTLY DONE ON THE ACCOUNTING PRINCIPLE AS PROVISIONS. ON THESE FACTS IT IS TO BE SEEN WHETHER THE EXPENSES ARE ALLOWABLE OR NOT. IN THIS REGARD THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION IN THE CASE OF MAYURA INFRASTRUCTURE DEVELOPMENT COMPANY 2012- 14. ORDER DATED: 25/04/2017. WHERE THEISSUE BEFORE THE HO REGARDING FUTUR E DEVELOPMENT EXPENSES. THE HON ISSUE AND HAS HELD AS UNDER: -HELD, (I) THAT FROM THE DALES OF THE DEEDS OF SALE (WHICH, IN VIEW OF THE FACT DIAL LONE WAS NOT OF THE ESSENCE O APPELLANT BINDING ITSELF ABSO IMPORTED A LIABILITY ON THE APPELLANT WHICH ACCRUED ON THE SALE, THOUGH THAT LIABILITY WAS TO BE DISCHARGED AT A FUTURE DALE IT WAS THUS AN ACCRUED LIABILITY AND THE ESTIMATED EXPENDITURE DISCHARGING THE SAME COULD BUSINESS, AND THE AMOUNT TO BE EXPENDED COULD BE DE BITED IN ACCOUNTS MAINTAINED IN THE MERCANTILE SYSTEM OF ACCOUNTING B EFORE IT WAS ACTUALLY DISBURSED . TH LIABILITY INTO AUTHORITIES CONCERNED TO ARRIVE AT A PROPER ESTIMAT E THEREOF HAVING REGARD ALL THE CIRCUMSTANCES OF THE CA ASSESSMENT YEAR: THE ALLOCATION OF ABOVE EXPENSE IS DEBITED TO P/L A CCOUNT ON THE BASIS OF SALES MADE FROM THE ABOVE TABLE IT CAN BE SEEN THAT ONLY AN AM OUNT OF RS. 76 DEBITED TO THE P/L ACCOUNT. THE EXPENSES WITH RESPE CT TO VILLAGE C CHARGED TO THE P/L ACCOUNT AS IT HAS BEEN REFLECTED AS AN INVESTMENT. THEREFORE THE FUTURE DEVELOPMENT EXPENSES CAPITALIZED DURING THE YEAR IS RS. 2.22.62.626 WHICH IS PROPORTIONATE TO THE INVENTORY OF UNSOLD FLATS. ONL Y TO THE EXTENT THE F SOLD, THE REVENUE REALIZED, THERE BEING A CONTRACTU AL LIABILITY THE PROPORTIONATE EXPENSES HAVE BEEN CHARGED TO THE PROFIT AND LOSS A CCOUNT. THIS HAS BEEN CONSISTENTLY DONE ON THE ACCOUNTING PRINCIPLE AS - 29 WHICH IS NOW RECOGNIZED IN THE 1CD PROVISIONS. ON THESE FACTS IT IS TO BE SEEN WHETHER THE EXPENSES ARE ALLOWABLE OR NOT. IN THIS REGARD THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION IN THE CASE OF MAYURA DEVELOPMENT COMPANY - ITA NO.873 & 874/JP/2016 A.Y. 201 1 14. ORDER DATED: 25/04/2017. WHERE THEISSUE BEFORE THE HO E DEVELOPMENT EXPENSES. THE HON BLE TRIBUNAL HAS ISSUE AND HAS HELD AS UNDER: THAT THE UNDERTAKING TO CURRY MIL THE DEVELOPMENTS WITHI N SIX MONTHS FROM THE DALES OF THE DEEDS OF SALE (WHICH, IN VIEW OF THE FACT DIAL LONE WAS NOT OF THE ESSENCE O F THE CONTRACT. MEANT A REASONABLE TIME) WAS UNCONDIT IONAL, THE APPELLANT BINDING ITSELF ABSO LUTELY TO CARRY OUT THE SAME. THAT UNDERTAKING IMPORTED A LIABILITY ON THE APPELLANT WHICH ACCRUED ON THE SALE, THOUGH THAT LIABILITY WAS TO BE DISCHARGED AT A FUTURE DALE IT WAS THUS AN ACCRUED LIABILITY AND THE ESTIMATED EXPENDITURE WHICH WOULD BE INCURRED IN DISCHARGING THE SAME COULD B E DEDUCTED FROM THE PROFITS AND GAINS OF THE BUSINESS, AND THE AMOUNT TO BE EXPENDED COULD BE DE BITED IN ACCOUNTS MAINTAINED IN THE MERCANTILE SYSTEM OF ACCOUNTING B EFORE IT WAS ACTUALLY . TH E DIFFICULTY IN THE ESTIMATION THEREOF DID NOT CONVERT THE ACCRU ED LIABILITY INTO THE CONDITIONAL ONE, BECAUSE IT WAS ALWAYS OPEN TO THE INCOME AUTHORITIES CONCERNED TO ARRIVE AT A PROPER ESTIMAT E THEREOF HAVING REGARD ALL THE CIRCUMSTANCES OF THE CA SE M/S ASHIANA HOMES PVT. LTD. ITA NO.1677/KOL/2018 ASSESSMENT YEAR: 2011-12 P PP PA AA AG GG GE EE E | || | 4 44 4 THE ALLOCATION OF ABOVE EXPENSE IS DEBITED TO P/L A CCOUNT ON THE BASIS OF SALES MADE FROM THE ABOVE TABLE IT CAN BE SEEN THAT ONLY AN AM OUNT OF RS. 76 ,26.264/- HAS BEEN DEBITED TO THE P/L ACCOUNT. THE EXPENSES WITH RESPE CT TO VILLAGE C ENTRE WAS NEVER CHARGED TO THE P/L ACCOUNT AS IT HAS BEEN REFLECTED AS AN INVESTMENT. THEREFORE THE FUTURE DEVELOPMENT EXPENSES CAPITALIZED DURING THE YEAR IS RS. 2.22.62.626 WHICH IS PROPORTIONATE TO THE INVENTORY OF UNSOLD FLATS. ONL Y TO THE EXTENT THE F LATS HAVE BEEN SOLD, THE REVENUE REALIZED, THERE BEING A CONTRACTU AL LIABILITY THE PROPORTIONATE EXPENSES HAVE BEEN CHARGED TO THE PROFIT AND LOSS A CCOUNT. THIS HAS BEEN CONSISTENTLY 29 WHICH IS NOW RECOGNIZED IN THE 1CD S PROVISIONS. ON THESE FACTS IT IS TO BE SEEN WHETHER THE EXPENSES ARE ALLOWABLE OR NOT. IN THIS REGARD THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION IN THE CASE OF MAYURA & 874/JP/2016 A.Y. 201 1 -12 & 14. ORDER DATED: 25/04/2017. WHERE THEISSUE BEFORE THE HO NBLE TRIBUNAL WAS BLE TRIBUNAL HAS CONSIDERED THE THE UNDERTAKING TO CURRY MIL THE DEVELOPMENTS WITHI N SIX MONTHS FROM THE DALES OF THE DEEDS OF SALE (WHICH, IN VIEW OF THE FACT DIAL LONE WAS NOT THE CONTRACT. MEANT A REASONABLE TIME) WAS UNCONDIT IONAL, THE LUTELY TO CARRY OUT THE SAME. THAT UNDERTAKING IMPORTED A LIABILITY ON THE APPELLANT WHICH ACCRUED ON THE DATES OF THE DEEDS OF SALE, THOUGH THAT LIABILITY WAS TO BE DISCHARGED AT A FUTURE DALE IT WAS THUS AN WHICH WOULD BE INCURRED IN E DEDUCTED FROM THE PROFITS AND GAINS OF THE BUSINESS, AND THE AMOUNT TO BE EXPENDED COULD BE DE BITED IN ACCOUNTS MAINTAINED IN THE MERCANTILE SYSTEM OF ACCOUNTING B EFORE IT WAS ACTUALLY IN THE ESTIMATION THEREOF DID NOT CONVERT THE ACCRU ED BECAUSE IT WAS ALWAYS OPEN TO THE INCOME -TAX AUTHORITIES CONCERNED TO ARRIVE AT A PROPER ESTIMAT E THEREOF HAVING REGARD TO M/S ASHIANA HOMES PVT. LTD. ITA NO.1677/KOL/2018 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 5 55 5 (II) THAT THE SUM OF RS 24,809 REPRESENTED THE EST IMATED AMOUNT WHICH WOULD HAVE TO BE EXPENDED BY THE ASSESSEE IN THE COURSE O F CARRYING ON ITS BUSINESS ANDWAS INCIDENTAL TO THE BUSINESS AND, HAVING REGAR D TO THE ACCEPTED COMMERCIAL PRACTICE AND TRADING PRINCIPLES, WAS A D EDUCTION WHICH, IF THERE WAS NO SPECIFIC PROVISION FOR IT UNDER SECTION 10(2 ) OF THE INCOME-TAX ACT. WAS CERTAINLY AN ALLOWABLE DEDUCTION, IN ARRIVING AT TH E PROFITS AND GAINS OF THE BUSINESS OF THE APPELLANT, UNDER SECTION 10(1) OF T HE ACT, THERE BEING NO PROHIBITION AGAINST ITEXPRESS OR IMPLIED, IN THE AC T, 10 ITA 873 & 874/JP/2016 ACIT VS. MAYURA INFRASTRUCTURE DEVLP. CO. THE EXPRE SSION 'PROFITS OR GAINS' IN SECTION 10(1) OF THE INCOME-TAX ACT HAS TO BE UN DERSTOOD IN ITS COMMERCIAL SENSE AND THERE CAN BE NO COMPUTATION OF SUCH PROFI TS AND GAINS UNTIL THE EXPENDITURE WHICH IS NECESSARY FOR THE PURPOSE OF E ARNING THE RECEIPTS IS DEDUCTED THERE FROM-WHETHER THE EXPENDITURE IS ACTU ALLY INCURRED OR THE LIABILITY IN RESPECT THEREOF HAS ACCRUED EVEN THOUG H IT MAY HAVE TO BE DISCHARGED AT SOME FUTURE DATE IN VIEWOF THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE ABOVE JUDGMENTS, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE ID. CIT(A). THEREFORE, REVENUE'S APPEA L BEING ITA NO. 873/JP/2016 STANDS DISMISSED. ' IT IS OBSERVED IN THE ABOVE ORDER THAT IT HAS BEEN HELD THAT THE CLAIM OF THE EXPENDITURE, FOR WHICH THE PROVISION WAS MADE, WAS HAVING DIRECT NEXUS WITH THE INCOME, AS DECLARED BY THE ASSESSEE. THEREFORE, SUC H PROVISION MADE BY THE ASSESSEE WAS ALLOWABLE DURING THE YEAR UNDER CONSIDERATION. IN THE IMPUGNED CASE ALSO IT IS SEEN THAT THERE IS DIRECT NEXUS WITH THE INCOME BOO KED IN THE P/L ACCOUNT AND THE EXPENDITURE ALLOCATED. FURTHER, THE ASSESSEE HAS PLACED RELIANCE ON THE DE CISION IN THE CASE OF RANKA COLONIZERS PVT. LTD. ITA NO-787/JP/2016. ORDER DATE D: 24/03/2017 WHERE THE ISSUE BEFORE THE HON'BLE TRIBUNAL WAS REGARDING PROVISION FOR FUTURE DEVELOPMENT EXPENSES. THE HON'BLE TRIBUNAL HAS CONSIDERED THE ISSUE AND H AS HELD AS UNDER: IT IS FURTHER SUBMITTED THAT THE ASSESSEE HAS SHOW N FULFILLMENT OF THREE ELEMENTS OF THE REASONABLENESS OF THE PROVISION II) HONESTY OF PROVISIONING OF EXPENSES (III) A FAIR BASIS, ESTIMATION OF EXPENSES FOR MAKING PROVISIONS. IT IS ALSO A FACT THAT THE AO HAS NOT BROUGHT ANY MATERIA L TO SHOW THAT THE PROVISION MADEBYTHE ASSESSEE IS EXCESSIVE, FURTHER. AO HAS EX AMINED THE BOOKS OF ACCOUNTBUT BOOKS OF ACCOUNT WERE NOT REJECTED BY HI M. IT IS SUBMITTED THAT THE ASSESSEE HAS FILED COMPLETE DETAILS OF ACTUAL EXPEN SES AND THE AO HAS VERIFIED THE SAME WITH VOUCHERS AND NO DEFICIENCY HAS BEEN P OINTED OUT BY HIM. THE PROVISION FOR THE DEVELOPMENT EXPENSES WERE MADE AT THE SAME RATE WHICH WAS APPLIED BY THE ASSESSEE IN PREVIOUS YEAR. THEREFOR E, IN VIEWOF FACTS AND CIRCUMSTANCES OF THE EASE AS WELL AS RESPECTFULLY B ILLOWING ABOVE CASE LAWS, ADDITION OF RS. 62,67,210/- MADE BY THE ASSESSING O FFICER IN TOTAL INCOME OF THE ASSESSEE BY DISALLOWING 'PROVISION MADE FOR DEV ELOPMENT EXPENSES IS HEREBY DELETED ASSESSEE'S APPEAL STANDS ALLOWED. FURTHER THE ASSESSEE HAS PLACED RELIANCE ON THE DEC ISION IN THE CASE OF M/S. GREEN TRIVENI DEVELOPERS ITA NO. 304/JP/20I6 A Y. 2012- 13 - DATE OF PRONOUNCEMENT: 27/09/2016. THE FACTS OF THE CASE AND THE FINDINGS OF THE HONBLE TRIBUNAL SUMMARIZED IN SHORT ARE AS FOLLOWS: M/S ASHIANA HOMES PVT. LTD. ITA NO.1677/KOL/2018 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 6 66 6 ISSUE: DISALLOWANCE OF THE PROVISION FOR DEVELOPME NT EXPENSES OF RS. 43,23,423/- FACTS: THE AO DISALLOWED THE PROVISION FOR DEVELOP MENT EXPENSES ON ACCOUNT OF IT ONLY BEING A PROVISION AND THE EXPENDITURE N OT ACTUALLY INCURRED. THE AO TREATED THE PROVISION AS AN UNASCERTAINED LIABILITY . HELD THE COST OF THESE EXPENSES WERE ALREADY INCLUD ED IN THE SALE PRICE OF THE PLOT AND THE DEVELOPER COULD NOT CHARGE-ANY EXTRA A MOUNT FROM THE CUSTOMERS IN INLINE JAR COMPLETE DEVELOPMENT OF THE PROJECT. THE HON'BLE TRIBUNAL RELIED ON THE APEX COURT DECIS IONS IN THE CASE OF CALCUTTA CO. LTD. V CIT (1959) 37 ITR 1 (SC). ROTOR K CONTROLS INDIA (P) LTD. VS. CIT [2009] 23 DTR (SC) 79 AND IN THE CASE OF BH ARAT EARTH MOVERS V CIT [2000] 162 CTR (SC 325/[2000] 245 ITR -128 (SC), AN D HELD THAT THE LIABILITY IS ALLOWABLE IF IT HAS ARISEN IN THE YEAR THOUGH IT MAY BE QUANTIFIED AND DISCHARGED AT A FUTURE DATE. FURTHER, THE ASSESSES HAS PLACED RELIANCE ON THE DE CISION IN THE CASE OF M/S SPYTECH BUILDCON VS. A.C.I T. CIRCLE -6, JAIPUR - ITA NO. 1 49/JP/2015 & 205/JP/20I5 - A.Y. 2010-11 - DATE OF PRONOUNCEMENT -14/09/2016 , WHERE THE ISSUE BEFORE THE HON'BLE TRIBUNAL WAS REGARDING PROVISION FOR 'EXPECTED EXPE NSES. THE HON'BLE TRIBUNAL HAS CONSIDERED THE ISSUE AND HAS HELD AS UNDER: 24. HERE, IT IS SEEN THAT IN SPITE OF THE ASSESSEE FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THE LD. CIT(A) HELD THE PROVISION MA DE BY THE ASSESSEE TO BE JUSTIFIED. THE LD. CIT(A) HAS HELD THAT SINCE TILL 31/3/2014, THERE WAS INCURRENCE OF EXPENDITURE TO THE TUNE OF RS. 4,68,4 3,199/- AND THAT THE SUM OF RS. 43,06,801/- REMAINED UNSPENT EVEN FOUR YEARS FR OM THE END OF THE YEAR IN WHICH THE PROVISION WAS MADE. IT WAS ON THIS BASIS, THAT THE PROVISION MADE WAS TAKEN TO BE EXCESSIVE TO THE EXTENT OF RS. 43,0 6,801/-. THE QUESTION IS AS TO WHETHER THIS ACTION OF THE LD. CIT(A) IS JUSTIFIED. 25. IT REMAINS UNDISPUTED THAT THE PROVISION WAS MA DE BY THE ASSESSEE FOR CERTAIN EXPECTED EXPENDITURE. AS SUCH, THE PROVISIO N WAS MADE DUE TO THE ARISING OF THE POSSIBILITY OF THE EXPENDITURE IN FU TURE. THIS WAS WHAT HAD PROMPTED THE ESTIMATION. NOW, IF THE PROVISION DOES NOT STAND EXHAUSTED EVEN FOUR YEARS FROM THE END OF THE YEAR IN WHICH IT WAS MADE, THIS DOES NOT MEAN THAT THE PROVISION TO THAT EXTENT WAS ILL CONCEIVED . THE DETAILS OF THE EXPENDITURE INTENDED WERE DULY MADE AVAILABLE. THAT SUCH INCURRENCE OF EXPENDITURE DID NOT COME ABOUT, CANNOT PUT TO NAUGH T THE PROVISION WHICH WAS MADE BONAFIDE. THE LEGAL POSITION REMAINS THAT THE AMOUNT UNUTILIZED WOULD BE AVAILABLE FOR BEING OFFERED TO TAX IN THE NEXT ASSE SSMENT YEAR. THE BASIS OF THE PROVISION MADE HAS NOT BEEN OBSERVED BY THE LD. CIT (A) TO BE IRRATIONAL. IN THIS REGARD, THE DECISION OF THE HON'BLE SUPREME COURT I N THE CASE OF BHARAT EARTH MOVERS VS CIT, (2000) 245 ITR 428 (SC), WHICH WAS FOLLOWED BY THE HONBLE DELHI HIGH COURT IN THE CASE OF YUM RESTAURANTS (I )(P) LTD., (2015) 371 ITR 139 (DEL), UNDER SIMILAR CIRCUMSTANCES, IS DIRECTLY ATTRACTED. 26. THEREFORE, WE ARE OF THE CONSIDERED OPINION THA T THE LD. CIT(A) HAS GONE WRONG IN SUSTAINING THE ADDITION TO THE EXTENT OF R S. 43,06,801/-. THE SAME SHOULD ALSO HAVE BEEN DELETED. WE ORDER SO NOW. THE REFORE, THE ADDITION OF RS. 5,11,50,000/- IS DELETED IN TOTO. IT IS OBSERVED IN THE IMPUGNED CASE THAT THE APPELL ANT HAS AN OBLIGATION TOWARDS HIS CUSTOMERS TO WHOM THE FLATS HAVE BEEN SOLD AND PAYM ENT RECEIVED TO COMPLETE THE PENDING W ORK RELATING TO COMMON FACILITIES, AS A RESULT OF OF THIS OBLIGATION WOULD RESULT IN AN OUT FLOW OF R ESOURCES. AN ESTIMATE OF THIS EXPENDITURE HAS BEEN MADE BY THE ASSESSEE THE BASIS OF WHICH WAS GIVEN DURING THE COURSE OF A SSESSMENT PROCEEDINGS. IN THIS CASE THE SALE DEED C REATES A CONTRACTUAL OBLIGATION ON THE ASSESSEE TO PROVIDE THE COMMON AM ENITIES AND FACILITIES AS PROMISED TO THE BUYERS. AS THE REVENUE HAS BEEN BOOKED AS PE R MATCHING PRINCIPLE THE EXPENSES ARE ALSO REQU IRED TO BE BOOKED TO THAT EXTENT. THE FUTURE DEVELO PMENT EXPENSES OF RS.3 CRORES HAS BEEN CLAIMEDOVER A PERIOD OF 4 ASSESSMEN T YEARS AS FOLLOWS: THE EXPENSES CLAIMED FROM ASST. YRS 2012 SCRUTINY PROCEEDINGS BY THE ASSESSING OFFICER HIMSE LF THEREFORE, THE ASSESSING OFFICER CANNOT TAKE DIFFERENT STAND, ON THE SAME ISSUE, IN DIFFERENT ACCOUNTING YEARS. ACCORDI NGLY, IN MY CONSIDERED OPINION THE DISALLOWANCE MAD E BY THE ASSESSING OFFICER OF THE FUTURE DEVELOPMENT EXPENSES IS NOT P ROPER. THEREFORE, IN VIEW OF THE FACTS AND DECISIONS DISCUSSED ABOVE, THE ADDITION M ADE BY THE ASSESSING OFFICER OF RS. 3,00,00,000/- I S HEREBY DELETED. 6 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REV ENUE IS IN APPEAL BEFORE US. 7. THE LD. D.R . FOR THE REVENUE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OU R EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE O THER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDEROF 8 . WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING TH E FINDINGS OF THE OTHER MATERIALS AVAILABLE ON RECORD. EXPENSES ARE CONTRACTUAL BASED ON THE AGREEMENT SIG NED WITH THE BUYERS. THE FUTURE DEVELOPMENT EXPENSES RELATE TO COMMON FACILITIES LI KE ELECTRIC WORK, COMMO ASSESSMENT YEAR: IT IS OBSERVED IN THE IMPUGNED CASE THAT THE APPELL ANT HAS AN OBLIGATION TOWARDS HIS CUSTOMERS TO WHOM THE FLATS HAVE BEEN SOLD AND PAYM ENT RECEIVED TO COMPLETE THE ORK RELATING TO COMMON FACILITIES, AS A RESULT OF THE SALE DEEDS. THE FULFILLING OF THIS OBLIGATION WOULD RESULT IN AN OUT FLOW OF R ESOURCES. AN ESTIMATE OF THIS EXPENDITURE HAS BEEN MADE BY THE ASSESSEE THE BASIS OF WHICH WAS GIVEN DURING THE SSESSMENT PROCEEDINGS. IN THIS CASE THE SALE DEED C REATES A CONTRACTUAL OBLIGATION ON THE ASSESSEE TO PROVIDE THE COMMON AM ENITIES AND FACILITIES AS PROMISED TO THE BUYERS. AS THE REVENUE HAS BEEN BOOKED AS PE R MATCHING PRINCIPLE THE EXPENSES IRED TO BE BOOKED TO THAT EXTENT. THE FUTURE DEVELO PMENT EXPENSES OF RS.3 CRORES HAS BEEN CLAIMEDOVER A PERIOD OF 4 ASSESSMEN T YEARS AS FOLLOWS: THE EXPENSES CLAIMED FROM ASST. YRS 2012 -13 TO ASST. YRS 14- 15 HAS BEEN ALLOWED IN SCRUTINY PROCEEDINGS BY THE ASSESSING OFFICER HIMSE LF THEREFORE, THE ASSESSING OFFICER CANNOT TAKE DIFFERENT STAND, ON THE SAME ISSUE, IN DIFFERENT ACCOUNTING YEARS. NGLY, IN MY CONSIDERED OPINION THE DISALLOWANCE MAD E BY THE ASSESSING OFFICER OF THE FUTURE DEVELOPMENT EXPENSES IS NOT P ROPER. THEREFORE, IN VIEW OF THE FACTS AND DECISIONS DISCUSSED ABOVE, THE ADDITION M ADE BY THE ASSESSING OFFICER OF RS. S HEREBY DELETED. . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REV ENUE IS IN APPEAL BEFORE US. . FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OU R EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE O THER HAND, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDEROF THE LD CIT(A). . WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING TH E FINDINGS OF THE OTHER MATERIALS AVAILABLE ON RECORD. WE NOTE THAT LIABILITIES OF FUTURE DEVELOPMENT EXPENSES ARE CONTRACTUAL BASED ON THE AGREEMENT SIG NED WITH THE BUYERS. THE FUTURE DEVELOPMENT EXPENSES RELATE TO COMMON FACILITIES LI KE ELECTRIC WORK, COMMO M/S ASHIANA HOMES PVT. LTD. ITA NO.1677/KOL/2018 ASSESSMENT YEAR: 2011-12 P PP PA AA AG GG GE EE E | || | 7 77 7 IT IS OBSERVED IN THE IMPUGNED CASE THAT THE APPELL ANT HAS AN OBLIGATION TOWARDS HIS CUSTOMERS TO WHOM THE FLATS HAVE BEEN SOLD AND PAYM ENT RECEIVED TO COMPLETE THE THE SALE DEEDS. THE FULFILLING OF THIS OBLIGATION WOULD RESULT IN AN OUT FLOW OF R ESOURCES. AN ESTIMATE OF THIS EXPENDITURE HAS BEEN MADE BY THE ASSESSEE THE BASIS OF WHICH WAS GIVEN DURING THE SSESSMENT PROCEEDINGS. IN THIS CASE THE SALE DEED C REATES A CONTRACTUAL OBLIGATION ON THE ASSESSEE TO PROVIDE THE COMMON AM ENITIES AND FACILITIES AS PROMISED TO THE BUYERS. AS THE REVENUE HAS BEEN BOOKED AS PE R MATCHING PRINCIPLE THE EXPENSES IRED TO BE BOOKED TO THAT EXTENT. THE FUTURE DEVELO PMENT EXPENSES OF RS.3 CRORES HAS BEEN CLAIMEDOVER A PERIOD OF 4 ASSESSMEN T YEARS AS FOLLOWS: - 15 HAS BEEN ALLOWED IN SCRUTINY PROCEEDINGS BY THE ASSESSING OFFICER HIMSE LF THEREFORE, THE ASSESSING OFFICER CANNOT TAKE DIFFERENT STAND, ON THE SAME ISSUE, IN DIFFERENT ACCOUNTING YEARS. NGLY, IN MY CONSIDERED OPINION THE DISALLOWANCE MAD E BY THE ASSESSING OFFICER OF THE FUTURE DEVELOPMENT EXPENSES IS NOT P ROPER. THEREFORE, IN VIEW OF THE FACTS AND DECISIONS DISCUSSED ABOVE, THE ADDITION M ADE BY THE ASSESSING OFFICER OF RS. . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REV ENUE IS IN APPEAL BEFORE US. HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OU R EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE O THER HAND, THE LD. COUNSEL FOR THE . WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING TH E FINDINGS OF THE LD CIT(A) AND WE NOTE THAT LIABILITIES OF FUTURE DEVELOPMENT EXPENSES ARE CONTRACTUAL BASED ON THE AGREEMENT SIG NED WITH THE BUYERS. THE FUTURE DEVELOPMENT EXPENSES RELATE TO COMMON FACILITIES LI KE ELECTRIC WORK, COMMO N M/S ASHIANA HOMES PVT. LTD. ITA NO.1677/KOL/2018 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 8 88 8 FLOORING, PAINTING WORK, CLUB HOUSE, SEWERAGE TREAT MENT, PLANT AND FIRE FIGHTING EQUIPMENTS ETC. THE REVENUE WITH RESPECT TO THE SOL D FLATS HAVE ALREADY BEEN REALIZED AND BOOKED IN THE SALES ACCOUNT. THESE COSTS NEED T O BE ALLOCATED AMONGST ALL THE FLATS, THE POSSESSION OF WHICH IS HANDED OVER DURING THE F INANCIAL YEAR. THE LD. COUNSEL SUBMITTED BEFORE US THAT THESE EXPENSES ARE NOT UNA SCERTAINED AND CONTINGENT IN NATURE. THE COST OF SUCH UNFINISHED WORK IS ASCERTAINED ON THE BASIS OF PURCHASE ORDERS PLACED ON SERVICE SUPPLIERS. WE NOTE THAT ASSESSEE HAS AN OBLIGATION TOWARDS HIS CUSTOMERS TO WHOM THE FLATS HAVE BEEN SOLD AND PAYMENT RECEIVED TO COMPLETE THE PENDING WORK RELATING TO THESE COMMON FACILITIES, AS A RESULT OF THE SALE DEEDS. HENCE, IT IS ACCRUED LIABILITY AND THEREFORE LD. CIT(A) HAS RIGHTLY DELE TED THE ADDITION. WE HAVE GONE THROUGH THE DETAILED FINDINGS OF THE LD. CIT(A) AND WE NOTE THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THAT BEING SO, WE DECLINE TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HEREBY UPHELD AND THE GROUNDS OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 21.02.2020 SD/- ( S.S.GODARA ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 21/02/2020 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-8(1), KOLKATA 2. M/S ASHIANA HOMES PVT. LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATABENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES M/S ASHIANA HOMES PVT. LTD. ITA NO.1677/KOL/2018 ASSESSMENT YEAR:2011-12 P PP PA AA AG GG GE EE E | || | 9 99 9