Green Home Landscape Private Ltd., Coimbatore V. DCIT, Coimbatore

ITA 2024/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0821 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 07-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BASHYAM IRS
• Assessee Lawyers: K BALASUBR AMANIAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A.NO. 2024/MDS/2012 ASSESSMENT YEAR : 2009-10 GREEN HOME LANDSCAPE PRIVATE LTD., 550, WHITES BUILDING, D.B.ROAD, R.S.PURAM, COIMBATORE 641 002. PAN AABCG1166H VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-I(3), COIMBATORE. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. BALASUBRAMANIAN, AD VOCATE RESPONDENT BY : SHRI GURU BASHYAM, IRS, JC IT DATE OF HEARING : 4 TH FEBRUARY, 2013 DATE OF PRONOUNCEMENT : 5 TH FEBRUARY, 2013 O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-I AT COIMBATORE, DATED 18.9.2012 AND ARISES OUT OF TH E ASSESSMENT COMPLETED UNDER SEC.143(3) OF THE INCOME-TAX ACT, 1 961. ITA 2024/12 :- 2 -: 2. THE ASSESSEE IS ENGAGED IN REAL ESTATE BUSINESS. IT IS UNDER MONTHLY INSTALMENT SCHEME AND THE TOTAL PERI OD OF PROJECT IS SIXTY MONTHS. AS THE ASSESSEE IS NOT SURE HOW M ANY MEMBERS IN FUTURE WOULD BE CONTINUING AS MEMBERS TILL THE E ND OF THE PROJECT, THE ASSESSEE FOLLOWED PROJECT COMPLETION M ETHOD IN ASCERTAINING THE PROFIT OR LOSS OF THE BUSINESS. T HEREFORE, THE ASSESSEE HAS TRANSFERRED THE YEARLY EXPENSES TO WOR K-IN-PROGRESS AND THE AMOUNT COLLECTED ON MONTHLY SCHEME WAS SHOW N AS CURRENT LIABILITIES AND PROVISIONS. 3. THE ASSESSEE HAD PRODUCED BOOKS OF ACCOUNT AND T HOSE BOOKS WERE VERIFIED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS ALSO ACCEPTED THE ABOVE STATED BUSINESS SCHEME EXPLAINED BY THE ASSESSEE. 4. BUT THE ASSESSING OFFICER FOUND THAT THE ASSESSE E HAS DEBITED A SUM OF ` 5,58,85,120/- IN PROFIT AND LOSS ACCOUNT TOWARDS PURCHASE OF LANDS IN THE PREVIOUS YEAR RELE VANT TO THE ASSESSMENT YEAR UNDER APPEAL. HE ACCORDINGLY APPLI ED THE PROVISIONS OF SEC.40A(3). HE WORKED OUT THE CASH P AYMENTS MADE BY THE ASSESSEE EXCEEDING ` 20,000/- IN A SINGLE DAY. SUCH PAYMENTS TOTALLED TO ` 85,55,372/-. THE SAID AMOUNT WAS DISALLOWED AND ADDED BACK. ITA 2024/12 :- 3 -: 5. IN FIRST APPEAL, THIS ADDITION WAS CONFIRMED BY THE COMMISSIONER OF INCOME-TAX(APPEALS). THE ASSESSEE IS AGGRIEVED AND, THEREFORE, THE SECOND APPEAL BEFORE US. 6. THE IMPUGNED ASSESSMENT YEAR IS 2009-10. THEREF ORE, THE RELEVANT PREVIOUS YEAR IS 2008-09. THE ASSESSEE HA S FURNISHED YEAR-WISE DETAILS OF CASH PAYMENTS MADE TO THE AGRI CULTURISTS AGAINST THE PURCHASE OF LANDS. IN THE PREVIOUS YE AR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE HAS NOT MADE A SINGLE CASH PAYMENT TO ANY OF THE PARTIES. IN FACT THESE AMOUNTS RELATE TO THE PAYMENTS MADE BY THE ASSESSEE IN THE EARLIER PREVIOUS YEARS FROM 2003-04, 2004-05, 2005-06, 2006 -07 AND 2007-08. THE EXPENSES INCURRED DURING THOSE PREVIO US YEARS CANNOT BE DISALLOWED THIS YEAR, FOR THE REASON THAT THE TOTAL OF SUCH CASH PAYMENTS WERE DEBITED IN THE PREVIOUS YEA R RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. THE ENTIRE AMOUN T WAS DEBITED IN THIS PARTICULAR PREVIOUS YEAR ONLY BECAU SE OF THE REASON THAT THE ASSESSEE WAS FOLLOWING PROJECT COMPLETION METHOD TO RECOGNIZE ITS INCOME. THEREFORE, WE CANNOT SAY THA T THE ENTIRE EXPENSES REPRESENTED BY THE DISPUTED CASH PAYMENTS WERE INCURRED IN THE PREVIOUS YEAR RELEVANT TO THE ASSES SMENT YEAR UNDER APPEAL. IN FACT THOSE EXPENSES WERE INCURRED SINCE ITA 2024/12 :- 4 -: PREVIOUS YEAR 2003-04 ONWARDS AND THEY WERE BEING C ARRIED OVER FROM YEAR TO YEAR IN THE FORM OF WORK-IN-PROGRESS. INCOME-TAX APPELLATE TRIBUNAL, AHMEDABAD A BENCH IN THE CASE OF ANANDKUMAR RAWATRAM JOSHI V. ITO (16 TAXMANN.COM 1 04) HAS CONSIDERED A SIMILAR ISSUE AND HELD THAT THE PROVIS IONS OF SUB- SEC.(3A) OF SEC.40A, INSERTED SINCE ASSESSMENT YEAR 2008-09 CANNOT BE MADE APPLICABLE TO LIABILITY INCURRED UPT O ASSESSMENT YEAR 2007-08. IN ANOTHER CASE, THE TRIBUNAL CHENNA I D BENCH IN THE CASE OF M/S. MAYUR MARKETING V. ITO IN ITA NO.3 76/MDS/2012 DATED 11.9.2012, HAS HELD THAT WHERE THE PAYEE AND THE PAYER WERE IDENTIFIED AND GENUINENESS OF THE PAYMENTS WER E ESTABLISHED, THE AMOUNTS PAID IN CASH COULD NOT BE DISALLOWED. IN ARRIVING AT THE ABOVE DECISION, THE TRIBUNAL HAS RE LIED ON THE JUDGMENT OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF CIT V. CHROME LEATHER CO. PVT. LTD. (235 ITR 708). 7. IN ADDITION TO THAT, IT IS TO BE SEEN THAT ALL T HE LANDS WERE PURCHASED BY THE ASSESSEE COMPANY FROM AGRICULTURIS TS. THEY WILL NOT SELL THE LANDS UNLESS THEY RECEIVE THE CASH. TH E ASSESSEE CANNOT ISSUE CHEQUES OR DRAFTS TO THE VILLAGERS AND GET THE TRANSACTIONS REGISTERED IN THE NAME OF THE ASSESSEE . IN THESE TYPES OF TRANSACTIONS, CASH PAYMENT IS THE CRITERIA . THEREFORE, IN ITA 2024/12 :- 5 -: FACT, THE ASSESSEE HAD NO OCCASION TO MAKE PAYMENTS BY WAY OF BANK INSTRUMENTS WHILE PURCHASING THESE LANDS FROM THE VILLAGERS. 8. IN THE ABOVE CIRCUMSTANCES, BOTH ON LAW AND FACT S, WE FIND THAT THE ADDITION OF ` 85,55,372/- MADE IN THIS APPEAL IS NOT JUSTIFIED. IT IS DELETED. 9. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON TUESDAY, THE 5 TH OF FEBRUARY, 2013 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR.O. K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 5 TH FEBRUARY, 2013 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR