Deputy Commissioner of Income-tax, V. M/s. Pharande Promoters & Builders, Pune

ITA 2195/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2186 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-04-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 21-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S C BATHI A
• Keywords: Revised return; Revenue expenditure
• Section: 143(3); 133A; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM . / ITA NO.1754/PUN/2016 / ASSESSMENT YEAR : 2011-12 PHARANDE PROMOTERS & BUILDERS, 98/2, GURUVIHAR, TARANGAN APARTMENTS, PUNE NASHIK ROAD, BHOSARI, PUNE-411039. PAN : AAHFP9748F ....... / APPELLANT / V/S. DCIT, CIRCLE-8, PUNE. / RESPONDENT . / ITA NO.2195/PUN/2016 / ASSESSMENT YEAR : 2011-12 DCIT, CIRCLE-8, PUNE. ....... / APPELLANT / V/S. PHARANDE PROMOTERS & BUILDERS, 98/2, GURUVIHAR, TARANGAN APARTMENTS, PUNE NASHIK ROAD, BHOSARI, PUNE-411039. PAN : AAHFP9748F / RESPONDENT ASSESSEE BY : SHRI KISHORE PHADKE & SHRI S. C. BATHIA REVENUE BY : SHRI RAJESH GAWALI / DATE OF HEARING : 08.04.2019 / DATE OF PRONOUNCEMENT : 25.06.2019 / ORDER PER D. KARUNAKARA RAO, AM: THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF CIT(A)-9, PUNE DATED 29.06.2016 FOR THE ASSESSMENT YEAR 2011-12. 2 ITA NO.1754/PUN/2016 ITA NO.2195/PUN/2016 2. THE GROUNDS RAISED BY THE ASSESSEE AS WELL AS BY THE REVENUE ARE AS UNDER :- ITA NO.1754/PUN/2016 (BY ASSESSEE): 1. WITHOUT PREJUDICE TO THE GROUNDS OF APPEAL FILED IN THE OFFICE OF HON. ITAT PUNE BENCH FOR THE AY 2010-2011, BASED ON THE FACTS & CIRCUMSTANCES OF THE CASE & AS STATED IN THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2010-11, THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED THE ENTIRE ADVERTISEMENT EXPENSES OF RS.33557954/- PERTAINING TO WOODSVILLE PROJECT . THE SAID CLAIM MAY PLEASE BE ALLOWED, IF NOT ALLOWED IN THE ITAT APPEAL FILED ON 29.08.2015 FOR THE ASSESSMENT YEAR 2010-2011. 2. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL THE GROUNDS OF APPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. ITA NO.2195/PUN/2016 (BY REVENUE ): 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.85,70,665/- COMPUTED ON THE BASIS OF SURVEY DECLARATION ? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.10,59,997/- ON ACCOUNT OF DISALLOWANCE OF PARTNERS REMUNERATION . 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.87,98,761/- ON ACCOUNT OF DISALLOWANCE OF PRIOR PERIOD EXPENSES. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 3. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A BUILDER AND LAND DEVELOPER. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.2,90,05,074/-. IN THE ASSESSMENT PROCEEDING U/S 143(3) OF THE ACT, THE ASSESSING OFFICER QUANTIFIED THE TOTAL INCOME OF THE ASSESSEE AT RS.5,69,63,780/-. 4. THE DETAILS OF THE ADDITIONS/COMPUTATION OF TOTAL INCOME AS GIVEN IN PARA 7 OF THE ASSESSMENT ORDER ARE EXTRACTED HEREUNDER :- 3 ITA NO.1754/PUN/2016 ITA NO.2195/PUN/2016 7. SUBJECT TO ABOVE DISCUSSION, THE TOTAL INCOME OF THE ASSESSEE FOR A.Y. 2011- 12 IS ASSESSED AS FOLLOWS :- PARTICULARS AMOUNT (RS.) TOTAL INCOME AS PER REVISED RETURN OF INCOME 3,85,34,360/- ADDITIONS : (I) ADDITION ON ACCOUNT OF SURVEY DECLARATION 85,70,665/- (II) DISALLOWANCE OF PARTNERS REMUNERATION 10,59,997/- (III) DISALLOWANCE OF PRIOR PERIOD EXPENSES (ADJUSTMENT ACCOUNT) 87,98,761/- TOTAL TAXABLE INCOME 5,69,63,783/- I.E. ROUND OFF TO 5,69,63,780/- 5. THERE WAS A SURVEY ACTION U/S 133A OF THE ACT ON 17.02.2011 ON THE ASSESSEE. THE PHARANDE GROUP GAVE A DECLARATION OF RS.10.35 CRORES AND A SUM OF RS.6,15,88,919/- BEING SPECIFIC TO THIS ASSESSEE WAS OFFERED BY THE ASSESSEE-FIRM WHILE FILING THE RETURN OF INCOME. HOWEVER, IN THE RETURN OF INCOME, THE ASSESSEE DECLARED THE UNDISCLOSED INCOME OF DIFFERENT AMOUNT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE FILED A RECONCILIATION AND THE SAME IS EXTRACTED IN PARA 4 OF THE ASSESSMENT ORDER. REJECTING THE RECONCILIATION-CENTRIC EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER MADE ADDITION OF RS.85,70,665/-. THE ASSESSING OFFICER ALSO MADE OTHER ADDITIONS ON ACCOUNT OF SALARIES OR REMUNERATION TO THE PARTNERS AMOUNTING TO RS.10,59,997/-. FURTHER ALSO, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF ADVERTISEMENT EXPENSES AMOUNTING TO RS.87,98,761/- AT PAR WITH SIMILAR ADDITION MADE IN THE PRECEDING ASSESSMENTS YEARS 2010-11 AND 2011-12. 6. AGGRIEVED WITH THE ABOVE, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. THE CIT(A) CONFIRMED THE ADDITION ON ACCOUNT OF ADVERTISEMENT EXPENSES AND DELETED OTHERS I.E. THE ADDITIONS OF RS.85,70,665/- AND RS.10,59,997/- AND PART OF THE ADVERTISEMENT EXPENSES. 4 ITA NO.1754/PUN/2016 ITA NO.2195/PUN/2016 7. AGGRIEVED WITH THE PART RELIEF GRANTED BY THE CIT(A), THE ASSESSEE AND THE REVENUE ARE IN CROSS APPEALS BEFORE THE TRIBUNAL WITH ABOVE EXTRACTED RESPECTIVE GROUNDS. ITA NO.1754/PUN/2016 (BY ASSESSEE): 8. FIRST, WE SHALL TAKE UP THE ASSESSEES APPEAL FOR ADJUDICATING THE IMPUGNED ISSUES RAISED IN THE GROUNDS. AT THE OUTSET, IN CONNECTION WITH THE SOLITARY ISSUE OF ALLOWABILITY OF THE ADVERTISEMENT EXPENSES RAISED IN THE GROUND, LD. COUNSEL MENTIONED THAT THE SAME WAS SUBJECT-MATTER OF LITIGATION SINCE THE ASSESSMENT YEAR 2010-11. ASSESSEE INCURRED ADVERTISEMENT EXPENDITURE AND CLAIMED THE SAME AS REVENUE EXPENDITURE IN THE ASSESSMENT YEARS 2010-11 AND 2011-12. REFERRING TO THE ASSESSMENT YEAR 2010-11, LD. COUNSEL SUBMITTED THAT THE SIMILAR CLAIM OF ADVERTISEMENT EXPENDITURE WAS NOT ALLOWED BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2010-11. THE MATTER REACHED TO THE TRIBUNAL VIDE ITA NO.1161/PUN/2015 FOR THE ASSESSMENT YEAR 2010-11 DATED 18.04.2018 READ WITH MA NO.16/PUN/2019 DATED 01.03.2019 AND SUBMITTED THAT THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AS PER DISCUSSION GIVEN IN PARA 11 TO 13 OF THE ORDER OF THE TRIBUNAL. THE MATTER STANDS REMANDED TO THE FILE OF THE INCOME TAX OFFICERS FOR FRESH ADJUDICATION. FURTHER, LD. COUNSEL SUBMITTED THAT THE SAID ORDER OF THE TRIBUNAL WAS GIVEN EFFECT BY THE ASSESSING OFFICER AND THE ASSESSING OFFICER EVENTUALLY ALLOWED THE CLAIM OF THE ASSESSEE IN THE SET-ASIDE ASSESSMENT PASSED U/S 143(3) R.W.S. 254 OF THE ACT HOLDING THAT THE CLAIM OF EXPENDITURE IS GENUINE. THE SAME IS ALLOWED TO BE REDUCED FROM THE CLOSING WIP AND THE CLAIM IS FOUND ALLOWABLE 5 ITA NO.1754/PUN/2016 ITA NO.2195/PUN/2016 U/S 37(1) OF THE ACT. THE CONTENTS OF PARA 3 OF THE SAID ASSESSMENT ORDER ARE RELEVANT AND THE SAME ARE EXTRACTED HEREUNDER :- REGARDING THE DIRECT EXPENSES OF RS.1,87,02,461/- WHICH ARE TAKEN TO WIP, IF THE SAME IS REDUCED FROM THE CLOSING WIP OF AY 2010-11, THE ASSESSED INCOME GOES BELOW THE RETURNED INCOME. HOWEVER, AS PER THE DECISION OF HONBLE ITAT, PUNE BENCH B, IN CASE OF BAJAJ FINANCE LIMITED VS. DCIT, DATED 29/01/2015. THE HONBLE ITAT HAS HELD THAT AS PER AMENDMENT U/S 143(3) OF THE ACT, THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT, INTER-ALIA, ENVISAGES THE ASSESSING OFFICER TO GRANT REFUND OF ANY AMOUNT DUE TO THE ASSESSEE CONSEQUENT TO THE ASSESSMENT AND THEREFORE, THE AO IS STATUTORILY EMPOWERED TO DETERMINE THE REVISED INCOME WHICH CAN BE LOWER THAN THE RETURN INCOME. IT IS SEEN THAT THIS DECISION HAS NOT BEEN FURTHER CONTESTED TO THE HONBLE HIGH COURT BY THE REVENUE. FURTHER, IN CASE OF CIT VS. MILTON LAMINATES LTD. HONBLE GUJRAT HIGH COURT HAS ALSO GIVEN THE SIMILAR DECISION. THEREFORE, THE ABOVE EXPENSES OF RS.1,87,02,461/- WHICH ARE FOUND TO BE GENUINE ARE ALLOWED TO BE REDUCED FROM THE CLOSING WIP OF AY 2010-11 AND TO BE TAKEN TO PROFIT AND LOSS ACCOUNT OF AY 2010-11, AS AN ALLOWABLE EXPENSES U/S 37(1) OF THE ACT. 9. THUS, THE ADVERTISEMENT EXPENSES OF RS.1,87,02,461/- WHICH IS A PART OF GROSS ADVERTISEMENT EXPENSES OF RS.3,52,77,749/-, WERE FOUND ALLOWABLE AND, TO THAT EXTENT, THE WIP ACCOUNT WOULD BE ADJUSTED. 10. FURTHER, ON THIS ISSUE OF CLAIM OF ADVERTISEMENT EXPENSES, LD. COUNSEL FILED AN AFFIDAVIT BEFORE US GIVING THE FOLLOWING SUBMISSIONS :- 1. I AM A PARTNER OF M/S PHARANDE PROMOTERS & BUILDERS HAVING REGISTERED OFFICE AT 98/2, TARANGAN, GURUVIHAR, PUNE NASHIK HIGHWAY, BHOSARI, PUNE - 411 039. THE COMPANY IS ENGAGED IN DEVELOPING RESIDENTIAL AND COMMERCIAL PROJECTS. 2. THE ADVERTISEMENT EXPENSES OF M/S PHARANDE PROMOTERS & BUILDERS FOR A.Y 2010-11 WAS AS UNDER : SR NO PARTICULARS AMOUNT (RS) 1 ADVERTISEMENT COST FOR PROJECT 'CULTURE CREST' 17,19,795 2 ADVERTISEMENT COST FOR PROJECT 'WOODSVILLE' & OTHERS 3,35,57,954 3 TOTAL ADVERTISEMENT COST (1+2) 3,52,77,749 6 ITA NO.1754/PUN/2016 ITA NO.2195/PUN/2016 4 BRAKE-UP OF ADVERTISEMENT COST RELATING TO WOODSVILLE 3,35,57,954 5-A PART-1 - CLAIMED AS DEDUCTION BY DEBIT TO P & L DURING AY 2010-11 (DISALLOWED BY AO DURING 143(3) PROCEEDINGS, BUT ALLOWED AFTER ORDER OF HONORABLE ITAT) 1,48,55,493 5-B PART-2 - CAPITALIZED TO WIP THROUGH FIRST REVISED RETURN (ALLOWED BY AO AFTER ORDER OF HONORABLE ITAT) 99,03,700 5-C PART-3 - CAPITALIZED TO WIP THROUGH SECOND REVISED RETURN (ALLOWED BY AO AFTER ORDER OF HONORABLE ITAT) 87,98,761 6 TOTAL CAPITALIZATION TO WIP (5-B + 5-C) WHICH IS REQUIRED TO BE REVERSED FROM CAPITALIZATION 1,87,02,461 3. APPELLANT, UNDER SOME INCORRECT NOTIONS AND BELIEFS, HAD CAPITALIZED PART OF THE SAID ADVERTISEMENT COST OF RS. 3,35,57,954/- AND CLAIMED ONLY PART THE SAID ADVERTISEMENT EXPENDITURE AS REVENUE EXPENDITURE IN AY 2010-11. HOWEVER, SINCE THE APPELLANT HAS BEEN GRANTED FULL BENEFIT OF ADVERTISEMENT EXPENDITURE OF RS. 3,35,57,954/- PURSUANT OF ORDER OF HONORABLE ITAT, NO ANY DEDUCTION CAN BE CLAIMED THROUGH THE WIP SYSTEM. AS SUCH, APPELLANT IS UNDERTAKING TO REMOVE RS. 1,87,02,461/- FROM THE CAPITALIZED WIP. 4. THIS REMOVAL OF CAPITALIZATION WILL BE ENSURED AT ONCE ALONG WITH ALL CORRECTIVE MEASURES. ADDITIONAL TAX LIABILITY ARISING FROM THE ABOVE WILL BE ADDRESSED AND PAID IMMEDIATELY. THE ABOVE STEPS WILL BE INITIATED TO ENSURE THAT, NO ANY DOUBLE DEDUCTION STANDS CLAIMED AND AVAILED ON AN OVERALL BASIS. 11. FROM THE ABOVE PARA 3 OF THE NOTE, ENTIRE SUM OF RS.3,35,57,954/- IS FOUND ALLOWABLE. CONSIDERING THE ABOVE SUBSEQUENT DEVELOPMENTS THAT THE CLAIM MADE IN THE ASSESSMENT YEAR 2011-12 AS APPEARING IN THE ABOVE CITED DECISION OF THE TRIBUNAL (SUPRA) AS WELL AS THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2010-11, LD. COUNSEL PRAYED FOR REMANDING THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. FURTHER, LD. AR SUBMITTED THAT THE GROUND NO.3 OF THE REVENUES APPEAL IS ALSO CONNECTED TO THE ABOVE DISCUSSED ISSUE. 7 ITA NO.1754/PUN/2016 ITA NO.2195/PUN/2016 THEREFORE, IT IS A CASE WHERE GROUNDS OF THE ASSESSEES APPEAL AS WELL AS THE GROUND NO.3 OF THE REVENUES APPEAL ARE REQUIRED TO BE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION GIVING EFFECT TO THE SAID ORDER OF THE TRIBUNAL (SUPRA). ACCORDINGLY, WE ORDER. THUS, THE GROUNDS RAISED BY THE ASSESSEE RELATING TO THE ADVERTISEMENT EXPENSES ARE ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2195/PUN/2016 (BY REVENUE) : 13. GROUND NO.1 RELATES TO THE DELETION OF ADDITION OF RS.85,70,665/- COMPUTED ON THE BASIS OF SURVEY DECLARATION. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER MADE ADDITION OF RS.85,70,665/- ON ACCOUNT OF SURVEY DECLARATION. THE ASSESSEE DISCLOSED PROFITS OF RS.6,15,88,919/- FOR THE YEAR UNDER CONSIDERATION. THE SAID AMOUNT WAS QUANTIFIED ON THE DATE OF SURVEY I.E. 17.02.2011. AS PER THE ASSESSEE, THE SAID OFFER OF PROFITS IS BASED ON THE FINALIZED ACCOUNTS AS ON 31.03.2011. AS PER THE ASSESSEE, RS. 5,89,94,404/- IS THE RIGHT AMOUNT OF PROFITS AFTER CONSIDERING THE VARIOUS DEDUCTIONS AS GIVEN IN PARA 5.3 OF THE ORDER OF THE CIT(A). THE CIT(A) CONSIDERED THE ABOVE EXPLANATION OF THE ASSESSEE AND CONSIDERED THE FACTS THAT THE OFFER OF ADDITIONAL INCOME WAS BASED ON THE ACCOUNTS FINALIZED AS ON 17.02.2011 UNLIKE THE RETURN FINALIZED BASED ON FINALIZED ACCOUNT ON 31.03.2011. THE 42 DAYS GAP WILL CERTAINLY ALTER THE PROFITS FIGURES. THE CIT(A) CONSIDERED THE FINALIZED ACCOUNTS OF THE ASSESSEE AND ACCEPTED THE RECONCILIATION FURNISHED BY THE 8 ITA NO.1754/PUN/2016 ITA NO.2195/PUN/2016 ASSESSEE. HE ALSO HELD, IN THE ABSENCE OF INCRIMINATING MATERIAL, THE OFFER OF INCOME MADE BY THE ASSESSEE DURING THE SURVEY ACTION IS NOT SUSTAINABLE LEGALLY ON THE MINOR DIFFERENCES OFFERED BY THE ASSESSEE. ACCORDINGLY, RELYING ON THE HONBLE SUPREME COURT JUDGEMENT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. [(1973) 91 ITR 18 (SC)], THE CIT(A) HELD AS UNDER :- 5.3 .......... IT IS OBSERVED BY THE HONBLE APEX COURT IN THE CASE OF PULLANGODE RUBBER AND CO. LTD. THAT ADMISSION IS AN EXTREMELY IMPORTANCE PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO THE ASSESSEE WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THE ASSESSEE SHOULD BE GIVEN A PROPER OPPORTUNITY TO SHOW AS TO HOW AND IN WHAT CIRCUMSTANCES THAT ADMISSION WAS MADE AND THAT THE CORRECT STATE OF FACTS ARE DIFFERENT THAN THE ADMISSION. THE SIMILAR VIEWS HAVE BEEN TAKEN BY THE OTHER HONBLE COURT THAT THE STATEMENT. THUS, CONSIDERING THE TOTALITY OF THE FACTS AND POSITION OF THE LAW AND EXPLAINED BY THE VARIOUS HONBLE COURTS, THE AO IS DIRECTED TO DELETE THE ADDITION. THUS, APPEAL ON THIS GROUND IS ALLOWED. 14. ON HEARING BOTH THE SIDES, WE FIND THE REVENUE HAS NOT MADE OUT THE CASE THAT THE ORDER OF THE CIT(A) ON THIS ISSUE REQUIRES ANY AMENDMENT. WE FIND THAT THE RETURN OF INCOME FILED ON THE BASIS OF THE FINAL ACCOUNTS OF ASSESSEE FOR THE YEAR UNDER CONSIDERATION. THEREFORE, THE RECONCILIATION FURNISHED BY THE ASSESSEE IS REQUIRED TO BE CONSIDERED BY THE ASSESSING OFFICER WHILE MAKING THE ADDITIONS. THE ASSESSING OFFICER FAILED TO FIND ANY MISTAKES IN SUCH RECONCILIATION FURNISHED BY THE ASSESSEE. THEREFORE, WE ARE OF THE OPINION, THE FINDING OF THE CIT(A), GIVEN IN PARA 5.3 OF THE APPELLATE ORDER, IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, THE GROUND NO.1 RAISED BY THE REVENUE IS DISMISSED. 9 ITA NO.1754/PUN/2016 ITA NO.2195/PUN/2016 15. GROUND NO.2 RELATES TO THE DELETION OF ADDITION OF RS.10,59,997/- ON ACCOUNT OF DISALLOWANCE OF PARTNERS REMUNERATION . THE CIT(A) DELETED THE SAID ADDITION AS PER THE DISCUSSION GIVEN IN PARA 6.3 OF HIS ORDER AND THE SAME ARE EXTRACTED HEREUNDER :- 6.3 I HAVE CONSIDERED CAREFULLY THE FACTS OF THE CASE AND SUBMISSIONS OF THE APPELLANT ON THE ISSUE. HERE QUESTION COME UP FOR DECISION IS WHETHER FOR THE PURPOSE OF COMPUTATION OF ALLOWABLE REMUNERATION TO THE PARTNERS, THE BOOK PROFIT COMPRISES THE ENTIRE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT OR ONLY PROFITS AND GAINS IN BUSINESS ASSESSED UNDER CHAPTER IVD OF THE I.T. ACT. THE HONBLE MUMBAI ITAT IN THE CASE OF SURESH A. SHROFF AND COMPANY HAS HELD THAT THE CHAPTER IVD NOWHERE PROVIDES THAT NET PROFIT SHOULD BE THE ONLY INCOME FROM BUSINESS AND PROFESSION ALONE AND NOT FROM OTHER SOURCES. SECTION 29 PROVIDES HOW THE INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION SHOULD BE COMPUTED AND THIS HAS TO BE DONE AS PROVIDED UNDER SECTION 30 TO 43D. THUS, FOR THE PURPOSE OF SECTION 40(B)(V) R.W. EXPLANATION THERE CANNOT BE SEPARATE METHOD OF ACCOUNTING FOR ASCERTAINING NET PROFIT AND/ OR BOOK PROFIT. IN OTHER WORDS, ACCORDING TO THE SAID EXPLANATION BOOK PROFIT MEANS THE NET PROFIT AS SHOWN IN THE PROFIT AND LOSS ACCOUNT INCLUDING INCOME FROM OTHER SOURCES AND NOT ONLY THE PROFIT COMPUTED UNDER THE HEAD PROFIT AND GAINS OF BUSINESS OR PROFESSION. IN THE INSTANT CASE THE AO HAS DISALLOWED THE REMUNERATION OF THE PARTNERS ON UNACCOUNTED CASH RECEIVED IN RESPECT OF THE THREE UNITS OF RS.28,00,000/-. THIS INCOME IS ARISING TO THE ASSESSEE FROM THE BUSINESS OF THE ASSESSEE ITSELF. IN VIEW OF THE FACTS OF THE CASE AND JUDICIAL PRONOUNCEMENT OF THE HONBLE COURTS AS DISCUSSED ABOVE, THE AO IS DIRECTED TO DELETE THE ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF REMUNERATION TO PARTNERS. THE APPEAL ON THIS GROUND IS ALLOWED. 16. CONSIDERING THE ABOVE LEGAL PROPOSITION AND THE ELIGIBLE PAYMENT OF REMUNERATION PAID TO THE PARTNERS, WE ARE OF THE OPINION, THE CIT(A) RIGHTLY RELIED ON THE BINDING ORDER OF THE TRIBUNAL (SUPRA). THEREFORE, WE ARE OF THE OPINION, THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE ON THIS ISSUE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 17. GROUND NO.3 RELATES TO THE DELETION OF ADDITION OF RS.87,98,761/- ON ACCOUNT OF PRIOR PERIOD EXPENSES I.E. ADVERTISEMENT EXPENSES. THIS GROUND 10 ITA NO.1754/PUN/2016 ITA NO.2195/PUN/2016 NO.3 HAS ALREADY ADJUDICATED BY US WHILE DECIDING THE GROUNDS OF THE ASSESSEE IN THE PRECEDING PARAGRAPHS OF THIS ORDER AND THE SAID GROUND NO.3 REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION GIVING EFFECT TO THE ORDER OF THE TRIBUNAL (SUPRA). ACCORDINGLY, THE GROUND NO.3 RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 18. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 19. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 25 TH JUNE, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (D. KARUNAKARA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 25 TH JUNE, 2019 SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-9, PUNE. 4. THE PR. CIT-5, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.