ACIT, Central Circle-20, New Delhi V. Ansal Properties and Infrastructure Ltd., New Delhi

ITA 2559/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8347 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 02-06-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 29-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GEETMALA MOHANAREY
• Assessee Lawyers: H MITTER
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA : VICE PRESIDENT; A ND SRI AKASH DEEP JAIN : JUDICIAL MEMBER ITA NO. 2559/DEL/08 ASSTT. YR: 2004-05 ACIT CEN. CIRCLE-20, VS. M/S ANSAL PROPERTIES & I NFRASTRUCTURE NEW DELHI. LTD. 115, ANSAL BHAWAN, 16 K.G. MARG, NEW DELHI. PAN/GIR NO. AAACA-0006-D ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SMT. GEETMALA MOHANAREY CIT DR RESPONDENT BY : SHRI H.MITTER CA O R D E R PER G.E. VEERABHADRAPPA, V.P: 1. THIS APPEAL, BY THE REVENUE , ARISES OUT OF THE ORDER DATED 26-5-2008 OF THE CIT(A), NEW DELHI, FOR A.Y. 2004-05. THE GRI EVANCE OF THE DEPARTMENT IS IN THE FOLLOWING THREE GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF OF RS. 2,90,25,704/- ON ACCOUNT OF NOTIONAL ANNUAL LETTING VALUE OF FLATS HELD AS CLOS ING STOCK. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN GRANTING RELIEF OF RS. 5,19,55,961/- ON ACCOUNT OF EXPENSES OF COMPLETED PROJECT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO COMPUTE THE BOOK PROFIT U/S 115JB AT RS. 5,80,92,128/- AFTER ADJUSTMENT. 2 2. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF REAL ESTATE, DEVELOPMENT OF MINI TOWNSHIP, CONSTRUCTION OF HOUSES, COMMERCIA L COMPLEXES ETC. THE AO FOUND THAT THE ASSESSEE WAS THE OWNER OF FLATS, WHICH WERE LYING AS UNSOLD IN THE CLOSING STOCK AT THE END OF THE PREVI OUS YEAR. THE AO PROCEEDED TO COMPUTE THE NOTIONAL RENTAL INCOME AND BROUGHT IT TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE CIT(A) F OLLOWING THE ORDER OF THE ITAT IN ASSESSEES OWN CASE IN A.Y. 2002-03 ACC EPTED THE CONTENTION OF THE ASSESSEE AND DELETED THE ADDITION, WHICH IS THE SUBJECT MATTER OF GROUND NO. 1 ABOVE. 2.1 THE ASSESSEES COUNSEL, WHO APPEARED BEFORE US , STATED THAT IDENTICAL ISSUE AROSE IN ASSESSEES OWN CASE RIGHT FROM A.Y. 1988-89 AND THE ITAT HAS CONSISTENTLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. COPIES OF ORDERS OF THE ITAT, NUMBERING ABOUT 15, ARE FILED IN THE P APER BOOK. 2.2. FACED WITH THIS, THE LEARNED DR STRONGLY ARGUE D IN FAVOUR OF THE VIEW TAKEN BY THE AO. 2.3. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENT IONS AND GONE THROUGH THE RECORDS. AS THE RECORDS SHOW, IN EARLIER YEARS THE ITAT HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE DISCUSSIONS IN THOSE ORDERS SHOW THAT THE ITAT APPRECIATED THE FACT THAT BUILDINGS UNDER COM PLETION STAGE WERE STOCK IN TRADE OF THE ASSESSEE FROM WHICH NO INCOME COUL D BE DERIVED BY THE ASSESSEE AND THEREFORE, ESTIMATING THE VALUE OF THE SE PROPERTIES AS INCOME FROM HOUSE PROPERTY WAS NOT PROPER. THE FACTS OF T HE CASE OF THIS YEAR AND THE EARLIER YEARS BEING IDENTICAL, FOLLOWING OUR OW N VIEW IN EARLIER YEARS, WE CONSISTENTLY TAKE THE SAME VIEW. IN THE LIGHT OF TH IS DISCUSSION, THE ORDER OF THE CIT(A) ON THE ISSUE IN QUESTION IS UPHELD. 3. PROJECT-WISE AND HEAD-WISE DETAILS WITH REGARD TO EXPENSES INCURRED DURING THE YEAR IN RESPECT OF PROJECT SHOWN AS COMP LETED IN EARLIER YEARS WAS 3 FURNISHED ALONG WITH THE RETURN OF INCOME. AS IN TH E EARLIER YEARS, SIMILAR EXPENSES WERE ACCOUNTED FOR IN RESPECT OF ITS VARI OUS PROJECTS SHOWN COMPLETED IN EARLIER YEARS. THE AO, AS COULD BE SEE N FROM THE DISCUSSION IN THE ASSESSMENT ORDER, FOLLOWED HIS OWN VIEW EXPRESS ED IN EARLIER YEARS IN MAKING THE DISALLOWANCE. THE AO IN HIS ORDER HAS A LSO MENTIONED THAT THE DECISION OF THE CIT(A) AND THE ITAT WERE NOT ACCEPT ED BY THE DEPARTMENT AND THE MATTER IS AWAITING FOR THE DECISION OF THE HIGH COURT OF DELHI. THE ASSESSEES COUNSEL HAS ALSO FILED COPIES OF THE ORD ERS ON THE IDENTICAL ISSUE RIGHT FROM THE ASSESSMENT YEARS 1987-88 TILL 2003-0 4. IN THE LIGHT OF OUR DECISION IN EARLIER YEARS ORDERS WITH WHICH WE AR E IN FULLY AGREEMENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) WH O HAS JUST FOLLOWED THE ORDER OF THE ITAT IN THE EARLIER YEARS. WE DECLINE TO INTERFERE. 4. WHILE DETERMINING THE BOOK PROFIT, THE AO FOR TH E PURPOSE OF SEC. 115JB MADE CERTAIN ADJUSTMENTS, ADDING BACK PROVISI ON FOR DEFERRED TAX, WHICH APPEAR IN THE CREDIT SIDE OF THE P&L A/C. 4.1. THE LEARNED COUNSEL FOR THE ASSESSEE PRODUCED BEFORE US COPIES OF P&L A/C AND THE ASSESSEES WORKING AT PAGES 10,11 & 12 OF THE PAPER BOOK. THE LEARNED COUNSEL ALSO PLEADED THAT IDENTICAL ISS UES AROSE IN ASSESSMENT YEAR 2003-04 AND THE TRIBUNAL VIDE ITS ORDER DATED 16-1-2009 IN ITA NO. 101/DEL/08 HAS UPHELD THE CIT(A)S ORDER IN DELET ING THE ADJUSTMENTS. 4.2. WE HAVE HEARD THE LEARNED COUNSEL FOR THE ASSE SSEE WHO RELIED UPON THAT ORDER OF ITAT FOR A.Y. 2003-04 APART FROM THE IMPUGNED ORDER OF CIT(A) . HE HAS ALSO FURNISHED COPIES OF ITS OWN W ORKING OF BOOK PROFIT U/S 115JB OF THE ACT. WE HAVE ALSO GONE THROUGH THE WOR KING MADE BY THE AO. IN OUR VIEW AND IN THE LIGHT OF THE ORDER OF THE TR IBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2003-04, SUCH ADJUSTMENTS CANNOT BE M ADE. MOREOVER, THE DEFERRED TAX IS APPEARING AS INCOME ITEM IN THE P& L A/C. THE AO SHOULD 4 HAVE, IN ALL FAIRNESS, EXCLUDED IT. INSTEAD OF EXC LUDING IT, HE HAS ADDED THE BOOK PROFIT. THE AO WAS NOT JUSTIFIED IN THE LIGHT OF THE PROVISION OF SECTION 115JB OF THE ACT. THE LEARNED CIT(A) HAS CORRECTLY UNDERSTOOD THE FACTS AND ADDRESSED HIMSELF TO THE ISSUES AND CORRECTLY D ELETED THE ADJUSTMENTS. WE DO NOT FIND ANY INFIRMITY IN HIS ORDER. THE APPE AL IS ACCORDINGLY DISMISSED. 5. IN THE RESULT, REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 2-6-2009. SD/- SD/- ( AKASH DEEP JAIN ) ( G.E. VEERABHADRA PPA ) JUDICIAL MEMBER VICE PRESIDENT DATED: 2-06-2009. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR