The ACIT, Central Circle-1, Surat V. M/s. Surya Developers, Surat

ITA 2612/AHD/2009

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1304 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 18-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ./ I.T.A. NO.2612/AHD/2009 ( / ASSESSMENT YEAR : 2005-06) THE ACIT CENTRAL CIRCLE-1 SURAT / VS. M/S.SURYA DEVELOPERS 738, AJANTA SHOPPING CENTRE RING ROAD, SURAT ' ./ ./ PAN/GIR NO. : AATFS 9248 R ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( / APPELLANT BY : SHRI DINESH SINGH, SR.DR &''% ) ( / RESPONDENT BY : NONE * ) / DATE OF HEARING 05/10/2015 +,-. ) / DATE OF PRONOUNCEMENT 27/10/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-II, AHMEDABA D [CIT(A) IN SHORT] DATED 16/06/2009 PERTAINING TO ASSESSMENT Y EAR (AY) 2005-06. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL:- 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE ADDITION OF RS.68,58,475/- MADE ON ACCOUNT OF ESTIMATING THE PROFIT @ 15% OF WORK-IN-PROGRESS. ITA NO.2612 /AH D/2009 ACIT VS. M/S.SURYA DEVELOPERS ASST.YEAR 2005-06 - 2 - 2. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN F AILING TO APPRECIATE THAT THE AO HAS NOT TAKEN ADVERSE VIEW WITH REGARD TO ACCOUNTING METHOD ADOPTED BY THE ASSESSEE IN A.Y.2004-05 AS TI LL A.Y.2004-05, NEITHER THE PROJECT HAD PROGRESSED SUBSTANTIALLY, N OR SUBSTANTIAL ADVANCES WERE RECEIVED BY THE ASSESSEE, WHILE THIS WAS NOT THE CASE FOR A.Y.2005-06. 3. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN F AILING TO APPRECIATE THAT THE AO HAD NOT DISREGARDED THE ACCOUNTING METH OD ADOPTED BY THE ASSESSEE IN A.Y.2006-07 SINCE IN THE A.Y.2006-07 TH E PROJECT HAD BEEN COMPLETED LEAVING NO CLOSING WIP IN THE HANDS OF TH E ASSESSEE AT THE END OF THE YEAR AND THEREFORE PROFIT HAD BEEN DULY SHOWN BY THE ASSESSEE IN THIS A.Y.2006-07. 4. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN N OT APPRECIATING THE JUDGMENT OF THE HONTDLE SUPREME COURT IN THE CASE O F TIRATHRAM AHUJA (P) LTD VS. CIT (180 ITR 428), WHEREIN THE HO NTDLE SUPREME COURT HAD CONFIRMED THE RATIO LAID DOWN BY THE DELH I HIGH COURT IN THE CASE OF TIRATHRAM AHUJA (P) LTD VS CIT (1973) (103 ITR 15)(DELHI). 5. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN A CCEPTING THE PLEA OF THE ASSESSEE THAT THE ACCOUNTING STANDARD AS-7 IS A PPLICABLE TO THE CONTRACTORS AND NOT TO THE ASSESSEE AS A DEVELOPER AS THE REVISED AS-7 IS APPLICABLE TO CONSTRUCTION ACTIVITIES UNDERTAKEN BY ENTERPRISES AS CONTRACTORS AS WELL AS ON THEIR OWN ACCOUNT. 6. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN F AILING TO APPRECIATE THAT EACH ASSESSMENT YEAR BEING A SELF CONTAINED UN IT, THE PROFIT OF ONE YEAR CANNOT BE SHIFTED TO ANOTHER YEAR AS SETTLED B Y HONBLE SUPREME COURT IN THE CASE OF CIT VS BRITISH PAINTS INDIA LT D. 7. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE C IT (A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. ITA NO.2612 /AH D/2009 ACIT VS. M/S.SURYA DEVELOPERS ASST.YEAR 2005-06 - 3 - 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 17/12/2007, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION OF RS.68,58,475/- ON ACCOUNT OF ESTIMATIN G THE PROFIT @15% OF WORK-IN-PROGRESS. THE ASSESSEE BEING AGGRIEVED BY THE ASSESSMENT ORDER, PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WH O AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE ALLOWED THE APPEAL ON THE BASIS THAT THE AO HAS ACCEPTED THE METHOD OF ACCOUNTING FOR AYS 20 04-05 & 2006-07. HE HAS NOT GIVEN ANY REASON AS TO WHY HE HAS ADOPTE D A DIFFERENT METHOD OF ACCOUNTING FOR THE YEAR UNDER APPEAL. AGGRIEV ED BY THE ORDER OF THE LD.CIT(A), THE REVENUE IS NOW IN APPEAL BEFORE US. 3. THE ONLY EFFECTIVE GROUND (I.E.GROUND NO.1) IN T HIS APPEAL IS AGAINST DELETION OF ADDITION OF RS.68,58,475/-. GR OUND NOS.2 TO 6 ARE ARGUMENTATIVE IN NATURE. GROUND NO.7 IS GENERAL I N NATURE WHICH REQUIRES NO INDEPENDENT ADJUDICATION. THEREFORE, GROUND NOS.1 TO 6 ARE TAKEN UP TOGETHER AND ARE BEING DISPOSED OF BY A CO NSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 4. NONE APPEARED ON BEHALF OF RESPONDENT-ASSESSEE D ESPITE SERVICE OF NOTICE OF HEARING TO THE ASSESSEE. IT IS RECORDED IN THE NOTICE THAT NOTICE RECEIVED, BUT LAST TIME ALSO IT WAS SUBMITTED THAT WE HAVE NOT RECEIVED ITA NO.2612 /AH D/2009 ACIT VS. M/S.SURYA DEVELOPERS ASST.YEAR 2005-06 - 4 - APPEAL PAPER SO YOU ARE REQUESTED TO GIVE THE PAPER OF (DEPARTMENT- APPEAL) APPEAL SO IT CAN BE ARGUED. SINCE THE NOT ICE HAS BEEN SERVED UPON THE ASSESSEE, THE APPEAL WAS TAKEN UP FOR HEAR ING EX-PARTE QUA THE ASSESSEE. 5. THE LD.SR.DR SUBMITTED THAT THE LD.CIT(A) WAS NO T JUSTIFIED IN DELETING THE ADDITION. HE SUBMITTED THAT THE AO HA S POINTED OUT THAT IN THE YEAR UNDER APPEAL, THE ASSESSEE HAS RECEIVED SU BSTANTIAL AMOUNT. 6. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. WE FIND THAT THE LD.CIT(A) HAS DECIDED THE ISSUE BY OB SERVING AS UNDER:- 2.3. I HAVE CONSIDERED THE FACTS AND THE SUBMISSIO NS. I AGREE WITH THE APPELLANTS VIEW. IT IS A FACT THAT THE A PPELLANT IS OT A CONTRACTOR. HE IS A DEVELOPER AND DEVELOPING PROJE CT FOR SALE AND FOLLOWING THE PROJECT COMPLETION METHOD. WHEN THE ASSESSING OFFICER HAS ACCEPTED METHOD OF ACCOUNTING FOR AY 2004-05 AND 2006-07, HE IS NOT JUSTIFIED IN REJECTI NG THE SAME FOR INTERVENING PERIOD FOR AY 2005-06. 6.1. DURING THE COURSE OF HEARING, A QUERY WAS RAIS ED BY THE BENCH TO THE SR.DR TO POINT OUT THE REASON FOR NOT ACCEPT ING THE METHOD OF ACCOUNTING WHICH WAS ACCEPTED IN THE EARLIER YEAR A ND SUBSEQUENT YEAR. THE LD.SR.DR EXCEPT RELYING ON THE ORDER OF THE AO COULD NOT ITA NO.2612 /AH D/2009 ACIT VS. M/S.SURYA DEVELOPERS ASST.YEAR 2005-06 - 5 - POINT OUT THE SPECIFIC REASON FOR NOT ACCEPTING THE METHOD OF ACCOUNTING AS DECLARED BY THE ASSESSEE. WE FIND TH AT THE LD.CIT(A) HAS GIVEN A FINDING THAT THE ASSESSEE IS A DEVELOPE R AND DEVELOPING THE PROJECT FOR SALE AND FOLLOWING THE PROJECT COMP LETION METHOD. THIS FACT IS NOT CONTROVERTED BY THE REVENUE AND EV EN THE REVENUE IS NOT IN APPEAL AGAINST THE FINDING OF THE LD.CIT( A) THAT THE ASSESSEE IS A DEVELOPER. THEREFORE, WE DO NOT SEE ANY REASO N TO INTERFERE WITH THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, GROUNDS RAISED IN THE REVENUES APPEAL ARE DISMISSED. 7. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED . ORDER PRONOUNCED IN THE COURT ON TUESDAY, THE 27 TH DAY OF OCTOBER, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 27/ 10 /2015 2.., .../ T.C. NAIR, SR. PS ITA NO.2612 /AH D/2009 ACIT VS. M/S.SURYA DEVELOPERS ASST.YEAR 2005-06 - 6 - !'#$%&' &$ / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 345 6 / CONCERNED CIT 4. 6 ( ) / THE CIT(A)-II, AHMEDABAD 5. 7 8 &45 , 45. , 3 / DR, ITAT, AHMEDABAD 6. 8:; <* / GUARD FILE. ! / BY ORDER, '7 & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..13.10.2015 (DICTATION-PAD 5 +PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.10.2015 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 27.X.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 27.X.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER