DCIT CEN CIR 10, MUMBAI V. CREDENCE PROPERTY DEVELOPERS P.LTD, MUMBAI

ITA 2851/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88108 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R N DSOUZA
• Keywords: Business expenditure; Revenue expenditure
• Section: 143(3)

Judgement Text

, , , , , ,, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI . . , ! '# , $ BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.2851/MUM/2013 ASSESSMENT YEAR: 2009-10 DCIT , CENTRAL CIRCLE-10, ROOM NO.802, 8 TH FLOOR, OLD CGO ANNEXE BLDG. M.K.ROAD, MUMBAI-400020 / VS. M/S CREDENCE PROPERTY DEVELOPERS PVT. LTD. 702, NATRAJ, M.V.ROAD, JUNCTION, WESTERN EXPRESS HIGHWAY, ANDHERI(EAST), MUMBAI - 400069 ( '# / REVENUE) ( ()* /ASSESSEE) P.A. NO.AABCC9387Q '# + , + , + , + , / REVENUE BY SHRI . R.N. DSOUZA - DR ()* + , + , + , + , / // / ASSESSEE BY): SHRI DIPEN TANNA + *- ! / / / / DATE OF HEARING : 27/01/2015 ./0 + *-! / DATE OF PRONOUNCEMENT : 27/01/2015 '1 '1 '1 '1 + *-! / DATE OF ORDER : 28 /01/2015 '1 '1 '1 '1 / / / / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) : THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 24/01/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, ON THE GROUND THAT THE LD. COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN HOLDING THAT THE ASSESSEE WAS CARRYING ON WITH I NVENTORY OF M/S CREDENCE PROPERTY DEVELOPERS PVT. LTD. 2 BOTH FLATS AND CONSTRUCTION WIP AND NO SALE WAS OFF ERED ALLOWING OF INTEREST AS REVENUE EXPENDITURE WITHOUT APPRECIA TING THE FACT THAT THE ASSESSEE WAS HAVING ONLY ONE PROJECT FOR T HE LAST MANY YEARS AND COMPLETED DIFFERENT BUILDINGS IN DIFFEREN T YEARS, CONSEQUENTLY, FINANCE COST/INTEREST OF TUNE OF RS.5 9,73,002/- SHOULD BE CAPITALIZED AND ADDED TO THE WIP/INVENTOR Y OF CLOSING STOCK. 2. AT THE TIME OF HEARING, LD. DR. SHRI R.N. DSOUZ A, ADVANCED HIS ARGUMENTS WHICH ARE IDENTICAL TO THE GROUND RAI SED BY FURTHER SUBMITTING THAT RELIEF WAS GRANTED TO THE A SSESSEE WITHOUT APPRECIATING THE FACTS IN PROPER PROSPECTIV E AS NO SALE WAS OFFERED BY THE ASSESSEE DURING THE RELEVANT TIM E AND THE ASSESSEE WAS HAVING ONLY ONE PROJECT FOR THE LAST M ANY YEARS. 2.1. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASS ESSEE, SHRI DIPEN TANNA, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY SUBMITTING THAT THE WORK WAS STAY ED BY THE HONBLE COURT. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS ENGAGED IN THE CONSTRUCTION BUSINESS, D ECLARED LOSS OF RS.94,16,324/- IN HIS RETURN FILED ON 30/09/2009 , AND ASSESSMENT WAS COMPLETED ON 30/12/2011 DETERMINING TOTAL INCOME AT RS.2,08,71,798/-. THE ASSESSEE AS PER PRO FIT & LOSS ACCOUNT SHOWED INCOME OF RS.4,91,546/- MAINLY DUE T O WRITE BACK OF SUNDRY BALANCES. IT WAS NOTED BY THE ASSES SING OFFICER THAT DURING THE RELEVANT PERIOD, THERE WAS NO ACTIV E BUSINESS DONE BY THE ASSESSEE AND THE FLATS SHOWN IN THE CLO SING STOCK WORK CONSTRUCTED FEW YEARS BACK, THUS, THE PURCHASE OF CEMENT AMOUNTING TO RS.49,000/-, INCURRING LABOUR EXPENSES TO THE TUNE OF RS.910/- WERE NOT SUFFICIENT TO DO CONSTRUC TION WORK, M/S CREDENCE PROPERTY DEVELOPERS PVT. LTD. 3 THERE WERE NO EXPENSES ON PURCHASE OF STEEL, BRICKS , BADARPUR/SAND AND STONES ETC, MEANING THEREBY, NO CONSTRUCTION ACTIVITY WAS CARRIED OUT DURING THE YE AR, CONSEQUENTLY, HE TREATED THE WRITTEN BACK EXPENSES AS INCOME OF THE CURRENT YEAR AND DISALLOWED THE EXPENSES CLAIME D ON ACCOUNT OF PROVISION FOR DOUBTFUL LOANS AND ADVANCE S AS BUSINESS EXPENSES. SIMILARLY, PAYMENT OF INTEREST A ND BUSINESS LOSS, DETERMINED BY THE ASSESSEE, AS NO ACTIVITY WA S CARRIED OUT, WERE DISALLOWED. 2.2. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEALS), THE FACTS/CLAIM OF THE ASSESSEE WERE DUL Y EXAMINED AND AFTER PLACING RELIANCE UPON VARIOUS JUDICIAL PRONOUNCEMENTS, RELIEF WAS GRANTED. THE REVENUE IS AGGRIEVED AND IS IN APPEAL BEFORE THIS TRIBUNAL. WE FIND THA T SO FAR AS DENIAL OF REVENUE EXPENSES OF RS.99,07,875/- ON THE GROUND THAT NO BUSINESS/CONSTRUCTION ACTIVITY WAS CARRIED OUT B Y THE ASSESSEE, IS CONCERNED, WE ARE NOT SATISFIED WITH T HE REASONING CONTAINED IN THE ASSESSMENT ORDER. THE ASSESSEE IT SELF DISALLOWED OF RS.4,17,34,598/- AND MERELY MADE A CL AIM OF RS.99,07,870/-AND DUE TO LEGAL DISPUTE BETWEEN THE LAND OWNERS AND THE ASSESSEE, THE HONBLE HIGH COURT GRANTED ST AY VIDE ORDER DATED 06/05/2004 AND DUE TO THAT REASON NO MAJOR CONSTRUCTION/SALE ACTIVITIES COULD BE CARRIED OUT. AT THE SAME TIME, MAINTENANCE ACTIVITY WAS CARRIED OUT BY THE A SSESSEE. IT IS ALSO NOTED THAT FOR ASSESSMENT YEAR 2008-09, ASSESS MENT WAS COMPLETED U/S 143(3) WHEREIN NO SUCH DISALLOWANCE W AS MADE. THE SALE/CONSTRUCTION COULD NOT BE CARRIED OUT DUE TO THE REASONS OF STAY BY THE HONBLE HIGH COURT WHICH WAS BEYOND THE CONTROL OF THE ASSESSEE. THUS, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX M/S CREDENCE PROPERTY DEVELOPERS PVT. LTD. 4 (APPEALS). IDENTICAL IS THE SITUATION FOR BRINGING TO TAX THE AMOUNT OF RS.2,03,80,252/- MORE SPECIFICALLY, WHEN THE ASSESSEE FURNISHED THE DETAILS AND EVEN THE ASSESSING OFFICE R DID NOT EXAMINE THE COMPUTATION OF INCOME. IN VIEW THE FACTS/REASONING/JUDICIAL PRONOUNCEMENTS CONTAINED I N THE IMPUGNED ORDER, THE STAND OF THE LD. COMMISSIONER O F INCOME TAX (APPEALS) IS AFFIRMED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 27/01/2015. '1 + ./0 2'3 27/01/2015 / + 9 SD/- (N.K.BILLAIYA) SD/- (JOGINDER SINGH) ! '# ! '# ! '# ! '# / ACCOUNTANT MEMBER '# '# '# '# / JUDICIAL MEMBER MUMBAI; 2' DATED : 28/01/201 5 F{X~{T? P.S/. .. '1 + :* ;0* '1 + :* ;0* '1 + :* ;0* '1 + :* ;0*/ COPY OF THE ORDER FORWARDED TO : 1. <= / THE APPELLANT 2. :><= / THE RESPONDENT. 3. ? ( ) / THE CIT, MUMBAI. 4. ? / CIT(A)- , MUMBAI 5. A9 :* , , / DR, ITAT, MUMBAI 6. 9B( C / GUARD FILE. '1 '1 '1 '1 / BY ORDER, >* :* //TRUE COPY// D DD D/ // /E ' E ' E ' E ' (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI