ACIT, Central Circle -2, Hyderabad V. M/s Universal Realtors Private Ltd., Hyderabad

ITA 342/HYD/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74493 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 02-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P SOMASEKHAR REDDY
• Assessee Lawyers: RAJIV DAVE
• Keywords: Search and seizure; Question of law
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 342/HYD/2012 ASSESSMENT YEAR 2008'09 THE ASST. CIT CENTRAL CIRCLE'2 HYDERABAD VS. M/S. UNIVERSAL REALTORS PVT. LTD., HYDERABAD PAN: AAACU7615C APPELLANT RESPONDENT ITA NO. 343/HYD/2012 ASSESSMENT YEAR 2008'09 M/S. UNIVERSAL REALTORS PVT. LTD., HYDERABAD PAN: AAACU7615C VS. THE ASST. CIT CENTRAL CIRCLE'2 HYDERABAD APPELLANT RESPONDENT REVENUE BY: SRI P. SOMA SEKHAR REDDY ASSESSEE BY: SRI RAJIV DAVE DATE OF HEARING: 21.11.2013 DATE OF PRONOUNCEMENT: 20.01.2014 O R D E R PER CHANDRA POOJARI, AM: THE ABOVE TWO APPEALS ARE CROSS APPEALS, THE FORME R BY THE REVENUE AND THE LATTER BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF THE CIT(A)'I, HYDERABAD DATED 29.12.20 11 FOR A.Y. 2008'09. ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 2 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) OUGHT TO HAVE HELD THAT THE SUPPLEMENTARY AGREEMENT DOES NOT FORM THE BASIS OF RECOGNITION OF REVENUE FOR THE A.Y. 2008' 09 AND THE FIGURES ADOPTED DURING SEARCH PROCEEDINGS BY THE ASSESSEE FOR DISCLOSING ADDITIONAL INCOME HOLD GOOD. 2. THE CIT(A) OUGHT TO HAVE HELD THAT THE ADOPTION OF ESTIMATED COST AS PER THE SUPPLEMENTARY AGREEMENT IS A CLEAR AFTERTHOUGHT BY THE ASSESSEE AND OUGHT TO BE REJECTED. 3. THE CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE SUPPLEMENTARY AGREEMENTS WERE SUBMITTED TO APHB MUCH BEYOND 31'03'2008 AND THEREFORE HAS NO FORCE OF LAW UNTIL APPROVED BY APHB. 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE HAS INFLATED THE COST UNDULY. THOUGH THE REASON OF REMOVAL OF BOULDERS AND ROCK SHEETS WAS GIVEN. IT IS DEFINITELY VALID ONE A S THIS EXPENDITURE EXISTED AT THE TIME OF ENTERED INTO ORIGINAL AGREEMENT. HENCE THE CIT(A) OUGHT TO HAVE DISPUTED THE INFLATED ESTIMATED COST BY THE ASSESSEE AT HIS WHIMS VIDE SUPPLEMENTARY AGREEMENT. 5. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE SUPPLEMENTARY AGREEMENT IS WITH REGARD TO THE EXTENSION OF EXISTING FLOORS I.E., VERTICAL NOT HORIZONTAL AND THE AREA INVOLVED IS THE SAME. 3. THE ASSESSEE RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME'TAX (APPEALS)' ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 3 I, HYDERABAD, HAS ERRED IN PARTLY ALLOWING THE APPEAL PREFERRED BY THE ASSESSEE'COMPANY AGAINST THE ORDERS PASSED UNDER SECTION 143(3) BY THE HON'BLE ASSESSING OFFICER BY MAKING AN ADDITION OF RS. 4,27,98,318 FOR THE ASSESSMENT YEAR 2008'2009. 2. THE LEARNED COMMISSIONER OF INCOME'TAX (APPEALS)'I, HYDERABAD, HAS ERRED IN APPLYING HIS OWN ACCOUNTING POLICY FOR MAKING THE IMPUGNED ADDITION AND IGNORING THE CONSISTENT ACCOUNTING POLICY FOLLOWED BY THE ASSESSEE' COMPANY FOR RECOGNIZING REVENUE WHICH IS IN ACCORDANCE WITH THE GUIDELINES PRESCRIBED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA AND WHICH HAS BEEN ACCEPTED EVEN BY THE ASSESSING OFFICER IN HIS ORDER UNDER SECTION 143(3) FOR THE RELEVANT ASSESSMENT YEAR AS WELL AS FOR THE PREVIOUS ASSESSMENT YEARS 2006'2007 AND 2007'2008 ' ALL SUBJECTED TO SCRUTINY ASSESSMENTS. 4. FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPE RATION U/S. 132 OF THE INCOME'TAX ACT, 1961 WAS CONDUCTED IN THE BUSINESS PREMISES OF AMBIENCE PROPERTIES LTD., ON 9 .10.2007. DURING THE COURSE OF SEARCH, BOOKS OF A/C AND OTHER INCRIMINATING EVIDENCES PERTAINING TO THE ASSESSEE COMPANY WERE ALSO FOUND AND SEIZED. THE ASSESSEE FILED THE RETURN OF INCOME ON 4'12'2008 FOR THE A.Y. 2008'09 ADMITTING TOTAL INCOME OF RS. 4,33,89,741/'. IN COURSE OF THE ASSE SSMENT PROCEEDING THE AO NOTICED THAT THE ASSESSEE COMPANY HAD ENTERED INTO A DEVELOPMENT AGREEMENT CUM GPA WITH M /S. ANDHRA PRADESH HOUSING BOARD (APHB) ON 30'4'2005 VI DE DOCUMENT NO. 1213/2006 FOR DEVELOPING 19 ACRES 35 G UNTAS ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 4 SITUATED AT GACHI BOWLI, HYDERABAD. THE ENTIRE LAN D WAS DIVIDED INTO FIVE BITS (BIT'I TO BIT'V). THE DOCUM ENTARY EVIDENCES FOUND AND GATHERED DURING SEARCH AND PLACED AT ANNE XURE A/APL/PO'1/1 REVEALED A FACT THAT FOR BIT'III AND B IT'IV THE ASSESSEE COMPANY HAD REACHED ITS THRESHOLD LIMIT OF MORE THAN 30% OF THE ESTIMATED COST AS ON 5'12'2007 AND ACCOR DINGLY THE ASSESSEE COMPANY HAS PREPARED ITS ESTIMATED PROFIT AND ADMITTED AN AMOUNT OF RS. 31.33 CRORES AS THE PROFI T BEFORE DDIT (INV) AS ON 5'12'2007. HOWEVER WHILE FILING THE RE TURN OF INCOME FOR THE AY 2008'09, ASSESSEE HAS NOT ADMITTED ANY S UCH PROFIT AND STATED THAT THEY HAVE NOT REACHED THE THRESHOLD LIMIT OF MORE THAN 30% OF THE ESTIMATED COST AS ON 31'3'2008 . THE AO OBSERVED THAT AS PER CLAUSE 2.7 OF THE DEVELOPMENT AGREEMENT CUM GPA ENTERED INTO WITH APHB, THE DEVELOPER COMPA NY SHALL BE SOLELY RESPONSIBLE FOR MARKETING OF PROJECT AND MAKE ITS BEST ENDEAVOURS IN THIS REGARD. FURTHER AS PER CLAUSE 2 .8 OF THE AGREEMENT, THE DEVELOPER COMPANY SHALL OPERATE AND MAINTAIN THE PROJECT IN ACCORDANCE WITH THE STANDAR D FOR REASONABLE AND PRUDENT DEVELOPER. ACCORDINGLY, THE DEVELOPER COMPANY HAS ENTERED INTO AGREEMENT OF SAL E WITH 4 DIFFERENT CUSTOMERS FOR DEVELOPING THE BITS I.E. BI T' I TO BIT'IV INTO HOTELS AND COMMERCIAL COMPLEXES AND BIT'V INTO RESI DENTIAL COMPLEX. THE AO OBSERVED THAT AS PER THE DEVELOPME NT AGREEMENT CUM GPA DATED 30'4'2005, THE RECOGNITION OF REVENUE FOR SALE OF DEVELOPED PROPERTIES IS ACCOUNT ED FOR BY THE PERCENTAGE COMPLETION METHOD IN RESPECT OF EACH PROJECT ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 5 WHERE THE OUTCOME CAN BE RELIABLY ESTIMATED. THE P ERCENTAGE COMPLETION IS DETERMINED BY REFERENCE TO THE COST I NCURRED TO DATE TO THE TOTAL ESTIMATED COST, PROVIDED THE COMP ANY HAS INCURRED 30% OF THE TOTAL PROJECTED COST AND BOOKED SALES OF 30% OF THE TOTAL NUMBER OF UNITS TO BE SOLD. THE A O FURTHER OBSERVED THAT DURING SEARCH OPERATION CONDUCTED ON 9'10' 2007 IN THE BUSINESS PREMISES OF M/S. AMBIENCE PROP ERTIES LTD., THE DDIT(INV) HAD FOUND CERTAIN DOCUMENTS PERTAININ G TO THE ASSESSEE COMPANY I.E., M/S. UNIVERSAL REALTORS PVT. LTD. WHICH CONTAIN DETAILS OF CONSIDERATION RECEIVED BY THE CO MPANY FROM VARIOUS CUSTOMERS AS PER THE AGREEMENT OF SALE, DET AILS OF EXPENDITURE INCURRED BY THE COMPANY FOR VARIOUS PRO JECTS, DETAILS OF REVENUE SHARED BETWEEN THE DEVELOPER COM PANY AND APHB, ETC. BASING ON THE MATERIAL FOUND, THE D DIT (INV) PREPARED AN ESTIMATE OF PROFIT AS ON DATE OF SEARCH . AS PER THE DETAILED ESTIMATE, PREPARED AND SUBMITTED BY THE AS SESSEE COMPANY THE RECOGNITION OF REVENUE AND THE ESTIMATI ON OF PROFIT ARE AS BELOW: PARTICULARS BIT' III BIT'IV TOTAL ESTIMATED SALES (IN CR.) 29.25 105.45 BOOKINGS UP TO 31'3'2007 29.25 105.45 BOOKINGS FROM 1'4'07 TO 31'10'07 ' ' % OF BOOKING MADE UP TO 31'3'07 100 100 TOTAL ESTIMATED WIP (IN CR.) 17.33 35.63 WIP INCURRED UP TO 31'3'07 (IN CR.) 4.91 10.42 WIP INCURRED FROM 1'4'07 TO 31'10' 07 (IN CR.) 0.90 3.53 WIP UP TO 31'10'07 (IN CR.) 5.81 13.95 % OF WIP AS ON DATE OF SEARCH 33.57 39.16 REVENUE TO BE RECOGNIZED (IN CR.) 9.81 41.29 ESTIMATED PROFIT ADMITTED (INCR.) 3.99 27.33 ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 6 5. THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY PREPARED THE ESTIMATED TAX LIABILITY FOR THE AY 200 8'09 ARISING OUT OF BIT'ILL AND BIT'IV AND ADMITTED AN AMOUNT OF RS. 3.99 CRORE AND RS. 27.33 CRORE AS THE ESTIMATED PROFITS FOR TH E YEAR ENDED 31'3'2008, BASING ON THE ESTIMATED FIGURES AVAILABL E ON 5.12.2007. THE SAME WAS ADMITTED IN THE SWORN STAT EMENT OF SRI PAVAN KUMAR AGARWAL, MANAGING DIRECTOR OF THE COMPA NY. HOWEVER, WHILE FILING THE RETURN OF INCOME, NO SUCH ESTIMATED PROFIT WAS ADMITTED ON THE GROUND THAT THE FIGURES OF THE ESTIMATED COST HAD UNDERGONE A CHANGE DUE TO SUPPLEMENTARY AGREEMENTS ENTERED INTO BY THE ASSESS EE COMPANY ON 18'3'2008 FOR BIT'ILL AND 10'3'2008 FOR BIT'IV. THE AO OBSERVED THAT AS ON 5'12'2007 THE ASSESSEE COMPA NY HAD ACHIEVED 30% OF THE ESTIMATED COST AND IT WAS UNDER THE OBLIGATION TO RECOGNIZE THE REVENUE FOR BIT'ILL AND BIT'IV WHICH WAS NOT DONE. 6. A SHOW CAUSE LETTER WAS ADDRESSED BY THE AO CALLING FOR ASSESSEE'S EXPLANATION. IN REPLY, THE ASSESSEE STA TED THAT AS PER THEIR ACCOUNTING POLICY, THE COMPANY HAS NOT REACHE D THE THRESHOLD LIMIT OF 30% IN ANY OF THE PROJECTS AND A S SUCH REVENUE RECOGNITION WAS NOT DONE IN RESPECT OF ANY OF THE P ROJECTS. IT WAS OBSERVED BY THE AO THAT THE WIP INCURRED AS ON 5'12'2007 FOR BIT'ILL AND BIT'IV WAS RS. 581.82 LAKHS AND RS. 1395.53 LAKHS RESPECTIVELY WHICH GIVES 33.57% AND 39.16% RESPECTI VELY AS THE ESTIMATED PERCENTAGE OF WIP PRIOR TO DECEMBER, 2007 . THE WIP INCURRED WAS INCREASED TO THE TUNE OF RS. 637.15 LA KHS FOR BIT'ILL ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 7 AND RS. 2407.85 LAKHS FOR BIT'IV THEREBY THE PERCEN TAGE OF WIP INCURRED TO THE PROJECT CAME DOWN TO 12.47% FOR BIT 'ILL AND 18.44% FOR BIT'IV AS ON 31'3'2008. THE AO OBSERVED THAT THE ASSESSEE COMPANY INTENTIONALLY WITH AN AFTERTHOUGHT ESCALATED THE PROJECTED COST AS ON 31'3'2008 AND SUPPRESSED T HE PROFIT AND POSTPONED THE TAX LIABILITY. HE NEGATED THE AR GUMENT OF THE ASSESSEE COMPANY IN SUPPORT OF THE SUPPLEMENTAR Y AGREEMENT AND PROCEEDED TO COMPUTE THE PROFIT OF TH E ASSESSEE COMPANY BASING ON THE ORIGINAL AGREEMENT W HICH IS AS BELOW. BIT' III ESTIMATED REVENUE AS PER ORIGINAL AGREEMENT ' RS. 2 9.25 CRORES ESTIMATED COST AS PER ORIGINAL AGREEMENT ' RS. 17. 33 CRORES WIP COSTS INCURRED UP TO 31'3'2008 ' RS. 6.37 C RORES PERCENTAGE OF WIP TO THE ESTIMATED COST ' 36. 75% GROSS REVENUE RECOGNIZED PROPORTIONATELY ' RS. 10, 74,93,750 LESS: EXPENDITURE INCURRED ' RS. 6,37,14,757 ESTIMATED PROFIT ' RS. 4,37,78,993 BIT' IV ESTIMATED REVENUE AS PER ORIGINAL AGREEMENT ' RS. 1 05.45 CRORES ESTIMATED COST AS PER ORIGINAL AGREEMENT ' RS. 3 5.63 CRORES WIP COSTS INCURRED UP TO 31'3'2008 ' RS. 24.37 CRORES PERCENTAGE OF WIP TO THE ESTIMATED COST ' 6 7.55% GROSS REVENUE RECOGNIZED PROPORTIONATELY ' RS. 71 ,23,14,750 LESS: EXPENDITURE INCURRED ' RS. 24,07,85,430 ESTIMATED PROFIT ' RS. 47,15,29,320 7. ACCORDINGLY, THE TOTAL ESTIMATED PROFIT AS PER PERC ENTAGE COMPLETION METHOD OF ACCOUNTING FOLLOWED BY THE ASS ESSEE COMPANY WAS ARRIVED AT BY THE AO AT RS. 55,86,98,05 4/' AND A TAX DEMAND OF RS. 18,99,63,171/' WAS RAISED. ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 8 8. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE COMPANY HAD ENTERED INTO A DEVELOPMENT AGREEMENT CU M POWER OF ATTORNEY WITH AP HOUSING BOARD TO UNDERTAK E THE DEVELOPMENT OF THE LAND BELONGING TO THE APHB. AS A DEVELOPER OF THE LAND, THE ASSESSEE COMPANY TO MAKE PAYMENT OF RS. 1,67,00,000/' PER ACRE AND 1.75% OF THE GROSS REVENUES FOR RESIDENTIAL DEVELOPMENT AND 2% OF THE GROSS REVENUES FOR COMMERCIAL DEVELOPMENT OF THE PROJECT. THE PERCENTAGE OF REVENUE HAS BEEN ENHANCED SUBSEQUENTL Y TO 3.5% AND 4% RESPECTIVELY. THE ENTIRE PROJECT HAS BE EN CATEGORIZED INTO 5 UNITS VIZ., BIT'I, BIT'IL, BIT'I II, BIT'IV AND BIT'V. AFTER OBTAINING THE NECESSARY POWER OF ATTORNEY THE ASSESSEE COMPANY ENTERED INTO AGREEMENT OF SALE FOR BIT'I TO BIT'V WITH DIFFERENT CUSTOMERS. THEREFORE, AS FAR AS SALES AR E CONCERNED, 100% SATISFACTION IS ACHIEVED. THAT IS BECAUSE, TH E ASSESSEE COMPANY IS DEALING WITH SINGLE BUYER FOR EACH PROJE CT. IN RESPECT OF BIT'IIL, THE ASSESSEE HAD AN AGREEMENT W ITH M/S. AGR CONSTRUCTIONS PVT. LTD. ORIGINALLY ON 17'3'2006 FOR SALE OF COMMERCIAL BLOCK WITH INFRASTRUCTURE TO THE EXTENT OF 1,50,000 SFT ALONG WITH PARKING SPACE OF 90,000 SFT. THE SALE CO NSIDERATION WAS WORKED OUT @ RS. 1800/'PER SFT FOR COLD'SHELL A ND RS. 250 PER SFT FOR PARKING SPACE. THUS THE TOTAL CONSIDERATIO N IS TO THE EXTENT OF RS. 29.25 CRORES. IN THE SAME AGREEMENT T HERE IS A PROVISION FOR ADDITIONAL CONSTRUCTION FOR BOTH COLD 'SHELL AS WELL AS FOR PARKING SPACE BEYOND 1,50,000 AND 90,000 RES PECTIVELY @ RS. 600/' PER SFT AND RS. 250/' PER SFT, RESPECTIVE LY. THIS ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 9 AGREEMENT HAS BEEN REVISED BY A SUPPLEMENTARY AGREE MENT DATED 18'3'2008 FOR INCREASED BUILT UP AREA FOR BOT H COLD'SHELL AND PARKING SPACE AND MEASURING ABOUT 4,14,000 SFT AND 2,07,000 SFT RESPECTIVELY FOR A TOTAL CONSIDERATION OF RS. 59.40 CRORES. SIMILARLY FOR BIT'IV, IT HAD ENTERED INTO A GREEMENT OF SALE ORIGINALLY ON 15'3'2007 FOR SALE OF COMMERCIAL BLOC K OF 3,00,000 SFT ALONG WITH PARKING SPACE OF 66,000 FOR A TOTAL CONSIDERATION OF 105.45 CRORES. SUBSEQUENTLY, SUPPLEMENTARY AGREE MENT WAS EXECUTED ON 10'3'2008 FOR ENHANCED BUILT UP AREA OF 5,50,000 SFT COMMERCIAL SPACE AND 3,05,000 SFT FOR PARKING S PACE FOR A TOTAL CONSIDERATION OF RS. 169.68 CRORES. IN BOTH T HE ORIGINAL AGREEMENTS, A PROVISION WAS MADE FOR CONSTRUCTION O F ADDITIONAL SPACE UNDER COMMERCIAL BLOCK AS WELL AS UNDER PARKING FOR A CONSIDERATION. IT MEANS THERE IS AN INTENTION ON THE PART OF BOTH THE DEVELOPER CUM CONTRACTOR AS WE LL AS THE BUYER TO UTILIZE THE MAXIMUM BUILT UP AREA ALLOWABL E AS PER PRESCRIBED RULES. 9. AT THE TIME OF SEARCH A STATEMENT WAS RECORDED FROM THE DIRECTOR SHRI PAWAN KUMAR AGARWAL, WHEREIN HE HAS A DMITTED THE INCOME FROM PROJECTS BIT'ILL AND BIT'IV BASED O N WORKINGS AS ON THE DATE OF SEARCH. THE WORKING WAS MADE ON THE BASIS OF THE SYSTEM OF ACCOUNTING ADOPTED BY THE ASSESSEE TO RECOGNIZE REVENUE ON THE PROJECT. ACCORDING TO THE ASSESSEE, AS AND WHEN THRESHOLD LIMIT OF 30% IS ACHIEVED BOTH IN RESPECT OF SALES AND IN RESPECT OF COST, THE REVENUE IS REC OGNIZED ON % TO THE SALES AND TO THE COST. ACCORDINGLY, THE ADM ISSION WAS ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 10 RECORDED ON THE DATE OF SEARCH. SUBSEQUENTLY, THE ASSESSEE CAME UP WITH THE ARGUMENT THAT DUE TO ADDITIONAL FS I, PERMITTED BY THE GOVT. OF AP, THE ASSESSEE COMPANY IS ENTITLED TO EXPLOIT THE LAND TAKEN BY IT FROM THE APHB ON DE VELOPMENT BASIS TO THE FULL EXTENT POSSIBLE. THEREBY IT ENTER ED INTO SUPPLEMENTARY AGREEMENTS WITH RESPECTIVE BUYERS OF ALL THE PROJECTS AND ACCORDINGLY BOOKS OF ACCOUNT ETC., HAV E BEEN DRAWN AS ON 31'3'2008. BY VIRTUE OF THE PROJECTED REVENUES AND PROJECTED COST OF CONSTRUCTION BASED ON ESTIMAT ES, THE ASSESSEE COMPANY DID NOT REACH THE THRESHOLD LIMIT OF 30% IN RESPECT OF COST OF THE PROJECT AS ON 31'3'2008. THO UGH SALES HAVE BEEN BOOKED 100% IN VIEW OF THE SECOND LIMB OF THE SYSTEM OF ACCOUNTING NO REVENUES HAVE BEEN RECOGNIZ ED DUE TO SHORTFALL OF THE THRESHOLD LIMIT ON ACCOUNT OF T HE COST OF THE PROJECT. 10. THE CIT(A) OBSERVED THAT THE ISSUE TO BE DECIDED IS WHETHER SUPPLEMENTARY AGREEMENTS CAN BE CONSIDERED FOR THE PURPOSE OF PROJECTED REVENUES AS WELL AS PROJECTED COSTS SO AS TO COMPUTE THE ESTIMATED PROFITS ON EACH PROJECT. T HERE IS NO DOUBT ABOUT THE EXISTENCE OF THE SUPPLEMENTARY AGRE EMENTS IN VIEW OF THE FACTS ON RECORD. ALSO IT IS A FACT THAT THE ASSESSEE APPROACHED THE COMPETENT AUTHORITIES WITH REVISED P LANS FOR ENHANCED BUILT UP AREA IN THE PROJECTS UNDER DISPUT E. IT IS ALSO A FACT THAT THE ASSESSEE COMPANY APPLIED FOR NECESSAR Y APPROVALS AND PERMISSIONS FROM VARIOUS DEPARTMENTS SUCH AS FIRE, ENVIRONMENT AND AIRPORT AUTHORITY, ETC. DURIN G ADVANCE ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 11 STAGE OF SUCH APPROVALS FROM VARIOUS DEPARTMENTS, T HE ASSESSEE COULD EXECUTE SUPPLEMENTARY AGREEMENT WITH THE BUYE RS AFTER ENSURING NO BLOCKS IN VIEW OF SUBSEQUENT DENIAL OF APPROVALS FROM THE VARIOUS DEPARTMENTS. ACCORDINGLY, IN THE M ONTH OF MARCH, 2008, IT EXECUTED SUPPLEMENTARY AGREEMENTS W ITH ENHANCED BUILT UP AREA IN RESPECT OF COMMERCIAL COL D SHELL AND PARKING SPACE FOR ENHANCED SALE CONSIDERATION. EVEN IF EXAMINED ON COMMERCIAL LINES, NO PRUDENT BUSINESS M AN OR FOR THAT PURPOSE, NO LAND OWNER WOULD BE IDLING ITS LAN D WITHOUT EXPLOITING TO ITS MAXIMUM COMMERCIAL USAGE WHEN THE GOVT. PERMITS THEM TO CONSTRUCT ADDITIONAL FSI SUBJECT TO CERTAIN CONDITIONS. EVEN IN THE INSTANT CASE, THOUGH IT IS A GOVT. ENTERPRISE, APHB IS VERY MUCH INTERESTED TO THE MAX IMUM USAGE OF THE LAND GIVEN ON DEVELOPMENT TO THE ASSESSEE CO MPANY. THEY HAVE NOTHING TO LOSE BY VIRTUE OF SUCH ADDITIO NAL BUILT UP AREA, ON THE OTHER HAND THEY HAVE EVERYTHING TO GAI N IN VIEW OF THE PERCENTAGE OF REVENUES ON GROSS SALES. THEREBY ANY INCREASE IN ADDITIONAL SPACE IS TO THE ADVANTAGE OF APHB. SIMILARLY, THE DEVELOPER AS WELL AS THE ULTIMATE BU YER IS ALSO BENEFITTED FOR MAXIMUM USAGE OF THE SAME LAND WITHO UT INCURRING ANY EXTRA COST TOWARDS SUCH LAND. THEREFO RE, THE SUPPLEMENTARY AGREEMENTS EXECUTED BY THE ASSESSEE C OMPANY ARE IN LINE WITH THE COMMERCIAL THINKING AND TO MAX IMIZE THE REVENUE TO FULL EXTENT POSSIBLE. HENCE IT IS NOT C ORRECT ON THE PART OF THE AO TO DISREGARD THE SUPPLEMENTARY AGREE MENTS AND CONSEQUENTIALLY THE REVISED BUILT UP AREA AND ENHAN CED ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 12 PROJECTED REVENUES AND COST OF THE PROJECT MERELY O N CONJECTURES AND SURMISES. IT IS TO BE CONSIDERED WH ETHER THE ASSESSEE COMPANY IS ENTITLED TO HAVE THE ADDITIONAL FSI ALLOWABLE AS PER THE GOVT. OF ANDHRA PRADESH GO OR NOT. IF A CASE IS ESTABLISHED THAT THE ASSESSEE COMPANY IS NO T ELIGIBLE TO EXPLOIT THE LAND TO THE MAXIMUM USAGE BY USING THE REVISED GO FOR CONSTRUCTING ADDITIONAL SPACE, THEN THE AO IS J USTIFIED IN REJECTING SUCH SUPPLEMENTARY AGREEMENTS. BUT NO SUC H INELIGIBILITY CRITERIA HAVE BEEN ESTABLISHED BY THE AO TO ARRIVE AT SUCH DECISION. ON THE OTHER HAND, IT IS CONTENDED B Y THE ASSESSEE COMPANY THAT IT HAS RECEIVED THE PERMISSIO N FOR BUILDING THE ADDITIONAL BUILT UP AREA TO SOME OF TH E PROJECTS. THEREFORE, REJECTION OF SUCH SUPPLEMENTARY AGREEMEN TS PURELY ON HYPOTHETICAL BASIS IS NOT JUSTIFIED. IT IS NOT T HE CASE THAT THE ASSESSEE COMPANY IS SUPPRESSING THE COST OF THE PRO JECT. ON THE CONTRARY, THE ASSESSEE IS PROJECTING THE MAXIMU M REVENUE ACCRUALS CONSEQUENT TO THE ENHANCED BUILT UP AREA. IT IS TO BE NOTED HERE THAT ESTIMATED COST OF THE PROJECT IS AR RIVED AT ONLY ON ESTIMATE BASIS KEEPING IN VIEW THE COST IMPLICAT IONS OVER A PERIOD OF TIME. THEREFORE, AO IS NOT CORRECT IN IGN ORING THE SUPPLEMENTARY AGREEMENTS MERELY ON THE GROUND THAT THESE ARE AFTER'THOUGHT AND WITH A VIEW TO AVOID THE TAX. 11. HAVING SAID SO, IT IS NECESSARY TO EXAMINE THE ACCO UNTING SYSTEM ADOPTED BY THE ASSESSEE COMPANY TO RECOGNIZE REVENUE ON THE BASIS OF THRESHOLD LIMIT OF 30% BOTH ON SALES AND ON COST. SUCH SYSTEM ADOPTED BY THE ASSESSEE DOES N OT GIVE ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 13 CORRECT PICTURE OF THE PROFITS ACCRUED TO THE ASSES SEE ON THE PROJECT YEAR AFTER YEAR. IT IS A CASE WHERE THE ASS ESSEE HAS BOOKED 100% SALES. THE COST OF THE PROJECT IS PROGR ESSIVELY SHOWING INCREASE OVER THE YEARS. THE ASSESSEE IS NO T ENGAGED IN ANY ACTIVITY OF ENTERPRISING SUCH AS MARKETING, ETC . IT IS DEALING WITH SINGLE CUSTOMER BY A WRITTEN CONTRACT WHEREIN THE SALE CONSIDERATION IS FIXED. THEREFORE, THE ASSESSEE OUG HT TO HAVE RECOGNIZED THE REVENUE BASED ON THE PROGRESS OF THE PROJECT RATHER THAN FIXING AN ARTIFICIAL LIMIT OF 30% AS TH RESHOLD LIMIT TO RECOGNIZE THE INCOME. THE ASSESSEE IS NOTHING BUT A CIVIL CONTRACTOR EXECUTING THE WORK TO THE SINGLE BUYER B ASED ON THE SPECIFICATIONS OF THE BUYER AND THE APPROVALS OF TH E SANCTIONING AUTHORITY. AS AND WHEN THE WORK IS PROGRESSING THE ASSESSEE SHOULD WORK OUT THE REVENUE BASED ON THE TOTAL SALE S AND THE TOTAL COST OF THE PROJECT VIS'A'VIS WORK COMPLETED AS AT THE END OF THE FINANCIAL YEAR. SUCH SYSTEM OF ACCOUNTING ME THOD WOULD GIVE CORRECT PROFITS RATHER THAN FIXING SOME ARTIFI CIAL PERCENTAGE AS THRESHOLD LIMIT. GUIDELINES OF THE ACCOUNTING ST ANDARDS (AS'7 AND AS'9) PRESCRIBED BY THE ICAI ALSO SUGGEST RECOG NIZING THE INCOME ON PROGRESSIVE PERCENTAGE COMPLETION METHOD OF THE PROJECT. WHEN IT WAS POINTED OUT TO THE AR, IT VEHE MENTLY ARGUED THAT THE HOLDING COMPANY OF THE ASSESSEE M/S . AMBIENCE PROPERTIES LTD., IS FOLLOWING THE SAME MET HOD FOR SO MANY YEARS, THEREFORE, THE ASSESSEE IS ALSO FOLLOWI NG THE SAME METHOD IN RECOGNIZING THE REVENUE, AND THEREFORE, I T IS NOT CORRECT TO DEVIATE FROM REGULAR METHOD FOLLOWED BY IT. ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 14 12. THE CIT(A) OBSERVED THAT THERE IS NO JUSTIFICATION IN THE ARGUMENT OF THE ASSESSEE THAT BECAUSE OF ITS HOLDIN G COMPANY'S METHOD, IT HAD TO FOLLOW SUCH UNIQUE ACCO UNTING SYSTEM. INCOME'TAX ACT IS APPLIED TO EACH ENTITY AN D TO EACH ASSESSMENT YEAR INDEPENDENT OF OTHERS (SUBHDEODAS J ALAN VS. CIT, 26 ITR 617). THERE ARE SO MANY JUDICIAL DECIS IONS DEFENDING THE ACTION OF THE ASSESSING AUTHORITIES TO CHANGE T HE METHOD OF ACCOUNTING WHEN IT WAS FOUND THAT THE METHOD FOLLOW ED BY THE ASSESSEE DOES NOT REPRESENT CORRECT PROFITS FOR THE PURPOSE OF TAXATION. THE MATTER OF TAXABILITY CANNOT BE DECIDE D ON THE BASIS OF ENTRIES WHICH THE ASSESSEE MAY CHOOSE TO M AKE IN HIS ACCOUNTS BUT HAS TO BE DECIDED IN ACCORDANCE WITH T HE PROVISIONS OF LAW. THE CIT(A) REFERRED TO THE APEX COURT DECISION IN THE CASE OF SUTLEJ COTTON MILLS LTD VS. CIT 116 ITR 1. SIMILARLY IN THE CASE OF UP STATE INDUSTRIAL DEVELOPMENT CORPORA TION (225 ITR 703) THEIR LORDSHIPS HAVE HELD THAT PRINCIPLES OF COMMERCIAL ACCOUNTING SHOULD BE APPLIED IN ASCERTAINING PROFIT S AND GAINS. IT IS THE DUTY OF THE ASSESSING AUTHORITY TO CONSID ER WHETHER INCOME CAN BE PROPERLY DEDUCED FROM ACCOUNTS EVEN I F METHOD OF ACCOUNTING IS REGULARLY FOLLOWED, THE AO CAN REJECT IT. ATTENTION IS INVITED TO THE DECISION IN THE CAS E OF CIT VS. SARANGAPUR COTTON MANUFACTURING CO LTD, 6 ITR 36 AN D SUNDARAM & CO LTD. VS. CIT (MAD) 36 ITR 162. 13. THE TERM 'ACCRUAL OF INCOME' USED IN THE COMPANIES ACT, AS EXPLAINED IN THE VARIOUS ACCOUNTING STANDARDS AN D AS ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 15 UNDERSTOOD FOR THE PURPOSE OF TAXATION LAWS IN CERT AIN CIRCUMSTANCES MAY HAVE DIFFERENT MEANINGS DEPENDING ON THE PURPOSE OF LEGISLATION, THE CONTEXT IN WHICH SUCH E XPRESSION HAS BEEN USED AND ON THE INTERPRETATION OF RELEVANT CON TRACTS. FOR TAX PURPOSES, THE ACCRUAL OF INCOME IN THE RELEVANT PREVIOUS YEAR WILL HAVE TO BE DETERMINED IN CONSONANCE WITH THE AMBIT OF INCOME AS PER SEC. 5 OF THE I.T. ACT. IN THE IN STANT CASE, IN VIEW OF THE AGREED SALE CONSIDERATION, AND RECEIPT OF SUCH CONSIDERATION FROM TIME TO TIME, DEPENDING ON THE P ROGRESS OF THE WORK SHOWN BY THE ASSESSEE COMPANY, INCOME ACCR UES PROGRESSIVELY DEPENDING ON THE STAGE OF THE PROJECT . AT EVERY STAGE OF CONSTRUCTION, THE INCOME ACCRUES TO THE AS SESSEE COMPANY. IN THIS LINE OF CIVIL CONSTRUCTION, THE BU ILDER HAS TO BE ASSESSED TO TAX ON THE BASIS OF PERCENTAGE COMPLETI ON METHOD AS SIGNIFICANT RISKS AND REWARDS ARE TRANSFERRED TO THE ULTIMATE BUYERS. THEREFORE, IT IS VERY MUCH WITHIN THE LEGAL JURISDICTION TO ADOPT PERCENTAGE COMPLETION METHOD WITHOUT FIXING A NY ARTIFICIAL LIMITS TO ARRIVE AT PROFITS FOR THE PURP OSE OF TAXATION UNDER I.T. ACT. IN FACT, WHILE GOING WITH THE SYST EM OF ACCOUNTING FOLLOWED BY THE ASSESSEE, THE ARTIFICIAL PERCENTAGE OF 30% FIXED BY THE ASSESSEE WITHOUT ANY REASONABLE BASIS IS ALTERED TO DELETE SUCH A FIXED RATE TO RECOGNIZE TH E INCOME ON REGULAR BASIS. THEREFORE, THERE IS NO BASIC DEVIAT ION FROM THE METHOD FOLLOWED BY THE ASSESSEE. THERE IS BASIC FLA W IN THE METHOD FOLLOWED BY THE ASSESSEE TO HAVE THRESHOLD L IMIT OF 30% AS THE SAID THRESHOLD LIMIT CAN BE DEFERRED BY VARI OUS MEANS. ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 16 THE ASSESSEE IS IN A POSITION TO POSTPONE SOME OF T HE TAX LIABILITIES SO AS TO GET OUT OF THE THRESHOLD LIMIT TO DISCLOSE PROFITS OF THE YEAR. HENCE CORRECT PROFITS CANNOT BE DEDUC ED BY SUCH SYSTEM FOLLOWED BY THE ASSESSEE. ACCORDINGLY, THE I NCOME OF THE ASSESSEE ON BIT'ILL AND BIT'IV IS COMPUTED AS UNDER BY REMOVING THE 30% THRESHOLD LIMIT AND BY FOLLOWING THE PROGRE SSIVE PERCENTAGE COMPLETION METHOD ON THE BASIS OF THE SUPPLEMENTARY AGREEMENTS. 14. IN VIEW OF THE ABOVE DISCUSSION, ACCORDING TO THE C IT(A) THE COMPUTATION OF INCOME IS TO BE MADE AS FOLLOWS: ' PARTICULARS BIT - III (RS.) BIT - III (RS.) ESTIMATED REVENUE AS PER SUPPLEMENTARY AGREEMENT 59,40,00,000 169,68,50,000 ESTIMATED COST AS PER SUPPLEMENTARY AGREEMENT 51,42,87,675 149,32,28,000 WIP COST UP TO 31.3.2008 6,37,14,757 28,07,85,430 % OF WIP TO THE ESTIMATED COST 12.39 16.13 GROSS REVENUE RECOGNISED PROPORTIONATELY 7,35,96,600 27,37,01,905 EXPENDITURE INCURRED 6,37,14,757 24,07,85,430 ESTIMATED COST 98,81,843 3,29,16,475 15. THE CIT(A) OBSERVED THAT WHILE CONSIDERING THE ESTI MATED PROJECT COST, DUE CONSIDERATION WAS GIVEN TO THE FA CT OF BOULDERS AND ROCK SHEET IN THE SITE OF PROJECT BIT' IV. IT IS EVIDENCED BY THE FACT THAT THE ASSESSEE HAD ENGAGED THE CONTRACTOR M/S. INDU PROJECTS FOR A CONSIDERATION O F RS. 96 CRORES FOR LAND DEVELOPMENT AND EXCAVATING THE BOULDERS AN D ROCK SHEETS ETC. THE ABOVE COMPUTATION AS PER THE TABLE IS A REASONABLE ESTIMATION OF PROFIT ON EACH PROJECT AFT ER CONSIDERING THE TOTAL SALE VALUE, PROJECTED COST, A ND COST INCURRED AS ON 31'3' 2008, ETC. IT GIVES RATIONAL P ICTURE OF THE PROFIT ESTIMATION ON THE PROJECT SO FAR EXECUTED. A CCORDINGLY, ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 17 THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ADD A SUM OF RS. 98,81,843/' TOWARDS ESTIMATED PROFIT IN RESPECT OF PROJECT BIT'ILL AND RS. 3,29,16,475/' IN RESPECT OF PROJECT BIT'IV AS AGAINST RS. 4,37,78,993/' AND RS. 47,15,29,320/' ARRIVED AT BY HIM IN RESPECT OF THE ABOVE TWO PROJECTS. THUS, THE TOTAL ADDITION COMES TO RS. 4,27,98,318/' INSTEAD OF RS. 51,53,08,313/' ARRIVED AT BY THE AO. THE SAME MAY BE SUBSTITUTED AS ADDITION TO THE TOTA L INCOME RETURNED BY THE ASSESSEE. AGAINST GIVING RELIEF TO THE ASSESSEE THE REVENUE IS IN APPEAL AND FOR SUSTAINING A PORTI ON OF THE ADDITION MADE BY THE AO, THE ASSESSEE IS IN APPEAL BEFORE US. 16. BEFORE US, THE AR ARGUED THAT THE ASSESSEE COMPANY HAS RECOGNIZED THE INCOME IN SUBSEQUENT YEARS BASING ON 30% THRESHOLD LIMIT AND PAID TAXES ON THE PROFITS; HENC E TAXING IN THIS YEAR THE INCOME/PROFITS ALREADY DECLARED IN THOSE Y EARS WOULD RESULT IN DOUBLE TAXATION OF THE SAME INCOME. ACCOR DING TO THE AR, THE CIT(A) WRONGLY OBSERVED THAT INCOME'TAX IS LEVIED BASED ON THE INCOME ACCRUALS FOR EACH ASSESSMENT YEAR. E ACH ASST. YEAR IS A SEPARATE UNIT AND TAX HAS TO BE COLLECTED ON THE INCOME RELATING TO SUCH ASSESSMENT YEAR. MERELY BEC AUSE TAXES HAVE BEEN COLLECTED IN SUBSEQUENT YEAR IT CANNOT BE CONSIDERED TO EXCLUDE THE INCOME ASSESSABLE IN THE EARLIER YEARS. THEREFORE, THE SUBMISSION OF THE ASSESSEE IS NOT TENABLE AS PER THE PROVISIONS OF LAW. ACCORDING TO THE AR, TH E CIT(A) WRONGLY DIRECTED THE AO TO VERIFY THE ASSESSMENT RE CORDS OF THE ASSESSEE IN SUBSEQUENT YEARS AND ACCORDINGLY GIVE D UE CREDIT ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 18 TO THE PROFITS ASSESSED IN THIS YEAR WHILE COMPUTIN G THE TOTAL INCOME OF THOSE YEARS BY EXCLUDING THE SAME. 17. HE SUBMITTED THAT THERE WAS NO INCRIMINATING MATER IAL FOUND DURING THE COURSE OF SEARCH TO SUGGEST ANY UN DISCLOSED INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. THE ASSESSEE BEING IN REAL ESTATE BUSINESS RECOGNISED T HE INCOME IN ACCORDANCE WITH THE GUIDANCE NOTE ISSUED BY THE INS TITUTE OF CHARTERED ACCOUNTANTS. HE SUBMITTED THAT THE ASSES SEE HAS RECOGNISED THE INCOME BASED ON THE PROPOSED CONSTRU CTION OF BUILT UP AREA AS PER 'AGREEMENT OF SALE' ENTERED WI TH THE CUSTOMERS. BASED ON THIS WORKING, NO REVENUE WAS R ECOGNISED FOR THE YEAR ENDED ON 31.3.2007 AS THRESHOLD LIMIT OF 30% OF COST WAS NOT ACHIEVED FOR ANY OF THE BITS. THE STATEMEN T MADE BY THE MANAGING DIRECTOR U/S. 132(4) OF THE ACT CANNOT BE A REASON FOR FASTENING ADDITIONAL TAX LIABILITY ON TH E ASSESSEE AS THE MD WAS NOT WELL VERSED IN ACCOUNTING AND THERE IS NO MATERIAL TO SUGGEST THAT THE ASSESSEE HAS EARNED TH AT MUCH OF PROFIT WHAT WAS STATED BY HIM IN THE STATEMENT MADE U/S. 132(4) OF THE ACT. THE SUPPLEMENTARY AGREEMENT ENTERED WI TH THE APHB, WHICH IS GOVERNMENT AUTHORITY, CANNOT BE SAID TO BE AN AFTERTHOUGHT AND THAT AGREEMENT WAS VALIDLY ENTERED ON 10.3.2008. IT IS REQUIRED TO BE VALIDLY ACTED UPON . HE SUBMITTED THAT THE STATEMENT WAS MADE BY THE MD BASED ON THE WORKING AVAILABLE AT THE TIME OF SEARCH. HOWEVER, THE SAME HAS SUBSEQUENTLY UNDERGONE CHANGE BECAUSE OF INCREASED COST FOR ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 19 EXCAVATION AS ALSO INCREASED COST ON ACCOUNT OF ADD ITIONAL BUILT UP AREA. 18. WHILE ANSWERING THE QUESTION NO. 15, THE DIRECTOR H AS CLEARLY MENTIONED AS TO WHAT POINT THE REVENUE IS R ECOGNIZED. IT WAS ALSO MADE CLEAR THAT THE PAYMENT OF REVENUE SHA RING OF 4% MADE TO APHB WAS ONLY TO DISCHARGE THE LIABILITY OF THE COMPANY AS ADVANCES HAVE BEEN RECEIVED FROM THE CUSTOMERS. THE TRIBUNAL MAY KINDLY NOTE THAT A DECL ARATION OF INCOME WHICH IS A PART OF THE REGULAR BOOKS OF ACCO UNT UNDER SECTION 132(4), WHEN NO INCRIMINATING MATERIALS OR UNDISCLOSED INCOME OBSERVED, CANNOT BE THE BASIS FOR MAKING AN ASSESSMENT MORE SO WHEN THE STATEMENT IS NOT CORROB ORATING WITH THE FACTS AND RECORDS PRODUCED DURING THE ASSE SSMENT. THE STATEMENT GIVEN BY THE DIRECTOR, SRI PAWAN KUMA R AGARWAL HAS TO BE READ IN TOTALITY, AND THE ASSESSING OFFIC ER CANNOT PICK AND CHOOSE A PART OF THE STATEMENT TO HIS CONVENIEN CE. IT IS CLEARLY MENTIONED IN THE VARIOUS ANSWERS GIVEN TO T HE QUESTIONS RAISED BY THE INVESTIGATION OFFICER THAT IN CASE TH E NECESSARY PERMISSIONS ARE RECEIVED AND IF THE ASSOCIATED COST S AND REVENUE ARE BASED ON WHAT WAS ESTIMATED DURING THAT TIME, THEN, THE PROFIT WOULD BE RS. 399.96 LAKHS FOR BIT' ILL AND RS. 2733 LAKHS FOR BIT'IV. IT IS THEREFORE, CLEAR THAT THE STATEMENT WAS CONDITIONAL ONLY. HE SUBMITTED THAT THE PURPORTED A DMISSION OF INCOME UNDER SECTION 132(4) IS NOT CORROBORATED BY THE FACTS WHICH HAVE SUBSEQUENTLY EMERGED BETWEEN THE DATE OF THE STATEMENT, I.E., 5.12.2007 AND THE CLOSE OF THE ACC OUNTING YEAR ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 20 31.3.2008. THE SUPPLEMENTARY AGREEMENTS WERE ENTER ED ON 18 TH MARCH 2008 BEFORE THE CLOSE OF THE ACCOUNTING YEAR . IT HAS BEEN HELD BY VARIOUS AUTHORITIES THAT NO ADDITION C AN BE MADE SOLELY ON THE BASIS OF THE STATEMENT UNDER SECTION 132(4). IN FACT, THE ANDHRA PRADESH HIGH COURT IN CIT VS. RAMD AS MOTOR TRANSPORT (1999) 238 ITR 177, 183 HELD AS FOLLOWS: THUS, WHERE A PERSON IS FOUND TO BE NOT IN POSSESSION OF ANY INCRIMINATING MATERIAL, QUESTION OF EXAMINING HIM BY THE AUTHORIZED OFFICER DURING THE COURSE OF SEARCH AND RECORDING ANY STATEMENT FROM HIM BY INVOKING THE POWERS UNDER SECTION 132(4), DOES NOT ARISE. THEREFORE, THE STATEMENT OF SUCH A PERSON, RECORDED PATENTLY UNDER SECTION 132(4), DOES NOT HAVE ANY EVIDENTIARY VALUE. THIS PROVISION EMBEDDED IN SECTION 132(4) IS OBVIOUSLY BASED ON THE WELL'ESTABLISHED RULE OF EVIDENCE THAT MERE CONFESSIONAL STATEMENT WITHOUT THERE BEING ANY DOCUMENTARY PROOF SHALL NOT BE USED IN EVIDENCE AGAINST THE PERSON WHO MADE SUCH STATEMENT. WHERE THE FINDING OF THE TRIBUNAL IS BASED ON THE ABOVE WELL'SETTLED PRINCIPLE, SUCH FINDING CANNOT GIVE RISE TO A QUESTION OF LAW. FROM THE ABOVE, IT IS CLEAR THAT THE QUESTION OF EXAMINING ANY PERSON BY THE AUTHORIZED OFFICER ARISES ONLY WHEN HE FINDS SUCH PERSON IS IN POSSESSION OF ANY UNDISCLOSED MONEY OR BOOKS OF ACCOUNT. 19. THE AR SUBMITTED THAT IN THE INSTANT CASE ALSO, THE SUBSEQUENT EVENTS WHICH HAVE TAKEN PLACE AFTER THE DATE OF RECORDING OF THE STATEMENT AND BEFORE 31.3.2008 HAV E HAD A DIRECT BEARING ON THE PROJECT WORKINGS OF EACH OF T HE BITS WHICH ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 21 RESULTED IN NOT ONLY INCREASING IN THE PROJECTED CO ST AS ON 31.3.2008 BUT ALSO THE PROJECTED REVENUE INCREASE S UBSTANTIALLY. DURING THE COURSE OF ASSESSMENT, IT WAS CLEARLY EXP LAINED THAT AS ON 31.3.2008, WHEN THE ACCOUNTS FOR THE YEAR 2007'2 008 WERE DRAWN UP, IT WAS OBSERVED THAT THE COMPANY DID NOT ACHIEVE THE THRESHOLD LIMITS, AND THEREFORE, REVENUE WAS NO T RECOGNIZED. THE ASSESSING OFFICER HAS MERELY MADE HIS ASSESSMEN TS BASED ON THE STATEMENT UNDER SECTION 132(4) OF THE ACT. T HE ENTIRE ASSESSMENT ORDER IS ON THE PRESUMPTION THAT THE SUP PLEMENTARY AGREEMENTS ENTERED WERE AN 'AFTER THOUGHT' AND ONLY MADE WITH AN INTENTION TO ESCALATE THE PROJECTED COST SO THAT REVENUE CANNOT BE RECOGNIZED AS PER THE COMPANY'S ACCOUNTIN G POLICY. IT WOULD BE RELEVANT TO DRAW THE ATTENTION OF THE B ENCH THAT SUPPLEMENTARY AGREEMENT WAS ALSO EXECUTED WITH THE BIT'I BUYER ON 20.3.2008 I.E., AFTER THE DATE OF STATEMEN T MADE UNDER SECTION 132(4) WHICH HAS BEEN ACCEPTED BY THE ASSES SING OFFICER AS NO NEGATIVE INFERENCE IS MADE ON THE BIT 'I IN THE ORDER. THE FACT OF THE MATTER IS THAT THE PROJECT W ORK IS BEING CARRIED'OUT AS PER SUPPLEMENTARY AGREEMENTS AND SAN CTIONS OBTAINED ACCORDINGLY. THE SALE CONSIDERATION AGREED UNDER THE SUPPLEMENTARY AGREEMENT IS ALSO ACCOUNTED UNDER MER CANTILE SYSTEM IN THE BOOKS, AND IS THE BASIS FOR RECOGNIZI NG REVENUE AND DETERMINING PROFITS FOR EACH OF THE YEAR AND TA X PAID ACCORDINGLY. ASSESSING OFFICER HAS COLLECTED TAX IN SUBSEQUENT YEAR ON THE ADDITIONAL REVENUE WHICH THE COMPANY IS EARNING ON ACCOUNT OF INCREASED CONSTRUCTION AS PER THE SUP PLEMENTARY ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 22 AGREEMENTS. THE ASSESSMENT FOR ASSESSMENT YEAR 2009 '10 AND 2010'11 HAVE BEEN COMPLETED AND THE ASSESSING OFFIC ER HAS ACCEPTED BOTH GROSS REVENUE AND REVISED COST OF CON STRUCTION AS PER THE SUPPLEMENTARY AGREEMENT FOR BIT'III AND BIT' IV. THE DY. COMMISSIONER OF INCOME'TAX. CENTRAL CIRCLE'2, H AS CONFIRMED IN HIS REMAND REPORT THE FACT THAT THERE WAS A SUPPLEMENTARY AGREEMENT ENTERED BETWEEN THE COMPANY AND THE BUYERS VIZ., AGR CONSTRUCTIONS PVT. LTD., AND M URTHY 4 YOU INFRA PVT. LTD., AND THE SAME SUPPLEMENTARY AGREEME NT THAT WAS PRODUCED FOR VERIFICATION DURING THE ASSESSMENT PRO CEEDINGS BY THE COMPANY WERE FURNISHED BY THE BUYERS ALSO. 20. THE AR SUBMITTED THAT BENCH MAY TAKE NOTE OF THIS ADMISSION BY THE ASSESSING OFFICER WHICH UNDERLINES THE FACT THAT THERE WAS A SUPPLEMENTARY AGREEMENT WHICH IS L EGAL AND' BINDING AND AGREED TO BY THE COMPANY AND THE TWO RESPECTIVE BUYER COMPANIES. THE COPY OF REMAND REPO RT AND THE REPLY BY THE ASSESSEE ARE ON RECORD. THE COST O F THE PROJECTS INCREASED ON ACCOUNT OF (I) ROCK CUTTING A ND EXCAVATION COSTS WHICH WERE DONE MANUALLY AS AGAINS T THE CONTROLLED BLASTING ENVISAGED EARLIER. THIS WAS NEC ESSITATED AS THE POLICE AUTHORITIES DID NOT ALLOW THE COMPANY TO GO FOR CONTROLLED BLASTING AND CRIMINAL CASES WERE FILED B Y THE IMMEDIATE NEIGHBOURS FOR USING EXPLOSIVES FOR ROCK' BLASTING. AT THE TIME THE ORIGINAL AGREEMENTS WERE MADE AND PRIC ES AGREED WITH THE CUSTOMERS, IT WAS NOT POSSIBLE TO COMPREHE ND THIS ASPECT. THIS HAS RESULTED IN SUBSTANTIAL INCREASE I N THE COST OR THE ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 23 EXCAVATIONS. THE BENCH MAY KINDLY FURTHER NOTE THAT THE ENTIRE LAND EXCAVATION COSTS HAVE BEEN INCURRED AND PAID I N THE FINANCIAL YEARS 2007'2008 AND 2008'2009 FOR ALL THE BITS INCLUDING BIT'III AND BIT'IV AND VERIFIED BY THE AS SESSING OFFICER DURING THE COURSE OF SCRUTINY ASSESSMENT FOR THE AS SESSMENT YEAR 2009'10 AND ACCEPTED (II)AS THE GROSS REVENUE INCRE ASED, THE REVENUE SHARING WITH APHB OF 4% OF GROSS REVENUE AL SO INCREASED RESULTING IN THE COST BEING INCREASED. IT IS WRONG ON THE PART OF THE ASSESSING OFFICER TO MENTION IN HIS REMAND REPORT THAT THE SUPPLEMENTARY AGREEMENTS FOR BIT'IV WAS NO T SUBMITTED BY THE COMPANY TO APHB. THE COMPANY HAS BEEN REGULA RLY SUBMITTING ALL SALE AGREEMENTS, SUPPLEMENTARY AGREE MENTS AND COPIES OF SANCTION PLANS ETC., TO APHB. THE COMPANY IS ALSO KEEPING APHB INFORMED THROUGH THE PROJECT COORDINAT OR SPECIFICALLY NOMINATED BY THEM FOR THE DEVELOPMENT WORK BEING CARRIED BY THE COMPANY. 21. THE AR SUBMITTED THAT COMPANY IS ALSO REGULARLY DISCHARGING ITS OBLIGATIONS OF PAYING THE REVENUE S HARE AT THE CONTRACTED RATE OF 4% FOR BITS I TO IV TO APHB. THE HON'BLE BENCH MAY ALSO NOTE THAT WHILE MAKING THE REVENUE SHARE P AYMENT, THE TOTAL CONSIDERATION AS PER THE SUPPLEMENTARY AG REEMENT IS ALSO IN FORMED TO APHB, AND REVENUE SHARE PAID ACCO RDINGLY. IN FACT APHB IS GETTING MORE REVENUE BECAUSE OF THE SUPPLEMENTARY AGREEMENTS. WITH REGARD TO THE OBSER VATIONS MADE IN THE REMAND REPORT BY THE HON'BLE ASSESSING OFFICER ON THE DPR (DETAILED PROJECT REPORT), THE HONBLE BENC H MAY KINDLY ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 24 NOTE THAT DPR IS NOT AN APPROVAL. THE DPR IS FOR T HE LIMITED PURPOSE OF ACHIEVING FINANCIAL CLOSURE AND IT WAS R EQUIRED TO BE SUBMITTED BEFORE GETTING THE POWER OF ATTORNEY FROM APHB. THE POWER OF ATTORNEY WAS EXECUTED BY APHB IN FAVOUR OF THE COMPANY ON 04.01.2006. 22. HE SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO IN HIS ORDER GIVEN CLEAR FINDING S WITH REGARD TO SUPPLEMENTARY AGREEMENT AS WELL AS THE REVISED P ROJECT COST WITH REGARD TO THE INCREASE IN THE PROJECT COST ALS O, THE CIT(A) IN HIS FINDINGS UNDER PARA 5.6 ON PAGE 16 HAS CLEARLY GIVEN A FINDING THAT BECAUSE OF THE FACT THAT BOULDERS AND ROCK SHEETS, THE ASSESSEE HAD TO INCUR A COST OF RS. 96 CRORES F OR LAND DEVELOPMENT AND EXCAVATING THE BOULDERS AND ROCK SH EETS. HE REQUESTED THE BENCH TO NOTE THAT THE REVISED REVENU E AS PER THE SUPPLEMENTARY AGREEMENT FOR BOTH BIT'III AND BI T'IV AS WELL AS THE REVISED COST WAS DULY ACCEPTED BY THE ASSESS ING OFFICER IN THE SUBSEQUENT ASSESSMENT YEARS 2009'10 AND 2010 '11. 23. HE SUBMITTED THAT THE ASSESSEE IS A BUILDER AND HE IS SELLING CONSTRUCTED BUILDING ALONG WITH LAND APPURT ENANT THERETO AS PER THE AGREEMENTS. THE GROSS REVENUE A S PER THE SUPPLEMENTARY SALE AGREEMENTS WILL REMAIN THE SAME FOR EACH OF THE ASSESSMENT YEARS. SIMILARLY, THE ESTIMATED P ROJECT'COST WILL ALSO REMAIN THE SAME SUBJECT TO INCREASE/DECREASE O N ACCOUNT OF FRESH ESTIMATIONS BASED ON ACTUAL CONSTRUCTION W ORK DONE, AND COST INCURRED THERETO. THERE CANNOT BE A CASE THAT THE ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 25 DEPARTMENT WILL ACCEPT A LOWER SALES FIGURE FOR THE SAME PROJECT IN ONE YEAR AND HIGHER SALES FIGURE IN THE SUBSEQUENT YEARS. THE AR REQUESTED THE BENCH TO KINDLY ACCEPT AND APPROVE THE FINDINGS MADE BY THE COMMISSIONER IN HI S ORDER WITH REGARD TO THE GENUINENESS OF THE SUPPLEMENTARY AGREEMENTS AND THE CONSEQUENTIAL INCREASE IN THE PR OJECT COST AND PROJECT REVENUE. 24. FURTHER REGARDING ASSESSEE'S APPEAL THE AR SUBMITTE D THAT WHILE THE FINDINGS MADE BY THE COMMISSIONER OF INCO ME TAX (A) WITH REGARD TO THE SUPPLEMENTARY AGREEMENTS AS WELL AS THE COST OF THE PROJECT IS TRUE AND CORRECT, THE ASSESS EE OBJECTS TO THE FACT THAT THE COMMISSIONER OF INCOME TAX (A) HA S THRUST HIS OWN ACCOUNTING POLICY ON THE COMPANY AND ARRIVED :A T A PROFITS FROM THE PROJECT OF BIT'ILL AND BIT'IV IGNO RING THE ACCOUNTING POLICY FOLLOWED CONSISTENTLY BY THE COMP ANY. THE AR SUBMITTED THAT THE ACCOUNTING POLICY FOLLOWED BY THE COMPANY FOR REVENUE RECOGNITION IS IN LINE WITH THE ICAI PRONOUNCEMENTS ON THIS SUBJECT. THE ACCOUNTING POL ICY FOLLOWED BY THE COMPANY IS MENTIONED IN THE AUDITED FINANCIAL STATEMENTS WHICH ARE ENCLOSED HEREWITH. THE THRESH OLD LIMIT OF 30% IS NOT AN ARTIFICIAL LIMIT BUT IS AN ACCEPTED A CCOUNTING PRACTICE SINCE TILL THE COST INCURRED ON THE PROJEC T ACHIEVES A DESIRED LEVEL, COST ESTIMATION CANNOT BE DONE PROPE RLY, AND WHERE THE COMPANY FOLLOWS 'PERCENTAGE COMPLETION ME THOD' WITHOUT PROPER ESTIMATIONS, THERE WOULD BE NO CONSI STENCY IN THE REVENUE REPORTING FROM YEAR'TO'YEAR AND FLUCTUA TIONS IN THE ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 26 PROFIT OF THE PROJECT WILL NOT BE CONSISTENT FROM Y EAR TO YEAR. THE COMMISSIONER OF INCOME TAX (APPALS) CANNOT THRUST A NEW POLICY WHEN THE ASSESSING OFFICER HAS ACCEPTED THE ACCOUNTING POLICY FOLLOWED BY THE COMPANY SINCE THE ADDITIONS MADE BY HIM IN THE ASSESSMENT ORDER WERE NOT ON ACCOUNT OF ACCOUNTING POLICY FOLLOWED BY THE COMPANY BUT ON AC COUNT OF THE ASSESSING OFFICER NOT ACCEPTING THE SUPPLEMENTA RY AGREEMENT. IN FACT, THE ASSESSING OFFICER HAS ENDOR SED THE ACCOUNTING POLICY OF THE COMPANY. IN THE CIRCUMSTAN CES THAT THE ADDITIONS WERE NOT MADE ON ACCOUNTING POLICY IS SUED, CAN THE HON'BLE COMMISSIONER OF INCOME TAX (A) BE JUSTI FIED IN MAKING HIS OWN ACCOUNTING POLICY AND THRUSTING IT O N THE COMPANY, MORE SO, WHEN THE ACCOUNTS HAVE BEEN AUDIT ED, AND THE STATUTORY AUDITORS HAVE NOT MADE ANY COMMEN T ON THE ACCOUNTING POLICY OF THE COMPANY. 25. THE LEARNED AR SUBMITTED THAT WHERE THE ACCOUNTS HA VE BEEN AUDITED, THERE CAN BE NO JUSTIFICATION FOR CHA NGING THE ACCOUNTING POLICY BY THE COMMISSIONER OF INCOME TAX (APPEALS). HE REQUESTED THE BENCH TO KINDLY NOTE TH AT THE ACCOUNTING POLICY FOLLOWED BY THE COMPANY HAS ALSO BEEN ENDORSED BY THE TRIBUNAL, HYDERABAD, IN THE CASE OF ANOTHER GROUP COMPANY, VIZ.. OMEGA SHELTERS PRIVATE LIMITED WHEREIN THE SAME ISSUE WAS RAISED BY THE DEPARTMENT. THE H ON'BLE BENCH MAY FURTHER NOTE THAT THE COMPANY ENTERED INT O SUPPLEMENTARY AGREEMENTS ON 28.09.2006 WITH BIT'I C USTOMERS AND 25.06.2007 WITH BIT'II CUSTOMERS. THE ASSESSMEN TS WERE ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 27 MADE FOR THE ASSESSMENT YEARS 2005'06, 2006'07 AS W ELL AS 2007'08 BY ACCEPTING THE ACCOUNTING POLICY FOLLOWED BY THE COMPANY SINCE NO ADDITIONS WERE MADE BY THE ASSESSI NG OFFICER. THE HON'BLE SUPREME COURT IN THE CA SE OF APOLLO TYRES LTD. VS. CIT (255 ITR 273) HELD THAT THE BOOK PROFI T AS CERTIFIED BY THE STATUTORY AUDITORS AND ADOPTED BY THE GENERAL M EETING SHOULD BE ACCEPTED BY THE INCOME TAX DEPARTMENT. TH E SYSTEM OF ACCOUNTING CONSISTENTLY ADOPTED BY THE AS SESSEE SHOULD NOT BE DISTURBED BY THE ASSESSING OFFICER/C OMMISSIONER OF INCOME TAX UNLESS THERE IS POSITIVE INFERENCE OF AN UNDERSTATEMENT OF INCOME WITH RESPECT OF THE BOOKS OF ACCOUNT. IN THE CASE OF THE COMPANY, THERE IS NO UNDERSTATEMENT OF INCOME BECAUSE OF THE ACCEPTED AN D CONSISTENT ACCOUNTING POLICY FOLLOWED BY THE COMPAN Y. THE HON'BLE BENCH IS THEREFORE REQUESTED TO DELETE THE ADDITIONS MADE BY THE HON'BLE COMMISSIONER OF INCOME TAX (APP EALS) BY APPLYING HIS OWN ACCOUNTING POLICY AND REJECTING TH E CONSISTENT ACCOUNTING POLICY BEING FOLLOWED BY THE COMPANY. 26. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT TH E ASSESSEE COMPANY ENTERED INTO A DEVELOPMENT AGREEME NT INVOLVING ISSUE OF POWER OF ATTORNEY BY THE AP HOUS ING BOARD FOR DEVELOPMENT OF 19 ACRES AND 35 GUNTAS AT GACHI BOWL I, HYDERABAD. THE ASSESSEE WAS TO PAY RS. 1.65 CRORES PER ACRE AND ALSO A REVENUE OF 1.75 % OF SALES ON RESIDENTIA L DEVELOPMENT AND 2% OF SALES (REVENUE) ON COMMERCIAL DEVELOPMENT WHICH WAS SUBSEQUENTLY ENHANCED TO 3.5% AND ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 28 4%. THE ASSESSEE DIVIDED THE LAND OF 19.35 ACRES I NTO 5 BITS AND ENTERED INTO SEPARATE SALE AGREEMENTS FOR EACH OF T HESE BITS. THE MAIN ISSUE IN THESE ASSESSMENTS INVOLVES BITS 3 AND 4. THE MD OF THE COMPANY, IN COURSE OF HIS 132(4) STATEMEN T ON 5/12/2007, OFFERED RS. 31 CRORES APPROXIMATELY AS T HE INCOME FROM DEVELOPMENT OF BITS 3 AND BIT 4 AS GIVEN IN TA BLE 1 AS PER PROJECT COMPLETION METHOD READ WITH THEIR ACCOUNTIN G POLICY OF RECOGNIZING REVENUE IF SALES AS WELL AS WORK IN PRO GRESS (CONSTRUCTION COST) EXCEEDS 30% THRESHOLD LIMIT OF TOTAL ESTIMATED SALES AND TOTAL PROJECT COST.(ANSWER TO Q 13 AND 17). THE DECLARATION WAS SUBJECT TO RECEIPT OF NECESSARY PERMISSIONS BY 31/3/08 AND BY 31/3/08, THERE WERE NO APPROVALS PENDING. THE COMPANY, HOWEVER, DID NOT OFFER THESE INCOMES I N THE RETURNS FILED AND WHEN QUERIED STATED THAT, THE EXP ENDITURE INCURRED (WORK IN PROGRESS}DID NOT CROSS THRESHOLD LIMIT OF 30% AS ON 31/3/2008 EVEN THOUGH THE SALES WERE COMPLETED 1 00%. THIS HAPPENED BECAUSE, ON ACCOUNT OF A SUPPLEMENTARY AGREEMENT WITH THE BUYERS, THE COMPANY REVISED BOTH ITS SALES AND TOTAL COST FIGURES. 27. THE DR SUBMITTED THAT THE AO REJECTED THIS REVISED WORKING AND ALSO THE SUPPLEMENTARY AGREEMENTS HOLDI NG THEM TO BE AN 'AFTERTHOUGHT' TO AVOID TAXES AND PROCEEDE D TO ASSESS THE INCOME. THE CIT(A) , REJECTED THE AO'S WORKING ON THE STAND THAT SUPPLEMENTARY AGREEMENTS ARE A RUSE. HE HOWEVER STATED THAT THE 30% THRESHOLD LIMIT OF ASSE SSEE IS ARTIFICIAL AND REJECTED THE SAME. HE HELD THAT UNDE R PROJECT ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 29 COMPLETION METHOD, REVENUE HAS TO BE RECOGNIZED TO THE EXTENT WORKS ARE DONE IN A CONTINUOUS MANNER AND SO PROCEEDED TO COMPUTE THE INCOME BY ADOPTING THE % O F WORKS DONE AND APPLYING THE SAME TO TOTAL EXPECTED SALES TO ARRIVE AT THE REVENUE THAT OUGHT TO HAVE BEEN RECOGNIZED. HE ACCEPTED THE REVISED SALES AS WELL AS COST FIGURES OF ASSESSEE AND ONLY MADE A PROPORTIONATE ASSESSMENT. THE GOVT RELAXED FSA RULES AND THE ASSESSEE GOT MORE AREA TO BUILD A ND SELL. THIS LED TO ENHANCEMENT OF BUILT UP AREA AND PARKING SPA CE AVAILABLE FOR SALE AND CONSEQUENTLY THE EXPECTED RE VENUE FROM SALES AS WELL AS THE COST CONSTRUCTION GOT REVISED. 28. HE DREW OUR ATTENTION TO THE CHRONOLOGICAL EVENTS T OOK PLACE IN THE CASE OF THE ASSESSEE WHICH ARE AS FOLL OWS: S. NO. EVENT DATE 1. DEVELOPMENT AGREEMENT WITH APHB 30.04.2005 2. SALE AGREEMENT (ORIGINAL) WITH AGR CONSTRUCTIONS FOR BIT'3 FOR 29.25 CRORES. 17.03.2006 3. SALE AGREEMENT FOR BIT'4 WITH MURTY 4 YOU INFRA SERVICES FOR RS. 105.50 CRORES 15.03.2007 4. APPLICATION TO GHMC FOR APPROVAL OF ORIGINAL PLANS 17.03.2006 5. SUPPLEMENTARY AGREEMENTS FOR BIT'I AND BIT'2 28.09.2006 25.06.2007 6. DATE OF SEARCH 09.10.2007 7. 132(4) STATEMENT 05.12.2007 8. SUPPLEMENTARY AGREEMENT FOR BIT'3 18.03.2008 9. SUPPLEMENTARY AGREEMENT FOR BIT'4 10.03.2008 10. DATE OF SUBMISSION OF REVISED PLANS TO GHMC FOR APPROVAL 13.05.2009 FOR BIT'3 30.06.2009 ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 30 FOR BIT'4 11. APPROVAL OF GHMC CAME ON 24.10.2009 29. FURTHER HE SUBMITTED THAT THE ASSESSEE HAD ALREADY REVISED AGREEMENT FOR BIT'1 AND BIT'2 BY 25/6/07 IT SELF AND IF ANYTHING IN THIS NATURE WAS IN THE OFFING FOR BIT'3 AND BIT'4, THE MD WOULD HAVE MENTIONED IT IN HIS STATEMENT OR MADE EFFORTS BY THEN. THERE IS NOTHING. THE SUPPLEMENTARY AGREE MENTS WERE ENTERED INTO ON 18/03/08 AND 10/3/08 BUT THE LETTER S SEEKING APPROVAL FOR REVISED PLANS INCORPORATING THE ENHANC EMENT IN BUILT UP AREA AND PARKING AREA WERE FILED ONLY ON 1 3/5/09 AND 30/06/2009 AND THE APPROVALS CAME ON 24/10/09. NONE OF THE PLANS WERE SANCTIONED AS ON 31/3/08. IT DOES NOT A PPEAR THAT APHB WAS INVOLVED WITH THESE REVISED PLANS AT LEAST TILL 31/3/08. THE AGREEMENT REGISTERED FOR BIT'4 WAS HALF BAKED A ND INCOMPLETE AS IT WAS NOT SIGNED AT MANY PLACES AND ALSO HAD BLANKS FOR COMPENSATION TO BE PAID FOR NON PERFORMA NCE. THE SALE AGREEMENTS REVISING THE REVENUE AND AREA OF SA LE WERE ENTERED INTO ON 18/3/08 AND 10/3/08 BUT HOW CAN THE COST OF CONSTRUCTION BE DETERMINED AND ESTIMATED WITHOUT PL ANS? THE PLANS WERE SUBMITTED IN MAY AND JUNE OF 2009 SHOW T HAT THEY WERE NOT THERE IN MARCH 2008. THE REVISION AS BROUG HT OUT IN TABLE 6 IS PATENTLY TO ASSESSEE'S DEVELOPERS DISADV ANTAGE. THE ENTIRE ADDITIONAL REVENUE IS EQUAL TO OR LESS THAN ENHANCED COST (AS IN BIT 4). SO WHY SHOULD ANYONE BUILD AT A LOSS ? THE 'TAKING ADVANTAGE' OF ENHANCED FSA RULES IS TO MAKE MORE MO NEY ' NOT LESS. THE ROCK CUTTING COSTS ARE SAID TO BE ABN ORMAL FOR BIT'4 BUT THEN THEY WERE THERE FROM THE BEGINNING ' NOT A NEW ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 31 DISCOVERY. SO COSTS WOULD BE PASSED ON OR NOTHING STOPS THE ASSESSEE TO SELL THE EXTRA SPACE TO OTHERS. IT NEE D NOT SELL AT A LOSS TO THE SAME BUYER. THE CIT(A) ACCEPTED THE SUP PLEMENTARY AGREEMENTS WITH THE CONCOMITANT ENHANCED COST ESCAL ATIONS ALONG WITH DEPRESSED REVENUES WITHOUT A QUESTION. T HIS FLIES AGAINST ALL THE NORMS AS ANYONE WILL SELL EXTRA SPA CE AT A HIGHER COST THAN THE ORIGINAL VALUE (PASSAGE OF TIME) IS A N ACCEPTED BUSINESS PRACTICE. THIS ITSELF SHOULD HAVE TRIGGERE D THE QUESTION THAT THE ASSESSING OFFICER WAS RAISING HOW MUCH 'MA KE BELIEVE' TO SUIT THE PURPOSE IS THE SUPPLEMENTARY AGREEMENT AND HOW RELIANCE CAN BE PLACED ON THEM TO ARRIVE AT REVENUE FOR 2007' 08 FY KEEPING IN VIEW THE POSITION TILL 31.03.2008. THE ORDER OF THE ASSESSING OFFICER THEREFORE MAY BE RESTORED. 30. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THERE WAS A SEARCH ACTION ON 9 .10.2007 IN THE BUSINESS PREMISES OF AMBIENCE PROPERTIES LTD. C ONSEQUENT TO THE SEARCH ACTION, INVESTIGATION WAS MADE IN THE CASE OF THE ASSESSEE BY DDIT (INV). ON 5.1.2007 THE ASSESSEE F URNISHED DETAIL OF ESTIMATION OF PROFIT AS FOLLOWS: PARTICULARS BIT' III BIT'IV TOTAL ESTIMATED SALES (IN CR.) 29.25 105.45 BOOKINGS UP TO 31'3'2007 29.25 105.45 BOOKINGS FROM 1'4'07 TO 31'10'07 ' ' % OF BOOKING MADE UP TO 31'3'07 100 100 TOTAL ESTIMATED WIP (IN CR.) 17.33 35.63 WIP INCURRED UP TO 31'3'07 (IN CR.) 4.91 10.42 WIP INCURRED FROM 1'4'07 TO 31'10' 07 (IN CR.) 0.9 0 3.53 WIP UP TO 31'10'07 (IN CR.) 5.81 13.95 % OF WIP AS ON DATE OF SEARCH 33.57 39.16 ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 32 REVENUE TO BE RECOGNIZED (IN CR.) 9.81 41.29 ESTIMATED PROFIT ADMITTED (INCR.) 3.99 27.33 31. AS PER THIS TABLE, THE ASSESSEE'S INCOME IS RS. 3.9 9 CRORES FROM BIT'3 AND RS. 27.33 CRORES FROM BIT'4. HOWEVER , THE ASSESSEE HAS NOT SHOWN THIS INCOME IN ITS RETURN OF INCOME A ND ACCORDING TO THE ASSESSEE THERE WAS SUPPLEMENTARY AGREEMENT A S PER WHICH THE ASSESSEE HAS NOT ACHIEVED THE THRESHOLD L IMIT OF 30% TO RECOGNISE INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND AS PER THE SUPPLEMENTARY AGREEMEN T, REVISED ESTIMATE REVENUE AND FLOOR SPACE ARE AS FOL LOWS: BITS NAME OF THE CUSTOMER DATE OF SUP. AGR. ESTIMATED REVENUE ESTIMATED COST DETAILS OF CONSTRUCTION III AGR CONSTNS. 18.3.08 RS. 59.40 CR (RS. 29.25 CR AS PER ORI. AGR.) RS. 51.07 CR (RS. 17.33 CRS AS PER ORI. AGR.) COMMERCIAL COMPLEX: 414000 SFT OF BUILTUP AREA (AS AGAINST 150000 SFT) 207000 SFT PARKING SPACE (AS AGAINST 19000 SFT) IV MURTHY 4 YOU INFRA 10.3.08 RS. 169.68 CR (RS. 105.45 CR AS PER ORI. AGR.) RS. 130.55 CR (RS. 35.63 CR AS PER ORI. AGR.) HOTEL: 555000 SFT BUILTUP AREA (AS AGAINST 320000 SFT) 305000 SFT FOR PARKING SPACE (66000 SFT) 32. ACCORDING TO THE ASSESSEE, THE ESTIMATED REVENUE HA S GONE UP FROM RS. 29.25 CRORES TO RS. 59.40 CRORES F OR BIT'3. ACCORDINGLY THE ESTIMATED COST ALSO GONE FROM RS. 1 7.33 CRORES TO RS. 51.07 CRORES. IN CASE OF BIT'5 ESTIMATED CO ST GONE UP TO RS. 130.55 CRORES FROM RS. 35.63 CRORES AND SALE CO NSIDERATION ALSO WAS AT RS. 105.45 CRORES AND THERE WAS NO ACHI EVING OF 30% THRESHOLD LIMIT TO RECOGNISE THE INCOME. CONTRARY TO THIS, THE AO IS NOT WILLING TO ACCEPT THE SUPPLEMENTARY AGREEMEN T ENTERED BY THE ASSESSEE AS THEY WERE ENTERED AT THE FAG END OF THE YEAR. ACCORDING TO THE AO THE ASSESSEE'S INTENTION IS TO MANIPULATE PROFIT FOR THE CURRENT YEAR BY DEFERMENT OF TAX ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 33 LIABILITY. ACCORDINGLY, HE COMPUTED THE INCOME OF THE ASSESSEE AS FOLLOWS: BIT' III ESTIMATED REVENUE AS PER ORIGINAL AGREEMENT ' RS. 2 9.25 CRORES ESTIMATED COST AS PER ORIGINAL AGREEMENT ' RS. 17. 33 CRORES WIP COSTS INCURRED UP TO 31'3'2008 ' RS. 6.37 C RORES PERCENTAGE OF WIP TO THE ESTIMATED COST ' 36. 75% GROSS REVENUE RECOGNIZED PROPORTIONATELY ' RS. 10, 74,93,750 LESS: EXPENDITURE INCURRED ' RS. 6,37,14,757 ESTIMATED PROFIT ' RS. 4,37,78,993 BIT' IV ESTIMATED REVENUE AS PER ORIGINAL AGREEMENT ' RS. 1 05.45 CRORES ESTIMATED COST AS PER ORIGINAL AGREEMENT ' RS. 3 5.63 CRORES WIP COSTS INCURRED UP TO 31'3'2008 ' RS. 24.37 CRORES PERCENTAGE OF WIP TO THE ESTIMATED COST ' 6 7.55% GROSS REVENUE RECOGNIZED PROPORTIONATELY ' RS. 71 ,23,14,750 LESS: EXPENDITURE INCURRED ' RS. 24,07,85,430 ESTIMATED PROFIT ' RS. 47,15,29,320 33. ON APPEAL, THOUGH THE CIT(A) AGREED WITH THE ARGUME NT OF THE ASSESSEE'S COUNSEL, HOWEVER, HE SUSTAINED A PORTION OF THE ADDITION AND RECOMPUTED THE PROFIT OF THE ASSES SEE AS FOLLOWS: PARTICULARS BIT - III (RS.) BIT - III (RS.) ESTIMATED REVENUE AS PER SUPPLEMENTARY AGREEMENT 59,40,00,000 169,68,50,000 ESTIMATED COST AS PER SUPPLEMENTARY AGREEMENT 51,42,87,675 149,32,28,000 WIP COST UP TO 31.3.2008 6,37,14,757 28,07,85,430 % OF WIP TO THE ESTIMATED COST 12.39 16.13 GROSS REVENUE RECOGNISED PROPORTIONATELY 7,35,96,600 27,37,01,905 EXPENDITURE INCURRED 6,37,14,757 24,07,85,430 ESTIMATED COST 98,81,843 3,29,16,475 34. ADMITTEDLY, THIS IS A SEARCH ASSESSMENT. ASSESSMEN T IS TO BE BASED ON SEIZED MATERIAL OR ANY OTHER MATERIAL W ITH THE AO. 'PROJECT PERCENTAGE METHOD ' IS AN ACCEPTED METHOD OF ACCOUNTING, PARTICULARLY FOR LONG TERM PROJECTS WHI CH TAKE ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 34 SEVERAL YEARS FOR COMPLETION, ACCOUNTING FOR THE PR OFIT ON PRO' RATA BASIS, WHEREBY THE PROFIT IS TAKEN INTO ACCOUN T ON THE BASIS OF PERCENTAGE COMPLETION METHOD THOUGH NO FINAL SAL ES HAD BEEN MADE WHICH WOULD MATERIALISE ONLY ON COMPLETIO N OF CONSTRUCTION, YET SALE AGREEMENT HAD BEEN ENTERED I NTO AND ADVANCE RECEIVED THEREUNDER. THE ASSESSEE HAS BEEN MAINTAINING BOOKS OF ACCOUNT IN THE PRESENT CASE. NO DEFECTS ARE NOTICED IN THE BOOKS OF ACCOUNT. THE INCOME/LO SS HAS BEEN ARRIVED AT BY THE ASSESSEE AFTER TAKING ALL THE DIR ECT AND INDIRECT EXPENSES INCURRED BY THE ASSESSEE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. AS SUCH, EVEN THOUGH NO SALES HAD A DMITTEDLY BEEN MADE DURING THE YEAR IN RESPECT OF BIT'3 AND B IT'4 PROJECTS, NO FAULT COULD BE POINTED OUT WHERE PROFI TS ARE ESTIMATED ON THE BASIS PROJECT PERCENTAGE METHOD. FURTHER, MERE DIFFERENCE IN ACCEPTING THE SUPPLEMENTARY AGRE EMENTS BY THE AO CANNOT BE A REASON TO JUSTIFY THE ADDITIO NS MADE BY THE AO OR SUSTAINED BY THE CIT(A). THERE IS A SUPP LEMENTARY AGREEMENT ENTERED BY THE ASSESSEE WHICH WAS PRODUCE D BEFORE THE LOWER AUTHORITIES. THE ASSESSMENT OF SU BSEQUENT ASSESSMENT YEARS ALSO IS DONE IN ACCORDANCE WITH TH E SUPPLEMENTARY AGREEMENTS. THE DEPARTMENT CANNOT TH RUST THE ADDITIONAL TAX LIABILITY ON THE ASSESSEE BY NOT REC OGNISING THE SUPPLEMENTARY AGREEMENTS. THE APPARENT AGREEMENT S HOULD BE CONSIDERED AS TRUE AND CORRECT UNLESS THERE IS A N EVIDENCE TO SHOW THAT IT IS A DEVICE FOLLOWED BY THE ASSESSE E TO DEFER THE TAXABILITY. ONCE THE AO ACCEPTED THE SUPPLEMENTARY ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 35 AGREEMENT IN ASSESSING THE ASSESSEE'S INCOME IN SUB SEQUENT ASSESSMENT YEARS, FOR THE ASSESSMENT YEAR UNDER CON SIDERATION IT CANNOT BE OVERLOOKED. THE REASON GIVEN BY THE AO F OR NOT CONSIDERING THE SUPPLEMENTARY AGREEMENTS IS THAT TH E SUPPLEMENTARY AGREEMENTS ARE ENTERED AT THE FAG END OF THE YEAR. IT IS A BUSINESS DECISION TO ENTER INTO SUPP LEMENTARY AGREEMENTS IN THE INTEREST OF BUSINESS OF THE ASSES SEE, THE AO CANNOT THRUST UPON THE ASSESSEE TO PAY TAX THOUGH T HERE IS A VALID AGREEMENT WHICH WAS SUBMITTED BEFORE HIM. IN OUR OPINION, THE ASSESSEE IS FOLLOWING THE SAME METHOD OF ACCOUNTING CONSISTENTLY. THE AO CANNOT THRUST UPON THE ASSESSEE TO PAY TAX IN ACCORDANCE WITH THE ORIGINAL AGREEMENT WITHOUT RECOGNISING THE SUPPLEMENTARY AGREEMENT. 35. FURTHER, IN THIS CASE, THE ASSESSMENT WAS NOT BASE D ON THE SEIZED MATERIAL BUT, IT IS BASED ONLY ON WRONG ACCO UNTING STANDARDS FOLLOWED BY THE ASSESSEE'COMPANY IN RECOG NISING THE REVENUE AND HENCE, THE ONLY ISSUE IS TO BE ADJUDICA TED UPON IN THIS APPEAL IS WHETHER THE AO IS RIGHT IN REJECTING THE ACCOUNTING METHOD REGULARLY EMPLOYED BY THE ASSESSE E AND SUBSTITUTING THE SAME WITH ACCOUNTING METHOD AS PER AS'7 AND COMPUTATION OF PROFIT BASED ON THE SAME. THE ASSES SEE CONTENDS THAT THE METHOD OF ACCOUNTING FOR RECOGNIT ION OF REVENUE IS REGULARLY EMPLOYED BY THE ASSESSEE AND T O THIS EFFECT THERE IS NO DISPUTE AND IT IS ALSO A FACT THAT THE DEPARTMENT ACCEPTED METHOD OF ACCOUNTING IN SUBSEQUENT ASSESSM ENT YEARS AND ASSESSMENTS WERE COMPLETED UNDER SECTION 143(3) OF ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 36 THE ACT BY THE AO. THE CATEGORICAL FINDING OF THE CIT(A) IS THAT THE AO SIMPLY BY REJECTING THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE IS NOT PROPER SINCE ASSESSMENTS HAV E BEEN COMPLETED IN OTHER ASSESSMENT YEARS CASES BASED ON THE SAME ACCOUNTING METHOD. WE FIND FORCE IN THE FINDING OF THE CLT(A) FOR THE REASON THAT SINCE THE ASSESSING OFFICER REJ ECTED THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE BUT H E ACCEPTED THE SAME METHOD OF ACCOUNTING FOLLOWED BY ASSESSEE IN SUBSEQUENT ASSESSMENT YEAR. THE ASSESSI NG OFFICER HAS NOT GIVEN A CLEAR FINDING MANDATED UNDER SECTIO N 145(3) OF THE ACT AND YET RE'COMPUTED THE PROFIT FROM THE PRO JECTS DONE BY THE ASSESSEE COMPANY. THE ADDITIONS MADE BY THE ASSESSING OFFICER ARE NOT SUPPORTED BY ANY FACTS AND FIGURES WHICH CAN DEMONSTRATE THAT THE IMPUGNED METHOD OF ACCOUNTING POLICY ADOPTED BY THE ASSESSEE COMPANY RESULTED IN UNDER E STIMATION OF PROFIT. ALTHOUGH THE ASSESSING OFFICER DISCUSSED IN DETAIL ABOUT THE ACCOUNTING ASPECTS IN HIS ORDER, HOWEVER NO CON CLUSION HAS BEEN REACHED BY THE ASSESSING OFFICER. THE ASSESSIN G OFFICER HAS TAKEN ESTIMATED REVENUE FROM THE PROJECTS WITHOUT C ONSIDERING THE FACT THAT WHETHER THE UNITS ARE SOLD OR NOT. IN OTHER WORDS, PROFIT IS BEING ESTIMATED ON UNSOLD STOCK ALSO. WE FIND THAT PRE' REVISED AS'7 ISSUED BY THE ICAI IN THE YEAR 1983 SP ECIFICALLY INCLUDED COMPANIES UNDERTAKING CONSTRUCTION ACTIVIT IES ON THEIR OWN, BUILDERS AND DEVELOPERS. AS PER REVISED AS'7 I N THE YEAR 2002, SUCH SPECIFIC INCLUSION WAS MISSING. HENCE, I N OUR CONSIDERED OPINION, AS'7 DOES NOT APPLY TO THE BUIL DERS AND ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 37 REAL ESTATE DEVELOPERS. THE METHOD FOLLOWED BY THE ASSESSEE COMPANY CANNOT BE CALLED AS AN UNREASONABLE METHOD AND ANY CHANGE IN THE METHOD WOULD ONLY BE TAX NEUTRAL. 36. COMING TO SUSTAINING OF ADDITION BY THE CIT(A), IN OUR OPINION, THOUGH HE ACCEPTED THE METHOD OF ACCOUNTIN G FOLLOWED BY THE ASSESSEE, HE FOUND FLAWS IN THE COM PUTATION AND HE HAS MADE THE REVISED COMPUTATION. IN OUR OP INION, HE CANNOT SUBSTITUTE ONE MORE COMPUTATION IN PLACE OF ASSESSEE'S COMPUTATION AS WELL AS AO'S COMPUTATION. THE ASSES SEE HAS RECOGNISED THE INCOME IN ACCORDANCE WITH THE TRUE T ERMS OF THE AGREEMENT AND IF THERE IS ANY INCONSISTENCY IN RECOGNISING THE INCOME THEN ONLY REVENUE AUTHORITIES CAN DISTUR B THE SAME. THERE IS NO WHISPER IN THE CIT(A)'S ORDER THAT THE ASSESSEE HAS NOT RECOGNISED THE INCOME IN ACCORDANCE WITH THE SUPPLEMENTARY AGREEMENTS. ONCE THE ASSESSEE RECOGN ISED THE INCOME IN ACCORDANCE WITH THE SUPPLEMENTARY AGREEME NTS, THE CIT(A) CANNOT SUBSTITUTE HIS ASSESSMENT TO SAY THAT THE ASSESSEE HAS POSTPONED THE TAX LIABILITY. THE CIT(A) OBSERV ED THAT THERE IS NO BASIC DEVIATION IN THE METHOD FOLLOWED BY THE AS SESSEE REGARDING RECOGNISING OF INCOME. HOWEVER, HE OBSE RVED IN THE SAME BREATH THAT THERE IS BASIC FLAW IN THE METHOD FOLLOWED BY THE ASSESSEE TO HAVE THRESHOLD LIMIT OF 30% AS THE SAID THRESHOLD LIMIT CAN BE DIFFERED BY VARIOUS MEANS. WHEN THERE IS NO DEVIATION IN RECOGNISING THE INCOME BY THE ASSESSEE , THE CIT(A) CANNOT RECOMPUTE THE PROFIT OF THE ASSESSEE BY OBSE RVING THAT THERE IS BASIC FLAW IN THE METHOD FOLLOWED BY THE A SSESSEE TO ITA. NO. 342 & 343/HYD/2012 M/S. UNIVERSAL REALTORS PVT. LTD. ============-============= 38 HAVE THRESHOLD LIMIT OF 30% AS THE SAID THRESHOLD L IMIT CAN BE DIFFERED BY VARIOUS MEANS, WHICH IS UNWARRANTED. AC CORDINGLY, THE FINDINGS OF THE CIT(A) ARE VACATED AND THE GROU NDS RAISED BY THE ASSESSEE ARE ALLOWED. 37. IN THE RESULT, WE ALLOW APPEAL OF THE ASSESSEE AND APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JANUARY, 2014. SD/' (SAKTIJIT DEY) JUDICIAL MEMBER SD/' (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 20 TH JANUARY, 2014 TPRAO COPY FORWARDED TO: 1. THE ASST. CIT, CENTRAL CIRCLE'2, 7 TH FLOOR, AAYAKAR BHAVAN, LB STADIUM ROAD, BASHEERBAGH, HYDERABAD'500 004. 2. M/S. UNIVERSAL REALTORS PVT. LTD., PLOT NO. 1023 , INRHYTHM BUILDING, 1 ST FLOOR, GURUKUL SOCIETY, KHANAMET VILLAGE, NEAR MERIDIAN SCHOOL, MADHAPUR, HYDERABAD. 3. THE CIT(A)'I, HYDERABAD. 4. THE CIT (CENTRAL), HYDERABAD 5. THE DR 'A' BENCH, ITAT, HYDERABAD