SWASTIK DEVELOPMENTS, MUMBAI V. ITO WD 16(1)(4), MUMBAI

ITA 3437/MUM/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2922 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 15-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D B SANGHAVI
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 3437/MUM/2014 (ASSESSMENT YEAR:2010-11) M/S. SWASTIK DEVELOPMENTS 1102, GIRNAR APARTMENT, 69, TARDEO ROAD, MUMBAI 400 034 APPELLANT VS. INCOME TAX OFFICER, WARD 16(1)(4), MUMBAI RESPONDENT PAN: AABFS1155M /BY APPELLANT : SHRI D. B. SANGHAVI, A.R. /BY RESPONDENT : SHRI VACHASPATI TRIPATHI, D.R. /DATE OF HEARING : 08.06.2016 /DATE OF PRONOUNCEMENT : 24.06.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-27, MUMBAI, DA TED 27.02.2014 FOR A.Y. 2010-11 ON FOLLOWING GROUNDS: ITA NO.3437/MUM/14 A.Y. 10-11 [M/S. SWASTIK DEVELOP MENTS VS.ITO] PAGE 2 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE ORDER PASSED BY THE LEARNED A.O. FOR DISALLOWANCE OF EXPENSES OF RS.6,32,366/-. THE DISALLOWANCE IS AGAINST THE PROVISIONS OF LAW A ND ARBITRARY. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED IN APPRECIATING THE FACT THAT THE APPELLANT FIRM IS FOLLOWING PERCENTAGE COMPLETION METHOD AND NOT PROJECT COMPLETION METHOD AND THE MATERIALS IN THE OPENING STOCK WERE USED FOR CONSTRUCTING INTERNAL PARTITION COMPOUND WALL OF SHEETAL SUPREME BUILDING NOS.2 & 4. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE LABOUR CHARGES INCURR ED DURING THE YEAR HAVE BEEN MERGED WITH EXPENSES OF LABOUR CHARGES OF SHEETAL SUPREME BUILDING NO.3 AS THE ENTIRE PROJECT OF SHEETAL SUPREME IS ONE PROJEC T. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT TREATING THE CONSUMPTION OF OPENING ST OCK OF RS.6,32,366/- AS BUSINESS EXPENDITURE. 2. ISSUE BEFORE US IS REGARDING DISALLOWANCE OF EXP ENSES OF RS.6,32,366/- MADE BY THE ASSESSING OFFICER IN RESP ECT OF CONSUMPTION OF MATERIAL ALLEGEDLY USED IN RESPECT O F THE PROJECT AT HAND. ASSESSING OFFICER MADE ADDITION AS SHE DI D NOT BELIEVE THAT RESIDUAL MATERIALS WHICH WERE NOT LINK ED TO FINISHING WORK OF CONSTRUCTION PROJECT WITHOUT USE OF LABOUR WAS AN ALLOWABLE EXPENDITURE. THE STAND OF LD. AUT HORIZED REPRESENTATIVE HAS BEEN THAT PROJECT OF THE ASSESSE E INCLUDES BUILDING NOS. 2, 3 & 4. BUILDING NOS. 2 & 4 WERE C OMPLETED WHILE THERE WAS A PROGRESS OF WORK IN RESPECT OF BU ILDING NO.3. IT IS UNDISPUTED FACT THAT ASSESSEE HAS APPLIED FOR COMPLETION CERTIFICATE AND RECEIVED THE SAME SUBSEQUENT TO THE CLAIM IN QUESTION. IT IS NOT THE CASE THAT NO LABOUR EXPENS ES BE ITA NO.3437/MUM/14 A.Y. 10-11 [M/S. SWASTIK DEVELOP MENTS VS.ITO] PAGE 3 DEDUCTED BUT ONLY DISPUTE IS THAT SAME HAS BEEN DEB ITED TO THE LABOUR ACCOUNT. ON OTHER BUILDINGS, THIS PHYSICAL VALUE OF MAINTENANCE ON THE PART OF ASSESSEE CANNOT BE APPRE CIATED WHILE REVENUE HAS NOT DISPUTED THE FINISHING WORK D ONE BY ASSESSEE IN RESPECT OF EXPENSES IN QUESTION. BEFOR E OBTAINING AS AND WHEN THERE ARE CHANCES OF INCURRING LEGAL PR OCESS IN THE CONSTRUCTION OF PROJECT, IN THE FACTS AND CIRCUMSTA NCES OF THE CASE, AMOUNT IN QUESTION IS DIRECTED TO BE ALLOWED. 3. AS A RESULT, APPEAL FILED BY ASSESSEE IS ALLOWED . PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF JUNE, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 24/06/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5.-./00'(, '( , %& / DR, ITAT, MUMBAI 6./4567 / GUARD FILE. BY ORDER / , / % , '( , %&