M/s. Kolte Patil Enterprises, Pune V. Deputy Commissioner of Income-tax,

ITA 395/PUN/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 0580 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 29-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 03-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: I P NAGO
• Keywords: Corroborative evidences

Judgement Text

] IQ.KS ] IQ.KS ] IQ.KS ] IQ.KS IQ.KS IQ.KSIQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.395/PN/2014 '% % / ASSESSMENT YEAR : 2007-08 M/S. KOLTE PATIL ENTERPRISES, 2 ND FLOOR, CITY POINT, DHOLE PATIL ROAD, PUNE 411001 PAN NO.AABFK5014H . / APPELLANT V/S DCIT, CENTRAL CIRCLE-1(1), PUNE . / RESPONDENT / ASSESSEE BY : SHRI NIKHIL PATHAK / DEPARTMENT BY : SHRI I.P. NAGO / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 31-10-2013 OF THE CIT(A)-II, PUNE RELATING TO ASSESSMENT YEAR 2007-08. 2. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEAR ING DID NOT PRESS GROUND OF APPEAL NO.2 FOR WHICH THE LD. DEPARTM ENTAL REPRESENTATIVE HAS NO OBJECTION. ACCORDINGLY, GROUND OF APPEAL NO.2 IS DISMISSED AS NOT PRESSED. / DATE OF HEARING :29.12.2015 / DATE OF PRONOUNCEMENT:30.12.2015 2 ITA NO.395/PN/2014 3. THE REMAINING GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER : ON FACTS AND IN LAW, 1. THE LD.CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD.A.O. IN VALUING THE WIP AT RS.2,41,80,000/- AS AGAINST THE VA LUE OF RS.7,53,48,000/- CLAIMED BY THE ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE GROUND, THE ASSESSEE SUBM ITS AS UNDER : 3. THE LD.CIT(A) ERRED IN HOLDING THAT THE LD. A.O. WAS JUSTIFIED IN VALUING THE CLOSING WIP IN RESPECT OF DN MULIK COMPLE X ON THE BASIS OF THE DECISION OF DISTRICT CIVIL COURT WITHOUT APPRECIA TING THAT THE SAID DECISION WAS NOT ACCEPTED BY THE ASSESSEE AND HENCE, THE CLOSING WIP SHOWN BY THE ASSESSEE SHOULD HAVE BEEN ACCEPTED. 4. THE LD.CIT(A) FAILED TO APPRECIATE THAT THE ASSESSE E HAD ACTUALLY CARRIED OUT THE WORK TO THE TUNE OF RS.7,53,48,000/- AND HENCE, THERE WAS NO REASON TO VALUE THE CLOSING WIP ON THE BASIS OF D ECISION OF DISTRICT CIVIL COURT. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND O R DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM BELONGING TO THE KOLTE PATIL GROUP OF COMPA NIES WHICH IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF REAL ES TATE, PURCHASE AND SALE OF LAND ETC. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS, THE AO NOTED THAT THE CLOSING WIP OF THE AS SESSEE FIRM IS INCLUSIVE OF RS.7.53 CRORES ON ACCOUNT OF THE TRANSACTION OF THE ASSESSEE FIRM WITH SHRI D.N. MULIK. THE WORKING OF THIS WIP IS AS UNDER : CONSTRUCTION WORK DONE OF D.N. MULIK COMPLEX RS.5,4 8,48,000/- PROVISION FOR DAMAGES (D.N. MULIK) RS.2,05,00,000/- 5. THE AO FURTHER NOTED THAT THE CITY CIVIL COURT HAS PA SSED THE ORDER DATED 03-01-2007 ACCORDING TO WHICH THE ASSESSE E COMPANY WAS ALLOWED AS UNDER : CONSTRUCTION WORK DONE OF D.N. MULIK COMPLEX RS.1,8 8,00,000/- PROVISION FOR DAMAGES (D.N. MULIK) RS.53,80,000/- 3 ITA NO.395/PN/2014 6. IN VIEW OF THE ORDER OF THE CITY CIVIL COURT THE AO ASK ED THE ASSESSEE TO EXPLAIN AS TO WHY THE WIP SHOULD NOT BE RE DUCED CORRESPONDINGLY. THE ASSESSEE REPLIED THAT MR. D.N. MULIK AN D OTHERS HAVE APPEALED BEFORE THE HONBLE HIGH COURT AGA INST THIS ORDER. FURTHER, THE WIP IS AS PER BOOKS OF ACCOUNT AN D SUPPORTED BY THE EXTERNAL SUPPORTING EVIDENCES. 7. HOWEVER, THE AO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. ACCORDING TO HIM, THE DECISION OF CITY CIV IL COURT HAS CLEARLY ORDERED THE WORK DONE AND PROVISION AS MEN TIONED ABOVE. THEREFORE, THE WIP IN RESPECT OF MR. D.N. MULIK COMPLE X WAS DISALLOWED BY THE AO TO THE EXTENT OF RS.5,11,68,000/-. 8. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT THE CONSTRUCTION WORK OF THE MULIK COMPLEX WAS PARTLY COMPLETED, WHI CH HAD BEEN AGREED TO BE BUILT FOR SHRI MULIK AS PER AGREE MENT DATED 20-06-1996 AND THE COST OF CONSTRUCTION COMPLETED A S ON 31- 03-2007 WAS RS. 5,48,48,000/- AND THE SAID COST WAS RECORDED AS WORK-IN-PROGRESS ALONG WITH RS. 2,05,00,000/- AS PROVISION FOR ESTIMATED DAMAGES TO BE RECOVERED FROM SHRI D.N . MULIK FOR CANCELLATION OF AGREEMENT. THUS, THE TOTAL COST OF THE WORK-IN- PROGRESS OF MULIK COMPLEX WAS RECORDED AT RS. 7,53,48,000/- IN THE BOOKS OF ACCOUNT. THE ASSESSEE FURTHER STATED T HAT IN THE ORDER PASSED BY CIVIL COURT, THE VALUE OF WORK-IN-P ROGRESS OF MULIK COMPLEX HAS BEEN DETERMINED AT RS. 2,41,80,000/- WHICH CONSISTS OF COST OF CONSTRUCTION WORK UNDERTAKING A T RS. 1,88,00,000/- AND PROVISION FOR DAMAGES TO BE RECOVERED FROM SHRI MULIK AT RS. 53,80,000/-. IT WAS SUBMITTED THAT THE DECISION OF THE CIVIL COURT HAS NOT BEEN ACCEPTED A ND AN APPEAL HAS BEEN FILED 4 ITA NO.395/PN/2014 9. HOWEVER, THE CIT(A) ALSO WAS NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE ACTION OF THE AO BY OBSERVING AS UNDER : 3.4 I HAVE CAREFULLY CONSIDERED THE SUBMISSION MA DE BY THE APPELLANT AND PERUSED MATERIAL ON RECORD. THE ASSES SING OFFICER HAS WORKED OUT THE WORK-IN- PROGRESS IN RESPECT OF D.N. MULIK COMPLEX AT RS. 2,41,80,000/-, WHICH INCLUDES RS. 1, 88,00,000/- CONSTRUCTION WORK DONE AND RS. 53,80,000/- ON ACCOU NT OF PROVISION FOR DAMAGES ON THE BASIS OF THE ORDER OF THE CITY CIVIL COURT DATED 03.01.2007. ON PERUSAL OF THE AFORESAID ORDER OF THE HON'BLE CIVIL COURT IT IS SEEN THAT THE COURT HAS A RRIVED AT THE FINDING AFTER TAKING INTO ACCOUNT THE CONTENTIONS R AISED BY THE PARTIES TO THE SUITS WHICH INCLUDED THE APPELLANT A ND ITS PARTNERS. IT IS ALSO NOTICED THAT THE ISSUE HAS BEEN DEEPLY EXAMINED BY THE COURT AND THE ABOVE FIGURES ARRIVED AT AFTER TAKING INTO CONSIDERATION THE CONTENTIONS RAISED BY THE APPELLANT. IN VIEW OF THE ABOVE FACTS, THOUGH THE DECISION OF THE CIVIL COURT MIGHT NOT HA VE BEEN ACCEPTED BY THE APPELLANT BEING NOT FAVOURABLE AND PREFERRED FURTHER APPEAL BEFORE THE HIGH COURT, THE CIVIL COURT VERDICT WHER EBY THE ISSUE HAS REACHED FINALITY WOULD BE EFFECTIVE/OPERATIVE TILL THE DECISION OF THE HON'BLE HIGH COURT. THUS THE VALUE DETERMINED BY TH E CIVIL COURT HAS RIGHTLY BEEN CONSIDERED BY THE ASSESSING OFFICE R AS THE VALUE OF CLOSING WORK-IN-PROGRESS. IN SUCH CIRCUMSTANCES AND FACTS OF THE CASE THE CONTENTION RAISED BY THE APPELLANT CANNOT BE CONSIDERED AND THE ASSESSING OFFICER'S ACTION IN VALUING THE C LOSING WORK-IN- PROGRESS AT RS. 2,41,80,000/- ON THE BASIS OF THE DECISION OF DISTRICT CIVIL COURT IS UPHELD. 10. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 11. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SA ME SUBMISSIONS AS MADE BEFORE THE AO AND THE CIT(A). 12. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 13. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDE RED THE VARIOUS DECISIONS CITED BEFORE US. WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE CIT(A). THE CITY CIVIL COURT IN THE INSTAN T CASE HAS ARRIVED AT A FINDING AFTER TAKING INTO ACCOUNT THE CONTENT IONS RAISED BY BOTH THE SIDES IN THE SUITS. THE ISSUE HAS BEEN T HOROUGHLY 5 ITA NO.395/PN/2014 EXAMINED BY THE COURT AND THE FIGURES HAVE BEEN ARRIVE D AT. NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE TO CONTRAD ICT THE FINDING GIVEN BY THE CITY CIVIL COURT. THEREFORE, WHEN THE VA LUE DETERMINED BY THE CITY CIVIL COURT HAS BEEN CONSIDERED BY THE AO AS THE CLOSING WIP, THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) UPHOLDING THE ORDER OF THE AO. ACCORDINGLY, T HE SAME IS UPHELD. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORD INGLY DISMISSED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-12-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; # DATED : 30 TH DECEMBER, 2015. LRH'K ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT (A) - I , PUNE 4. 5. 6. CIT-I, PUNE ' *, *, IQ.KS / DR, ITAT, B PUNE; / GUARD FILE. / BY ORDER , // TRUE COPY // ' //TRUE COPY// / * / SR. PRIVATE SECRETARY *, IQ.KS / ITAT, PUNE