DCIT, CHENNAI V. M/s. Rajeswari Foundations Ltd., CHENNAI

ITA 444/CHNY/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58098 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-03-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 07-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M N NAIK
• Assessee Lawyers: R SUNDARA RAJAN
• Keywords: Capital asset; Depreciation; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENN AI BEFORE SHRI N.S.SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. ITA NO.444/MDS./2011 ASSESSMENT YEAR:2006-07 DY. COMMISSIONER OF INCOME TAX , COMPANY CIRCLE V(3), FOURTH FLOOR, MAIN BUILDING, 121 N H ROAD, NUNGAMBAKKAM, CHENNAI-34. VS. M/S.RAJESWARI FOUNDATIONS LTD., B-3,C BLOCK, III FLOOR, PARSN PARADISE APARTMENTS, 109, G.N.CHETTY ROAD, CHENNAI 17. PAN AAACR 1628 N (APPELLANT) (RESPONDENT) ITA NO.445/MDS./2011 ASSESSMENT Y EAR:2007-08 DY. COMMISSIONER OF INCOME TAX , COMPANY CIRCLE V(3), FOURTH FLOOR, MAIN BUILDING, 121 N H ROAD, NUNGAMBAKKAM, CHENNAI-34. VS. M/S.RAJESWARI INFRASTRUCTURE LTD., (FORMERLY KNOWN AS M/S.RAJESWARI FOUNDATIONS LTD. ,) B-3,C BLOCK, III FLOOR, PARSN PARADISE APARTMENTS, 109, G.N.CHETTY ROAD, CHENNAI 17. PAN AAACR 1628 R (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI M N NAIK, C.I.T.DR ASSESSEE BY : SHRI R.SUNDARA RAJAN, C.A. ITA.444 & 445/MDS/11 2 DATE OF HEARING : 14.03.12 DATE OF PRONOUNCEMENT : 16. 03.12 O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : ITA NO.444/MDS./11 IS APPEAL FILED BY THE REVENU E AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(A)- V,CHENNAI IN APPEAL NO.119/08-09 DATED 30.11.10. I TA NO.445/MDS./11 IS APPEAL FILED BY THE REVENUE AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX(A)-V, IN APPEAL NO.406/09-10 DATED 30.11.10. SHRI M.N.NAIK, LD. C. I.T. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI R. SU NDARA RAJAN, C.A., REPRESENTED ON BEHALF OF THE ASSESSEE. 2. IT WAS SUBMITTED BY LD. DR THAT FOR ASSESSMENT YEAR 2006-07, THERE WERE TWO ISSUES. THE FIRST WAS AGAI NST THE ACTION OF THE COMMISSIONER OF INCOME TAX(A) IN ALLO WING CAPITAL EXPENSES OF ` 12,68,286/- ON CONVERSION OF LAND HELD AS CAPITAL ASSETS AND LATER CONVERTED INTO STOCK IN T RADE. THE SECOND ISSUE WAS AGAINST THE ACTION OF THE LD. COMM ISSIONER OF INCOME TAX(A) IN ALLOWING THE TERMINAL DEPRECIAT ION ON THE WDV OF THE COST OF THE FACTORY BUILDING AND LAND AS A REVENUE EXPENDITURE. IT WAS THE SUBMISSION THAT IN THE RE VENUE APPEAL ITA.444 & 445/MDS/11 3 NO.445/MDS./11, THERE WAS ONLY ONE ISSUE AGAINST TH E ACTION OF THE COMMISSIONER OF INCOME TAX(A) IN ALLOWING WDV B EING THE TERMINAL DEPRECIATION AS A REVENUE EXPENDITURE. 3. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD ACQ UIRED LAND AND PUT UP A FACTORY DURING 1995. IT WAS THE S UBMISSION THAT THE ASSESSEE WAS DOING THE BUSINESS OF OFFSET PRINTING AND TYPESETTING. IT WAS THE SUBMISSION THAT IN 2003, T HE ASSESSEE HAD STOPPED ITS BUSINESS OF OFFSET PRINTING AND TYP ESETTING AND IT HAD CONVERTED THE LAND AND BUILDING INTO STOCK I N TRADE. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD SHIFTED IT S BUSINESS INTO NEW LINE OF BUSINESS BEING REAL ESTATE DEVELOP MENT. ON THE SAID LAND, THE ASSESSEE HAD BEEN CONSTRUCTING D WELLING UNITS AND HAD SOLD THE SAME. IT WAS THE SUBMISSION THAT DURING THE ASSESSMENT YEAR 2006-07, THE ASSESSEE HAD DEMOL ISHED 75% OF THE FACTORY BUILDING AND HAD USED THE LAND T HEREON FOR PUTTING UP THE CONSTRUCTION OF THE DWELLING UNITS A ND HAD ALSO SOLD THE SAME. DURING THE ASSESSMENT YEAR 2007-08, THE BALANCE OF 25% OF THE FACTORY BUILDING WAS DEMOLISH ED AND THE LAND THEREON USED. IT WAS THE SUBMISSION THAT WHEN COMPUTING THE BUSINESS PROFITS OF THE ASSESSEE, THE ASSESSEE HAD TAKEN THE WDV OF THE FACTORY BUILDING AND HAD CLAIMED 75% THEREOF ITA.444 & 445/MDS/11 4 FOR THE ASSESSMENT YEAR 2006-07 AND BALANCE 25% FOR THE ASSESSMENT YEAR 2007-08 AS TERMINAL DEPRECIATION U/S.32(1)(III) OF THE ACT. FURTHER, THE ASSESSEE H AD INCURRED DEVELOPMENT COST OF ` 21,54,602/- DURING 1995, WHICH WAS ALSO CLAIMED AS A REVENUE EXPENDITURE AGAINST THE SALE PROCEEDS OF THE LAND AND BUILDING, WHICH WERE SOLD BY THE AS SESSEE. IT WAS THE SUBMISSION THAT AS THE LAND AND BUILDING HA D BEEN CONVERTED INTO STOCK IN TRADE IN 2003, THE BUSINESS OF THE ASSESSEE OF TYPESETTING AND OFFSET PRINTING HAD BEE N DISCONTINUED. AS THE BUSINESS HAD BEEN DISCONTINUE D, THE TERMINAL DEPRECIATION IN RESPECT OF THAT BUSINESS C OULD NOT BE CLAIMED AS EXPENDITURE IN THE BUSINESS OF REAL ESTA TE. IT WAS THE SUBMISSION THAT LD. COMMISSIONER OF INCOME TAX (A) ERRED IN GRANTING THE ASSESSEE THE BENEFIT OF DEDUCTION A S A REVENUE EXPENDITURE OF BOTH THE TERMINAL DEPRECIATI ON AS ALSO THE DEVELOPMENT COST INCURRED BY THE ASSESSEE IN RE SPECT OF ITS BUSINESS OF OFFSET PRINTING AND TYPESETTING, WHICH HAD BEEN DISCONTINUED. IT WAS THE SUBMISSION THAT THE ORDER OF THE ASSESSING OFFICER IS LIABLE TO RESTORED. 4. LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE H AS FILED WRITTEN SUBMISSIONS AS FOLLOWS:- ITA.444 & 445/MDS/11 5 FOR A.Y. 2007-08 1. LOSS ON CONVERSION OF LAND ` 12,68,286/- DURING 1995 THE FACTORY LAND OF 69,478 SQ. FT. OF A ND WAS ACQUIRED AT THE COST OF ` 23,50,823/- AND THE ASSESSEE HAVE INCURRED THE DEVELOPMENT COST OF ` 21,54,602/- FOR THE LAND PORTION IN WHICH THE FACTORY BUILDING IS CONSTRUCTED DURING 1995. THE FACTORY BUILDING WAS CONSTRUCTED ON 14,300 SQ.FT. AND THE DEVELOPMENT CO ST OF LAND IS INCURRED ONLY FOR THAT PORTION. THE TOTAL COST OF LAND INCLUDING THE LAND DEVELOPMENT COST IS INCLUDE D IN THE FIXED ASSETS SCHEDULE DURING 1995 AS COST OF LA ND. AFTER 2003, BECAUSE OF THE RECESSION IMPRINTING IND USTRY FOR WHICH THE COMPANY IS ORIGINALLY FORMED, THE MANAGEMENT OF THE COMPANY THOUGHT OF UTILIZING THE VACANT LAND AVAILABLE FOR PROMOTING INDEPENDENT RESIDENTIAL DWELLING UNITS AND DIVERSIFIED THEIR LI NE OF ACTIVITY AND GOT NECESSARY APPROVALS FROM TH GOVERN MENT AUTHORITIES. IN THE FIRST TWO YEARS 2003-04 AND 20 04-05 ONLY VACANT FACTORY LAND IS UTILIZED AND ONLY THE C OST OF THE LAND AND THE CONVERSION VALUE IS TAKEN INTO ACCOUNT IN THE BOOKS. HOWEVER, DURING 2005-06 ACCOUNTING YEAR, THE LAND WHEREIN THE FACTORY BUILDING HAS BEEN CONSTRUCTED I S DEMOLISHED AND THE PORTION USED FOR SECOND PHASE AN D THIRD PHASE OF THE PROJECT. THE DEVELOPMENT COST H AS TO BE ABSORBED ONLY IN THE SECOND AND THIRD PHASE OF U NITS CONSTRUCTED AND SOLD AS INDEPENDENT BUNGALOWS. DUR ING ITA.444 & 445/MDS/11 6 2005-06 75% OF THE DEVELOPED LAND IS USED FOR CONSTRUCTION OF DWELLING UNITS AND BALANCE 25% IN 2 006- 07. THREE AGREEMENTS ARE ENTERED INTO BETWEEN THE INDIVIDUAL BUNGALOW UNIT BUYERS AND THE ASSESSEE COMPANY, LAND SALE AGREEMENT, DEVELOPMENT AGREEMENT AND THE CONSTRUCTION AGREEMENT. A SEPARATE DEVELOPMENT AGREEMENT IS ENTERED INTO BETWEEN THE INDIVIDUAL BUNGALOW UNIT BUYERS AND THE ASSESSEE COMPANY FOR RECOVERING THE DEVELOPMENT COS T INCLUDING THE COST OF BUILDING DEMOLISHED. THE LAN D COST AND THE DEVELOPMENT COST ARE RECOVERED IN 2005-06 A ND OFFERED AS INCOME DURING THAT YEAR. THE COST RECOVERED FROM THE INDIVIDUAL BUNGALOW UNI TS FOR LAND AND LAND DEVELOPMENT IS MORE THAN THE COST CLAIMED IN THE BOOKS OF ACCOUNT WE REQUEST YOU TO A LLOW THE LOSS ON CONVERSION OF LAND ` 4,22,762/- AS EXPENDITURE. THIS AMOUNT IS ARRIVED AT AFTER THE CONVERSION COST OF ` 57 PER SQ FT COST OF LAND FOR 5003 SQ FT ( ` 2,85,174/-) AS PER LAND COST TO INDIVIDUAL BUNGALOW UNITS FROM 25% OF LAND COST ` 7,07,936/- DEDUCTED IN THE FIXED ASSETS SCHEDULE BALANCE OF LAND COST. THE LAND AND THE LAND DEVELOPMENT COST FOR THE SOME OF THE UNITS IN THIS PHASE IS ALREADY COLLECTED IN THE EARLIER YEAR I.E . 2005-06. SINCE THE DEVELOPMENT COST OF THE LAND IS RECOVERED AND INCLUDED IN THE SALE OF BUNGALOW UNITS, THE LAND ITA.444 & 445/MDS/11 7 DEVELOPMENT COST RECOVERED CAN BE ALLOWED AS EXPENDITURE. 2. WRITTEN DOWN VALUE OF BUILDING DEMOLISHED ` 19,45,692/- AS EXPLAINED EARLIER DURING 2005-06 A PORTION OF FA CTORY BUILDING (75%) IS DEMOLISHED AND UTILIZED THE SAME VACANT LAND FOR CONSTRUCTION OF DWELLING UNITS AND SOLD THE DWELLING UNITS AS SALE OF BUNGALOW UNITS. THE BALA NCE 25% BUILDING IS ALSO DEMOLISHED DURING THE YEAR 200 6-07. WDV VALUE OF BUILDING BLOCK NOW NO LONGER EXIST ` 19,45,694/- HAS BEEN DEBITED A WRITTEN DOWN VALUE O F BUILDING DEMOLISHED AND CLAIMED AS TERMINAL DEPRECI ATION RELYING ON SECTION 31(1)(III). THE SALVAGE MATERIA LS ARE AGAIN USED FOR BUILDING INDIVIDUAL BUNGALOW UNITS CONSTRUCTED BY THE ASSESSEE COMPANY. FOR A.Y. 2006-07 1. LOSS ON CONVERSION OF LAND ` 12,68,286/- DURING 1995 THE FACTORY LAND OF 69,478 SQ. FT. OF A ND WAS ACQUIRED AT THE COST OF ` 23,50,823/- AND THE ASSESSEE HAVE INCURRED THE DEVELOPMENT COST OF ` 21,54,602/- FOR THE LAND PORTION IN WHICH THE FACTORY BUILDING IS CONSTRUCTED DURING 1995. THE FACTORY BUILDING WAS CONSTRUCTED ON 14,300 SQ.FT. AND THE DEVELOPMENT CO ST OF LAND IS INCURRED ONLY FOR THAT PORTION. THE TOTAL COST OF LAND INCLUDING THE LAND DEVELOPMENT COST IS INCLUDE D IN THE FIXED ASSETS SCHEDULE DURING 1995 AS COST OF LA ND. AFTER 2003, BECAUSE OF THE RECESSION IMPRINTING IND USTRY FOR WHICH THE COMPANY IS ORIGINALLY FORMED, THE ITA.444 & 445/MDS/11 8 MANAGEMENT OF THE COMPANY THOUGHT OF UTILIZING THE VACANT LAND AVAILABLE FOR PROMOTING INDEPENDENT RESIDENTIAL DWELLING UNITS AND DIVERSIFIED THEIR LI NE OF ACTIVITY AND GOT NECESSARY APPROVALS FROM TH GOVERN MENT AUTHORITIES. IN THE FIRST TWO YEARS 2003-04 AND 20 04-05 ONLY VACANT FACTORY LAND IS UTILIZED AND ONLY THE C OST OF THE LAND AND THE CONVERSION VALUE IS TAKEN INTO ACCOUNT IN THE BOOKS. HOWEVER, DURING 2005-06 ACCOUNTING YEAR, THE LAND WHEREIN THE FACTORY BUILDING HAS BEEN CONSTRUCTED I S DEMOLISHED AND THE PORTION USED FOR SECOND PHASE AN D THIRD PHASE OF THE PROJECT. THE DEVELOPMENT COST H AS TO BE ABSORBED ONLY IN THE SECOND AND THIRD PHASE OF U NITS CONSTRUCTED AND SOLD AS INDEPENDENT BUNGALOWS. DUR ING 2005-06 75% OF THE DEVELOPED LAND IS USED FOR CONSTRUCTION OF DWELLING UNITS AND BALANCE 25% IN 2 006- 07. THREE AGREEMENTS ARE ENTERED INTO BETWEEN THE INDIVIDUAL BUNGALOW UNIT BUYERS AND THE ASSESSEE COMPANY, LAND SALE AGREEMENT, DEVELOPMENT AGREEMENT AND THE CONSTRUCTION AGREEMENT. A SEPARATE DEVELOPMENT AGREEMENT IS ENTERED INTO BETWEEN THE INDIVIDUAL BUNGALOW UNIT BUYERS AND THE ASSESSEE COMPANY FOR RECOVERING THE DEVELOPMENT COS T INCLUDING THE COST OF BUILDING DEMOLISHED. THE DEVELOPMENT COST RECOVERED FROM THE INDEPENDENT BUNGALOW UNITS COMES TO AROUND ` 89,66,138/- AND INCLUDED IN SALE OF BUNGALOW UNITS IN ADDITION TO T HE ITA.444 & 445/MDS/11 9 RECOVERY OF ` 57 PER SQ FT FOR THE LAND PORTION FROM INDIVIDUAL BUNGALOW UNITS AROUND ` 13,36,935/-. THE COST RECOVERED FROM THE INDIVIDUAL BUNGALOW UNI TS FOR LAND AND LAND DEVELOPMENT IS MORE THAN THE COST CLAIMED IN THE BOOKS OF ACCOUNT. HENCE, THE LOSS O N CONVERSION OF LAND ` 12,68,286/- IS AN ALLOWABLE EXPENDITURE. THIS AMOUNT IS ARRIVED AT AFTER THE R ECOVERY OF ` 57 PER SQ. FT COST OF LAND FOR 15009 SQ FT ( ` 8,55,521/-) AS PER LAND SALE DEED TO INDIVIDUAL BUNGALOW UNITS FROM 75% OF LAND COST ` 21,23,807/- DEDUCTED IN THE FIXED ASSETS SCHEDULE OF LAND COST. SINCE THE DEVELOPMENT COST OF THE LAND IS RECOVERED AND INCLUDED IN THE SALE OF BUNGALOW UNITS, THE LAND DEVELOPMENT COST RECOVERED CAN BE ALLOWED AS EXPENDITURE. 2. WRITTEN DOWN VALUE OF BUILDING DEMOLISHED ` 19,45,692/- AS EXPLAINED EARLIER DURING 2005-06 A PORTION OF FA CTORY BUILDING (75%) IS DEMOLISHED AND UTILIZED THE SAME VACANT LAND FOR CONSTRUCTION OF DWELLING UNITS AND SOLD THE DWELLING UNITS AS SALE OF BUNGALOW UNITS. THE ABOV E SALE AMOUNT IS INCLUSIVE OF THE DEVELOPMENT COST WHICH INCLUDES COST OF BUILDING DEMOLISHED. HERE COST IS 75% OF THE OPENING WDV VALUE AS ON 01.04.2005 ( ` 81,48,770/-). ITA.444 & 445/MDS/11 10 THE 75% WDV VALUE I.E. ` 61,11,577/- HAS BEEN DEBITED AS WRITTEN DOWN VALUE OF BUILDING DEMOLISHED AS EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT. THE B ALANCE 25% OF THE BUILDING NOT DEMOLISHED DURING THE YEAR HAS BEEN USED FOR STORAGE OF CONSTRUCTION MATERIALS AS GODOWN. THE SALVAGE MATERIALS ON DEMOLITION OF THE BUILDINGS WERE UTILIZED FOR THE CONSTRUCTION OF IND EPENDENT DWELLING UNITS. AS PER THE SEPARATE DEVELOPMENT AGREEMENT ENTERED I NTO BETWEEN THE INDIVIDUAL BUNGALOW UNIT BUYERS THE COS T OF BUILDING DEMOLISHED AND THE LAND DEVELOPMENT COST I S RECOVERED DURING THE YEAR AMOUNTING TO ` 89,66,138/- SHOWN AS SALE OF BUNGALOW UNITS AND OFFERED AS INCO ME IN THE PROFIT AND LOSS ACCOUNT. HENCE THE COST IS REC OVERED AND SHOWN AS INCOME IN THE BOOKS OF ACCOUNT, THE WR ITTEN DOWN VALUE OF THE BUILDING DEMOLISHED CAN BE TREATE D AS ALLOWABLE EXPENDITURE AND RELYING ON SECTION 32(1)( III), THE WRITTEN DOWN VALUE OF THE BUILDING DEMOLISHED C AN BE ALLOWED AS EXPENDITURE. THE SALVAGE MATERIALS ON DEMOLITION IS AGAIN USED F OR CONSTRUCTION OF INDIVIDUAL DWELLING UNITS AND HENCE THE SAME IS ABSORBED IN THE COST OF CONSTRUCTION. ITA.444 & 445/MDS/11 11 3. DEPRECIATION ON BUILDING ` 1,19,481/- DEPRECIATION HAS BEEN CLAIMED FOR THE PORTION OF TH E BUILDING NOT DEMOLISHED DURING THE YEAR AND THE SAM E HAS BEEN UTILIZED FOR BUSINESS PURPOSES AS GODOWN AND T HE ASSESSEE HAS STORED THE BUILDING MATERIALS AND OTHE R TOOLS USED FOR CONSTRUCTION OF DWELLING BUNGALOW UN ITS. THE PORTION OF BUILDING NOT DEMOLISHED IS USED ONLY FOR THE BUSINESS PURPOSES AND HENCE THE DEPRECIATION IS CLA IMED IN OUR RETURN OF INCOME. 5. WE HAVE CONSIDERED THE WRITTEN SUBMISSIONS FI LED BY THE ASSESSEE, AS ALSO THE SUBMISSIONS MADE BY THE LD. D R. PERUSAL OF THE PROVISIONS OF SEC.32(1) SHOWS THAT T HE WORDS USED THEREIN ARE USED FOR THE PURPOSE OF THE BUSIN ESS OR PROFESSION. ADMITTEDLY, THE ASSESSEE WAS IN THE B USINESS OF OFFSET PRINTING AND TYPESETTING. IN 2003, THE ASSES SEE ADMITTEDLY HAD CONVERTED THIS LAND AND FACTORY BUIL DING INTO STOCK IN TRADE. THE MINUTE OF THE ASSESSEE COMPANY DID THE CONVERSION OF THE LAND AND FACTORY BUILDING INTO ST OCK IN TRADE, THE BUSINESS ASSETS OF THE ASSESSEE NO MORE SURVIVE D AS THE BUSINESS ASSET ELIGIBLE FOR DEPRECIATION. ONCE THIS HAPPENS, THE BUSINESS OF THE ASSESSEE WOULD BE DEEMED TO HAV E BEEN ITA.444 & 445/MDS/11 12 DISCONTINUED. ONCE THE BUSINESS OF THE ASSESSEE I S DISCONTINUED AND THE SAID ASSETS ARE NO MORE USED F OR THE PURPOSE OF BUSINESS OR PROFESSION, THE PROVISION OF SEC.32(1) ARE NO MORE AVAILABLE TO THE ASSESSEE. TERMINAL DE PRECIATION IS PROVIDED U/S.32(1)(III) OF THE ACT. FOR CLAIMIN G DEPRECIATION U/S.32(1)(III), IT MUST FIRST COMPLY WITH THE PROVI SIONS OF SEC.32(1) OF THE ACT THAT THE ASSET IS USED FOR TH E PURPOSE OF BUSINESS OR PROFESSION. AS THE ASSET BEING THE LAN D AND FACTORY BUILDING, THE ASSETS WERE USED IN THE BUSI NESS OF OFFSET PRINTING AND TYPESETTING, WHICH WAS DISCONTINUED BU SINESS FROM 2003, THE PROVISIONS OF SEC.32(1) IS NO MORE AVAIL ABLE IN REGARD TO SUCH BUSINESS AS THE BUSINESS ITSELF DOES NOT EXIST. THE BUSINESS OF REAL ESTATE IS A NEW LINE OF BUSINE SS AND THE LAND AND BUILDING IS THE STOCK IN TRADE. FURTHER P ERUSAL OF THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE CLEARLY S HOWS THAT THE DEVELOPMENT COST WAS INCURRED FOR THE LAND PORT ION IN WHICH THE FACTORY BUILDING WAS CONSTRUCTED DURING 1 995. THIS IS A PART OF THE COST OF THE LAND AND BUILDING. IT IS ALSO CLAIMED IN ITS BALANCE SHEET AS THE ASSET OF THE BUSINESS O F OFFSET PRINTING AND TYPESETTING, WHICH HAS BEEN DISCONTINU ED. AS THE BUSINESS IN RESPECT OF WHICH THE SAID DEVELOPMENT C OST HAS BEEN INCURRED IS DISCONTINUED, THE SAME CANNOT BE C LAIMED AS ITA.444 & 445/MDS/11 13 REVENUE EXPENDITURE IN RESPECT OF ANOTHER BUSINESS BEING REAL ESTATE BUSINESS, JUST BECAUSE THE LAND HAS BEEN C ONVERTED INTO STOCK IN TRADE FOR THE PRESENT BUSINESS. IN T HE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX(A) ON THESE ISSUES ARE L IABLE TO BE REVERSED AND WE DO SO. IN THE CIRCUMSTANCES, THE ORDER OF THE COMMISSIONER OF INCOME TAX(A) ON THE ISSUES IN THE APPEALS STAND REVERSED AND THAT OF THE ASSESSING OF FICER RESTORED. IN THE CIRCUMSTANCES, THE APPEALS OF REV ENUE ARE ALLOWED. 6. IN THE RESULT, APPEALS OF THE REVENUE ARE ALLOW ED. ORDER PRONOUNCED ON 16 TH MARCH, 2012. SD/- SD/- ( N.S.SAINI ) (GEORGE MATHAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 16 TH MARCH, 2012. K S SUNDARAM COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA.444 & 445/MDS/11 14