M/S CITY LIFE DEVELOPERS, MUMBAI V. CIT - 25, MUMBAI

ITA 4498/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92567 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-12-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R PRASADDR
• Assessee Lawyers: DR K SHIVRAM
• Section: 143(3); 142(1); 263

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.4498/MUM/2013 ASSESSMENT YEAR: 2009-10 M/S CITY LIFE DEVELOPERS, 5 TH FLOOR, AGARWAL GOLDEN CHAMBER, PLOT NO.13/A, FUN REPUBLIC ROAD, OFF NEW LINK ROAD, ANDHERI-WEST, MUMBAI-400053 / VS. CIT-25, C-11, 2 ND FLOOR, PRATYAKSH KAR BHAVWAN, BKC BANDRA-EAST, MUMBAI-400051 ( #$% & /ASSESSEE) ( ' / REVENUE) P.A. NO. AADFC1252B #$% & / ASSESSEE BY DR. K. SHIVRAM & RAHUL SARDA ' / REVENUE BY SHRI R.R. PRASAD-DR ( ') * & + / DATE OF HEARING : 18/05/2015 * & + / DATE OF ORDER: 18/05/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 25/04/2013, OF THE LD. COMMISSIONER OF INCOME TAX, MUMBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTA INS TO M/S CITY LIFE DEVELOPERS 2 INVOKING THE REVISIONAL JURISDICTION U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). THE CRUX OF T HE ARGUMENT ADVANCED BY DR. K. SHIVARAM ALONG WITH SHR I RAHUL SARDA, LD. COUNSEL FOR THE ASSESSEE IS THAT T HE ASSESSMENT ORDER IS NEITHER ERRONEOUS NOR PREJUDICI AL TO THE INTEREST OF THE REVENUE AS THE NECESSARY DETAILS WE RE FILED BEFORE THE ASSESSING OFFICER RELATING TO THE PROJEC T PEACE HEAVEN AND THE SAME WERE DULY EXAMINED AND VERIFIED BY HIM BY PASSING A ASSESSMENT ORDER U/S 143(3) OF THE ACT. THUS, INVOKING THE REVISIONAL JURISDICTION IS UNJUS TIFIED. ON THE OTHER HAND, SHRI R.R. PRASAD, LD. CIT-DR, DEFEN DED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY SUBM ITTING THAT THE ASSESSMENT ORDER SHOWS THAT THERE IS NO DI SCUSSION ABOUT THE CORRECTNESS OF METHOD OF ACCOUNTING EMPLO YED BY THE ASSESSEE AS THERE IS NO WHISPER ABOUT THE GENUI NENESS AND ACCURACY OF THE PROFIT DECLARED BY THE ASSESSEE BY ADOPTING PERCENTAGE COMPLETION METHOD, CONSEQUENTLY , THE ASSESSMENT WAS FRAMED WITHOUT EXAMINING ABOUT THE M ETHOD OF ACCOUNTING EMPLOYED BY THE ASSESSEE FOR DETERMIN ING THE INCOME OF PROJECT AGRAWAL PEACE HEAVEN. 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. IF THE OBSERVATIO N MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO T HE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MAT ERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RES PECTIVE COUNSEL, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE NOTE THAT THE ASSESSEE DECLARED INCOME OF RS.47,95,692/- IN I TS RETURN FILED ON 25/09/2009, WHICH WAS PROCESSED U/S 143(1) OF THE M/S CITY LIFE DEVELOPERS 3 ACT. SUBSEQUENTLY, THE CASE OF THE ASSESSEE WAS SE LECTED FOR SCRUTINY UNDER CASS, THEREFORE, NOTICES U/S 143(2) AND 142(1) OF THE ACT ALONG WITH DETAILED QUESTIONNAIRE S WERE SERVED UPON THE ASSESSEE. THE ASSESSEE ATTENDED TH E PROCEEDINGS FROM TIME TO TIME AND FILED VARIOUS DET AILS CALLED FOR AND THE CASE WAS DISCUSSED WITH THE ASSESSEE AS IS EVIDENT FROM PAGE 1 ONWARDS OF THE ASSESSMENT ORDER ITSELF. IN THE ASSESSMENT ORDER, WE FIND THAT THE FACTS HAV E BEEN ELABORATED AS THE ASSESSEE UNDER TOOK THREE PROJECT S NAMELY (A) AGARWAL TRINITY TOWER AT ORLEM CHURCH AT MALAD WEST, MUMBAI, (B) AGARWAL HILL VIEW AT VASAI EAST, THANE, AND (C) AGARWAL PEACE HEAVEN AT VASAI EAST, THANE. THE PROJ ECT AT AGARWAL TRINITY TOWER WAS CONSISTING OF 27 FLOURS W HICH WAS COMPLETED IN ASSESSMENT YEAR 2008-09 AND THE STOCK OF UNSOLD FLATS WERE SOLD DURING THE YEAR BY CLAIMING DEDUCTION U/S 80IB(10) OF THE ACT. THE PROJECT WAS AGRAWAL HI LL VIEW WAS CONSISTING OF THREE WINGS OF FOUR STORIES, EACH WERE ALSO COMPLETED DURING THE YEAR AND NO DEDUCTION WAS CLAI MED U/S 80IB(10) OF THE ACT. THE PROJECT NAMELY PEACE HEAVE N, CONSISTING OF TEN WINGS OF SEVEN STORIES EACH OF WH ICH THE WORK WAS IN PROGRESS FOR WHICH THE ASSESSEE OFFERED INCOME ON PERCENTAGE COMPLETION METHOD. THE ASSESSEE SHOW ED LOSS OF RS.1,02,86,173/- FROM THE PROJECT AGRAWAL TRINIT Y TOWER AND LOSS OF RS.36,53,108/- FROM THE PROJECT PEACE H EAVEN AND A PROFIT OF RS.1,68,39,377/- FROM PROJECT HILL VIEW. THE PROJECT AT TRINITY TOWER WAS SHOWN AS ELIGIBLE FOR DEDUCTION U/S 80IB(10). THERE IS A DISCUSSION IN THE ASSESSM ENT ORDER THAT CLAIM U/S 80IB(10) WAS DISALLOWED FOR EARLIER YEARS I.E. M/S CITY LIFE DEVELOPERS 4 2004-05 TO 2008-09 ON THE BASIS OF DISCUSSION AND F INDING MADE IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 20 05-06, AS ORIGINALLY THE COMMENCEMENT CERTIFICATE WAS ISSU ED IN THE NAME OF M/S DHRUV CONSTRUCTION TO DEVELOP WINGS A, B AND C, HOWEVER, IN RESPECT OF WING C, THE ASSESSEE ENTE RED INTO A JOINT VENTURE AGREEMENT DATED 18/11/2003 AND BECAME A JOINT DEVELOPER ALONG WITH M/S DHRUV CONSTRUCTION. WE FIND THAT THE LD. ASSESSING OFFICER HAS MADE AN ELABORAT E DISCUSSION OF FACTS BY PLACING RELIANCE UPON VARIOU S DECISIONS OF HIGHER AUTHORITIES. WE NOTE THAT THE LD. ASSESSI NG OFFICER HAS TAKEN ONE OF THE POSSIBLE VIEW, MORE SPECIFICAL LY, WHEN THE TRIBUNAL UPHELD THE DECISION OF THE LD. COMMISS IONER OF INCOME TAX (APPEALS) HOLDING THE ASSESSEE AS A JOIN T DEVELOPER ALONG WITH M/S DHRUV CONSTRUCTION. NO AP PEAL WAS FILED BY THE DEPARTMENT AGAINST THE DECISION OF THE TRIBUNAL. EVEN, NO CONTRARY DECISION HAS BEEN MENTI ONED MORE SPECIFICALLY WHEN THE ASSESSMENT WAS FRAMED, T HE DECISION FROM A HIGHER FORUM WAS AVAILABLE BEFORE T HE ASSESSING OFFICER. THE LD. ASSESSING OFFICER HAS AL SO MADE DISCUSSION ABOUT OTHER DISALLOWANCES IN THE ASSESSM ENT ORDER ALONG WITH OTHER DETAILS AND COMPUTATION OF T OTAL INCOME AS IS EVIDENT FROM PAGE-6 OF THE ASSESSMENT ORDER. 2.1. WE ALSO NOTE THAT BEFORE THE ASSESSMENT WAS FRAMED, THE FACTS WERE DULY EXAMINED IN A DETAILED MANNER BY THE ASSESSING OFFICER AS SCRUTINY ASSESSMENT PRO CEEDINGS WERE CARRIED OUT IN THE PRESENT CASE. ASSESSMENT OR DER U/S 143(3) OF THE ACT WAS PASSED AFTER DETAILED ENQUIRY/EXPLANATION AND DISCUSSION BY THE ASSESSING OFFICER. M/S CITY LIFE DEVELOPERS 5 DUE DISCUSSION HAS BEEN MADE IN THE ASSESSMENT ORDE R WITH RESPECT TO PEACE HEAVEN PROJECT AND THE ASSESSEE CONSISTENTLY FOLLOWED THE SAME METHOD WHICH WAS ACC EPTED IN EARLIER YEARS AFTER MAKING A DETAILED ENQUIRY AS IS EVIDENT FROM VARIOUS PAGES OF THE PAPER BOOK LIKE NOTICE U/ S 142(1), REPLY TO THE NOTICE BY THE ASSESSEE, AUDIT REPORT, NOTE IN THE AUDIT REPORT, DETAILS OF INVENTORY IN AGARWAL PEACE HEAVEN PROJECT AND THE ASSESSING OFFICER HAS MADE SPECIFIC RECORDING ABOUT THE CONSTRUCTION IN PROGRESS AND PERCENTAGE COMPLETION PROJECT METHOD ADOPTED BY THE ASSESSEE. IN VIEW OF THESE FACTS, IT IS CLEAR THAT THE ASSESSMENT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE RE VENUE. THE CASE OF THE ASSESSEE FIND SUPPORTS FROM THE DECISIO N IN CIT VS ESCORTS LTD. 338 ITR 435 (DEL.), SPECTRA SHARES AND SCRIPS PVT. LTD. VS CIT (2013) 354 ITR 35 (AP)(HC), CIT VS ADVANCE CONSTRUCTION COMPANY PVT. LTD. 275 ITR 30 (GUJ.) 2.2. SO FAR AS, THE CONTENTION OF THE LD. COMMISSI ONER AND ALSO OF THE LD. CIT-DR THAT NO DISCUSSION HAS B EEN MADE IN THE ASSESSMENT ORDER WITH RESPECT TO CORRECTNESS OF METHOD OF ACCOUNTING AND ASSESSMENT WAS PASSED WITH OUT DUE ENQUIRES, WE NOTE THAT RATHER NECESSARY DETAILS CALLED FOR, DUE DISCUSSION WAS MADE AND THE FACTS WERE DULY SCR UTINIZE, THUS, THE RATIO LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN IDEA CELLULAR LTD. VS DCIT & ORS. (2008) 301 ITR 407 (BOM.) AND CIT VS FINE JEWELLERY (INDIA) LTD. (2015 ) 372 ITR 303 (RELEVANT PAGE 307) TO THE FACT THAT MERE NON-M ENTION OF AN ISSUE IN ASSESSMENT ORDER AFTER CALLING FOR DETA ILS DOES NOT MEAN LACK OF ENQUIRY IF THE DETAILS WERE CALLED FOR AND M/S CITY LIFE DEVELOPERS 6 EXAMINED. WE FIND THAT BEFORE THE ASSESSMENT ORDER WAS PASSED THE LD. ASSESSING OFFICER MADE A DETAILED EN QUIRY AND ON BEING SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE AND THEN FRAMED THE ASSESSMENT, THEREFORE, THERE IS NO QUESTION OF ALLEGING THAT THE ISSUE WAS NOT EXAM INED. ONE OF THE POSSIBLE VIEW, TAKEN BY THE LD. ASSESSING O FFICER, THUS, THE DECISION IN CIT VS MAX INDIA LTD. 295 ITR 282 F ROM HONBLE APEX COURT, CIT VS BINA INDRA KUMAR (2015) 370 ITR 552 ALONG WITH THE CASE IN CIT VS GRASIM INDUSTRIES LTD. (2014) 226 TAXMAN 165 FROM HONBLE JURISDICTIONAL HIGH COURT SUPPORTS THE STAND OF THE ASSESSEE. IN VIEW OF THE DISCUSSION, WE FIND THAT THE ASSESSMENT ORDER IS NE ITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENU E, THEREFORE, WE ALLOW THE APPEAL OF THE ASSESSEE AND REVERSE THE STAND OF THE LD. COMMISSIONER OF INCOME TAX. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 18/05/2015. SD/- SD/- ( N.K. BILLAIYA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ( ) MUMBAI; , DATED : 18/05/2015 F{X~{T? P.S/. .. M/S CITY LIFE DEVELOPERS 7 %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. 3 3 ( 4& ( -. ) / THE CIT, MUMBAI. P4. 3 3 ( 4& / CIT(A)- , MUMBAI 5. 6'7 1&# , 3 -.+ -# 8 , ( ) / DR, ITAT, MUMBAI 6. 9$ :) / GUARD FILE. / BY ORDER, 26.& 1& //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ( ) / ITAT, MUMBAI