KARAN VIREN CONSTRUCITONS P.LTD, MUMBAI V. ITO WD 6(2)(4), MUMBAI

ITA 4598/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9050 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARUN SHENOY
• Assessee Lawyers: S C TIWARI; RUTUJA PAWAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI G.S.PANNU (AM) AND SHRI RAM LAL NEGI (JM) ITA NO.4598/MUM/2013 ASSESSMENT YEAR: 2009-10 M/S. KARAN VIREN CONSTRUCTION P. LTD., 401, SHARDA CHAMBERS NO. 1, 31, KESHAVJI NAIK ROAD, BHATBAZARE, MUMBAI- 400 009. PAN:- AACCK7667G VS. THE ITO WARD 6(2 ) (4) , AAYAKAR BHAVAN, MUMBAI- 400 020. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. S.C.TIWARI & MS. RUTUJA PAWAR RESPONDENT BY : SHRI. ARUN SHENOY DATE OF HEARING: 06 /0 9 /201 6 DATE OF PRONOUNCEMENT: 13/01/2017 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 28/03/2013 PASSED BY LD. CIT (APPEALS)-12 FOR THE ASST. YEAR 2009-10, WHEREBY THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEA L FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED UNDER SECTION 1 43(3)(II) OF THE INCOME TAX ACT, 1961(FOR SHORT THE ACT) 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE C OMPANY ENGAGED IN THE BUSINESS AS DEVELOPERS AND BUILDERS FILED ITS RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2009-10 DECLARING THE TOTAL INCOME AS NIL. DURING THE ASSESSMENT PROCEEDING, SINCE IT WAS OBSERVED THAT T HE ASSESSEE HAD SHOWN THE 2 ITA NO.4598/MUM/2013 ASSESSMENT YEAR: 2009-10 CLOSING WORK IN PROGRESS (WIP) OF RS. 3,18,09,807/- , THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF THE CLOSING WORK IN PROG RESS ALONG WITH THE DETAILS OF THE PROJECT TO WHICH WIP PERTAINS. THE DETAILS FILE D BY ASSESSEE REVEALED THE FOLLOWING FACTS. I). ONE SHRI. SUDHIR SHARAD REDKAR, ENTERED INTO AN AGREEMENT DATED 17/02/2002 WITH THE CENTRAL CO-OPERATIVE HOUSING SO CIETY LTD.(CCHS) AS PER WHICH SHRI. REDKAR ACQUIRED DEVELOPMENT RIGHTS IN R ESPECT OF THE PROPERTY BEARING CADASTRAL SURVEY NO. 1/1245, FINAL PLOT NO. 382, OF LOWER PAREL DIVISION SITUATED AT AGASHE PATH, OFF BHAVANI SHANKAR ROAD, DADAR, MUMBAI. II). THE CENTRAL CO-OPERATIVE HOUSING SOCIETY LTD. GRANTED DEVELOPMENT RIGHTS TO SHRI. REDKAR IN RESPECT OF PROPERTY AFORESAID TO DEMOLISH THE EXISTING STRUCTURE FOR CONSTRUCTION OF TWO BUILDINGS, ONE FO R THE REHABILITATION OF THE TENANTS AND THE OTHER FOR CONSTRUCTING SOCIETYS HALL AND THERE ABOVE FURTHER FLOORS FOR SALE IN OPEN MARKET FOR CONSIDERATION. III). ACCORDINGLY, SHRI. REDKAR TOOK POSSESSION OF THE PROPERTY FOR CONSTRUCTION OF THE PROPOSED BUILDINGS AND ASSIGNED THE PROJECT IN FAVOUR OF THE APPELLANT/ASSESSEE BY ENTERING INTO A CONSTRUCTION CONTRACT ON 18.5.2006 FOR A TOTAL CONSIDERATION OF RS. 2,47,00,000/- HOWEVER, S UBSEQUENTLY THE CONSIDERATION AMOUNT WAS ENHANCED TO 2,49,00,000/-V IDE MEMORANDUM OF UNDERSTANDING ENTERED BETWEEN THE PARTIES. INITIALL Y THE DEVELOPER PAID RS. 81 LACS TO THE ASSESSEE. LATER ON DUE TO FINANCIAL CRI SES, SH. RADKAR OFFERED TO SELL SEVEN FLATS IN THE BUILDING WHICH WAS TO BE CONSTRU CTED FOR A TOTAL CONSIDERATION OF RS. 3,86,00,000/- AND TO ADJUST THE BALANCE AMOU NT AGAINST THE SAID SALE CONSIDERATION. 3. ACCORDINGLY, ASSESSEE ENTERED INTO AN AGREEMENT WITH SHRI. REDKAR ON 29/12/2006 FOR PURCHASING FLAT NO.S 2,3,4,5,6,7,& 8 IN THE BUILDING AAROHI 3 ITA NO.4598/MUM/2013 ASSESSMENT YEAR: 2009-10 TOWER I.E. THE BUILDING TO BE CONSTRUCTED ON CADAS TRAL SURVEY NO. 1/1245. THE DETAILS OF CONSIDERATION PAID AS PER CLAUSE 2(B ) OF THE SAID AGREEMENT ARE RS. 47,88,000/- AS THE COST OF EACH FLAT, RS. 4,00, 000/- AS THE COST OF ONE OF THE STILT CAR PARKING AND RS. 75,000/- AS OPEN CAR PARK ING SPACE ALLOTTED INCLUDING RS. 65,000/- EACH BEING THE PROPORTION PRICE OF TH E COMMON AREAS. DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSE E SOLD FLAT NO. 2, 4 AND 7. THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY CAPITAL GAIN SHOULD NOT BE CHARGED AND WHY THE PROVISIONS OF SECTION 50 OF THE ACT SHOULD NOT BE APPLIED. 4. THE ASSESSEE CONTENDED THAT SINCE THE CONSTRUCTI ON WORK WAS NOT COMPLETED THE DEVELOPER SHRI. REDKAR WAS NOT IN A P OSITION TO APPLY FOR OCCUPATION CERTIFICATE DUE TO DISPUTE BETWEEN SOCIE TY OWNER AND THE OWNER OF GARAGE. HENCE, POSSESSION COULD NOT BE HANDED OVER TO THE BUYERS. SINCE THE ASSESSEE HAD NOT RECEIVED FULL PAYMENT FROM THE BUY ERS SECTION 50C WOULD NOT BE APPLICABLE IN THE ASSESSMENT YEAR UNDER CONSIDER ATION. 5. THE A.O REJECTED THE CONTENTION OF THE ASSESSEE AND CALCULATED THE SHORT TERM CAPITAL GAIN OF RS. 2,41,90,270/- AND ALSO ES TIMATED THE PROFIT ON THE CONTRACT ACTIVITY @ 8% OF THE WORK DONE AMOUNTING T O RS.6,24,520/- AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS. 2, 48,14,790/-. IN APPEAL THE CIT(A) CONFIRMED BOTH THE ADDITIONS MADE BY THE A.O . AGGRIEVED BY THE IMPUGNED ORDER PASSED BY THE LD.CIT(A), THE ASSESSE E IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE OF THE APPELLANT AND IN LAW, LEARNED COMMISSIONER OF INCOM E TAX(APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 2,41,90 ,270/- MADE BY LEARNED ASSESSING OFFICER BY WAY OF ASSESSMENT OF SHORT-TERM CAPITAL GAINS U/S. 50C OF THE INCOME TAX ACT, 1961. 4 ITA NO.4598/MUM/2013 ASSESSMENT YEAR: 2009-10 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE OF THE APPELLANT AND IN LAW, LEARNED COMMISSIONER OF INCOM E TAX(APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF RS. 6,24,52 0/- MADE BY LEARNED ASSESSING OFFICER BY WAY OF THE PROFIT ON C ONTRACT ACTIVITY OF THE APPELLANT DURING THE RELEVANT PREVIOUS YEAR. 6. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE CIT(A) HAS WRONGLY CONFIRMED THE FINDINGS OF THE LD. A.O. THE MAIN OBJECT OF THE ASSESSEE COMPANY WAS TO CARRY ON ITS BUSINESS AS DEVELOPERS AND BUILDERS. MR. REDKAR APPROACHED THE DIRECTORS OF THE APPELLANT COMPANY T O CARRY OUT THE CONSTRUCTION AND DEVELOPMENT WORK AND THE AGREEMENTS WERE ENTERE D INTO BETWEEN THE PARTIES. SINCE MR. REDKAR COULD NOT MAKE PAYMENTS A S PER THE TERMS OF THE AGREEMENTS, HE OFFERED TO SELL SEVEN FLATS IN THE P ROPOSED BUILDING, INCLUDING OPEN PARKINGS, FOUR STILT PARKING AND TWO TERRACES FOR A TOTAL CONSIDERATION OF RS. 3,86,00,000/- SO AS TO ADJUSTED AND SET OFF T HE AMOUNT UNDER THE MEMORANDUM OF UNDERSTANDING DATED 25/05/2006 BETWEE N MR. SUDHIR REDKAR AND THE APPELLANT. WHILE REGISTERING THE SAID AGREE MENT, A SENTENCE WAS DELIBERATELY INSERTED THAT THE FLATS WERE PURCHASED FOR THE PURPOSE OF INVESTMENT WITH A VIEW TO SAVE STAMP DUTY. 7. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT THE AGREEMENT BETWEEN THE ASSESSEE AND MR. SUDHIR REDKAR WAS A FI NANCIAL ARRANGEMENTS AND THE APPELLANT COMPANY HAD ENTERED INTO THE AGREEMEN T FOR PURCHASING SEVEN FLATS SO AS TO ADJUST THE EXPENDITURE WHICH IT HAD AGREED TO INCUR IN CONSTRUCTION OF THREE BUILDINGS. BUT, BECAUSE OF TH E SUBSEQUENT DEVELOPMENTS, THE APPELLANTS TRANSACTION OF PURCHASE OF SEVEN FL ATS FROM MR. REDKAR AND FURTHER SALE OF THREE FLATS TO DIFFERENT CUSTOMERS COULD NOT BE COMPLETED AS THE POSSESSION OF THE FLATS NEVER CAME INTO THE POSSESS ION OF THE ASSESSEE. SINCE THE ASSESSEE DID NOT TRANSFER THE CAPITAL ASSETS, THE Q UESTION OF SHORT TERM CAPITAL GAIN DOES NOT ARISE AT ALL. SECTION 50C OF THE ACT COMES INTO PICTURE ONLY WHEN 5 ITA NO.4598/MUM/2013 ASSESSMENT YEAR: 2009-10 LAND OR BUILDING OR BOTH ARE TRANSFERRED. IN THE PR ESENT CASE THERE IS NO TRANSFER OF ANY LAND OR BUILDING OR BOTH AS THE ASSESSEE WAS NOT IN POSSESSION OF THE FLATS IN QUESTION TO TRANSFER THE SAME. THE AMOUNT RECEIV ED DURING THE PREVIOUS YEAR IS, THEREFORE, PERTAINING TO ITS BUSINESS AND THE S AME CANNOT BE TREATED AS INCOME FROM SHORT TERM CAPITAL GAIN. THEREFORE THE ADDITION CONFIRMED BY THE LD. CIT(A) IS LIABLE TO BE DELETED. 8. AS REGARDS GROUND NO 2, REGARDING CONFIRMATION OF ADDITION OF RS. 6,24,520/-ASSESSED AS PROFIT ON THE CONTRACT ACTIVI TY, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ORDER OF THE LD. CIT(A) SUFFERS FROM SERIOUS ERROR AS THE SAME HAS BEEN PASSED WITHOUT APPRECIATING THE F ACT THAT CONTRACTORS PROFIT CANNOT BE DETERMINED BEFORE COMPLETION OF CONSTRUCT ION WORK. TO SUBSTANTIATE HIS CONTENTION, THE LD. COUNSEL PLACED RELIANCE ON THE FOLLOWING DECISIONS:- 1. ASIF ABDUL KADER FAZLANI VS. ACIT (2013) 26 CCH 234 MUMBAI TRIBUNAL 2. ITO VS. YAIN MOOSA GODIL (2012 72 DTR 167 (AHD) TRIBUNAL. 3. WEINER V. HARRIS (1910) 1 KB 285 4. SUNIL SIDDHARTHBHAI VS. CIT (1985) 156 ITR 509(S C). 9. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRE SENTATIVE (DR) RELYING ON THE CONCURRENT FINDINGS OF THE AUTHORITIES BELOW SUBMIT TED THAT SINCE THE ASSESSEE HAS PURCHASED THE FLATS FROM SHRI. REDKAR IN THE CA PACITY OF AN INVESTOR, THE GAIN ARISING FROM TRANSFER OF SUCH PROPERTY HAS TO BE TAXED AS CAPITAL GAIN IN THE HANDS OF THE ASSESSEE. AS REGARDS SECOND GROUND OF APPEAL, THE LD. DR SUBMITTED THAT SINCE THE ASSESSEE HAD CARRIED OUT T HE CONSTRUCTION WORK DURING THE PREVIOUS YEAR, THE LD. CIT (A) HAS RIGHTLY CONF IRMED THE ADDITION MADE ON ACCOUNT OF PROFIT EARNED @ 8% OF THE DIFFERENCE OF AMOUNT OF CLOSING WIP AS ON 31.3.2008 AND WIP AS ON 31.3.2009. 6 ITA NO.4598/MUM/2013 ASSESSMENT YEAR: 2009-10 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL PLACED BEFORE US IN THE LIGHT OF THE RESPECTIVE CONTENTION S OF THE PARTIES. ADMITTEDLY, THE SH. REDKAR ENTERED INTO AN AGREEMENT WITH THE ASSES SEE AND ASSIGNED THE CONSTRUCTION WORK TO THE ASSESSEE. SH. REDKAR MADE PART PAYMENT TO THE ASSESSEE AS PER THE TERMS OF THE CONTRACT, HOWEVER, LATER ON ASKED THE ASSESSEE TO PURCHASE SEVEN FLATS IN QUESTION IN THE BUILDING WHICH WAS TO BE CONSTRUCTED AND FURTHER ASKED TO ADJUST THE EXPENDITURE TO BE I NCURRED ON CONSTRUCTION. THUS THE FLATS ALONG WITH PARKING FACILITIES WERE P URCHASED BY THE ASSESSEE AGAINST CONSIDERATION FOR CONSTRUCTION WORK DONE. A GREEMENTS FOR SALE IN RESPECT OF THREE FLATS IN QUESTION WERE ENTERED INT O DURING THE RELEVANT PREVIOUS YEAR. AS PER THE ASSESSEE, SINCE THE PROJECT COULD NOT BE COMPLETE DUE TO SOME ONGOING DISPUTE, SH. RADKAR COULD NOT HAND OVER POS SESSION OF THE SEVEN FLATS IN QUESTION TO THE ASSESSEE DUE TO WHICH FURTHER PO SSESSION OF THREE FLATS COULD NOT BE TRANSFERRED TO THE PURCHASERS BY THE ASSESSE E. ACCORDINGLY, ASSESSEE DID NOT MENTION THE TRANSACTION OF PURCHASE AND SALE OF FLATS IN QUESTION IN ITS BOOKS OF ACCOUNT AND ONLY MENTIONED THE AMOUNTS REC EIVED AS ADVANCE. THE AUTHORITIES BELOW HAVE TREATED THE RECEIPTS AS SHOR T TERM CAPITAL GAIN MAINLY ON THE GROUNDS THAT THE ASSESSEE HAD PURCHASED THE SAI D SEVEN FLATS IN THE CAPACITY OF AN INVESTOR; UNDER SECTION 2(14) OF THE ACT, ANY KIND OF PROPERTY HELD BY THE ASSESSEE WHETHER OR NOT CONNECTED WITH HIS B USINESS OR PROFESSION COMES WITHIN THE DEFINITION OF CAPITAL ASSET EXCEPT THE PROPERTIES MENTIONED UNDER CLAUSE (I) TO (VI) AND UNDER SECTION 2(47) OF THE A CT, TRANSFER IN RELATION TO A CAPITAL ASSET INCLUDES; SALE, EXCHANGE OR RELINQUIS HMENT OF THE ASSET OR EXTINGUISHMENT OF ANY RIGHTS ETC. SINCE, THE ASSESS EE HAD TRANSFERRED ITS RIGHT IN THE SAID THREE FLATS DURING THE RELEVANT PREVIOUS Y EAR, THE CONSIDERATION RECEIVE AGAINST THE SAID TRANSFER IS LIABLE TO BE TAXED AS CAPITAL GAIN UNDER THE PROVISIONS OF SECTION 45 OF THE ACT. 7 ITA NO.4598/MUM/2013 ASSESSMENT YEAR: 2009-10 11. IN OUR CONSIDERED VIEW, THE REVENUE AUTHORITIE S HAVE HELD THE AMOUNTS RECEIVED FROM THE THREE BUYERS AS CAPITAL GAIN ON T HE BASIS OF THE AGREEMENTS DATED 20.5.2008, 23.5.2008 AND 7.7.2008, WITHOUT TA KING INTO CONSIDERATION THE EARLIER AGREEMENTS AND MEMORANDUM OF UNDERSTANDING ENTERED BETWEEN SH. REDKAR AND THE ASSESSEE. THE CONSTRUCTION CONTRACT AGREEMENT DATED 18.5.2006, AGREEMENT FOR SALE DATED 29.12.2006 AND BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE COMPANY CORROBORATE THE CONTENTION OF THE ASSESSEE. THE ASSESSEE AGREED TO PURCHASE THE AFORE SAID SEVEN FLATS AGAINST CONSIDERATION OF CONSTRUCTION WORK DONE BY IT. FURT HER THE ASSESSEE ENTERED INTO AN AGREEMENT WITH THE BUYERS OF THE THREE FLATS IN ORDER TO RECOVER THE COST OF CONSTRUCTION OF THE BUILDING. SINCE, THE FLATS IN Q UESTION WERE PURCHASED TO ADJUST THE COST OF CONSTRUCTION, THE AMOUNTS RECEIV ED BY THE ASSESSEE CANNOT BE TREATED AS CAPITAL GAIN. AT THAT STAGE IT WAS EVEN NOT POSSIBLE TO ASSESS ANY GAIN OR LOSS FROM THE BUSINESS BECAUSE THE CONSTRUCTION OF BUILDING WAS STILL IN PROGRESS DURING THE RELEVANT PREVIOUS YEAR. THE REV ENUE AUTHORITIES HAVE TREATED THE AMOUNTS RECEIVED BY THE ASSESSEE WITHOUT TAKING INTO THE CONSIDERATION THE FACTS THAT THE ASSESSEE HAD AGREED TO PURCHASE THE FLATS IN QUESTION AGAINST CONSIDERATION FOR THE CONSTRUCTION WORK DONE. AS PE R THE SETTLED POSITION OF LAW CONSIDERATION CAN BE PAID OR RECEIVED EITHER IN TER MS OF MONEY OR MONEYS WORTH. SO, PERUSAL OF ALL THE AGREEMENTS/MEMORANDUM OF UNDERSTANDINGS ENTERED BETWEEN SH. REDKAR AND THE ASSESSEE, IN THE LIGHT OF THE CONTENTION OF THE ASSESSEE, GIVES RISE TO THE CONCLUSION THAT THE AMOUNT OF RS,1,68,00,000/- WHICH WAS PAYABLE BY SH REDKAR WAS TO BE ADJUSTED A GAINST THE COST OF SEVEN FLATS WHICH WAS FIXED AT RS.3,86,00,000/- AND THIS ARRANGEMENT WAS MADE DUE TO INABILITY OF MR. REDKAR TO PAY THE AFORESAID AMO UNT TO THE ASSESSEE. IN OUR CONSIDERED VIEW CONTENTS OF CLAUSE 3(H) OF THE AGRE EMENT THAT THE ASSESSEE IS BUYING THE FLATS AS AN INVESTOR, DO NOT IPSO FACTO CHANGE THE NATURE OF ACTUAL TRANSACTION. MOREOVER, THE ASSESSEE HAS EXPLAINED B EFORE THE AUTHORITIES BELOW AS WELL AS BEFORE US THAT THE SAID CLAUSE WAS DELIB ERATELY INSERTED AT LATER STAGE 8 ITA NO.4598/MUM/2013 ASSESSMENT YEAR: 2009-10 IN ORDER TO SAVE STAMP DUTY. THE REVENUE AUTHORITIE S HAVE NOT POINTED OUT ANY COGENT EVIDENCE ON RECORD TO REBUT THE CONTENTION O F THE ASSESSEE. HENCE, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND HOLD THAT THE CONSIDERATION AMOUNTS IN QUESTION RECEIVED BY THE ASSESSEE CANNOT BE CONSIDE RED AS CAPITAL GAIN WITHIN THE MEANING OF SECTION2(14) OF THE ACT, TO ASSESS T HE SAME UNDER THE HEAD INCOME FROM SHORT TERM CAPITAL GAIN. ACCORDINGLY, W E DECIDE THIS GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE 12. SECOND GROUND PERTAINS TO ADDITION OF RS. 6,24 ,520/- MADE BY THE AO BY ESTIMATING INCOME OF THE APPELLANT @ 8% OF THE WORK DONE DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR. AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF WORK DONE DURING THE YEAR AS THE ASSESSE E HAD SHOWN WORK IN PROGRESS OF RS.3,18,09,807/- DURING THE PREVIOUS YE AR. AO FURTHER ASKED THE ASSESSEE TO EXPLAIN AS TO WHY 8% OF THE TOTAL WORK DONE SHOULD NOT BE TREATED AS INCOME DURING THE PREVIOUS YEAR. IN RESPONSE THE REOF THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS, RELEVANT PORTION OF WHICH READ S AS UNDER:- AS PER UNDERSTANDING WITH MR. SUDHIR REDKAR, HE A GREED TO SELL 7 FLATS TO US WITH THE CONDITION TO RETAIN TWO FLATS FOR HI S SELF OCCUPANCY AND 1 COMMUNITY HALL FOR OWNER SOCIETY FOR AN AGREED VALU E OF RS. 3,86,00,000/-THE CONSTRUCTION COST FOR SALABLE BUIL DING AND TENANT BUILDING SHOULD BE BORN BY US. THE WORK OF THE PROJ ECT IS IN PROGRESS AND ALSO THE DEVELOPER MR. SUDHIR REDKAR HAS NOT AP PLIED FOR OCCUPATION CERTIFICATE, HENCE QUESTION OF 8% PROFIT ON CONTRACT VALUE IS NOT APPLICABLE. 13. THE AO REJECTED THE CONTENTION OF THE ASSESSEE AND ON THE BASIS OF WIP AS ON 31.3.2008 AND 31.3.2009 IN THE P&L ACCOUNT CA LCULATED THE WORK DONE AT RS. 78,06,498/- AND ESTIMATED THE PROFIT @ 8% AND A DDED THE SAME TO THE 9 ITA NO.4598/MUM/2013 ASSESSMENT YEAR: 2009-10 INCOME OF THE ASSESSEE. IN APPEAL THE LD. CIT(A) A FFIRMED THE ACTION OF THE AO. WE NOTICE THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS THE ASSESSEE ALSO SUBMITTED THAT IT HAD APPOINTED A SUB CONTRACTOR TO CONSTRUCT ONE OF THE BUILDINGS AND THE COST OF CONSTRUCTION WAS BORNE BY THE ASSESSEE. WE FIND MERIT IN THE CONTENTION OF THE ASSESSEE THAT CONTRACTORS PROFIT CANNOT BE DETERMINED BEFORE COMPLETION OF CONSTRUCTION WORK. IT IS NOT T HE CASE OF THE REVENUE THAT ASSESSEE HAD COMPLETED THE CONSTRUCTION WORK DURING THE PREVIOUS YEAR. HENCE, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE AND DECIDE THIS GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. 14. IN THE RESULT, APPEAL OF THE ASSESSEE FOR THE A SSESSMENT YEAR 2009-10 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JANUARY, 2017 SD/- SD/- ( G.S.PANNU ) (RAM LAL NEGI) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 13/01/2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. !' , $ !'% , / DR, ITAT, MUMBAI 6. &' ( / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA