THE ITO 9(1)-2, MUMBAI V. M/S. BHADRASEN CONSTRUCTION P. LTD, MUMBAI

ITA 4634/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1390 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-06-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 09-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R BAIWAR
• Keywords: Business income; Depreciation; Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI J SUDHAKAR REDDY, ACCOUNTANT MEMBER I T A NO: 4634/MUM/2008 (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER 9(1)-2, MUMBAI APPELLANT VS M/S BHADRASEN CONSTRUCTION PVT. LTD., MUMBAI RES PONDENT (PAN: AAACB1910H) APPELLANT BY: SHRI A R BAIWAR RESPONDENT BY: SHRI DEEPAK TRALSHAWALA O R D E R R V EASWAR, PRESIDENT: THIS IS AN APPEAL BY THE REVENUE AND IT RELATES TO THE ASSESSMENT YEAR 2005-06. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN CONSTRUCTION BUSINESS. THE APPE AL ARISES OUT OF THE ASSESSMENT MADE UNDER SECTION 143(3) OF THE INC OME TAX ACT, 1961, BY ORDER DATED 20.12.2007. 2. THE GROUNDS TAKEN BEFORE US BY THE REVENUE ARE T O THE EFFECT THAT THE CIT(A) ERRED IN HOLDING THAT THE PROJECT U NDERTAKEN BY THE ASSESSEE WAS NOT COMPLETED DURING THE RELEVANT ACCO UNTING YEAR AND, THEREFORE, THE PROFITS THEREFROM CANNOT BE ASSESSED IN THE SAID YEAR. THE GROUNDS FURTHER STATE THAT THE PROJECT WAS SUBS TANTIALLY COMPLETED DURING THE YEAR, THAT TOTAL SALE CONSIDERATION HAS BEEN RECEIVED AND ITA NO: 4634/MUM/2008 2 FURTHER SOME AGREEMENTS WITH THE BUYERS OF THE FLAT S WERE ALSO REGISTERED DURING THE YEAR. REFERENCE IS ALSO MADE TO THE ORDER OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF CHAMPIO N CONSTRUCTION CO. VS. ITO (1983) 5 ITD 495 (MUM). 3. THE BRIEF FACTS GIVING RISE TO THE APPEAL MAY BE NOTED. THE ASSESSEE ACQUIRED LAND IN KHAR WEST. IT STARTED CO NSTRUCTION OF A BUILDING WITH GROUND AND SIX FLOORS IN THE YEAR 199 4. IN THE RETURN OF INCOME THE ASSESSEE DID NOT SHOW ANY PROFITS FOR TH E AFORESAID PROJECT THOUGH SIX YEARS HAD ELAPSED FROM THE COMMENCEMENT OF THE CONSTRUCTION. IN THE BALANCE SHEET AS ON 31.03.200 5 FILED WITH THE RETURN, THE ASSESSEE SHOWED ADVANCES OF RS.7,83,48, 250/- AGAINST BOOKING OF FLATS AND SUNDRY ADVANCES OF RS.5,17,86, 501/-. THE WORK- IN-PROGRESS WAS SHOWN AT RS.5,53,36,058/-. IN SCHE DULE G TO THE BALANCE SHEET IT WAS STATED THAT THE COMPANY FOLLOW S THE PROJECT COMPLETION METHOD OF ACCOUNTING AND, THEREFORE, THE PROFITS OR LOSSES FROM THE KHAR PROJECT WOULD BE RECOGNIZED ONLY UPON COMPLETION THEREOF. IT WAS FURTHER STATED THAT SINCE THE SAID PROJECT WAS NOT COMPLETED IN THE YEAR ENDED 31.03.2005; NO PROFITS THEREFROM HAVE BEEN OFFERED FOR TAXATION. 4. WHILE EXAMINING THE RETURN THE ASSESSING OFFICER TOOK THE VIEW THAT SOME PROFITS FROM THE PROJECT SHOULD BE ESTIMA TED ON THE BASIS OF THE PERCENTAGE COMPLETION METHOD AND ASSESSED AND A CCORDINGLY CALLED UPON THE ASSESSEE TO STATE ITS OBJECTIONS. IT WAS EXPLAINED BY THE ASSESSEE THAT THE FIRST RETURN OF INCOME WAS FI LED IN RESPECT OF THE ASSESSMENT YEAR 1994-95, THAT THE ASSESSEE HAS BEEN FOLLOWING THE ITA NO: 4634/MUM/2008 3 PROJECT COMPLETION METHOD RIGHT FROM THE INCEPTION, THAT IT WAS A RECOGNIZED METHOD OF ACCOUNTING, THAT THE SAID METH OD WAS NEVER DISTURBED BY THE INCOME TAX AUTHORITIES AND THAT FO R THE ASSESSMENT YEAR 2000-01 WHERE THE METHOD WAS SOUGHT TO BE DIST URBED FOR THE FIRST TIME THE CIT(A) HAD ACCEPTED THE ASSESSEES METHOD THEREBY PUTTING AN END TO THE CONTROVERSY. IT WAS FURTHER STATED T HAT THE INCOME FROM THE PROJECT AMOUNTING TO RS.24,58,942/- HAS BEEN SH OWN BY THE ASSESSEE IN THE ASSESSMENT YEAR 2007-08 AND TAX HAS ALSO BEEN PAID ON THAT BASIS AND THE RETURN FILED FOR THAT YEAR WA S ASSESSED UNDER SECTION 143(3) OF THE ACT, BY ORDER DATED 22.12.200 9, IN WHICH THE INCOME WAS ACCEPTED. 5. THE ASSESSEES SUBMISSIONS AS ABOVE WERE NOT ACC EPTED BY THE ASSESSING OFFICER WHO REFERRED TO THE FACT THAT THE TOTAL SALE CONSIDERATION HAS BEEN RECEIVED IN THE YEAR UNDER A PPEAL AND SOME OF THE AGREEMENTS WITH THE PURCHASERS WERE ALSO REGIST ERED IN THAT YEAR. THESE FACTS, ACCORDING TO THE ASSESSING OFFICER, IN DICATED THAT THE PROJECT WAS SUBSTANTIALLY COMPLETED IN THE YEAR UND ER APPEAL. THE ASSESSING OFFICER ALSO REFERRED TO THE FACT THAT WH EREAS ACCOUNTING STANDARD7 ISSUED BY THE INSTITUTE OF CHARTERED ACC OUNTANTS OF INDIA IN 1983 RECOGNIZED THE COMPLETED CONTRACT OR PROJECT C OMPLETION METHOD, THE REVISED ACCOUNTING STANDARD ISSUED WITH EFFECT FROM 01.04.2003 HAS DONE AWAY WITH THE SAID METHOD AND HAS RECOGNIZ ED THE PERCENTAGE OF COMPLETION METHOD AS THE ONLY METHOD OF COMPUTING THE PROFITS FROM THE CONSTRUCTION BUSINESS. THE ASSESS ING OFFICER ACCORDINGLY OPINED THAT IN ALL CASES WHERE THE OUTC OME OF THE ITA NO: 4634/MUM/2008 4 CONSTRUCTION CONTRACT CAN BE ESTIMATED WITH REASONA BLE ACCURACY, THE REVENUE AND THE COSTS PERTAINING TO THE CONTRACT HA VE TO BE RECOGNIZED IN THE YEAR IN WHICH THE CONTRACT ACTIVITY HAS BEEN SUBSTANTIALLY COMPLETED. THE ASSESSING OFFICER ALSO REFERRED TO THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF TUTICORIN ALKALI CHEMI CALS & FERTILISERS LTD. VS. CIT (1997) 227 ITR 172 (SC) IN SUPPORT OF HIS VIEW THAT THE PROFITS HAVE TO BE RECOGNIZED ACCORDING TO THE PRIN CIPLES OF LAW AND NOT WITH REFERENCE TO ACCOUNTANCY PRACTICES WHICH CANNO T OVERRIDE THE PROVISIONS OF THE INCOME TAX ACT. REFERENCE WAS AL SO MADE TO THE JUDGMENT OF THE SUPREME COURT IN CIT VS. BRITISH PA INTS INDIA LTD. (1991) 188 ITR 44 (SC). SOME OTHER AUTHORITIES WER E ALSO REFERRED TO INCLUDING THE ORDER OF THE MUMBAI BENCH OF THE TRIB UNAL IN THE CASE OF CHAMPION CONSTRUCTION CO. VS. ITO (SUPRA). 6. THE ASSESSING OFFICER ALSO HELD THAT EVEN ON FAC TS THE PROJECT WAS SUBSTANTIALLY COMPLETED IN THE CURRENT YEAR AND FOR THIS PURPOSE, AS ALREADY NOTED, REFERRED TO THE RECEIPT OF SALE C ONSIDERATION OF ALL FLATS AND THE REGISTRATION OF THE AGREEMENTS WITH SOME PU RCHASERS EFFECTED DURING THE RELEVANT YEAR. 7. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED A COPY OF THE OCCUPATION CERTIFICATE AND A CERTIFICATE FROM THE ARCHITECT STATING THAT EVEN AS ON 31.03.2005, R CC WORK UP TO THE SIXTH FLOOR ONLY WAS COMPLETED, IN ORDER TO SHOW TH AT THE PROJECT ITSELF WAS NOT COMPLETED AND WHAT WAS CONSTRUCTED DURING T HE RELEVANT YEAR WAS ONLY THE OUTER SHELL OF THE BUILDING. THIS SUB MISSION WAS REJECTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER EV ENTUALLY ESTIMATED ITA NO: 4634/MUM/2008 5 THE PROFITS AT 8% OF THE TOTAL ADVANCES OF RS.7,83, 48,250/- RECEIVED BY THE ASSESSEE. THE PROFITS SO ESTIMATED CAME TO RS. 62,67,860/- WHICH WAS ASSESSED AS THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER APPEAL AS AGAINST NIL INCOME RETURNED BY THE ASSESS EE. 8. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) A ND MADE SEVERAL SUBMISSIONS, BESIDES REITERATING THE SUBMIS SIONS MADE BEFORE THE ASSESSING OFFICER. IT WAS CONTENDED THAT THE C ONSTRUCTION OF THE BUILDING HAD BEEN DELAYED DUE TO LACK OF FINANCE AN D IT COULD BE COMPLETED DURING THE FINANCIAL YEAR ENDED 31.03.200 7 ONLY BY A COMMITTEE OF BUYERS CONSTITUTED FOR REVIVING THE CO NSTRUCTION. IT WAS ALSO POINTED OUT THAT POSSESSION LETTERS TO THE BUY ERS WERE ISSUED ONLY FROM MAY 2006 AND THE OCCUPATION CERTIFICATE WAS GI VEN BY THE BOMBAY MUNICIPAL CORPORATION ONLY ON 24.05.2006. T HAT APART, THE ELECTRICITY CONNECTION WAS PROVIDED ONLY IN JUNE 20 06. IT WAS FURTHER CONTENDED THAT THE ASSESSING OFFICERS RELIANCE ON THE REVISED ACCOUNTING STANDARD-7 IS MISPLACED BECAUSE THAT WOU LD APPLY ONLY TO A CONTRACTOR, WHEREAS IN THE ASSESSEES CASE THE PR OJECT WAS OWNED AND DEVELOPED BY THE ASSESSEE ITSELF. IT WAS POINT ED OUT THAT THE REVISED ACCOUNTING STANDARD-7 WAS APPLICABLE ONLY F OR ACCOUNTING FOR CONSTRUCTION CONTRACTS AS CLARIFIED BY THE EXPERT A DVISORY COMMITTEE OF THE ICAI. 9. THE CIT(A) TOOK NOTE OF THE AFORESAID SUBMISSION AND ALSO HIS OWN ORDER DATED 04.09.2007 IN RESPECT OF THE ASSESS MENT YEAR 2000- 01, WHERE HE HAD HELD AS UNDER: - ITA NO: 4634/MUM/2008 6 THERE IS FORCE IN THE APPELLANTS CONTENTION THAT T HE PROJECT WAS COMPLETED IN THE YEAR 2006-07. THEREFO RE, THERE WAS NO JUSTIFICATION IN ESTIMATING THE INCOME @ 1% OF THE TOTAL WIP WHEN THE ASSESSEE COMPANY HAS BEEN FOLLOWING PROJECT COMPLETION METHOD CONSISTENTLY AN D ALSO ACCEPTED BY THE DEPARTMENT SINCE 1994-95. THE PROJECT COULD NOT BE COMPLETED DUE TO ACUTE FINANCI AL CRISIS. CONSIDERING THE FACTS OF THE CASE DISCUSSE D ABOVE, I DIRECT THE AO TO DELETE THE ADDITION OF RS.4,66,589/-. THE RELIANCE PLACED ON BY THE AO IN THE CASE OF M/S CHAMPION CONSTRUCTION CO. VS. ITO, ITAT MUMBAI (5 ITD 495) IS MISPLACED AND KEEPING IN VIEW THE APPELLANTS POSITION THE DECISION IS NOT APPLICABLE IN THE APPELLANTS CASE. THIS GROUND OF APPEAL STANDS ALLOWED . HE ALSO HELD THAT THE REVISED ACCOUNTING STANDARD-7 WAS NOT APPLICABLE TO THE ASSESSEE SINCE IT WAS APPLICABLE ONLY TO CONSTRUCTION CONTRACTS WHEREAS THE ASSESSEE WAS DEVELOPING THE P ROJECT ON ITS OWN. HE HELD THAT THE COMPLETION CERTIFICATE WAS OBTAINE D FROM THE BMC ONLY ON 24.05.2006. FROM THESE FACTS HE HELD THAT THE PROJECT WAS NOT COMPLETED IN THE RELEVANT ACCOUNTING YEAR. AS THER E WAS NO CHANGE IN THE FACTS OF THE CASE AS COMPARED TO THE ASSESSMENT YEAR 2000-01 FOR WHICH YEAR HE HAD DECIDED THE ISSUE IN FAVOUR OF TH E ASSESSEE, HE ALLOWED THE ASSESSEES APPEAL. 10. THE REVENUE IS IN APPEAL TO REITERATE THE STAND TAKEN BY THE ASSESSING OFFICER. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE FACTS FOR THE YEAR UNDER APPEAL WERE DIFFERENT FROM THE FACTS FOR THE ASSESSMENT YEAR 2000-01 IN WHICH YEAR THE CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. I T WAS HOWEVER STATED THAT AGAINST THE ORDER OF THE CIT(A) FOR THE ASSESSMENT YEAR 2000-01 AS ALSO THE ASSESSMENT YEAR 2004-05, FOR WH ICH YEAR ALSO THE CIT(A) HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSES SEE, THE ITA NO: 4634/MUM/2008 7 DEPARTMENT DID NOT FILE ANY APPEALS TO THE TRIBUNAL . HE HOWEVER CONTENDED THAT EACH YEAR SHOULD BE LOOKED AT AS A S EPARATE YEAR IN INCOME TAX PROCEEDINGS AND, THEREFORE, IT WAS OPEN TO THE DEPARTMENT TO DISCARD THE PAST PRACTICE IF THERE WAS SUFFICIEN T JUSTIFICATION FOR DOING SO. IT WAS POINTED OUT THAT SINCE THE ENTIRE SALE CONSIDERATION HAS BEEN RECEIVED IN THE YEAR UNDER APPEAL AND FURTHER SINCE SOME OF THE AGREEMENTS WERE REGISTERED IN THE SAME YEAR, THE AS SESSING OFFICER WAS JUSTIFIED IN TREATING THE PROJECT AS HAVING BEE N COMPLETED IN THAT YEAR. THE LEARNED SENIOR DR THUS PLEADED THAT THE ASSESSMENT ORDER SHOULD BE RESTORED. 11. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND SUBMITTED THAT THE PROJECT WAS COMPLETED IN THE ACC OUNTING YEAR ENDED 31.03.2007 AND THE ASSESSEES RETURN FOR THE ASSESS MENT YEAR 2007- 08 DECLARING PROFITS OF RS.24,58,942/- SHOWN FOR TH AT YEAR HAS BEEN ACCEPTED BY THE ASSESSING OFFICER AFTER A SCRUTINY OF THE RETURN UNDER SECTION 143(3) OF THE ACT. A COPY OF THE SAID ORDE R HAS BEEN FILED AT PAGES 64 AND 65 OF THE PAPER BOOK. HE ALSO POINTED OUT THAT THE ASSESSEES CLAIM THAT THE PROJECT WAS NOT COMPLETED EVEN AS ON 31.03.2006, RELEVANT FOR THE ASSESSMENT YEAR 2006-0 7, WAS ACCEPTED BY THE ASSESSING OFFICER BY ACCEPTING THE RETURN FI LED BY THE ASSESSEE FOR THAT YEAR SHOWING RS.NIL BUSINESS INCOME. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINTED OUT THAT THE ORDERS OF TH E CIT(A) FOR THE ASSESSMENT YEARS 2000-01 AND 2004-05 ACCEPTING THE ASSESSEES CONTENTION THAT THE PROJECT WAS COMPLETED ONLY IN T HE YEAR ENDED 31.03.2007 WERE ACCEPTED BY THE ASSESSING OFFICER W HO DID NOT FILE ITA NO: 4634/MUM/2008 8 ANY APPEAL TO THE TRIBUNAL. IT WAS THUS CONTENDED THAT THE RULE OF CONSISTENCY ADUMBRATED IN THE JUDGMENT OF THE DELHI HIGH COURT IN THE CASE OF CWT VS. ALLIED FINANCE P. LTD. (2007) 289 I TR 318 (DEL), HAS TO BE FOLLOWED IN INCOME TAX PROCEEDINGS EVEN THOUG H THE RULE OF RES JUDICATA IS NOT APPLICABLE TO INCOME TAX PROCEEDING S. OUR ATTENTION WAS ALSO DRAWN TO PAGES 42 TO 58 OF THE PAPER BOOK, WHICH CONTAINED COPIES OF POSSESSION LETTERS ISSUED BY THE ASSESSEE TO THE VARIOUS PURCHASERS OF THE PREMISES. ALL THE POSSESSION LET TERS HAVE BEEN ISSUED IN THE PERIOD BETWEEN MAY TO JULY 2006. AT PAGE 59 OF THE PAPER BOOK THERE IS A LETTER DATED 11 TH JULY 2005 ISSUED BY DOULTANI & ASSOCIATES, CIVIL ENGINEERS & ARCHITECTS, ADDRESSED TO THE ASSESSEE AND ENCLOSING A CERTIFICATE. A COPY OF THE CERTIFI CATE IS AT PAGE 60 OF THE PAPER BOOK, WHICH CERTIFIES THAT THE RCC WORK U P TO THE SIXTH FLOOR OF THE BUILDING WAS COMPLETED AS ON 31.03.2005. FR OM THIS CERTIFICATE IT WAS SUBMITTED BY THE LEARNED COUNSEL FOR THE ASS ESSEE THAT WHEN ONLY THE SHELL OF THE BUILDING HAS BEEN PUT UP AS O N 31.03.2005, IT CANNOT BE SAID THAT THE PROJECT WAS COMPLETED IN TH AT YEAR. OUR ATTENTION WAS ALSO DRAWN TO THE FACT THAT EVEN IN T HE YEARS ENDED 31.03.2006 AND 31.03.2007, THE ASSESSEE HAD DISCLOS ED THE WORK-IN- PROGRESS AS ON THESE DATES, IN THE BALANCE SHEETS, AT RS.6,74,65,954/- AND RS.7,35,68,053/-, WHICH ALSO SHOWED THAT THE PR OJECT WAS NOT COMPLETED AS ON 31.03.2005. IT WAS ACCORDINGLY CON TENDED THAT THE DECISION OF THE CIT(A) REQUIRES NO MODIFICATION. 12. IN HIS BRIEF REPLY THE LEARNED SENIOR DR SUBMIT TED THAT THE NON- FILING OF APPEALS AGAINST THE ORDERS OF THE CIT(A) FOR THE ASSESSMENT ITA NO: 4634/MUM/2008 9 YEARS 2000-01 AND 2004-05 WAS NOT FATAL TO THE CLAI M OF THE REVENUE AND THAT IF FACTUALLY THE PROJECT WAS SUBSTANTIALLY COMPLETED IN THE YEAR ENDED 31.03.2005, THE DISPUTE CAN BE INDEPENDENTLY DECIDED WITHOUT REFERENCE TO THE CONDUCT OF THE INCOME TAX AUTHORIT IES IN THE EARLIER YEARS. RELIANCE WAS ALSO PLACED ON THE ORDER OF TH E MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF CHAMPION CONSTRUCTION C O. VS. ITO (SUPRA). 13. WE HAVE CAREFULLY CONSIDERED THE FACTS AND THE RIVAL CONTENTIONS. IN OUR VIEW THE DECISION OF THE CIT(A ) REQUIRES NO CHANGE. RIGHT FROM THE INCEPTION, I.E. FROM THE AS SESSMENT YEAR 1994- 95, THE ASSESSEE HAS BEEN FOLLOWING THE PROJECT COM PLETION METHOD OF ACCOUNTING AND HAS ALSO STATED SO IN ITS ACCOUNTS A S WELL AS BEFORE THE INCOME TAX AUTHORITIES. THE RETURNS UP TO AND INCL UDING THE ASSESSMENT YEAR 1999-2000 DO NOT APPEAR TO HAVE BEE N DISPUTED BY THE ASSESSING OFFICER. FOR THE FIRST TIME AN ATTEM PT WAS MADE TO DISTURB THE RETURN FILED BY THE ASSESSEE FOR THE AS SESSMENT YEAR 2000- 01 IN WHICH YEAR THE ASSESSING OFFICER HAD ATTEMPTE D TO ESTIMATE PROFITS FROM THE PROJECT ON A PERCENTAGE OF THE WOR K-IN-PROGRESS. THIS ATTEMPT WAS NEGATED BY THE CIT(A) WHO HELD THAT THE ASSESSEE WAS FOLLOWING THE PROJECT COMPLETION METHOD WHICH HAD B EEN ACCEPTED BY THE DEPARTMENT SINCE 1994-95. HE ALSO HELD THAT TH E PROJECT WAS COMPLETED ONLY IN THE FINANCIAL YEAR 2006-07. A SI MILAR DECISION WAS RENDERED BY HIM IN RESPECT OF THE ASSESSMENT YEAR 2 004-05 BY ORDER DATED 29.04.2008. BOTH THESE ORDERS DO NOT SEEM TO HAVE BEEN APPEALED AGAINST BY THE ASSESSING OFFICER. THUS TH E RULE OF CONSISTENCY REQUIRES THAT THE SAME DECISION HAS TO BE APPLIED EVEN FOR ITA NO: 4634/MUM/2008 10 THE YEAR UNDER CONSIDERATION AS THERE IS NO DIFFERE NCE IN THE FACTS OF THE CASE. FOR THE YEAR UNDER CONSIDERATION, IN ADD ITION TO THE EARLIER ORDERS OF THE CIT(A) WHICH HAVE BECOME FINAL, THERE ARE FURTHER FACTS WHICH ARE IN FAVOUR OF THE ASSESSEE. THESE FACTS A RE THAT THE BMC GAVE THE OCCUPATION CERTIFICATE ONLY ON 24.05.2006 AND THAT THE POSSESSION LETTERS WERE GIVEN TO THE PURCHASERS ONL Y IN THE PERIOD BETWEEN MAY TO JULY 2006. THE ELECTRICITY CONNECTI ON HAS ALSO BEEN PROVIDED IN JUNE 2006. THESE THREE ASPECTS HAVE AL SO BEEN TAKEN NOTE OF BY THE CIT(A) IN THE IMPUGNED ORDER. IN AD DITION TO THE SAME THERE IS ALSO THE CERTIFICATE OF THE CIVIL ENGINEER S & ARCHITECTS THAT THE RCC WORK UP TO SIXTH FLOOR WAS COMPLETED AS ON 31.0 3.2005. THE OCCUPATION CERTIFICATE AS WELL AS THE CERTIFICATE O F THE CIVIL ENGINEERS & ARCHITECTS HAVE BEEN FURNISHED BEFORE THE ASSESSING OFFICER AS CAN BE SEEN FROM PARAGRAPH 4.13 OF THE ASSESSMENT ORDER. THESE ADDITIONAL FACTS ALSO GO TO SHOW THAT THE PROJECT WAS NOT COMP LETED AS ON 31.03.2005. AT PAGE 61 OF THE PAPER BOOK THE ASSES SEE HAS GIVEN THE SUMMARY OF THE WORK-IN-PROGRESS FOR THE YEARS ENDED 31.03.2005 TO 31.03.2007. THE WORK-IN-PROGRESS WHICH WAS RS.5,53 ,36,058/- AS ON 31.03.2005 INCREASED TO RS.6,74,65,954/- AS ON 31.0 3.2006 AND FURTHER INCREASED TO RS.7,35,68,053/- AS ON 31.03.2 007. WHEN THE WORK IS IN PROGRESS, IT IS NOT POSSIBLE TO SAY THAT THE PROJECT HAS BEEN COMPLETED. IT MAY BE CLARIFIED THAT THE WORK-IN-PR OGRESS OF RS.7,35,68,053/- HAS BEEN TAKEN AS THE FINAL COST O F CONSTRUCTION OF THE PROJECT AND DEBITED TO THE PROFIT & LOSS ACCOUNT FO R THE YEAR ENDED 31.03.2007. A COPY OF THE PROFIT & LOSS ACCOUNT FO R THE YEAR ENDED ITA NO: 4634/MUM/2008 11 31.03.2007 IS AT PAGE 33 OF THE PAPER BOOK. AFTER TAKING CREDIT FOR THE SALE OF FLATS OF RS.7,49,71,250/-, LEGAL CHARGES, E LECTRICITY & WATER CHARGES AND CAR PARKING CHARGES, THE ASSESSEE HAS S ET OFF THE EXPENDITURE BEING THE COST OF CONSTRUCTION OF RS.7, 35,68,053/-, AUDIT FEES, DEPRECIATION, INTEREST ON VEHICLE LOAN AND DI RECTORS REMUNERATION AND HAS ARRIVED AT A NET PROFIT OF RS.24,58,942/- W HICH HAS BEEN SHOWN AS THE ASSESSEES PROFIT FROM THE PROJECT IN THE RE TURN FILED FOR THE ASSESSMENT YEAR 2007-08. AS ALREADY NOTED, THE SAI D RETURN HAS BEEN EXAMINED UNDER SECTION 143(3) AND ACCEPTED. THE FU LL OCCUPATION CERTIFICATE ISSUED BY THE MUNICIPAL CORPORATION OF GREATER MUMBAI, A COPY OF WHICH IS AT PAGE 41 OF THE PAPER BOOK, IS D ATED 24.05.2006. WHEN THE OCCUPATION CERTIFICATE HAS BEEN ISSUED ONL Y IN THE FINANCIAL YEAR ENDED 31.03.2007, IT CANNOT BE SAID THAT THE P ROJECT WAS COMPLETE EARLIER. THE ASSESSEES CONTENTION THAT THE REVISE D ACCOUNTING STANDARD-7 IS APPLICABLE FOR CONSTRUCTION CONTRACTS AS CLARIFIED BY THE EXPERT COMMITTEE OF THE ICAI IS CORRECT. THE ASSES SEE HAS CONSTRUCTED THE BUILDING ALL BY ITSELF AND CANNOT B E SAID TO BE IN THE BUSINESS OF TAKING UP AND EXECUTING CONSTRUCTION CO NTRACTS. THE BUSINESS OF THE ASSESSEE IS TO BUILD AND DEVELOP IT S OWN PROJECTS ALL BY ITSELF. 14. IN THE ABOVE CIRCUMSTANCES WE DO NOT FIND ANY R EASON TO INTERFERE WITH THE DECISION OF THE CIT(A). THERE I S NO SCOPE FOR APPLYING THE ORDER OF THE MUMBAI BENCH OF THE TRIBU NAL IN THE CASE OF CHAMPION CONSTRUCTION CO. VS. ITO (SUPRA) IN THE LI GHT OF THE AFORESAID FACTS OBTAINING IN THE ASSESSEES CASE. WE ACCORDI NGLY CONFIRM THE ITA NO: 4634/MUM/2008 12 DECISION OF THE CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE 2010. SD/- SD/- (J SUDHAKAR REDDY) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 30 TH JUNE 2010 SALDANHA COPY TO: 1. M/S BHADRASEN CONSTRUCTION PVT. LTD. A N HOUSE, 1 ST FLOOR, 31 ST ROAD TPS-III, BANDRA (WEST), MUMBAI 400 050 2. ITO 9(1)-2 3. CIT-IX 4. CIT(A)-IX 5. DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI