Veteran Properties Pvt.Ltd., Hyd, Hyderabad V. Asst. Commissioner of Income Tax, CC-1, Hyderabad

ITA 478/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66260 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 02-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G MANIKYA PRASAD
• Assessee Lawyers: V V RAMANA RAO
• Keywords: Business income; Depreciation; Search and seizure
• Section: 143(3); 142(1); 153A; 32; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 478/HYD/2012 ASSESSMENT YEAR : 2008-09 VETERAN PROPERTIES PVT. LTD., APPELLANT HYDERABAD (PAN AABCV3337M) VS. ASSTT. COMMISSIONER OF INCOME-TAX, RESPONDENT CENTRAL CIRCLE 1, HYDERABAD. APPELLANT BY : SHRI V.V. RAMANA RAO RESPONDENT BY : SHRI G. MANIKYA PRASAD DATE OF HEARING : 08/08/2012 DATE OF PRONOUNCEMENT : 07/09/2012 ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL IS PREFERRED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF CIT(A)-I, HYDERABAD, DATED 23/08/2011 FOR THE ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HEREIN IS A COMPANY IN WHICH THE PUBLIC ARE NOT SUBSTANTIALLY INTERESTED AND CARRYIN G ON THE BUSINESS OF REAL ESTATE. FOR THE ASSESSMENT YEA R 2008-09, THE ASSESSEE ORIGINALLY FILED THE RETURN O F INCOME ON 23/02/2009 ADMITTING AN INCOME OF RS. 5,27,821/-. THE INCOME TAX AUTHORITIES THEREAFTER CONDUCTED SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE ACT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 17/09/2008. LATER THE ASSESSING OFFICER ISSUED NOTI CE U/S 153A AND THE ASSESSEE REQUESTED THE ASSESSING OFFIC ER 2 ITA NO. 478HYD/2012 VETERAN PROPERTIES PVT. LTD. THAT THE RETURN FILED EARLIER SHALL BE TAKEN AS THE RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE. THE ASSE SSING OFFICER ALSO ISSUED NOTICES U/S 143(2) AND 142(1) O F THE ACT AND COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 153A OF THE ACT ON 14/12/2010 DETERMINING THE TOTAL INCOME AT RS. 23,75,230/-. WHILE DOING SO, THE ASSE SSING OFFICER MADE THE FOLLOWING DEVIATIONS FROM THE INCO ME ADMITTED BY THE ASSESSEE: 1) THE ASSESSING OFFICER REJECTED THE INCOME ADMITT ED FROM BUSINESS AT 8% ON THE WORK-IN-PROGRESS. HE ESTIMATED THE NET INCOME FROM WORK-IN-PROGRESS AT 10% AND DID NOT ALLOW DEDUCTION OF ADMINISTRATIVE A ND OTHER EXPENSES. 2) IN RESPECT OF THE COMPLETED VENTURE, THE ASSESSI NG OFFICER HAS TAKEN INTO CONSIDERATION THE SALE PRICE OF THE WORK AT RS. 1,33,93,000/- AND DEDUCTED THEREFRO M COST OF WORKS SOLD BEING RS. 1,29,59,356/- AND ARRI VED THE PROFIT ON THE COMPLETED VENTURE AT RS. 4,33,644 /-. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). 4. THE CIT(A) ESTIMATED THE PROFIT AT 10% ON THE TOTAL SALES AND EXECUTION SHOWN BY THE ASSESSEE AT RS. 1,33,93,000/-. THE CIT(A) DID NOT ALLOW THE DEPRECI ATION CLAIM OF THE ASSESSEE. FURTHER, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ADD THE AMOUNT OF RS. 14,00,00 0/- SEPARATELY TO THE INCOME ASSESSED. 3 ITA NO. 478HYD/2012 VETERAN PROPERTIES PVT. LTD. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWI NG GROUNDS OF APPEAL:- 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT. 2. THE LEARNED CIT(A) ERRED IN ESTIMATING THE INCOM E AT 10% OF THE TOTAL TURNOVER. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT RATE OF PROFIT AT 10% IS VERY HIGH. 3. THE LEARNED CIT(A) ERRED IN NOT ALLOWING DEPRECIATION CLAIMED BY THE APPELLANT. HE OUGHT TO HAVE SEEN THAT THE APPELLANT IS ENTITLED FOR DEPRECIATION, EVEN WHEN AN ESTIMATED INCOME IS DETERMINED. 4. THE LEARNED CIT(A) ERRED IN DIRECTING THE AO TO ADD THE AMOUNT OF RS. 14,00,000/- SEPARATELY TO THE INCOME ESTIMATED. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE APPELLANTS INCOME IS FROM BUSINESS ACTIVITY AND ANY ADDITIONAL INCOME OFFERED IS FROM BUSINESS ACTIVITY. IF THE LEARNED CIT(A) PROPOSES T O ARRIVE AT THE INCOME ON ESTIMATE BASIS, THE AMOUNT OF RS. 14,00,000/- SHOULD NOT BE ADDED SEPARATELY. HE OUGHT TO HAVE DIRECTED THE AO TO DELETE THE SAME. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE I SSUE HAS ALREADY BEEN DEALT WITH BY THE ITA, HYDERABAD B ENCH IN THE CASE OF TEJA CONSTRUCTIONS IN ITA NO. 1191/HYD/2011 DATED 17/02/2012 WHEREIN ITAT HAS ESTIMATED THE PROFITS OF THE ASSESSEE @ 9% ON OWN CONTRACT WORKS, 8% ON CONTRACTS TAKEN BY ASSESSEE O N SUBCONTRACTS AND @ 5% ON CONTRACTS GIVEN BY THE ASSESSEE TO 3RD PARTY ON SUBCONTRACTS. 7. IN THE PRESENT CASE, THE ASSESSING OFFICER IS DIRECTED TO FOLLOW THE DECISION IN THE CASE OF TEJA CONSTRUCTIONS (SUPRA) AND DETERMINE THE ESTIMATE OF NET 4 ITA NO. 478HYD/2012 VETERAN PROPERTIES PVT. LTD. PROFIT BASED ON WHETHER THE ASSESSEE IS A CONTRACTO R OR A SUB-CONTRACTOR. GROUND NO. 2 IS ALLOWED FOR STATIS TICAL PURPOSES. 8. REGARDING DEPRECIATION, IT IS ALLOWABLE U/S 32 OF THE IT ACT AND IT FALLS UNDER THE PROVISION OF SECT ION 30 TO 38 AND BE DEEMED TO HAVE BEEN ALREADY GIVEN FULL EF FECT WHILE ESTIMATING THE INCOME OF THE ASSESSEE. HENCE WITH RESPECT TO DEPRECIATION, THE GROUND OF APPEAL NO. 3 RAISED BY ASSESSEE IS DISMISSED. 9. WITH REGARD TO GROUND NO. 4 RAISED BY THE ASSESSEE, THE FACTS ARE THAT DURING THE COURSE OF S EARCH IN THE BUSINESS PREMISES OF SURABHI SHELTERS PVT. L TD. CERTAIN DOCUMENTS WERE FOUND AND SEIZED AS PER ANNEXURE A/SSL/03 WHICH RELATED TO CERTAIN PAYMENTS MADE TO VARIOUS LANDLORDS FOR PURCHASE OF FLATS. CONSIDERING THE SAME, SHRI SHYAM KUMAR AHUJA HAD ADMITTED RS. 1.50 CRORE FOR THE AY 2008-09 AND 2009 -10 IN THE CASE OF VARIOUS INDIVIDUALS, HUF AND COMPANI ES. OUT OF THE SAME, RS. 14 LAKH WAS ADMITTED IN THE CA SE OF THE ASSESSEE COMPANY FOR THE AY 2008-09. 10. THE AMOUNT OF RS. 14,00,000/- HAS BEEN SEPARA TELY ADDED TO THE INCOME ESTIMATED BY THE ASSESSING OFFI CER AND THE SAME CONFIRMED BY THE CIT(A). THE REASON BE ING THAT THE ASSESSEE HAS CONFIRMED THAT THE AMOUNT OF RS. 14,00,000/- IS NOT REFLECTED IN THE BOOKS OF ACCOUN T OF THE ASSESSEE. THE INCOME WAS ADMITTED TO BE GENERAT ED FROM VARIOUS BUSINESS ACTIVITIES OF SHRI SHYAMKUMAR AHUJA, MEMBERS OF HIS FAMILY AND BUSINESS CONCERNS 5 ITA NO. 478HYD/2012 VETERAN PROPERTIES PVT. LTD. CONTROLLED BY SHRI AHUJA. IT WAS, THEREFORE, ADMITT ED BY HIM THAT FOR THE ASSESSMENT YEAR 2008-09 AN ADDITIO NAL INCOME OVER AND ABOVE THE REGULAR INCOME IN THE HAN DS OF MANAGING DIRECTOR SHRI SHYAMKUMAR AHUJA, IN THE HANDS OF THE FAMILY MEMBERS AND THE BUSINESS CONCER NS WAS RS. 14,00,000/-. HENCE, THIS AMOUNT IS NOT WITH IN THE PURVIEW OF ESTIMATED INCOME AND THEREFORE THE DECISION IN THE CASE OF INDWELL CONSTRUCTIONS 232 I TR 776 (AP) IS INAPPLICABLE WITH RESPECT TO THE ADDITION O F RS. 14,00,000/-. ACCORDINGLY, THE ORDER OF CIT(A) IS HE REBY CONFIRMED ON THIS ISSUE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 07/09/2012. SD/- SD/- (D. KARUNAKARA RAO) ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 7 TH SEPTEMBER, 2012 KV COPY TO:- 1) VETERAN PROPERTIES PVT. LTD., C/O SHRI S. RAMA RAO, ADVOCATE, FLAT NO. 101, SHRIYAS ELEGANCE, ST. NO. 9, HIMAYAT NAGAR, HYDERABAD 500 029. 2) ACIT, CENTRAL CIRCLE-1, HYDERABAD 3) THE CIT (A)-I, HYDERABAD 4) THE CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD