ITO WD 22(2)3, NAVI MUMBAI V. SKY STAR, MUMBAI

ITA 5298/MUM/2012

• Counselvise Citation: 529819914 RSA 2012
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 23-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI P.M. JAGTAP , ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 5298/MUM/2012 ASSESSMENT YEAR : 2006 - 07 ITO , WD - 22(2) - 3, VASHI RLY. STATION COMPLEX, TOWER NO. 6, 4 TH FLOOR. VASHI NAVE MUMBAI VS. M/S. SKY STAR, SKYLINE OASIS, PREMIER ROAD, VIDYA VIHAR STATION, GHATKOPAR (W) MUMBAI. - 400 086 PAN: ABCFS 0618 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NARESH JAIN REVENUE BY : SHRI PITAMBAR DAS DATE OF HEARING : 15.10.2013 DATE OF PRONOUNCEMENT : 30 .10 .2013 O R D E R PER DR . S.T.M. PAVALAN , J M: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD.CI T(A) - 33, MUMBAI DATED 26.06.2012 FOR THE ASSESSMENT YEAR 2006 - 07 . 2. IN THIS APPEAL THE REVENUE HAS AGITATED THE ACTION OF THE LD.CIT(A) IN DELETING THE ADDITION OF RS .1,40,35,806/ - MADE BY THE AO O N THE GROUND THAT THE PERCENTAGE COMPLETION METHOD IS N OT APPLICABLE TO THE REAL ESTATE DEVELOPER/ BUILDER. 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE , A F IRM ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPERS AND BUILDERS, WHILE DECLARING A TOTAL INCOME AT NI L HAD SHOWN CONSTRUCTION WORK IN PROGRESS AT RS.1 7,54,47,585/ - IN R ESPECT OF THE BUILDING SKY LINE ICON. ACCORDING TO THE ASSESSEE , THE PROF IT SHALL BE DETERMINED ONLY WHEN THE PROJECT IS COMPLETED. HOWEVER, IN TH E ASSESSMENT FRAMED U/S 143(3) R.W.S 147 OF THE INCOME TAX ACT, T HE AO HAD TAKEN 8% OF THE CONSTRUCTION WORK IN PROGRESS, I.E., RS.1,40,35,806/ - AS PROFIT OF THE PROJECT AND THEREBY ADDED THE SAME TO THE TOTAL ITA NO. 5298/MUM/2012 M/S. SKY STAR, ASSESSMENT YEAR : 2006 - 07 2 INCOME OF THE ASSESSEE. ACCORDING TO THE AO , AS PER REVISED AS - 7 FRAMED BY ICAI , PROFIT SHOULD BE OFFERED ON THE PERCENTAGE COMPLETION M ETHOD. ON APPEAL , THE LD.CIT(A) DELETED THE IMPUGNED ADDITION MADE BY THE AO BY RELYING ON HIS OWN ORDER FOR THE ASSESSMENT YEARS 2007 - 08 & 2008 - 09 IN THE ASSESSEES OWN CASE. 4. AT THE OUT SET IT H AS BEEN BROUGHT TO OUR NOTICE THAT THE ORDER OF THE LD.CI T(A) IN RESPECT OF THE SAME PROJECT FO R THE ASSESSMENT YEAR 2007 - 08 O N THE SAME ISSUE HAS BEEN CONFIRMED BY THE ITAT IN ITA NO. 2422/MUM/2011. IN THE SAID DECISION , THE ITAT HAS RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF AWADEHESH BUILDER (37 SO T 122), WHEREIN IT HAS BEEN HELD THAT EVEN IN TERMS OF THE REVISED GUIDELINES DESCRIBED IN AS - 7, THE INCOME CAN BE ACCOUNTED ONLY ON COMPLETION OF THE PROJECT WHEN THE FLATS ARE SOLD. SINCE THE ASSESSEE HAS FOL LOWED ONE OF THE PRESCRIBED METHODS AND THE SA ME METHOD HAS BEEN ACCEPTED IN THE EARLIER YEARS, THE METHOD CANNOT BE CHANGED BY THE AO IN THE SUBSEQUENT YEAR. IT HAS FURTHER BEEN HELD THAT THE ASSESSEE HAS RIGHT IN COMPUTING ITS INCOME ON THE BASIS OF COMPLETED CONTRACT METHOD. SINCE THE FACT S AND ISS UES ARE SIMILAR DURING THE YEAR UNDER CONSIDERATION AND THE LD.CIT(A) HAS RELIED ON HIS OWN ORDER FOR THE AY 2007 - 08 WHICH HAS BEEN CONFIRMED BY THE ITAT, WE DO NOT FIND ANY JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE LD.CIT(A) AND THE SAME IS UP HELD. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN CO URT ON THIS 30 TH DAY OF OCTOBER , 2013. SD/ - SD/ - ( P.M. JAGTAP ) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30 . 10 . 2013. * S RIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR E BENCH // TRUE COPY // BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.