ITO 8(3)(1), MUMBAI V. SHACHKAKA LEASING & INVESTMENTS P. LTD, MUMBAI

ITA 5357/MUM/2010

• Counselvise Citation: 535719914 RSA 2010
• Duration Of Justice: 1 year(s) 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 18-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 30-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: BHUPENDRA SHAH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER, A ND SHRI VIJAY PAL RAO, JUDICIAL MEMBER ITA NO. 5357/MUM./2010 (ASSESSMENT YEAR : 2004-05 ) INCOME TAX OFFICER WARD8(3)(1), MUMBAI .. APPELLANT V/S M/S. SHACHAKA LEASING & INVESTMENT PVT. LTD. ROOM NO.701, VENUS LOKHANDWALA COMPLEX 69, OSHIWARA, ANDHERI MUMBAI 400 069 PAN AAACS7199H .... RESPONDENT REVENUE BY : MR. V.V. SHASTRI ASSESSEE BY : MR. BHUPENDRA SHAH DATE OF HEARING 18.10.2011 DATE OF ORDER 21.10.2011 O R D E R PER J. SUDHAKAR REDDY, A.M. THIS APPEAL PREFERRED BY THE REVENUE, IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 18 TH MARCH 2010, PASSED BY THE COMMISSIONER (APPEALS)-XVIII, MUMBAI, FOR ASSESSMENT YEAR 2004-0 5, ON THE FOLLOWING GROUNDS:- 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ACTION OF THE A.O. FOLLOWING PERCENTAGE COMPLETION METHOD AND ESTIMATI NG 15% OF SALES AS PROFIT OF RS.43,32,220/- WITHOUT APPRECIATING TH E FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW. M/S. SHACHAKA LEASING & INVESTMENT PVT. LTD. ITA NO. 5357/MUM./2010 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN NOT CONSIDERING THAT THE ASS ESSEE ITSELF HAD FOLLOWED THE PERCENTAGE COMPLETION METHOD OF ACCOUN TING INCOME ON SALE OF FLATS FOR SUBSEQUENT ASSESSMENT YEARS, HENC E THE A.O. WAS CORRECT IN ADOPTING PERCENTAGE COMPLETION METHOD. 2. WE HAVE HEARD THE LEARNED DEPARTMENTAL REPRESENTATI VE, MR. V.V. SHASTRI, ON BEHALF OF THE REVENUE, AND THE LEARNED COUNSEL, MR. BHUPENDRA SHAH, ON BEHALF OF THE ASSESSEE. ON A CAREFUL CONSI DERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON PERUSAL OF THE PAP ERS ON RECORD, WE HOLD AS FOLLOWS:- 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION. IT FOLLOWS PROJECT COMPLETION METHOD OF ACCOUNTING. FOR THE IMPUGNED ASSESSMENT YEAR, THE ASSESSING OFFICER ESTIMATED 15 % OF THE RECEIPTS AS INCOME AND BROUGHT TO TAX ` 43,32,220. ON APPEAL, THE COMMISSIONER (APPEALS) FOUND THAT THE ASSESSING OFFICER HAS, FOR THE ASSESSMENT YEAR 2007-08, ON COMPLETION OF THE PROJECT, IN AN ASSESS MENT MADE UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT ), ACCEPTED THE LOSS RETURNED FROM THE PROJECT AT ` 43,31,787. AS THE ASSESSEE FOLLOWS PROJECT COMPLETION METHOD OF ACCOUNTING AND ULTIMATELY THE REVENUE HAS ACCEPTED THAT THE ASSESSEE HAS INCURRED A LOSS ON THIS PROJE CT, THE QUESTION OF ESTIMATING PROFITS IN THE EARLIER YEARS WHEN THE CO NSTRUCTION WAS IN PROGRESS, DOES NOT ARISE. THIS WAS THE DECISION OF COMMISSION ER (APPEALS) AND WE FULLY AGREE WITH THE SAME. CONSEQUENTLY, THE GROUNDS RAIS ED BY THE REVENUE ARE DISMISSED. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OCTOBER 2011 SD/- VIJAY PAL RAO JUDICIAL MEMBER SD/- J. SUDHAKAR REDDY ACCOUNTANT MEMBER MUMBAI, DATED: 21 ST OCTOBER 2011 M/S. SHACHAKA LEASING & INVESTMENT PVT. LTD. ITA NO. 5357/MUM./2010 3 COPY TO : (1) THE ASSESSEE; (2) THE RESPONDENT; (3) THE CIT(A), MUMBAI, CONCERNED; (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, H BENCH, ITAT, MUMBAI. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY ASSISTANT REGISTRAR SR. PRIVATE SECRETARY ITAT, MUMBAI BENCHES, MUMBAI DATE INITIAL 1. DRAFT DICTATED ON 19.10.2011 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 19.10.2011 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 19.10.2011 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 19.10.2011 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 19.10.2011 SR.PS 6. DATE OF PRONOUNCEMENT 21.10.2011 SR.PS 7. FILE SENT TO THE BENCH CLERK 21.10.2011 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER