Appeal details
Counselvise Citation
[2021] 107 COUNSELVISE.COM (IT) 5897 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 5 month(s) 9 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
14-09-2021
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB-B
Next Hearing Date
17-06-2021
Assessment Year
2008-2009
Appeal Filed On
04-04-2018
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD (THROUGH VIRTUAL CONFERENCE) BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER IT A NO S . 616 & 617 /H/20 18 ASSESSMENT YEAR S : 2 0 08 - 09 & 2010 - 11 LANCO HILLS TECHNOLOGY PARK PVT. LTD., HYDERABAD. PAN A ABCL 1228 R VS. JT . COMMISSIONER OF INCOME - TAX, RANGE 6, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI P . MURALI MOHAN RAO REVENUE BY: S HRI RAVI KIRAN DATE OF HEARING: 17 /0 6 /2021 DATE OF PRONOUNCEMENT: 14 /0 9 /2021 O R D E R PER L.P. SAHU, A.M. : BOTH THESE APPEAL S FILED BY THE ASSESSEE ARE DIRECTED AGAINST CIT(A) - 4 , HYDERABAD S SEPARATE ORDER S DATED 18/01/2018 FOR AY S 2008 - 09 & 2010 - 11 INVOLVING PROCEEDINGS U/S 14 3(3) OF THE INCOME - TAX ACT, 1961; IN SHORT THE ACT . I TA NO. 616 & 617 /HYD /20 18 LANCO HILLS TECHNOLOGY PAR K PVT. LTD., HYD. : - 2 - : 2. THE ASSESSEE HAS RAISED 22 GROUNDS OF APPEAL AND ANOTHER THREE GROUNDS OF APPEAL FROM 23 TO 25 IN ADDITIONAL GROUNDS OF APPEAL IN AY 2008 - 09 . THE SUM AND SUBSTANCE OF WHICH ARE AGAINST THE ACTION OF THE LOWER AUTHORITIES IN REJECTING THE REVISED RETURN OF INCOME AND ACCEPTING THE ORIGINAL RETURN OF INCOME. SINCE THE GROUNDS RAISED IN AY 2010 - 11 ARE SIMILAR, THE DECISION TAKEN IN AY 2008 - 09 SHALL MUTATIS - MUTANDIS APPLY TO AY 2010 - 11. 3 . BRIEFLY, THE FACTS OF THE CASE ARE THAT T HE A SSESSEE COMPANY WHICH IS THE BUSINESS OF REAL ESTATE AND PROPERTY DEVELOPMENT, ORIGINALLY FILED ITS RETURN OF INCOME ON 29 - 09 - 2008 FOR THE A.Y. 2008 - 09 DECLARING TAXABLE INCOME OF RS. 33,68;45,110/ - . LATER, THE A SSESSEE COMPANY FILED REVISED RETURN OF INCOME ON 28 - 08 - 2010 DECLARING TOTAL LOSS OF RS . 1, 76,26,195/ - . THE ORIGINAL RETURN OF INCOME WAS PROCESSED U/S 143(1) OF THE IT ACT . THE ASSESSING OFFICER OBSERVED THAT IN THE ORIGINAL RETURN OF INCOME FILED ON 29 - 09 - 2008, THE ASSESSEE ADMITTED THE TURNOVER OF THE PROPERTY DEVELOPMENT AT RS. 128,82,98,000/ - AND OFFERED TAXABLE INCOME AT RS. 33,68,45,110/ OFFERING PROFIT AT 29% ON ORIGINAL TURNOVER. SUBSEQUENTLY, THE ASSESSEE REVISED RETURN OF INCOME ON 28 - 08 - 2010 BY DISCLOSED REVISED TURNOVER OF THE PROPERTY DEVELOP MENT AT RS., 82,31,37,621/ - AND IN THE REVISED PROFIT AND LOSS ACCOUNT LOSS OF RS, 3,78,33,053/ - IS REFLECTED AND IN THE REVISED RETURN OF INCOME FLIED ON 28 - 08 - 2010, RS. 1,76,26,195/ - IS I TA NO. 616 & 617 /HYD /20 18 LANCO HILLS TECHNOLOGY PAR K PVT. LTD., HYD. : - 3 - : DECLARED AS CURRENT YEAR'S LOSS. THE CASE WAS SELECTED FOR SCRUTINY A N D ACCORDINGLY THE ASSESSING OFFICER ISSUED STATUTORY NOTICES. IN RESPONSE TO THE NOTICES, THE AR OF THE APPELLANT' APPEARED AND FILED THE INFORMATION. 3 .1 AFTER GOING THROUGH THE INFORMATION, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY ADOPTING THE INCOME RETURNED FILED ON 29 - 09 - 2008 BY ACCEPTING THE IN COME RETURNED BY OBSERVING THAT THE ASSESSEE HAS FILED THE ORIGINAL RETURN OF INCOME AS PER THE RESULTS AND AUDITED BOOKS OF ACCOUNT AND AGAIN THE ASSESSEE HAS FILED REVISED RETURN BY DEVIATING FROM THE AUDITED BOOK RESULTS AND MOREOVER, REDUCING SALES CANNOT BE CLAIMED AS OMISSION/WRONG STATEMENT. 4 . WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ORDER OF THE AO BY OBSERVING THAT THE AO HAS VERY WELL CONSIDERED T HE REVISED RETURN AND DECIDED THAT AS PER THE RESULTS AND AUDITED BOOKS OF ACCOUNT, THE ORIGINAL RETURN HAS BEEN FILED AND THE ASSESSEE HAS FILED THE REVISED RETURN BY DEVIATING FROM THE AUDITED BOOK RESULTS WITHOUT ANY SUPPORTING EVIDENCES. 5 . AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. I TA NO. 616 & 617 /HYD /20 18 LANCO HILLS TECHNOLOGY PAR K PVT. LTD., HYD. : - 4 - : 6 . BEFORE US, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE CIT(A) WAS WRONG IN DISMISSING THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE FAILED TO SUBMIT ANY FURTHER SUPPORTIN G EVIDENCES. HE FURTHER SUBMITTED THAT THE CIT(A) OUGHT TO HAVE CONSIDERED THE FRESH COMPUTATION/ INFORMATION ON ASSESSEE S CLAIMS ON REVISION OF INCOME/LOSS, EVEN THOUGH THE REVISED RETURN WAS FURNISHED BEYOND THE DUE DATE. HE RELIED ON VARIOUS CASE LAWS IN SUPPORT OF ASSESSEES WHICH ARE FILED IN PAPER BOOK , WHICH ARE AS UNDER: 1. MARUTI SECURITIES LTD., 468/HYD/2009 , (IT AT, HYD.) 2. H.M. KASHIPAREKH & CO. LTD., 379 ITR 706 (BOM. HC) 3. HIND CONSTRUCTION LTD., 83 ITR 211 (SC) 4. SANJEEV WOOLEN MILLS, 149 TAXMANN 431 5. LOK HOUSING & CONSTRUCTIONS LTD., .58 TAXMANN.COM 179 (BOM HC). 6. LOK HOUSING & CONSTRUCTIONS LTD., 2 7 TAXMANN.COM 15 (MUMBAI ITAT) 7. SPR INFRASTRUCTURE INDIA LTD. 1173 & 74/H/2014 (ITAT, HYD.) 8. LOK HOUSING & CONSTRUCTIONS LTD.,70 TAXMANN.COM 2 9. SHOORJI VALLABHADAS & CO., 46 ITR 144 (SC) 7 . THE LD. DR, ON OTHER HAND RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND SUBMITTED THAT THE ASSESSEE HAS FILED THE REVISED RETURN OF INCOME BEYOND THE DUE DATE, WHICH IS DEVIATED FROM THE AUDITED BOOK RESULTS. HE, THEREFORE, SUBMITTED THAT THE ORDER O F THE CIT(A) MAY BE UPHELD. I TA NO. 616 & 617 /HYD /20 18 LANCO HILLS TECHNOLOGY PAR K PVT. LTD., HYD. : - 5 - : 8 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 29/09/2008 DECLARING TAXABLE INCOME OF RS. 33,68,45,110/ - AND THE REVISED RETURN OF INCOME WAS FILED ON 28/08/2010 DECLARING TOTAL LOSS OF RS. 1,75,26,195/ - , WHICH IS BEYOND THE DUE DATE. THE AO DID NOT CONSIDER THE REVISED RETURN OF INCOME AND ASSESSED U/S 143(3) OF THE ACT ON THE BASIS OF THE ORIGINAL RETURN OF INCOME ON THE GROUND THAT THE ASSESSEE HAS FILED THE REVISED RETURN OF INCOME BY DEVIATING FROM THE AUDITED BOOK RESULTS. HE FURTHER OBSERVED AT PARA NO. 3.6 THAT REDUCING SALES CANNOT BE CLAIMED AS OMISSION/WRONG STATEMENT. IN THE REVISED RETURN, THE ASSESSEE COMPUTED PROFIT ON THE BASIS OF PRICE REVISION AND CANCELLATION. SIMILAR ISSUE CAME UP FOR CONSIDERATION BEFORE THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2011 - 12 IN ITA NO. 1126/HYD/2018, VIDE O RDER DATED 07/09/2021, WHEREIN THE COORDINATE BENCH HAS OBSERVED AS UNDER: 10. THIS LEAVES US WITH THE ASSESSEE'S 9 TH TO 11 TH SUBSTANTIVE GROUNDS SEEKING TO DELETE THE DISALLOWANCE OF RS.18,76,42,239 TOWARDS CANCELLATION AND PRICE REVISION. THE CIT(A )S DETAILED DISCUSSION AFFIRMING THE IMPUGNED DISALLOWANCE READS AS UNDER : I TA NO. 616 & 617 /HYD /20 18 LANCO HILLS TECHNOLOGY PAR K PVT. LTD., HYD. : - 6 - : I TA NO. 616 & 617 /HYD /20 18 LANCO HILLS TECHNOLOGY PAR K PVT. LTD., HYD. : - 7 - : 11. THERE IS HARDLY ANY DISPUTE THAT THE LEARNED LOWER AUTHORITIES; AND MORE PARTICULARLY THE ASSESSING O FFICER, QUOTE ACCOUNTING STANDARD AS - 7 AS APPLICABLE ONLY IN CASE OF CONTRACTOR RATHER THAN BUILDER AS WELL. IT IS CLEAR THAT THERE IS NO ISSUE ABOUT THE GENUINENESS OF THE ASSESSEES PRICE REVISION OR CANCELLATION CLAIM; AS THE CASE MAY BE. THE CLINCHIN G FACT THAT APPEARS TO HAVE FORMED THE BASIS OF THE ASSESSEES IMPUGNED CLAIM(SUPRA)) IS A LIS IN THE ANDHRA PRADESH STATE WAKF TRIBUNAL AT HYDERABAD INSTITUTED BY THE DARGA I TA NO. 616 & 617 /HYD /20 18 LANCO HILLS TECHNOLOGY PAR K PVT. LTD., HYD. : - 8 - : HAZARAT HUSSAIN SHAHWALI AGAINST 17 DEFENDANTS/RESPONDENTS WHEREIN THIS TAXPAY ERS HAD BEEN IMPLEADED AT SL.NO.5. THE ABOVE STATED PLAINTIFF HAS SOUGHT FOR INJUNCTION RELIEF AGAINST THIS ASSESSEE AS WELL AS ALL OTHER RESPONDENTS THEREBY CLAIMING THAT THE LAND IN ISSUE IS WAKF PROPERTY ONLY. AND THAT THESE DEFENDANTS NEVER ENJOY ED ANY TITLE THEREUPON SO AS TO DERIVE REAL ESTATE DEVELOPMENT ACTIVITY. 12. IT IS EVIDENT FROM A PERUSAL OF THE INSTANT CASE FILE THAT THE LEARNED WAKF TRIBUNAL HAD PASSED A STATUS QUO ORDER DT.14.02.2011 RELEVANT TO THE IMPUGNED ASSESSMENT Y EAR ONLY . AND THAT THE SAID PROCEEDINGS ARE STATED TO HAVE BEEN PENDING ALL ALONG (PAGES 70 TO 86 IN THE PAPER BOOK). LEARNED COUNSEL HAS QUOTED ACCOUNTING STANDARD AS - 9 ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA REGARDING THE ISSUE OF REVENUE RECOGNITION. HIS VEHEMENT CONTENTION IN LIGHT OF THE FOREGOING ACCOUNT STANDARD AS - 9 IS THAT THE ABOVE STATED WAQF PROCEEDINGS COMPELLED THIS ASSESSEE TO REDUCE/REVIVE THE REAL ESTATE PROJECT PRICES IN ISSUE. WE FIND NO FORCE IN THE INSTANT ARGUMENT AND MADE IT CLEAR THAT AS - 9 IS APPLICABLE IN THE PRESCRIBED ACTIVITIES OF SALE OF GOODS, RENDERING OF SERVICES AND THE USE BY OTHERS OF ENTERPRISE YIELDING INTEREST, ROYALTY AND DIVIDEND ONLY. WE THUS ADOPT STRICTER INTERPRETATION AND REJECT T HE ASSESSEE'S INSTANT ARGUMENT. THE FACT HOWEVER REMAINS THAT IT CAN BE SUFFICIENTLY PRESUMED BY VIRTUE OF LEARNED WAQF TRIBUNALS FOREGOING STATUS QUO ORDER QUA THAT THE ASSESSEE'S PROJECT LANDS (SUPRA) THAT THE LATTER HAD NO OPTION BUT TO OPT FOR DOWN WARD REVISION / CANCELLATION ONLY IN ORDER TO AVOID EXODUS OF ITS CUSTOMERS. WE WISH TO EMPHASISE THAT THE REVENUE IS FAIR ENOUGH IN NOT HAVING DISPUTED THE ASSESSEE'S CLAIM IN PRINCIPLE. OR THAT THE SAME CONTAINED ANY ON MONEY ELEMENT, AS WELL. FA CED WITH THIS SITUATION, WE FIND THAT HON'BLE APEX COURTS MUCH A CELEBRATED DECISION I.E. CHAINRUP SAMPATHRAM VS. CIT (1953) 24 ITR 481 (SC) HOLD THAT ANTICIPATED BUSINESS LOSSES I TA NO. 616 & 617 /HYD /20 18 LANCO HILLS TECHNOLOGY PAR K PVT. LTD., HYD. : - 9 - : COULD BE BOOKED AT THE FIRST REASONABLE PROBABILITY AS UNDER : WHILE ANTICIPATED LOSS IS THUS TAKEN INTO ACCOUNT, ANTICIPATED PROFIT IN THE SHAPE OF APPRECIATED VALUE OF THE CLOSING STOCK IS NOT BROUGHT INTO THE ACCOUNT AS NO PRUDENT HOLDER WOULD CARE TO SHOW INCREASED PROFIT BEFORE ITS ACTUAL REALIZATION LEGISLATIVE ENAC TMENT. THEIR LORDSHIP HOLD IN VERY MUCH UNAMBIGUOUS TERMS THAT PRINCIPLES OF CONSERVATISM AND CONSIDERATIONS OF PRUDENCE IN ACCOUNTING TREATMENT REQUIRE THAT NO ANTICIPATED PROFITS ARE TO BE TREATED AS INCOME BEFORE REALIZATION, AN ANTICIPATED LOSS OU GHT TO BE DEDUCTED AT THE FIRST SIGN OF PROBABILITY. WE THUS REJECT THE LEARNED CIT - DRS ARGUMENT SUPPORTING THE LOWER AUTHORITIES IMPUGNED STAND IN PRINCIPLE. WE FURTHER CONCLUDE THAT SINCE THERE IS NO CLARITY EITHER IN THE ASSESSMENT ORDER OR IN THE LO WER APPELLATE DISCUSSION AS TO WHETHER THE FOREGOING WAKF LITIGATION INVOLVES THE ASSESSEES PROJECT LAND(S) OR NOT, THIS RECONCILIATION ASPECT DESERVES TO BE RESTORED BACK TO THE ASSESSING OFFICER FOR HIS NECESSARY FACTUAL VERIFICATION. ORDERED ACCORDING LY. NEEDFUL SHALL BE DONE WITHIN THREE EFFECTIVE OPPORTUNITIES OF HEARING BEFORE THE ASSESSING OFFICER. THIS ASSESSEE'S 9 TO 11 SUBSTANTIVE GROUNDS ARE ALLOWED THEREFORE. 8.1 ON CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND THE CASE LAW REL IED ON BY THE ASSESSEE AS WELL AS TO MEET THE ENDS OF JUSTICE, WE REMIT THE ISSUE BACK TO THE FILE OF THE AO WITH A DIRECTION TO MAKE DE - NOVO ASSESSMENT BY CONSIDERING THE CONCEPT OF REAL INCOME THEORY, WHICH COULD BE FILED BY THE ASSESSEE BEFORE HIM AND I N ACCORDANCE WITH LAW BY CONSIDERING THE ABOVE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEES OWN CITED SUPRA. THE I TA NO. 616 & 617 /HYD /20 18 LANCO HILLS TECHNOLOGY PAR K PVT. LTD., HYD. : - 10 - : ASSESSEE IS DIRECTED TO SUBSTANTIATE THE REVISED RETURN OF INCOME WITH SUPPORTING EVIDENCES BEFORE THE AO. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 9 . AS THE FACTS AND GROUNDS IN ITA NO. 617/HYD/2018 FOR AY 2010 - 11 ARE MATERIALLY IDENTI CAL TO THAT OF ITA NO. 616/HYD/2018 FOR AY 2008 - 09, FOLLOWING THE DECISION THEREIN, WE REMIT THIS APPEAL ALSO TO THE FILE OF AO WITH IDENTICAL DIRECTIONS. 10. IN THE RESULT, BOTH THE APPEALS UNDER CONSIDERATION ARE ALLOWED FOR STATISTICAL PURPOSES. A CO PY OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE CASE FILES. PRONOUNCED IN THE OPEN COURT ON SEPTEMBER , 2021 . ( S.S. GODARA ) (L . P . SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDE RABAD, DATED : SEPTEMBER , 20 2 1 . K V I TA NO. 616 & 617 /HYD /20 18 LANCO HILLS TECHNOLOGY PAR K PVT. LTD., HYD. : - 11 - : C OPY TO : 1 LANCO HILLS TECHNOLOGY PART PVT. LTD., C/O P. MURALI & CO., CAS, 6 - 3 - 655/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD 82 2 J C IT, RANGE 6, HYDERABAD . 3 C I T(A) 4 , HYDERABAD. 4 PR. CIT - 4 , HYDERABAD. 5 ITAT, DR, HYDERABAD. 6 GUARD FILE.
