M/s. Ohm Developers, Surat V. The Income tax Officer, Ward-3(2), Surat

ITA 621/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5980 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-06-2010
• Assessment Year: 2000-2001
• Appeal Filed On: 09-02-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: P M MEHTA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, B-BENCH, AHMEDABAD. BEFORE: SHRI BHAVNESH SAINI, JUDICIAL MEM BER, AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER. ITA NO.620/AHD/2007 (ASSESSMENT YEAR 2000-2001) M/S. OHM ORGANIZERS B-1002, YOGI COMPLEX, OPP.; KADAWA PATIDAR WADI, NEW RANDER ROAD, SURAT. VERSUS I.T.O., WARD 3(2), SURAT. (APPELLANT) (RESPONDENT) PAN:AAAFO 5736 D ITA NO.621/AHD/2007 (ASSESSMENT YEAR 2000-2001) M/S. OHM DEVELOPERS CHANDAN PARK, B/H. MAHARAJA AGRASEN BHAVAN, CITY LIGHT AREA, SURAT. VERSUS I.T.O., WARD 3(2), SURAT. (APPELLANT) (RESPONDENT) PAN:AAAFO 4652 Q ITA NO.622/AHD/2007 (ASSESSMENT YEAR 2003-2004) M/S. OHM DEVELOPERS CHANDAN PARK, B/H. MAHARAJA AGRASEN BHAVAN, CITY LIGHT AREA, SURAT. VERSUS I.T.O., WARD 3(2), SURAT. (APPELLANT) (RESPONDENT) PAN:AAAFO 4652 Q FOR THE ASSESSEE: SHRI P.M. MEHTA, AR FOR THE REVENUE: SMT NEETA SHAH, SR. DR ORDER PER BENCH: THESE ARE THE THREE APPEALS, ONE FILED BY OHM ORGA NIZERS FOR THE ASSESSMENT YEAR 2000-2001 AND OTHER TWO FILED B Y M/S. OHM 2 ITA NO.620/AHD/2007 AND ORS. DEVELOPERS FOR THE ASSESSMENT YEARS 2000-2001 AND 2 003-2004. SINCE ALL THESE APPEALS INVOLVED COMMON ISSUES, THEY ARE TAKEN UP TOGETHER FOR THE SAKE OF CONVENIENCE. 2. ITA NO.620/AHD/2007 ASSESSMENT YEAR 2000-2001 IN THIS APPEAL FILED BY THE OHM ORGANIZERS, FOLLOWI NG GROUNDS ARE RAISED. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLO WANCE OF PORTION OF THE COST OF CONSTRUCTION TO THE TUNE OF RS.2,45,131/- ON ACCOUNT OF ALLEGED NON-INCURRING O F SUCH EXPENDITURE. 2. IT IS, THEREFORE, PRAYED THAT THE ABOVE ADDITION CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) BE DELETED. 3. THE APPELLANT PRAYS FOR GRANTING SUCH OTHER RELI EF AS MAY BE DEEMED JUST AND PROPER BY YOUR HONOURS CONSIDERING THE FACTUAL AND LEGAL ASPECTS OF THE CASE OF THE APPELL ANT. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DELETE, SUBSTITUTE OR MODIFY ANY OR ALL OF THE GROUNDS OF A PPEAL. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONST RUCTION. DURING THE CURRENT YEAR, THE ASSESSEE SOLD SOME FLATS IN AN APARTMENT COMPLEX WHICH HE HAD DEVELOPED. THE SALE PROCEEDS OF THE F LATS WAS SHOWN AT RS.28,08,050/-, WHILE COST OF CONSTRUCTION OF THE S AME FLATS WAS SHOWN AT RS.24,78,640/-. IN THIS REGARD FOLLOWING CALCULATI ONS WAS SUBMITTED BY THE ASSESSEE. AMT.(RS.) A) TOTAL COST OF CONSTRUCTION UP TO 31/3/2000 1,77 ,98,409 B) ESTIMATED CONSTRUCTION COST TO COMPLETE THE 19,53,396 CONSTRUCTION OF FLATS TO BE INCURRED DURING 1/4/2000 TO 31/3/2001 3 ITA NO.620/AHD/2007 AND ORS. C) TOTAL COST OF CONSTRUCTION OF APARTMENTS 1,97 ,51,805 [(A+B)] D) TOTAL SALEABLE AREA IN THE APARTMENT (IN SQ. FT. ) 46,753 E) PER SQ. FEET COST OF CONSTRUCTION [/(D)] 422. 47 F) TOTAL AREA SOLD DURING THE YEAR (IN SQ. FT.) 5,867 COST OF CONSTRUCTION OF AREA SOLD DURING THE 27,78,640 YEAR [(F) X (E)] 4. WHEN THE ASSESSING OFFICER QUESTIONED, IT WAS EX PLAINED THAT ESTIMATED EXPENDITURE OF RS.19,53,396/- WAS INCLUDE D IN ACCORDANCE WITH THE MATCHING PRINCIPLES OF ACCOUNTING. THE SAID EX PENDITURE OF RS.19,53,396/- PERTAINED TO 5 FLATS WHICH HAD BEEN SOLD, BUT IN RESPECT OF WHICH ACTUAL PAYMENT/EXPENDITURE WAS YET TO BE MADE . SINCE EVIDENCE OF ACTUAL PAYMENT WAS NOT FURNISHED, THE ASSESSING OFF ICER WORKED OUT ON THE BASIS OF OTHER SIMILAR FLATS SOLD, THE COST AT THE RATE OF RS.380.69/SQ.FT. FOR 5 FLATS SOLD DURING THE YEAR AND THUS WORKED OU T THEIR COST AT RS.22,33,509/- AS AGAINST THE CLAIM OF RS.24,78,640 /- RESULTING IN AN ADDITION OF RS.2,45,130/-. THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) CONFIRMED THE ADDITION ON THE GROUND THAT THERE IS NO EVIDENCE TO SHOW THAT ASSESSEE HAS ACTUALLY INCURRED THE EXP ENDITURE OF RS.19,53,396/- INCLUDED IN RS.24,78,640/-. HE CONF IRMED THE ESTIMATE MADE BY ASSESSING OFFICER. 5. WE HAVE HEARD THE PARTIES. WE HAVE CAREFULLY PE RUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) BECAUSE EVEN BEFORE US ASSESSEE HAS NOT BEEN ABLE TO SHOW HOW MU CH ACTUAL EXPENDITURE IT HAS INCURRED ON THE CONSTRUCTION OF 5 FLATS. NO DEFECT HAS BEEN POINTED OUT IN THE ESTIMATE MADE BY THE LEARNE D ASSESSING OFFICER OR 4 ITA NO.620/AHD/2007 AND ORS. BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS). I N OUR CONSIDERED VIEW ALSO, SUCH WORKING IS REASONABLE AND HENCE IS CONFIRMED. 6. AS A RESULT, APPEAL FILED BY THE ASSESSEE IS DIS MISSED. ITA NO. 621/A/2007 7. IN THIS APPEAL M/S. OHM DEVELOPERS HAVE RAISED F OLLOWING GROUNDS. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLO WANCE OF PORTION OF THE COST OF CONSTRUCTION TO THE TUNE OF RS.3,78,503/- ON ACCOUNT OF ALLEGED NON-INCURRING O F SUCH EXPENDITURE. 2. IT IS, THEREFORE, PRAYED THAT THE ABOVE ADDITION CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) BE DELETED. 3. THE APPELLANT PRAYS FOR GRANTING SUCH OTHER RELI EF AS MAY BE DEEMED JUST AND PROPER BY YOUR HONOURS CONSIDERING THE FACTUAL AND LEGAL ASPECTS OF THE CASE OF THE APPELL ANT. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DELETE, SUBSTITUTE OR MODIFY ANY OR ALL OF THE GROUNDS OF A PPEAL. 8. THE FACTS RELATING TO ABOVE ISSUE IS THE SAME AS IN THE CASE OF ITA NO.620/AHD/2007 AS DISCUSSED ABOVE. THIS YEAR, THI S ASSESSEE HAS SOLD 25 FLATS @ RS.1,43,82,230/-. THEIR COST OF CONSTRU CTION WAS ESTIMATED AT RS.1,38,67,238/- AS UNDER: AMT.(RS.) A) TOTAL COST OF CONSTRUCTION UP TO 31/3/2000 6,85 ,55,903 B) ESTIMATED CONSTRUCTION COST TO COMPLETE THE 19,23,722 CONSTRUCTION OF FLATS TO BE INCURRED 5 ITA NO.620/AHD/2007 AND ORS. DURING 1/4/2000 TO 31/3/2001 C) TOTAL COST OF CONSTRUCTION OF APARTMENTS 7,04 ,79,625 [(A+B)] D) TOTAL SALEABLE AREA IN THE APARTMENT (IN SQ. FT. ) 1,71,355 E) PER SQ. FEET COST OF CONSTRUCTION [(C)/(D)] 41 1.31 F) TOTAL AREA SOLD DURING THE YEAR (IN SQ. FT.) 3 3,715 COST OF CONSTRUCTION OF AREA SOLD DURING THE 1, 38,67,238 YEAR [(F) X (E)] 9. NO EVIDENCE OF ACTUAL EXPENDITURE INCURRED WAS S UBMITTED EVEN BEFORE US. THE ASSESSING OFFICER APPLIED THE COST ON THE BASIS OF SIMILAR OTHER FLATS SOLD AT RS.400.08 PER SQUARE FEET AND W ORKED OUT THE COST OF 25 FLATS AT RS.1,34,88,735/- RESULTING IN AN ADDITION OF RS.3,78,503/-. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIR MED THE ADDITION. EVEN BEFORE US, NO EVIDENCE OF ACTUAL COST INCURRED HAS BEEN FURNISHED. THE ESTIMATE MADE BY THE AUTHORITIES BELOW IS QUITE REASONABLE AND JUSTIFIED. THEREFORE, EXCESS CLAIM OF RS.3,78,503/ - WAS RIGHTLY ADDED BY THE AUTHORITIES BELOW. THE ORDER OF LEARNED COMMIS SIONER OF INCOME TAX (APPEALS) IS CONFIRMED. 10. AS A RESULT, APPEAL FOR THIS YEAR IS DISMISSED. ITA NO.622/AHD/2007, ASSESSMENT YEAR 2003-2004 11. IN THIS YEAR FOLLOWING GROUNDS ARE RAISED. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLO WANCE OF PORTION OF THE COST OF CONSTRUCTION TO THE TUNE OF RS.1,21,727/- ON ACCOUNT OF ALLEGED NON-INCURRING O F SUCH EXPENDITURE. 6 ITA NO.620/AHD/2007 AND ORS. 2. IT IS, THEREFORE, PRAYED THAT THE ABOVE ADDITION CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) BE DELETED. 3. THE APPELLANT PRAYS FOR GRANTING SUCH OTHER RELI EF AS MAY BE DEEMED JUST AND PROPER BY YOUR HONOURS CONSIDERING THE FACTUAL AND LEGAL ASPECTS OF THE CASE OF THE APPELL ANT. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, DELETE, SUBSTITUTE OR MODIFY ANY OR ALL OF THE GROUNDS OF A PPEAL. 12. IN THIS YEAR ASSESSEE SOLD 5 FLATS FOR RS.30,59 ,235/- WHOSE COST WAS SHOWN AT RS.29,63,679/- AS UNDER: AMT.(RS.) A) TOTAL COST OF CONSTRUCTION UP TO 31/3/2000 39,2 69,158 B) ESTIMATED CONSTRUCTION COST TO COMPLETE THE 1,682,000 CONSTRUCTION OF FLATS TO BE INCURRED DURING 1/4/2003 TO 31/3/2004 C) TOTAL COST OF CONSTRUCTION OF APARTMENTS 40,9 51,158 [(A+B)] D) TOTAL SALEABLE AREA IN THE APARTMENT (IN SQ. FT. ) 99,280 E) PER SQ. FEET COST OF CONSTRUCTION [(C)/(D)] 412.48 F) TOTAL AREA SOLD DURING THE YEAR (IN SQ. FT.) 7,185 COST OF CONSTRUCTION OF AREA SOLD DURING THE 2, 963,679 YEAR [(F) X (E)] 13. THE ASSESSING OFFICER REQUIRED ASSESSEE TO FURN ISH ACTUAL EXPENDITURE INCURRED AND EVIDENCE OF SUCH EXPENDITU RE, BUT ASSESSEE FAILED TO DO SO. HE ACCORDINGLY APPLIED A RATE OF 395.53 PER SQUARE FEET ON THE BASIS OF COST OF SIMILAR FLATS CONSTRUCTED A ND SOLD AND DETERMINED THE COST OF CONSTRUCTION OF 5 FLATS AT RS.28,41,951 /- AS AGAINST DECLARED COST OF RS.29,63,679/- RESULTING IN AN ADDITION OF RS.1,21,727/-. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) CONFIR MED THE SAME. 7 ITA NO.620/AHD/2007 AND ORS. 14. WE HAVE HEARD THE PARTIES. EVEN BEFORE US, NO EVIDENCE OF ACTUAL EXPENDITURE INCURRED HAS BEEN FURNISHED. THEREFORE , FOLLOWING OUR ORDERS IN THE CASE OF THIS ASSESSEE AND IN THE CASE OF OHM ORGANIZERS AS ABOVE, WE CONFIRM THE ORDER OF ASSESSING OFFICER AND OF LE ARNED COMMISSIONER OF INCOME TAX (APPEALS) IN WORKING OUT THE COST OF CONSTRUCTION AND MAKING THE RESULTANT DIFFERENCE AS ADDITION TO THE INCOME. 15. AS A RESULT, WE CONFIRM THE ORDER OF LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) AND DISMISS THE APPEAL FILED B Y THE ASSESSEE. 16. AS A RESULT, ALL THREE APPEALS ARE DISMISSED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DATED 11 TH JUNE, 2010. SD/- SD/- (BHAVNESH SAINI) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; DATED: 11/06/2010 ANKIT* COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT, 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT, AHMEDABAD BENCHES, AHMEDABAD.