MUDHIT M GUPTA, MUMBAI V. DCIT 17(2), MUMBAI

ITA 692/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92242 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.692/MUM/2013 ASSESSMENT YEAR: 2009-10 MUDHIT M. GUPTA, 1 ST FLOOR, BAHUBALI BUILDING, CAWASJI PATEL STREET, FORT, MUMBAI-400001 / VS. DY. COMMISSIONER OF INCOME TAX,-17(2), ROOM NO.217, 2 ND FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012 ( '#$% & /ASSESSEE) ( / REVENUE) P.A. NO. AACPG3554F ITA NO.828/MUM/2013 ASSESSMENT YEAR: 2009-10 DY. COMMISSIONER OF INCOME TAX,-17(2), ROOM NO.217, 2 ND FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI-400012 / VS. MUDHIT M. GUPTA, 1 ST FLOOR, BAHUBALI BUILDING, CAWASJI PATEL STREET, FORT, MUMBAI-400001 ( / REVENUE) ( '#$% & /ASSESSEE) P.A. NO.AACPG3554F '#$% & / ASSESSEE BY SHRI SASHI TULSIYAN / REVENUE BY SHRI VIJAY KUMAR BORA-DR MUDHIT M. GUPTA, . 2 ' '( ) & * / DATE OF HEARING 09/04/2015 ) & * / DATE OF ORDER: 09/04/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THESE CROSS APPEALS BY THE ASSESSEE AS WELL AS THE REVENUE ARE DIRECTED AGAINST THE IMPUGNED ORDER DAT ED 27/11/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. IN THE APPEAL OF THE ASSESSEE (ITA NO.692/MUM/2013) THE ONLY GROUND RAISED PERTAINS TO CONFIRMING THE ADDIT ION OF RS.4,92,721/-, BEING ESTIMATED PROFIT ON ADVANCES RECEIVED FROM CUSTOMER, FOR SALE OF FLATS IN CASE O F AN INCOMPLETE PROJECT BASED ON PERCENTAGE OF WORK COMPLETION METHOD AND FURTHER TREATING THE INCOME O F THE ASSESSEE. 2. AT THE TIME OF HEARING, SHRI SASHI TULSIYAN, LD . COUNSEL FOR THE ASSESSEE, ADVANCED HIS ARGUMENTS, W HICH ARE IDENTICAL TO THE GROUND RAISED BY FURTHER SUBMI TTING THAT THE ASSESSEE IS FOLLOWING PROJECT COMPLETION M ETHOD FOR WHICH OUR ATTENTION WAS INVITED TO PARA 5.1 (PA GE-7) OF THE IMPUGNED ORDER. ON THE OTHER HAND, SHRI VIJAY KUMAR BORA, LD. DR, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSING OFFICER ITSELF FOUND THAT THE MUDHIT M. GUPTA, . 3 ASSESSEE WAS FOLLOWING PROJECT COMPLETION METHOD OF ACCOUNTING FOR TALEGAON PROJECT AND DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPLETED 30% OF THE P ROJECT FOR WING-A. AS PER THE REVENUE, THE ASSESSEE DID N OT OFFERED THE INCOME FOR TAXATION BY CLAIMING THAT TW O FLATS OF WING-A WERE REGISTERED IN AY 2009-10 AND THE ASS ESSEE RECEIVED 100% OF SALE CONSIDERATION MENTIONED IN TH E SALE AGREEMENTS. EVEN THE LD. ASSESSING OFFICER HAS AD MITTED THAT THE ASSESSEE IS FOLLOWING PROJECT COMPLETION M ETHOD. THE STAND OF THE ASSESSEE IS THAT THE ASSESSING OFF ICER HAS MISINTERPRETED ACCOUNTING STANDARD AND APPLIED THE PERCENTAGE COMPLETION METHOD. AS PER THE REVISED AS 7, THE ACCOUNTING WAS TO BE DONE AS PER PERCENTAGE/ PROGRESSIVE COMPLETION METHOD AND FURTHER THE PROJE CT COMPLETION METHOD, USED BY THE ASSESSEE FOR RECOGNI ZING THE REVENUE FOR THE TALEGAON PROJECT CANNOT BE TREA TED AS INCOME. THERE IS NO DISPUTE TO THE FACT THAT THE DEPARTMENT HAD BEEN ACCEPTING THE METHOD OF ACCOUNT ING AS PERCENTAGE COMPLETION METHOD. THE LD. COMMISSIO NER OF INCOME TAX (APPEALS) HAS EXPECTED FROM THE ASSES SING OFFICER TO COMPUTE THE TRUE AND CORRECT INCOME OF T HE ASSESSEE. WHAT IS WRONG WITH THE METHOD OF ACCOUNT ING FOLLOWED BY THE ASSESSEE HAS NOT BEEN ANSWERED IN T HE ORDER, MORE SPECIFICALLY, WHEN THE DEPARTMENT HAD B EEN ACCEPTING THE SAME, CONSEQUENTLY, WE ALLOW THIS GRO UND OF THE ASSESSEE. 3. IN THE APPEAL OF THE REVENUE THE GROUND RAISED TO PERTAINS TO DELETING THE CLAIMED DEDUCTION U/S 8 0IB(10) MUDHIT M. GUPTA, . 4 OF THE ACT AMOUNTING TO RS.1,82,61,205/-. THE CRUX OF ARGUMENT ADVANCED BY THE LD. DR IS THAT WHILE GRANT ING RELIEF TO THE ASSESSEE, THE LD. COMMISSIONER OF INC OME TAX (APPEALS) DID NOT APPRECIATE THE FACTS THAT THE ASS ESSEE DID NOT FULFILL THE CONDITIONS LAID DOWN IN THE SECTION AS THE SIZE OF TWO FLATS EXCEEDED THE PRESCRIBED LIMIT OF 1000 SQ. FT. WHICH WAS FOUND IN THE SURVEY REPORT THAT TOO A FTER RECORDING THE STATEMENTS OF FEW FLAT OWNERS. IT WAS ALSO PLEADED THAT THE LAND ON WHICH THE PROJECT WAS DEVE LOPED WAS LESS THAN ONE ACRE. ON THE OTHER HAND, THE LD . COUNSEL FOR THE ASSESSEE DEFENDED THE CONCLUSION DR AWN IN THE IMPUGNED ORDER AND ADVANCED HIS ARGUMENTS WHICH WAS PREFERRED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WITHOUT G OING INTO MUCH DELIBERATION, WE NOTE THAT THE CASE OF TH E ASSESSEE IS COVERED IN HIS FAVOUR BY THE DECISION O F THE TRIBUNAL DATED 23/12/2010 (ITA NO.3220, 3444 AND 3445/MUM/2010 FOR AYS. 2005-06 TO 2007-08), WHEREIN ON IDENTICAL FACTS DECIDED IN FAVOUR OF THE ASSESSE E. THE RELEVANT FINDING AS CONTAINED IN PARA 17 (PAGE-20) OF THE ORDER HAS ALREADY BE REPRODUCED IN PARA 3.3 OF THE IMPUGNED ORDER WITH RESPECT TO AREA OF THE FLAT. S O FAR AS, THE CONTENTION OF NON-COMPLETION OF D WING IS CONCE RNED, THE TRIBUNAL HAS DEALT WITH AT PAGES 33 AND 34 (PAR A-26) WHICH HAS ALSO BEEN CONSIDERED IN PARA 3.3.1 OF THE IMPUGNED ORDER ALONGWITH VARIOUS DECISIONS LIKE SAR OJ MUDHIT M. GUPTA, . 5 SALES ORGANIZATION VS ITO 115 TTJ 484 (BOM.), DCIT VS BRIGADE ENTERPRISES LTD. 119 TTJ 269 (BANG.) AND TH E SPECIAL BENCH DECISION IN BRAHMA ASSOCIATES VS JCIT . SO FAR AS, THE CONTENTION OF THE LD. DR WITH RESPECT T O AREA BELOW ONE ACRE IS CONCERNED A FACTUAL FINDING IN PA RA 29 (PAGE-38) HAS BEEN RECORDED HOLDING THAT THE PROJEC T WAS ON THE LAND WHICH IS APPROXIMATELY 7000 SQ. MT. (WH ICH IS ALSO MORE THAN ONE ACRE). IDENTICALLY, FOR AY 2008 -09, VIDE ORDER DATED 29/02/2012, THE LD. COMMISSIONER OF INC OME TAX (APPEALS) DECIDED IN FAVOUR OF THE ASSESSEE AND NO CONTRARY DECISION WAS PRODUCED BEFORE US BY THE REV ENUE. THE FACTS ARE SIMILAR TO ASSESSMENT YEAR 2008-09, THEREFORE, WE FIND NO MERIT IN THE CONTENTION OF TH E REVENUE, CONSEQUENTLY, THE APPEAL OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THAT OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVE OF BOTH SIDES, AT TH E CONCLUSION OF HEARING ON 09/04/2015. SD/- SD/- ( D.KARUNAKARA RAO ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' ( MUMBAI; +' DATED : 09/04/2015 F{X~{T? P.S/. '. . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT MUDHIT M. GUPTA, . 6 2. 01./ / THE RESPONDENT. 3. 2 2 ' 3& ( ,- ) / THE CIT, MUMBAI. P4. 2 2 ' 3& / CIT(A)- , MUMBAI 5. 56 0&'# , 2 ,-* ,# , ' ( / DR, ITAT, MUMBAI 6. $ 7( / GUARD FILE. / BY ORDER, 15-& 0& //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' ( / ITAT, MUMBAI