M/s. Baibhav Properties Pvt. Ltd., Bhubaneswar V. ITO, Ward-1(1), Bhubaneswar

ITA 7/CTK/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3769 (ITAT-CUTTACK)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 04-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P K MISHRA
• Keywords: Business expenditure

Judgement Text

1 ITA NO.07/CTK/2017 ASSESSMENT YEAR :2012 - 2013 IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N.S SAINI, ACCOUNTANT MEMBER ITA NO. 07/CTK/2017 ASSESSMENT YEAR : 2012 - 2013 M/S. BAIBHAV PROPERTIES (P) LTD., PL OT NO.717, BJB NAGAR, BHUBANESW AR. VS. ITO, WARD - 1(1), BHUBANESWAR PAN/GIR NO.AADCB 2318 J (APPELLANT ) .. ( RESPONDENT ) SEE BY : SHRI P.K.MISHRA , AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 14 /06 / 2017 DATE OF PRONOUNCEMENT : /06 / 2017 O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 1, BHUBANESWAR, DATED 19.9 .2016 FOR THE ASSESSMENT YEAR 2012 - 13. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE CIT(A) ERRED IN CONFIRMING RS.43,74,405 / - SHOWN IN THE PROFIT AND LOSS ACCOUNT AS INCOME FROM OTHER SOURCES. 3. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. DURING 2 ITA NO.07/CTK/2017 ASSESSMENT YEAR :2012 - 2013 THE YEAR UNDER CONSIDERATION, THE ONLY REVENUE OF THE ASSESSEE WAS INTEREST INCOME OF RS.43,74,405/ - . THE ASSESSEE CLAIMED BUSINESS EXPENDITURE OF RS.29,01,409/ - AND SET OFF FROM THE SAID INTEREST INCOME AND DISCLOSED NET INCOME OF RS.14,72,996/ - AS ITS TOTAL INCOME. THE ASSESSING OFFIC ER OBSERVING THAT NO REVENUE WAS EARNED FROM REAL ESTATE BUSINESS HELD THAT THE BUSINESS OF THE ASSESSEE HAS NOT COMMENCED BY THE END OF THE RELEVANT PREVIOUS YEAR AND, THEREFORE, DISALLOWED THE ENTIRE BUSINESS EXPENDITURE. HE TREATED THE INTEREST INCOME OF RS.43,74,405/ - AS INCOME FROM OTHER SOURCES AND AS NO EXPENDITURE WAS FOUND TO BE INCURRED FOR EARNING INTEREST INCOME., HE COMPUTED THE INCOME AT RS.43,74,405/ - . 4. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. IN MY CONSID ERED VIEW SIMPLY BECAUSE NO REVENUE WAS GENERATED DURING THE YEAR , FROM THIS FACT ALONE, IT CANNOT BE CONCLUDED THAT NO AC TUAL BUSINESS WAS COMMENCED. I FIND ON PERUSAL OF ASSESSEES AUDITED FINANCIAL STATEMENT THAT RAW MATERIAL CONSUMED DURING THE YEAR W AS RS.1,43,75,246/ - AND THE INVENTORY IN THE FORM OF WORK - IN - PROGRESS AS AT THE END OF THE RELEVANT PREVIOUS YEAR WAS RS.1,43,75,246/ - . THE ABOVE FACTS ARE NOT IN DISPUTE. THE ABOVE EVIDENCES SHOW THAT THE ASSESSEE COMMENCED ITS BUSINESS OF REAL ESTATE DEVELOPMENT DURING THE YEAR UNDER C ONSIDERATION. THEREFORE, IN MY CONSIDERED VIEW, THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN HOLDING THAT BUSINESS WAS NOT COMMENCED DURING THE YEAR AND CONSEQUENTLY IN DISALLOWING BUSINESS LOSS OF RS.29,01,409/ - . AS 3 ITA NO.07/CTK/2017 ASSESSMENT YEAR :2012 - 2013 THE BUSINESS LOSS OF THE CURRENT YEAR IS ALLOWED TO BE SET OFF AGAINST INCOME FROM OTHER SOURCES, I, THEREFORE, SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND DELETE THE DISALLOWANCE OF RS.29,01,409/ - . THUS, THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 /06 /2017 IN THE PRESENCE OF PARTIES. SD/ - ( N.S SAINI) A CCOUNTANT MEMBER CUTTACK; DATED 15 /0 6 /2017 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT : M/S. BAIBHAV PROPERTIES (P) LTD., PLOT NO.717, BJB NAGAR, BHUBANESWAR. 2. THE RESPONDENT. ITO, WARD - 1(1),BHUBANESWAR 3. THE CIT(A) - 1, BHUBANESWAR 4. PR.CIT - 1, BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//