M/s. Alliance Nirman Ltd., Bareilly V. Addl.CIT, Bareilly

ITA 704/LKW/2010

• Counselvise Citation: 70423714 RSA 2010
• Duration Of Justice: 3 year(s) 7 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: YOGESH AGARWAL
• Keywords: Rejection of books of accounts; Business income; Business expenditure; Competent authority; Revenue expenditure
• Section: 80IB; 133(6); 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.704/LKW/2010 ASSESSMENT YEAR:2007 - 08 M/S ALLIANCE NIRMAAN LIMITED 253, JANAKPURI, BAREILLY. PAN:AAFCA6550R VS. ADDL.C.I.T., BAREILLY. (APPELLANT) (RESPONDENT) ITA NO.705/LKW/2010 ASSESSMENT YEAR:2007 - 08 ADDL.C.I.T., BAREILLY. VS. M/S ALLIANCE NIRMAAN LIMITED 253, JANAKPURI, BAREILLY. PAN:AAFCA6550R (APPELLANT) (RESPONDENT) ITA NO.761/LKW/2011 ASSESSMENT YEAR:2008 - 09 M/S ALLIANCE NIRMAAN LIMITED 253, JANAKPURI, BAREILLY. PAN:AAFCA6550R VS. ADDL.C.I.T., RANGE - 1, BAREILLY. (APPELLANT) (RESPONDENT) ITA NO.655/LKW/2011 ASSESSMENT YEAR:2008 - 09 INCOME TAX OFFICER - 1(1), BAREILLY. VS. M/S ALLIANCE NIRMAAN LIMITED 253, JANAKPURI, BAREILLY. PAN:AAFCA6550R (APPELLANT) (RESPONDENT) 2 ASSESSEE BY SHRI YOGESH AGARWAL, ADVOCATE REVENUE BY SHRI MANOJ KUMAR GUPTA, CIT, D.R. DATE OF HEARING 11/07/2014 DATE OF PRONOUNCEMENT 1 7 /07/2014 O R D E R PER A. K. GARODIA, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE, WHICH ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF CIT(A), BAREILLY DATED 30/08/2010 FOR THE ASSESSMENT YEAR 2007 - 08 AND DATED 28/07/2011 FOR ASSESSMENT YEAR 2008 - 09. ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2007 - 08 IN I.T.A. NO. 705/L KW/2010. 3. GROUND NO. 1 OF THE APPEAL IS AS UNDER: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN NOT UPHOLDING THE APPLICATION OF SECTION 145(3) OF THE IT ACT, 1961 BY THE ASSESSING OFFICER. THE ASSESSING OFFICER W AS NOT SATISFIED ABOUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE AS NECESSARY EVIDENCES AS REQUIRED BY THE ASSESSING OFFICER WERE NOT PRODUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, HENCE THE APPLICATION OF SECTI ON 145(3) OF THE IT ACT, MAY KINDLY BE UPHELD.' 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THIS ISSUE WAS DECIDED BY CIT(A) IN FAVOUR OF THE ASSESSEE BY MAKING THE FOLLOWING OBSERVATIONS: 3 THE 2 ND GROUND OF APPEAL IS RELATED TO APPLICATION OF SECTION 145(3) AND TO MAKE ASSESSEE U/S 144 OF THE ACT. THE A. O , MENTIONED IN THE ASSESSMENT ORDER THAT 'DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAD FILED THE DETAILS OF VARIOUS EXPENSES UNDER THE HEAD PURCHASE, DIRECT EXPENSES, SELLING AND DISTRIBUTION EXPENSES, ADMINISTRATIVE EXPENSES, ETC. ON A P ERUSAL OF SUB - HEAD OF THESE EXPENSES IT WAS SEEN THAT THE ASSESSEE HAD DEBITED EXPENSES UNDER THE HEAD COMMISSION AND BROKERAGE, BROKER INCENTIVE, ADVERTISEMENT EXPENSES, BUSINESS PROMOTION EXPENSES. WHEN THE ASSESSEE WAS ASKED SPECIFICALLY TO GIVE DETAIL ED WORKING OF BROKERAGE AND COMMISSION IN RESPECT OF SALE OF EACH PLOT AND ALSO FOR ADVANCE BOOKING OF PLOTS, THE ASSESSEE FAILED TO GIVE EXACT WORKING THEREOF. FURTHER THE ASSESSEE COULD NOT GIVE THE EXACT BASIS OF VALUATION OF INVENTORY EXCEPT BY STATING THAT THE COMPANY HAD APPORTIONED VARIOUS EXPENSES IN W I P (WORK IN PROGRESS). THE ASSESSEE HAD ALSO NOT PRODUCED THE STOCK REGISTER WHICH COULD JUSTIFY THE WORKING OF WIP. IN VIEW OF THE ABOVE DISCREPANCIES, I AM N OT SATISFIED ABOUT THE CORRECTNESS AND C OMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, THEREFORE, I AM MAKING AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144 OF THE INCOME TAX ACT, 1961 AS ENVISAGED IN SECTION 145(3) OF THE I. T. ACT, 1961.' THE A.R. OF THE ASSESSEE SUBMITTED THAT 'THAT THE APPLICATION OF PROVISION SECTION 145(3) TO MAKE ASSESSMENT AS ENVISAGED IN SECTION 144 WAS INCORRECT. THAT THE ASSESSEE HAS MAINTAINED PROPER BOOKS OF ACCOUNTS WHICH WERE DULY AUDITED BY THE AUDITOR OF THE COMPANY M/S ANIL SUSHIL & CO., CHARTERED ACCOUNTA NTS, NEW DELHI. THE LEARNED ADDL. COMMISSIONER OF INCOME TAX RANGE - 1, BAREILLY HAS HIMSELF ASSERTED IN PARA - 1 OF ASSESSMENT ORDER THAT SRI RAJEN VIDYARTH I , FCA, SRI APOORV MISHRA, CA & SRI ARVINDER SINGH, MD OF THE COMPANY ATTENDED FROM TIME TO TIME ALONG WITH BOOKS OF ACCOUNTS. FURTHER IN PARA - 4 OF ASSESSMENT ORDER HE HAS MENTIONED THAT DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSEE HAS FILED THE DETAILS OF VARIOUS EXPENSES UNDER THE HEAD PURCHASE, DIRECT EXPENSES, SELLING AND DISTRIBUTION EXPENSES, ADMINISTRATIVE EXPENSES, ETC. IT MAY BE OBSERVED THAT NO DEFECT HAS BEEN POINTED OUT IN OUR BOOKS OF ACCOUNTS . THE LEARNED ADDL . COMMISSIONER HAS NOT POINTED OUT ANY SUPPRESSION OF SALE OR INFLATION OF EXPENSES. ALL THE EXPENSES WERE VERIFIABLE W HICH HAVE BEEN DISALLOWED BY THE LEARNED ADDL. COMMISSIONER OF INCOME TAX, RANGE - I, BAREILLY ON ESTIMATE BASIS. ENTIRE VALUATION OF WORK IN PROGRESS WAS VERIFIABLE AND SUPPORTED BY VOUCHERS AND BILLS. 4 COMPLETE DETAILS ABOUT THE VALUATION OF WORK IN PROGRES S HAVE BEEN MENTIONED IN THE BALANCE SHEET ITSELF WHEN COMPLETE DETAILS ABOUT THE CALCULATION OF WORK IN PROGRESS WERE AVAILABLE REJECTION OF BOOKS OF ACCOUNTS U/S 145(3) ARE NOT JUSTIFIABLE, MERELY ON THE BASIS OF NON SUBMISSION OF STOCK REGISTER. IN SUPPORT OF ABOVE GIVEN FACTS THERE ARE SO MANY JUDICIAL PRONOUNCEMENTS . SOME OF THESE ARE AS FOLLOWS: - 1 . ASHOKE REFRACTORIES (P) LTD. (2005) 279 ITR 457 (CAL) 2 . ASSISTANT COMMISSIONER OF INCOME TAX ITAT, CHANDIGARH BENCH, ITA NOS. 94 & 1432/CHD/1990; ASST. YR S. 1986 - 87 & 1987 - 88 3 . S HREE GAUTAM TEXTILES ITAT, JODHPUR BENCH, ITA NO, 226/JD/1999; ASST. YR. 1994 - 95.' THE REASON RECORDED BY THE A.O., FOR APPLYING SECTION 145(3), WAS THAT THE ASSESSEE DID NOT FURNISH COMPLETE DETAILS OF EXPENSES DEBITED UNDER THE HE ADS OF BROKERAGE AND COMMISSION, INCENTIVE, ADVERTISEMENT, BUSINESS PROMOTION ETC. THE CONTENTS OF THE ASSESSMENT ORDER REVEAL THAT THE ASSESSEE PRODUCED BOOKS OF ACCOUNT AND ATTENDED PROCEEDINGS FROM TIME TO TIME. IT WAS ALSO MENTIONED THAT THE ASSESSEE R ECEIVED ADVANCES FROM CUSTOMERS AND MADE PAYMENTS TO THE PARTIES FOR PURCHASE OF LAND THROUGH CHEQUES AND DRAFTS AND THESE TRANSACTION WERE MADE THROUGH BANK ACCOUNTS, IN PARA 4 OF THE ORDER, IT WAS MENTIONED THAT THE ASSESSEE FURNISHED DETAILS OF VARIOUS EXPENSES UNDER THE HEADS OF PURCHASE, DIRECT EXPENSES, SELLING AND DISTRIBUTION, ADMINISTRATIVE CHARGES ETC. IN PARA 5 OF THE ORDER, IT WAS FURTHER MENTIONED THAT THE CONSIDER ATION FOR SALE OF PLOTS AND DISCOUNT, WHICH WAS DIRECTLY ALLOWED TO THE BUYERS, WERE VERIFIED FROM SOME OF THE PARTIES. THUS, THE ABOVE OBSERVATION OF THE A.O . ITSELF, ESTABLISHED THAT THE BOOKS WERE MAINTAINED AND THE SAME WERE PRODUCED BEFORE HIM FOR VERIFICATION. ALL STATUTORY REGISTERS RELATING TO PURCHASES, SALES AND STOCKS, WERE MAINTAINED ALONG W IT H SUPPORTING BILLS AND VOUCHERS. THE A . O. DID RIOT CHALLEN GE THESE BOOKS OF ACCOUNT. NO SPECIFIC DEFECT WAS DETECTED IN THE BOOKS BY THE ASSESSING OFFICER. THERE WAS NO DISPUTE THAT THE ASSESSEE WAS MAINTAINING BOOKS OF ACCOUNT. THE A.O. WAS SATISFIED ABOUT THE CORRECTNESS AND COMPLETENESS OF BOOKS AND METHOD OF ACCOUNTING REGULARLY EMPLOYED BY THE ASSESSEE. THE PROVISIONS OF SECTION 145(3) COULD BE INVOKED IF THE ASSESSING OFFICER WAS NOT SATISFIED ABOUT THE CORRECTNESS AND COMPLETENESS OF THE' ACCOUNTS AND METHOD OF ACCOUNTING FOLLOWED. FOR THESE PURPOSES, THE A SSESSING 5 OFFICER HAS TO FIND OUT NOT ONLY THE FIGURES IN THE BOOKS OF ACCOUNT BUT THE INCORRECTNESS OF ACCOUNTS. THE KERALA HIGH COURT IN THE CASE OF ST, TERASA'S OIL MILLS VS. STATE OF KERALA (1970) 76 ITR 365 HAS OBSERVED THAT THE ACCOUNTS REGULARLY MAIN TAINED IN THE COURSE OF BUSINESS HAVE TO BE TAKEN AS CORRECT UNLESS THERE ARE STRONG AND SUFFICIENT REASONS TO INDICATE THAT THEY ARE UNRELIABLE. THE DEPARTMENT HAS TO PROVE SATISFACTORILY THAT ACCOUNT BOOKS ARE UNRELIABLE, INCORRECT OR INCOMPLETE BEFORE I T CAN REJECT ACCOUNTS WHICH MAY BE DONE BY SHOWING THAT THE IMPORTANT .PURCHASES WERE OMITTED THERE FROM OR PROPER PARTICULARS OR VOUCHERS WERE NOT FORTHCOMING. THE PROCEEDINGS BEFORE THE ITO ARE OF A JUDICIAL NATURE AND IN MAKING ASSESSMENT HE SHOULD PROC EED ON JUDICIAL PRINCIPLES. THE GAUHATI HIGH COURT HAS HELD IN THE CASE OF ALLUMINIUM INDUSTRIES PRIVATE LIMITED, 80 TAXMAN 184, THAT WHEN THE A .O . DID NOT POINT OUT ANY DEFECT IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, NO ADDITION COULD BE MADE MERELY BECAUSE THERE WAS LESSER RATE OF GROSS PROFIT DECLARED BY THE ASSESSEE AS COMPARED TO THE PREVIOUS YEAR. RELIANCE MAY BE PLACED IN THE CASE OF SHREE BARDHMAN RICE & GENERAL MILL (2001) 116 TAXMAN 298 (ITAT, DELHI BENCH A) . SINCE, NO SPECIFIC EXAMPL ES WERE CITED BY THE A.O. AND THERE WAS NO CLEAR PROOF BEFORE THE A.O, TO REACH THE CONCLUSION THAT THE ASSESSEE SUPPRESSED SALES OR INFLATED PURCHASES OR EXPENSES AND CONCEALED INCOME ON THIS ACCOUNT. THEREFORE, THE ACTION WITHOUT ANY SPECIFIC FINDING WAS NOT JUSTIFIED. ACCORDINGLY, THE APPEAL IN THIS GROUND IS ALLOWED. 6. WE FIND THAT A CLEAR FINDING IS GIVEN BY THE CIT(A) THAT AS PER THE OBSERVATION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, IT IS NOTED THAT NO SPECIFIC DEFECT WAS DETECTED BY THE ASSESSING OFFICER IN THE BOOKS AND T HERE WAS NO DISPUTE THAT THE ASSESSEE WAS MAINTAINING BOOKS OF ACCOUNT. HE ALSO NOTED THAT THE ASSESSING OFFICER WAS SATISFIED ABOUT THE CORRECTNESS AND COMPLETENESS OF BOOKS AND METHOD OF ACCOUNTING REGULARLY E MPLOYED BY THE ASSESSEE. THE PROVISIONS OF SECTION 145(3) COULD BE INVOKED IF THE ASSESSING OFFICER IS NOT SATISFIED ABOUT THE CORRECTNESS AND COMPLETENESS OF THE ACCOUNTS AND METHOD OF ACCOUNTING FOLLOWED. THE CIT(A) HAS FOLLOWED 6 VARIOUS JUDGMENTS WHEREI N IT WAS HELD THAT WHEN THE ASSESSING OFFICER DID NOT POINT OUT ANY SPECIFIC DEFECTS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, THE BOOKS CANNOT BE REJECTED BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. MOREOVER, EVEN AFTER REJECTING T HE BOOKS OF ACCOUNT, THE ASSESSING OFFICER HAS NOT PROCEEDED TO ESTIMATE THE INCOME OF THE ASSESSEE AND HE HAS MADE DISALLOWANCE OUT OF VARIOUS EXPENSES DEBITED BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. HENCE, IN OUR CONSIDERED OPINION, UNDER THESE FACTS, REJECTION OF BOOKS OF ACCOUNT IS NOT PROPER AND WHEN THE ASSESSING OFFICER IS MAKING SPECIFIC ADDITIONS/DISALLOWANCE, THERE IS NO IMPACT ON THE ASSESSABLE INCOME OF THE ASSESSEE EVEN IF THE BOOKS ARE NOT REJECTED AND THEREFORE, ON THIS ASPECT, WE DO NOT FI ND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). ACCORDINGLY, THIS GROUND OF THE REVENUE IS REJECTED. 7. GROUND NO. 2 IS AS UNDER: 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF R S.1,69,45,090/ - OUT OF DIRECT EXPENSES BY THE ASSESSING OFFICER AS THE SAME WAS MADE ON THE GROUND THAT THE ASSESSEE HAD NOT FURNISHED DETAILS OF DIRECT EXPENSES RELATED TO DEVELOPMENT OF FLATS WHICH WERE NOT SOLD DURING THE YEAR AND HENCE, SUCH EXPENSES W ERE TO BE INCLUDED IN WORK - IN - PROGRESS (WIP) AND MAY NOT BE DEBITED TO P&L A/C AS PER ACCOUNTING POLICY FOLLOWED BY THE ASSESSEE.' 8. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS RAISED BEFORE THE CIT(A) AS PER GROUND NO. 7 OF THE APPEAL AND IT WAS DECIDED BY CIT(A) IN FAVOUR OF THE ASSESSEE BY MAKING FOLLOWING OBSERVATIONS: THE 7 TH GROUND OF APPEAL IS REGARDING ADDITION OF RS.1,69,45,090/ - . THE A.O. MENTIONED IN THE ASSESSMENT ORDER THAT ' THE ASSESSEE HAS DEBITED RS.16,94,50,896/ - AS DIRECT EXPENSES. THESE EXPENSES INCLUDE EXPENSES ON ACCOUNT OF 7 MATERIAL PURCHASE (LIKE BRICK, CEME NT, MARBLE AND SAND ETC.), CONSTRUCTION EXPENSES, JOB WORK CHARGES ETC. THE ASSESSEE CONTENDED THAT DURING THE YEAR THE COMPANY HAS DEVELOPED COMPLETE HOUSING PROJECT AS A WHOLE AND SUBSTANTIAL PORTION OF INFRASTRUCTURAL DEVELOPMENT IS ALREADY COMPLETE SUC H AS LEVELING OF LAND, LANDSCAPING, CONSTRUCTION OF MAJOR ROADS, ERECTION OF STREET LIGHT POLLS, CONSTRUCTION OF OVER HEAD WATER TANK ETC. THE ASSESSEE HAS DEBITED THE ENTIRE EXPENSES ON ACCOUNT OF THESE DIRECT EXPENSES TO THE P & L ACCOUNT. WHILE WORKING OUT THE WIP PROJECT EXPENSES THE ASSESSEE HAD BOOKED CERTAIN EXPENSES IN TO THE WIP ACCOUNT AS THEY WERE INCURRED IN THE YEAR BUT THEY WERE GOING TO GIVE ADVANTAGE IN COMING YEAR ALSO HENCE WERE DEFERRED TO MATCH THE PERIOD. DURING THE YEAR THE ASSESSEE H AD SOLD PLOTS ONLY AND MAJOR PORTION OF THESE DIRECT EXPENSES RELATED TO THE SALE OF PLOT. HOWEVER, IT IS EVIDENT THAT THE ASSESSEE HAD STARTED BOOKING OF FLAT AND FOR THAT HE HAD STARTED DEVELOPING THE LAND. THE ASSESSEE HAD NOT FURNISHED THE DETAILS OF P ART OF THESE EXPENSES RELATED TO THE DEVELOPMENT OF FLATS AND IT HAD NOT TRANSFERRED PART OF EXPENSES IN WIP PROJECT EXPENSES. IN THESE CIRCUMSTANCES, ON THE ANALOGY OF ACCOUNTING POLICY FOLLOWED BY THE ASSESSEE, I WOULD DISALLOW 10% OF THE DIRECT EXPENSES BY ESTIMATE TO BE APPORTIONED IN WIP PROJECT EXPENSES. IN THESE CIRCUMSTANCES, I DISALLOW 10% OF DIRECT EXPENSES OF RS.16,94,50,896/ - AMOUNTING TO RS.1,69,45,090/ - AND ADD IT TOWARDS THE ASSESSEE'S TOTAL INCOME. PENALTY NOTICE U/S 271(1)(C) IS BEING ISSUE D SEPARATELY.' THE A.R. OF THE ASSESSEE SUBMITTED THAT 'THAT THE LEARNED ADDL. COMMISSIONER OF INCOME TAX RANGE - I, BAREILLY HAS WRONGLY DISALLOWED A SUM RS.1,69,45,090 / - ON ESTIMATE BASIS BEING 10% OF TOTAL DIRECT EXPENSES CLAIMED AT RS.16,94,50,896 / - . YOUR HONOUR WOULD APPRECIATE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF HOUSING DEVELOPMENT AND IT HAS STARTED ITS FIRST PROJECT NAMED AND STYLED AS C I TYONE WHICH IS AN INTEGRATED TOWNSHIP PROJECT. AS PER THE SCHEME 25 UNITS OF VILLAS, 1054 UNITS OF BU NGLOWS & 668 UNITS OF GROUP HOUSING ARE TO BE DEVELOPED AND CONSTRUCTED. OUT OF THESE 1054 BANGLOWS , 990 UNITS ARE BEING CONSTRUCTED BY THE BUYER AS PER THE APPROVED BUILDING PLAN DULY APPROVED BY COMPETENT AUTHORITY. DURING THE YEAR COMPANY HAS DONE INFRA STRUCTURE DEVELOPMENT SUCH AS LEVELING OF LAND, LANDSCAPING, CONSTRUCTION OF ROAD, ERECTION OF STREET LIGHT POLLS AND CONSTRUCTION OF OVER HEAD WATER TANK. IN ALL THESE PROCESS COMPANY HAS USED PURCHASED, USED AND CONSUMED 8 MUD, SAND, BRI CKS, CEMENT, STONE AND MARBLES, WHICH HAVE BEEN CLAIMED AS DIRECT EXPENSES. THEY ALSO INCLUDE CONSTRUCTION EXPENSES, DEVELOPMENT FEES, DUMPER REPAIR AND MAINTENANCE, FREIGHT AND CARTAGE, MAP APPROVAL FEES, AND SITE DEVELOPMENT FEES, JCB REPAIR AND MAIN TENANCE, STORE CONSUMABLES, JOB WORK CHARGES. DETAILS OF THESE DIRECT EXPENSES ALONG WITH THE NATURE OF WORK DONE, IS AS UNDER: - PARTICULARS TOTAL MATERIAL - BRICKS 27281041 MATERIAL - CEMENT 2101 1 400 MATERIAL MARBLES 3648973335 MATERIAL - MUD 28587833 MATERIAL - SAND 37703105.65 CONSTRUCTION EXPENSES 12523526 DEVELOPMENT FEES 406891 DUMPER REPAIRS & MAIN. 18289 FREIGHT & CARTAGE - 34770 JCB REPAIRS & MAIN. 13065 JOB WORK CHARGES 2415002 MAP APPROVAL FEES 1003501 SITE DEVELOPMENT FEES 1710628 STORE CONSUMABLES 252111 169450896 FROM PERUSAL OF THESE DETAILS YOUR HONOR WILL APPRECIATE THAT ALL THESE EXPENSE S DIRECTLY RELATE TO PROJECT AND HAVE BEEN INCURRED DURING THE COURSE OF DEVELOPMENT OF PHASE - I OF THE PROJECT I.E. DEVELOPMENT OF HOUSING PLOTS TO BE CONSTRUCTED BY THE BUYER, REFERRED TO AS SALE OF PLOTS . IN VIEW OF THESE FACTS DISALLOWANCE MERELY ON THE BASIS OF ESTIMATE IS ILLEGAL, UNJUSTIFIED AND AGAINST THE FACTS OF THE CASE . ' THE A.O. MADE ADDITION ON THE GROUND THAT THE ASSESSEE DID NOT FURNISH BIFURCATION OF EXPENSES RELATED TO THE BOOKING OF FLATS DURING THE YEAR. ACCORDINGLY HE ESTIMATED DISALLOWANCE @ 10% OF THE CLAIM. THE CONTENTION OF THE APPELLANT WAS THAT THE COMPANY WAS ENGAGE IN DEVELOPMENT OF INTEGRATED TOWNSHIP PROJECT AND THIS TOWNSHIP WAS HAVING 25 UNITS OF VILLAS, 1054 UNITS OF BUNGALOWS AND 668 UNITS OF GROUP HOUSING. THE APPELLANT HAD TO INCUR MAJOR 9 EXPENDIT URE ON INFRASTRUCTURAL DEVELOPMENT SUCH AS LEVELING OF LAND, LAND SCAPING, CONSTRUCTION OF ROADS, ERECTION OF STREET LIGHT POLLS, CONSTRUCTION OF OVERHEAD WATER TANK ETC, FOR 1 ST PHASE OF THE PROJECT. HE FURNISHED COPY OF BILLS AND OTHER DETAILS ALONG WITH NATURE OF WORK DONE AT PAGE 122 TO 275 OF THE PAPER BOOK. THE ASSESSING OFFICER EXAMINED THESE DETAILS AND FURNISHED REMAND REPORT. THE RELEVANT EXTRACT OF THE REPORT DATED 28 . 7.2010 IS REPRODUCED AS UNDER: 'THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS DEBITED DIRECT EXPENSES OF RS.16,94,50,896 / - . TO ASCERTAIN THE GENUINENESS OF THE EXPENSES DEBITED BY THE ASSESSEE IN VARIOUS HEADS THE ASSESSEE WAS REQUIRED TO FURNISH THE FULL AND COMPLETE DETAILS INCLUDING VOUCHERS AS WELL AS THE WORK I N PROGRESS. IN RESPONSE OF ABOVE QUERY THE ASSESSEE FURNISHED SOME MATERIAL AND ON EXAMINATION OF THIS MATERIAL IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT DEVELOPED THE FLATS WHEREAS THE ASSESSEE HAS SOLD PLOTS DURING THE PERIOD UND ER CONSIDERATION. IT IS FURTHER OBSERVED BY THE ASSESSING OFFICER THAT MAXIMUM EXPENSES RE FETES TO SALE OF PLOTS. HOWEVER THE ASSESSEE HAD FAILED TO PRODUCE THE FULL DETAILS ABOUT THE PLOTS SOLD AND THE FLATS DEVELOPED DURING THE PERIOD UNDER CONSIDERATIO N. IN ABSENCE OF PROPER EVIDENCES IN THE SHAPE OF VOUCHERS AND DETAILS AS WELL AS NAME AND COMPLETE ADDRESSES TO WHOM AN AMOUNT OF RS . 16,94,50,896 / - HAD BEEN PAID. THEREFORE , A TOKEN AMOUNT OF RS.01,69,45,090 / - WHICH IS 10% OF TOTAL AMOUNT OF EXPENSES IS D ISALLOWED. NOW THE SUBMISSION OF THE ASSESSEE BEFORE YOUR GOOD SELF IS GENERAL IN NATURE, HOWEVER, THE ASSESSEE HAS FURNISHED VOUCHERS AND COPY OF ACCOUNTS .WHICH ARE EXAMINED. ON EXAMINATION OF THESE VOUCHERS IT APPEARS THAT THE ASSESSEE HAS TRIED TO KEE P AND MAINTAIN VOUCHERS . ' AFTER TAKING INTO ACCOUNT THE CONTENTION OF THE APPELLANT AND THE REMAND REPORT OF THE A.O., IT IS MY CONSIDERED VIEW THAT THE A.O. MADE ADDITION WITHOUT HAVING ANY MATERIAL ON RECORD. IN VIEW OF SUCH FACTS AND CIRCUMSTANCES OF T HE CASE, THE ACTION OF THE A.O. WAS NOT JUSTIFIED. ACCORDINGLY, THE APPEAL ON THIS GROUND IS ALLOWED. 10 9.1 FROM THE ABOVE PARAS REPRODUCED FROM THE ORDER OF CIT(A), WE FIND THAT THE MAIN BASIS OF THE A.O. FOR MAKING THIS DISALLOWANCE WAS THAT THE ASSESSEE DID NOT FURNISH BIFURCATION OF EXPENSES RELATED TO THE BOOKING OF FLATS DURING THIS YEAR AND ON THIS BASIS, THE ASSESSING OFFICER MADE AD HOC DISALLOWANCE OF 10% OF THE TOTAL DIRECT EXPENSES OF RS.1695.50 LAC. IN THIS REGARD, WE FIND THAT IT IS NOTED BY CIT(A) THAT THE ASSESSEE HAD TO INCUR MAJOR EXPENDITURE ON INFRASTRUCTURAL DEVELOPMENT SUCH AS LEVELING OF L AND, LANDSCAPING, CONSTRUCTION OF ROADS, ERECTION OF STREET LIGHT POLLS, CONSTRUCTION OF OVERHEAD WATER TANK ETC . FOR 1 ST PHASE OF THE PROJECT. HE HAS ALSO NOTED THAT THE ASSESSEE FURNISHED COPY OF BILLS AND OTHER DETAILS ALONG WITH NATURE OF WORK DONE IN THE PAPER BOOK FILED BEFORE HIM. HE HAS FURTHER NOTED THAT THE ASSESSING OFFICER HAS EXAMINED THESE DETAILS AND FURNISHED REMAND REPORT. THE RELEVANT EXTRACT OF THE REMAND REPORT IS REPRODUCED BY THE CIT(A) IN HIS ORDER, WHICH IS ALSO REPRODUCED ABOVE. FROM THE SAME , IT IS SEEN THAT THE ASSESSING OFFICERS OBJECTION IS THAT THE ASSESSEE HAS NOT DEVELOPED THE FLATS BECAUSE THE ASSESSEE HAS SOLD PLOTS IN THE PRESENT YEAR. IN THE DETAILS OF THE EXPENSES INCURRED BY THE ASSESSEE, REPRODUCED BY THE CIT(A), I T IS NOT COMING OUT THAT THESE EXPENSES ARE NOT IN RELATION TO DEVELOPMENT OF PLOTS AND THE SAME ARE FOR CONSTRUCTION OF FLATS. THE ASSESSING OFFICER IS MAKING A GENERAL OBSERVATION THAT IN ABSENCE OF PROPER EVIDENCE IN THE SHAPE OF VOUCHERS AND DETAILS A S WELL AS NAME AND COMPLETE ADDRESS TO WHOM THIS AMOUNT OF RS.1694.50 LAC HAS BEEN PAID, THE TOKEN DISALLOWANCE OF 10% IS JUSTIFIED BUT THE ASSESSING OFFICER HAS NOT POINTED OUT A SINGLE INSTANCE AS TO WHAT DETAILS WERE ASKED FOR BY HIM IN REMAND PROCEEDINGS, WHICH HAS NOT BEEN SUBMITTED BY THE ASSESSEE. UNDER THESE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) ON THIS ISSUE WHERE IT IS HELD BY HIM THAT THE ASSESSING OFFICER MADE THE ADDITION WITHOUT HAVING ANY MATERIAL ON RECORD. THEREFORE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. THIS GROUND OF REVENUE IS REJECTED. 11 10. GROUND NO. 3 OF THE REVENUES A PPEAL IS AS UNDER: 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.3,36,87,110/ - IGNORING THE VERY BASIS ON WHICH THE ADDITION WAS MADE. THE ASSESSING OFFICER HAD MADE THE ADDITION ON ACCOUNT OF THE FACT THAT APPOR TIONMENT OF EXPENSES ON COMMISSION AND BROKERAGE TO WORK - IN - PROGRESS (WIP) IN P&L A/C WAS NOT CORRECT AS THE PAYMENT OF COMMISSION AND BROKERAGE WAS SPECIFIC TO SALE OF PLOT AND BOOKING OF PLOT AND HENCE, HAD TO BE DEBITED TO THE P&L A/C ON SPECIFIC BASIS AND SINCE THE ASSESSEE HAD FAILED TO GIVE THE DETAILS AT THE TIME OF ASSESSMENT PROCEEDINGS AND ALSO DURING THE COURSE OF APPEAL PROCEEDINGS, THE ADDITION MADE BY THE ASSESSING OFFICER WAS JUSTIFIED AND THE ORDER OF THE CIT(A) MAY BE CANCELLED'. 11. LEAR NED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS RAISED BY THE ASSESSEE BEFORE CIT(A) AS PER GROUND NO. 5 OF THE APPEAL AND THE SAME WAS DECIDED BY CIT(A) IN FAVOUR OF THE ASSESSEE BY MAKING FOLLOWING OBSERVATIONS: THE 5 TH GROUND OF APPEAL IS REGARDING ADDITION OF RS . 3,36,87,110/ - . THE A . O. MENTIONED IN THE ASSESSMENT ORDER THAT 'THE ASSESSEE HAD INCURRED EXPENSES OF RS . 8,17,01,938 / - ON ACCOUNT OF COMMISSION AND BROKERAGE PAID TO BROKERS. THE ASSESSEE HAD DEBITED THESE EXPENSES UNDER THE HEADING OF SELLING & DISTRIBUTION EXPENSES. AS PER NOTES TO THE ACCOUNT UNDER THE HEADING SIGNIFICANT ACCOU NTING POLICY , THE COMPANY HAD RECOGNIZED W I P OF PROJECT CITY ONE BY APPORTIONMENT OF VARIOUS DIRECT ADMINISTRATIVE, SELLING AND FINANCIAL EXPENSES INTO COST AGAINST THE SALE OF PLOTS AND WIP. THESE WERE APPORTIONED AS THESE EXPENSES WERE GOING TO GIVE ADVA NTAGE IN COMING YEARS ALSO SO THEY WERE DEFERRED TO MATCH THE PERIOD. HOWEVER, IT WAS SEEN THAT COMMISSION AND BROKERAGE WAS GIVEN TO BROKERS FOR BOOKING OF PLOTS AND FLATS. THE ASSESSEE HAD 12 FILED CONFIRMATION FROM CERTAIN BROKERS AND IT WAS SEEN THAT THEY HAD CHARGED COMMISSION PAYABLE AT THE RATE OF 7% AND THE FIRST BILL WAS FOR APPROXIMATELY 30% OF SUCH COMMISSION PAYABLE. VIDE ORDER SHEET ENTRY DATED 13 - 10 - 2009 THE ASSESSEE WAS ASKED TO GIVE DETAILS OF EXACT COMMISSION AND BROKERAGE PAID ON EACH SAL E OF PLOT. THE ASSESSEE WAS GIVEN AMPLE OPPORTUNITIES BUT IT HAD FAILED TO FURNISH SUCH DETAILS. IT IS VERY APPARENT THAT THE PAYMENT OF COMMISSION AND BROKERAGE WAS SPECIFIC TO SALE OF PLOT AND BOOKING OF F LATS AND HENCE HAD TO BE DEBITED TO THE PROFIT AND LOSS ACCOUNT ON SPECIFIC BASIS AND NOT ON PERCENTAGE BASIS IN P&L ACCOUNT AND WIP EXPENSES. AS THE ASSESSEE HAD NOT GIVEN THE DETAILS OF EXACT COMMISSION AND BROKERAGE ON SALE OF PLOT, I AM LEFT WITH NO OTHER OPTION BUT TO ESTIMATE THE COMMISSION AND B ROKERAGE ON SALE OF PLOT AND THE BALANCE HAD TO BE INCORPORATED IN WIP EXPENSES. IT IS SEEN THAT THE ASSESSEE HAD GENERALLY GIVEN COMMISSION AND BROKERAGE AT THE RATE V A R Y ING BETWEEN 5 % TO 7% ON SALE AMOUNT THEREFORE I WOULD ESTIMATE THE COMMISSION AT THE AVERAGE RATIO OF 6% AND ON THAT BASIS THE COMMISSION ON SALE OF RS . 3 9 ,17,37,450/ - (SALES AFTER DISCOUNT) WOULD WORK OUT AT RS . 2,35,04,247 / - . THE ASSESSEE HAD CLAIMED BROKERAGE AND COMMISSION OF RS.5,71,91,357/ - IN ITS P&L ACCOUNT. I WOULD, THEREFORE, ALLOW EXPENSES ON ACCOUNT OF BROKERAGE AND COMMISSION AT RS.2,35,04,247/ - AND THE DIFFERENCE OF RS . 3,36,87, 110/ - WOULD BE DISALLOWED AND ADDED TOWARDS THE ASSESSEE'S TOTAL INCOME.' THE A.R. OF THE ASSESSEE SUBMITTED THAT 'IT MAY KINDLY BE SUBMITTED THAT COMPLE TE DETAILS OF PAYMENT OF COMMISSION AND BROKERAGE TO VARIOUS BOOKING AGENTS WERE FURNISHED ALONG WITH THEIR PAN AND DETAILS OF TDS DEDUCTED THEREON AND COPY OF BILLS RAISED BY BROKERS WERE ALSO PRODUCED BY REPLY SUBMITTED ON 27 - 08 - 2009, D T. 1 4 - 0 8 - 2009, DT. 13 - 10 - 2009 AND DT 23 - 10 - 2009. FROM THE DETAILS OF COMMISSION PAID DURING THE YEAR 2006 - 2007, IT IS VERY MUCH CLEAR THAT AN AMOUNT OF RS.5,71,91,357/ - WAS PAID ON SALES OF PLOTS AND THE BALANCE COMMISSION OF RS.2,45,10,581/ - HAS RIGHTLY BEEN CARRIED FORWAR D AS WORK IN PROGRESS. NAME WISE DETAILS OF BROKERS WITH THEIR ADDRESSES, DATE WISE DETAILS OF PAYMENT AND TDS THEREON AND PLOT WISE DETAILS OF COMMISSION A R E BEING FURNISHED FOR YOUR KIND PERUSAL, IT MAY FURTHER BE SUBMITTED THAT IN THIS PARTICULAR LINE O F BUSINESS OF REAL ESTATE, PAYMENT OF COMMISSION AND BROKERAGE TO BROKERS AND BOOKING AGENTS IS A REGULAR AND COMMON PRACTICE. MOREOVER, ALL THESE 13 PAYMENTS HAVE BEEN MADE BY CHEQUES AFTER DEDUCTING DUE TDS, SOME OF THE BROKERS HAVE ALSO CONFIRMED FOR T HE PAYMENT OF COMMISSION AND - BROKERAGE TO THEM. IN VIEW OF THIS THE ACTION OF THE ADDL. COMMISSIONER OF INCOME TAX, RANGE - I, BAREILLY IN ALLOWING COMMISSION AND BROKERAGE ON ESTIMATE BASIS @ 6% ON SALES IS UNJUSTIFIED AND AGAINST THE FACT OF THIS CASE. THE RE WAS NO BASIS AS WELL AS REASON FOR ESTIMATE OF COMMISSION AND BROKERAGE WHEN SPECIFIC DETAILS WERE AVAILABLE WITH HIM. IT IS THEREFORE REQUESTED THAT ENTIRE AMOUNT OF RS.5,7L,91,357/ - , AS CLAIMED IN THE PROFIT & LOSS ACCOUNT, BE ALLO WED AS BUSINESS EXPENSE . ' THE A.O. MADE ADDITION WITH THE OBSERVATION THAT THE ASSESSEE DID NOT FURNISH PLOT WISE DETAILS FOR PAYMENT OF CO MMI SSION AND BROKERAGE TO THE AGENTS AND BROKERS. HE FURTHER MENTIONED THAT IN ABSENCE OF THESE DETAILS, HE WAS LEFT WITH NO OPTION BUT TO MAKE ADDITION ON BASIS OF ESTIMATE. THE ASSESSEE FURNISHED PLOT WISE DETAILS OF COMMISSION AND BROKERAGE PAID ALONG WITH PARTICULARS OF TDS DEDUCTED AND DATE OF DEPOSIT OF THE SAME TO THE GOVERNMENT ACCOUNT FROM PAGE 97 TO 120 OF THE PAPER BOOK. COPY OF THE PAPER BOOK WAS PROVIDED TO THE A.O, TO EXAMINE THE DETAILS AND FURNISH REMAND REPORT. THE ASSESSING OFFICER FURNISHED FINAL REMAND REPORT DATED 17 . 8.2010 IN THIS OFFICE THROUGH THE ADDITIONAL CIT, RANGE - I, BAREILLY. THE RELEVANT EXTRACT OF THE REPORT IS REPRODUCED AS UNDER: - 'NOW BEFORE YOUR HONOR, THE ASSESSEE HAS FURTHER PRODUCED NAMES AND ADDRESSES AND AMOUNT PAID TO THEM. TO ASCERTAIN THE GENUINENESS OF THE AMOUNT PAID OF COMMISSION AND BROKERAGE AS WELL AS BROKER INCENTIVE THE FOLLOWING INFORMATION U/S 133(6) OF THE I.T. ACT, 1961 IS FURTHER CALLED FOR. 1. COPY OF ACCOUNT OF THE ASSESSEE IN THEIR BOOKS OF ACCOUNTS. 2. COPY OF FORM NO. 16A ISSUED BY THE ASSESSEE. 3. COPY OF BANK ACCOUNT IN WHICH AMOUNT PAID BY THE ASSESSEE WAS CREDITED. THE ABOVE NOTICES WERE ISSUED TO 23 CONCERNS/COMPANIES WHOSE NAMES, THE AMOUNT OF RS.08,17,01,838 / - AND RS.88,68,35 3/ - WERE DEBITED UNDER THE HEADS OF SELLING AND DISTRIBUTION AS WELL AS INCENTIVE TO THE BROKERS INCLUDING COMMISSION........ 14 IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS NOT MADE DISALLOWANCES ON THE BASIS OF CONFIRMATION GIVEN BY THE ASSESSEE ARE BROKER/COMMISSION AGENT BY OR OBTAINED BY THE ASSESSING OFFICER, THE DISALLOWANCES HAS BEEN WORKED OUT BY THE ASSESSING OFFICER AGAINST THE SALES WHICH HAD BEEN CLAIMED BY THE COMMISSION AGENTS AND BROKERS IN THEIR BILLS SUBMITTED BEFORE T HE ASSESSING OFFICER THE CLAIM OF THE COMMISSION AND BROKERAGE WAS MADE BEFORE THE ASSESSING OFFICER IN SOME CASES 5%, IN SOME CASES 6% AND IN SOME CASES 7%. CONSIDERING THE CLAIM OF PERCENTAGE THE ASSESSING OFFICER TAKEN AVERAGE RATE 6% AGAINST THE SALES OF RS.39,17,37,450/ - WHICH COMES RS.2,35,04,247 / - , HOWEVER THE COMMISSION AND BROKERAGE CLAIMED BY THE ASSESSEE OF RS.5,71,91,357 / - . AFTER GIVING EFFECT OF RS.2,35,04,247 / - THE EXCESS CLAIMED OF RS.3,36,87 ,110/ - HAS BEEN DISALLOWED. HOWEVER, AS DISCUSSED I N MY REMAND REPORT DATED 28.07,2010 SUBMITTED TO YOUR GOOD SELF THE NOTICE U/S 133(6) WERE ISSUED TO THE COMPANY'S TO WHOM COMMISSION, BROKERAGE AND INCENTIVES WERE PAID BY THE ASSESSEE. IN RESPONSE TO ABOVE NOTICES THE MAXIMUM COMPANIES HAVE SENT THEIR CO NFIRMATION TILL DATE WHICH ARE PLACED ON RECORD AND SAME ARE VERIFIED.' FURTHER, THE A,O. ATTENDED APPEAL PROCEEDINGS ON 23.8.2010 ALONG WITH CASE RECORDS. HE FURNISHED WRITTEN SUBMISSION DATED 23.8,2010. THE RELEVANT EXTRACT OF THE SUBMISSION IS REPRODUC ED AS UNDER: - ' THE TOTAL COMMISSION AND BROKERAGE DEBITED IN THE PROFIT AND LOSS A/C OUT OF RS.8,17,01,838/ - WAS ONLY RS.5,71,91,353/ - . THEREFORE, THE FIGURES MENTIONED IN THE LAST PARAGRAPH OF PAGE NO. 3 OF MY REMAND REPORT DATED 28.07.2010 SHOULD BE CO NSIDERED ACCORDINGLY . 2. IT IS FURTHER REPORTED THAT AGAINST THE TOTAL BROKERAGE AND COMMISSION DEBITED IN THE PROFIT AND LOSS ACCOUNT, RS.6,40,81,183 / - WAS VERIFIED BY OBTAINING THE INFORMATION U/S 133(6) OF THE I.T. ACT, 1961, FROM THE BENEFICIARY PARTIES, INCLUDING TWO CONFIRMATIONS RECEIVED FROM M/S NIDHI ESTATE, NEW DELHI AND M7S GHARONDA ESTATE, NEW DELHI. 4 . I T MAY BE MENTIONED THAT OUT OF THESE PAYMENTS OF COMMISSION AND BROKERAGE ONLY 70% IS TO BE CONSIDERED FOR THE 15 PURPOSE OF REVENUE EXPENDITU RE BECAUSE 30% WAS ACCOUNTED FOR IN WORK IN PROGRESS BY THE ASSESSE E ITSELF. 5 . AS STATED EARLIER IN MY REMAND REPORT, IT IS MENTIONED, IN CONTINUATION TO THE SAME THAT THE NOTICES ISSUED U/S 133(6) WERE COMPLIED WITH BY THE PARTIES BY FURNISHING THE REQUIRE D INFORMATION SUCH AS COPY OF ACCOUNT OF THE ASSESSEE IN THEIR BOOKS OF ACCOUNT, COPY OF FORM NO. 16A ISSUED BY THE ASSESSEE AGAINST THE PAYMENT OF BROKERAGE, COMMISSION, INCENTIVE ETC. THUS, APPARENTLY NO DISCREPANCY WAS NOTICED AFTER VERIFICATION WITH TH E DETAILS FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND COPY OF WHICH WAS PROVIDED TO THIS OFFICE FOR NECESSARY VERIFICATION.' T HE CONTENTS OF THE SUBMISSION OF THE APPELLANT AND THE REMAND REPORT OF THE A.O. WERE CONSIDERED AND IT WAS OBSERVED THAT THE APPELLANT FURNISHED DETAILS OF THE RECIPIENTS OF COMMISSION AND B ROKERAGE AT PAGE 95 TO 96 OF THE BOOK AND THE A. O . CROSS VERIFIED CERTAIN PARTIES BY CALLING FOR INFORMATION U/S 133(6). THE IMPORTANT INFORMATION CALLED FOR WAS THE COPY OF FORM 16A CONTAINING DETAILS OF AMOUNT OF COMMISSION PAID, TDS DEDUCTED AND THE DATE OF DEPOSIT OF THE SAME TO THE ACCOUNT OF THE CENTRA L GOVERNMENT IN CASE OF EACH - OF THE COMMISSION AGENTS. IT WAS ALSO OBSERVED THAT THE A.O. DID NOT FIND ANY DISCREPANCY AFTER VERIFICATION OF THE SAID INFORMATION. REGARDING THE FINDING OF THE A.O., IN THE ASSESSMENT ORDER, THAT THE ASSESSEE DID NOT FURNISH ANY BASIS TO QUANTIFY THE RATIO OF REVENUE EXPENDITURE AND THAT OF WORK - IN - PROGRESS OUT OF COMMISSION AND BROKERAGE PAID TO THE BROKERS AND AGENTS FOR BOOKING OF PLOTS AND FLATS, IT WAS NO T ICED THAT THE ASSESSEE FURNISHED SEPARATE DETAILS OF PAYMENT OF COMMISSION AND BROKERAGE IN PAGE 99 TO 120 OF THE PAPER BOOK FOR SALE OF PLOTS. THE ASSESSING OFFICER CARRIED OUT VERIFICATION U/S 133(6) FROM 23 PARTIES AND ON THAT BASIS FURNISHED REMAND REPORT ON 28.7.2010 AND 17.8.2010. HE ATTENDED APPEAL PROCEEDINGS ALONG WITH CASE RECORDS AND ALSO FURNISHED WRITTEN SUBMISSION DATED 23.8 . 2010 . THE A.O. ADMITTEDLY, DID NOT REPORT ANY DISCREPANCY REGARDING CLAIM OF COMMISSION AND BROKERAGE. AFTER TAKING INTO ACCOUNT THE CONTENTION OF THE APPELLANT AND THE REMAND REPORT OF THE A.O., IT IS MY CONSIDERED VIEW THAT THE GENUINENESS OF THE CLAIM HAS BEEN ESTABLISHED. THEREFORE, THIS GROUND OF APPEAL IS ALLOWED . 16 12.1 FROM THE ABOVE PARAS FROM THE ORDER OF CIT(A), WE FIND THAT IT IS NOTED BY CIT(A) THAT THE ASSESSEE HAS FILED CONFIRMATION FROM CERTAIN BROKERS. AS PER THE DETAILS OF COMMISSION PAYMENT AVAILABLE ON PAGE NO. 107 TO 127 OF THE PA PER BOOK, TOTAL COMMISSION EXPENSES DEBITED IN THE PROFIT & LOSS ACCOUNT OF RS. 5,71,91,357/ - IS IN RESPECT OF TOTAL SALES ACCOUNTED FOR IN THE BOOKS OF ACCOUNT OF RS.50,04,22,750/ - AND BALANCE COMMISSION OF RS.2,45,10,581/ - WAS TAKEN TO WIP OUT OF TOTAL CO MMISSION EXPENDITURE OF RS.8,17,01,938/ - . IT WAS EXPLAINED BY LEARNED A.R. OF THE ASSESSEE BEFORE US THAT IN THE PROFIT & LOSS ACCOUNT, AVAILABLE ON PAGE NO. 23 OF THE PAPER BOOK, TOTAL SALES IS SHOWN AT THE SAME FIGURE OF RS.50,04,22.750/ - FROM WHICH A D ISCOUNT OF RS.10,86,85,300/ - WAS REDUCED AND IN THIS MANNER, NET SALE INCOME WAS CONSIDERED IN THE P & L ACCOUNT AT RS.39,17,37,450/ - BUT WHILE FURNISHING THE DETAILS OF BROKERAGE AND COMMISSION, GROSS SALES FIGURE WAS SHOWN BECAUSE GROSS SALE FIGURE WAS T HE BASIS FOR MAKING PAYMENT OF COMMISSION AND DISCOUNT WAS ALLOWED TO THE BUYERS FOR CERTAIN EARLY PAYMENT ETC. AND THIS DISCOUNT IS NOT IN DISPUTE. FROM THESE DETAILS, IT COMES OUT THAT WHATEVER SALES WAS ACCOUNTED FOR BY THE ASSESSEE IN THE PRESENT YEAR , THE COMMISSION EXPENDITURE CLAIMED BY THE ASSESSEE IS IN RESPECT OF SUCH SALE ONLY AND NOT IN RESPECT OF SALE WHICH IS NOT CONSIDERED IN THE PRESENT YEAR. THAT BEING THE POSITION OF FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE ALSO. THIS GROUND IS ALSO REJECTED. 12.2 IN THE RESULT, THIS APPEAL OF THE REVENUE IS DISMISSED. 13. NOW WE TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 I.E. I.T.A. NO.704/LKW/2010. IN THE APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN NOT DECIDING THE GROUND OF ASSESSEE 17 CHALLENGING THE ASSESSMENT TO BE WITHOUT JURISDICTION AND THUS, VOID AB INITIO. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,71,000.00 OUT OF BUSINESS EXPENSES WHEN EACH AND EVERY EXPENDITURE HAS BEEN DULY VOUCHED AND SUPPORTED. THE LEARNED CIT(A) HAS ERRED IN APPRECIATING THE BUSINESS NATURE OF THE EXPENDITURE AN D CONFIRMED THE ADDITION WITH TOTAL DISREGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING AN ADDITION OF RS.4,30,873/ - OUT OF INCENTIVES PAID TO BROKERS MERELY BECAUSE NO REPLY TO THE NOTICE WAS RECEIVED FROM PARTIES TO WHOM SUCH PAYMENTS WERE MADE. THE ASSESSEE HAD FURNISHED COMPLETE NAMES, ADDRESSES AND COPY OF TDS CERTIFICATES ISSUED BY THE ASSESSEE ESTABLISHING THE GENUINENESS OF THE TRANSACTIONS, A FACT WHICH HAS BEEN IGNORED BY THE LD APPELLATE AUTHO RITY. 4. THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S 80IB WITH TOTAL DISREGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE ASSESSEE RESERVES IT'S RIGHT TO ADD, AMEND, ALTER OR DELETE ANY GR OUND OF APPEAL AT THE TIME OF HEARING. 14. REGARDING GROUND NO. 1, NOTHING SPECIFIC WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE IN COURSE OF HEARING BEFORE US AND HE SIMPLY ARGUED ON MERIT OF VARIOUS DISALLOWANCES/ADDITIONS MADE BY THE ASSESSING OFFICE R AND HENCE, WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. ACCORDINGLY, GROUND NO. 1 IS REJECTED. 15. REGARDING GROUND NO. 2, IT WAS SUBMITTED BY HIM THAT IT IS NOTED BY THE CIT(A) ON PAGE NO. 11 THAT THIS INCLUDES RS.21,000/ - BEING EXP ENSES INCURRED BY THE ASSESSEE IN RESPECT OF KUSHTI DANGAL AND RS.1.50 LAC IN RESPECT OF SIKH CLUB, RUDRAPUR. HE SUBMITTED THAT KUSHTI DANGAL WAS ORGANIZED IN RUDRAPUR AND IT WAS SPONSORED BY THE ASSESSEE COMPANY AND IT WAS PURELY A BUSINESS EXPENDITURE A S BY SPONSORING ANY SPORTS OR CULTURAL EVENTS, COMPANY GETS 18 PUBLICITY AND BUILDS IT BRAND IMAGE. REGARDING THE PAYMENT MADE TO SIKH CLUB, RUDRAPUR , HE SUBMITTED THAT IT WAS MADE FOR SPONSORING THE CULTURAL EVENTS ON THE OCCASION OF VAISHAKHI MELA AT RUDRAPUR. 16. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF LEARNED CIT(A). 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS WAS THE ONLY OBJECTION OF THE ASSESSING OFFICER IN THE REMAND REPORT THAT THESE EXPENSES OF RS.21,000/ - AN D RS.1.50 LAC WERE IN THE NATURE OF CHARITY AND DONATION. THE DECISION OF CIT(A) IS ALSO ON THE BASIS THAT THE NATURE OF EXPENSES WERE CHARITY AND DONATION. BUT IN OUR CONSIDERED OPINION, SPONSORING KUSHTI DANGAL AND MAKING SOME PAYMENT TO A CLUB FOR SP ONSORING CULTURAL EVENTS ON THE OCCASION OF BAISHAKHI MELA, CANNOT BE CONSIDERED AS CHARITY AND DONATION. IT IS NOT THE OBJECTION OF THE AUTHORITIES BELOW THAT THE BUSINESS OF THE ASSESSEE WAS NOT BEING CONDUCTED AT RUDRAPUR. THEIR OBJECTION IS MAINLY TH AT THESE EXPENSES ARE IN THE NATURE OF CHARITY AND DONATION. SINCE WE HAVE NOTED THAT IN THE FACTS OF THE PRESENT CASE, THESE EXPENSES ARE NOT IN THE NATURE OF CHARITY AND DONATION, IN OUR CONSIDERED OPINION, THIS DISALLOWANCE IS NOT JUSTIFIED. WE DELETE THE SAME. GROUND NO. 2 IS ALLOWED. 18. REGARDING GROUND NO. 3, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT MERELY BECAUSE NO REPLY TO THE NOTICE WAS RECEIVED FROM THE PARTIES TO WHOM SUCH PAYMENTS OF INCENTIVES WAS MADE, THE DISALLOWANCE IS NO T JUSTIFIED. HE ALSO SUBMITTED THAT THE ASSESSEE HAS FURNISHED COMPLETE NAMES AND ADDRESSES OF ALL THE PAYEES AND THEREFORE, PART DISALLOWANCE CONFIRMED BY LEARNED CIT (A) SHOULD ALSO BE DELETED. 19. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEA RNED CIT(A). 19 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT TOTAL AMOUNT OF INCENTIVE PAID BY THE ASSESSEE TO THE BROKERS WAS RS.88,68,353/ - . OUT OF THIS, THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.26,60,505/ - @30% OF THIS EXPENDITURE. IT IS NOTED BY CIT(A) THAT TO ASCERTAIN THE GENUINENESS OF INCENTIVES DEBITED IN THE PROFIT & LOSS ACCOUNT, NOTICE U/S 133(6) HAS BEEN ISSUED TO 23 COMPANIES ALONG WITH THE VERIFICATION OF COMMISSION AND BROKERAGE. HE ALSO NOTED THAT OUT OF THESE COMPANIE S, SOME COMPANIES HAVE CONFIRMED THE PAYMENT OF INCENTIVES. THE CIT(A) HAS ALSO REPRODUCED RELEVANT PORTION OF WRITTEN SUBMISSIONS FILED BY THE ASSESSING OFFICER BEFORE HIM DATED 28/03/2010. IN THIS WRITTEN SUBMISSIONS, IT HAS BEEN SUBMITTED BY THE ASSES SING OFFICER THAT OUT OF TOTAL DISALLOWANCE UNDER THIS HEAD OF RS.26,60,505/ - , CONFIRMATION WAS CALLED FOR AND WAS RECEIVED FOR RS.22,29,5632/ - AND FOR THE BALANCE AMOUNT OF RS.4,30,873/ - DISALLOWANCE WAS CONFIRMED BY CIT(A). UNDER THESE FACTS, WE FIND T HAT THE DISALLOWANCE WAS CONFIRMED BY CIT(A) MERELY ON THE BASIS THAT REPLY WAS NOT RECEIVED FROM SOME PAYEES . IT IS ALSO NOTED BY CIT(A) THAT IN THE ASSESSMENT ORDER , THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER TO THE EXTENT OF 30% FOR THE REASON THAT THE ASSESSEE DID NOT FURNISH BIFURCATION OF INCENTIVE ON SALE OF FLATS AND ADVANCE BOOKING OF FLATS. AS PER THE WRITTEN SUBMISSIONS FILED BY THE ASSESSING OFFICER BEFORE THE CIT(A) ON 23/08/2010, IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT EVEN A SINGLE PERSON HAS I NTIMATED THAT THE INCENTIVE WAS PAID TO HIM IN RESPECT OF WORK IN PROGRESS. THE ENTIRE AMOUNT FOR WHICH REPLY WAS RECEIVED BY THE ASSESSING OFFICER FOR RS.22,29,632/ - HAS BEEN ALLOWED BY CIT(A) AND THE ONLY BASIS FOR MAKING THE DISAL LOWANCE IS THAT FOR THE BALANCE AMOUNT OF RS.4,30,873/ - , NO REPLY WAS RECEIVED IN REPLY TO NOTICE U/S 133(6) OF THE ACT. WHEN THE INITIAL OBJECTION OF THE ASSESSING OFFICER THAT PART OF THE AMOUNT OF INCENTIVE PAYMENT MADE IS IN RELATION TO PROJECT IN PROGRESS AND THIS OBJECTION IS NOT FINDING SUPPORT FROM EVEN ONE REPLY OF THE PAYEE EVEN AFTER OBTAINING REPLY FROM MAJOR AMOUNT OF THE PAYMENT , I.E. 20 RS.22,29,632/ - OUT OF TOTAL ENQUIRY OF RS.26,60,505/ - , THEN MAKING DISALLOWANCE ON THE BASIS OF THIS FACT ALONE THAT SOME PARTIES DID REPLY, IS NOT JUSTIFIED CONSIDERING THE TOTALITY OF FACTS OF THE PRESENT CASE. WE, THEREFORE, DELETE THE SAME. THIS GROUND IS ALSO ALLOWED. 21. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. 22. NOW WE TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2008 - 09 I.E. I.T.A. NO.655/LKW/2011. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS BY DELETING THE ADDITION OF RS.39,50,349/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 145(3) OF THE I.T.ACT, 1961 AS THE ASSESSEE FAILED TO JUSTIFY THE CHANGED PRACTICE OF WORKING 'THE WORK IN PROGRESS' AS PER ITS ACCOUNTING POLICY. THE ASSESSING O FFICER HAS ACCEPTED THAT CHANGE IN ACCOUNTING POLICY WAS PARTLY JUSTIFIED AND ACCORDINGLY THE ASSESSING OFFICER HAS MADE DISALLOWANCE BY 5% OF 'INDIRECT EXPENSES' AND RS.5,00,000/ - 'DIRECT EXPENSES WHICH IS QUITE JUSTIFIED IN THIS NATURE OF BUSINESS. 2. THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) BEING ERRONEOUS IN THE EYE OF LAW AND ON FACTS MAY BE CANCELLED AND THE ORDER OF THE INCOME TAX OFFICER/ASSTT. COMMISSIONER OF INCOME TAX/ADDL. COMMISSIONER OF INCOME TAX MAY BE RESTORED. 3. ANY O THER GROUNDS OF APPEAL WHICH MAY BE TAKEN AT THE TIME OF HEARING OF APPEAL. 23. LEARNED D.R. OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LEARNED A.R. OF THE ASSESSEE SUPPORTED THE ORDER OF LEARNED CIT(A). 24. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT IN ASSESSMENT YEAR 2007 - 08 , THE ENTIRE SALE OF THE ASSESSEE WAS IN 21 RESPECT OF PLOTS SALES WHEREAS IN THE PRESENT YEAR, THE SALE OF PLO TS IS TO THE EXTENT OF 50.28% OF THE TOTAL SALES AND THE AMOUNT OF APARTMENT SALE IS 49.28%. IT WAS EXPLAINED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW THAT BECAUSE OF THESE FACTS, THE COMPANY DECIDED TO CHANGE ITS POLICY REGARDING CHARGING OF EXPENSES TO PROFIT & LOSS ACCOUNT. WE ALSO FIND THAT A CLEAR FINDING IS GIVEN BY THE CIT(A) ON PAGE NO. 12 THAT THE ASSESSING OFFICER DID NOT FIND ANY DEFECT IN THE BOOKS OF ACCOUNT OR SUPPORTING BILLS AND VOUCHERS. HE HAS ALSO NOTED THAT THE BOOKS ARE AUDITED B Y THE AUDITORS WITHOUT GIVING ANY QUALIFYING REMARK. HE HAS ALSO NOTED THAT THE ASSESSING OFFICER DID NOT NOTICE ANY DEFECT IN THE METHOD OF ACCOUNTING. HE FURTHER NOTED THAT THE ASSESSING OFFICER DID NOT BRING ANY MATERIAL ON RECORD TO ESTABLISH THAT TH ERE WAS ANY INFLATION OF EXPENSES. AFTER GIVING THESE FINDINGS, IT WAS HELD BY CIT(A) THAT THE ASSESSING OFFICER WAS NOT HAVING ANY FACTUAL OR LEGAL BASIS TO ESTIMATE ADDITION OUT OF DIRECT AND INDIRECT EXPENSES U/S 145(3) OF THE ACT. THIS FINDING OF CIT (A) COULD NOT BE CONTROVERTED BY LEARNED D.R. OF THE REVENUE. THIS IS ALSO NOT BROUGHT ON RECORD BY LEARNED D.R. OF THE REVENUE THAT THE CHANGE IN ACCOUNTING POLICY ADOPTED BY THE ASSESSEE IN THE PRESENT YEAR HAS NOT BEEN CONSISTENTLY FOLLOWED BY THE ASSE SSEE IN SUBSEQUENT YEARS AND THEREFORE, THE CHANGE IS NOT JUSTIFIED. CONSIDERING ALL THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISUE . THIS GROUND IS REJECTED. 25. IN THE RESULT, THE APPEAL IS DISMISSED. 26. NOW W E TAKE UP THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2008 - 09 I.E. I.T.A. NO.761/LKW/2011. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THE LEARNED COMMISSIONER OF INCOME TAX - (APPEALS), BAREILLY [ HERE - IN - AFTER REFERRED TO AS THE LD. CIT] GROSSLY ERRED ON FACTS AND IN LAW IN UPHOLDING THE DISALLOWANCE 22 MADE BY REJECTING THE CLAIM OF DEDUCTION 'U/S 80IB (10) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE PECULIAR CIRCUMSTANCES OF THE PRESET CASE THE LD. CIT WAS NOT AT ALL JUSTIFIED IN HOLDING THAT THE APPELLANT CO. DID NOT FULFILL ALL THE CONDITIONS REQUIRED U/S 80IB (10) OF THE ACT MORE SO ON ACCOUNT OF THE FACT THAT THE ASSESSING OFFICER HIMSELF HAS ALLOWED THE DEDUCTION IN THE SUBSEQUENT Y EAR. 3. THE LD. CIT GROSSLY ERRED ON FACTS AND IN LAW THE CLAIM OF DEDUCTION U/S 80IB (10) OF THE ACT AND IN HOLDING THAT AS THE APPELLANT HAD ALSO SOLD PLOTS AS WELL AS APARTMENTS IN THE HOUSING PROJECT DURING THE YEAR IT WAS NOT ELIGIBLE FOR DEDUCTION WHICH IS AGAINST ALL SETTLED PRINCIPLES OF LAW AND MAY THUS KINDLY BE ORDERED TO BE ALLOWED. 4. THE LD. CIT DID NOT GIVE PROPER AND SUFFICIENT OPPORTUNITY TO THE APPELLANT SOCIETY TO HAVE ITS SAY OR MAKE NECESSARY COMPLIANCE TO THE REASONS RELIED UPON BY HIM IN REJECTING THE CLAIM OF DEDUCTION U/S 80IB (10) OF THE ACT, AND FURTHER IN NOT GIVING DUE AND SUFFICIENT IMPORTANCE TO THE DOCUMENTS PRODUCED AND SUBMISSIONS MADE BEFORE HIM AND THUS THE ORDER MAY KINDLY BE SET ASIDE AND CLAIM ALLOWED U/S 80IB (10) O F THE L.T. ACT, 1961. 27. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT SINCE IN THE PRESENT YEAR , THE ASSESSEE WAS SELLING APARTMENTS ALSO IN ADDITION TO SALE OF PLOTS, DEDUCTION U/S 80IB(10) SHOULD BE ALLOWED IN RESPECT OF PROFIT ON SALE OF APARTMENTS. 28. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 29. WE HAVE CONSIDERED THE R IVAL SUBMISSIONS. WE FIND THAT A CLEAR FINDING IS GIVEN BY CIT(A) ON PAGE NO. 34 THAT THE ASSESSEE DID NOT CONSTRUCT THE RESIDENTIAL UNITS IN THE PLOTS AND THESE PLOTS WERE SOLD AFTER BASIC INFRASTRUCTURAL DEVELOPMENT OF THE PROJECT. HE HAS ALSO NOTED TH AT THE PLOTS WERE SOLD TO THE BUYERS AND IT WAS NOT THE CONCERN OF THE ASSESSEE WHETHER THE CONSTRUCTION HAD TO BE CARRIED OUT OR NOT BY THE BUYERS. HE HAS ALSO 23 NOTED THAT THE ASSESSEE DID NOT OBTAIN COMPLETION CERTIFICATE OF CONSTRUCTION OF THE HOUSING P ROJECT FROM THE COMPETENT LOCAL AUTHORITY AS REQUIRED IN THE EXPLANATION TO SEC TION 80IB(10)(A) OF THE ACT. THESE FINDING S OF CIT(A) COULD NOT BE CONTROVERTED BY LEARNED A.R. OF THE ASSESSEE AND HENCE, WE DO NOT FIND ANY MERIT IN THIS CLAIM OF THE ASSESSEE THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 80IB(10) OF THE ACT. WE, THEREFORE, DECLINE TO INTERFERE IN THE ORDER OF CIT(A) ON THIS ISSUE. 30. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS DISMISSED. 31. IN THE COMBINED RESULT, BOTH THE APPEALS O F THE REVENUE ARE DISMISSED WHEREAS APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 2007 - 08 IS PARTLY ALLOWED AND APPEAL FOR ASSESSMENT YEAR 2008 - 09 IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 7 /07/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR