ITO, Mangalore V. Prithvi Developers and Builders, Mangalore

ITA 732/BANG/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8481 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 06-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Cost of acquisition
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.732/BANG/2016 ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER, WARD-1(3), MANGALURU. VS. M/S. PRITHVI DEVELOPERS AND BUILDERS, 4-6-535/11, 1 ST FLOOR, ESSEL CHAMBERS, KARANGALPADY, MANGALURU-575003. PAN : AAJFP0662J APPELLANT RESPONDENT REVENUE BY : SHRI. M. K. BIJU, JCIT ASSESSEE BY : NONE DATE OF HEARING : 08.12.2016 DATE OF PRONOUNCEMENT : 7.03.2017 O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PANAJ I DATED 01-02-2016 FOR THE ASSESSMENT YEAR 2010-11. ITA NO.732/BANG/2016 PAGE 2 OF 4 2. THE REVENUE RAISED THE FOLLOWING TWO GRO UNDS OF APPEAL: 1. THE LEARNED CIT(APPEALS) ERRED IN FACT AND IN LA W IN DIRECTING THE ASSESSING OFFICER TO CALCULATE THE INCOME @ 12. 5% OF THE TURNOVER AS AGAINST @ 50% OF THE TURNOVER COMPUTED BY THE ASSESSING OFFICER. 2. THE LEARNED CIT(APPEALS) ERRED IN FACT AND IN LA W IN ESTIMATING OF THE INCOME @ RS.1,78,44,562/- AFTER GIVING RELIE F OF RS.5,35,33,688/-. 3. BRIEFLY THE FACTS OF THE CASE ARE THE RESPONDENT ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF BUYING AND SELLING OF LA ND AND REAL ESTATE AGENCY. THE RETURN OF INCOME FOR THE ASSESSMENT YE AR 2010-11 WAS FILED ON 31.03.2011 DECLARING A TOTAL INCOME OF RS.71,37, 825/-. AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS.7,13,78,250/- AFTER MAKING ADDITION OF RS.6,42,4 0,425/- IN RESPECT OF INCOME FROM BUSINESS. THE ASSESSING OFFICER MADE A DDITION OF RS.6,42,40,425/- ON THE GROUND THAT THE ASSESSEE FI RM HAS MADE PROFIT IN THE TRANSACTIONS OF PURCHASE AND SALE OF THE PROPER TIES AND THE MARGIN IN THE GIVEN CASES WAS 83.6% AND THEREFORE, THE ASSESS ING OFFICER HAD PROCEEDED TO ESTIMATE THE PROFIT @ 50% OF THE SALES , AS NO BOOKS OF ACCOUNTS WERE MAINTAINED AND ACCORDINGLY, THE ESTIM ATING PROFIT AT 50% OF THE SALES MADE, THE ASSESSMENT WAS COMPLETED. ON A PPEAL BEFORE THE ITA NO.732/BANG/2016 PAGE 3 OF 4 CIT(A), THE CIT(A) ESTIMATED PROFIT AT 12.5% AND TH E BALANCE ADDITION WAS DELETED. 4. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. ON THE DATE OF HEARING, NONE APPEARED BEFORE US ON BEHALF OF THE A SSESSEE. WE FIND FROM THE PERUSAL OF THE RECORD THAT THOUGH THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF DEEDS AND HE IS NO T ENGAGED IN THE BUSINESS OF EXECUTION OF CIVIL CONTRACTS OR IN THE BUSINESS OF CONSTRUCTION. THE DIFFERENCE BETWEEN THE PURCHASE COST AND THE SA LE PRICE AFTER DEDUCTING THE EXPENDITURE INCURRED THEREON, HAS TO BE TREATED AS INCOME AND BROUGHT TO TAX. THE WHOLE APPROACH OF CIT(A) I N TREATING THE APPELLANT AS A CIVIL CONTRACTOR IS CONTRARY TO THE EVIDENCE O N RECORD. THEREFORE, WE QUASH THE ORDER OF THE CIT(A) ON THIS GROUND AND SE T ASIDE THE ASSESSMENT ORDER TO THE AO TO COMPUTE THE PROFIT BASED ON THE ACTUAL SALE CONSIDERATION RECEIVED DURING THE YEAR, AFTER DEDUC TING THE COST OF ACQUISITION AND THE INCIDENTAL EXPENSES THEREON. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 07 TH DAY OF MARCH, 2017. SD/- SD/- (VIJAY PAL RAO) (INTURI RAMA RAO) JUDICIAL MEMBER ACC OUNTANT MEMBER BANGALORE. DATED: 7 TH MARCH, 2017. /NS/ ITA NO.732/BANG/2016 PAGE 4 OF 4 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.