M/s Apna sapna, Bangalore V. ACIT, Bangalore

ITA 753/BANG/2012

• Counselvise Citation: 75321114 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 28-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: FARHAT HUSSAIN QURESHIDR
• Assessee Lawyers: ZHAIN KHAN
• Keywords: Assessment record; Prejudicial to interest; Revenue expenditure; Capital expenditure
• Section: 143(3); 142(1); 263

Judgement Text

ITA NO.753 OF 2012 APNA SAPNA BANGALORE PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE B BENCH, BANGALORE BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.753/BANG/2012 (ASSESSMENT YEAR: 2007-08) M/S. APNA SAPNA VS. ASSTT. COMMISSIONER OF NO.65-67, I & II FLOOR INCOME TAX, CIRCLE 1(1) SRI SADGURU COMPLEX 6 TH FLOOR, HMT BHAVAN OPP IIM BANNERGHATTA ROAD BELLARY ROAD BANGALORE 500076 BANGALORE 560032 PAN: AAIFA 7051 P (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI ZHAIN KHAN, CA DEPARTMENT BY: SHRI FARHAT HUSSAIN QURESHI,(DR) DATE OF HEARING: 24/07/2014 DATE OF PRONOUNCEMENT: 25/07/2014 O R D E R PER RAJPAL YADAV, J.M. THE PRESENT APPEAL IS DIRECTED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIO NER DATED 30.03.2012 PASSED U/S 263 OF THE I.T. ACT, 1961. TH OUGH THE ASSESSEE HAS TAKEN NINE GROUNDS OF APPEAL, BUT ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE, WHEREBY IT HAS PLEA DED THAT THE LEARNED CIT HAS ERRED IN TAKING ACTION U/S 263 BY S ETTING ASIDE THE ASSESSMENT ORDER PASSED U/S 143(3) AND DIRECTIN G THE ASSESSING OFFICER TO REFRAME THE ASSESSMENT ORDER O N THE ISSUES TAKEN IN 263 PROCEEDINGS. ITA NO.753 OF 2012 APNA SAPNA BANGALORE PAGE 2 OF 10 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A FIRM ENGAGED IN THE BUSIENSS OF REAL ESTATE DEVELOPMENT. IT HAS FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-0 8 ON 13.11.2007 DECLARING TOTAL INCOME AT RS.82,15,770/- . THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICES U/ S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. T HE LEARNED ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER U /S 143(3) ON 4/12/2009. THE LEARNED COMMISSIONER AFTER GOING THR OUGH THE RECORD ARRIVED AT A CONCLUSION THAT THE ASSESSMENT ORDER FOR A.Y 2007-08 IS ERRONEOUS ORDER WHICH HAS CAUSED PREJUDI CE TO THE REVENUE ON THE FOLLOWING ISSUES: A) THE ASSESSEE FIRM, DURING THE FINANCIAL YEAR RELEVA NT TO THE ASSESSMENT YEAR HAS RECOGNIZED REVENUE FROM ITS PR OJECT NAMED APNA ASHIANA ON PERCENTAGE OF COMPLETION METH OD BASED ON ACCOUNTING STANDARD 7 ISSUED BY THE INSTIT UTE OF CHARTERED ACCOUNTANTS OF INDIA WHEREIN IT HAS ADOPT ED RS.450/- PER SQ.FT FOR THE PURPOSES OF ESTIMATING T HE SALE PROCEEDS FROM THE SALE OF SITES. HOWEVER, NO DOCUME NTARY EVIDENCE FOR ADOPTING THE SAME WAS FURNISHED BY THE ASSESSEE AS BORNE OUT FROM THE ASSESSMENT RECORDS. B) THE ASSESSEE FIRM HAS INCLUDED A SUM OF RS.4.82 CRO RES AS PROPORTIONATE COST OF CLUB HOUSE FOR ADOPTING THE E STIMATED COST FOR PURPOSES OF REVENUE RECOGNITION. SINCE THE OWNERSHIP OF THE CLUB HOUSE REMAINS WITH THE FIRM, THE CLUB HOUSE EXPENDITURE OUGHT NOT TO HAVE BEEN CONSI DERED FOR PURPOSES OF RECOGNIZING THE REVENUE UNDER THE PERCENTAGE OF COMPLETION METHOD. ITA NO.753 OF 2012 APNA SAPNA BANGALORE PAGE 3 OF 10 C) THE COMPUTATION OF PERCENTAGE COMPLETION OF WORK WA S THUS NOT VERIFIED BY THE ASSESSING OFFICER WITH DOC UMENTARY EVIDENCES. 3. ACCORDINGLY THE LEARNED COMMISSIONER ISSUED A SH OW CAUSE NOTICE AND AFTER HEARING THE ASSESSEE, SET ASIDE TH E ASSESSMENT ORDER DIRECTING THE ASSESSING OFFICER FOR RE-FRAMIN G THE ASSESSMENT ORDER. THE LEARNED COMMISSIOENR HAS BAS ICALLY ASSIGNED THREE REASONS WHILE REJECTING THE CONTENTI ON OF THE ASSESSEE. IT IS IMPORTANT TO TAKE NOTE OF THE LEARN ED COMMISSIONERS FINDINGS IN THIS CONNECTION: THE SUBMISSION OF THE AR IS NOT ACCEPTABLE, SINCE PRIMARILY, THE FIRM CONTINUES TO ENJOY THE USAGE OF CLUB HOUSE FACILITIES AND THE OWNERSHIP IS NOT TRANSFERR ED TO THE PURCHASERS OF THE PROJECT. HENCE THE ASSESSMENT COMPLETED IS ERRONEOUS AND PREJUDICIAL IN THE INTER EST OF REVENUE AND THE ASSESSING OFFICER IS DIRECTED TO MODIFY HIS ASSESSMENT ORDER ACCORDINGLY. SECONDLY THERE IS NOTHING ON RECORD TO SHOW WHETHER THE CLUB HOUSE WAS BUILT ON THE AREA EARMARKED FOR THE CIVIC AMENITIES PORTION IN WHICH CASE THE OWNER OF THE CLUB HOUSE WILL BE THE BBMP. THIRDLY THE PROPORTIONATE COST OF THE CLUB HOUSE ADOPTED WORKS OUT TO ALMOST 59% OF THE TOTAL COST WHICH APPEARS TO BE HIGH AND UNREASONABLE AND HENCE THE BASIS FOR ADOPTING THE COST OF CLUB HOUSE NEEDS TO BE EXAMINED. IN SO FAR AS THE APPLICABILITY OF THE PARTICULAR ACCOUNTING STANDARD IS CONCERNED, ONCE THE SELLER H AS TRANSFERRED ALL SIGNIFICANT RISKS AND REWARDS OF OWNERSHIP TO THE BUYER AND OTHER CONDITIONS FOR RECOGNITION OF REVENUE AS SPECIFIED IN PARAGRAPHS 1 0 AND 11 OF AS 9 ARE SATISFIED, ANY FURTHER ACTS ON T HE ITA NO.753 OF 2012 APNA SAPNA BANGALORE PAGE 4 OF 10 REAL ESTATE PERFORMED BY THE SELLER ARE, IN SUBSTAN CE, PERFORMED ON BEHALF OF THE BUYER IN THE MANNER SIMI LAR TO A CONTRACTOR. ACCORDINGLY, IN CASE THE SELLER IS OBLIGED TO PERFORM ANY SUBSTANTIAL ACTS AFTER THE TRANSFER OF ALL SIGNIFICANT RISKS AND REWARDS OF OWNERSHIP, THE REVENUE IS TO BE RECOGNIZED APPLYING THE PERCENTAGE OF COMPLETION METHOD IN THE MANNER SPECIFIED IN AS-7. I HAVE GONE THROUGH THE RELEVANT GOVERNING PRINCIPL ES. IT IS PERTINENT TO MENTION THAT THE ISSUE HERE IS N OT APPLYING AS 7 OR AS 9. IT IS THE ALLOWABILITY OF TH E INCLUSION OF THE COST OF CLUB HOUSE IN THE ESTIMATE D COST FOR PURPOSES OF ARRIVING AT THE ESTIMATED GROSS PRO FITS AS PER PERCENTAGE OF COMPLETION METHOD OF REVENUE RECOGNITION. SINCE THE FACT FINDING AUTHRITY I.E. THE ASSESSING OFFICER, WHO, IN MY OPINION, HAS FAILED IN ASCERTAI NING THE ABOVE ISSUES CORRECTLY AND ARRIVE AT A LOGICAL CONCLUSION WHILE FRAMING THE ASSESSMENT ORDER, WHIC H UNDOUBTEDLY HAS MADE THE ORDER THUS PASSED, ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE. SUCH BEING THE CASE, THE ASSESSMENT ORDER MADE ON 04.12.2009 BY THE ASSESSING OFFICER IN THE ASSESSEE S CASE WARRANTS SETTING ASIDE AS THE SAME IS ERRONEOU S AND PREJUDICIAL TO INTERESTS OF REVENUE. IN VIEW OF THE POWERS VESTED UPON ME U/S 263 OF THE ACT, I HEREBY CALCEL THE ASSESSMENT ORDER AND SET ASIDE THE ASSESSMENT THUS MADE, FOR REDOING THE SAME. IN THE ASSESSMENT PROCEEDINGS, THE BASIS FOR ADOPTING THE COST OF THE CLUB HOUSE IN COMPUTNG THE GROSS PROFIT BASED ON PERCETNAGE COMPLETION METHOD OF REVENUE RECOGNITION IS TO BE VERIFIED. THE ASSESSING OFFICE R SHALL ALSO VERIFY WHETHER CATEGOFICAL TRANSFER OF OWNERSHIP IS MENTIONED IN ANY OF DOCUMENTS CONVEYING THE RIGHT OF THE CLUB HOUSE TO THE PROSPE CTIVE BUYERS, AND CONCLUDE THE RE-ASSESSMENT PROCEEDINGS . ITA NO.753 OF 2012 APNA SAPNA BANGALORE PAGE 5 OF 10 4. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUG NING THE ORDER OF THE CIT, CONTENDED THAT, AS PER THE REGULA TIONS OF BANGALORE DEVELOPMENT AUTHORITY, THE ASSESSEE IS SU PPOSED TO KEEP MINIMUM 5% OF THE TOTAL PLOT AREA FOR CIVIC AM ENITIES. THE CLUB HOUSE CONSTRUCTED BY THE ASSESSEE IS PART OF T HE CIVIC AMENITIES, A PROJECT USED TO TAKE 3 TO 4 YEARS TO C OMPLETE AND AT THE TIME OF BOOKING, OWNERSHIP IN THE CLUB IS NOT T O BE HANDED OVER TO THE CUSTOMERS, ONLY ON COMPLETION THEY ARE BEING ENROLLED AS MEMBERS. THE ASSESSING OFFICER HAD ISSUED NOTICE U/S 143(2) WHEREBY HE CALLED UPON THE FINANCIAL STATEMENTS INC LUDING THE COMPUTATION OF INCOME AND TAXES THEREON, BALANCE SH EET, P&L A/C AND STATUTORY AUDIT REPORT. ALL THESE DOCUMENTS WERE GIVEN TO THE ASSESSING OFFICER AND HE MUST HAVE CONSIDERE D THOSE DOCUMENTS BEFORE PASSING THE ASSESSMENT ORDER. THER EFORE, THE LEARNED CIT CANNOT ALLEGE THAT NO INQUIRY WAS CONDU CTED. 5. ON THE OTHER HAND THE LEARNED DR SUBMITTED THAT NO INQUIRY IS DISCERNIBLE FROM THE RECORD. HE TOOK US TO THE COPIES OF THE SHOW CAUSE NOTICE AS WELL AS THE REPLY SUBMITTE D BY THE ASSESSEE AVAILABLE ON PAGE NOS. 34 TO 43 OF THE PAP ER BOOK. ACCORDING TO THE LEARNED DR, THERE ARE VAGUE REPLIE S ON THE ISSUES IN DISPUTE, NO SPECIFIC QUERY WAS RAISED BY THE ASSESSING OFFICER. 6. WE HAVE DULY CONSIDERED RIVAL CONDITION AND GONE THROUGH THE RECORD CAREFULLY. THE ITAT IN THE CASE OF MRS. KHATIZA S. OOMERBHOY VS. ITO, MUMBAI, 101 TTJ 1095, ANALYSED I N DETAIL VARIOUS AUTHORITATIVE PRONOUNCEMENTS INCLUDING THE DECISION OF ITA NO.753 OF 2012 APNA SAPNA BANGALORE PAGE 6 OF 10 HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIES 243 ITR 83 AS WELL AS HONBLE BOMBAY HIGH COURT RENDERE D IN THE CASE OF GABRIEL INDIA LTD. AND HAS PROPOUNDED THE F OLLOWING BROADER PRINCIPLE TO JUDGE THE ACTION OF CIT TAKEN UNDER SECTION 263. THE FUNDAMENTAL PRINCIPLE WHICH EMERGE FROM THE AB OVE CASES MAY BE SUMMARIZED BELOW (I) THE CIT MUST RECORD SATISFACTION THAT THE ORDER OF THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. BOTH THE CONDITIONS MUST BE FULFILLED. (II) SEC. 263 CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE AO AND IT WAS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. (III) AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SUFFICE THE REQUIREMENT OF ORDER BEING ERRONEOUS. (IV) IF THE ORDER IS PASSED WITHOUT APPLICATION OF MIND, SUCH ORDER WILL FALL UNDER THE CATEGORY OF ERRONEOUS ORDER. (V) EVERY LOSS OF REVENUE CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE AND IF THE AO HAS ADOPTED ONE OF THE COURSES PERMISSIBLE UNDER LAW OR WHERE TWO VIEWS ARE POSSIBLE AND THE AO HAS TAKEN ONE VIEW WITH WHICH THE CIT DOES NOT AGREE. IF CANNOT BE TREATED AS AN ERRONEOUS ORDER, UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE UNDER LAW (VI) IF WHILE MAKING THE ASSESSMENT, THE AO EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINE THE INCOME, THE CIT, WHILE EXERCISING HIS POWER UNDER S 263 IS NOT PERMITTED TO SUBSTITUTE HIS ESTIMATE OF INCOME IN PLACE OF THE INCOME ESTIMATED BY THE AO. ITA NO.753 OF 2012 APNA SAPNA BANGALORE PAGE 7 OF 10 (VII) THE AO EXERCISES QUASI-JUDICIAL POWER VESTED IN HIS AND IF HE EXERCISES SUCH POWER IN ACCORDANCE WITH LAW AND ARRIVE AT A CONCLUSION, SUCH CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE THE CIT DOES NOT FEE STRATIFIED WITH THE CONCLUSION. (VIII) THE CIT, BEFORE EXERCISING HIS JURISDICTION UNDER S. 263 MUST HAVE MATERIAL ON RECORD TO ARRIVE AT A SATISFACTION. (IX) IF THE AO HAS MADE ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON THE RELEVANT ISSUES AND THE ASSESSEE HAS GIVEN DETAILED EXPLANATION BY A LETTER IN WRITING AND THE AO ALLOWS THE CLAIM ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE, THE DECISION OF THE AO CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER HE DOES NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 7. APART FROM THE ABOVE PRINCIPLES, WE DEEM IT APPR OPRIATE TO MAKE REFERENCE TO THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SUN BEAM AUTO REPORTED IN 227 C TR 113 WHEREIN THE HON'BLE HIGH COURT HAS PROPOUNDED A DIS TINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE IS A LACK OF ENQUIRY, THEN THE ASSESSMENT ORDER CAN BE BRANDE D AS ERRONEOUS. THE FOLLOWING OBSERVATIONS OF THE HON'BL E DELHI HIGH COURT ARE WORTH TO NOTE: 12. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE COUNSEL ON THE OTHER SIDE AND HAVE GONE THROUGH THE RECORDS. THE FIRST ISSUE THAT ARISES FO R OUR CONSIDERATION IS ABOUT THE EXERCISE OF POWER BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263 OF THE INCOME-TAX ACT. AS NOTED ABOVE, THE SUBMISSION OF LEARNED COUNSEL FOR THE REVENUE WAS THAT WHILE PASSING THE ASSESSMENT ORDER, THE ITA NO.753 OF 2012 APNA SAPNA BANGALORE PAGE 8 OF 10 ASSESSING OFFICER DID NOT CONSIDER THIS ASPECT SPECIFICALLY WHETHER THE EXPENDITURE IN QUESTION WAS REVENUE OR CAPITAL EXPENDITURE. THIS ARGUMENT PREDICATES ON THE ASSESSMENT ORDER WHICH APPARENTLY DOES NOT GIVE ANY REASONS WHILE ALLOWING THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. HOWEVER, THAT BY ITSELF WOULD NOT BE INDICATIVE OF THE FACT THAT THE ASSESSING OFFICER H AD NOT APPLIED HIS MIND ON THE ISSUE. THERE ARE JUDGMENTS GALORE LAYING DOWN THE PRINCIPLE THAT THE ASSESSING OFFICER IN THE ASSESSMENT ORDER IS NOT REQUIRED TO GIVE DETAILED REASON IN RESPECT OF EACH AND EVERY ITEM OF DEDUCTION, ETC. THEREFORE, ONE HA S TO SEE FROM THE RECORD AS TO WHETHER THERE WAS APPLICATION OF MIND BEFORE ALLOWING THE EXPENDITURE IN QUESTION AS REVENUE EXPENDITURE. LEARNED COUNSEL FOR THE ASSESSEE IS RIGHT IN HIS SUBMISSION THAT ONE HAS TO KEEP IN MIND THE DISTINCTION BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WAS ANY INQUIRY, EVEN INADEQUATE, THAT WOULD NOT BY ITSELF, GIVE OCCASION TO THE COMMISSIONER TO PASS ORDERS UNDER SECTION 263 OF THE ACT, MERELY BECAUSE HE HAS DIFFERENT OPINION IN THE MATTER. IT IS ONLY IN CASES OF LACK OF INQUIRY , THAT SUCH A COURSE OF ACTION WOULD BE OPEN. 8. THE HON'BLE DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES VS. ADDL. CIT & ORS. (1975) 99 ITR 375 (DEL . ) HAS PROPOUNDED THE ROLE REQUIRED TO BE PLAYED BY THE AS SESSING OFFICER. THE REASON IS OBVIOUS. THE POSITION AND FUNCTION O F THE INCOME TAX OFFICER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STATEMENTS MADE IN A PLEADING PRO VED BY THE MINIMUM AMOUNT OF EVIDENCE MAY HE ACCEPTED BY A CIVIL COURT IN THE ABSENCE OF ANY REBUTTAL. TH E CIVIL COURT IS NEUTRAL. IT SIMPLY GIVES DECISION ON THE B ASIS OF THE PLEADING AND EVIDENCE WHICH COMES BEFORE IT. TH E INCOME TAX OFFICER IS NOT ONLY AN ADJUDICATOR BUT A LSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FA CE ITA NO.753 OF 2012 APNA SAPNA BANGALORE PAGE 9 OF 10 OF A RETURN WHICH IS APPARENTLY IN ORDER BUT CALLS FOR FURTHER INQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TR UTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANC ES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD 'ERRONEOUS' IN SECT ION 263 EMERGES OUT OF THIS CONTRACT. IT IS BECAUSE IT IS INCUMBENT ON THE INCOME TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT THAT THE WORD 'ERRONEOUS' IN SECTION 263 INCLUDES T HE FAILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANY THING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED T O BE CORRECT. 9. IN THE LIGHT OF THE ABOVE PROPOSITIONS IF WE EXA MINE THE FACTS OF PRESENT CASE, THEN IT WOULD REVEAL THAT TH E ASSESSING OFFICER HAS ACCEPTED ACCOUNTING ENTRIES AS IT IS WI THOUT MAKING ANY INQUIRY ON THE ISSUES ENTERTAINED BY THE LEARNE D CIT IN THE 263 PROCEEDINGS. SIMILARLY, IT IS QUITE UNUSUAL THA T THE COST TOWARDS THE CLUB HOUSE WOULD 59% OF THE TOTAL COST OF THE FLATS. THUS THE COST INCURRED BY THE ASSESSEE TOWARDS THE CLUB HOUSE OUGHT TO HAVE BEEN DESERVED TO BE EXAMINED, MORE PA RTICULARLY IT REMAINED WITH THE FIRM AT THE END OF ACCOUNTING YEA R. ASSESSEE IS FOLLOWING PERCENTAGE COMPLETION METHOD. NO EVIDENCE WAS SHOWN TO US THAT THE EXPENDITURE CLAIMED FOR CONSTRUCTION OF CLUB HOUSE WHILE RECOGNIZING THE REVENUE ON PERCENTAGE COMPLET ION METHOD WOULD BE ULTIMATELY ACCOUNTED IN THE ACCOUNTS OF BU YER. IT IS ALSO NOT CLEAR THAT ASSESSEE WILL NOT HAVE ANY SAY IN AD MISSION OF THE MEMBERS IN THE CLUB HOUSE OR IT WILL NOT ENROLL ANY OUTSIDER AS A MEMBER. THE BY LAWS OF THE SOCIETY OR OF THE CLUB N OT FRAMED NOT SHOWN TO US. IT WAS A CRUCIAL QUESTION WHETHER EXPE NDITURE ITA NO.753 OF 2012 APNA SAPNA BANGALORE PAGE 10 OF 10 INCURRED ON CONSTRUCTION OF CLUB HOUSE OUGHT TO BE ALLOWED TO THE ASSESSEE WHILE RECOGNIZING THE REVENUE UNDER TH E PERCENTAGE COMPLETION METHOD. WE DO NOT FIND ANY WHISPER ON TH IS ISSUE EITHER IN THE SHOW CAUSE NOTICE OR IN THE REPLY OF THE ASSESSEE OR IN THE ASSESSMENT ORDER. THUS THE LEARNED COMMISSIO NER HAS RIGHTLY HELD THAT THE ASSESSMENT ORDER IS ERRONEOUS WHICH HAS CAUSED PREJUDICE TO THE REVENUE. THEREFORE, WE DO N OT FIND ANY MERIT IN THIS APPEAL. IT IS DISMISSED. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2014. SD/- SD/- (JASON P. BOAZ) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 25 TH JULY, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE