ITO 11(2), MUMBAI V. DR AVINASH C. TIWARI, MUMBAI

ITA 83/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3433 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 04-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MADHAV V NANDGAONKAR
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI . . , ! ' #'' '$ , % ! & BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER . : 8512 / / 2010 A.Y. 2007-08 ITA NO. : 8512/MUM/2010 (ASSESSMENT YEAR: 2007-08) INCOME-TAX OFFICER WARD 3(2), 2 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN VS M/S. KASTURI CONSTRUCTION, KASTURI PARK, NR. B. WARD OFFICE, SURVEY NO. 9, NR. SANGHAVI PARK, CHIKANAGHAR, KALYAN (W) (APPELLANT) (RESPONDENT) . : 8570 / / 2010 A.Y. 2008-09 ITA NO. :8570/MUM/2010 (ASSESSMENT YEAR: 2008-09) M/S. KASTURI CONSTRUCTION, SANGHAVI PARK, CHIKANAGHAR, KALYAN (W) .: PAN: AAHFK 7469E VS INCOME-TAX OFFICER WARD 3(2), KALYAN (APPELLANT) (RESPONDENT) APPELLANT-ASSESSEE BY : SHRI MADHAV V. NANDGAONKAR RESPONDENT-REVENUE BY : SHRI MANOJ KUMAR /DATE OF HEARING : 06-06-2013 !' / DATE OF PRONOUNCEMENT : 19-06-2013 * O R D E R #'' '$ , : PER VIVEK VARMA, JM: THE CROSS APPEALS ARISE FROM THE ORDER OF CIT(A) 1, THANE , DATED 30.08.2010. THE DEPARTMENT HAS RAISED THE FOLLOWING GROUNDS: ITA NO. 8512/MUM/2010, REVENUES APPEAL : $ . . . 8512 /%% / 2010 $ . . . 8570 /%% / 2010 M/S. KASTURI CONSTRUCTION ITA NO.8512/MUM/2010 ITA NO. 8570/MUM/2010 2 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND FACTS B Y DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF REJECTION OF PROJECT C OMPLETION METHOD. 2. THE LEARNED CIT(A) HAS ERRED IN ALLOWING ASSESSE ES CLAIM OF PROJECT COMPLETION METHOD OF ACCOUNTING, AS AGAINST THE AO S ACTION OF ESTIMATION OF PROFIT AS PER PERCENTAGE COMPLETION M ETHOD OF ACCOUNTING. 3. THE LEARNED CIT(A) HAS ERRED IN ALLOWING THE CLA IM OF DEDUCTION UNDER SECTION 80IB(10) OF THE ACT BY REJECTING THE ISSUE OF COMPLETION OF PROJECT BEFORE 31.03.2008 AND CONSIDERING THE ASSESSEES CL AIM HOLDING THAT THE APPROVAL OF THE LOCAL AUTHORITY TO THE ORIGINAL PLAN HAS BEEN ACCORDED PRIOR TO 01.04.2005 AND FOUR YEAR LIMIT FO R COMPLETION OF PROJECT WOULD NOT APPLY. 4. THE LEARNED CIT(A) HAS ERRED IN RELYING ON THE I TAT, MUMBAIS DECISION IN THE CASE OF SAROJ SALES ORGANISATION VS. ITO IN 3 DTR 494 WHEREIN IT IS HELD THAT THE AMENDMENTS WHICH CAME INTO EFFECT FROM 01.01.2005 WOULD NOT APPLY TO PROJECTS APPROVED PRIOR TO THAT DATE. 2. AT THE TIME OF HEARING, THE AR POINTED OUT THAT IDENTICA L GROUNDS HAD BEEN RAISED BY THE DEPARTMENT IN ASSESSEES OWN C ASE IN ITA NO. 1082/MUM/2010 PERTAINING TO ASSESSMENT YEAR 2006-07. 3. GROUNDS NO. 1 & 2 PERTAIN TO PROJECT COMPLETION METHO D REJECTED BY THE AO. 4. IT WAS POINTED OUT BY THE AR THAT THE COORDINATE BE NCH DEALT WITH THE IMPUGNED ISSUE IN PARAS 5 TO 5.1 OF THE ITAT OR DER, AS CITED ABOVE AND IT WAS HELD AS UNDER: THE ASSESSING OFFICER HAS ACCEPTED THE FACT THAT T HE ASSESSEE HAS BEEN CONSISTENTLY FOLLOWING THE PROJECT COMPLETION METHOD. THE ASSESSING OFFICER HAS ALSO RECORDED THE FACT THAT T HE PROJECT WAS NOT COMPLETED BEFORE 31ST 3 2008 AND THE SALE OF FLATS AS WELL AS CONSTRUCTION WORK WERE LESS THAN 30%. THE RELEVANT PART OF THE ASSESSMENT ORDER IN PARA 12 AT PAGE 20 OF THE ASSES SMENT ORDER READS AS UNDER: 12. THE WORKING OF PROFIT 1. IN THE RETURN OF INCOME FILED ON 15.10.2008, FOR AY 2008-09, ASSESSEE HAS SHOWN THE PROFIT ON THE BASIS OF PROJECT COMPLETION METHOD AT RS. 1,42,32,105/- COPY OF E RETURN FILED ON 15.10.2008 VIDE ACKNOWLEDGEMENT NO. 33963. DURING THE HEARING PROCEEDING ON DATED 02.12.2008 THE ASSESSEES AR WAS ASKED TO SUBMIT TH E COPY OF AUDIT REPORT OF F.Y. 2007-8, TILL DATE HE H AS NOT SUBMITTED THE, SAME. THE ASSESSEE HAS SUBMITTED THE LIST OF FIAT SOLD ALONG WITH DETAILS OF FLAT AREA, VALUE OF AGREEMENT AND DATE OF AGREEMENT FOR ENTIRE PROJECT. FROM WHICH IT IS FOUND THAT, THE TOTAL RECEIPT UP TO THE END OF F.Y. 2007-08 FROM SALE OF FLATS IS OF RS. 6,61,60,8 66/- OUT OF WHICH UP TO THE END OF F.Y. 2005- 06 ASSESSE E HAS SOLD FLATS AND RECEIVED AMOUNT AS ADVANCE AGAINST F LAT $ . . . 8512 /%% / 2010 $ . . . 8570 /%% / 2010 M/S. KASTURI CONSTRUCTION ITA NO.8512/MUM/2010 ITA NO. 8570/MUM/2010 3 SOLD WHICH IS APPEARS IN THE BALANCE SHEET IS OF RS . 1.88,26,259/- AND WIP UP TO RS. 2,31,27,150/- 2. FROM THE ABOVE IT IS SEEN THAT FROM THE TOTAL VA LUE AS PER AGREEMENT IS RS. 6,61,60,866/- UP TO END OF F.Y . 2007-08, AND OUT OF WHICH ASSESSEE HAS EARNED PROFI T OF RS. 1,42,32,105/- THUS THE PROFIT PERCENTAGE FROM T HE PROJECT WORKS OUT TO 21.51% AS PER INCOME SHOWN OF AY 2008-09. ACCORDINGLY THE PROFIT FROM THE PROJECT UP TO 31.03.2006 IS ALSO ESTIMATED BY ADOPTING THE SAID P ROFIT PERCENTAGE OF 21.51%, WHICH THE ASSESSEE HAS ITSELF SHOWN IN THE RETURN OF AY 2008-09. 3. THE CLOSING WIP HAS BEEN SHOWN AT RS. 2,31,27,15 0/- IN THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FL IED ALONG WITH THE RETURN OF ASSESSMENT YEAR2006-07. TAKING THE PROFIT AT THE RATE 21.51% ON THE WIP, TH E PROFIT UP TO 31.03.2006 COMES TO RS. 49,74,650/- WHEN THE ASSESSING OFFICER HIMSELF HAS GIVEN THE FA CTS THAT THE PROJECT WAS COMPLETED ONLY AFTER 31ST MARCH 2008 AND UP TO THE END OF THE YEAR ON 31ST OF MARCH 2006, ONLY 30% OF THE WORK WA S COMPLETED. IN THESE UNDISPUTED FACTS, THE DECISIONS RELIED UPON B Y THE ASSESSING OFFICER IN ADOPTING PERCENTAGE COMPLETION METHOD OF ACCOUNTING IS MISPLACED. IT IS NOT A CASE OF SUBSTANTIAL COMPLETI ON OF PROJECT DURING THIS YEAR AND SELLING OUT THE SAME. FURTHER THE ASS ESSING OFFICER ACCEPTED THIS FACT THAT ON COMPLETION OF PROJECT, T HE ASSESSEE HAS OFFERED THE INCOME TO TAX AFTER CLAIMING THE DEDUCT ION UNDER SECTION 80 IB(10). THEREFORE WHEN THE ASSESSEE OFFERED THE INC OME TO TAX FROM THE ENTIRE PROJECT FOR THE ASSESSMENT YEAR 2008-09 WHIC H HAS BEEN ADOPTED BY THE ASSESSING OFFICER FOR ESTIMATION OF THE INCO ME FOR THE YEAR UNDER CONSIDERATION, THEN THIS FACT GOES TO PROVE THAT TH ERE IS NO DIFFERENCE IN THE RATE OF PROFIT DECLARED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 AND THE RATE ADOPTED BY THE ASSESSING OFFIC ER FOR THE YEAR UNDER CONSIDERATION. THUS THERE IS NO REVENUE EFFEC T AND THE INCOME OFFERED BY THE ASSESSEE ON COMPLETION OF THE PROJEC T IS REVENUE NEUTRAL. 5. RESPECTFULLY FOLLOWING THE ORDER OF THE COORDINATE BENCH, WE HELD THAT THERE WAS NO INFIRMITY IN THE METHOD ADOPTED BY THE ASSESSEE, I.E. PROJECT COMPLETION METHOD. 6. WE, THEREFORE, DO NOT FIND ANY REASON TO DISTURB THE FIND INGS OF THE CIT(A), WHICH WE SUSTAIN. 7. IN THE RESULT, THE GROUNDS FRAMED BY THE DEPARTMENT ARE REJECTED. ITA NO. 8570/MUM/2010, ASSESSEES APPEAL : 8. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND: $ . . . 8512 /%% / 2010 $ . . . 8570 /%% / 2010 M/S. KASTURI CONSTRUCTION ITA NO.8512/MUM/2010 ITA NO. 8570/MUM/2010 4 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED ASSESSING OFFICER HAS ERRED IN HOLDING AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THAT AREA OF THE PLOT OF THE LAND OF THE PROJECT WAS LESS THAN ONE ACRE. 9. THE SOLITARY ISSUE IS WITH REGARD TO THE DISPUTE OF MEAS UREMENT OF THE PLOT OF THE PROJECT WAS LESS THEN ONE ACRE. 10. IT WAS POINTED OUT BY THE AR THAT IN ITA NO. 1082/ MUM/2010, THE COORDINATE BENCH HAD MADE THE FOLLOWING OBSERVATION, WHICH WAS FOLLOWED BY THE COORDINATE BENCH IN ITA NO. 7395/MUM/2011 , PERTAINING TO THE ASSESSMENT YEAR 2008-09, IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND I N THE INTEREST OF JUSTICE, WE ADMIT THE ADDITIONAL EVIDENCE AND REMAND THE ISSUE TO THE RECORD OF THE ASSESSING OFFICER TO VERIFY THE ACTUAL SIZE OF THE PLOT EITHER BY PHYSICAL VERIFICATION OR THROUGH SOME AGENCIES. 11. AS A CONSEQUENCE OF THE DIRECTIONS OF THE COORDINATE BENCH, IT WAS SUBMITTED THAT THE VERIFICATION WAS ASSIGNED TO THE V ALUATION CELL OF THE DEPARTMENT, WHO SUBMITTED THE REPORT ON 19.03.201 3. ACCORDING TO THE ANNEXURE TO THE REPORT, THE ACTUAL SIZE OF THE PLOT IS 4097.81 SQ. MT., WHICH IS MORE THEN ONE ACRE AND CERTIFIED AS SUCH BY SHRI SURESH THAVRDASANI, ASST. VALUATION OFFICER, INCOME TAX DEPARTMENT, THANE (APB 12, 13, 14, & 15). 12. SINCE, THE AREA HAS NOW BEEN CERTIFIED TO THE MORE TH EN 1 ACRE, THE CONTROVERSY GETS RESTED. 13. IN THE RESULT, THE AO IS DIRECTED TO PROVIDE FULL BENEFIT, IN SO FAR AS THE DEDUCTION IS CONCERNED, AS NOW, EVEN THE DISPUTE ON AREA IS ALSO REMOVED BY THE DEPARTMENT ITSELF. 14. IN THESE CIRCUMSTANCES, THE APPEAL FILED BY THE ASSES SEE IS ALLOWED. $ . . . 8512 /%% / 2010 $ . . . 8570 /%% / 2010 M/S. KASTURI CONSTRUCTION ITA NO.8512/MUM/2010 ITA NO. 8570/MUM/2010 5 15. IN THE RESULT: ITA NO. 8512/MUM/2010, APPEAL FILED BY THE DEPARTMENT IS DISMISSED. ITA NO. 8570/MUM/2010, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH JUNE, 2013. SD/- SD/- ( .. ) ( #'' '$ ) ! ! (P.M. JAGTAP) (VIVEK VARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 19 TH JUNE, 2013 / COPY TO:- 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) $ $( ( ) - 1 THANE / THE CIT (A)-1, THANE. 4) $ $( II, THANE / THE CITII, THANE, 5) *+, - . , $ - , %/ / THE D.R. A BENCH, MUMBAI. 6) ,0 1 COPY TO GUARD FILE. $23 / BY ORDER / / TRUE COPY / / [ 4 / 5 6 $ - , %/ DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI *895 . . * CHAVAN, SR. PS