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2016 (1) TMI 1083 - AT - Income TaxAccountability of project income - CIT(A) accounted for its income on project completion method - Held that:- We are in agreement with the findings of the CIT(A) that the project was completed in the assessment year 2005-06 and the assessee had rightly accounted for its income on project completion method in the said year and not in AY 2004-05. Enhancement of assessment on the basis of fair market price - Held that:- The order of CIT(A) enhancing the assessment by ₹ 5,30,80,200/- on the basis of fair market price of ₹ 8,990/-per sq.ft. on estimated basis when the actual sales deeds were on records, appears to be not correct and based on surmises and conjectures. The CIT(A) overlooked the fact that the assessee as per the terms of MOI dated 14.07.2001 took over the liabilities and commitments of the original owners towards the 4 original purchasers to whom the sale of flats were to be made at ₹ 3,000/- per Sq. fts as referred to in table A. The assessee was under contractual obligation to sell the flats to the original purchasers at the price agreed to by the original owners. Neither the AO nor the CIT(A) brought any materials on records to show that the assessee received more than what had been shown in the sale deeds. The Ld CIT(A) also failed to bring any cogent materials on records for enhancing the assessement. No defects were pointed out in the records maintained by the assessee and therefore the invoking the provisions of section 145(3) of the Act to estimate the income is wrong and the decisions relied on by the CIT(A) are not applicable to the assessee’s case as the guess work in estimation can only be made when there defects in the records maintained by the assessee and it is not possible to arrive at the correct income by the AO on the basis of the said records. Further ,we also find force in the arguments of the ld authorized representative that the provision of section 50C are not applicable for ascertaining the full value of consideration in respect of business assets i.e inventories as the said provisions deals with ascertaining the full value of consideration in case of capital assets for the purpose of capital gain. Further our attention was drawn to the newly inserted section 43CA of the act which deals with ascertaining the full value of consideration in case of assets other than capital assets but the said section is applicable w.e.f. 2014-15. After taking into accounts all the facts, arguments of both the parties and records before us, we are of the considered view that the order passed by the ld.CIT(A) suffered from several infirmities and cannot be sustained. We therefore delete the enhancement of assessment of ₹ 5,30,80,200/- by the CIT(A) by allowing the appeal of the assessee - Decided in favour of assessee.
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