2022 (11) TMI 1105 - AT - Income Tax
Suppression of closing stock - AO is of the opinion that such non saleable area should have been assigned some valuation of its own and hence rejected the books of books of accounts u/s 145(3) - HELD THAT:- Approach of the CIT(A) is neither erroneous nor contrary to any of the provision of law. The ‘non saleable area’ are necessary requirements for a real estate projects, without such facilities/compositions the smooth operation cannot be conducted. As per the certificate of architect, tax audit reports details of stock the computation of income and the assessment order in the previous year prior to the year under consideration that the assessee has duly demonstrated the consistency in its accounting practice and its acceptance by the AO as well. CIT(A) has considered all the above facts and came to a just decision in deleting the addition which requires no interference at our hands. Accordingly, the Ground No. 1 of the Revenue is dismissed.
Disallowance u/s 37 - assessee had debited license renewal fee in its expenses which was disallowed by the A.O by working out the rightful license of the said area in respect of Iris Project - HELD THAT:- Assessee had merely claimed as its expense, while other half expense had been received as reimbursement from M/s Weldon Technologies Park Development. CIT(A) has also arrived to the conclusion to delve the addition by going through the breakup of direct expenses containing group Misc. work(OE) with copy of the ledger account license renewal fee along with the bank statement showing the credit reimbursement received.The said finding of the fact with cogent evidence and the decision made thereupon by the CIT(A) requires no interference and we are of the view that the order of the CIT(A) in deleting the above disallowance made u/s 37 by the A.O. requires no interference. Ground of the revenue is dismissed.
Scope of limited scrutiny - AO moved further to verify closing stocks of the assessee company along with other expense heads debited in the revenue account and ultimately made addition/disallowances which are not part of the reasons mentioned in the limited scrutiny - HELD THAT:- If a case is taken for limited scrutiny by the A.O., he cannot exceed the jurisdiction beyond the one which he has carved out himself in the notice issued for limited scrutiny. In the present case, AO has travelled beyond his jurisdiction and made addition on the issues which are not part of the reasons for limited scrutiny. Therefore, both the A.O. and Ld. CIT(A) has committed an error in making the addition/disallowance and sustaining the same which requires to be set aside. Accordingly, the Additional Ground mentioned in the C.O. filed by the assessee is allowed, the addition sustained by the Ld. CIT(A) is hereby deleted.