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2020 (6) TMI 371 - AT - Income TaxValue of closing stock - assessee had included only land cost, but not included the development cost of plots in arriving at the work in progress/closing stock - AO reworked the value of closing stock including the development cost and made the addition representing the difference amount on account of undervaluation of the stock - AO observed that as per Accounting Standard 2, the inventory required to be valued at cost or net realisable value whichever is lower - HELD THAT:- Though the assessee stated that the entire development cost pertained to the plots sold and ready for sale, the assessee had incurred the expenditure for development of roads, levelling of the land, drainage, water tank, street lights, parks etc., for laying the plots, hence the assessee cannot argue that no expenditure was incurred for unsold plots. In the absence of the details with regard to the actual expenditure incurred on sold plots and unsold plots, there is no option except to resort for estimation of income and arrive at the value of closing stock. We, find from the order of the AO and the Ld.CIT(A), against the sale price of ₹ 2,500/-, the AO worked out the profit of ₹ 1,676/- per plot which is unreasonable. Since, the assessee did not produce the details of the tracks of the land developed and undeveloped out of the total area we are also unable to accept the contention of the assessee that the expenditure was exclusively laid out for the sold plots. Therefore we hold that the CIT(A) has rightly resorted for estimation of the profit.- The department did not bring any other case establishing that the profit of 15% estimated by the Ld.CIT(A) is less in this line of business. Therefore, we are of the view, that no interference is called for in the order of the Ld.CIT(A) and the same is upheld. The appeal of the revenue is dismissed.
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