TMI Blog2012 (7) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... 1, passed by the Commissioner (Appeals) IV, Mumbai, for assessment years 2005-06. 2. Brief facts, as brought out by the Assessing Officer in his assessment order vide Paras 6 to 9, are extracted below:- 6. The relevant facts are: The assessee, vide deed of assignment dated 13.6.1994, had purchased the one-fourth undivided share in land and premises situated on Plot no.14A, of the Worli Estate for a sum of Rs. 80,00,000. 6.1 The assessee executed an agreement dated 21.3.2000 with Khorshed Sorabji Pavri, Mrs. Perves Sorabji Seabrook (nee Pavri) and Mr. Kelly Sorabji Pavri (therein all collectively called Tenants). These tenants were incomplete physical possession and enjoyment of south wing of the ground floor premises of premises of the building known as Mon Repos together with on servants quarters and garage no.2, in the out house situated on Plot no.14A, of Worli Estate. 6.2 The assessee, vide agreement dated 21.3.2000, paid compensation of Rs. 50,00,000 to the tenants named herein, in pursuance of the surrender of tenancy and handing over vacant and peaceful possession of the South Wing of the ground floor premises of the building known as Mon Repos together with on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee was not required to provide accommodation to tenants as the tenants who occupied its one-fourth share of the said property had already handed over vacant and peaceful possession to the assessee in pursuance of agreement dated 21.3.2000. 8. The joint venture resulted in Total Area Built of 38901.08 sq.ft. The area attributable to the assessee is 20% of 38901.08 sq.ft. i.e., 7780.21 sq.ft. The area attributable to the First Developer i.e., Akta Real Estate P. Ltd. is 80% of 38901.08 i.e., 31120.87 sq.ft. Accordingly the saleable area should have been computed as under:- Akta Real Estate P. Ltd. Prerana Real Estate P. Ltd. Total Area Build up Area 31120.87 7780.21 38901.08 Less: Area provided to tenants 8141.08 Nil 8141.08 Seleable Area 22979.79 7780.21 30760.11 Area apportioned by developers in the ratio 80:20 24608 6152.00 30760 Short fall in area (-) 1628.21 1628.21 0 9. The assessee received sale consideration of Rs. 9 crores for 6152 sq.ft. which works out to Rs. 14629 per sq.ft. Applying this rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urther loss towards providing accommodation to the tenants of the other 3/4th portion of the property belonging to M/s. Ekta Real Estate P. Ltd. There is no doubt that even in such a situation the assessee could have agreed for bearing further losses on whatever account as a prudent business person, but the assessee has not done so because in the agreement for development of property also, there is no clause or provision for providing for tenants of any area by the assessee. Hence, it is clear that assessee should have got 20% of the total developed area before any allocation to the tenants of M/s. Ekta Real Estate P. Ltd. This view is supported by the deed of development and by the usual business practices and also by a logical conclusion. Therefore, assessee has concealed the income to the extent of 1628.21 sq.ft. of saleable area which has not been disclosed by the assessee and, therefore, the addition of equivalent amount after conversion into money by the A.O. is confirmed and the ground of appeal is rejected. 5. Aggrieved, the assessee is in appeal before the Tribunal on the following grounds:- 1. On the facts and in the circumstances of the case and in law, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal and it has to be admitted. He vehemently contended that the truth of the matter would come out if these documents are examined. He referred to the order of the Tribunal passed against an appeal under section 263 and pointed out that the Tribunal agreed with the findings of the Commissioner that the issue as to whether the assessee was entitled to higher revenue in terms of the agreement with AREPL is to be examined by eh Assessing Officer. He prayed that the additional evidence be admitted and the issue be set aside to the file of the Assessing Officer for fresh adjudication. 7. Learned Counsel, Mr. Rakesh Josi, representing the assessee, on the other hand, strongly opposed the admission of the additional evidence on the ground that the learned Departmental Representative cannot raise fresh argument and make out fresh set of facts and fresh issue for consideration of the Tribunal when the Assessing Officer as well as the Commissioner (Appeals) have examined the documents and have come to a conclusion that there is an obligation on the part of AREPL to provide accommodation to tenants and the only issue was whether the assessee was entitled to bear the expenditure of such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner in his order passed under section 263, which is placed at Page 37/Para-4 of the paper book and emphasized that the Commissioner has never doubted the fact that certain area has to be allotted to the tenants. He referred to the order dated 22nd January 2010, passed by the Tribunal in ITA no.7359/Mum./2008, which was against an order passed under section 143(3), as confirmed by the Commissioner (Appeals) and submitted that the Tribunal categorically observed that neither the agreement was found false nor is the bonafide intention of the assessee found false. He submitted that this is the agreement between the two co developers and the Revenue cannot step into the arrangement and dictate as to what should be the revenue or share of each party. He submitted that cost of construction was recovered from the tenants for the area allotted to them and the assessee accounted for this recovery in its books and the Assessing Officer accepted the same. He pointed out that the sister concern has offered the consideration on the sale of the balance area as its income and he filed certificates to that extent. He vehemently contended that the income in question has been accounted f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sposing the appeal on the order under section 143(3) r/w 263 of the Act and, hence, the entire issue should be set aside to the file of the Assessing Officer for fresh investigation. On a query from the bench, he submitted that the Assessing Officer in the case of AREPL, did not doubt the claim of the assessee but the assessment of AREPL are re opened now. He repeated his contentions that the matter should be set aside for fresh investigation. 14. In reply, the learned Counsel opposed these contentions and submitted that once the Assessing Officer of AREPL had examined these very documents in its assessment and came to a conclusion that there was a legal obligation on behalf of the assessee who allots certain areas to the tenants after recovering cost, the learned Departmental Representative cannot argue to the contrary on the same set of documents and request for set aside. He submitted that re opening, if any, would be a change in opinion and, hence, bad in law. 15. Rival contentions heard. On a careful consideration of the facts and circumstances of the case and on a perusal of the papers on record, as well as the case laws cited before us, we hold as follows:- 16. The Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not have an obligation to provide the tenants with constructed area. He argued that the AO, the CIT and the CIT(A) have not considered these significant facts and have decided the issue on the assumption that there is a liability to provide constructed area to the tenants. He wants the issue to be set aside for fresh investigation. In our opinion, such a request cannot be entertained for the following reasons (i) the additional evidence in question are nothing but papers available in the assessment record of AREPL. The Assessing Officer, in the case of AREPL, has, after obtaining all these documents, examined them and had come to a conclusion that AREPL has an obligation to provide constructed property to the old tenants. When this is the conclusion of the Assessing Officer on the very set of papers, we are unable to understand as to how a fresh investigation helps the matter and how the Assessing Officer can now change his opinion. The plea that in the case of AREPL, the assessments were re opened, also does not help the Revenue as it might be a matter of change of opinion. At best, it may be an issue for invoking power under section 263. The argument that the assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings for income escaping assessment, or even a revision proceeding everything must be completed within the prescribed time-limit. To suggest that even a proceeding before the Tribunal is a continuation of assessment proceedings and, therefore, the AO can be allowed to make up for his deficiencies will amount to rendering all these time-limits as nugatory and redundant. it is indeed not open for the Tribunal to take away the benefit given by the AO. When the AO decided to grant deduction under s. 80-113(10) in respect of residential units it was t well-considered and conscious decision on his part to have granted the benefit of deduction. With the benefit of hindsight this benefit of deduction might have been little more generous than what is found to be admissible by the Tribunal, but then the decision of the Tribunal has not yet reached finality and it is not an end of the route so far as legal developments in that regard are concerned. It is not the scheme of the Act that entire assessment is open before the Tribunal and it must consider the same. Ground which was raised by the Revenue was confined to profits relatable to commercial units and therefore, it is not really open to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking the view that he had no power to enhance penalty and in such circumstances, the Tribunal had the power to remand the case to the authority competent to make an order in accordance with law. This is not a case where the factual findings of the Assessing Officer are disputed by the Revenue at the stage of the Tribunal without any further material and remand sought. In our opinion, this case does not apply to the facts of the present case. 20. The Hon'ble Supreme Court in Bhavana Chemicals Ltd. (supra) was not inclined to go into the question as the matter was remanded. It held that it was not necessary to examine the question of the power of Tribunal in this matter. 21. Thus, this case does not come to the rescue of the Revenue. Under these circumstances, we reject the arguments of the Revenue that it be permitted to file additional grounds challenging the findings of the Assessing Officer and to enhance the disallowance to 100%. We consider only the grounds of appeal that are filed in the appeals filed by the assessee as well as the Revenue. 19. UOP LLC v/s ADIT, [2007] 108 ITD 186 (Del.), the Tribunal has held that in an appeal filed by the assessee, additional eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1.55 crores as advance adjustable towards the profit when the project was to be completed. This sum of Rs. 1.55 crores was utilised by the assessee in its business activity. The assessee received this advance of Rs. 1.55 crores which was interest free. In these circumstances, the assessee agrees to share 20% of profit instead of 25%. If financial implication in development of the property and advance of Rs. 1.55 crores taken into consideration, then it is found that it was a prudent businessmen s decision of sharing the profit @ 20% instead of 25% as there were so many formalities involved in completing the development of property in question. However, assessee was free from all these responsibilities as co developer M/s. Akta Real Estate P. Ltd. have taken all the responsibilities to complete the project. 11. In view of the above facts and circumstances, we hold that share profit shared by assessee @ 20% was reasonable as the same was commercially viable and a decision of a prudent businessman. It is a well settled position that businessmen know how to run the business activity. Accordingly, the addition made of Rs. 1,44,98,140, which was sustained by the CIT(A) on protect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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