TMI Blog2013 (9) TMI 799X X X X Extracts X X X X X X X X Extracts X X X X ..... - Sum of Rs.1,32,65,000/- appearing on the impounded document, which is clearly attributed towards various clearances given by the authorities such as commencement certificate, intimation of deficiency etc. represented the money actually paid which is unaccounted. Amount can be added as unaccounted expenditure under section 69C of the Act only in the year in which expenditure has been actually incurred - Dates of clearances, such as, IOD, commencement certificate, condonation of deficiency, occupation certificate etc. can be reasonably taken as the dates of incurring the expenditure - Making addition of the entire amount in this year without ascertaining the dates of incurring such expenditure is not justified – Matter restored to the file of A.O. to pass necessary order after examination. Addition of Rs.57,82,000/-, Rs. 10.00 lacs, Rs.12.00 lacs on the basis of entries made in the impounded documents - The sum of Rs.57,82,000/- has been explained as interest calculated for the period of early payment of installments. It had been explained that since payments had been made before due dates, the interest for the period had been calculated to be reduced from the cost of land. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A). 2. The appeal of the revenue in ITA No.4393/M/2010 (Assessment Year - 2002-03) :- In this appeal the revenue has raised disputes on five different grounds which have been dealt with in the subsequent paras. 2.1 The first dispute is regarding deletion of addition made by AO of Rs.1,32,65,000/- on the basis of entries made at page 62 of the impounded document. The said document a copy of which has been placed at page 31 of the paper book contained the following entries in relation to computation of land cost. Particulars Amount Land Cost 12,00,00,000 Stamp Duty 11,42,000 Regn 60,000 ULC 40,00,000 Staircase Premium, Balcony Enclosure Other BMC Expenses by cheque 1,32,65,000 Out of Pocket Expenses for obtaining I.O.D., CC. {Conversion from 1-3 to R, Work done beyond CC.} Directors Orders, Condonation of Deficiencies etc.} 1,32,65,000 15,17,32,000 Divided by : 1,89,016 Cost of Land = Rs.802.75 p.s.f. 2.1.1 The AO asked the assessee to explain the entry of Rs.1,32,65,000/- mentioned as out of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a follower of Brahma Kumaris was affiliated to the trust. CIT(A) was satisfied by the explanation given. It was observed by him that at page 65 of the impounded documents cost of construction of the flats sold was computed at Rs.2,88,19,207/- in which the inflated cost of land as entered at page-62 of the document had been used. This page also contained the sale price of flats to the trust of Rs.2,80,17,500/- which had been separately confirmed by the trust. Further on page 65 of the document name of Shri B.K. Jayantibhai was written who was related to the said trust. The document also mentioned that the land cost had been calculated as minimum as possible. CIT(A) observed that these notes supported the explanation of the assessee that the land cost had been infalted only to justify the minimum sale price charged from the trust as a builder/developer does not give any breakup of cost to the buyer. CIT(A) also observed that there was no evidence of incurring any such expenses. Therefore no addition could be made without giving any corroborative evidence. CIT(A) directed the AO to delete the addition of Rs.1,32,65,700/- aggrieved by which the revenue is in appeal before the Tribuna ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion from 1-3 to R, Work done beyond CC., directors orders, condonation of deficiencies etc. This entry makes it clear that the amount represented various payments made for obtaining clearances from the government authorities. The assessee has however explained that it was a hypothetical amount included in the computation of cost only to inflate cost of land in order to show to the World Renewal Spiritual Trust the assessee was selling the flats to that organization below cost price. It has been pointed out that one of the partners who was a follower of Brahma Kumaris, to avoid any loss to other partners, had inflated land cost to show that the assessee was doing favour to the trust by selling the flats at rate almost equal to cost price. To support the submission that it was a hypothetical amount, it has been argued that no such expenditure had been claimed in P L Account nor any evidence had been found during the survey of incurring any such expenses. It has thus been argued that no such addition can be made only on the basis of entry in the document. The assessee has also referred to the noting at page-65 of the impounded paper in which actual calculation of cost of flat has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y improbable that the partner being a religious person will lie to the religious trust and show favours by inflating cost when no favour have actually been given. Considering the entirety of facts and circumstances, we are of the view that sum of Rs.1,32,65,000/- appearing on the document which has been clearly attributed towards various clearances given by the authorities such as commencement certificate, intimation of deficiency etc. represented the money actually paid which is unaccounted. However, such amount can be added as unaccounted expenditure under section 69C of the Act only in the year in which expenditure has been actually incurred. The actual point of time of incurring of such expenditure has to be ascertained after obtaining details of various clearances such as IOD, commencement certificate, condonation of deficiency, occupation certificate etc. and dates of clearances can be reasonably taken as the dates of incurring the expenditure. Thereafter, the total expenditure shown have to be allocated to various clearances on an objective basis. Making addition of the entire amount in this year without ascertaining the dates of incurring such expenditure may not be justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It was found that before finalization of deal, the vendor was in dire need of money and, therefore, the assessee had paid various amounts. It was also pointed out that SIWL had enclosed hundi dated 13.1.2001 for re-payment of loan of Rs.10.00 lacs. However, since the amount was not actually paid, the same was reduced from the cost towards land. Moreover, the sum of Rs.10.00 lacs had been paid in assessment year 2001-02 and therefore no addition could be made in this year. The AO, however, rejected the explanation on the ground that there was no supporting evidence. 2.2.2 The assessee disputed the decision of the AO and submitted before CIT(A) that the AO was not justified in holding that there was no evidence produced by the assessee. It was pointed out that the AO was fully satisfied by the explanation given and had not asked for any evidence. It was submitted that copies of agreement and payments made to vendor were already on record of the AO. A chart of payment along with copies of bank statement was submitted by SIWL vide letter dated 26.2.2002 the AO rejected the same on the ground that it was notorised on 28.1.2009. The assessee submitted that the original letter dated 26. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of CIT(A) in relation to deletion of addition of Rs.57,82,000/-, Rs.10.00 lacs and Rs.12.00 lacs, the revenue is in appeal before the Tribunal. 2.2.4 Before us, the ld. AR for the assessee reiterated the submissions made before the lower authorities that a sum of Rs.57,82,000/- was reduced from the land cost on account of early payment of loan which was clear from the working given in the paper. Similarly sum of Rs.10.00 lacs was the amount paid on behalf of the vendor, which had been reduced from cost. There was no dispute that total sum of Rs.1,26,05,000/- which included Rs.57,82,000/-, Rs.10,00,000/- and Rs.12,00,000/- had been reduced from the cost of land loan payable to the vendor. No claim had been made on account of any expenditure. The sum of Rs.12.00 lacs even did not relate to this year. Therefore, it was submitted that the additions had been rightly deleted by CIT(A). The ld. DR placed reliance on the order of the AO. 2.2.5 We have perused the records and considered the rival contentions carefully. The dispute is regarding addition of Rs.57,82,000/-, Rs. 10.00 lacs, Rs.12.00 lacs on the basis of entries made at page 70 of the impounded documents. The entries ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h dispute is regarding the sum of Rs.12,65,000/- paid to Shri VT as appearing on page 229 of the impounded papers, which had been added by AO. The AO noted hat on page 229 shop nos. and area was mentioned and the document was also mentioned paid to VT Rs.12,65,000/- (Rs.1,150 x 11,000) and at the bottom, it was written Ekta Bhoomi Garden A/c. shops VT. The AO, observed that the sum of Rs.12,65,000/- was the amount paid by the assessee and, therefore asked the assessee to explain as to why sum the should not be added as payment from undisclosed source. Assessee submitted that the impounded page contained some rough working and it was not clear who made the working and in what context. It was also submitted that the existing shops in B,C, and K wings were numbered as under :- Wing Shop No. Carpet Area of the shop (in sq.ft.) C P-1 335 C P-2 139 C P-3 126 C P-4 223 C P-5 287 C P-6 135 C P-7 148 C P-8 166 B P-9 139 B P-10 126 B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see that it was only some rough working has to be accepted. We, therefore, see no infirmity in the order of CIT(A) in deleting the addition and the same is, therefore, upheld. 3. ITA No.4394/M/2010 (Assessment Year 2004-05) :- In this appeal, the revenue has raised disputes on four different grounds. 3.1 The first dispute is regarding allowability of prorata deduction under section 80 IB(10) of the Act. The assessee who was a builder and developer had constructed a building named Ekta Bhoomi Garden in respect of which the assessee had claimed deduction of Rs.12,46,90,977/- under section 80 IB(10). Subsequently, assessee in the revised return reduced the claim of deduction to Rs.10,97,94,257/-. The AO on examination of records noted that there were many flats in respect of which built up area exceeded 1000 sq.ft. violating the conditions prescribed under section 80 IB(10). He therefore, asked the assessee to explain as to why claim of deduction under section 80 IB(10) should not be rejected as one of the conditions regarding built up area of the flats was not satisfied. The assessee submitted that most of the flats had built up area of less than 1000 sq.fts. and only in some c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowability of prorata deduction under section 80IB(10) of the Act. The deduction under section 80IB(10) can be allowed only on fulfillment of certain conditions one of which is that built up area of each flat should be less than 1000 sq.ft.. In this case, it was found that 14% of built-up area consisted of flats which have built up area exceeding 1000 sq.ft.. The AO has therefore, disallowed the entire claim. The case of the assessee is that proportionate deduction for 86% of built up area which consisted of flats of built up area less than 1000 sq.ft. should be allowed. The claim of the assessee is supported by the decision of Calcutta Bench of the Tribunal in the case of Bengal Ambuja Housing Development Ltd. (supra), which has also been upheld by the Hon'ble High Court of Calcutta. Several other decisions of the Tribunal including the decision of Mumbai Bench of the Tribunal in which the said decision has been followed have also been placed on record. We, therefore see no infirmity in the order of CIT(A) in allowing proportionate claim of the assessee. The order of CIT(A) is accordingly upheld. 3.2 The dispute raised in grounds No.2 3 relate to addition made by AO amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the additions. Regarding third addition of Rs.6,13,864/- which had been referred to by the AO as BMC charges, the assessee explained that on impounded documents, the difference between sale price and cost of construction had been computed at two places giving figure of Rs.8,01,707/- and Rs.6,13,864/-. These amounts represented the balance receivable from the trust which ultimately was not received. These amounts did not represent any cash payment. CIT(A) being satisfied by explanation denied the addition made. 3.2.3 Before us, the ld. AR referred to page-65 of the impounded document a copy of which is placed at page-37 of the paper book to point out that on the said page, cost of construction of the flat including land cost had been mentioned at Rs.2,88,19,207/- by hand and Rs.2,84,32,464/- in typed figure. The assessee had received a sum of Rs.2,80,17,500/- as confirmed by the trust. The difference of Rs.2,88,19,207/- and Rs.2,80,17,500/- i.e. Rs.8,01,707/- was mentioned at page-66 of the impounded documents. There was also another figure of Rs.2,56,92,000/- mentioned as received from the trust which was figure of earlier receipt and difference of Rs.2,80,17,500/- and Rs.2,56 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be taken. There is nothing produced before us to controvert the finding of CIT(A). Therefore, deletion of addition is upheld. 3.3 The fourth dispute is regarding deletion of addition of Rs.1,32,65,000/- made by the AO on account of out of pocket expenses as noted at page-62 of the impounded document. The same additions had been made by AO in the assessment year 2002-03 also treating the said amount as payment to authorities as unaccounted expenditure. The AO has made the addition this year also as exact date of incurring of expenditure was not clear from the document. CIT(A) has deleted the addition on the ground that there was no corroborative material to show that the amount represented unaccounted expenditure. Aggrieved by the decision of CIT(A), the revenue is in appeal in this year also. 3.3.1 We have heard both parties and perused the records and considered the matter carefully. The issue raised in this ground has already been considered by us while dealing with ground No.1 in appeal for assessment year 2002-03 and following our decision in para 2.1.7 we set aside the order of CIT(A) on this ground and restore the matter to the AO for passing a fresh order after necess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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