Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Income-tax Officer, Ward 5(1) New Delhi Versus K. Sahni Bros. Pvt. Ltd.

2015 (4) TMI 440 - ITAT DELHI

Addition made applying percentage of completion method - Held that:- No infirmity in the order of the CIT(Appeals) on the fact that the assessee has consistently followed the same method of accounting of income in all the earlier years as well as the succeeding years, has not been disputed by the Revenue. Thus the facts remains that the assessee has always been accounting for the sale proceeds of the portions sold by it as income in the year when the possession is given and the registered sale d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the subsequent years and assessments have been framed u/s 143(3) of the Act which is not tenable in law. - Decided against revenue.

Unaccounted sales proceeds received in cash - CIT(A) deleted the addition holding neither the A.O. was justified in adopting the sales consideration on the basis of circle rate prescribed for charging of stamp duty nor was he justified in considering the taxability of transactions relating to office / residential flats against which only advances had .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

which it could be said that the assessee has actually received any amount of sales proceeds over and above the amount declared by it in the registered sale deeds and its books of accounts and therefore we do not find any infirmity in the order of the learned CIT(Appeals) in deleting the addition of ₹ 1,46,25,071/-. - Decided against revenue. - ITA No. 782/Del/2011 - Dated:- 31-3-2015 - Shri I. C. Sudhir And Shri. Pramod Kumar,JJ. For the Petitioner : Shri P. Damkaunjma, Sr. DR For the Res .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g the addition of ₹ 7,10,94,646 made by the A.O. by applying percentage of completion method. 2.1 The Learned CIT(Appeals) ignored the finding recorded by the A.O. and the fact following AS-7(Accounting Standard) is mandatory in the case of the assessee. 3. On the facts and in the circumstances of the case and in law, the Learned CIT(Appeals) has erred in deleting the addition of ₹ 1,46,25,071 made by the A.O. being the unaccounted sales proceeds received in cash. 3.1 The Learned CIT .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f M4U at Ghaziabad. The assessee is owner of a commercial plot at Ghaziabad having acquired the same from Ghaziabad Development Authority in 1981 and the construction of office-cum-residential flats and multiplex cinema has been done by the assessee on this plot from 1987 onwards and the office / residential flats are sold as and when the same is ready and the construction is still under progress. The assessee is occupying a part of this complex for running its multiplex business and the other p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

assessee has recognised revenue on account of sales of real estate at ₹ 1,26,44,200/- against total area sold of 7987.11 sq. ft. The Assessing Officer however, was not satisfied with the actual sale rate declared by the assessee in the registered sale deeds and found that the value adopted by the stamp valuation authority was higher and accordingly he made a reference to the Departmental Valuation Officer during the course of assessment proceedings. The report of the D.V.O. was not receive .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ossession was handed over and registered sale deed was executed, was not the correct method and that the assessee ought to have adopted the percentage completion method and according to the percentage of completion method the A.O. computed the income of the assessee by applying the circle rate for stamp duty purpose on the area which was not sold during the year but only advances were received and he computed such income at ₹ 7,10,94,646/- and made addition thereof to the income of the ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the registered sale deeds and also confirmed by the purchasers before the Assessing Officer. As regards the percentage completion method, it was contended by the assessee that the same was not notified by the Central Govt. u/s 145(2) of the Act, and therefore there was no valid basis to say that the same was mandatory on the assessee for computation of its income. It was further contended that the method of accounting of income followed by the assessee in the instant year was consistently foll .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(Appeals) vide his order dated 9.12.10 has accepted the contentions of the assessee and has deleted both the additions of ₹ 1,46,25,071/- as well as ₹ 7,10,94,646/- by holding that neither the A.O. was justified in adopting the sales consideration on the basis of circle rate prescribed for charging of stamp duty nor was he justified in considering the taxability of transactions relating to office / residential flats against which only advances had been received during the year and ac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

g of property. It was the contention of the learned D.R. that the Assessing Officer has rightly made the addition of ₹ 1,46,25,071/- as it was not imaginary but based on the relevant circle rate for stamp duty purposes fixed by the Government and that the sale rates declared by the assessee in the registered sale deed were found to be on a much lower side even though stamp duty was paid according to the circle rate. According to the Learned CIT(DR), the A.O. was thus justified in taking th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

advances, therefore the assessee ought to have applied the percentage of completion method and accordingly the addition made of ₹ 7,10,94,646/- ought to be upheld. 6. The learned A.R. appearing on behalf of the assessee contended before us that there was no valid basis for the Revenue to contend that AS-7 issued by ICAI was required to be mandatorily followed by the assessee for computing its taxable income. It was argued by him that neither the assessee was a construction contractor on wh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d in favour of the buyer. The learned A.R. further contended that such method of accounting stood duly accepted in the case of the assessee in all the earlier years and succeeding years when assessments were framed u/s 143(3) of the Act. The learned A.R. filed the copies of the assessment orders passed u/s 143(3) for assessment year 1998- 99, assessment year 2009-10, assessment year 2010-11 as well as assessment year 2011-12 when same method of accounting followed by the assessee was duly accept .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n on the part of the A.O. to adopt the percentage completion method for one year (the year under appeal) on selective basis when the method of accounting of income on the basis of handing over of possession and registered sale deed stood accepted in the case of the assessee in all the earlier and succeeding years. He further relied on the order of Delhi ITAT in the case of Malibu Estates Private Ltd. (ITA No. 4085/Del/2009) as also the judgement of Hon ble Delhi High Court in the case of Siddhar .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

over and above the declared amount was actually received by the assessee in cash as sales proceeds. He further argued that in the instant case the provisions of section 50C also were not applicable as the assessee was engaged in the business of building and selling of properties and had not earned any income from capital gains. The Learned AR also relied on the judgment of Hon'ble Delhi High Court in the case of CIT vs. Discovery Holdings Pvt. Ltd. 356 ITR 159 (Del.) in support of his conte .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion for assessing the business income in relation to the area sold by the assessee and therefore the A.O. was not justified in adopting the circle rate for the purpose of estimating the income. Even before us, the Revenue has not been able to bring any such material on record on the basis of which it could be said that the assessee has actually received any amount of sales proceeds over and above the amount declared by it in the registered sale deeds and its books of accounts and therefore we do .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

relation to the addition of ₹ 7,10,94,646/-, we do not find any infirmity in the order of the learned CIT(Appeals). The fact that the assessee has consistently followed the same method of accounting of income in all the earlier years as well as the succeeding years, has not been disputed by the Revenue. Thus the facts remains that the assessee has always been accounting for the sale proceeds of the portions sold by it as income in the year when the possession is given and the registered s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

lared in the subsequent years and assessments have been framed u/s 143(3) of the Act which is not tenable in law. It is further seen that percentage completion method as sought to be applied by the A.O. for computing the income of the assessee by not accepting the method of accounting of income declared by the assessee, is also not prescribed u/s 145/145A of the Income Tax Act, 1961 and therefore also there is no justification for the Assessing Officer to insist that the assessee ought to have a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was not applicable. Even in the case of Sabh Infrastructure Limited (supra) the assessee recognised revenue at the time of execution of sale deed through which significant risks and rewards of owner of the property were transferred to the buyer and the same was stated to be in accordance with AS-9 issued by ICAI and that the advance received from buyers of the flats was shown as advances from customers. The ITAT in this case found that the method of accounting adopted by the assessee is an accep .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version