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ACIT. Versus Navratna SG. Highway Properties Pvt. Ltd.,

2015 (6) TMI 21 - ITAT AHMEDABAD

Disallowance from work in progress account - CIT(A) directing the Assessing Officer to pass order while giving effect to CIT(A)’s order after verifying part details furnished by assessee during assessment proceeding and by calling for further details from assesse - Held that:- CIT(A) held that Assessing Officer was not just and proper to deny the benefit of expenses incurred by assessee in the construction of multi storied mall. He further directed the Assessing Officer that while giving effect .....

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g decided the main issue in favour of assessee by observing that it was not just and proper to deny the benefit of expenses incurred by assessee in the construction of multi storied mall. CIT(A) directed the Assessing Officer to make certain inquiries with regard to genuineness of expenses incurred and business nexus by passing speaking order. It amounts to setting aside the issue to Assessing Officer which is not permitted. Accordingly, we set aside the order of CIT(A) and restore the issue to .....

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both these Revenue s appeals and assessee s Cross Objections are arising out from the consolidated order of CIT(A)-I, Ahmedabad, dated 25.02.2011 for A.Y. 06-07 & 07- 08, so they are being disposed of by way of common order for sake of convenience. 2. In IT(SS)A No. 344/Ahd/2011 for A.Y. 2006-07, Revenue has filed the appeal on the following grounds: 1) Ld.CIT(A) erred in law and on facts in directing the A.O.to pass a speaking order while giving effect to CIT(A)'s order after verifying .....

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sessee has not furnished any corroborative evidence to prove genuineness of the expenses as well as business nexus thereof. 4) On the facts and in the circumstances of the case and in law, the CIT(A)ought to have upheld the order and not directed the A.O. to verify the submission of the assessee ignoring that such direction amounted to setting aside of the assessment order which he no longer can do after 01/06/2001. 2.1 In Cross Objection No. 155/Ahd/2011 for A.Y. 2006-07, assessee has filed the .....

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and/or was produced before the assessing officer. The observation being contrary to the facts and bad in law be quashed. 3.0 The CIT(A) erred on facts and in law in directing the AO to verify details etc. The CIT(A) ought to have held that ₹ 8,52,32,051/- was incurred by the appellant on capital account and was eligible for all deductions under the Income tax Act, 1961. 3.1 The assessing officer erred in holding that expenses of ₹ 8,52,32,051/- are to be disallowed. The assessee sub .....

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sallowances made by the assessing officer are incomprehensible and the said disallowances are contrary to the facts and law. The assessee submits that each and every disallowance made by the assessing officer be quashed. The assessee submits that each and every expenditure was incurred and each and every expenditure was incurred for the project and therefore each and every expenditure is forming part of the project. The assessee submits that it be so held. 3. At the outset of hearing, learned Au .....

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lat scheme. The land was purchased in F.Y.2005-06 and this project was also started in the same year. This project belongs to company M/s. Navratna S.G. Highway Properties Pvt. Ltd. The company Navratna S.G. Highway Properties Pvt. Ltd. is a Special Purpose Vehicle for the purpose of construction and development of this commercial project "Kshitij Project". The equity capital of Navratna S.G. Highway Properties Pvt Ltd. was held by M/s. Navratna Organizers & Developers Pvt. Ltd. (N .....

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etails for the first time. However, as the corroborative evidence of incurring these expenses and business nexus has not been established, therefore, Assessing Officer disallowed the following expenses from work in progress account:- Sr.No. A.Y. Disallowances 1. 2006-07 Rs.8,52,34,051/- 2. 2007-08 Rs.7,74,27,638/- For both the Assessment Years involved, Assessing Officer has computed total income at Rs.Nil. However, Assessing Officer has carried out disallowance from work in progress account. He .....

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tions were raised in this regard. In appeal, CIT(A) decided as under: 6. I have considered the submissions of the appellant. It has been represented before me that the memorandum of understanding has been entered between Navratna Organizer and Developers Pvt.Ltd. (NODPL), a private limited company and M/s. Kshitij Venture Capital Fund (KVCF), a SEBI registered trust having its registered office at Mumbai on 01.10.2005. Vide the memorandum of understanding, supra, NOPDL and KVCF have agreed to de .....

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ords, it is a contention of the appellant that business of the SPV had already commenced. 7. Considering the facts in totality, I am of the opinion that it is not just and proper to deny the benefits of the expenses incurred by the appellant in the construction of multi storied mall. Accordingly, the Assessing Officer is directed that while giving effect to the instant appellate order, verify the expenses incurred and claimed by the appellant in A.Y. 2006-07 and A.Y.2007-08 as per the details su .....

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sing Officer to pass order while giving effect to CIT(A) s order after verifying part details furnished by assessee during assessment proceeding and by calling for further details from assessee. CIT(A) ought to have decided the issue on the basis of details filed by assessee before him and ought not to have directed the Assessing Officer to reconsider his own decision. CIT(A) ought to have upheld the action of Assessing Officer in disallowing the expenses from work-in-progress as assessee has no .....

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ue with having decided the issue in principle in favour of assessee. 4.4 After going through rival submissions and material on record, we find that CIT(A) held that Assessing Officer was not just and proper to deny the benefit of expenses incurred by assessee in the construction of multi storied mall. He further directed the Assessing Officer that while giving effect to the instant appellate order, verify the expenses incurred and claimed by assessee in A.Y. 2006-07 and A.Y.2007-08 as per detail .....

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