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2015 (8) TMI 602 - ITAT MUMBAI

2015 (8) TMI 602 - ITAT MUMBAI - TMI - Addition on refund of money - Held that:- The issue about the refund of money to two parties had attained finality during the first round of litigation. From the order of the Tribunal also,it is evident that the order of the FAA was not challenged by the AO with regard this issue.In these circumstances, addition made by the AO and confirmed by the FAA is held be to unjustified. Reversing the order of the FAA pertaining to the issue under consideration, we d .....

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and report and after considering the same has passed an elaborate order on this issue.The learned DR could not controvert the above factual findings given by the CIT(A). We find the only grievance of the Revenue is that the original agreements or confirmations from the parties to whom the compensation for surrendering of incomplete flats has been paid were not furnished for which it was not possible on the part of the Assessing Officer to verify the genuineness. However, we find the assessee has .....

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firmity in the same and accordingly, the same is upheld.The FAA had, in the first round,deleted the addition made by the AO,then there was no justification on his part in upholding the same in the second round especially after the order of the Tribunal.Therefore, reversing the order of the FAA on the issue and following the earlier order of the ITAT, we decide ground no.2 in favour of the assessee.

Deduction being the expenditure incurred by the appellant in the subsequent years in re .....

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red expenditure of ₹ 3,45,69,104 towards cost of the project and which is not in the nature of repairs. As during the first round of hearing the FAA had admitted additional evidence and had called for a remand report from the AO, that he had forwarded the paper submitted before him to the AO, that the AO had submitted the report and had stated that it was difficult to comment upon the admissibility of additional evidences.Thus,the existence of Remand report is proved. If the assessee had s .....

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he order of the AO. Considering the peculiar facts of the case,we are of the opinion that in the interest of justice, the matter should be restored back to the file of the AO for fresh adjudication.He would afford a reasonable opportunity of hearing to the assessee,after considering the documentary evidences admitted by the FAA during the first round of litigation. The assessee is directed to appear before the AO and to extend full cooperation. - Decided in favour of revenue by way of remand. < .....

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taxed during the AY.19992000. - Decided in favour of assessee by way of remand. - ITA/4241&4242/Mum/2012 - Dated:- 5-8-2015 - Sh. Joginder Singh and Rajendra, JJ. For The Appellant : Shri S. C. Tiwari For The Respondent : Shri Yogesh Kamat-Sr. AR Order PER RAJENDRA, AM Challenging the orders of CIT(A)9, Mumbai, dated 19.3.2012 the assessee has filed the following Grounds of Appeal for the above mentioned two assessment years : ITA 4241/Mum/2012 (AY :1999-00) 1. That on the facts and in the circ .....

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compensation paid on surrender of flats, thus flouting the order of Hon'ble ITAT dated 18.12.2009 in ITA No. 3483/ Mum/2006. 3. That on the facts and in the circumstances of the case of the appellant and in law learned CIT (Appeals)has erred in not directing the deduction of ₹ 29,480,530/ -being the expenditure incurred by the appellant in the subsequent years in relation to income assessed for Assessment Year 1999- 2000/-. 4. All the above grounds of appeal are independent and without .....

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he circumstances of the case of the appellant and in law learned CIT (Appeals) has erred in not directing the deletion of the sum of ₹ 21,903,394/- as being double assessment of the income already brought to assessment for Assessment Year 1999-2000. 2. That on the facts and in the circumstances of the case of the appellant and in law learned CIT (Appeals) has erred in not directing the deletion of the sum of ₹ 21,903,394/ - because in any case this sum of ₹ 21,903,394/ -does no .....

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to each other. 5. Assessing Officer's order being contrary to law, evidence and facts of the case may kindly be set aside, amended or modified in the light of the grounds enumerated above. 6. The appellant craves leave to reserve to himself the right to add to, alter or amend any of the grounds of appeal at or before the time of hearing and to produce such further evidences, documents and papers as may be necessary. Assessee-company, engaged in the business of builders and developers, filed .....

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ain grounds filed by the assessee were allowed. As the assessee did not appear before the Tribuanl, so it decided the matter on the basis of the material available and after hearing the representative of the Department. The Tribunal set aside ground no.2 and 3 to the file of the AO. It was also held that the project was substantially completed in the AY.19992000 and that the receipt from the projects had to be assessed in the that AY.only. In pursuance of the order of the Tribunal, the AO compel .....

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by the order of the AO the assessee preferred an appeal before the First Appellate authority (FAA), who confirmed the order of the AO. 2.1. Before us, the Authorised Representative(AR)submitted that in the first round of litigation the FAA had deleted the addition, that the AO had not challenged the order of the then FAA, that the issue had become final at that point of time, that the AO was not justified in disallowing the same during the second assessment proceedings. He referred to the page .....

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pany were ₹ 21,59,40,112/- which included amount of ₹ 17,00,000/- received from Shri C.J. Patel (Rs. 4lacs) and M/s. Aryan International Transport ( ₹ 13 lacs). Since no flat was allotted to these two persons, this amount was refunded in the F.Y. 2004-2005. Accordingly, the appellant sought exclusion of this amount from the receipts appearing in the balance sheet. However, rejecting the claim of the appellant, the AO proceeded to adopt the total receipts of the appellant at  .....

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port. Since both these persons were not allotted any flat, the sum of ₹ 17 lacs has been refunded to them in the F. Y. 2004-2005. Accordingly, the receipts of the appellant as on 31.03.99 in respect of the project should be taken only at ₹ 21,29,98,875/-. 4.2 1 have carefully considered the submissions made by the Ld. AR. Vide my letter dated 5.7.2005, the AO was asked to comment on the claim of the appellant regarding exclusion of ₹ 17 lacs from the receipts. Vide his letter d .....

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re, the advances received from these persons cannot be included in the receipts. The same is directed to be deleted from the receipts for the purpose of working out the income of the appellant from the project. From the above, it is clear that the issue about the refund of money to two parties had attained finality during the first round of litigation.From the order of the Tribunal also, it is evident that the order of the FAA was not challenged by the AO with regard this issue. In these circums .....

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was about compensation paid on surrender of flats. The issue had travelled up to the Tribunal. 3.1. Before us, the AR contended that in the first round of appeal the issue was decided in favour of the asessee, that the AO had challenged the order of the FAA before the Tribunal, that the Tribunal vide its order dated 18.12.2009 (supra) had decided the issue against the AO, that the AO and the FAA had incorrectly made the addition/upheld the addition in the second round. He referred to the page no .....

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the ld. CIT(A)Mumbai erred in directing the AO to treat the compensation of ₹ 3,67,95,990/- paid to various persons as the cost of the project ignoring the fact that assessee failed to furnish any evidence in support of the compensation claimed to have been paid by it. The Tribunal deliberated upon the matter and decided it in following manner: 18. Facts of the case, in brief, are that the assessee during the course of assessment proceedings submitted before the Assessing Officer that var .....

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nsideration received was much higher than the compensation paid by the assessee to the original flat owners. The assessee included this compensation of ₹ 3,67,95,990 in the cost of project on account of compensation paid 19. However, the Assessing Officer did not accept the claim of the assessee on the ground that the original agreements entered into by the assessee with the persons to whom compensation was paid were not produced before him to prove as to whether there was any clause exist .....

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id to them. It was further submitted that the payments to these persons have been made by account payee cheques/drafts. The copies of the bank account evidencing clearance of cheques issued to those persons were also filed before the CIT(A). The assessee also gave the details of 9 persons to whom the flats of ₹ 7,03,66,767which is much higher than the amount of compensation paid. It was further submitted that in case the compensation of ₹ 3,67,95,990 was to be excluded from the cost .....

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ch order of the CIT(A), the Revenue is in appeal before us. 22. After hearing the learned DR and on perusal of the orders of the authorities below, we do not find any infirmity in the order of the CITCA). We find the CIT(A) while directing the Assessing Officer to treat the compensation paid to various persons as the cost of the project has called for the remand report and after considering the same has passed an elaborate order on this issue. The relevant portion of his order which is reproduce .....

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nal agreements entered into with these persons at the time of booking of flats to enable the AO to ascertain whether there was any clause allowing compensation at the time of thetermination of booking. It was the claim of the appellant that the copies of agreement on the basis of which compensation was paid were filed before the AO. Since those copies were not taken note of by the AO during the course of asstt Proceedings, vide letter dt 5.7.2005; the AO was asked to examine the issue after givi .....

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been submitted by the Ld. AR before me that the AO did not ask the appellant to furnish these documents. I feel that the issue has not been properly examined by the AO.You are requested to - again examine the issue after giving opportunity of being heard to the appellant and thereafter send the remand report regarding the admissibility of the deduction claimed by the appellant," 4.8.1 Before the AO, the appellant filed copies of agreements with the nine persons vide which the compensation w .....

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is difficult to race out the party after almost 20 years. However, we have given you copies of sample receipts received by the party for the payment received by him from time to time. ii) Mrs. S. D. Pardiwala .. iii) Mrs. Kamla J. Gehani iv) Mrs. Vimal S. Thakore v) Dr. C.L. Zaveri & Others vi) Mrs. K. A. Dave vii) M/s. Indo Saigaon Agency viii) Mrs. Manjula Babulal ix) Mr. Bharat R. Gupte In the case of S. No. (ii) to (ix) the assessee has filed copies of the agreement made for the surrende .....

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ears and as such the question of giving the details should not arise as there is no section in the Incometax Law which ask the assessee to give the details prior to 18 to 20 years. Hence in absence of original agreement or confirmation from the parties to whom compensation for surrender of incomplete flats has been paid are not possible to verify." 4.8.2 I have carefully considered the contention of the appellant have also gone through the remand report received from the AO.Various evidence .....

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n respect of payment of compensation to various persons have been filed before the AO.Further, on perusal of copies of various bank accounts filed by the appellant, it is seen that all the cheques issued to various parties have been cleared. In the bank statements, the name of the person to whom the payment in respect of a particular cheque has been made, has been specified. The copies of agreements and the proof having made the payments through cheques are sufficient evidence to support the cla .....

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t paid the compensation to the original allottees, it would not have received these sale proceeds from the resale of flats. Even if there was no clause permitting payments of compensation to' the original allottees in case of cancellation of bookings, the payment of compensation made is required to be allowed as a deduction on the principle of business expediency. In view of this discussion, the AO is directed to treat the compensation of ₹ 3,67,95,990/- paid to various persons as the .....

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e find the assessee has produced the copies of the bank account and the copies of agreements, etc., before the Assessing Officer. Further the assessee by cancelling the agreements has paid compensation of ₹ 3,67,95,990 and by reselling the flats has received an amount of ₹ 7,03,66,767 which has been disclosed as the receipts and which is much higher than the compensation so paid. In this view of the matter and in view of the detailed discussion by the CIT(A)in his order on this issue .....

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ed finality, it should not be revived again. It is not the case where the Tribunal had set aside the matter to the file of the AO for fresh adjudication and the AO after making inquiry computed the tax liability. The FAA had, in the first round, deleted the addition made by the AO, then there was no justification on his part in upholding the same in the second roundespecially after the order of the Tribunal. Therefore, reversing the order of the FAA on the issue and following the earlier order o .....

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considered a part of the cost of the project. The asessee estimated the cost of the project at ₹ 90 lakhs. The AO did not accept the claim of the asessee on the ground that no supporting evidences were filed to substantiate the claim of estimated expenditure on plastering and painting. 4.1. Before the FAA, in the first round of hearing, an additional ground was raised. The assessee claimed that the actual expenditure amounted to ₹ 3.45 Crores and not ₹ 90 lakhs as claimed befor .....

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I. T. Rules. Further, it was submitted that even the AO did not give any opportunity to the appellant to file evidence in respect of the claim that the additional ground taken by it and the additional evidence filed in support thereof should be admitted. After considering the submissions of the assessee the FAA held that all the expenses claimed by it in the additional ground of appeal were incurred in F.Y. 200405 and 200506 i.e after the return of income for the AY.under consideration was file .....

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ll the expenses relating to the said project as well as all the receipts from the said project should be taken into consideration for working out the profits from the said project. Therefore, I am of the view that the expenses of ₹ 3,45,69.1041- are required to apportioned towards the cost of the project consisting of 34 floors while computing the profit therefrorn. The other project towards which these expenses could have been said to be incurred related to the additional FSI comprising o .....

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ost of the project consisting of 34 floors while computing the profit therefrom. This allocation has been done by taking the receipts from the project at ₹ 22,61, 02,956/-. The same will change if the AO changes the figure of receipts from the project after verification. The AO challenged the order of the FAA before the Tribunal, who restored the matter back to the file of the AO for fresh adjudication in following manner: 26. Before CIT(A)it was submitted that the figure of ₹ 90 lak .....

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the evidence in support of the claim. 27. The CIT(A) following the decision of the Hon'ble Supreme Court in the case of Jute Corporation of India reported in 87 ITR 688 admitted the additional grounds raised by the assessee and called for a remand report from the Assessing Officer. After considering the remand report from the Assessing Officer, a copy of the same was supplied to the assessee calling for its comments. After considering the remand report from the Assessing Officer and the rep .....

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ders of the authorities below, we find the assessee during the course of assessment proceedings has claimed an amount of ₹ 90 lakhs which was incurred in respect of the project consisting of 34 floors after 31st March, 1999. We find the said figure has gone up to ₹ 3,45,69,104 before the CIT(A). We find the CIT(A) called for a remand report from the Assessing Officer who objected the allowability of the expenditure in the A.Y.1999-2000 since these expenses were incurred in financial .....

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We find the CIT(A) had given a finding that the assessee had given the figure of incomplete work in respect of the project at ₹ 90 lakhs on estimate basis and the figure of ₹ 3,47,69,104 given by the assessee was actual. However, we do not find any sound logic by the CIT(A) while accepting this figure as actual especially when the assessee failed before the Assessing Officer to substantiate the expenditure of ₹ 90.00 lakhs. In our opinion the powers of the Assessing Officer du .....

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pairs. The Assessing Officer shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground by the Revenue is accordingly allowed for statistical purposes. FAA held that the AO had issued notice of hearing on 3.3.2010 but the assessee did not attend nor furnished the requisite details before him, that later on three more opportunities were given to the assessee but same were not availed, that the AO .....

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oject cost that it further failed to furnish relevant details on the issue of compensation of ₹ 3,67,95,990/paid to various persons as cost of the project.Finally, he held that the AO had rightly taxed the assessee at ₹ 5,77,77, 896/. 4.2. Before us, the AR stated that the asessee was following project completion method, that till AY.200506 it did not calculate profit, that assessment for the AY.19992000 was reopened u/s.147 of the Act holding that all the flats were sold in that yea .....

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e documents were available to the departmental authorities, that the assessee could not appear before the Tribunal, that the FAA decided the issue after obtaining a report from the AO, that the fact of submission of the remand report by the AO was not brought to the notice of the ITAT, that the dispute was not about the genuineness of the expenditure but about the nature of the expenditure i.e. Whether it was renovation or not. He referred to page no.69 of the paper book and stated that the asse .....

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