TMI Blog2015 (8) TMI 1142X X X X Extracts X X X X X X X X Extracts X X X X ..... one expenses, which included residential phone also and the AO has disallowed 20% of the same towards personal use. Considering the activity of the assessee, we are of the view that the disallowance of 20% of the aggregate amount of telephone expenses is on higher side. Accordingly, we modify the order of ld. CIT(A) on this issue and direct the AO to restrict the disallowance to 10% of the telephone expenses claimed by the assessee. - Decided partly in favour of assessee. Assessment of profit on plot no.42 - Held that:- The undisputed facts remains that the assessee has completed the project carried on plot no.42. However, while estimating the profit on the said project, the AO allocated administrative expenses equally on all the three projects viz Plot No.42 (which is completed), Plot No.57 and Plot No.76 (under progress). Under these set of facts, we are of the view that the AO was not justified in allocating the administrative expenses equally between all the three projects. Since the assessee has been selling flats constructed on Plot No.42, naturally he would have spent more time and energy in respect of this project. Accordingly, we are of the view that the major portion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0/-. The return is accompanied with tax audit report which shows the assessee is proprietor of M/s Orient Associates doing the business as Builders and developers. The asset side of the balance sheet shows WIP at ₹ 14,42,034/- and various plots of land at Ulve and Kamothe. The assessee has also shown advance against booking at ₹ 29,00,556/-. However, on examination assessee s return for AY 2005-06, it is seen that the assessee has shown salary income of ₹ 2,36,925/-. No balance sheet is enclosed with the return. It is therefore, presumed that the assessee has sold the work-in-progress in the AY 2004-05 itself. In view of the above facts and circumstances of the case I have reason to believe that income to the tune of ₹ 14,42,034/- and further income on sale other assets, chargeable to tax has escaped assessment for the AY 2004-05 within the meaning of subsection (b) of section 147 of the IT Act. Accordingly, this is a fit case for issue of notice under section 148 of the IT Act, 1961 4. The ld. counsel submitted that the AO has reopened the assessment on presumption without pointing out the income which has escaped assessment. He further submitted tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A), the assessee submitted that the construction on plot No.200 had already been completed and possession of flats were also given in the immediately preceding year. It was submitted that the assessee received a bill for an amount of ₹ 2,81,034/- during the year under consideration from the Electricity department and the same was paid by the assessee and claimed as deduction. Accordingly it was submitted that the electricity expenses is related to the year under consideration. The assessee further submitted that he has incurred a sum of ₹ 7980/- towards the electricity charges of his residence and claimed the same as expenditure, since he was carryon the business activities from his residence. The ld. CIT(A), by accepting the contention of the assessee with regard to the electricity charges pertaining to Plot No.200, granted relief to the tune of ₹ 2,81,034/-. However, the ld. CIT(A) confirmed the electricity charges of ₹ 7980/- pertaining to residence. Aggrieved by the decision of the ld.CIT(A) in confirming the addition of ₹ 7980/- towards electricity charges the assessee is in appeal before us. 9. We notice that the electricity charges o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordingly he submitted that the AO was not justified in preferring profit and loss account project wise. Accordingly, the ld. AR submitted that the profit declared by the assessee should be accepted. In the alternative, he submitted the allocation of administrative expenses on the project carried out in Plot No.42 is on the lower side. On the contrary, the ld DR strongly defended the orders of authorities below on this issue. 14. The undisputed facts remains that the assessee has completed the project carried on plot no.42. However, while estimating the profit on the said project, the AO allocated administrative expenses equally on all the three projects viz Plot No.42 (which is completed), Plot No.57 and Plot No.76 (under progress). We notice from the assessment order, that the assessee has received a sum of ₹ 95,85,736/- on sale of flats constructed on plot no.42 and the total expenses incurred was ₹ 82,03,672/-. However amount spent on Plot No.57 and 76 was ₹ 9,71,227/- and 2,40,497/- only. Thus it is seen that the projects carried in Plot No.57 and 76 are comparatively lower in size. Under these set of facts, we are of the view that the AO was not justified ..... X X X X Extracts X X X X X X X X Extracts X X X X
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