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Elenji Kamalil V. Thomas Versus JCIT – 22 (2) , Mumbai

2016 (6) TMI 171 - ITAT MUMBAI

Nature of major Repair and Renovation expenditure on land without approval from local authorities - capital cost of improvement as contemplated by section 43(6)(c)(i)(A) - construction / renovation activity done by the same person who purchased the same premises later - Held that:- on the touch stone of preponderance of probabilities which cannot be simply brushed aside or demolished by the Revenue based on conjectures and surmises on suspicion , except through cogent incriminating material whic .....

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es given on the invoices which is not sufficient enough to fasten the liability on the assessee as it does not prove that these purchases were bogus and are accommodation entries as set out above by Revenue

Even for the sake of argument it is assumed that the assessee has not obtained the approval from CIDCO for doing this major and extensive structural repair and modification work to the factory Building, this technical breach will not in itself disentitle the assessee from claiming .....

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work which are done post receipt of this occupancy certificate dated 30-03-2009, such as applying for electrical connection, water connection, drainage connection etc and also finishing work is to be done in these flats to complete construction of these flats, as also there are other relevant factors to be kept in mind to book revenue as per percentage completion method apart from the occupancy certificate - Held that:- Revenue has not rejected the books of accounts . Thus, keeping in view the .....

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Member And Shri Ramit Kochar, Accountant Member For the Assessee : Shri Prakash Pandit For the Revenue : Shri Sunil Kumar Agarwal ORDER Per Ramit Kochar, Accountant Member This appeal, filed by the assessee , being ITA No. 199/Mum/2013, is directed against the order dated 9-11-2012 passed by learned Commissioner of Income Tax (Appeals)- 33, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2009-10, the appellate proceedings before the CIT(A) arising from the assessment order date .....

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being the capital cost of improvement as contemplated by section 43(6)(c)(i)(A) of the Income Tax Act 1961. (2) Reasons given by the CIT(A) for confirming the act of the A. O. of rejecting appellant's claim of ₹ 48,22,390/- being the capital cost of improvement as contemplated by section 43(6)(c)(i)(A) of the Income Tax Act 1961, are wrong insufficient and contrary to the facts and evidence on record. (3) In the facts and circumstances of the case and in law the learned CIT (A) erred .....

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arned CIT (A) erred in confirming the act of the A.O. of making addition of ₹ 77,99,056/- to the profit disclosed by the appellant without pointing out defects in the Books Of Accounts. (6) Reasons given by the learned CIT (A) for confirming the act of the A. O. of making addition of ₹ 77,99,056/- to the profit disclosed by the appellant without pointing out defects in the Books Of Accounts, are wrong, insufficient and contrary to the facts and evidence on record. 3. The brief facts .....

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ry premises at Nerul for a consideration of ₹ 1.16 crores. The above factory premises was depreciable asset and the short term capital gain of ₹ 33,14,640/- was reported on the sale of such depreciable asset. The assessee did not offer taxation on the ground that the assessee has acquired three shops for ₹ 53 lacs, so the block of asset did not ceased during the relevant financial year 2008-09. The controversy/dispute in this appeal is with respect to the addition of ₹ 48 .....

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deed of assignment is registered on 4th November, 2008 , but the transaction started on 15th October, 2007 , wherein the parties agreed for the said transfer and first payment was received by the assessee. During the course of mutual understanding and agreement , since the assessee being involved in construction activities was asked by the buyer to make the workshop building usable as per the buyer s requirements. Since the workshop building which was built in the year 2001 was used as factory b .....

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ructure , no approval from the local authorities was required. The assessee submitted that the assessee himself is engaged in the construction activities and he has the technical expertise and resources to carry out the work. The assessee has spent ₹ 48,22,390/- towards the above work and necessary copies of the bills with respect to the work done have also been submitted before the A.O. The A.O. rejected the contentions of the assessee on the grounds that the assessee has not obtained any .....

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ork of ₹ 48,22,390/- was to be done prior to sale of the factory building, hence, it is unlikely that assessee has invested such a huge amount for repair before sale of the building. The MOU dated 17th August, 2007 was entered into between the assessee and the buyer wherein it was agreed to transfer the factory building at a consideration of ₹ 1.16 crores , but there is no mention of expense of ₹ 48,22,390/- towards repairs of the building to be incurred by the assessee was fou .....

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kely that 41.6% of the sale consideration of the land and building will be invested for making the factory building usable before the sale of the building, that too without any written agreement. The assessee in this regard submitted that the plot was given on rent prior to its sale , the AO observed that then how the construction work has been carried out in the said plot. The A.O. observed that no prudent person will sell a plot of size of 511 sq. meter after making a investment of ₹ 48. .....

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not regular suppliers of steel and it is unlikely that such suppliers will give credit for more than one year. To verify the genuineness of the suppliers, Inspector from the Department was deputed to serve notice u/s 133(6) of the Act and it was reported by the Inspector that neither M/s Payal Enterprises nor M/s Bhumi Enterprises have ever existed in the given address as stated in the invoice. The assessee was confronted with the findings of the Inspector. The assessee submitted that the paymen .....

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om various parties is not matching with the bill amount and the assessee being engaged in the building activities and electrical contractor, managed to get the bills for showing investment in construction. The AO further observed that the cement purchased from Thakkar Popatlalji Velji shown of ₹ 2,85,000/- but the bill amount submitted was ₹ 61,251/-. Similarly, there were other discrepancies which were noted by the A.O.in the amounts of the bills claimed and the amount as per the bi .....

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passed by the A.O. u/s. 143(3) of the Act, the assessee filed first appeal before the learned CIT(A). 5. Before the learned CIT(A), the assessee submitted that the A.O. has made the additions to the income of the assessee in the assessment order based upon surmises and conjectures on suspicion and not supported by any evidence. The A.O. has wrongly presumed that major repair requires approval from local authorities. It was submitted that the assessee not only repaired extensively structure of 2 .....

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ructure and the flooring etc. to suit buyers requirement was a precondition for the sale. The assessee submitted that the assessee has rightly spent the amount on repairing of the building and rightly claimed the deduction as per section 43(6)(c)(i)(A) of the Act. With respect to the contentions of the A.O. that the plot was given on rent, then how the construction work was carried out in the plot and no prudent businessman will sell a plot of size 511.50 sq. mtr. after making investment of S .....

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ties except one have confirmed that they were supplying building material to the assessee and also confirmed that TDS was duly deducted on amount paid to them from time to time. The assessee submitted that the A.O. was wrong in concluding that all the bills are accommodation bills. The suppliers were regularly supplying building material to the assessee and therefore outstanding as on 31-03-2009 has nothing to do with the goods supplied by them. It was contended by the assessee that because of t .....

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2002. The assessee has submitted the copies of balance sheet which shows that the land and factory building in the block of their share from the year 2001 onwards , the copy of deed of assignment entered between the assessee and the buyer and a copy of MOU dated 03-09-2007 vide clause No. 2 stipulates that to make the building fit and in proper usable condition , the buyer required repairing and modification before handing over the possession. The learned CIT(A) after going through the same, re .....

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deed of assignment dated 20-01-2009 does not mention anything about the MOU dated 3rd September, 2007 and does not talk that advance of ₹ 3 lacs was received by the assessee in accordance with the MOU. Rather, the deed of assignment shows the details of particulars of payment of that amount having been received on 15th October, 2007 along with other payments received from 15th December, 2007 to 1st January, 2009 , from time to time , aggregating to ₹ 1.16 crores. The learned CIT(A) .....

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reliable as firstly it was entered into even prior to the date of permission granted to the assessee by the CIDCO and then also for the reason that same does not find any mention in the deed of assignment dated 20th January, 2009 , though the other relevant agreement to lease dated 21st January, 1999 and 14th May, 2008 did find mention in the deed of assignment dated 20-01-2009. Hence, the learned CIT(A) held that the MOU dated 3rd September, 2007 is not a genuine document to support the assess .....

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parties M/s Payal Enterprises and M/s Bhumi Enterprises never existed at the given addresses and some other persons were staying for many years. When it was confronted to the assessee, it was stated by the assessee that the payments were made through the banking channel and copy of bank statements were furnished before the A.O. . The CIT(A) , thus, concluded that construction expenses are not genuine. During the appellate proceedings, the assessee has not disputed the finding of the A.O. made b .....

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improvement of an amount of ₹ 48,22,390/- claimed by the assessee cannot be taken as addition to the factory building and the claim of the assessee was rejected, vide appellate orders date 09.11.2012 6. Aggrieved by the appellate orders dated 09.11.2012 passed by the learned CIT(A), the assessee filed second appeal before the Tribunal. 7. The learned Counsel for the assessee submitted that the dispute under this appeal is with regard to the cost of improvement of ₹ 48,22,390/- spent .....

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ducted at source on the amounts paid to the parties who undertook the work wherever applicable as per provisions of Chapter XVII-B of the Act. It was agreed by the assessee with the buyer that the assessee will carry out the repair work to make the property usable and hence the expenses was incurred of which the details are placed in the paper book filed with the Tribunal. He also drew our attention to clauses of the MOU entered into between the assessee and the buyer dated 3rd September, 2007 w .....

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cion while all the cogent material has been brought on record to substantiate that major structural repairs and modification work was carried out by the assessee at the factory building . He also drew our attention to the certificate of Architect dated 10th September, 2007 describing the work to be carried on for the purposes of repairing to avoid collapsing of the building which is placed at paper book page 89. It was submitted that the learned CIT(A) erred in referring to the MOU dated 3rd Sep .....

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ury .He drew our attention to page 166 of paper book to contend that tax of ₹ 31,765/- was deducted at source on labour charges of ₹ 15,42,000/- paid for structural repair and modification work carried on by the assessee in the factory building. Further, the ld. Counsel relied upon the submission made before the authorities below which are not repeated for the sake of brevity. 8. The ld. D.R. submitted that the factory area was only around 255 sq. meters and the expenses has been inc .....

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fication work was undertaken by the assessee. It was also submitted that there was no permissions required from CIDCO for carrying out these extensive structural repairs and modification work as it is not a case of construction of new factory building, consequently no permission from CIDCO was taken by the assessee. 10. We have considered the rival contentions and also perused the material available on record. We have observed that the assessee was the owner of the land and factory building at 3 .....

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id MOU dated 03-09-2007 (stamp paper purchase dated 17-08-2007) is placed by the assessee at page 85-86 of paper book filed with the Tribunal. As per clause 2 of the MOU dated 03-09-2007, the assessee was required to make the said building in a fit and proper usable conditions as the building structure required repairs and modification to suit the requirement of the buyer. The architect certificate dated 10-09-2007 is also placed by the assessee in the paper book page 89 filed with the Tribunal, .....

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n the paper book certificate that these documents were duly placed before the learned AO and the learned CIT(A) during the course of relevant proceedings before these authorities. The assessee has incurred these expenses for the extensive structural repairs and modifications in the factory building apart from repairs to the compound wall and leveling of plot, for which the assessee submitted the details/documents including invoices regarding the material cost and labour charges etc. incurred for .....

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ade the addition merely on the basis of surmises and conjectures on suspicion by terming the invoices of material and labour submitted by the assessee as bogus and accommodation entries. No cogent incriminating material has been brought on record by the authorities below to prove that assessee has made bogus purchases except inspector report which is not sufficient to fasten the liability to tax on the assessee. The inspector report has merely submitted that two of the vendors from whom steel wa .....

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ment or with the bankers of these two vendors as the payment were all made through account payee cheques . No further enquiry was conducted by the Revenue to bring on record cogent incriminating material to disprove and demolish the contentions of the assessee. The assessee in all dealt with fifteen parties as per details vide page 90 of paper book filed by the assessee with the Tribunal. Only enquiries were made through inspector with respect to four parties out of these fifteen parties , of wh .....

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e assesseee having undertaken extensive structural repairs and modification work to the factory building prior to its sale, nor the statement of the buyer of the afore-stated property was recorded. No technical expert such as DVO was appointed by the Revenue to enquire about the extensive structural repairs and modification claimed to be carried on by the assessee to disprove and demolish the contentions of the assessee . No enquiry was even made with the office of the municipal authorities to a .....

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e assessee is a farce , in-fact the reliance by the Revenue on the inspector report without conducting further probe to conclusively disprove and demolish the contentions of the assessee, has led the revenue conclusions fall into the realm of conjectures and surmises on suspicion which is not permissible. Suspicion howsoever strong cannot take the place of the proof is a settled proposition of law. Thus, in nut-shell, no proper and adequate enquiry has been conducted by the Revenue to rebut , di .....

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are irrelevant de-hors fastening of the liability to tax on the assessee . Similarly to contend that the said MOU did not find mention in the deed of assignment dated 20-01-2009 and is merely an after-thought is based on surmises and conjectures on suspicion , while the MOU did talk of payment of ₹ 3 lacs vide cheque dated 15-10- 2007 which find mention in the deed of assignment dated 20-01-2009 . To contend that the MOU dated 03-09-2007 has preceded the permissions received by the assess .....

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ased on suspicion which is not permissible under the Act. The CIT(A) again enter into realm of conjectures and surmises based on suspicion by contending that the material and labour charges must have been used in building business of the other proprietary concern of the assessee namely E. V. Homes , while the invoices speak voluminously of the name of the concern of the assessee M/s Vicky Electrical Corporation as the vendee in the said invoices , which concern of the assessee namely, M/s Vicky .....

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backed with the chain of events starting from signing of MOU dated 03-09-2007 and ending with deed of assignment dated 20-01-2009 , which comprised agreement to sell land and factory building for ₹ 1.16 crores vide MOU dated 03-09-2007 with conditions agreed by the assessee to make the factory building fit and usable as the building required extensive structural repairing and modification to suit the buyers requirement, architect certificate dated 10-09-2007 pointing out deficiencies in th .....

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payment from the same buyer starting from 15-10-2007 and ending on 01-01-2009 in all aggregating to ₹ 1.16 crores as agreed in the MOU dated 03-09-2007 and finally execution of deed of assignment in favour of the same buyer vide deed dated 20-01-2009, which completes full chain of event of the transaction for sale of land and factory building for which necessary structural repairs and modifications were done by the assessee as contended, on the touch stone of preponderance of probabilities .....

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f preponderance of probabilities which the revenue could not do except by bringing on record inspector report that two of the parties are not existing on the addresses given on the invoices which is not sufficient enough to fasten the liability on the assessee as it does not prove that these purchases were bogus and are accommodation entries as set out above by Revenue . Even for the sake of argument it is assumed that the assessee has not obtained the approval from CIDCO for doing this major an .....

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to the factory building cannot be sustained and we order deletion of the addition made by the A.O. and as sustained by the CIT(A). However, from the perusal of the invoices submitted by the assessee in the paper book filed with the Tribunal which are placed at paper book page 92-111, we have observed that the same totaled to ₹ 38,18,517/-( excluding one invoice which is placed twice at page 100 and101 being Ritesh Transport of ₹ 92,192/- bearing number 385 dated 31/05/2008) ) against .....

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e, the A.O. observed that the Project Carmel at Kamothe is completed during the previous year 2008-09 relevant to the assessment year 2009-10. The occupancy certificate of the said project issued by the CIDCO was obtained on 30th March, 2009. The assessee has already taken booking advance from the buyers and agreement to sale was also executed still no sale booked for many buyers by the assessee . The assessee has booked sale of ₹ 1,98,47,560/- in the Project Carmel and advance against the .....

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the building construction need not be 100% complete at the time of the receipt of the occupation certificate. The assessee submitted that there could be certain items which would be incomplete and unfinished at the time of receipt of completion certificate , the builder may not be in a position to give the possession to all the buyers. The assessee submitted that he follows a method of offering profits on estimation basis for ongoing projects based on percentage completed till the end of the fi .....

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e booking amount was received in the financial year 2008-09 but the finishing work was not complete by the end of the year on 31-03-2009 and the possession was not given, the sales is booked in the subsequent financial year i.e. 2009-10. The assessee submitted the sales account before the A.O. . The assessee submitted that the assessee is following percentage completion method for offering profits on the said project during the construction stage . In immediately succeeding year, the balance uni .....

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r 2009-10, against the profits on the sale of said units for which the working of such proportionate cost incurred in the subsequent year was submitted to the A.O. by the assessee. The A.O. rejected the contentions of the assessee by holding that the occupancy certificate was obtained by the assessee of the Project Carmel on 30th March, 2009 and then how the possession has been given to the buyers whose sale has been booked and how he booked sale for some of the buyers and not booked sale for so .....

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ture for the assessee. The A.O. held that as per the guidance note on recognition of revenue by the real estate developers issued by ICAI, the revenue should be recognized when (i) the seller has transferred to the buyer all significant risks and rewards of ownership and the seller retains no effective control of the real estate to a degree usually associated with the ownership (ii) no significant uncertainty exists regarding the amount of the consideration that will be derived from the real est .....

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eferring his tax liability. As per the AO , the possession given to the customers is not the criteria for recognizing income by the builder following percentage completion method. The AO held that the contention of the assessee that the cost incurred in the subsequent year in the case of Carmel Project should be allowed in this financial year is not acceptable according to the mercantile system of accounting. The cost will be allowed in the financial year in which it is incurred. Thus, the A.O. .....

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submitted that the assessee is in the business of developers and contractors at Navi Mumbai under the name and style of E.V.Homes. The accounting method followed by the assessee for ascertaining profits is based on the percentage completion method. The assessee submitted that he is keeping separate records for each project. The Revenue has accepted in the past the said percentage completion method followed by the assessee while framing assessments u/s 143(3) of the Act . The Revenue has in the i .....

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roject Carmel on 30-03-2009 to the assessee, though the construction of the remaining flats continued and building was completed in the assessment year 2010-11. The assessee submitted that building occupation certificate is a mere formality in order to get the water connection, electric connection, drainage connection etc.. The assessee submitted that detailed cost of the material and construction expenses were duly given to show that the construction of the building continued till the assessmen .....

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assessee is following percentage completion method and the profit is duly disclosed to the Revenue from year to year. The assessee also submitted that with respect to flat no 101,203,501 and 601 were on the verge of cancellation and were in-fact cancelled. With respect to flat no 501 and 601, the advances were received and the AO wanted to treat the same as sales. The occupation certificate was though received on 30/03/2009 , the water , electricity, drainage connections etc were obtained by th .....

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ethod and the same is required to be accepted. But the AO relying on the judgment of Champion Construction (1983) 5 ITD 495(Bom. Trib.) held that if the project is complete, then there is no reason for not recognizing the advances received as sale and accordingly the AO added sum of ₹ 77,99,076/- as an income in the current year and reduced the WIP by ₹ 1,75,29,144/-. The assessee submitted that the assessee is recognizing the revenue as per AS-9 that is percentage completion method .....

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ually associated with the ownership. (b) The seller has effectively handed over possession of the real estate unit to the buyer forming the part of the transaction (c) No significant uncertainty exist regarding the amount of consideration that will be derived from real estate sale, and (d) It is not unreasonable to expect ultimate collection of revenue from the buyer. The said method also recognizes following indicator of such transactions and activities:- (i) The revenue is recognized based on .....

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t under this method and appropriate allowance for future unforeseeable factors which may affect the ultimate quantum of profit is generally made. The assessee submitted that the assessee is following the said accounting standard AS-9 and is disclosing the profits on percentage completion method in the past as well as in the future. The assessee submitted that he has already booked profit of ₹ 11,35,720/- from Project Carmel during the assessment year 2008-09 when there were no sales and th .....

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essee and it can only be disturbed where the method of accounting followed is such that in the opinion of A.O. the income cannot be properly deduced there from, the A.O. can compute the income in such a manner as he may determine. The assessee is following AS- 9 from the first year of his business. This method has been consistently followed and now the said method cannot be rejected without pointing out that the said method is not giving true income of the assessee. Without prejudice to the abov .....

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s disclosed profit of this Project Carmel from year to year and the assessee disclosed sales of remaining flat in the assessment year 2010-11 on five counts such as (i) as out of the total consideration 1/3rd of the consideration was received after 31st of March 2009, (ii) there were cancellation of booking for four flats which include two flats which the A. O. has considered as sales (iii) possession to each flat holder was given in the assessment year 2010-11 and the assessment year 2011-12, ( .....

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same method may be accepted. The book results have not been rejected by the A.O.. Thus the assessee prayed that the addition of ₹ 77,99,056 is required to be deleted. In support, the assessee relied upon the decision of ITAT , Mumbai Bench in the case of Awadhesh Builders v. ITO, (2010) 37 SOT 122(Mum.) and ITAT , Ahmadabad Benches in ACIT v. National Builders, (2012) 137 ITD 277(Ahd. Trib.). The assessee also relied on the decision of Hon ble Supreme Court in the case of CIT v. Realest Bu .....

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that regular method adopted by the taxpayer cannot be rejected merely because it gives benefit to the assessee in certain years. The assessee also relied upon the decision of ITAT, Mumbai Benches in the case of ACIT v. Dharti Estate, (2011)129 ITD 1(Mum)(TM). The ld. CIT(A) rejected the contention of the assessee whereby he held that the assessee has given a list of buyers from where it is clear that the agreement has also been registered of sales made to those buyers by the assessee , against .....

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erved that on the one hand the assessee has stated that they are following percentage completion method of accounting as per AS-7 which is an approved method and on the other hand the assessee is stating that they are following AS-9 method, which is also an approved method for builders. The occupation Certificate was obtained by the assessee on 30-03-2009. The occupation Certificate was given on the basis of assessee s architect certificate wherein it was certified that work is completed and bui .....

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dicting himself. The methodology adopted by the assessee is to recognize the revenue as and when he wants to and as and when he chooses to do so is not supported by AS-7 or AS-9 method of accounting . It is also not supported by a mercantile method of accounting. With respect to the two flats cancelled included in the sale receipt by the AO, the CIT(A) held that when the flats were sold by the assessee , agreements were registered and the amount were realized , it amounts to sale by the assessee .....

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IT(A) rejected the contention of the assessee as the projects have been completed and all the flats are sold ,revenue recognized, there is nothing left to allow as expenses pertaining to the same project in the subsequent year. , vide orders dated 09-11-2012. 14. Aggrieved by the orders dated 09-11-2012 of the ld. CIT(A), the assessee is in second appeal before the Tribunal. 15. The ld. Counsel for the assessee submitted that the asessee is following percentage completion method by following Acc .....

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s been accepted by the Revenue and no addition has been made on this count. The ld. Counsel for the assessee submitted that the booking of sales is revenue neutral whereby no loss or prejudice has occurred to the Revenue as there is no tax loss to the Revenue as the taxes have been paid in the immediately succeeding assessment year and there is no intention to avoid or postpone the tax liability. The assessee submitted that he constructed 27 flats in this project Carmel and the entire profit ear .....

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ffered to tax by the assessee as gross profit from this Project Carmel for the previous year ended 31-03-2009 corresponding to the assessment year 2009-10. Similarly , he drew our attention to page 20 of paper book which is audited Profit and Loss Account of E. V. Homes (proprietary concern of the assessee) for the financial year 2007-08 to contend that ₹ 11,35,720/- has been offered to tax by the assessee as gross profit from this Project Carmel for the previous year ended 31-03-2008 corr .....

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0-11 has also been framed u/s 143(3) of the Act whereby Revenue accepted the method of accounting being percentage completion method adopted by the assessee and the assessment order is placed at paper book,page 82-84 . The ld. Counsel relied upon the decision of Hon ble Supreme Court in the case of CIT v. Realest Builders and Services Ltd. [2008] 307 ITR 202 (SC) ,wherein the Hon ble Supreme Court held that in the absence of any specific finding to demonstrate that there is an underestimation of .....

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ns so made by the AO and sustained by the CIT(A), once in the impugned assessment year and again in the succeeding assessment year 2010-11 which is not permissible under the Act , as the assessee of his own volition has offered for tax the entire income in three assessment years i.e. 2008-09,2009-10 and 2010-11 based on percentage completion method with respect to all 27 flats so constructed and with the additions of ₹ 77,99,076/- as made by the AO and confirmed by the CIT(A) to the income .....

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0-03-2009, almost entire consideration has been received from the buyers and there is no risk and uncertainity with the assessee about realization of the remaining proceeds, the buyers have got right to sell and transfer their interest in the flats and hence revenue should be recognized in this assessment year as was done by the AO and sustained by the CIT(A). He further relied upon the orders of authorities below. 17. We have considered the rival contentions and also perused the material on rec .....

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mpletion method of accounting for accounting revenue as stipulated vide accounting standards AS -7 and AS-9 prescribed by ICAI. The assesseee has stated to have disclosed the profit from this Project Carmel with respect to all 27 flats so constructed over the three years i.e. financial year 2007-08, 2008-09 and 2009-10 by following percentage completion method of accounting. The entire profit with respect to all 27 flats so constructed is stated by the assessee to have been duly offered for taxa .....

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en with respect to these 13 flats in the financial year 2009-10 and 2010-111, although almost entire sales consideration has been received till 31-03-2009 with respect to these flats barring one flat where very little amount vis-à-vis total consideration has been received . The assessee has stated to have incurred expenses of ₹ 31,79,171/- in the financial year 2009-10 towards these 13 flats as these flats were not finished by the end of the relevant previous year i.e. 2008-09 and d .....

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s also there are other relevant factors to be kept in mind to book revenue as per percentage completion method apart from the occupancy certificate. Thus, the assessee had submitted that he acted bonafidely and voluntarily offered to tax the entire income of the Project Carmel with respect to all 27 flats so constructed spread in three financial years namely 2007-08, 2008-09 and 2009-10 and paid due taxes to the Revenue in these three year of his own volition by following percentage completion m .....

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book page 120-140 . The assessee stated to have acted with a bona-fide belief that the income has to be offered to tax based on percentage completion method based on the stages of completion of the project and the receipt of the occupancy certificate is one of the relevant factors to be taken into account for determining the completion of the project but it is not the only or the sole relevant and conclusive factor for determining the completion of the project for booking revenue under the perce .....

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on is received by the assessee from the flat buyers. The same method of accounting being percentage completion method as followed by the assessee is stated to be consistently followed by the assessee and accepted by the Revenue in the past as well in the succeeding assessment years and even the assessments were framed u/s. 143(3) of the Act for the assessment year 2010-11 accepting the method of accounting followed by the assessee, which has not been disturbed by the Revenue in assessment year 2 .....

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