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 →

ITO-17 (3) (1) , Mumbai Versus M/s. Arsh Constructions 1

2016 (9) TMI 1215 - ITAT MUMBAI

Determination of income on ‘project completion method - Ad-hoc estimation of profits - assessment completed u/s 143 - Held that:- In the present case, assessee had demonstrated that there was no substantial completion of project in the instant assessment year, and rather the fact-situation clearly showed that on account of litigation amongst the partners the continuation of the project itself was in jeopardy. In any case, the facts brought out by the CIT(A), and which have not been negated by 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

was completed u/s 143(3) of the Act, the income has been assessed by following the ‘project completion method’ adopted by the assessee. There is also no repudiation to the assertions of the assessee before us that the decision of CIT(A) for Assessment Year 2007-08, rendered under similar situation, has not been appealed against by the Revenue before the Tribunal. For all the above reasons, in our considered opinion, CIT(A) made no mistake in holding that in view of the uncertainties involved, t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e - ITA NO. 982/MUM/2012 - Dated:- 19-8-2016 - SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER For The Assessee : Aasifa Khan For The Revenue : Shri A. Ramachandran ORDER PER G.S. PANNU, AM : The captioned appeal by the Revenue is directed against the order of CIT(A)-29, Mumbai dated 30.11.2011, pertaining to the Assessment Year 2006-07, which in turn has arisen from the order passed by the Assessing Officer, Mumbai dated 30.12.2010 under section 143(3) r.w.s. 263 of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

an addition made of ₹ 37,70,718/-. 3. Although Revenue has raised two Grounds of appeal, but there is a solitary issue relating to the manner in which the Assessing Officer has assessed the income of assessee from the business of development and construction at ₹ 37,70,718/-. 4. Briefly put, the relevant facts are that the respondent-assessee is a partnership firm engaged in the business of developers and construction. It has undertaken a slum rehabilitation project in terms of a sc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eturn of income on 30.10.2006 declaring NIL income from such project on the ground that it was following the project completion method and during the year under consideration the construction of such project was not completed. An assessment, based on such return of income, was finalised u/s 143(3) of the Act on 29.12.2008 whereby the returned income was accepted. It transpires that subsequently the assessment was set-aside by the Commissioner by invoking Sec. 263 of the Act with direction to red .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

/- to the returned income. Such an action of the Assessing Officer was carried in appeal before the CIT(A), raising contentions on facts and in law. 5. In appeal before the CIT(A), assessee pointed out that in the earlier two Assessment Years of 2004-05 and 2005-06 the project completion method adopted by the assessee was accepted by the Department and it was also pointed out that so far as assessment for Assessment Year 2005-06 is concerned, same was also a scrutiny assessment made u/s 143(3) o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hat certain disputes had arisen amongst the partners and various cases were filed in court which brought the work to a standstill and even the bank account was frozen for a certain period of time. It was also pointed out that due to the aforesaid disputes and delay in the construction, the possession of the flats in the case of saleable wings, i.e., B & C was not given to the buyers. Before the CIT(A), it was also pointed out that the methodology adopted by the Assessing Officer was fallacio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct. With regard to the reliance placed by the Assessing Officer on the decision of the Mumbai Bench of the Tribunal in the case of Champion Construction Co., 5 ITD 494, assessee pointed out that the said decision was inapplicable inasmuch as in the present case neither 80% of the projected receipts of the project were received and nor 80% of the work was completed during the year under consideration; and, thus the criteria laid down in Champion Construction Co. (supra) was not applicable. Consid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hereinbelow :- 9. I have carefully considered the facts of the case, arguments of the Assessing Officer and the written submissions of the Authorised Representative of the appellant. I find that during the year under consideration the project was completed only about 50%. The total sale consideration upto AY 2006-07 was only ₹ 471,33,924/- as against the cumulative sale figure of ₹ 7,68,91,449/- in AY 2010-11. Therefore it cannot be said that there was substantial completion of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the cases filed by the partners were in Supreme Court, National Consumer Redressal Commission. The final verdict of the Supreme Court came in FY 2011-12. Therefore the profit from the project cannot be estimated in the financial year 2005-06. The final verdict of Supreme Court has arrived in June 2011. iv) Because of constant litigations between partners Bombay High Court had issued injunction stopping the project in August, 2006 and the injunction got lifted in the year 2008. Therefore it can b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the aforesaid basis CIT(A) proceeded to set-aside action of the Assessing Officer in making an ad-hoc estimation of profits from the construction of the impugned project. Against such a decision of the CIT(A), Revenue is in appeal before us. 7. Before us, the learned Departmental representative has placed reliance on the order of the Assessing Officer whereby it was sought to be justified that the project completion method adopted by the assessee would lead to postponement of tax liability consi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pattern and the CIT(A) vide his order dated 7.12.2011 has deleted the addition and no appeal has been preferred by the Department against such order. It was further contended that the instant appeal of Revenue is thus misplaced and is contrary to its stand for Assessment Year 2007-08. Apart therefrom, it has been pointed out that entire profit for the project has been declared and assessed to tax in Assessment Year 2011-12. Before us, a chart was also furnished showing the total profit from the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

has been assessed to tax purely on an ad-hoc basis. Even if the Assessing Officer was to give a go-by to the project completion method adopted by the assessee and deduce the income from the impugned project, it was imperative for the Assessing Officer to adopt a rationale basis. The reliance placed by the Assessing Officer on the decision of Tribunal in the case of Champion Construction Co. (supra) to justify application of percentage rate to deduce profit is also misplaced on facts. In the cas .....

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