9911796707
TMI Blog2019 (2) TMI 1391X X X X Extracts X X X X X X X X Extracts X X X X ..... time to time after getting the books of accounts audited as per the provisions of Companies Act and Income Tax Act. The books are also separately audited by the office of Comptroller & Auditor General. For the assessment year 2006-2007, the assessee appellant filed its return of income on 27.10.2006 declaring therein total income at Rs. 43,73,82,600/-. The return of income was subsequently revised on 24.08.2007 declaring therein total income at Rs. 43,73,82,600/-. The assessee appellant's primary objective was to set up of industrial areas in the State of Rajasthan such as SEZ parks, Information Technology parks, Bio- Technology parks, Stone parks, Textile parks, Agro parks, etc., for which it acquired lands and spent substantial amount towards creating infrastructural facilities so as to enable setting up of industries in such industrial parks by way of allotment/auction. The land acquired by the assessee appellant for the purpose of creating industrial parks is stock-in-trade and the assessee appellant carries out development activities in such industrial areas. Assessee appellant valued its closing stock of land at actual direct development expenditure (less grant utilized) in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'the CIT(A)') wherein the assessee appellant challenged the various disallowances/additions made by the Assessing Officer. The matter was transferred to CIT(A), Bikaner who by its order dated 29.09.2017 partly allowed the appeal of the assessee appellant. It is contended that with reference to valuation of encroached/litigated land, the CIT(A) concurred with the view of the Assessing Officer and has held that the value of land cannot be taken at NIL and has further upheld that the assessee appellant has changed its method of valuation during the year under consideration. Against the order dated 29.09.2017 passed by the CIT(A), the assessee appellant preferred appeal before the ITAT. The ITAT by impugned order dated 28.05.2018 has remitted back the matter to the Assessing Officer. Hence this appeal. Shri Siddharth Ranka, learned counsel for the appellantassessee has argued that the learned ITAT failed to appreciate that valuing the closing stock of encroached/litigated land at actual direct development expenditure upto assessment year 2005-2006 is against the principle of prudence. The settled principle of valuation of closing stock is Cost or Market value which is lower. Even whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the ITAT has argued that earlier assessee was valuing the closing stock of land at actual direct development expenditure, however, in the notes to accounts for the assessment year 2005-06 it is stated that at few industrial area some of the portion of the land is under litigation as well as under encroachment aggregating to 263.03 crores as on 31.03.2005. The statutory auditors in their audit report have observed that stock of land under litigation is treated as saleable, therefore, the observation of the statutory auditor was considered by the assessee and consequently a Board Resolution was passed whereas the valuation of such land has been taken at Nil as on 31.03.2006. The land was not available to the assessee as on 31.03.2006, therefore, the realization value of the land at the end of the financial year was Zero and accordingly, the assessee has considered the same at Nil which is justified as per the principle of prudence accounting policy. It is contended that whenever the assessee retrieves the lands from encroachment, the same is offered to tax, therefore, the said method of valuing the closing stock adopted by the assessee is Revenue in nature. The assessee is consist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at nil as on 31-03-07 to the extent of Rs. 145.33 11 crores was purchased during the year. We were informed that the land was not purchased in this year. We are not having the details of the litigation in respect of land for which valuation has been taken at nil from 31-03-06 to 31-03-07. It is true that encroachment and litigation will have an impact on the on the valuation. The management has taken the decision to consider the value at Nil but we are not informed as to whether the decision is based on certain expert opinion or on the basis of prudence or after considering each and every case on merits. Section 4 is a charging Section and according to which income tax is to be charged in respect of total income of the previous year. The reduction in the value of the stock is to be substantiated by the assessee that it has resulted into previous year relevant to assessment year under consideration. In case the litigation and encroachment were existing at the time when the assessee acquired the land and filed the dispute before 31-03-06 then why such reduction was not considered when the assessee was changing the method of accounting in the assessment year 2006-07. As per charging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer for deciding the same afresh in terms of the directions as given by the Tribunal for the A.Y. 2007-08." The Tribunal considering the decisions of Coordinate benches of the Tribunal itself in assessee's own case, set aside the issue to the record of the Assessing officer for fresh adjudication after conducting a proper verification and enquiry. The assessee was also directed to produce all the relevant facts in respect of each and every piece of land under litigation and encroachment so as to reveal the actual status of the land for the purpose of determination of value. Moreover, in the subsequent assessment year viz assessment year 2007-08 in the case of assessee, the Tribunal vide order dated 24.06.2011, restored back the matter to the Assessing Officer for deciding the issue and even in subsequent years i.e. 2009-10, 2010-11, 2011-12, 2012-13, vide order dated 23.02.2018, the Tribunal set aside this issue to the record of the Assessing Officer for deciding the same afresh in terms of the directions as given by the Tribunal in the assessment year 2007- 2008 and no appeal has been filed against the aforesaid orders by the assessee before this Court or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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