TMI Blog2021 (3) TMI 565X X X X Extracts X X X X X X X X Extracts X X X X ..... eceding financial year(F.Y. 2012-13) cannot be taken for estimating and taxing the profit element therein in the hands of the assessee in present assessment year 2014-15. Although as also concluded above that the profit element embedded in the amount during the financial period 2013-14 can be taxed by the AO in the hands of the assessee for assessment year 2014-15 but at the same time, I have no hesitation to hold the profit percentage of 15% of total advance amount from customers is very high, unreasonable and excessive and simultaneously also observe that the prayer of assessee that the profit may be estimated @ 5% is also very unreasonable and thus not acceptable. Considering the entire facts and circumstances of the case and to take care of all possible leakage of revenue, direct the AO to estimate 10% of amount of advance received from customers during the relevant financial year 2013-14 relevant to assessment year 2014-15 only. The AO is direct to recompute the profit as per the direction given above - Appeal of the assessee is partly allowed. - ITA No. 458/CTK/2019 - - - Dated:- 12-3-2021 - SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER Assessee by : Shri Mohit Sheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not deposit the TDS within the stipulated period as specified in the Act and, therefore, the AO made disallowance by invoking the provisions of section 40(a)(ia) of the Act. Ld A.R. of the assessee submitted that the assessee has deposited ₹ 73,437/- (i.e. TDS u/s.194C of ₹ 62,230/- and interest of ₹ 11,201/-) against payment of ₹ 41,84,879/- on 31.3.2015, i.e. much before the completion of assessment, supported by challan placed in paper book at page 89. From the above, it is discernible that the assessee has already deposited the TDS alongwith interest before completion of assessment. We also note that a person is liable to pay interest under section 201(1A) for failure to deduct tax at source or delay in payment of tax deducted at source and interest under section 206C(7) is levied for failure to collect tax at source or delay in payment of tax collected at source. In this case, the assessee has already deposited the TDS alongwith interest to the Government exchequer, as is evident from the challan, placed before the Tribunal. In view of above, I am of the considered view that no loss is caused to the revenue. Hence, I allow this ground of appeal of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... customer s advance by applying percentage completion method. He submitted that during the assessment proceedings, the assessee has produced all the details as asked for by the AO. He submitted that the advance from customers is a liability. He further submitted that the opening balance as at 1.4.2013 is ₹ 8,09,01,787.64 and closing balance as at 31.3.2014 is ₹ 11,23,61,226.65 as is evident from the ledger account of the assessee duly furnished before the lower authorities. Therefore, no addiction could be made with regard to credit balances brought forward from either assessment years. Ld A.R relied on the decision of Hon ble Gujarat High Court in the case of CIT vs Shivalik Buildwell Pvt Ltd., (2013) 40 taxmann.com 219 (Guj), wherein, it was held that assessee being a developer of project, profits in its case would arise only on transfer of title of property and, therefore, receipt of any advance or booking amount could not be treated as trading receipt of year under consideration. He also relied on the decision of Chandigarh ITA\T in the case of M/s. Kuldip Industrial Corpn vs ITO (1987) TAXATION 84(4) -96, wherein, it was held that no addition could be made with rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case also, the balances have been brought forward from earlier years and the AO has adopted 15% profit of the advance from customers as the revenue to be recognised on the amount brought forward of earlier years and also the amount received in the present year. 10. In the present case, the AO has made addition of ₹ 1,68,54,180/ @ 15% by considering whole amount of advance from customers i.e. closing balance as on 31.3.14 of ₹ 11,23,61,227/-, which also includes opening balance from customers brought forward from earlier year as opening balance as on 1.4.2013 of ₹ 8,09,01,787.64. As I have noted above that as per the decision of Hon ble Gujarat High Court in the case of Sjhivalik Buildwell pvt Ltd (supra), the profit in its case would arise only on transfer of title of property, therefore, receipts of any advance or booking amount could not be treated as trading receipt of the year under consideration. We are also in agreement with the contention of ld counsel for the assessee on the strength of the order of ITAT Chandigarh in the case of Kuldip Industrial Corpn (supra), wherein, the Co-ordinate Bench has held that no addition could be made with reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l receipts during the relevant financial period. 11. Ld D.R. submitted that the assessee is a developer and builder and earning huge profit from its project and not offering any amount for taxation. Therefore, the AO was right in making addition with regard to element of profit embedded in the amount of advance from customers. Therefore, the action of the AO may kindly be upheld. Ld D.R. in all fairness submitted that the percentage of profit taken by the AO is 15% and the assessee s request to take 5% of profit from advance from customers is also not reasonable to cover the possible of leakage of revenue. Therefore, the prayer of the assessee may kindly be dismissed and action of the AO may kindly be upheld. Ld D.R. submitted that if the contention of ld A.R. is found to be just and proper for determination of profit percentage, then he would prefer to leave this issue for the wisdom of the Bench to determine percentage of profit for taking care of all possible leakage of revenue. 12. On careful of rival submission, first of all I observe that the AO is right in taking action against the assessee, wherein, he proceeded to tax the element of profit embedded in the amount of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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