M/s. Jain Farms & Resorts Ltd,, Bangalore v. ACIT, Bangalore

ITA 1324/BANG/2010 | 2006-2007
Pronouncement Date: 25-10-2013 | Result: Allowed

Appeal Details

RSA Number 132421114 RSA 2010
Assessee PAN AABCJ6726E
Bench Bangalore
Appeal Number ITA 1324/BANG/2010
Duration Of Justice 2 year(s) 10 month(s) 29 day(s)
Appellant M/s. Jain Farms & Resorts Ltd,, Bangalore
Respondent ACIT, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 25-10-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 25-10-2013
Date Of Final Hearing 08-08-2013
Next Hearing Date 08-08-2013
Assessment Year 2006-2007
Appeal Filed On 26-11-2010
Judgment Text
ITA NOS.1324 - 1325 JAIN FARMS AND RESORTS LTD BANG ALORE PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BBENCH BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI JASON P. BOAZ ACCOUNTANT MEMBER ITA NOS.1324 & 1325/BANG/2010 (ASSESSMENT YEARS: 2006-07 & 2007-08) M/S. JAIN FARMS & RESORTS LTD NAKODA ARCADE 3 RD FLOOR NO.59/1 DVG ROAD BASAVANAGUDI BANGALORE-560004 PAN: AABCJ 6726 E VS. ASSTT. COMMISSIONER OF INCOME- TAX CIRCLE 11(5) BANGALORE (APPELLANT) (RESPONDENT) ASSESSEE BY: SMT.SHEETHAL BORKAR ADV. DEPARTMENT BY: SHRI A.K.GANESH RAO DR DATE OF HEARING: 07/10/2013 DATE OF PRONOUNCEMENT: 25/10/2013 O R D E R PER GEORGE GEORGE K. J.M. THESE TWO APPEALS OF THE ASSESSEE COMPANY ARE DIREC TED AGAINST THE CONSOLIDATED ORDER OF THE CIT (A)-I BANGALORE DATED 31.8.2010. THE RELEVANT ASSESSMENT YEARS ARE 2006-07 AND 2007-08. I. ITA NO.1324/B/10 A.Y 2006-07: 2. THOUGH THE ASSESSEE HAS IN ITS GROUNDS OF MEMO RANDUM RAISED NINE GROUNDS GROUND NOS.1 8 & 9 BEING GENERAL IN NATURE THEY ARE DISMISSED AS INCONSEQUENTIAL. IN GROUND NO.6 THE ASSESSEE HAD RAISED A PLEA THAT THE LOSS OF RS.75 000/- THE INVESTMENT IN EQUITY SHARES WAS NOTHING BUT INCIDENTAL TO BUSINESS AND THEREFORE ITA NOS.1324 - 1325 JAIN FARMS AND RESORTS LTD BANG ALORE PAGE 2 OF 10 ALLOWABLE AS BUSINESS LOSS. HOWEVER DURING THE CO URSE OF HEARING THE LEARNED AR SUBMITTED THAT THIS ISSUE IS NOT PRESSED . ACCORDINGLY GROUND NO.6 IS DISMISSED AS NOT PRESSED . GROUND NO.7 IS NOT MAINTAINABLE AS CHARGING OF INTEREST U/S 234B OF TH E ACT IS MANDATORY AND CONSEQUENTIAL IN NATURE. THUS THE REMAINING G ROUNDS RELATE TO A SOLITARY ISSUE NAMELY THAT THE CIT (A) HAD FAILED TO ACCEDE TO THE ASSESSEES PLEA TO REFRAIN FROM SUSTAINING THE ADDI TION TOWARDS DEDUCTION CLAIMED AS DEFERRED REVENUE EXPENDITURE . II. ITA NO.1325/B/10 A.Y 2007-08: 2.1. FOR THIS ASSESSMENT YEAR THE ASSESSEE HAS RAI SED EIGHT GROUNDS OUT OF WHICH GROUND NOS.1 7 & 8 BEING GENERAL AND NO SPECIFIC ISSUES RAISED THEY HAVE BECOME INCONSEQUE NTIAL. GROUND NO.6 IS NOT MAINTAINABLE AS CHARGING OF INTEREST U/S 23 4B OF THE ACT IS MANDATORY AND CONSEQUENTIAL IN NATURE. THE REMAINI NG GROUNDS RELATE TO A SOLITARY ISSUE AS IN THE PREVIOUS ASSE SSMENT YEAR NAMELY THAT THE CIT (A) HAD FAILED TO ACCEDE TO THE ASSES SEES PLEA TO REFRAIN FROM SUSTAINING THE ADDITION TOWARDS DEDUCTION CLAI MED AS DEFERRED REVENUE EXPENDITURE. 3. AS THE ISSUES RAISED IN THESE APPEALS BEING IDEN TICAL AND PERTAINING TO THE SAME ASSESSEE FOR THE SAKE OF CO NVENIENCE THEY WERE HEARD TOGETHER AND DISPOSED OFF IN THIS CONSOL IDATED ORDER. 4. BRIEFLY STATED THE FACTS OF THE ISSUE ARE AS UN DER: THE ASSESSEE IS ENGAGED IN THE BUSINESS O F DEALING IN FARM LANDS AND REAL ESTATE BUSINESS. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS FOR BOTH THE AYS UNDER DISPUTE THE AOS NOTICED THAT THE ASSESSEE HAD DEBITED RS.1 06 27 087/- AND RS.26 09 028/- AS MISCELLANEOUS EXPENSES WRITTEN OFF FOR THE AYS 2006 -07 AND 2007-08 ITA NOS.1324 - 1325 JAIN FARMS AND RESORTS LTD BANG ALORE PAGE 3 OF 10 RESPECTIVELY. BEING QUERIED IT APPEARS THE ASSES SEE IN ITS ALMOST IDENTICAL SUBMISSIONS EXPLAINED BEFORE THE RESPECTI VE AOS THAT - ALL THE EXPENSES CARRIED FORWARD AS DEFERRED RE VENUE EXPENSES WAS PURELY REVENUE EXPENSES IN NATURE AND THAT THE ASSESSEE HAD NOT CLAIMED ANY CAPITAL EXPENSE AS EXPENSE IN I TS P & L ACCOUNT; - ALL EXPENSES WHICH WERE WRITTEN OFF IN FUTURE YE ARS WAS EXCLUSIVELY INCURRED FOR THE ASSESSEES BUSINESS ON LY; AND THAT THE EXPENSES INCURRED WAS BENEFICIAL TO THE ASSESSE E FOR SEVERAL YEARS AND THE EXPENSES IN QUESTION WAS NOT INCURRED FOR THE SAME FINANCIAL YEAR; - THAT THE ASSESSEE HAD STARTED ITS COMMERCIAL ACT IVITIES IN THE YEAR 1994-95 AND DURING THE INITIAL YEARS IT HAD I NCURRED HUGE EXPENSES IN LAND DEVELOPMENT AND MARKETING EXPENSES AS IT WAS DEALING IN SALE OF FARM LANDS AND THUS LAND SALES REQUIRE SUBSTANTIAL LAND DEVELOPMENT EXPENSES AS WELL AS MA RKETING EXPENSES; - THAT THE ASSESSEE HAD ACCUMULATED ALL THE LAND D EVELOPMENT EXPENSES AND MARKETING EXPENSES UP-TO THE YEAR 1999 -2000; - THAT DURING THE YEARS 2000-01 TO 2002-03 THERE WAS A LULL IN THE PROPERTY MARKET AND THUS HARDLY ANY MAJOR OPE RATION REVENUE TO WRITE OFF ANY DEFERRED EXPENSE. IT WAS DECIDED BY THE ASSESSEE TO CARRY ON ALL DEFERRED EXPENSES AS IT WA S IN THE BALANCE SHEET; - THAT FROM THE FY 2003-04 TO THE F.Y 2007-08 TH ERE WAS IMPROVEMENT IN THE PROPERTY MARKET AND DURING THAT RELEVANT PERIOD THE ASSESSEE HAD SUBSTANTIAL OPERATIONAL IN COME AND ACCORDINGLY IT WROTE OFF THE DEFERRED EXPENSES IN ITS P & L ACCOUNT; & - THAT IT HAD WRITTEN OFF RS.59.44 LAKHS RS.59.44 LAKHS AND RS.106.27 LAKHS IN 2003-04 2004-05 AND 2005-06 RES PECTIVELY AND THE BALANCE AMOUNTS IN THE F.Y 2006-07 AND THU S THERE WAS NO MISC. EXPENSES CARRIED OVER IN THE FINANCIAL YEAR 2007- 08. 4.1. HOWEVER THE AOS HAVE REJECTED THE ASSESSEES CONTENTIONS ON THE PREMISE THAT THE EXPENSES HAVE BEEN ANALYZED AND FOUND TO BE IN THE NATURE OF PRIOR-PERIOD EXPENSES AND HENCE THE SAME WERE NOT ITA NOS.1324 - 1325 JAIN FARMS AND RESORTS LTD BANG ALORE PAGE 4 OF 10 ALLOWABLE AS EXPENSES. ACCORDINGLY THE AOS HAVE A DDED BACK THE SUMS OF RS.1 06 27 087/- AND RS.26 09 028/- FOR THE AYS 2006-07 AND 2007-08 RESPECTIVELY. 5. AGGRIEVED THE ASSESSEE TOOK UP THE ISSUES FOR BOTH THE AYS AMONG OTHERS BEFORE THE CIT (A). AFTER TAKIN G INTO ACCOUNT THE SUBMISSIONS PUT-FORTH BY THE ASSESSEE AS RECORDED IN HIS CONSOLIDATED ORDER THE CIT (A) HAD HOWEVER REJECTED THE PLEA OF THE ASSESSEE. THE RELEVANT PORTIONS OF THE REASONING OF THE CIT (A) A RE EXTRACTED AS UNDER: 7.3.(ON PAGE 9) NEVERTHELESS DURING THE APPELLATE PROCEEDING THE AR WAS GIVEN A N OPPORTUNITY TO RECAST THE P/L A/C AND BALANCE-SHEET S OF EARLIER YEAR SO THAT IT CAN BE EXAMINED WHETHER THE PROFIT WOULD HAVE GOT DISTORTED BY RECORD OF EXPENDITURE IN THE CONCE RNED YEARS OR NOT? BUT THE A.RS EXPRESSED HIS INCAPACITY TO DO THE SAME SHOWING PLEA OF LACK OF REQUISITE RECORDS OF EARLIE R YEARS. IN VIEW OF THE ABOVE I AM ONE WITH THE AO THAT THE AP PELLANT HAS NOT FOLLOWED THE PROPER PRACTICE OF COMPUTATION OF INCOME FOR THE AY 2006-07 & 2007-08 AND HAS CONVENIENTLY REDUC ED ITS PROFIT BY CLAIM OF EXPENDITURE INCURRED IN EARLIER YEARS. THEREFORE THE GROUND OF APPEAL IS DISMISSED. THE ADDITIONS IN THESE TWO YEARS ARE CONFIRMED. 7.4... 8. SUMMARY THE AR ARGUED THAT THE MISCELLANEOUS EXPENDITURE WRITTEN OFF IN AYS 2007-08 AND 2008-09 THOUGH WERE ACTUALLY INCURRED IN EARLIER YEARS AND HAD NOT BEEN RECORDED IN THE YEAR OF THEIR EXPENDITURE STILL TH EY SHOULD BE ALLOWED IN THESE YEARS ON THE PRINCIPLES OF DEFERRE D REVENUE EXPENDITURE INSOMUCH AS FIRSTLY THE EFFECT OF SUCH EXPENDITURE CAN BE ALSO SEEN FELT AND EXPERIENCED IN THESE YEA RS AND SECONDLY THE RECORDING OF SUCH IN THE YEAR OF ITS EXPENDITURE WOULD HAVE RESULTED IN DISTORTION OF PROFITS OF THO SE YEARS AND LASTLY THE ULTIMATE RESULT I.E. PROFITS OF AY 2007 -08 AND 2008- 09 HAVE NOT BEEN EFFECTED BY SUCH CLAIM. IN VIEW O F SUCH ARGUMENT THE AR WAS ASKED TO RECAST ITS PROFITS AN D LOSS A/C AS WELL AS BALANCE SHEETS OF EARLIER YEARS RECORDIN G THE ACTUAL EXPENDITURE INCURRED IN THOSE YEARS WHICH COULD NOT BE DONE ON THE GROUND THAT FULL RECORDS OF EARLIER YEARS IS NO T AVAILABLE. I ITA NOS.1324 - 1325 JAIN FARMS AND RESORTS LTD BANG ALORE PAGE 5 OF 10 THEREFORE HOLD THAT THE ARGUMENT OF AR HAS NO MERIT AND STRENGTH AND REJECT THE SAME AS NOT ACCEPTABLE. ON THE OTHER HAND THE ASSESSING OFFICER HAS A STRONG GROUND OF ADDITION WHEN HE HELD THESE EXPENDITURE AS DISALLOWABLE TREA TING THE SAME AS PRIOR PERIOD EXPENDITURE. SUCH VIEW ALSO CO NFIRMS TO ACCOUNTING STANDARD5. BESIDES THE LAW IS WELL EST ABLISHED THAT THE INCOME COMPUTATION FOR INCOME-TAX PURPOSE HAS TO BE DONE ON THE BASIS OF ORDINARILY PRINCIPLES OF COMME RCIAL ACCOUNTING. THE LAW AFTER THE ADOPTION OF PRACTICE OF UNIFORM ACCOUNTING YEAR THROUGH AMENDMENT TO S 3 OF I T ACT IT HAS BECOME MANDATORY STRINGENT AND TIGHT THAT THE ACCO UNTING OF INCOME AND ALLOWANCE OF EXPENDITURE THERE FROM SHOU LD BE DONE ON YEAR-TO-YEAR BASIS BECAUSE OF RULE THAT ONE YEARS INCOME OR LOSS CANNOT BE TAKEN OVER TO AN EARLIER O R LAST YEAR. THEREFORE IT IS OFTEN STATED THAT THERE IS NEED TO AVOID BELATED BOOKING OF EXPENSES BEYOND THE ACCOUNT YEAR VIDE DE VI FILMS (P) LTD V. CIT (1970) 75 ITR 301(MAD). THEREFORE THE ADDITIONS RELATING TO BOTH AYS ARE CONFIRMED.. 6. AGGRIEVED THE ASSESSEE HAS COME UP BEFORE US WI TH THE PRESENT APPEALS. DURING THE COURSE OF HEARING THE LEARNED AR REITERATED MORE OR LESS WHAT HAS BEEN REPRESENTED BEFORE THE FIRST APPELLATE AUTHORITY. IN FURTHERANCE IT WAS ARGUED THAT THE CIT (A) OUGH T TO HAVE ACCEPTED THE EXPLANATION OFFERED BY THE ASSESSEE AND REFRAIN ED FROM UPHOLDING THE ADDITIONS TOWARDS DEDUCTIONS CLAIMED AS DEFERRE D REVENUE EXPENSES. IT WAS ALSO THE STAND OF THE LEARNED AR THAT THE EXPENDITURE CLAIMED AS DEFERRED REVENUE EXPENSES WERE IN RELATI ON TO THE FARM LANDS SOLD DURING THE RELEVANT YEAR AND THAT FOR HA VING DEVELOPED FARM LANDS WHICH WERE STOCK-IN-TRADE AND ALL THE EXPENSE S INCURRED WERE PART OF THE WORK-IN-PROGRESS AND THUS THE ASSESSE E HAD RIGHTLY CLAIMED THE EXPENSES RELATED TO THE LANDS SOLD AND ALSO THE COMMON EXPENSES IN PROPORTION TO SUCH LANDS DURING THE REL EVANT YEAR. 6.1. DURING THE COURSE OF HEARING THE LEARNED AR S UBMITTED AN APPLICATION UNDER RULE 29 OF THE INCOME-TAX (APPELL ATE TRIBUNAL) RULES 1963 WHICH CONTAINED THAT: IT IS SUBMITTED THAT THE FOLLOWING DOCUMENTS ARE N OT PRODUCED DURING THE ASSESSMENT PROCEEDINGS. THE SAME WAS FU RNISHED ITA NOS.1324 - 1325 JAIN FARMS AND RESORTS LTD BANG ALORE PAGE 6 OF 10 BEFORE THE ASSESSING AUTHORITY AND IT WAS BELIEVED THAT THE SAID DETAILS WERE SUFFICIENT. IN THE CIRCUMSTANCES THE ENCLOSED DOCUMENTS COULD NOT BE PLACED BEFORE THE ASSESSING AUTHORITY NOR BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) SIN CE WE WERE UNDER BONA FIDE INFORMATION THAT WHAT DETAILS WE HA VE FURNISHED EITHER BEFORE THE ASSESSING AUTHORITY OR THE CIT (A PPEALS) WERE ADEQUATE. THE NON-PRODUCTION OF THESE DOCUMENTS WA S ON ACCOUNT OF BONA FIDE MISTAKE AND NOT DUE TO ANY DELIBERATE OR MALA FIDE INTENTION. THESE DOCUMENTS ARE VERY MUCH ESSENTIAL IN ORDER TO PROVE THE ISSUE IN HAND AND THESE DOCUMENTS WERE ON LY SUPPORTING THE SUBMISSIONS ALREADY MADE BEFORE THE ASSESSING A UTHORITY AND THE CIT (APPEALS). ACCORDINGLY THESE DOCUMENTS AR E BEING PLACED ON RECORD. IT IS THEREFORE PRAYED THE SAME MAY K INDLY BE ADMITTED AND KINDLY BE CONSIDERED WHILE DISPOSING O F THE APPEAL IN THE INTEREST OF JUSTICE. 6.2. AFTER HEARING THE RIVAL SUBMISSIONS ON THE ISS UE WE ARE OF THE VIEW THAT THE NON-PRODUCTION OF THE RELEVANT DOCUME NTS BEFORE THE AUTHORITIES BELOW WAS A BONA FIDE MISTAKE ON THE PA RT OF THE ASSESSEE AS WE COULD NOT FIND ANY DELIBERATE INTENTION OF TH E ASSESSEE ON SUCH ACTION. ACCORDINGLY THE REGISTRY WAS DIRECTED TO PLACE THE ASSESSEES APPLICATION ALONG WITH ITS ENCLOSURES ON RECORD. 6.3. ON THE OTHER HAND THE LEARNED DR SUBMITTED TH AT THE ISSUE HAS SINCE BEEN DELIBERATED UPON BY THE CIT (A) IN A COM PREHENSIVE MANNER AND CAME TO A CONCLUSION THAT THE AOS WERE RIGHT IN DISALLOWING THE ASSESSEES CLAIM FOR THE AYS UNDER CONSIDERATION. OUR ATTENTION WAS ALSO DRAWN BY THE LEARNED DR TO THE EFFECT THAT IN SPITE OF AFFORDING AN OPPORTUNITY TO THE ASSESSEE BY THE FIRST APPELLATE AUTHORITY TO RECAST THE P & L ACCOUNT BALANCE-SHEET OF THE EARLIER YEA R SO THAT IT CAN BE EXAMINED THE VERACITY OF THE ASSESSEE BY THE APPELL ATE AUTHORITY THE ASSESSEE HAD HOWEVER PLEADED ITS INABILITY TO DO SO ON THE PRETEXT OF LACK OF REQUISITE RECORDS OF EARLIER YEARS ETC. I T WAS THEREFORE PRAYED THAT THE STAND OF THE AUTHORITIES BELOW REQUIRES TO BE SUSTAINED. ITA NOS.1324 - 1325 JAIN FARMS AND RESORTS LTD BANG ALORE PAGE 7 OF 10 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS PERUSED THE RELEVANT CASE RECORDS DOCUMENTARY EVIDENCES PRODUC ED BY THE LEARNED AR IN THE SHAPE OF A PAPER BOOK AND ALSO THE ADDITI ONAL EVIDENCES PRODUCED BY THE ASSESSEE UNDER RULE 29 OF I.T. (APP ELLATE TRIBUNAL RULES) 1963 (SUPRA). 7.1. ADMITTEDLY THE ASSESSEE IS ENGAGED IN THE BU SINESS OF DEALING IN FARMLANDS AND REAL ESTATE BUSINESS. DURING THE YEARS UNDER APPEAL THE ASSESSEE HAD DEBITED RS.1.06 CRORES AND RS.26.0 9 LAKHS AS MISC. EXPENSES WRITTEN OFF RESPECTIVELY. IT WAS THE CONT ENTION OF THE ASSESSEE BEFORE THE AOS THAT IT HAD INCURRED A SUBSTANTIAL E XPENSE IN THE DEVELOPMENT OF LANDS AS WELL AS MARKETING EXPENSES. AS THERE WAS A LULL IN THE PROPERTY MARKET IN THE F.YS 2000-01 TO 2002-03 ACCORDING TO THE ASSESSEE NO SIGNIFICANT OPERATIONAL REVENUE WAS GENERATED TO WIPE OUT THE DEFERRED EXPENSE(S). HOWEVER FROM TH E FINANCIAL YEAR 2003-04 ONWARDS THERE WAS A BRIGHT FORTUNE IN THE MARKET ACCORDING TO ITS VERSION THE ASSESSEE HAD ABLE TO WRITE OFF THE DEFERRED EXPENSES IN ITS P & L ACCOUNTS. ACCORDINGLY THE ASSESSEE H AD WRITTEN OFF RS.59.44 LAKHS RS.59.44 LAKHS AND RS.106.27 LAKHS DURING THE F.YS 2003-04 TO 2005-06 RESPECTIVELY AND THE BALANCE AMO UNT WAS WIPED OFF IN THE FY 2006-07. HOWEVER THE ASSESSING OFFI CERS HELD THAT THE EXPENSES BEING IN THE NATURE OF PRIOR PERIOD EXPENS ES THE SAME WAS NOT ALLOWABLE AS EXPENSES DURING THE YEARS UNDER CO NSIDERATION. ACCORDINGLY RS.1.06 CRORES AND RS.26.09 LAKHS CLAI MED AS MISC. EXPENSES WRITTEN OFF FOR THE A.YS 2006-07 AND 2007- 08 WERE ADDED BACK TO THE INCOMES OF THE ASSESSEE FOR THE RESPECT IVE ASST. YEARS. THE CIT (A) HAD ALSO REJECTED THE ASSESSEES CONTENTION S FOR THE REASONS RECORDED IN HIS FINDINGS UNDER DISPUTE. 7.2. BRIEFLY THE ASSESSEE IS ENGAGED IN SELLING T HE DEVELOPED FARMLANDS OF DIFFERENT SIZES IN VARIOUS CITIES AND ALSO SERVING ITS ITA NOS.1324 - 1325 JAIN FARMS AND RESORTS LTD BANG ALORE PAGE 8 OF 10 MEMBERS BY PROVIDING RECREATION AND CLUB FACILITIES AT ITS PROJECTS. THE ASSESSEE BUYS AGRICULTURAL LANDS IN BULK AND AF TER DEVELOPING THOSE LANDS CONVERT THEM INTO SMALL PLOTS AND SELL THEM TO THE PROSPECTIVE BUYERS. THE BUYER IS CONSIDERED AS A M EMBER OF THE CLUB CALLED COUNTRY CLUB. THE CLUB BUILDING AND OTHER FACILITIES SUCH AS APPROACH ROADS PARKS SWIMMING POOL INDOOR GAMES LIBRARY DRAINAGE SYSTEM PARKING LOTS ETC. WERE PROVIDED F OR THE USE OF THE MEMBERS OF THE CLUB BY THE ASSESSEE. THE SALE CONS IDERATION OF PLOTS ALSO INCLUDED THE COST OF PLANTING OF TREES INSTAL LATION OF DRIP IRRIGATION SYSTEMS ETC. ACCORDING TO THE ASSESSEE IT HAD SPE NT A SIZEABLE AMOUNT ON THE DEVELOPMENT OF THE LANDS LAYING OF A PPROACH ROADS CLUB FACILITIES SALES PROMOTIONS ETC. WHICH WERE COMMON REVENUE EXPENSES FOR THE ENTIRE PROJECT IN THE FORM OF WORK -IN-PROGRESS. AS THE ASSESSEE COULD CLAIM ONLY THE EXPENDITURE WHICH WAS RELATING TO THE SITES SOLD DURING THE PARTICULAR YEAR AND THE BALAN CE EXPENSES IF ANY WAS CLAIMED IN THE SUBSEQUENT YEAR AS AND WHEN THE SALE OF PLOTS TOOK PLACE. ACCORDINGLY THE PROPORTIONATE DEDUCTION FO R THE EXPENSES WAS CLAIMED OVER THE YEARS. AS A MATTER OF FACT THE A OS HAVE NOT DOUBTED THE GENUINENESS OF THE CLAIM OF THE EXPENSES BUT ADDED THE EXPENSES TO THE INCOME(S) OF THE ASSESSEE ON THE PREMISE THA T THE EXPENSES DID NOT RELATE TO THE ASSESSMENT YEARS UNDER CONSIDERAT ION BUT TO THAT OF THE EARLIER YEARS. AFTER VERIFYING THE DETAILS FUR NISHED BY THE ASSESSEE IT IS A FACT THAT THOUGH THE EXPENSES WERE DEBITED UNDER THE HEAD MISCELLANEOUS EXPENSES ACCOUNT A RUNNING ACCOUN T. THE SAME WAS REFLECTED ON THE ASSET-SIDE OF THE BALANCE SHEET WH ICH IS - IN ACCOUNTING PARLANCE NOTHING BUT WORK-IN-PROGRESS ONLY AND DULY DEBITED TO THE P & L ACCOUNT PROPORTIONATELY BY ATT RIBUTING THE SAME TO THE SALES. 7.3. AS RIGHTLY CLAIMED BY THE ASSESSEE THOSE EXPE NSES WERE COMMON IN NATURE SINCE SUCH EXPENDITURE WAS INCURRE D FOR THE ENTIRE ITA NOS.1324 - 1325 JAIN FARMS AND RESORTS LTD BANG ALORE PAGE 9 OF 10 PROJECT AND FOR THE BENEFITS OF ALL THE BUYERS (MEM BERS) OF THE PLOTS. THERE IS ALSO AN ELEMENT OF REASONABLENESS IN THE A RGUMENT OF THE ASSESSEE THAT INSTEAD OF ADDING THE COST OF EXPENDI TURE TO THE CLOSING STOCK THE ASSESSEE HAD REFLECTED IN THE BALANCE-SH EET AS MISC. EXPENSES ON THE ASSET SIDE OF THE BALANCE SHEET DEFERRED REVENUE EXPENDITURE. 7.4. AS ALREADY MENTIONED THE LEARNED AR HAD WHIL E SEEKING THE PERMISSION OF THIS BENCH TO FURNISH ADDITIONAL EVID ENCES UNDER RULE 29 OF I.T. (A T) RULES 1963 FAIRLY CONCEDED THAT ALL T HE RELEVANT DETAILS OF (I) PROJECTS UNDER-TAKEN BY THE ASSESSEE; (II) INCO ME & MISC. EXPENSES INCURRED ON VARIOUS YEARS; (III) MISC. EXPENSES FOR THE YEARS-ENDED 31.3.1995 TO 31.3.2007 HAVE NOT BEEN FURNISHED BEFO RE THE ASSESSING AUTHORITIES/FIRST APPELLATE AUTHORITY AS THE SAME A CCORDING TO THE ASSESSEE COULD NOT BE TRACED AT THAT RELEVANT TIME. WE HAVE ALSO NOTICED THAT THE ASSESSMENTS HAVE BEEN CONCLUDED IN A BRIEF MANNER AND THE SAME IS NOT A SPEAKING ORDER 7.5. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE ISSUE AND ALSO KEEPING THE PRINCIPLES OF NATURAL JUSTICE AND EQUITY IN VIEW WE ARE OF THE CONSIDERED OPINION THAT ONE MORE OPPORTU NITY NEED TO BE AFFORDED TO THE ASSESSEE TO PROVE ITS CASE SINCE G ENUINENESS OF THE SAID EXPENDITURE WAS NEVER SERIOUSLY IN QUESTION B UT ONLY YEAR OF DEDUCTIBILITY. THEREFORE THE ENTIRE ISSUE FOR BOTH THE AYS REQUIRES TO BE LOOKED INTO AFRESH AT THE ASSESSING AUTHORITYS LEVEL. TO FACILITATE THE AO TO UNDERTAKE THE ABOVE EXERCISE THE IDENTIC AL ISSUE FOR THE AYS 2006-07 & 2007-08 IS RESTORED ON THE FILE OF THE AO WITH A SPECIFIC DIRECTION TO EXAMINE THE SAME WITH REFERENCE TO THE ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE WHICH HAVE BEEN ADMITTED BY THIS BENCH (SUPRA) AND TO TAKE APPROPRIATE ACTION IN ACC ORDANCE WITH THE PROVISIONS OF THE ACT. IN THE MEANWHILE THE ASSES SEE THROUGH ITS A.R ITA NOS.1324 - 1325 JAIN FARMS AND RESORTS LTD BANG ALORE PAGE 10 OF 10 IS ADVISED TO FURNISH ALL THE RELEVANT DETAILS/EVID ENCES AT ITS POSSESSION BEFORE THE AO WHICH WILL ENABLE HIM/HER TO CARRY OUT THE DIRECTION OF THIS BENCH (SUPRA) EXPEDITIOUSLY. IT IS ORDERED ACCORDINGLY. 8. IN THE RESULT THE ASSESSEES APPEALS FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 ARE ALLOWED FOR STATISTICAL PUR POSE. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH OCTOBER 2013. SD/- SD/- (JASON P. BOAZ) (GEORGE GEORGE K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 25 TH OCTOBER 2013. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR ITAT BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES BANGALORE