ACIT 21(1), MUMBAI v. RUSHI CONSTRUCTION, MUMBAI

ITA 4137/MUM/2010 | 2007-2008
Pronouncement Date: 23-09-2011 | Result: Partly Allowed

Appeal Details

RSA Number 413719914 RSA 2010
Assessee PAN AAAFR8093G
Bench Mumbai
Appeal Number ITA 4137/MUM/2010
Duration Of Justice 1 year(s) 4 month(s) 2 day(s)
Appellant ACIT 21(1), MUMBAI
Respondent RUSHI CONSTRUCTION, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 23-09-2011
Date Of Final Hearing 12-11-2015
Next Hearing Date 12-11-2015
Assessment Year 2007-2008
Appeal Filed On 21-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAMLAL NEGI (JM) I.T.A. NO. 4137 /MUM/ 2010 (ASSESSMENT YEAR 2007 - 08 ) ACIT CIRCLE 21(1) 6 TH FLOOR ROOM NO. 601 PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX BAND RA EAST MUMBAI - 400 051. VS. M/S. RUSHI CONSTRUCTION 302 GALAXY ARCADE M.G. ROAD VILE PARLE EAST MUMBAI - 400 057. ( APPELLANT ) .. ( RESPONDENT ) PAN NO. AAAFR8093G ASSESSEE BY : SHRI ASHOK J. PATIL DEPARTMENT BY : SHRI B.S. BIST DATE OF HEARING : 2 . 3 . 201 6 DATE OF PRONOUNCEMENT : . 3 . 201 6 O R D E R PER B.R. BASKARAN A M : - THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 11 . 03 . 2010 PASSED BY LD CIT(A) - 32 MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2007 - 08. THE REVENUE IS A GGRIEVED BY THE DECISION OF LD CIT(A) IN DELETING FOLLOWING ADDITIONS MADE BY THE AO: - (A) DISALLOWANCE OF INFRASTRUCTURE EXPENSES (B) DISALLOWANCE OUT OF DEVELOPMENT EXPENSES 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS A PARTNERSHIP F IRM WHICH IS ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD FOR OFFERING INCOME FROM THE PROJECT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE SOLD DEVELOPMENT RIGHTS HELD BY IT IN A LAND TO M /S DIMPLE CREATIONS FOR A SUM OF RS.3 82 50 000/ - . AS PER THE AGREEMENT THE ASSESSEE RECEIVED A SUM OF RS.2 96 50 000/ - AND THE BALANCE AMOUNT OF RS.86 00 000/ - WAS RETAINED BY M/S. RUSHI CONSTRUCTION 2 M/S DIMPLE CREATIONS IN ORDER TO MEET CERTAIN EXPENSES ON BEHALF OF THE ASSES SEE HEREIN. AS ON 31.3.2007 THE ASSESSEE HAD TO RECEIVE A SUM OF RS.55 88 761/ - FROM M/S DIMPLE CREATION MEANING THEREBY M/S DIMPLE CREATIONS HAS SPENT A SUM OF RS.30 11 239/ - . 3. THE ASSESSING OFFICER EXAMINED THE VARIOUS EXPENDITURE CLAIMED BY T HE ASSESSEE. IT HAD CLAIMED A SUM OF RS.3 18 89 203/ - UNDER THE HEAD INFRASTRUCTURE EXPENSES. THE AO NOTICED THAT THE ABOVE SAID AMOUNT INCLUDED OUTSTANDING EXPENSES OF RS.1 21 50 000/ - . THE DETAILS THEREOF GIVEN BY THE ASSESSEE ARE AS UNDER: - LA XMI ENTERPRISES 51 54 488 KALPANA V BAVISKAR 68 35 630 --------------- 1 19 90 118 ========= THE AO NOTICED THAT THE ABOVE SAID PARTIES HAVE RAISED BILLS IN THE MONTHS OF AUGUST 2007 AND JULY 2008 ONLY. FURTHER THE ASSES SEE HAD PAID A SUM OF RS.48 92 000/ - ONLY IN THE SUBSEQUENT YEARS. ACCORDINGLY THE AO TOOK THE VIEW THAT THE PROVISION OF RS.1 21 50 000/ - MADE BY THE ASSESSEE WAS NOT RELATED TO THE BILLS RAISED BY LAXMI ENTERPRISES AND KALPANA V BAVISAKAR. SINCE THE A SSESSEE HAD SHOWN A SUM OF RS.55 88 761/ - AS RECEIVABLE FROM M/S DIMPLE CREATION THE AO TOOK THE VIEW THAT THE OUTSTANDING EXPENDITURE SHOULD NOT EXCEED THE ABOVE SAID AMOUNT. ACCORDINGLY HE DISALLOWED A SUM OF RS.65 61 239/ - (RS.1 21 50 000/ - LESS RS.55 88 761/ - ) FROM OUT OF INFRASTRUCTURE EXPENSES. 4. THE ASSESSEE HAD ALSO CLAIMED DEVELOPMENT EXPENSES TO THE TUNE OF RS.1 46 67 967/ - WHICH HAD BEEN INCURRED DURING THE ACCOUNTING PERIOD FROM 2000 - 01 TO 2005 - 06. THE ASSESSEE EXPRESSED ITS INABILI TY TO FURNISH THE RELEVANT VOUCHERS ON THE REASONING THAT ALL ITS VOUCHERS WERE DESTROYED DUE TO HEAVY RAIN OCCURRED IN 2005. SINCE THE ASSESSEE COULD NOT SUBSTANTIATE THE SAID CLAIM WITH RECORDS RELATING TO POLICE COMPLAINT OR INSURANCE CLAIM THE AO M/S. RUSHI CONSTRUCTION 3 DIS ALLOWED 1/3 RD OF THE EXPENDITURE CLAIMED UNDER THE HEAD DEVELOPMENT EXPENSES. 5. THE LD CIT(A) HOWEVER HELD THAT ASSESSING OFFICER HAS MISDIRECTED HIMSELF BY LINKING THE AMOUNT RETAINED BY M/S DIMPLE CREATIONS WHICH ACCORDING TO THE AGREEMENT WAS R ETAINED TO MEET THE EXPENDITURE RELATING TO PAYMENT OF PREMIUM FOR FSI. THE LD CIT(A) FURTHER NOTICED THAT THE ASSESSEE HAS PROVIDED A SUM OF RS.1 21 50 000/ - AGAINST THE TOTAL EXPENSES OF RS.2.30 CRORES THAT IS REQUIRED TO BE INCURRED. ACCORDINGLY HE DI RECTED THE AO TO DELETE THE ADDITION OF RS.65 61 239/ - . WITH REGARD TO THE DISALLOWANCE OF DEVELOPMENT EXPENSES THE LD CIT(A) DIRECTED THE AO TO REDUCE THE DISALLOWANCE TO 10% OF EXPENSES AS AGAINST 1/3 RD DISALLOWED BY THE AO. AGGRIEVED THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER OF LD CIT(A). 6. WITH REGARD TO THE FIRST ISSUE WE NOTICE THAT THE LD CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSING OFFICER HAS MISDIRECTED HIMSELF BY LINKING THE AMOUNT RETAINED BY M/S DIMPLE CREA TIONS WITH THE OUTSTANDING EXPENDITURE PROVIDED BY THE ASSESSEE. THE EXPENDITURE THAT WAS REQUIRED TO BE INCURRED BY THE ASSESSEE AFTER 31.3.2007 WAS SUMMED UP BY THE ASSESSEE AS UNDER BEFORE LD CIT(A): - AMOUNT RETAINED BY M/S DIMPLE CREATIONS 86 00 0 00 AMOUNT RETAINED BY M/S DIMPLE REALTORS P LTD 25 00 000 BILL RAISED BY LAXMI ENTERPRISES 51 54 488 BILL RAISED BY KALPANA V BAVISKAR 68 35 630 --------------- 2 30 90 118 ========= AGAINST THE ABOVE SAID AMOUNT IT IS CLAIMED THAT THE ASSESSEE HAS PROVIDED A SUM OF RS.1 21 50 000/ - AS OUTSTANDING EXPENDITURE. ACCORDINGLY THE LD CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE. AT THE TIME OF HEARING IT WAS NOT SHOWN TO US AS TO HOW THE ANALY SIS MADE BY THE LD CIT(A) WAS WRONG. HENCE WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. M/S. RUSHI CONSTRUCTION 4 7. WITH REGARD TO THE DISALLOWANCE MADE OUT OF DEVELOPMENT EXPENSES WE NOTICE THAT THE ASSESSING OFFICER DID NOT BEL IEVE THE EXPLANATIONS GIVEN BY THE ASSESSEE FOR NON - FURNISHING OF VOUCHERS RELATING TO THE SAID CLAIM I.E. THE RELEVANT VOUCHERS HAVE BEEN DESTROYED IN THE FLOODS THAT OCCURRED DUE TO HEAVY RAINS. ACCORDINGLY THE AO HAS DISALLOWED 1/3 RD AMOUNT OF THE C LAIM WHICH HAS BEEN REDUCED TO 10% BY LD CIT(A). SINCE THE DISALLOWANCE WAS MADE ON ESTIMATED BASIS IN ORDER TO COVER POSSIBLE EXCESS CLAIM WE ARE OF THE VIEW THAT THERE IS NO REASON TO INTERFERE WITH THE ESTIMATE BY THE LD CIT(A). 8. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER HAS BEEN PRONOU NCED IN THE OPEN COURT ON 9 . 3 .2016 . SD/ - SD/ - (RAMLAL NEGI ) (B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 9 / 3 /20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. BY ORDER //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT MUMBAI PS