Deputy Commissioner of Income Tax -5(1), Indore v. M/s Sunderdeep Constructions Pvt. Ltd. , Indore

ITA 784/Ind/2018 | 2010-2011
Pronouncement Date: 09-03-2021 | Result: Dismissed

Appeal Details

RSA Number 78422714 RSA 2018
Assessee PAN AAACU2189B
Bench Indore
Appeal Number ITA 784/Ind/2018
Duration Of Justice 2 year(s) 5 month(s) 11 day(s)
Appellant Deputy Commissioner of Income Tax -5(1), Indore
Respondent M/s Sunderdeep Constructions Pvt. Ltd. , Indore
Appeal Type Income Tax Appeal
Pronouncement Date 09-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 09-03-2021
Date Of Final Hearing 20-01-2021
Next Hearing Date 20-01-2021
Last Hearing Date 26-03-2020
First Hearing Date 09-07-2020
Assessment Year 2010-2011
Appeal Filed On 27-09-2018
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE HONBLE KUL BHARAT JUDICIAL MEMBER AND HONBLE MANISH BORAD ACCOUNTANT MEMBER ITA NO.784 & 786/IND/2018 ASSESSMENT YEARS 2010-11 & 2013-14 DCIT-5(1) INDORE : REVENUE V/S M/S SUNDERDEEP CONSTRUCTION PVT. LTD 35-A DINDAYAL UPADHYAY NAGAR INDORE : RESPONDENT PAN : AAACU2189B REVENUE BY SHRI LAL CHAND CIT ASSESSEE BY S/ SHRI GIRISH AGRAWAL VIJAY BANSAL & MS. NISHA LAHOTI ARS DATE OF HEARING 1 6 .02 .2021 DATE OF PRONOUNCEMENT 09 . 0 3 . 202 1 O R D E R PER MANISH BORAD A.M THE ABOVE CAPTIONED APPEALS FILED AT THE INSTANCE OF THE REVENUE PERTAINING TO ASSESSMENT YEAR 2010-11 & 201 3-14 ARE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-II (IN SHORT LD. CIT] BHOPAL DATED 2 7.07.2018 WHICH SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 2 IS ARISING OUT OF THE ORDER U/S 143(3)/147 OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 29.12.2016 AND 29.03 .2016 FRAMED BY ACIT-5(1) INDORE. 2. REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- ITA NO.784/IND/2018 A.Y 2010-11 1. THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE MADE BY AO ON ACCOUNT OF DEVELOPMENT EXPENSES OF RS.2 93 76 568/- EVEN THOUGH THE ASSESSEE HAS ALREADY CHARGED THIS AMOUNT FROM THE C USTOMERS TO WHOM PROPERTY WAS TRANSFERRED DURING F.Y 2009-10. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT (A) WAS JUSTIFIED IN HOLDING THAT THE AO HAS MADE ADDIT ION BY DISALLOWING DEVELOPMENT EXPENSES OF RS.2 93 76 558/- ON PRESUMP TION BASIS WHEREAS THE FACT IS THAT THE CLAIM MADE BY THE ASSESSEE FOR DEVELOPMENT EXPENSES HAS BEEN DISALLOWED AS THE ASSESSEE HAS RECEIVED TH IS EXPENDITURE FROM THE CUSTOMERS THEREFORE THE LD. CIT(A) HAS GROSSLY ERRED IN HOLDING THAT THE ADDITION WAS MADE PRESUMING THAT THE ASSESSEE HAS R ECEIVED THE SAME IN CASH. 3. THE APPELLANT CRAVES LEAVE TO ADD TO OR DEDUCT FROM OR OTHERWISE AMEND THE ABOVE GROUND OF APPEAL. ITA NO.786/IND/2018 A.Y 2013-14 1. THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE MADE BY AO ON ACCOUNT OF DEVELOPMENT EXPENSES OF RS.7 14 97 410/- WHILE THE DEVELOPMENT EXPENSES HAVE NOT YET BEEN INCURRED IN RESPECT OF ALL THE PLOTS OF THE ENTIRE INFOCITY PROJECTS AND THE AMOUNT. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 3 2. THE LD. CIT (A) HAS ERRED IN DELETING THE DISALLOW ANCE MADE BY AO ON ACCOUNT OF DEVELOPMENT CHARGE OF RS.7 14 97 410/- WHILE IT WAS CONTINGENT IN NATURE. 3. THE APPELLANT CRAVES LEAVE TO ADD TO OR DEDUCT FROM OR OTHERWISE AMEND THE ABOVE GROUND OF APPEAL. 3. FURTHER DURING THE COURSE OF HEARING LD. COUNSEL FOR THE ASSESSEE WITH REFERRING TO RULE 27 OF THE INCOME TA X (APPELLATE TRIBUNAL) RULES 1963 SUBMITTED THAT THE FINDING OF LD. CIT(A) WITH REGARD TO THE ISSUE OF DEVELOPMENT EXPENSES OF RS.3 70 650/- TO BE TAXED IN ASSESSMENT YEAR 2010-11 IS NOT JUSTIFIED S INCE THE ASSESSEE HAD ALREADY OFFERED THIS AMOUNT OF RS.3 70 650/- TO TAX IN ASSESSMENT YEAR 2015-16. 4. WE WILL FIRST TAKE UP REVENUES APPEAL AND THE S OLE ISSUE COMMONLY RAISED FOR BOTH THE YEARS IS WITH REGARD T O ALLOWABILITY OF DEVELOPMENT EXPENSES OF RS.2 93 76 568/- AND RS.7 1 4 97 410/- FOR ASSESSMENT YEARS 2010-11 AND 2013-14 RESPECTIVE LY. SINCE THE ASSESSMENT FOR ASSESSMENT YEAR 2013-14 WAS FRAMED E ARLIER ON 29.12.2016 AND ON THE BASIS OF THE OBSERVATIONS OF THE LD. A.O FOR ASSESSMENT YEAR 2013-14 DISALLOWING THE CLAIM OF DE VELOPMENT EXPENSES SIMILAR ACTION WAS ALSO TAKEN FOR ASSESSME NT YEAR 2010- SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 4 11 WHICH WAS REASSESSED ON 29.12.2016. WE THEREFOR E PROCEED TO ADJUDICATE THIS COMMON ISSUE RAISED BY THE REVENUE ON THE BASIS OF FACTS FOR ASSESSMENT YEAR 2013-14 TO WHICH BOTH THE PARTIES HAVE AGREED. 5. BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN DEVELOPMENT OF COLONY. T HE ASSESSEE PURCHASES LANDS DEVELOPS AND SELLS BY PLOT TING THEM INTO SMALLER SIZES THE ASSESSEE HAS UNDERTAKEN TWO PROJECTS NAMELY 'INFOCITY' PROJECT AND 'ROYAL PREMIUM PARK' SITUATED AT GRAM-ARANDIA INDORE. ISSUES UNDER CONSIDERATION I N THE INSTANT APPEAL PERTAINS TO INFOCITY PROJECT ONLY . THE ASSESSEE HAS FILED RETURN OF INCOME ON 01-10-2013 S HOWING INCOME AT RS 52 86 000/- . SUBSEQUENTLY THIS CASE WAS SELECTED FOR SCRUTINY THROUGH CASS. ACCORDINGLY NOTICE U/ S 143(2) OF THE IT ACT 1961 DATED 03.09.2014 DULY SERVED UPON THE ASSESSEE. IN 'LNFOCITY' PROJECT THE TOTAL SALEABLE AREA IS 26 34 265 SQ. FEET. THE ASSESSEE COMPANY HAS STARTED SELLING PLOTS SINCE F. Y.2008-09 AND ALSO RECOGNIZED REVENUE OUT OF THE SALE PROCEED S. THE ASSESSEE HAS SOLD OUT AN AREA OF 6 74 480 SQ. FEET UP TO AY. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 5 2012-13 AND OUT OF THE BALANCE AREA OF 19 59 785 SQ . FEET (26 34 265 - 6 74 480 SQ. FEET) THE ASSESSEE HAS S OLD AN AREA OF 4 20 573 SQ. FEET IN INFOCITY PROJECT DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAS INCURRED DEVELOPMEN T EXPENSES FOR INFOCITY PROJECT AND HAS CLAIMED THE SE EXPENSES ON ACTUAL BASIS DURING A.Y.2009-10 TO AY.2 012-13. HOWEVER W.E.F. A.Y.2013-14 THE ASSESSEE COMPANY DEC IDED TO CHANGE ACCOUNTING POLICY AND ESTIMATED THE EXPEN SES ON DEVELOPMENT TO BE INCURRED IN THIS PROJECT AT RS.33 31 66 000/- (APART FROM THE DEVELOPMENT EXPENSES WHICH ARE ALREADY INCURRED BY THE ASSESSEE TILL A.Y .2012-13). THESE EXPENSES ARE ESTIMATED ON THE BASIS OF THE RE PORT GIVEN BY ARCHITECT & ENGINEER NAMELY M/S MATHUR AND ASSOCIATES (COPY ENCLOSED). SINCE THE BALANCE UNSOLD AREA AS O N 01.04.2012 WAS 19 59 785 SQ. FEET AND THE ESTIMATED DEVELOPMENT EXPENSES AS PER THE ARCHITECT WAS RS. 33 31 66 000/- THE ASSESSEE HAS WORKED OUT AVERAGE DEVELOPMENT EXPENSES AT THE RATE OF RS.170/- PER SQ . FEET (RS. 33 31 66 000 DIVIDED BY 19 59 785 SQ. FEET). DU RING YEAR UNDER CONSIDERATION I.E. A.Y.2013-14 THE ASSESS EE HAS SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 6 ACTUALLY INCURRED DEVELOPMENT EXPENSES AT RS.L 94 7 4 600/- BUT HAS AMORTIZED DEVELOPMENT EXPENSES AT RS.7 14 97 410/- ON ESTIMATION BASIS AS DISCUSSED AB OVE. SIMILARLY IN SUBSEQUENT ASSESSMENT YEARS ALSO THE ASSESSEE HAS FOLLOWED THIS SYSTEM. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SOLD OUT 4 20 573 S Q. FEET OF LAND AND THUS APPLYING THE RATE OF RS. 170/- PER SQ . FT. ACCORDINGLY THE ASSESSEE HAS ESTIMATED DEVELOPMENT EXPENSES AT RS.7 14 97 410/- (420573 SQ. FEET X RS. 170/-). 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEN LD. A.O OBSERVED THAT THE ASSESSEE HAD CLAIMED DEVELOPM ENT EXPENSES ON ESTIMATED BASIS WHICH ARE MUCH HIGHER T HAN THE ACTUAL EXPENSES INCURRED DURING THE YEAR ISSUED A LETTER ON 13.01.2016 REQUIRING THE ASSESSEE TO REPLY AS TO WH Y THE ASSESSEE HAS CHANGED THE SYSTEM OF CLAIMING DEVELOP MENT EXPENSES ON ESTIMATED BASIS WITH EFFECT FROM ASSESS MENT YEAR 2013-14. THE RELEVANT PARA OF THIS LETTER IS R EPRODUCED BELOW:- SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 7 '2. DURING THE YEAR UNDER CONSIDERATION THE COMPAN Y HAS SHOWN SALES AT RS.12 60 97 OOO/- AND THE NET PROFIT BEFORE TAX IS SHOWN AT RS.51 07 895/- AS PER STATEMENT OF P&L A/C. THIS NET PROFIT IS ARRIVE D AT AFTER TAKING INTO CONSIDERATION THE VARIOUS EXPENSES ACTUALLY INCU RRED AND ALSO THE EXPENSES TOWARDS DEVELOPMENT OF THE PROJECT NAMELY INFOCITY TO BE INCURRED IN SUBSEQUENT YEARS. IT IS SEEN THAT THE BASIC COST OF PLOT PER S Q. FEET WORKED OUT AT RS.98/- PER SQ. FEET IS LOADED WITH THE DEVELOPMENT EXPENSES ES TIMATING THE SAME AT THE RATE OF RS.170/- PER SQ. FEET FOR THE PROJECT NAMELY 'INFOC ITY'. HOWEVER IT IS SEEN THAT PRIOR TO ASSESSMENT YEAR 2013-14 THAT IS UPTO A. Y.2012- 13 THE COMPANY HAS TAKEN INTO CONSIDERATION ONLY THOSE DEVELOPMENT EXPENSES WHICH WERE ACTUALLY INCURRED DURING THE RESPECTIVE PREVIOUS YEARS. BUT THE COMP ANY HAS CHANGED THE SYSTEM OF ACCOUNTING W.E.F. A. Y.2013-14 BY WAY OF LOADING TH E ESTIMATED COST OF DEVELOPMENT EXPENSES AT THE RATE OF 170/- PER SQ. FEET TO THE ACTUAL COST OF THE LAND. IN THI S REGARD YOU ARE REQUESTED TO STATE THAT UNDER WHICH ACCOUNTING STANDARD THIS SYSTEM OF ACCOUNTING BEING FOLLOWED BY THE COMPANY W.E.F. A. Y.2013-14 IS GOVERNED AND GIVE JUSTIFICATION FOR CHANGING THE SY STEM OF ACCOUNTING ' 7. IN RESPONSE TO THE ABOVE LETTER THE AUTHORISED REPR ESENTATIVE OF THE ASSESSEE FILED FOLLOWING WRITTEN SUBMISSIONS:- 1. CHANGE IN METHOD OF ACCOUNTING :- YOUR HONOUR THE ASSESSEE COMPANY HAS TILL F.Y. 2011-12 HAS DEBITED THE EXPENSES ACT UALLY INCURRED THE SALE OF DEVELOPED PLOT A DETAILED CHART FOR THE YEAR-WISE SALE AND DEVELOPMENT EXPENS ES CLAIMED IS ENCLOSED (ENC.157). FROM THE ABOVE CHART IT MAY BE NOTED THAT THE TOTAL AREA OF PLOT SOLD IN FOUR YEARS (A.Y. 2009-10 TO A.Y. 2012-13) WAS ONLY 6 74 480 S Q.FT WHICH WAS ONLY 25.60% OF TOTAL SALABLE AREA OF 26 34 265 SQ. FTS IN THE INFO-CITY PROJECT. IN THE A.Y. 2013-14 DUE TO INTRODUCTION OF SECTION 43CA IN THE INCOME SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 8 TAX ACT MANY OF THE CUSTOMERS WHO HAVE ONLY BOOKED THE PLOT BY PAYING SMALL AMOUNT OF ADVANCE BUT NOT TURNING OUT FOR REGISTRY OF THE PLOT ASSESSEE COMPANY HAS RIGOROUSLY FOLLOWED THEM TO GET THEIR PLOT REGIS TERED AND PAY THE DIFFERENCE AMOUNT. ON SUCH FOLLOW UP MANY OF THE CUSTOMERS (PLOT AREA SOLD WAS 4 20 573 SQ. FTS DURING A.Y. 2013-14 WHICH IS ABOU T 16% SALEABLE AREA OF 26 34 265 SQ. FTS) HAVE GOT REGIST ERED THEIR PLOT IN THE LAST QUARTER OF THE F.Y. 2012-13. THE PLOTS WH ICH WERE SOLD BY THE ASSESSEE COMPANY WERE DEVELOPED PLOTS BUT HOWE VER DEVELOPMENT WORK WAS PENDING AND EXPENDITURE NEEDS TO BE INCURRED BY THE ASSESSEE COMPANY AGAINST THE SALES REVENUE SO BOOKED. ASSESSEE COMPANY HAS NO OPTION BUT TO BOOK CORRESPONDING EXPENDITURE TOWARDS THE DEVELOPMENT O F THE LAND TO MATCH THE REVENUE BOOKED AND THEREFORE IT HAS GOT T HE REPORT OF THE QUALIFIED VALUER WHO HAS ESTIMATED THE COST OF RS.170 PER SQ.FT OF REMAINING AREA TO BE DEVELOPED. THEREFORE TO CL AIM THE EXPENDITURE ON PRUDENT BASIS ON MATCHING CONCEPT T HIS EXPENSES HAVE BEEN BOOKED TO FOLLOW MERCANTILE SYSTEM OF ACC OUNTING ALSO AS THE REVENUE AS EXPLAINED ABOVE WAS BOOKED FOR THE SALE OF FULLY DEVELOPED PLOT BUT HOWEVER THE CORRESPONDING DIREC T EXPENSES HAVE NOT BEEN INCURRED AND SINCE LOOKING TO THE COM PLICATED NATURE OF THE ACCOUNTING THE AMOUNT OF DEVELOPMENT EXPENSES HAVE GOT BEEN ESTIMATED BY A QUALIFIED VALUER AND C LAIMED AS EXPENSES. 8. LD. A.O FURTHER EXAMINED THE ISSUE AND OBSERVED THA T THE CLAIM OF DEVELOPMENT EXPENSES @ RS.170/- PER SQ. FT WAS BASED ON THE REPORT OF THE ARCHITECT NAMELY M/S. MATHUR & AS SOCIATES. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 9 FURTHER LD. A.O RECORDED THE STATEMENTS OF SOME OF THE PERSONS WHO PURCHASED THE PLOTS OF LAND FROM THE ASSESSEE I N INFO CITY. THESE PERSONS STATED THAT THEY HAVE PAID DEVELOPMEN T CHARGES. FURTHER ENQUIRY WAS MADE WITH REGARD TO 22 PURCHASE RS OF PLOT WHO ALSO STATED TO HAVE PAID DEVELOPMENT CHARGES THROUG H CHEQUE. WHEN THE LD. A.O ASKED FURTHER THAT THE ASSESSEE WO ULD HAVE RECEIVED SIMILAR TYPE OF DEVELOPMENT CHARGES FROM O THER PURCHASERS/PLOT HOLDERS TO WHICH THE ASSESSEE DENI ED THAT THESE WERE SPECIAL CHARGES TAKEN FROM THESE 22 PERSONS AN D NO OTHER CHARGES WERE TAKEN FROM ANY OTHER PARTIES. IT WAS ALSO STATED THAT THE EXCESS AMOUNT RECEIVED ON ACCOUNT OF CLAIM OF D EVELOPMENT EXPENSES HAVE BEEN OFFERED TO TAX IN THE INCOME TAX RETURN FILED FOR ASSESSMENT YEAR 2015-16 AND THEREFORE THE CLAIM OF DEVELOPMENT EXPENDITURE SHOULD BE ALLOWED. HOWEVER LD. A.O WAS NOT SATISFIED WITH THESE SUBMISSIONS AND HE WAS OF THE VIEW THAT APART FROM THESE 22 PLOT HOLDERS THE REMAINING PERSONS MIGHT HAVE PAID CASH TO THE ASSESSEE TOWARDS DEVELOPMENT CHARGES AND THE RE IS NEITHER INCOME OR EXPENSES UNDER THE HEAD DEVELOPMENT CHARG ES SINCE WHATEVER DEVELOPMENT EXPENSES HAVE BEEN INCURRED TH E SAME HAVE BEEN RECEIVED BY THE ASSESSEE ON MATCHING PRINCIPLE . LD. A.O SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 10 THEREFORE DISALLOWED THE CLAIM OF ESTIMATED DEVELOP MENT EXPENSES OF RS.7 14 97 410/- AND ALSO DID NOT ALLOWED THE CLAIM OF ACTUAL DEVELOPMENT EXPENSES INCURRED FOR ASSESSMENT YEAR 2 010-11 AT RS.1 94 74 600/- OBSERVING AS FOLLOWS:- ON CONSIDERATION OF THE ABOVE FACTS AND CIRCUMSTAN CES IT EMERGES THAT:- A) THE ASSESSEE HAS CARRIED OUT DEVELOPMENT WORK ON TH E PLOTS OF 'INFOCITY' PROJECTS WHICH IT HAS DEBITED ON ACTUAL BASIS UP TO A.Y.20 12-13. HOWEVER DURING THE AY. UNDER CONSIDE RATION THE DEVELOPMENT EXPENSES HAVE BEEN WORKED OUT ON AN EST IMATED BASIS AT THE RATE OF RS.170/- PER SQ. FEET AND CLAIMED AT RS.7 14 97 410/- ACCORDINGLY. AS THE SAID EXPENDITU RE IS ON PROJECTION BASIS I.E. CONTINGENT IN NATURE AND HAS NOT BEEN ACTUALLY INCURRED DURING THE YEAR THE SAME IS NOT ALLOWABLE AS AN DEDUCTION IN TERMS OF THE PROVISIONS OF SECTION 37(1) OF THE ACT AND HENCE DISALLOWABLE. B) IN PARA 14 ABOVE IT HAS BEEN ESTABLISHED THAT THE ASSESSEE HAS BEEN CHARGING DEVELOPMENT CHARGES AT THE RATE OF RS .170/ - PER SQ. FEET AS ALSO RECORDED BY THE ASSESSEE IN ITS BO OKS OF ACCOUNTS IN RESPECT OF THE BUYERS WHO HAVE PAID THE AMOUNTS BY CHEQUES. HOWEVER IN RESPECT OF THE BUYERS WHO HAVE PAID THE AMOUNTS IN CASH THE ASSESSEE HAS NOT RECORDED CORRESPONDING DEVELOPMENT CHARGES RECEIVABLE AT THE RATE OF RS.170/- PER SQ. FEET EVEN THOUGH THE ASSESSEE HAS CLAIMED EXCESS DEDUCTION ON ACCOUNT OF DEVELOPMENT EXPENSES . WHEN CONFRONTED WITH SUCH APPARENT INCONSTANCY AND INCON GRUITY SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 11 BETWEEN THE BUYERS PAYING ENTIRE PURCHASE CONSIDERA TION BY CHEQUE AND OTHER BUYERS THE ASSESSEE TOOK THE PLEA OF DIFFERENCE IN CONSIDERATION DUE TO DIFFERENT LOCATI ON OF PLOTS AS DISCUSSED IN PARA 16 ABOVE. HOWEVER THE PLEA OF TH E ASSESSEE IS INCONSISTENT AND CONTRARY TO ITS OWN ACCOUNTING OF DEVELOPMENT EXPENSES INCURRED/INCURABLE AT THE RATE OF RS.170/- PER SQ. FEET AND DEVELOPMENT CHARGES RECEI VED AT THE RATE OF RS.170/- PER SQ. FEET FROM 22 BUYERS OF PLOTS. THIS BEING THE ADMITTED POSITION AS PER ASSESSEE'S BOOKS OF ACCOUNTS IT CAN BE CONCLUDED THAT :- A) DEVELOPMENT EXPENSES HAVE NOT YET BEEN INCURRED IN RESPECT OF ALL THE PLOTS OF THE ENTIRE 'INFOCITY' PROJECTS AND THE AMOUNT OF RS.7 14 97 410/- CLAIMED IS CONTINGENT IN NATURE. B) ACTUAL DEVELOPMENT EXPENSES WHEN ACTUALLY INCURRED WOULD HAVE TO BE CONSIDERED FOR DEDUCTION IN THE RELEVANT A.YS. SUBJECT TO FULFILMENT OF THE PROVISIONS OF SECTION 37(1) OF THE ACT. C) DEVELOPMENT CHARGES WHETHER RECEIVED OR NOT WOULD A CCRUE TO THE ASSESSEE AT THE RATE OF RS.170/- PER SQ. FEET AT PAR WITH 22 BUYERS OF THE PLOTS AS DETAILED IN PARA 13 AND 14 A BOVE AND THUS THE DEVELOPMENT CHARGES WOULD NOT BE A CHARGE ON THE ASSESSEE'S PROFIT AS THE SAME WOULD BE COMMENSURATE LY RECOVERABLE FROM THE BUYERS OF THE PLOTS. ALSO THE ASSESSEE HAS ITSELF SHOWN THE ENTRIES OF THE DEVELOPMENT CHARGES RECEIVED FROM 22 BUYERS BY CHEQUES BY PASSING GENERAL ENTRIE S IN ASSESSMENT YEAR 201S-16 FOR WHICH THE ASSESSEE HAS ALREADY FILED ITS RETURN OF INCOME. (COPY OF P&L A/C FOR A.Y.2015-16 IS MARKED AS ANNEXURE 'A' ) SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 12 9. ON THE BASIS OF OBSERVATION FOR ASSESSMENT YEAR 2013-14 SIMILAR ACTION WAS TAKEN FOR ASSESSMENT YEAR 2010-1 1 ALSO. THOUGH THE ASSESSEE HAS NOT CLAIMED THE DEVELOPMENT EXPENSES ON ESTIMATED BASIS AND HAS CLAIMED ACTUAL EXPENSES INC URRED AT RS.2 97 47 218/- BUT THE LD. A.O APPLYING THE SAME ANALOGY DENIED THE CLAIM AND ADDED IT BACK TO THE INCOME OF THE AS SESSEE. 10. AGGRIEVED ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AGAINST THE DISALLOWANCE OF DEVELOPMENT EXPENSES AT RS.7 14 97 410/- AND SUCCEEDED AS THE CLAIM OF THE ASSESSEE WAS ALLOWED BY LD. CIT(A) GIVING DETAILED FINDING OF FACT PLACING RELIANCE O N SETTLED JUDICIAL PRONOUNCEMENTS AND ALSO OBSERVING THAT THERE IS NO IOTA OF EVIDENCE OF ANY CASH SUM RECEIVED BY THE ASSESSEE TOWARDS DE VELOPMENT CHARGES OTHER THAN THOSE RECEIVED BY CHEQUE FROM TH E PARTIES MENTIONED BY THE LD. A.O IN THE IMPUGNED ORDER SEC ONDLY THE GENUINENESS OF ACTUAL EXPENSES INCURRED BY THE ASSE SSEE IS NOT IN DOUBT AND EXCESS DEVELOPMENT CHARGES RECEIVED FROM SOME CUSTOMERS HAS BEEN OFFERED TO TAX IN THE ASSESSMENT YEAR 2015-16. 11. AGGRIEVED REVENUE IS IN APPEAL BEFORE THE TRIBU NAL. 12. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGU ED SUPPORTING THE ORDER OF LD. A.O. REFERENCE WAS ALS O MADE TO THE SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 13 PAPER BOOK FILED ON 27.11.2020 WHICH INCLUDED THE C OMMENTS OF LD. A.O. LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMI TTED THAT THE CLAIM OF THE ASSESSEE OF HAVING RECEIVED DEVELOPMEN T CHARGES FROM 22 PERSONS ARE WITH REGARD TO SPECIAL LOCATION IS T OTALLY MISCONCEIVED SINCE THE DIRECTOR INCHARGE OF THE PRO JECT HAVE REFUSED TO HAVE CHARGED EXTRA MONEY FOR LOCATIONAL ADVANTAG ES. FURTHER HE SUBMITTED THAT IT IS TOTALLY UNACCEPTABLE THAT THE ASSESSEE HAD TAKEN DEVELOPMENT CHARGES ONLY FROM 22 PLOT HOLDERS AND HAS NOT TAKEN ANY SUCH DEVELOPMENT CHARGES FROM THE REMAINI NG PLOT HOLDERS. HE SUBMITTED THAT SINCE ASSESSMENT YEAR 2 009-10 413 PLOTS HAVE BEEN SOLD AND THE ASSESSEE MIGHT HAVE RE CEIVED THE DEVELOPMENT CHARGES IN CASH FROM THE REMAINING PLOT HOLDERS. FURTHER AS PER THE DIRECTION GIVEN BY THIS TRIBUNAL DURING THE COURSE OF HEARING TO FILE WRITTEN SUBMISSION (IF AN Y NEEDED) WITHIN ONE WEEK OF THE CONCLUSION OF THE HEARING LD. DEPA RTMENTAL REPRESENTATIVE HAS FILED FOLLOWING WRITTEN SUBMISSI ONS:- F.NO. CIT (AUDIT)/BPL/2020-21/ DAT ED: 05.03.2021 TO THE HONBLE MEMBERS ITAT INDORE BENCH INDORE. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 14 RESPECTED SIRS SUB:-WRITTEN SUBMISSION IN THE CASE OF M/S SUNDERD EEP CONSTRUCTIONS PVT. LTD. INDORE IN ITA NO. 786/I ND./2018 FOR A.Y. 2013-14. KINDLY REFER THE SUBJECT AS ABOVE. IN CONTINUATION OF MY ARGUMENTS IN THE APPEAL PROC EEDINGS OF ABOVE MENTIONED CASE ON 16.02.2021 AS DESIRED TH E WRITTEN SUBMISSION IS BEING FILED IN SUPPORT OF THE GROUNDS OF DEPARTMENT FOR KIND CONSIDERATION OF HONBLE BENCH. BRIEF BACKGROUND 1. THE APPELLANT IS ENGAGED IN DEVELOPMENT OF COLONY. THE APPELLANT PURCHASES LANDS AND SELLS THE LAND BY PLOTTING THEM INTO SMALLER SIZES. THE APPELLANT HAS UNDERTAKEN TWO PROJECTS NAMELY I NFOCITY PROJECT AND ROYAL PREMIUM PARK SITUATED AT GRAM- ARANDIA IND ORE. DURING THE RELEVANT ASSESSMENT YEAR THE APPELLANT HAS SHOWN S ALES AT RS.12 60 97 000/- IN RESPECT OF INFOCITY PROJECT AND HAS SHOWN PROFIT AT RS.51 07 895/- AS PER P &L A/C AND RS.52 86 000/- AS PER COMPUTATION OF TOTAL INCOME. AS REGARDS PREMIUM ROYAL PARK PRO JECT IT HAS SHOWN ADVANCES RECEIVED AT RS.10 12 07 850/- AND NO PROFI T IS RECOGNIZED BY THE APPELLANT IN RESPECT OF THIS PROJECT. HOWEVER IN INFOCITY PROJECT THE TOTAL SALEABLE AREA IS 26 34 265 SQ. FT. THE APPEL LANT COMPANY HAS STARTED SELLING PLOTS SINCE F.Y. 2008-09 AND ALSO R ECOGNIZED REVENUE OUT OF THE SALE PROCEEDS. THE APPELLANT HAS SOLD OUT A N AREA OF 6 74 480 SQ. FT. UPTO A.Y. 2012-13 AND OUT OF THE BALANCE AREA O F 19 59 785 SQ. FT. (26 34 265 6 74 480 SQ. FT.) THE APPELLANT HAS S OLD OUT AN AREA OF 4 20 573 SQ. FT. IN THIS PROJECT DURING THE YEAR UN DER CONSIDERATION. 2. IT CAN BE SEEN THAT THE APPELLANT HAS INCURRED DEVE LOPMENT EXPENSES FOR THIS PROJECT AND HAS CLAIMED THESE EXP ENSES ON THE BASIS OF ACTUAL EXPENSES INCURRED DURING RELEVANT F.YS. W.E. F. A.Y. 2009-10 TO A.Y. 2012-13. HOWEVER W.E.F. A.Y. 2013-14 THE AP PELLANT COMPANY HAS ESTIMATED THE EXPENSES ON DEVELOPMENT TO BE INCURRE D IN THIS PROJECT AT RS.33 31 66 000/- (APART FROM THE DEVELOPMENT EXPEN SES WHICH ARE ALREADY INCURRED BY THE APPELLANT TILL A.Y. 2012-13 ). THESE EXPENSES ARE ESTIMATED ON THE BASIS OF THE REPORT GIVEN BY ARCHI TECT NAMELY M/S MATHUR AND ASSOCIATES. THE TOTAL EXPENDITURE TO BE INCURRED W.E.F. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 15 01.04.2012 WAS ESTIMATED AT RS.33 31 66 000/- BY TH E SAID ARCHITECT. THE BALANCE UNSOLD AREA AS ON 01.04.2012 WAS 19 59 785 SQ. FT. AS SHOWN BY THE APPELLANT AND THE ESTIMATED DEVELOPMEN T EXPENSES AS PER THE ARCHITECT WAS RS.33 31 66 000/-. THE APPELLANT HAS WORKED OUT AVERAGE DEVELOPMENT EXPENSE AT THE RATE OF RS.170/- PER SQ. FT. (RS.33 31 66 000 19 59 785 SQ. FT.) AND APPLIED T HIS RATE FOR WORKING OUT AND CLAIMING THIS EXPENDITURE IN VARIOUS ASSESS MENT YEARS FROM A.Y. 2013-14. 3. THE DETAILS OF AREA SOLD OUT DEVELOPMENT EXPENSES INCURRED AND DEVELOPMENT EXPENSES INCURABLE ON THE BASIS OF ESTI MATION AT THE RATE OF RS.170/- PER SQ. FT. AND ALSO THE ACTUAL EXPENSES D EVELOPMENT EXPENSES INCURRED OUT OF THE ESTIMATION MADE BY THE APPELLAN T ARE SUMMARIZED BY AO IN THE ASSESSMENT ORDER AS UNDER:- PARTICULARS FINANCIAL YEAR GRAND TOTAL 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 TOTAL SALEABLE AREA 2 634 265 2 634 265 2 634 265 2 634 265 2 634 265 2 634 265 2 634 265 2 634 265 AREA SOLD 141 474 311 131 134 125 87 750 4 20 573 8 600 12 006 11 15 659 PERCENTAGE OF TOTAL SALEABLE AREA SOLD 5.37% 11.81% 5.09% 3.33% 15.97% 0.33% 0.46% 42.35% TOTAL DEVELOPMENT EXPENSES ACTUALLY INCURRED AND CLAIMED 11 587 720 29 747 218 9 116 040 2 416 100 _ _ _ 52 867 078 ESTIMATED _ _ _ _ 71 497 410 1 462 000 2 041 020 75 000 430 SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 16 DEVELOPMENT EXPENSES CLAIMED ACTUAL EXPENSES INCURRED 11 587 720 29 747 218 9 116 040 2 416 100 19 474 600 13 626 544 10 117 084 96 085 306 4. FROM THE ABOVE TABLE IT CAN BE SEEN THAT DURING YE AR UNDER CONSIDERATION I.E. A.Y. 2013-14 THE APPELLANT HAS A CTUALLY INCURRED DEVELOPMENT EXPENSES AT RS.1 94 74 600/- BUT HAS AM ORTIZED DEVELOPMENT EXPENSES ATRS.7 14 97 410/- ON ESTIMATI ON BASIS AS DISCUSSED IN ABOVE PARA. SIMILARLY IN SUBSEQUENT A.YS. ALSO THE APPELLANT HAS FOLLOWED THIS SYSTEM WHEREAS PRIOR TO A.Y. 2013-14 THE APPELLANT HAS DEBITED DEVELOPMENT EXPENSES WHICH WE RE ACTUALLY INCURRED. 5. DURING THE YEAR UNDER CONSIDERATION THE APPELLANT HAS SOLD OUT 4 20 573 SQ. FT. OF LAND AFTER DEVELOPING THE SAM E IN THE PLOTS. ACCORDINGLY THE APPELLANT HAS ESTIMATED DEVELOPME NT EXPENSES OF RS.71 497 410/- (420573 SQ. FT. X RS.170/-) WHEREAS ACTUAL EXPENSES INCURRED DURING THE YEAR WAS ONLY AT RS.1 94 74 600 /-. IT IS CLEAR FROM THE ABOVE INTRODUCTORY PART OF SUBMISSIONS THAT FRO M A.Y. 2009-10 TO 2012-13 THE APPELLANT HAD BEEN DEBITING THE DEVELO PMENT EXPENDITURE ON ACTUAL BASIS. THE TOTAL AREA SOLD WAS 6 74 480 SQ. FT. AND TOTAL AMOUNT OF RS.5 28 67 078/- WAS INCURRED AS DEVELOPM ENT EXPENDITURE WHICH GIVES COST OF RS.78.38 PER SQ. FT. 6. HOWEVER FOR THE RELEVANT ASSESSMENT YEAR THE A PPELLANT HAS DEBITED AN AMOUNT OF RS.7 14 97 410/- AGAINST SOLD AREA OF 4 20 573 SQ. FT. AT AVERAGE COST OF RS.170/- PER SQ. FT. WHICH IS MORE THAN DOUBLE OF DEVELOPMENTAL COST AS SHOWN DURING THE PERIOD FRO M F.Y. 2008-09 TO F.Y.2011-12. FURTHER PERUSAL OF RECORD REVEALS TH AT DURING THE RELEVANT ASSESSMENT YEAR ACTUAL COST OF DEVELOPMENT INCURRE D WAS RS.1 94 74 600/- WHEREAS THE APPELLANT HAS DEBITE D AN AMOUNT OF RS. 7.14 CRORE (APPROX) ON PROVISIONAL BASIS ON THE BA SIS OF ESTIMATION GIVEN BY ONE ARCHITECT IN THE NAME AND STYLE OF M/S MAT HUR AND ASSOCIATES WHO HAS ESTIMATED THE REMAINING PART OF DEVELOPMEN T EXPENSES TO RS. 33.31CRORES AND THE APPELLANT HAD PROCEEDED TO DEBI T THE PROVISION OF RS.7.14 CRORES DURING THE RELEVANT YEAR PROPORTION ATELY ALTHOUGH THE SAME WAS SIMPLE PROVISION THAT TOO CONTINGENT TO TH E INCURRING OF SAME AND MEETING THE STANDARD AS SPECIFIED BY THE ARCHI TECT. THE AO HAD SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 17 RECORDED THE STATEMENT OF SHRI N.M. MATHUR OF M/S M ATHUR AND ASSOCIATES. HE IS NONE ELSE BUT THE ONE WHO WAS SU PERVISING THE PROJECT RIGHT FROM THE BEGINNING. IN OTHER WORDS THEY W ERE THE CONTRACTORS FOR EXECUTION OF WORK. IN HIS STATEMENT MR. N. M. MAT HUR HAS FAILED TO GIVE ANY BASIS FOR ESTIMATION OF DEVELOPMENT EXPENS ES TO THE EXTENT OF RS.33.31CRORES @ RS.170/- PER SQ. FT. EVEN THOUGH TILL F.Y. 2011-12 THE SAME WAS BEING SHOWN @ RS.78.38 PER SQ. FT. AS DE TAILED ABOVE. 7. FURTHER IN HIS STATEMENT MR. N.M. MATHUR HAD CLE ARLY STATED THAT DEBIT OF PROPORTIONATE DEVELOPMENT EXPENSES DURING THE F.Y. 2012-13 ALSO INCLUDED AN AMOUNT OF RS.3.48 CRORES ON ACCOUN T OF CONSTRUCTION OF CLUB HOUSE THE OWNERSHIP OF WHICH WAS TO BE REMAIN ED WITH THE APPELLANT AS DISCUSSED IN DETAIL BY THE A.O. AT P AGE 10 OF THE ASSESSMENT ORDER DATED 31.03.2016 FOR THE A.Y. 2013 -14. THE AO HAS ALSO CLEARLY BROUGHT OUT THAT THE CAPITAL EXPENDITU RE IN THE FORM OF CLUB HOUSE IS NOT ALLOWABLE. AO HAS ALSO REPRODUCED REL EVANT PAGE OF SALE DEED OF PLOT OF LAND AT PAGE NO. 10 OF THE ASSESSME NT ORDER WHICH CLEARLY SPECIFIES THAT THE BUYERS OF PLOT IN THE SAID PROJE CT WILL NOT HAVE OWNERSHIP RIGHT OVER THE CLUB HOUSE. 8. IN VIEW OF THE ABOVE DISCUSSION IT IS EVIDENT TH AT THE APPELLANT HAS NOT ONLY DEBITED THE INADMISSIBLE EXPENSES BUT ALS O THE PROVISION OF EXPENSES WHICH HAVE NOT BEEN INCURRED YET. MOREOVE R THE SAME WAS CONTINGENT IN NATURE. THE ORDER OF CIT (A):- 9. THE OPERATIVE PART OF ORDER OF CIT (A) STARTS FRO M PARA 3 AT PAGE NO. 14 OF THE APPEAL ORDER. THE CIT (A) HAS ADJUDICATE D GROUND NO. 2 TO 5 TOGETHER. ON GOING THROUGH THE ENTIRE APPEAL ORDE R OF CIT (A) IT CAN BE SEEN THAT NOWHERE THE CIT (A) HAS DISCUSSED AND AD JUDICATED THE FINDINGS OF AO THAT DEVELOPMENT EXPENSES OF RS.7.14 CRORES WERE CONTINGENT AND WERE PROVISION WHICH CANNOT BE ALLOW ED. FURTHER THE AO HAS SPECIFICALLY CONCLUDED AT PARA 10 OF ASSESSMEN T ORDER THAT INVESTMENT IN CONSTRUCTION OF CLUB HOUSE AMOUNTING TO RS.3.48 CRORES WAS NOT ALLOWABLE FOR THE DETAILED REASONS AND DOCU MENTS PLACED AT PAGE NO. 10 OF THE ASSESSMENT ORDER. 10. APPARENTLY THE DEPARTMENT IS IN APPEAL WITH FOLL OWING GROUND: 1. THE LD.CIT (A) HAS ERRED IN DELETING THE DISALLOWAN CES MADE BY AO ON ACCOUNT OF DEVELOPMENT CHARGE OF RS.7 14 97 4 10/- WHILE THE DEVELOPMENT EXPENSES HAVE NOT YET BEEN INCURRED IN RESPECT OF ALL THE PLOTS OF THE ENTIRE INFOCITY PROJECTS AND THE AMOUNT. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 18 2. THE LD.CIT (A) HAS ERRED IN DELETING THE DISALLOWAN CE MADE BY AO ON ACCOUNT OF DEVELOPMENT CHARGE OF RS.7 14 97 4 10/- WHILE IT WAS CONTINGENT IN NATURE. 11. THE ISSUE HAS NEITHER BEEN CONSIDERED NOR ADJUDICA TED BY CIT (A) NOR HAS IT BEEN DECIDED BY HIM. THEREFORE ON THIS ISS UE/POINT EITHER THE MATTER HAS TO GO TO CIT (A) FOR PROPER ADJUDICATION OR THE ISSUE IS TO BE DECIDED IN FAVOUR OF REVENUE ON MERITS. 12. FURTHER ONGOING THROUGH THE GROUNDS OF APPEAL FI LED BEFORE CIT (A) AS REPRODUCED IN PAGE NO. 1 OF THE APPEAL ORDER IT IS NOTICED THAT ABOVE DISCUSSED ISSUE OF DEBITING PROVISIONS AND ESTIMA TED COST OF CLUB HOUSE DISCUSSED IN DETAIL BY AO HAVE NOT BEEN RAISED BY THE APPELLANT THROUGH A SPECIFIC GROUND. THE CONCLUDING FINDING OF AO ON THE RELEVANT ISSUE IS GIVEN AT PAGE NO. 34 OF THE ASSESSMENT ORD ER WHICH FOR THE SAKE OF CONVENIENCE IS REPRODUCED AS UNDER: (A) THE ASSESSEE HAS CARRIED OUT DEVELOPMENT WORK ON TH E PLOTS OF INFOCITY PROJECTS WHICH IT HAS DEBITED ON ACTU AL BASIS UPTO A.Y.2012-13. HOWEVER DURING THE A.Y. UNDER CONSID ERATION THE DEVELOPMENT EXPENSES HAVE BEEN WORKED OUT ON AN ES TIMATED BASIS AT THE RATE OF RS.170/- PER SQ. FEET AND CLAIMED AT RS.7 14 97 410/- ACCORDINGLY. AS THE SAID EXPENDITURE IS ON PROJEC TION BASIS I.E. CONTINGENT IN NATURE AND HAS NOT BEEN ACTUALLY INCURRED DURING THE YEAR THE SAME IS NOT ALLOWABLE AS AN DEDUCTION IN TERMS OF THE PROVI SIONS OF SECTION 37 (1) OF THE ACT AND HENCE DISALLOWABLE. (B) ACTUAL DEVELOPMENT EXPENSES WHEN ACTUALLY INCURRED WOULD HAVE TO BE CONSIDERED FOR DEDUCTION IN THE RELEVANT A.YS. S UBJECT TO FULFILLMENT OF THE PROVISIONS OF SECTION 37 (1) OF THE ACT. 13. THE CIT (A) IN HIS ORDER HAS NEITHER ADJUDICATED THIS ISSUE NOR HAS DISCUSSED THE FACTS AND THE ASSESSEE HAS NOT RAISE D THE ISSUES SPECIFICALLY IN THE GROUND BEFORE CIT (A). IT IS NOT UNDERSTOOD HOW THE ADDITION ON THIS ACCOUNT HAS BEEN DELETED. THE ADDI TION HAS TO CONSIDERED AS ACCEPTED BY THE APPELLANT IN THE ABSE NCE OF SPECIFIC GROUND OF APPEAL. THE SECOND ISSUE INVOLVED IN THE CASE. 14 . THE SECOND ISSUE INVOLVED IN THE CASE IS REGARDIN G ALLOWABILITY OF ACTUAL DEVELOPMENT CHARGES. WHETHER THE APPELLANT WHILE CHARGING PRICE OF THE PLOT HAS INCLUDED THE COST OF DEVELOPMENT? W HETHER THE SAID AMOUNT FORMS PART OF SALES TURNOVER OF RS.12.60 CRO RES REFLECTED IN THE TRADING ACCOUNT? WHETHER THE DEVELOPMENT CHARGES H AVE BEEN SEPARATELY RECEIVED FROM THE CUSTOMER AND NOT SHOWN IN SALES TURNOVER OF SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 19 THE F.Y. 2012-13 I.E. ASSESSMENT YEAR 2013-14 WHICH IS UNDER CONSIDERATION? 15. NOW THIS IS REGARDING ACTUAL INCURRING OF DEVELOPM ENT CHARGES DURING VARIOUS ASSESSMENT YEARS AS AGAINST THE PROVISION O F 7.14 CRORES DEBITED ON ACCOUNT OF DEVELOPMENT CHARGES DURING A.Y. 2013- 14 WHICH IS UNDER CONSIDERATION WHICH STANDS DISCUSSED COMPREHENSIV ELY IN PRE-PAGES OF THIS SUBMISSION. DURING THE RELEVANT YEAR THE AC TUAL EXPENDITURE ON ACCOUNT OF DEVELOPMENT CHARGES HAVE BEEN REFLECTED AT RS.1 94 74 600/- (PLEASE REFER A CHART AT PAGE NO. 3 OF THE ASSESSMENT ORDER). 16. THE AO HAS UNAMBIGUOUSLY CONCLUDED THAT THE ACTU AL EXPENSES OF RS.1 94 74 600/- ON ACCOUNT OF DEVELOPMENT CHARGES HAVE BEEN RECOVERED SEPARATELY FROM THE CUSTOMERS AND THE SAM E DONT FIND PART OF SALE TURNOVER OF RS.12.60 REFLECTED DURING THE A.Y. 2013-14. THEREFORE IT CANNOT BE DEBITED TO TRADING AND PROFIT & LOSS ACC OUNT AS SUCH ITS CHARGE TO THE PROFIT IS NOT ALLOWABLE. IT IS QUITE LOGICAL BECAUSE WHATEVER HAS BEEN SPENT ON DEVELOPING THE LAND HAS DIRECTLY BEEN SPENT BY THE CUSTOMER (THE PURCHASER OF THE PLOT). WHILE REGIST ERING THE SALE DEED THIS PART OF AMOUNT HAS NOT BEEN INCLUDED IN THE SALE CO NSIDERATION. THE ASSESSEE HAS SHOWN ONLY THE COST OF PLOT IN SALE CO NSIDERATION. 17. THEREFORE THE AO HAS CONCLUDED THAT EXPENDITURE ON ACCOUNT OF DEVELOPMENT OF LAND HAS BEEN DIRECTLY INCURRED BY T HE PURCHASER; THE ASSESSEE WAS NOT TO BE ALLOWED THE CLAIM OF SUCH EX PENDITURE. THIS ASPECT HAS IMPLICATION ON THE ASSESSMENTS FOR A.Y. 2009-10 TO 2012-13. THE BASIS ADOPTED BY AO TO REACH TO ABOVE CONCLUSIO N. 18. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO HAD RECORDED THE STATEMENT OF FOLLOWING PURCHASERS OF PLOT. 1. NIRMAL CHAND TIWARI 2. JAGDISH CHANDRA TIWARI 3. ANIL MALLIK 4. RAMPURKAR TIWARI 5. 19. SHRI NIRMAL CHAND TIWARI HAD CONFIRMED THAT AS PE R REGISTERED SALE AGREEMENT THE CONSIDERATION WAS RS.5 17 000/- BUT HE HAD PAID TOTAL AMOUNT OF RS.10 LACS BY CHEQUE WHICH ALSO INCLUDED AN AMOUNT OF RS.5.98 LACS ON ACCOUNT OF OTHER CHARGES INCLUDING DEVELOPMENT CHARGES WHICH AS PER THE COPY OF ACCOUNT RE-PRODUC ED AT PAGE 12 OF THE ASSESSMENT ORDER WAS RS. 2.93 LACS. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 20 20. SIMILARLY IN CASE OF OTHER THREE PARTIES AS PER THE STATEMENTS PRICE OF PLOT AS PER REGISTERED SALE DEED DID NOT INCLUDE THE COMPONENT OF DEVELOPMENT CHARGES. NAME OF PARTY AMOUNT AS PER DEED (IN LAKHS) AMOUNT ACTUALLY PAID (IN LAKHS) COMPONENT OF DEVELOPMENT CHARGES (IN LAKHS) ANIL MALIK 6.30 13 3.57 RAM PURKAR TIWARI 7.20 13 4.08 SHAILESH 6.75 13.50 5.11 WHILE REGISTERING THE DOCUMENTS THE ASSESSEE HAS S HOWN ONLY THE PART OF SALE AMOUNT AS PER REGISTERED SALE AGREEMENT. AT T HE STAGE OF ASSESSMENT PROCEEDINGS THE APPELLANT CAME OUT WITH THE LIST OF 22 PARTIES (CUSTOMERS) IN REGARD WITH WHOM THE ELEMEN T OF DEVELOPMENT EXPENDITURE WAS NOT ACCOUNTED FOR IN THE SALE CONSI DERATION DURING THE RELEVANT ASSESSMENT YEAR. THE LIST IS DULY REPRODUC ED AT PAGE NO. 18 OF THE ASSESSMENT ORDER. 21. IN CASE OF THESE PARTIES THE SALE DEEDS WERE REG ISTERED IN F.Y. 2008- 09 2009-10 2011-12 AND 2012-13 BUT THE SAME WAS N OT DISCLOSED. (PLEASE REFER THE CHART AT PAGE NO. 18 OF THE ASSES SMENT ORDER). THE TOTAL AMOUNT OF RS.61.21 LAKHS PERTAINING TO THESE 22 PAR TIES ON ACCOUNT OF DEVELOPMENT CHARGES WAS STATED TO HAVE BEEN OFFERE D FOR TAXATION DURING F.Y. 2014-15 RELEVANT TO A.Y. 2015-16. 22. NOW THE ISSUE BEFORE AO WAS WHETHER THE ASSESSEE H AD FOLLOWED THE SAME ACCOUNTING PRACTICE IN REGARD OF OTHER CUSTOME RS? IT WAS NOTICED BY THE AO THAT EXCEPT THESE 22 PURCHASES THE ASSESSEE HAS NOT DISCLOSED THE DEVELOPMENT CHARGES RECOVERED FROM THE CUSTOMER S IN THE RESPECTIVE ASSESSMENT YEARS. 23. THE AO FOUND THAT THESE 22 PARTIES INSISTED ON PAY ING THE ENTIRE CONSIDERATION BY CHEQUES. THEREFORE THE APPELLANT HAD NO CHOICE BUT TO DISCLOSE THE SAME IN THE ACCOUNTS OF LATER YEARS TH OUGH THE SAME SHOULD HAVE BEEN DISCLOSED IN SAME ASSESSMENT YEAR IN WHIC H THE SALE DEED WAS REGISTERED. THIS CLEARLY MEANT THAT WHERE THE P AYMENTS WERE RECEIVED BY CHEQUE ON ACCOUNT OF DEVELOPMENT CHARGES THE S AME WAS DISCLOSED BUT IN ALL OTHER CASES IT WAS RECEIVED IN CASH A S SUCH NOT DISCLOSED. NOW WHAT ARE THE BASIS BEFORE AO TO REACH THE ABOVE CONCLUSION? (A) ALL THE 22 LISTED PERSONS HAD PAID THE DEVELOPMENT CHARGES BY CHEQUE AND NONE PAID BY CASH. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 21 (B) THE PLOTS BELONGED TO THE SAME PROJECT WITHOUT HAVI NG ADDED ADVANTAGES OVER EACH OTHER. (C) THE SALE DEEDS HAVE BEEN FOUND REGISTERED ON THE CO ST OF PLOT ONLY EXCLUDING DEVELOPMENT CHARGES IN REGARDS OF PLOTS TO THE PARTIES OTHER THAN THESE 22 PARTIES. (D) IN REGARD WITH SOME OF THESE 22 PARTIES IN THEIR S TATEMENT THEY HAVE CLEARLY STATED THAT DEVELOPMENT CHARGES WERE SEPARATELY CHARGED AND NOT INCLUDED IN COST OF PLOT. IN CAS ES OF PARTIES OTHER THAN 22 PARTIES THE PLOTS HAVE BEEN REGISTERED O NLY ON COST OF PLOTS. (E) IN THE INTEREST OF NATURAL JUSTICE DURING THE COUR SE OF ASSESSMENT PROCEEDINGS THE STATEMENT OF SHRI RAMESH JAIN DIR ECTOR OF APPELLANT COMPANY WAS RECORDED AND IT WAS SPECIFI CALLY ASKED AS WHY THE DEVELOPMENT CHARGES IN REGARD WITH ONLY 22 PARTIES WERE SEPARATELY RECORDED FOR. IT WAS STATED BY THE DI RECTOR THAT THESE WERE NOT ON ACCOUNT OF DEVELOPMENT CHARGES BUT EXT RA CHARGES WERE DUE TO LOCATION ADVANTAGE LIKE CORNER PLOT ETC. THE AO HAS PREPARED AND REPRODUCED A CHART SHOWING LOCATIONS O F THE PLOTS OF 22 PARTIES AT PAGE NO. 18 OF ASSESSMENT ORDER. IT CAN BE SEEN THAT EXCEPT IN CASE OF 03 PARTIES ALL OTHERS WERE NON- CORNER PLOTS AND WITH NO OTHER ADVANTAGES. MOREOVER THE STATEMEN T OF DIRECTOR WAS ENTIRELY CONTRARY TO THE COPIES OF ACCOUNTS OF VARIOUS PARTIES AND STATEMENTS GIVEN BY MANY PURCHASERS. (F) AO VIDE LETTER DATED 13/01/2016 HAD REQUIRED ASSESS EE TO EXPLAIN AS WHY THE REVENUE IN REGARD OF 22 PERSONS WAS NOT RECOGNIZED IN THE YEAR OF REGISTRATION OF DEED. BUT THE ASSESSEE HAS MAINTAINED THE NOBLE SILENCE ON THE ISSUE AS CAN BE SEEN IN T HE DETAILED DISCUSSION AT PAGE NO. 17 OF THE ASSESSMENT ORDER. (G) DURING THE COURSE OF ASSESSMENT SHRI RAMESH JAIN DIRECTOR HAD ALSO CROSS-EXAMINED SHRI NIRMAL CHAND TIWARI AND SH RI RAM PURKAR TIWARI WHO HAS RE-CONFIRMED THE FACTS THAT D EVELOPMENT CHARGES WERE PAID SEPARATELY AND NOT ACCOUNTED FOR IN THE SALE CONSIDERATION OF PLOT. 24. FURTHER TWO PARTIES NAMELY SHRI ANU KUMAR GARGAV AND SHRI VINAY KUMAR TIWARI HAD GIVEN THE LETTERS STATING THAT DEVELOPMENT CHARGES WERE PAID OVER AND ABOVE THE COST OF PLOTS ON WHICH THE DEED WAS REGISTERED. THE COPIES OF LETTERS AND ACCOUNTS ARE DULY REPRODUCED BY AO AT PAGE NO. 29 TO 33 OF THE ASSESSMENT ORDER. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 22 25. THE A.O. AFTER TAKING INTO ACCOUNT THE FINDINGS OF INQUIRIES DOCUMENTS SUBMITTED BY THE ASSESSEE AND DETAILED DI SCUSSION PROCEEDED TO CONCLUDE THAT THE ACTUAL EXPENDITURE ON ACCOUNT OF DEVELOPMENT OF LAND WAS NOT CHARGEABLE TO THE PROF ITS AS THE SAME HAVE BEEN RECOVERED DIRECTLY FROM THE CUSTOMERS NOT FOR MING PART OF SALE CONSIDERATION ON WHICH THE SALE DEEDS WERE REGISTE RED. THE RELEVANT PART OF FINDING OF AO IS REPRODUCED AS UNDER:- (C) DEVELOPMENT CHARGES WHETHER RECEIVED OR NOT WOULD A CCRUE TO THE ASSESSEE AT THE RATE OF RS.170/- PER SQ. FEE T AT PAR WITH 22 BUYERS OF THE PLOTS AS DETAILED IN PARA 13 AND 14 A BOVE AND THUS THE DEVELOPMENT CHARGES WOULD NOT BE A CHARGES ON T HE ASSESSEES PROFIT AS THE SAME WOULD BE COMMENSURATELY RECOVERA BLE FROM THE BUYERS OF THE PLOTS. ALSO THE ASSESSEE HAS ITSELF SHOWN THE ENTRIES OF THE DEVELOPMENT CHARGE RECEIVED FROM 22 BUYERS B Y CHEQUES BY PASSING GENERAL ENTRIES IN ASSESSMENT YEAR 2015-16 FOR WHICH THE ASSESSEE HAS ALREADY FILED ITS RETURN OF INCOME. (C OPY OF P &L A/C FOR A.Y. 2015-16 IS MARKS AS ANNEXURE A). 26. NOW THE ISSUE IS WHETHER THE AO WAS CORRECT IN CONCLUDING THAT THE ASSESSEE HAS WRONGLY CLAIMED DEVELOPMENT EXPEN DITURE IN ALL THE ASSESSMENT YEARS I.E. A.Y. 2009-10 TO 2013-14 ON T HE BASIS OF STATEMENTS/CONFIRMATIONS BY A FEW CUSTOMERS AND ACCOUNTING FOLLOWED IN THE CASE OF 22 CUSTOMERS IN WHOSE CASES THE DE VELOPMENT CHARGES WERE RECEIVED SEPARATELY AND ACCOUNTED FOR SEPAR ATELY AND DISCLOSED IN THE F.Y. 2014-15 I.E. A.Y. 2015-16. THIS WAS SOLEL Y FOR THE REASONS THAT THESE 22 CUSTOMERS INSISTED FOR MAKING PAYMENT BY C HEQUE ONLY. 27. THE AO HAD CORRECTLY CONCLUDED THAT THE ASSESSEE H AS NOT DISCLOSED THE DEVELOPMENT CHARGES RECEIVED FROM VARIOUS CUSTO MERS IN CASH IN ALL THE AYS. I.E. A.Y. 2009-10 TO 2012-13 BECAUSE OUT O F 22 CUSTOMERS IN CASE OF 03 CUSTOMERS THE DEED WAS REGISTERED IN F.Y. 2008-09 AND SIMILARLY THE SAME WAS REGISTERED FOR 03 PARTIES IN F.Y. 2009-10. FURTHER IT IS SEEN THAT THE DEED FOR 05 AND 10 PART IES WERE REGISTERED IN F.Y. 2011-12 AND F.Y. 2012-13 RESPECTIVELY. IT IS E VIDENT THAT THE ASSESSEE HAS BEEN INDULGING INTO THE PRACTICE OF N OT ACCOUNTING THE DEVELOPMENT CHARGES RECOVERED FROM THE CUSTOMERS RI GHT FROM THE BEGINNING. 28. THEREFORE THE AO WAS WITHIN HIS COMPETENCE TO RE -OPEN THE CASES FOR A.Y. 2009-10 2010-11 AND 2012-13 AND MAKING DIS ALLOWANCE ON ACCOUNT OF DEVELOPMENT CHARGES DIRECTLY RECOVERED F ROM THE CUSTOMERS NOT FORMING PART OF SALES TURN OVER. THE CONCLUSI ON OF A.O. IS FULLY SUPPORTED BY THE DECISION OF HONBLE SUPREME COUR T IN THE CASE OF COMMISSIONER OF SALES TAX .. VS M/S H.M. ESUFALL H .M. ABDULALI ON 18 TH SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 23 APRIL 1973 (EQUIVALENT CITATIONS: 1973 AIR 2266 1973 SCR (3) 1005 WHERE THE TURNOVER FOR ENTIRE YEAR WAS ESTIMATED ON THE BASIS OF SALES FIGURES FOR ONLY 19 DAYS. THIS DECISION HOLDS THE GROUND EVEN TODAY AS NO OTHER DECISION CONTRARY TO THIS HAS BEEN GIVEN B Y HONBLE SUPREME COURT TILL NOW. THE RELEVANT PART OF DECISION IS A S UNDER:- THE QUESTION BEFORE US IS WHETHER THERE IS A REAS ONABLE NEXUS BETWEEN THE BASIS ADOPTED BY THE ASSESSING AUTHORIT Y AND THE ESTIMATE OF ESCAPED TURNOVER MADE. WE HAVE NO DOUBT THAT THERE IS SUCH A NEXUS. ON BEHALF OF THE ASSESSEE RELIANCE WAS PLACED ON T HE DECISION OF THIS COURT IN COMMISSIONER OF INCOME-TAX. WEST BEN GAL V. PADAMCHAND RAMGOPAL(1). THEREIN WHILE INVESTIGATIN G INTO THE CASE OF THE ASSESSEE THE INCOME-TAX OFFICER FOUND TWO I NSIGNIFICANT MISTAKES IN THE ASSESSEES ACCOUNTS RELATING TO THE ASSESSMENT YEAR 1953-54. NO MISTAKES WERE FOUND IN THE ACCOUNTS REL ATING TO THE ASSESSMENT YEARS 1954-55 TO 1957-58. MERELY BECAUSE THERE WERE SOME INSIGNIFICANT MISTAKES IN THE ACCOUNTS MAINTAI NED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1953-54 THE INCOM E- TAX OFFICERREJECTED THE ACCOUNTS OF THE ASSESSEE FOR AL L THE CONCERNED ASSESSMENT YEARS AND ADDED TO THE INCOME RETURNED H ALF THE AMOUNT OF GROSS RECEIPTS SHOWN BY THE ASSESSEE UNDE R THE HEAD 'INTEREST' FOR EACH OF THE YEARS AS ESCAPED INCOME. THE TRIBUNAL UPHELD THE ADDITION 'BUT THE HIGH COURT CAME TO THE CONCLUSION THAT THE ADDITIONS MADE BY THE INCOME-TAX OFFICER WERE Q UITE ARBITRARY. THIS COURT AGREED WITH THAT VIEW. WE DO NOT THINK T HAT THE SAID DECISION LENDS ANY SUPPORT TO THE ASSESSEE'S CONTEN TION. (1) 60 I.T.R.239 (1) 76 I.T.R.719. FOR THE REASONS MENTIONED ABOVE WE ARE UNABLE TO A GREE WITH .THE HIGH COURT THAT THE SALES.-TAX OFFICER. HAD ARBITRA RILY ASSESSED THE ASSESSEE. IT WAS NEXT CONTENDED THAT IN ARE ASSESSMENT UNDER S. 19(1) OF THE ACT SALE-TAX OFFICER WAS- NOT COMPETENT TO- MAKE. 'BEST. JUDGMENT ASSESSMENT' AS NO SUCH POWER WAS CONFERRED ON HIM U NDER THE SAID SECTION. THIS CONTENTIONS HAD BEEN REJECTED BY THE; HIGH COURT AND THE ASSESSEE HAD NOT APPEALED AGAINST THAT PART OF THE JUDGMENT. BE THAT AS IT MAY EVEN THOUGH S. 19 DOES NOT IN SPECI FIC TERMS CONFER ON THE ASSESSING AUTHORITY POWER TO MAKE 'BEST-JUDGMEN T ASSESSMENT' THAT SECTION SPECIFICALLY SAYS THAT THE .ASSESSMENT MADE UNDER THAT SECTION IS A REASSESSMENT. SECTION 18 DEALS WITH AS SESSMENT OF TAX. SECTION 18 (4) SAYS 'IF A REGISTERED DEALER- SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 24 X X A) X X X X (B) X X X X (C) X X X X (D) HAS NOT MAINTAINED ANY ACCOUNT OR HAS NOT REGUL ARLY EMPLOYED ANY METHOD OF ACCOUNTING OR IF THE. METHOD EMPLOYE D IS SUCH THAT IN THE OPINION OF THE COMMISSIONER ASSESSMENT CANNOT P ROPERLY BE MADE ON THE BASIS THEREOF; THE COMMISSIONER SHALL I N THE PRESCRIBED MANNER ASSESS THE DEALER TO THE BEST OF HIS JUDGMEN T.' WHAT IS TRUE OF THE ASSESSMENT MUST ALSO BE TRUE OF REASSESSMENT BECAUSE REASSESSMENT IS NOTHING BUT A FRESH ASSESSM ENT. WHEN REASSESSMENT IS MADE UNDER S. 19 THE FORMER ASSESS MENT IS COMPLETELY REOPENED AND IN ITS PLACE FRESH ASSESSME NT IS MADE. WHILE REASSESSING A DEALER THE ASSESSING AUTHORITY DOES NOT MERELY ASSESS HIM ON THE ESCAPED TURNOVER BUT IT ASSESSES HIM ON HIS TOTAL ESTIMATED TURNOVER. WHILE MAKING REASSESSMENT UNDER S. 19 IF THE ASSESSING AUTHORITY HAS. NO POWER TO MAKE BEST JUD GMENT ASSESSMENT ALL THAT THE ASSESSEE NEED DO TO ESCAPE REASSESSMENT IS TO REFUSE TO FILE A RETURN OR REFUSE TO PRODUCE HIS ACCOUNT-BOOKS. IF THE CONTENTION TAKEN ON BEHALF OF THE ASSESSEE IS CORRECT THE ASSESSEE CAN ESCAPE HIS LIABILITY TO BE REASSESSED BY ADOPTING AN OBSTRUCTIVE ATTITUDE. IT IS DIFFICULT TO CONCEIVE T HAT SUCH COULD BE THE POSITION IN LAW. BEFORE MAKING REASSESSMENT THE ASSESSING AUTHORITY HAS TO UNDER RULE 33(1) FRAMED UNDER THE ACT CALL UPON THE ASSES SEE TO PRODUCE HIS BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH THE ASSESSING AUTHORITY MAY REQUIRE AND ANY EVIDENCE WHICH THE DE ALER MAY WISH TO PRODUCE IN SUPPORT OF HIS OBJECTION. WHEN SUCH A NOTICE IS ISSUED TO THE DEALER HE MAY APPEAR BEFORE THE ASSESSING A UTHORITY ON THE DATE FIXED IN THE NOTICE AND PREFER HIS OBJECTIONS AND PRODUCE SUCH EVIDENCE AS HE MAY THINK NECESSARY. SUB- RULE (2) O F RULE 33 PROVIDES THAT IF THE ASSESSEE APPEARS IN RESPONSE T O THE NOTICE UNDER S. 3 3 (1). THE ASSESSING AUTHORITY MAY MAKE REASS ESSMENT IF NECESSARY ONLY AFTER CONSIDERING THE OBJECTIONS R AISED BY THE DEALER AND AFTER EXAMINING SUCH EVIDENCE AS MAY BE PRODU CED BY HIM . IT IS IMPORTANT TO NOTE THAT IN THE NOTICE WHICH T HE ASSESSING AUTHORITY IS REQUIRED TO ISSUED TO THE DEALER IN FO RM 16 THE EXTENT OF THE ESCAPED TURNOVER AS ESTIMATED BY THE ASSESSING AUTHORITY HAS TO BE SPECIFIED. THE PROCEDURE LAID DOWN IN RULE 33 COULD NOT HAVE B EEN A MERE EMPTY FORMALITY. IF THE ASSESSEE'S CONTENTION IS RI GHT IN ORDER TO SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 25 ESCAPE REASSESSMENT ALL THAT THE ASSESSEE NEED DO I S TO IGNORE THE NOTICE ISSUED UNDER RULE 33(1) AND REFUSE TO CO-OPE RATE WITH THE ASSESSING AUTHORITY IN THE REASSESSMENT PROCEEDINGS . WE ARE UNABLE TO ACCEPT THAT IS THE TRUE POSITION IN LAW. IN OUR OPINION THE DECISION OF THE ANDRA PRADESH HIGH COURT IN STATE OF ANDHRA PRADESH V. BAVURI V. NARASIMHAN (1) RELIED ON BY THE ASSESSEE WAS NOT CORRECTLY DECIDED. FOR THE REASONS MENTIONED ABOVE WE ALLOW THESE APPEALS VACATE THE ANSWERS GIVEN BY THE HIGH COURT TO QUESTIONS NOS. 1 AND 3 AND ANSWER THOSE QUESTIONS IN FAVOUR O F THE DEPARTMENT I.E. THAT THE ESTIMATE OF TAXABLE TURNOV ER UNDER THE 'STATE ACT AND THE 'CENTRAL ACT' MADE BY THE ASSESSING AUT HORITY FOR THE PERIOD FROM NOVEMBER 1 1959 TO OCTOBER 20 1960 ON THE BASIS OF RS. 31 171.28 AS THE ESCAPED TURNOVER FOR A PERIOD OF 19 DAYS WAS LEGAL AND JUSTIFIED AND CONSEQUENTLY THE PENALTY OF RS. 2 000/IMPOSED ON THE ASSESSEE WAS IN ACCORDANCE WIT H LAW. THE ASSESSEE SHALL PAY THE COSTS OF THE DEPARTMENT BOTH IN THIS COURT AND IN THE HIGH COURT. THE FINDINGS OF CIT (A) 29. THE CONCLUDING PART OF ORDER OF CIT (A) STARTS FRO M PARA 3.6 OF APPEAL ORDER. IT WILL BE IMPERATIVE TO EXAMINE THE FINDI NGS PARA WISE. PARA 3.6:- THE CIT (A) HAS STATED THAT DEVELOPMENT CHARGES @ R S.170/- WERE CONSIDERED ONLY IN CASE OF 07 CUSTOMERS WHEREAS IN CASE OF 15 CUSTOMERS IT WAS RANGING BETWEEN RS. 7/- TO R S.165/- ONLY. THIS WAS A NEW FACT BROUGHT TO THE NOTICE OF CIT (A) W HICH NEEDED THE COMMENTS FROM AO AS SUCH THE MATTER SHOULD HAVE BEE N REMANDED. PARA 3.8:- THE CIT (A) SAYS THAT THE AO HAS NOT RECORDED THE S TATEMENT OR CALLED THE INFORMATION FROM OTHER CUSTOMERS AS SUCH MADE THIS AS ONE OF THE BASIS FOR DELETING THE ADDITION. THE CIT (A) HAS GOT CO- TERMINUS POWERS WITH THE AO. THE CIT (A) COULD HAVE INVOKED SECTION 251 (4) OF IT ACT IN ORDER TO GET THE FURTHER VERIFICATION DONE BY THE AO. PARA 3.9:- THE CIT (A) STATES THAT LEARNED AO HAD DISALLOWED A SUM OF RS. 7.14 CRORES BEING THE AMOUNT ACTUALLY INCURRED AND CHARGED TO P & L ACCOUNT. THE CONCLUSION OF CIT (A) IS FACTUALLY I NCORRECT. THE AO HAS NO WHERE STATED THAT AN AMOUNT OF RS. 7.14 CRORES WAS ACTUALLY INCURRED. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 26 RIGHT FROM THE BEGINNING THE AO HAS BEEN INSISTING THAT THE PROVISION (CONTINGENT) ON ACCOUNT OF DEVELOPMENT EXPENSES HAV E BEEN CLAIMED BY ASSESSEE AND THE SAME WAS NOT ALLOWABLE. THEREFORE THE CIT (A) HAS DELETED THE ADDITION ON MISTAKEN UNDERSTATING OF AO S CONCLUSION. PARA 3.10:- THE ENTIRE ISSUE WAS DISCUSSED AND DECIDED ON THE F ACTUAL MATRIX AS PER THE RECORD STATEMENTS AND OUTSIDE INQUIRES. THE QUESTION OF REJECTION OF BOOKS DID NOT ARISE BEFORE THE CIT (A). MOREOVE R THE SAME WAS NOT RAISED BY THE APPELLANT IN SPECIFIC GROUNDS OR IN W RITTEN SUBMISSIONS. FURTHER THE CIT (A) HAS STATED THAT THE ADDITION ON ACCOUNT OF DISALLOWANCE OF DEVELOPMENT EXPENDITURE BY AO WAS F OR ITS BEING CONTINGENT IN NATURE. BUT THE CIT (A) HAS FAILED T O ADJUDICATE AND DECIDE WHETHER THE AO WAS CORRECT IN HIS CONCLUSION. PARA 3.13:- THE CIT (A) HAS STATED THAT NONE OF THE CUSTOMERS HAS ADMITTED OF HAVING PAID ANY AMOUNT OVER AND ABOVE WHAT WAS R ECORDED IN THE BOOKS OF ACCOUNT. HE HAS NOT CONSIDERED AND APPRE CIATED THE DETAILED DISCUSSION BY THE AO IN THE ASSESSMENT ORDER THAT T HE APPELLANT HAD RECEIVED THE COST OF DEVELOPMENT SEPARATELY FROM THE CUSTOMERS AND THE SAME HAS NOT BEEN CONSIDERED IN SALE CONSIDERATIO N AS SHOWN IN THE P & L ACCOUNTS OF A.Y. 2009-10 2010-11 AND 2012-13 A ND 2013-14. THESE AMOUNTS HAVE BEEN DISCLOSED ONLY IN THE F.Y. 2014-15 FOR WHICH NO EXPLANATION COULD BE FILED DURING THE ASSESSMEN T PROCEEDINGS. THE ENTIRE DISCUSSION BY THE AO AND ABOVE SUBMISSION P ROVE IT BEYOND DOUBT THAT THE ASSESSEE HAS DISCLOSED THE COMPONE NT OF DEVELOPMENT CHARGES ONLY ON ACCOUNT OF THOSE PARTIES WHO HAD PA ID THE SAME BY CHEQUES. FURTHER THE CIT (A) HAS FAILED TO TAKE NOTE OF DET AILED DISCUSSIONS AND COPIES OF STATEMENTS AND CONFIRMATION BY THE P ARTIES WHICH ARE DULY PASTED IN THE ASSESSMENT ORDER AT PAGE NO. 11 TO 33 OF THE ASSESSMENT ORDER. PARA 3.17:- THE FINDING OF CIT (A) THAT THE AO HAS NOT BROUGH T ON RECORD ANY EVIDENCE IS FAR FROM REALITY AS CAN BE SEEN FROM T HE DETAILED DISCUSSION RUNNING IN TO 35 PAGES . NOTHING HAD PREVENTED TH E CIT (A) TO REACH THE TRUTH BY INVOKING SECTION 251 (4) OF IT ACT. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 27 PARA 3.18:- REGARDING ALLOWING OF CROSS EXAMINATION OF SHRI N. M. MATHUR THE ARCHITECT THERE IS NOTHING ON RECORD TO PROVE THA T THE ASSESSEE HAD SOUGHT CROSS-EXAMINATION. FURTHER NOT GIVING CROS S- EXAMINATION IS NOT SUFFICIENT GROUND FOR ALLOWING THE APPEAL OF ASSESS EE AS HELD IN FOLLOWING CASES OF HONBLE APEX COURT. M/S PEBBLE INVESTMENT AND FINANCE LTD. VS ITO SUPREME COURT 2017 2017 - TIOL - 238 - SC - IT ITO VS M. PIRAL CHOODI SUPREME COURT 2010 [2012] 20 TAXMAN.COM 733 (SC)/[2011]334 ITR 262 (SC)/[2011] 245 CTR 233 (SC) ROGER ENTERPRISES (P.) LTD. VS. CIT SUPREME COURT 2016 [2016] 72 TAXMANN.COM 167 (SC) FURTHER CIT (A) COULD HAVE DIRECTED THE AO TO ALLO W THE CROSS- EXAMINATION OF ARCHITECT IN REMAND PROCEEDINGS. TH EREFORE THE ORDER OF CIT (A) IS NOT IN ACCORDANCE WITH THE PROVISIONS OF IT ACT 1961. PARA 3.19:- THERE IS NO MISTAKE BY AO IN RELYING ON THE REPOR T OF M/S MATHUR AND ASSOCIATES ABOUT THE COST OF CLUB HOUSE AS THE FIR M WAS ASSOCIATED WITH THE PROJECT SINCE BEGINNING. PARA 3.21:- THE CIT (A) WHILE DELETING THE ADDITION HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT. THE FACTS OF DECISION OF HON BLE SUPREME COURT IN THE CASE OF ROTARK CONTROL INDIA PVT. LTD. VS CIT (314 ITR 62) IS TOTALLY DISTINGUISHABLE FROM THE FACTS OF PRESENT CASE. IN THAT CASE THE ISSUE BEFORE HONBLE APEX COURT WAS ESTIMATION OF WARRANTY EXPENSES WHICH WAS CONSIDERED AS INTEGRAL PART OF SALE PR ICE. THE PROVISION FOR WARRANTY WAS RECOGNIZED AS THE ASSESSEE HAD PRESEN T OBLIGATION AS A RESULT OF PAST EVENTS WHEREAS IN THE PRESENT CASE THE ASSESSEE HAD BEEN COMFORTABLY DEBITING THE EXPENSES ON ACTUAL BASIS FROM A.Y. 2008-09 TO A.Y. 2012-13. THE AVERAGE COST ON ACCOU NT OF DEVELOPMENT CHARGES @ RS.78. 38/- PER SQ.FT. WAS BEING REFLECTE D . BUT SUDDENLY DURING THE RELEVANT ASSESSMENT YEAR THE APPELLANT HAS ESTIMATED THE COST OF DEVELOPMENT @ RS.170/- PER SQ. FT. FOR REMA INING PART OF THE PROJECT AND STARTED CLAIMING THE EXPENSES ON PROPOR TIONATE BASIS. MOREOVER THE ARCHITECT M/S MATHUR AND ASSOCIATES HAVE THEMSELVES STATED THAT THE ESTIMATES WERE CONTINGENT TO THE QUALITY OF WORK SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 28 SPECIFIED IN THE REPORT ( REFER STATEMENT OF SHRI N .M. MATHUR). THEREFORE IN THE PRESENT CASE THE LIABILITY WAS NOT DETERMIN ABLE WITH CERTAINTY. 30. THE HONBLE SUPREME COURT IN THE CASE AS CITED SU PRA HAD LAID DOWN THE FOLLOWING PRINCIPLES FOR RECOGNIZING THE PROVISION AS LIABILITY. A PROVISION IS A LIABILITY WHICH CAN BE MEASURED ONLY BY USING A SUBSTANTIAL DEGREE OF ESTIMATION. A PROVIS ION IS RECOGNIZED WHEN: (A) AN ENTERPRISE HAS A PRESENT OB LIGATION AS A RESULT OF A PAST EVENT; (B) IT IS PROBABLE THAT AN OUTFLOW OF RESOURCES WILL BE REQUIRED TO SETTLED THE OBLIGATIO N AND (C ) A RELIABLE ESTIMATE CAN BE MADE OF THE AMOUNT OF THE OBLIGATION. IF THESE CONDITIONS ARE NOT MET NO PR OVISION CAN BE RECOGNIZED. IT IS EVIDENT FROM THE PLAIN READING OF FACTS OF P RESENT CASE THAT IT DID NOT FIT INTO THE PARAMETERS LAID DOWN BY HONBLE APEX COURT. 31. THE DECISION OF HONBLE INDORE BENCH OF ITAT AS CI TED BY THE CIT (A) IS ALSO CLEARLY DISTINGUISHABLE ON FACTS AS SUCH CA NNOT BE APPLIED ON THE FACTS OF PRESENT CASE. IN VIEW OF THE FACTS BROUGHT OUT ABOVE AND DETAILED DISCUSSION BASED ON VARIOUS DOCUMENTS INQUIRES STATEMENT OF VARIOUS P URCHASERS AND JUDICIAL DECISIONS WE REQUEST HONBLE BENCH ITAT INDORE TO SET ASIDE THE ORDER OF CIT (A) AND RESTORE THE ORDER OF ASSES SING OFFICER. SD/- (LAL CHAND) COMMISSIONER OF INCOME TAX (AUDIT) BHOPAL (ASSIGNED CHARGE- CIT (DR)) 13. PER CONTRA LD. COUNSEL FOR THE ASSESSEE APART F ROM SUPPORTING THE ORDER OF LD. CIT(A) AND ALSO RELIED ON THE FOLL OWING SUBMISSIONS:- 1. ASSESSEE IS A DEVELOPER ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LAND BY DEVELOPING THE COLONY AND SELLING OF DEVELOPED P LOTS OF THE COLONY. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 29 2. DURING THE IMPUGNED YEAR ASSESSEE HAD UNDERTAKEN T WO PROJECTS NAMELY INFO-CITY AND ROYAL PREMIUM PARK. DURING BO TH THE YEARS UNDER CONSIDERATION PLOTS OF ONLY INFO-CITY PROJECT WERE SOLD AND DEVELOPED. THE TOTAL PLOTS IN THE INFO CITY PROJECT ARE 1142 . THE YEAR WISE BREAK-UP OF SALE OF PLOTS FROM F.Y. 2008-09 TO F. Y . 2014-15 (AY 2009-10 TO 2015-16) IS AS UNDER:- 4. MPEB CHARGES DEVELOPMENT CHARGES CLUB HOUSE CH ARGES AND SUCH OTHER CHARGES WERE RECEIVED FROM THE BUYERS OF THE PLOTS IN ADDITION TO THE TOTAL SALE CONSIDERATION. 5. DURING AY 2013-14 ASSESSEE HAD RECEIVED CERTAIN AMOUNT OVER & ABOVE THE AMOUNT OF SALE CONSIDERATION FROM THE FOLLOWING BUYERS DETAILS OF WHICH ARE AS UNDER [REFER CIT(A) ORDER PARA 3.15 PAGE 17] SR. NO. NAME OF THE PARTY PLOT NO. AREA OF PLOT (SQ.FT .) EXCESS AMOUNT RECEIVED IN ADDITION TO THE SALE CONSIDERAT ION IN AY 2013-14 (RS.) PB [AY 201 3- 14] AMOUNT TRANSFERR ED TO MPEB DEPOSIT ACCOUNT (RS.) AMOUNT TRANSFERRE D TO DEVELOPM ENT CHARGES ACCOUNT (RS.) RATE OF DEVELOPM ENT CHARGES PER SQ.FT PB [AY 201 3- 14] (A) (B) (C) (D) (E) (F) (G) (H) = (E-G) (I) =(G/D) (J) 1 MEETA RAJESH PANWAR 421 420 463 8200 40 40 000 44 77- 78 2 87 000 13 94 000 170 228 2 SEEMA AND PIYUSH ZALAYA 1000 1725 1 82 500 45 60 375 1 22 125 70.80 228 3 RAJEEV KUMAR 991 1725 9 97 500 44 126 60 375 2 93 250 170 228 A.Y. NO. OF PLOTS OF INFO-CITY PROJECT SOLD 2009 - 10 56 2010 - 11 120 2011 - 12 54 2012 - 13 33 2013-14 168 2014 - 15 4 2015 - 16 6 SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 30 NIKHAR 4 ANU KUMAR GARGAV 957 1725 7 65 000 43 60 375 2 93 250 170 228 5 RAMPUKAR TIWARI 122 2400 5 80 000 44 84 000 4 08 000 170 228 6 SATYANARAY AN DHRUV 464 4260 4 22 000 45 1 49 100 2 72 900 64.06 228 7 ANITA SURESH SHARMA 882 2100 4 20 000 43 172 73 500 3 46 500 165 228 8 NIRMAL RAJENDRA TIWARI 986 1725 6 82 500 187- 188 60 375 2 93 250 170 228 9 ANIL MALIK 391 2100 4 00 000 200 73 500 3 26 500 155.48 228 10 AMIT SHANTILAL 345 2100 2 45 000 43 216 73 500 1 71 500 81.67 228 TOTAL 39 21 275 OUT OF THE ABOVE MENTIONED EXCESS AMOUNT AS MENTION ED IN COLUMN E AFTER TRANSFERRING TO THE MPEB DEPOSIT ACCOUNT (COLUMN G) THE BALANCE AMOUNT WAS THEN TRANSFERRED TO DEVELOPMENT CHARGES (COLUMN H) . THESE DEVELOPMENT CHARGES VARY FROM THE RANGE OF RS. 64 P ER SQ. FT. TO RS. 170 PER SQ. FT. AND ARE NOT EXACTLY RS. 170 PER SQ. FT. (COLUMN I) . 6. LD. AO WITHOUT BRINGING ON RECORD ANY COGENT AND POSITIVE MATERIAL HAS CONCLUDED THAT DEVELOPMENT CHARGES WERE RECEIVED IN CASH BY THE ASSESSEE OVER AND ABOVE THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS OF ASSESSEE ARE DULY AUDITED AND NO ADVERS E REMARKS/FINDINGS HAVE BEEN GIVEN BY THE AUDITOR. 7. NONE OF THE BUYERS OF THE PLOTS IN THEIR STATEME NTS RECORDED BY THE LD. AO HAVE STATED ABOUT PAYMENT OF CASH TO THE ASSESSEE. THE FACT OF THE MATTER IS THAT WHATEVER THE BUYERS HAVE CONFIRMED IN THEIR ST ATEMENTS RECORDED BY THE LD. AO IN RESPECT OF PAYMENTS MADE TO THE ASSES SEE ALL THOSE AMOUNTS HAVE BEEN DULY RECORDED IN THE RESPECTIVE LEDGER AC COUNT OF THAT BUYER AND REPORTED IN THE AUDITED FINANCIAL STATEMENTS OF THE ASSESSEE. THESE ARE VERIFIABLE FACTS FROM THE DOCUMENTARY MATERIAL PLAC ED ON RECORD. 8. DEVELOPMENT CHARGES RECOVERED FROM THE BUYERS AM OUNTING TO RS. 61 21 220 WERE OFFERED TO TAX IN AY 2015-16. THESE DEVELOPMENT CHARGES INCLUDE THE CHARGES RECEIVED FROM THE TEN BUYERS AS MENTIONED IN TABLE AT PARA 5 ABOVE. OUT OF THE DEVELOPMENT CHARGES OF RS. 61 21 220; AMOUNT OF RS. 39 21 275 RELATES TO AY 2013-14. IF THIS AMOUNT IS AGAIN BROUGHT TO TAX SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 31 IN THE YEAR UNDER CONSIDERATION IT SHALL AMOUNT TO TAXING THE SAME TWICE IN TWO DIFFERENT YEARS VIZ. AY 2015-16 WHEREIN THE AS SESSEE ITSELF HAS OFFERED IT TO TAX AND AY 2013-14 WHEREIN IT IS DONE BY THE LD. AUTHORITY. [AO PARA 14 PAGE 17 TABLE AND CIT(A) PARA 3.4 PAGE 14-15] 9. THE AMOUNT OF DEVELOPMENT CHARGES FROM THE TEN B UYERS FOR RS. 39 21 275 HAS ALREADY BEEN REPORTED IN THE RETURN F OR AY 2015-16 WHICH IS AN UNDISPUTED FACT. ALSO REFER ANNEXURE A TO THE IMPUGNED ASSESSMENT ORDER WHEREIN THE AUDITED P&L ACCOUNT AND ITS RELEV ANT NOTE 14 FOR AY 2015-16 IS ENCLOSED BY THE LD. AO AS PART OF THE AS SESSMENT ORDER. PARA 14 OF THE ASSESSMENT ORDER STATES THIS FACT OF REPORT ING OF RS. 61 21 220 IN RESPECT OF DEVELOPMENT CHARGES RECOVER ED FROM 22 BUYERS IN AY 2015-16 WHICH HAS BEEN TABULATED AT PAGE 17 . THIS AMOUNT OF RS. 61 21 220 IS INCLUDED IN THE NOTE 14 TO THE STATEMENT OF PROFIT AND LOSS FOR AY 2015-16 FORMING PART OF THE IMPUGNED ASSESSM ENT ORDER AS ANNEXURE A . 10. IT IS A SETTLED LAW THAT ONCE AN AMOUNT HAS BEE N SUBJECTED TO TAX IN A GIVEN ASSESSMENT YEAR IT CANNOT BE TAXED AGAIN IN ANOTHER ASSESSMENT YEAR. THIS PRINCIPLE EMERGED FROM THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRIES LTD. 358 ITR 295 (SC) [201 3] . IT WAS HELD THIRDLY THE REAL QUESTION CONCERNIN G US IS THE YEAR IN WHICH THE ASSESSEE IS REQUIRED TO PAY TAX. THERE IS NO DI SPUTE THAT IN THE SUBSEQUENT ACCOUNTING YEAR THE ASSESSEE DID MAKE I MPORTS AND DID DERIVE BENEFITS UNDER THE ADVANCE LICENCE AND THE D UTY ENTITLEMENT PASS BOOK AND PAID TAX THEREON. THEREFORE IT IS NOT AS IF THE REVENUE HAS BEEN DEPRIVED OF ANY TAX. WE ARE TOLD THAT THE RATE OF T AX REMAINED THE SAME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN THE SUBSE QUENT ASSESSMENT YEAR. THEREFORE THE DISPUTE RAISED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT BEST MAY HAVE A MINOR TAX EFFECT. THERE WAS THE REFORE NO NEED FOR THE REVENUE TO CONTINUE WITH THIS LITIGATION WHEN IT WA S QUITE CLEAR THAT NOT ONLY WAS IT FRUITLESS (ON MERITS) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH TO THE PUBLIC COFFERS. 11. THE ABOVE DECISION OF EXCEL INDUSTRIES LTD (SUP RA) HAS BEEN FOLLOWED BY HONBLE P&H HIGH COURT IN THE CASE OF VEE GEE INDUS TRIAL ENTERPRISES IN ITA 187 OF 2014 ORDER DATED 28.07.2015 AND HELD IN PARA 8 IT WAS CONCEDED THAT EVEN IN THE PRESENT CASE THE RATE OF TAX REMAINED THE SAME IN BOTH THE ASSESSMENT YEARS I.E. 2005-06 AND 2007- 08. FOLLOWING THE ABOVE JUDGMENT OF THE HONBLE SUP REME COURT IT MUST BE HELD THAT THE DISPUTE RAISED BY THE REVENUE IS ESSE NTIALLY ACADEMIC. THE SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 32 ISSUE MAY HAVE SOME TAX EFFECT IN THAT IF THE DEPAR TMENT IS CORRECT AND THE AMOUNT OUGHT TO HAVE BEEN BROUGHT TO TAX TWO YEARS EARLIER THERE WOULD BE LOSS OF INTEREST FOR TWO YEARS ON THE AMOUNT OF ` 31 10 000/-. THE DEPARTMENT HAS NOT RAISED THE CLAIM IN THAT REGARD. WE DO NOT WISH TO EXPRESS ANY OPINION AS TO THE RIGHT OF THE DEPARTME NT TO CLAIM INTEREST. 12. ASSESSEE RELIES ON RULE 27 OF THE INCOME-TAX (APPELLATE TRIBUNAL) RULES 1963 AGAINST THE ORDER OF LD. CIT(A) ON THE GROUND OF B RINGING THE AMOUNT OF RS. 39 21 275 TO TAX IN AY 2013-14 AGAIN WHEN IT HAS ALREADY BEEN TAXED IN AY 2015-16 DRAWING FORCE FROM THE AB OVE REFERRED JUDICIAL PRECEDENTS. RULE 27 STATES THE RESPONDENT THOUGH HE MAY NOT HAVE APPEALED M AY SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GR OUNDS DECIDED AGAINST HIM. 13. RELIANCE IS PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF SANJAY SAWHNEY [2020] 116 TAXMANN.COM 701 (DELHI) D ATED 01.05.2020 FOR THE APPLICATION OF RULE 27 IN THE INSTANT CASE . THE CATCH NOTE READS WHERE ASSESSEE SUCCEEDED BEFORE COMMISSIONER (APPEA LS) IN ULTIMATE ANALYSIS AND WAS THUS NOT AN AGGRIEVED PARTY IN REVENUES APPEAL TRIBUNAL COMMITTED A MISTAKE BY NOT PERMITTING ASSE SSEE (RESPONDENT BEFORE IT) TO SUPPORT FINAL ORDER OF COMMISSIONER ( APPEALS) BY ASSAILING FINDINGS OF COMMISSIONER (APPEALS) ON ISSUES THAT H AD BEEN DECIDED AGAINST HIM. 14. COMBINED READING OF EXPLANATION 2(A) TO SECTION 153 SECTION 153(6)(I) AND SECTION 150(1) ALSO FORTIFIES THE CONTENTION OF THE ASSESSEE TO HAVE THE DIRECTION OF THE HONBLE BENCH TO RE-COMPU TE THE TOTAL INCOME OF AY 2015-16 AND / OR AY 2013-14 AS THE CASE MAY BE SO AS TO BRING TO CHARGE THE AMOUNT OF RS. 39 21 275/- ONLY ONCE. THE COMBINED READING OF THESE SECTIONS PROVIDES THA T THE APPELLATE AUTHORITY MAY DIRECT FOR RE-COMPUTATION OF TOTAL IN COME TO GIVE EFFECT TO A FINDING IN AN ORDER PASSED BY IT UNDER AN APPEAL. 15. UP TO ASSESSMENT YEAR 2012-13 ASSESSEE HAD CHA RGED ACTUAL EXPENDITURE INCURRED ON DEVELOPMENT OF LAND TO THE PROFIT AND LOSS ACCOUNT IRRESPECTIVE OF THE AREA SOLD IN THAT PARTICULAR YE AR. 16. FROM AY 2013-14 I.E. THE IMPUGNED YEAR ASSESS EE CHANGED ITS ACCOUNTING POLICY IN THIS RESPECT OWING TO FOLLOWIN G REASONS A) SECTION 43CA WAS INTRODUCED W.E.F. 01.04.2014 IN TH E INCOME-TAX ACT 1961 BECAUSE OF WHICH BUYERS WHO HAD BOOKED THEIR P LOTS BY MAKING SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 33 PART PAYMENTS AND THEIR REGISTRY PENDING WERE PERSU ADED TO GET THE REGISTRY DONE UNDER THE ERSTWHILE LAW WHICH WAS TO THEIR ADVANTAGE. OWING TO FOLLOW UP WITH THE BUYERS SIGNIFICANT POR TION OF LAND WAS SOLD IN THE IMPUGNED YEAR I.E. 4 20 573 SQ. FT. WHI CH IS 16% OF THE TOTAL SALEABLE AREA OF 26 34 265 SQ. FT. B) VILLAGE ARANDIYA WHERE THE INFO-CITY PROJECT UN DER CONSIDERATION WAS UNDER CONSTRUCTION WAS BROUGHT UNDER INDORE MUNICIP AL CORPORATION (IMC) VIDE NOTIFICATION OF THE STATE GOVERNMENT. PR IOR TO COVERAGE UNDER THE IMC IT FELL UNDER VILLAGE PANCHAYAT. OWING TO COVERAGE UNDER THE MUNICIPAL AREA OF IMC THE DEVELOPMENT NORMS WOULD CHANGE TO THAT OF CPWD AND EQUAL TO IND ORE DEVELOPMENT AUTHORITY (IDA) REQUIRING EXTRA CHARGE S BY MPEB EXTRA PROPERTY TAX SHELTER TAX EXPENSES ON NARMADA WATE R SUPPLY LINE RCC ROADS INSTEAD OF METAL ROADS STREET LIGHTS ET C. CHANGE IN ACCOUNTING POLICY IS DULY DISCLOSED IN TH E AUDITED FINANCIAL STATEMENTS BY WAY OF A NOTE AT NOTE 9. [PB 30] ACCORDINGLY AN ESTIMATE WAS DRAWN ON THE DEVELOPME NT EXPENSES TO BE INCURRED FOR THE INFO-CITY PROJECT BY ENGAGING THE EXPERT ARCHITECT AND ENGINEERS MATHUR & ASSOCIATES . A DETAILED REPORT WITH SCIENTIFIC ANALYSIS ON THE ESTIMATION OF DEVELOPMEN T EXPENSES WAS OBTAINED BASED ON WHICH DEVELOPMENT EXPENSES WERE P ROVIDED FOR IN THE BOOKS OF ACCOUNT FROM AY 2013-14 AND ONWARDS. [PB 49 60] THESE EXPENSES WERE PROVIDED ON THE BASIS OF AREA O F LAND SOLD FOR WHICH REVENUE WAS 33ECOGNIZED IN THE P&L OF THE YEA R. [AO PARA 8 PAGE 3 TABLE] 17. ACCOUNTING STANDARD AS 5 ON CHANGES IN ACCOUNTING POLICIES ISSUED BY INSTITUTE OF CHARTERED ACCOUNTANTS OF IND IA PERMITS FOR CHANGE IN ACCOUNTING POLICY. PARA 29 OF THE SAID AS 5 PROVIDES THAT WHERE IT IS CONSIDERED THAT THE CHANGE WOULD RESULT IN A MORE A PPROPRIATE PRESENTATION OF THE FINANCIAL STATEMENTS OF THE ENTERPRISE THE CHANGE CAN BE MADE. [PB 61] FOLLOWING THE PRUDENT BASIS OF MATCHING CONCEPT OF ACCOUNTING ASSESSEE PROVIDED FOR DEVELOPMENT EXPENSES OF RS. 7 14 97 41 0 ON THE BASIS OF TECHNICAL REPORT OF MATHUR & ASSOCIATES ARCHITECT & ENGINEERS IN THE IMPUGNED YEAR. FURTHER ASSESSEE BEING A DEVELOPER ACCOUNTING S TANDARD AS 7 ON CONSTRUCTION CONTRACTS DOES NOT APPLY. THIS STANDAR D IS APPLICABLE IN CASE OF CONTRACTORS. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 34 18. LD. AO WHILE MAKING DISALLOWANCE OF DEVELOPMENT EXPENSES OF RS. 7 14 97 410 HELD THAT THESE EXPENSES ARE CONTINGENT IN NATURE AND CHARGED ON PROJECTED BASIS. [AO PAGE 33 PARA (A)] 19. DEVELOPMENT CHARGES CLAIMED BY THE ASSESSEE IN PROFIT AND LOSS ACCOUNT OF RS. 7 14 97 410 ARE TOWARDS DEVELOPMENT OF PLOTS OF LAND FOR WHICH SALES REVENUE HAS BEEN TAKEN IN THE PROFIT AND LOSS STATE MENT AND THESE ARE LEGITIMATE BUSINESS EXPENSES ALLOWABLE UNDER SECTIO N 37(1) COMPUTED ON A SCIENTIFIC BASIS BY RELYING ON REPORT OF AN EXPERT. 20. THE CLAIM OF THE ASSESSEE IS FORTIFIED BY THE D ECISION OF HONBLE JURISDICTIONAL INDORE ITAT BENCH IN THE CASE OF BALAJI NEEMUCH INFRASTRUCTURE PVT LTD IN ITA 918 TO 920 / IND / 20 16 ORDER PRONOUNCED ON 27.09.2017 . IT WAS HELD IN PARA 48 & 49 AS .WHEN AFTER SCIENTIFIC ESTIMATION OF MAINTENANCE AND REPAIRS THE ASSESSEE MADE A PROVISION BY DEBITING THE PROFI T AND LOSS ACCOUNT AND CREDITING THE PROVISION ACCOUNT THEN THE ACCOUNTING POLICY OF THE ASSESSEE CANNOT BE HELD AS FAULTY AS UNDISPUTEDLY THE ASSESSEE DID NOT DEBIT ANY AMOUNT TO THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF ACTUAL MAINTENANCE AND REPAIR EXPENSES RATHER THE ASSESSEE REVERSED THE EXCESS AMOUNT OF PROVISION THAN THE ACTUAL EXPENDITURE WAS CREDITED TO PROFIT AND LOSS ACCOUNT AND OFFERED AS INCOME AFTER THE END OF 5 TH YEAR. THEREFORE THE CIT(A) WAS QUITE CORRECT AND JUSTIFIED IN FOLLOWING DECISION IN ROTORK CONTROL INDIA PVT LTD [2009] 314 ITR 62 (SC) AND ITAT IS UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH TH E CONCLUSION DRAWN BY CIT(A). [EMPHASIS SUPPLIED] [REFER PB 62 & 67] 21. LD. CIT(A) HAS RIGHTLY HELD THAT DEVELOPMENT EX PENSES OF RS. 7 14 97 410 CHARGED TO PROFIT AND LOSS ACCOUNT ON P RUDENT BASIS OF MATCHING CONCEPT BY APPLYING SCIENTIFIC METHOD IS A N ALLOWABLE EXPENDITURE. [CIT(A) PARA 3.21 PAGE 19] 22. CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE C ASE UNDISPUTED FACT AS TO AMOUNT OF RS. 39 21 275 ALREADY REPORTED FOR TAX ATION IN AY 2015-16 AND ACCEPTED SCIENTIFIC BASIS OF COMPUTATION OF DEVELO PMENT EXPENSES OF RS. 7 14 97 410 NOT IN DISPUTE AS IT IS BASED ON REPORT OF ARCHITECT & ENGINEER FORCE OF RULE 27 AND JUDICIAL PRECEDENTS INCLUDING THAT OF HONBLE JURISDICTIONAL INDORE ITAT BENCH WHICH IN TURN RELI ED ON HONBLE SUPREME COURT DISALLOWANCE MADE BY LD. AO OF RS. 7 14 97 4 10 OUGHT TO BE ALLOWED AND APPROPRIATE DIRECTION BE GIVEN TO RE-COMPUTE TH E TOTAL INCOME SO AS TO AVOID TAXING THE AMOUNT OF RS. 39 21 275 TWICE IN T WO DIFFERENT ASSESSMENT YEARS VIZ. AY 2013-14 AND AY 2015-16. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 35 14. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE WRI TTEN SUBMISSIONS FILED BY BOTH THE PARTIES. REVENUE HAS RAISED THE COMMON ISSUE FOR ASSESSMENT YEAR 2010-11 AND 2013-1 4 CHALLENGING THE FINDING OF LD. CIT(A) DELETING THE DISALLOWANCE OF DEVELOPMENT EXPENSES MADE BY LD. A.O AT RS. 2 93 76 568/-AND RS. 7 14 97 410/- FOR ASSESSMENT YEARS 2010-11 AND 2013-14 RESPECTIVELY. SINCE THE ASSESSMENT ORDER FOR ASSES SMENT YEAR 2013-14 WAS FINALIZED EARLIER THAN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2010-11 ADJUDICATION OF THE SOLE IS SUE RAISED BY THE REVENUE IS ON THE BASIS OF FACTS FOR ASSESSMENT YEAR 2013-14. WE OBSERVE THAT THE ASSESSEE IS INVOLVED IN THE BUS INESS OF DEVELOPMENT OF LAND AND DEVELOPING COLONY UNDERTOOK TWO PROJECTS NAMELY INFO-CITY AND ROYAL PREMIUM PARK. THE ISSUE UNDER APPEAL FOR THE TWO ASSESSMENT YEARS IS WITH REGARD TO THE PLOTS SOLD UNDER THE PROJECT INFO-CITY. THERE ARE TOTAL 1142 PLOT S IN THE INFO-CITY AND THE ASSESSEE HAS SOLD 56 120 54 33 168 4 & 6 DURING ASSESSMENT YEAR 2009-10 TO 2015-16. THERE IS NO DI SPUTE WITH REGARD TO NUMBER OF PLOTS SOLD. FROM ASSESSMENT YE AR 2009-10 ONWARDS TILL ASSESSMENT YEAR 2012-13 ASSESSEE WAS C LAIMING ACTUAL SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 36 DEVELOPMENT EXPENSES INCURRED DURING THE YEAR. FOR ASSESSMENT YEAR 2010-11 RS. 2 97 47 218/- WAS CLAIMED. 15. FROM ASSESSMENT YEAR 2013-14 ONWARDS THOUGH THE ASSESSEE WAS INCURRING DEVELOPMENT EXPENSES REGULARLY BUT IT OPTED TO CHANGE THE ACCOUNTING POLICY AND CLAIMED THE DEVELO PMENT EXPENSES IN THE PROFIT & LOSS ACCOUNT ON ESTIMATED BASIS CALCULATED @RS.170/- PER SQ. FEET IF FOR THE AREA SOLD DURING THE YEAR AND THE DEVELOPMENT EXPENSES WERE BOOKED IN THE BOOKS. AV ERAGE RATE OF DEVELOPMENT EXPENSES @RS.170/- PER SQ.FEET WAS ARRI VED ON THE BASIS OF THE REPORT PREPARED BY AN EXPERT ARCHITEC T & ENGINEER M/S MATHUR & ASSOCIATES AS PER WHICH THE DEVELOPMENT EX PENSES REMAINING TO BE INCURRED FROM 1.4.2012 ONWARDS WAS RS.33 31 66 000/- AND THIS AMOUNT WAS DIVIDED BY TH E UNSOLD AREA AS ON 1.4.2012 WHICH WAS 1959785 SQ.FEET. DURING T HE ASSESSMENT PROCEEDINGS THIS CLAIM OF ESTIMATED DEVELOPMENT EXP ENSES AS AGAINST THE ACTUAL DEVELOPMENT EXPENSES PROMPTED TH E LD. A.O TO INVESTIGATE THE ISSUE DURING WHICH IT WAS REVEALED THAT ASSESSEE HAD RECEIVED DEVELOPMENT CHARGES FROM 22 PURCHASERS OF PLOTS. THE RELEVANT LEDGER ACCOUNT OF THE PURCHASERS WERE CALL ED FOR. THE ASSESSEE HAS ALSO NOT DISPUTED THIS FACT THAT IT HA D RECEIVED SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 37 DEVELOPMENT CHARGES FROM THESE PURCHASERS OF PLOTS THROUGH ACCOUNT PAYEE CHEQUE. 16. ON THE BASIS OF THE FACT THAT THE ASSESSEE HAS BEEN RECEIVING THE DEVELOPMENT CHARGES FROM THE PURCHASERS OF PLOT LD. A.O CAME TO A CONCLUSION THAT OTHER THAN THE PURCHASER OF PLOT WHO HAVE PAID DEVELOPMENT CHARGES BY CHEQUE DULY REFLECTED I N THE REGULAR BOOKS OF ACCOUNTS THE ASSESSEE MIGHT HAVE RECEIVED DEVELOPMENT CHARGES IN CASH FROM THE REMAINING PURCHASER OF PLO TS WHICH ASSESSEE HAS NOT REVEALED IN THE BOOKS. BASED ON T HIS SELF DEVELOPED THEORY LD. A.O CONCLUDED THAT ASSESSEE SH OULD NOT BE ALLOWED THE CLAIM OF DEVELOPMENT EXPENSES SINCE THE ASSESSEE IS RECEIVING THE DEVELOPMENT CHARGES AGAINST THE EXPEN SES SO INCURRED AND THEREFORE DEVELOPMENT EXPENSES ARE INCURRED ON MATCHING PRINCIPLE RESULTING IN NO PROFIT NO LOSS. IT IS IN TERESTING TO NOTE THAT THE LD. A.O WITHOUT REFERRING TO ANY MATERIAL EVIDE NCE INDICATING THAT THE ASSESSEE HAVE RECEIVED DEVELOPMENT CHARGES IN CASH FROM PURCHASER OF OTHER PLOTS NOT DOUBTING THE GENUINEN ESS OF THE ACTUAL DEVELOPMENT CHARGES INCURRED BY THE ASSESSEE AND AL SO NOT REBUTTING THE FACT THAT EXCESS DEVELOPMENT CHARGES SO CLAIMED BY THE ASSESSEE DURING ASSESSMENT YEAR 2009-10 TO 2014 -15 HAS BEEN SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 38 OFFERED TO TAX IN THE INCOME TAX RETURN FILED FOR A SSESSMENT YEAR 2015-16 DECIDED TO DISALLOW THE CLAIM OF ASSESSEE O F DEVELOPMENT CHARGES ON FOLLOWING THREE COUNTS:- 1. DEVELOPMENT EXPENSES HAVE NOT YET BEEN INCURRED IN RESPECT OF ALL THE PLOTS OF THE ENTIRE 'INFOCITY' PROJECTS AND THE AMOUNT OF RS.7 14 97 410/- CLAIMED IS CONTINGEN T IN NATURE. 2. ACTUAL DEVELOPMENT EXPENSES WHEN ACTUALLY INCU RRED WOULD HAVE TO BE CONSIDERED FOR DEDUCTION IN THE RELEVANT A.YS. SUBJECT TO FULFILMENT OF THE PROVIS IONS OF SECTION 37(1) OF THE ACT. 3. DEVELOPMENT CHARGES WHETHER RECEIVED OR NOT WOUL D ACCRUE TO THE ASSESSEE AT THE RATE OF RS.170/- PER SQ. FEET AT PAR WITH 22 BUYERS OF THE PLOTS AND THUS T HE DEVELOPMENT CHARGES WOULD NOT BE A CHARGE ON THE ASSESSEE'S PROFIT AS THE SAME WOULD BE COMMENSURATE LY RECOVERABLE FROM THE BUYERS OF THE PLOTS. ALSO THE ASSESSEE HAS ITSELF SHOWN THE ENTRIES OF THE DEVELO PMENT CHARGES RECEIVED FROM 22 BUYERS BY CHEQUES BY PASSI NG GENERAL ENTRIES IN ASSESSMENT YEAR 2015-16 FOR WHIC H THE ASSESSEE HAS ALREADY FILED ITS RETURN OF INCOME . SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 39 17. FROM PERUSAL OF THE ABOVE OBSERVATION BY LD. A. O WE FIND THAT FIRSTLY HE MENTIONS THAT DEVELOPMENT EXPENSES HAS NOT YET BEEN INCURRED IN RESPECT OF ALL THE PLOTS AND THEN HE FU RTHER OBSERVES THAT ACTUAL DEVELOPMENT EXPENSES ACTUALLY INCURRED WOULD HAVE TO BE CONSIDERED FOR DEDUCTION BUT HE FAILS TO GIVE THE B ENEFIT OF ACTUAL EXPENSES INCURRED BY THE ASSESSEE DURING THE YEAR A ND THIRDLY HE APPLIES A COMPLETE DIFFERENT APPROACH WITH REGARD T O THE DEVELOPMENT CHARGES WHETHER RECEIVED OR NOT BUT WOU LD ACCRUE TO THE ASSESSEE @ RS.170/- PER SQ.FEET AT PAR WITH 22 BUYERS OF PLOTS. LOOKING TO THE ABOVE OBSERVATION OF LD. A.O WE ARE OF THE VIEW THAT HIS APPROACH IS NEITHER HERE NOR THERE. LD. A.O IS NOT SURE WHAT ACTUALLY HE WANT TO ASSERT UPON. 18. WE FURTHER FIND THAT WHEN THE MATTER CAME UP BE FORE THE LD. CIT(A) HE AFTER EXAMINING THE FACTS IN DETAIL AND ALSO DISCUSSING THE SETTLED JUDICIAL PRECEDENTS DECIDED IN FAVOUR OF TH E ASSESSEE ALLOWING THE CLAIM OF DEVELOPMENT EXPENSES CLAIMED ON ESTIMATED BASIS OF DEVELOPMENT EXPENSES AT RS.7 14 97 410/- F OR ASSESSMENT YEAR 2013-14 AND PARTLY ALLOWING THE CLAIM OF DEVEL OPMENT EXPENSES AT RS. 2 93 76 568/- FOR ASSESSMENT YEAR 2010-11. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 40 RELEVANT FINDING OF LD. CIT(A) FOR ASSESSMENT YEAR 2013-14 WHICH IS SQUARELY APPLICABLE FOR ASSESSMENT YEAR 2010-11 ALS O IS REPRODUCED BELOW:- GROUND NO. 2 TO 5 3.0 THESE GROUNDS OF APPEAL ARE WITH RESPECT TO DISALLO WING RS.7 14 97 410/- CONSIDERING THE EXPENSES DEBITED ON ESTIMATE TO MATCH THE CORRESPONDING REVENUE. I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSION MAD E BY THE APPELLANT BEFORE ME AND NOTED THAT:- 3.1 THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF THE DEVELOPMENT OF THE COLONY. THE APPELLANT COMPANY PU RCHASES LAND AND SELLS AFTER DEVELOPING AND PLOTTING THEM I N SMALLER SIZES. THE APPELLANT COMPANY HAD UNDER TAKEN TWO PR OJECTS NAMELY 'INFOCITY' AND 'ROYAL PREMIUM PARK' .. 3.2 THE LEARNED AO WHILE ASSESSING THE INCOME FOR A.Y. 2013- 14 HAD NOTED THAT THE APPELLANT TILL ASSESSMENT YEA R 2012-13 HAD CHARGED THE ACTUAL EXPENDITURE INCURRED ON DEVE LOPMENT OF LAND TO ITS PROFIT AND LOSS ACCOUNT IRRESPECTIVE OF THE AREA SOLD IN THAT PARTICULAR YEAR HOWEVER FROM AY 2013-14 THE APPELLANT COMPANY HAD CHANGED ITS ACCOUNTING: POLIC Y BASED ON THE REPORT OF A QUALIFIED ENGINEER OBTAINED BY T HE APPELLANT AND DEBITED AN AMOUNT OF RS. 7 14 97 410/- @ RS. 170/- PER SQ. FEET OF RS. 4 20 573 SQ. FEET BEING THE TOTAL A REA SOLD DURING THE YEAR INSTEAD OF ACTUAL EXPENSES INCURRED OF RS . 1 94 74 600/- IN F.Y. 2012-13 TO MATCH THE REVENUE. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 41 3.4 DURING SUCH PROCEEDINGS THE LEARNED AO HAD ALSO NO TED THAT IN CASE OF 22 CUSTOMERS THE APPELLANT HAD REC EIVED THE AMOUNT IN EXCESS OF THE AMOUNT STATED IN THE SALE D EED TOWARDS MPEB CLUB HOUSE DEVELOPMENT EXPENSES ETC. THE SALE DEEDS OF THESE 22 CUSTOMERS WERE EXECUTED IN T HE FY 2008-09 2009-10 2011-12 AND 2012-13 (NO SALE 'DEED RELATED TO FY 2010-11). AND THE AMOUNT OF RS. 1 25 94 195/- SO RECEIVED FROM THESE 22 CUSTOMERS WERE TRANSFERRED T O VARIOUS HEADS INCLUDING DEVELOPMENT CHARGES OF RS. 61 21 20 0 /- AS INCOME IN AY 2015-16 AND BALANCE WAS KEPT. AS LIABILITY TOWARDS MPEB CLUB HOUSE MEMBERSHIP & COLONY MAINTENANCE CHARGES. A CHART GIVEN BY APPELLANT IS FORMING THE PART OF SUBMISSION MADE BY APPELLANT WHICH IS REPRODUCED A S BELOW: S.N O NAME OF THE PLOT HOLDER PLOT NO. BOOK ED AREA AMOUNT DEVELOPMENT CHARGES RECEIVED AND OFFERED FOR TAX IN F.Y 2014-15 MPEB @ RS.35/- CLUB HOUSE MAINTEN ANCE FINANCAL YEAR OF REGISTRY 1 CHETNA W/0 R.K. MISHRA 888 2100 247 595 174 095 73 500 0 0 2008-09 2 SANJAY BADJATIYA 145 2800 148600 50 600 98 000 0 0 2008-09 3 VINAY KUMAR TIWARI 837 2100 357 000 283 500 73 500 0 0 2008-09 4 GOVIND & VIDYAVATI 135 2700 111 300 16 800 94 500 0 0 2009-10 5 KAVITA MUNDRA 175 3200 121 600 9 600 112 000 0 0 2009-10 6 LALITA W/O SURESH KABRA 381 2025 425 000 344 250 70 875 9875 0 2009-10 7 DEVI KISHAN SHARMA 120 2400 972 000 408 000 84 000 55 000 36 000 2011- 12 8 DR. SHAILESH J.N. PRASAD 124 AND 125 5400 700 000 511 000 189 000 0 0 2011-12 9 PRAJUN S/O RAJENDRA SONI 485 3700 175 000 45 500 129 500 0 0 2011-12 10 PUSHPA WASDEV GABA 215 2800 433 600 335 600 98 000 0 0 2011-12 11 SATISH S/O MOHANLAL LAHOTI 339 2100 84 000 10 500 73 500 0 0 2011-12 12 SEEMA W/O SATISH LAHOTI 340 2100 84 000 10 500 73 500 0 0 2011-12 13 MEETA W/O RAJESH PANWAR 421 420 463 8 200 4 040 000 1 394 000 287 000 16 5000 108 000 2 012-13 14 SEEMA AND PIYUSH ZALAYA 1000 1725 182 500 122 125 60 375 0 0 2012-13 15 RAJEEV KUMAR NIKHAR 991 1725 997 500 293 250 60 375 55000 36 000 2012-1 3 16 ANU KUMAR GARGAV 957 1725 765 000 293 250 60 375 55000 36 000 2012-1 3 SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 42 17 RAMPUKAR TIWARI 122 2400 580 000 408 000 84 000 55000 33 000 2012-1 3 18 SATANARAY AN DHRUV 464 4260 422 000 272 900 149 000 0 0 2012-13 19 ANITA W/O SURESH SHARMA 882 2100 420 000 346 500 73 500 0 0 2012-13 20 NIRMAL S/0 RAJENDRA TIWARI 986 1725 682 500 293 250 60 375 55000 36 000 2012-1 3 21 ANIL MALIK 391 2100 400 000 326 500 73 500 0 0 2 012-13 22 AMIT SHANTILAL 345 2100 245 000 171 500 73 500 0 0 2012-13 TOTAL 12 594 195 6 121 220 2 151 975 449 875 285 000 3.5 THE LEARNED AO DURING THE PROCEEDINGS FOR AY 2013-1 4 HAD CALLED 4 CUSTOMERS OF THE APPELLANT COMPANY AND HAD RECORDED THEIR STATEMENTS THESE PERSONS WERE SHRI NIRMAL CH ARID TIWARI SHRI RAMPUKAR TIWARI SHRI ANIL MALIK AND S HRI JAGDISH NARAYAN PRASAD (FATHER OF CUSTOMER DR. SHAILENDER K UMAR). IN ADDITION TO THIS 2 CUSTOMERS NAMELY ANU KUMAR GARG AV AND VINAY KUMAR TIWARI HAD SUBMITTED THEIR REPLIES IN RESPONSE TO INFORMATION CALLED BY LEARNED AO. SHRI NIRMAL KUMAR TIWARI & SHRI RAMPUKAR TIWARI WERE ALSO ALLOWED BY THE AO FO R LIMITED CROSS EXAMINATION. 3.6 IT WAS ALSO BROUGHT TO MY KNOWLEDGE THAT OUT OF THE CASES OF 22 CUSTOMERS ONLY IN CASES OF 7 CUSTOMERS THE INCOME TOWARDS DEVELOPMENT CHARGES WAS CONSIDERED @ RS. 170/- PER SQ. FT. WHILE IN THE REMAINING 15 CUSTOMERS SUCH INCOME HAD RANGED FROM RS. 3/- PER SQ. FT. TO RS. 165 PER SQ. FT. 3.7 OUT OF 6 CUSTOMERS FROM WHOM STATEMENTS WERE RECORD ED AND/OR INFORMATION WAS CALLED ONLY FOR 3 CUSTOMERS INCOME WAS BOOKED @ RS.170/ - PER SQ. FT. 3.8 THE LEARNED AO HAD NOT RECORDED OR CALLED INFORMATI ON FROM ANY OTHER CUSTOMER FROM WHOM HE HAS PRESUMED THE A PPELLANT TO HAVE RECEIVED CASH IN ADDITION TO WHAT WAS RECOR DED IN BOOKS @ RS. 170/- PER SQ. FT. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 43 3.9 ON THE BASIS OF THESE STATEMENTS THE LEARNED AO HAD COME TO THE CONCLUSION THAT THE APPELLANT HAD RECEIVED A N AMOUNT OF RS. 170 PER SQ. FT. OVER AND ABOVE WHAT HAD BEEN RE CORDED IN THE BOOKS OF ACCOUNT FROM EACH AND EVERY CUSTOMER AND THEREFORE FROM THE EXPENDITURE INCURRED TOWARDS DE VELOPMENT THE LEARNED AO HAD DISALLOWED A SUM OF RS. I 7 14 97 410/- BEING THE AMOUNT ACTUALLY INCURRED AND CHARGED TO P ROFIT & LOSS ACCOUNT BY HOLDING THAT DEVELOPMENT CHARGES WHETHER RECEIVED OR NOT WOULD ACCRUE TO THE APPELLANT AT THE RATE OF RS. 170 PER SQ. FEET AND ALSO PRESUMED THAT THE SAME WAS RECEIV ED FROM EACH AND EVERY CUSTOMER OVER AND ABOVE WHAT WAS REC ORDED AND OFFERED BY THE APPELLANT COMPANY. 3.10 ON THE OTHER HAND OF THE APPELLANT HAD SUBMITTED TH AT THE APPELLANT HAD A VALID REASON FOR CHANGE IN ACCOUNTI NG POLICY IN AY 2013-14 WHICH HAS ALREADY BEEN REPRODUCED ABOVE. FURTHER THE LEARNED AO HAS NOT REJECTED THE BOOKS OF ACCOUN TS OF THE APPELLANT. THE ONLY FINDING OF THE LEARNED AO FOR DISALLOWING THE CLAIM OF THE APPELLANT WAS THAT THIS EXPENDITURE IS CONTINGENT IN NATURE. 3.11 THE LEARNED AO HAS ALSO DISALLOWED THIS U/S 37 (1) THAT THE EXPENSES BEEN CHARGED ON PROJECTED BASIS. 3.12 THE APPELLANT HAD POINTED OUT THAT ON THE ONE HAND THE LEARNED AO HAS MENTIONED THAT THE EXPENDITURE DEBITED SHOULD BE ON ACTUAL BASIS AND T HE EXPENDITURE ACTUALLY INCURRED SHOULD BE ALLOWED U/S 37(1) BUT HAS NOT ALLOWED THE ACTUAL EXPENDITURE INCURRED BY APPELLANT. 3.13 THE APPELLANT HAD FURTHER SUBMITTED DURING APPELLAN T PROCEEDINGS THAT OUT OF 4 CUSTOMERS WHOSE STATEMENT S WERE SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 44 RECORDED AND HEAVILY RELIED ON BY THE LEARNED AO O NLY 2 WERE ALLOWED TO BE CROSS EXAMINED AND THAT TOO FOR THE L IMITED PURPOSE OF CONFIRMING THE ANSWER TO ONE QUESTION AS KED BY LEARNED AO. HE ALSO POINTED OUT THAT NONE OF THE CU STOMERS HAD ADMITTED TO HAVE PAID ANY AMOUNT OVER AND ABOVE WHA T HAD BEEN RECORDED IN THE BOOKS OF ACCOUNTS BY THE APPEL LANT EITHER BY WAY OF CHEQUE OR CASH. 3.14 THE LEARNED AO ON HIS OWN BELIEF HAD COME TO T HE CONCLUSION THAT THE APPELLANT HAD. RECEIVED DEVELOP MENT CHARGE IN CASH ALTHOUGH HE HAS NOT BROUGHT ON RECORD ANY POSITIVE AND COGENT EVIDENCE THAT ANY ADDITIONAL MONEY HAD F LOWN IN THE HANDS OF THE APPELLANT. STATEMENT RECORDED OF C USTOMER DID NOT CONTAIN ANY ACCEPTANCE ON THEIR PART THAT ANY C ASH IN ADDITION TO WHAT HAD BEEN RECORDED IN THE BOOKS OF ACCOUNTS HAD BEEN PAID BY THEM. 3.15 IT HAD FURTHER BEEN NOTED BY AO THAT THE AMOUN T OF RS. 61 21 200/HAD BEEN OFFERED BY APPELLANT HIMSELF IN AY 2015- 16 AS DEVELOPMENT CHARGES WHICH HAD BEEN RECEIVED IN EXCESS IN RESPECTIVE YEARS AND NOT OFFERED AS INCOME EVEN ON ACCRUAL/RECEIPT BASIS. THE FINANCIAL YEAR WISE BREA KUP OF THE SAME IS UNDER: S. NO. NAME OF THE PLOT HOLDER FINANCIAL YEAR OF REGISTRY PLOT NO. BOOKED PLOT AREA IN SQ. FT T/F TO DEVELOPMENT CHARGES RECOVERED IN 2014-15 RATE PER SQ.FT RECOVERED AS DEVELOPMENT CHARGE 1 CHETNA W/O R.K. MISHRA 2008-09 888 2100 174 095 82.90 2 SANJAY BADJATIYA 2008-09 145 2800 50 600 18.07 3 VINAY KUMAR TIWARI 2008-09 837 2100 283 500 135.00 TOTAL 2008-09 7000 508195 SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 45 4 GOVIND &VIDYAVATI BAGHORE 2009-10 135 2700 16 800 6.22 5 KAVITA MUNDRA 2009-10 175 3200 9 600 3.00 6 LALITA W/O SURESH KABRA 2009-10 381 2025 344 250 170.00 TOTAL 2009-10 7925 370650 7 DEVI KISHAN SHARMA 2011-12 120 2400 408 000 170.00 8 DR. SHAILESH J.N. PRASAD 2011-12 124 & 125 5400 511 000 94.63 9 PRAJUN S/O RAJENNDRA SONI 2011-12 485 3700 45 500 12.30 10 PUSHPA WASDEV GABA 2011-12 215 2800 335 600 119.86 11 SATISH S/O MOHANLAL LAHOTI 2011-12 339 2100 10 500 5.00 12 SEEMA W/O SATISH LAHOTI 2011-12 340 2100 10 500 5.00 TOTAL 2011-12 18500 1 321 100 13 MEETA W/O RAJESH PANWAR 2012-13 421 420 463 8200 1 394 000 170.00 14 SEEMA AND PIYUSH ZALAYA 2012-13 1000 1725 122 125 70.80 15 RAJJEV KUMAR NIKHAR 2012-13 991 1725 293 250 170.00 16 ANU KUMAR GARGAV 2012-13 957 1725 293 250 170.00 17 RAMPUKAR TIWARI 2012-13 122 2400 408 000 170.00 18 SATYANARAYAN DHRUV 2012-13 464 4260 272 900 64.06 19 ANITA W/O SURESH SHARMA 2012-13 882 2100 346 500 165.00 20 NIRMAL S/O RAJENDRA TIWARI 2012-13 986 1725 293 250 170.00 21 ANIL MALIK 2012-13 391 2100 326 500 155.48 22 AMIT SHANTILAL 2012-13 345 2100 171 500 81.67 TOTAL 2012-13 28060 3921275 16 IT WOULD BE PERTINENT HERE TO EXAMINE THE DECISI ON OF THE HON'BLE SUPREME COURT OF INDIA IN THE CASE OF CALCUTIA CO. LT D. VS. COMMISSIONER OF INCOME TAX. 'CALCUTTA CO . LTD. VS. COMMISSIONER OF INCOME TAX SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 46 SUPREME COURT OF INDIA (1959) 37 ITR 0001 BUSINESS EXPENDITURE-CONDITIONS FOR ALLOWING DEDUCT ION OF EXPENSES-ASSESSEE ENGAGED IN THE BUSINESS OF LAND A ND PROPERTY DEVELOPMENT-ASSESSEE FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING-EXPENDITURE ACTUALLY INCURRED BUT NOT DU RING THE RELEVANT YEAR IS STILL ALLOWABLE IF SUCH EXPENDITUR E WAS INCIDENTAL TO THE CARRYING ON OF THE BUSINESS. FACTS THE ASSESSEE DEALS IN LAND AND PROPERTY AND CARRIES ON LAND DEVELOPING BUSINESS AND IN THE COURSE OF BUSINESS IT BUYS LAND DEVELOPS IT SO AS TO MAKE IT FIT FOR BUILDING PURPOSES AND SELLS IT AT A PROFIT IN PLOTS. WHENEVER A PLOT IS SOLD THE PURCHASE 1' PAYS ABOUT 25 OF THE PURCHASE PRICE IN CASH AND UNDERTAKES TO PAY THE BALANCE WITH INTEREST AT A CERTAIN RATE IN TEN ANNUAL INSTALMENTS WHICH HE SECURES BY CREATING A CHARGE ON THE LAND PURCHASED. THE ASSESSEE UNDERTAKES TO CARRY OUT THE DEVELOPMENTS INCLUDING LAYING OUT ROADS PROVISION OF DRAINAGE SYSTEM ETC. WITHIN A REASONABLE TIME. THE ASSESSEE FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING DURING THE REL EVANT ASSESSMENT YEAR ENTERED IN THE CREDIT SIDE OF ITS B OOKS OF ACCOUNTS THE WHOLE OF THE SUM REPRESENTING THE FUL L SALE PRICE OF THE LANDS SOLD DURING THE ACCOUNTING YEAR THOUG H ONLY A PART OF IT WAS ACTUALLY RECEIVED IN CASH FROM THE P URCHASER AND THE BALANCE REPRESENTED THE UNPAID BALANCE RETAINED BY THE PURCHASERS THE PAYMENT OF WHICH WAS SECURED BY CREA TING CHARGE ON THE SAID LANDS AS ALSO THE INTEREST RECEI VED OR RECEIVABLE IN THE YEAR OF ACCOUNT UNDER THE DEEDS O F CHARGE. THE ASSESSEE ESTIMATED CERTAIN SUM AS EXPENDITURE F OR THE SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 47 DEVELOPMENTS TO BE CARRIED OUT IN RESPECT OF THE PLOTS WHICH HAD BEEN SOLD DURING THE YEAR AND DEBITED THE SAME IN THE BOOKS OF ACCOUNT ON THE GROUND THAT THE LIABILITY FOR THE SAID SUM HAD ACTUALLY ARISEN THE ASSESSEE BEING BOUND TO PROVIDE THE FACILITIES IT HAD UNDERTAKEN TO DO EVEN THROUGH NO PART OF THAT AMOUNT REPRESENTED ANY EXPENDITURE ACTUALLY MA DE DURING THAT YEAR. THE SUM OF RS. 24 809 REPRESENTED THE ESTIMATED AMOUNT WHICH WOULD HAVE TO BE EXPENDED BY THE APPELLANT IN THE COURSE OF CARRYING ON ITS BUSINESS AND WAS INCIDENT AL TO THE SAME AND HAVING REGARD TO THE ACCEPTED COMMERCIAL PRACTICE AND TRADING PRINCIPLES WAS A DEDUCTION WHICH IF T HERE WAS NO SPECIFIC PROVISION FOR IT UNDER S. 10(2) OF THE ACT WAS CERTAINLY ALLOWABLE DEDUCTION IN AN1.VING AT THE PROFITS AND GAINS OF THE BUSINESS OF THE APPELLANT UNDER S. 10(1) OF THE ACT THERE BEING NO PROHIBITION AGAINST IT EXPRESS OR IMPLIED IN THE ACT. HAVING ACCEPTED THE RECEIPTS OF RS. 43 692-11-9 IN THEIR TOTALITY EVEN THOUGH A SUM OF RS. 29 392-11-9 ONLY WAS ACTUALLY RECEIVED BY THE APPELLANT IN CASH THUS MAKING THE APPELLANT LI ABLE FOR INCOME TAX ON A SUM OF RS. 14 300 WHICH HAD NOT BEEN RECEIVED BY IT DURING THE ACCOUNTING YEAR IT WAS HARDLY OPEN TO THE REVENUE TO URGE THAT THE SUM OF RS. 24 809 SHOULD NOT HAVE BEEN ALLOWED AS A PERMISSIBLE DEDUCTION BEFORE ARRIVING AT THE PROFITS OR GAINS OF THE APPELLANT WHICH WERE LIABLE TO TAX. CONSISTENTLY ENOUGH WITH THIS ATTITUDE THE RE VENUE OUGHT TO HAVE EXPRESSED ITS WILLINGNESS TO TREAT ONLY A SUM OF RS. 29 392-11-9 AS THE ACTUAL RECEIPT OF THE APPELLANT DURING THE ACCOUNTING YEAR AND MADE UP THE COMPUTATION OF THE PROFITS SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 48 AND GAINS OF THE APPELLANT'S BUSINESS ON THAT BASIS . THE REVENUE HOWEVER DID NOTHING OF THE SORT AND INSISTED UPON HAVING ITS POUND OF FLESH ASKING TO DELETE THE WHOLE OF THE ITEM OF RS. 24 809 FROM THE DEBIT SIDE OF THE ACCOU NT WHICH IT WAS CERTAINLY NOT ENTITLED TO DO.-CALCUTTA CO. LTD. VS. CIT (1953) 24 ITR 454 (CAL) : TC16R.204 OVERRULED.' 3.17 THE LEARNED AO HAS NOT BROUGHT ON RECORD ANY EVIDENCE AGAINST THE APPELLANT TO PROVE THAT THE ACTUAL EXP ENDITURE INCURRED IS NOT ACTUAL EXPENDITURE EXCEPT FOR HIS OWN PRESUMPTION THAT THE APPELLANT WOULD HAVE RECEIVED DEVELOPMENT CHARGES IN CASH. FURTHER NO EVIDENCE B ROUGHT ON RECORD BY THE LEARNED AO TO PROVE THAT THE PLOT SOLD WAS NOT DEVELOPED PLOT. 3.18 FROM THE ASSESSMENT ORDER IT IS FOUND THAT THE LEARNED AO HAD RECORDED THE STATEMENT OF SHRI M. M. MATHUR ENG INEER WHO HAD ISSUED THE REPORT FOR DEVELOPMENT EXPENDITURE R EQUIRED TO BE INCURRED @ RS. 170/- SQ. FT. ON THE REMAINING PROJECT. IT IS A LSO A FACT ON RECORD THAT HE WAS NEVER ALLOWED TO BE CR OSS EXAMINED BY THE APPELLANT COMPANY. 3.19 HIS REPORT WAS RELIED UPON BY THE LEARNED AO T O COME TO THE CONCLUSION THAT THE COST ESTIMATED INCLUDES THE COST OF CLUB HOUSE AND THE LEARNED AO HAS COMPLETELY RELIED ON H IS REPORT TO COME TO THE CONCLUSION THAT THE APPELLANT HAD RECEI VED DEVELOPMENT CHARGES @RS 170 PER SQ. FT FROM EACH AN D EVERY CUSTOMER. 3.20 NO EVIDENCE WAS BROUGHT ON RECORD BY THE LEARN ED AO TO PROVE THAT THE APPELLANT HAD RECEIVED ANY AMOUNT IN CASH OVER AND ABOVE WHAT WAS RECORDED IN BOOKS OF A CCOUNT. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 49 THE SOLE BASIS FOR MAKING ADDITION WAS THE BOOK ENT RY PASSED IN AY 2015-16 FOR OFFERING INCOME UNDER DEVELOPMENT CHARGES IN CASE OF 22 CUSTOMERS AND BASED ON THAT ENTRY STATE MENT OF CUSTOMERS WERE RECORDED. THEREFORE THE ENTRY PASSE D IN AY 2015-16 COULD NOT BE CONSIDERED FOR DISALLOWING EXP ENDITURE. 3.21 RESPECTFULLY FOLLOWING THE DECISION OF HON 'BL E SUPREME COURT IN CASE OF ROTARK CONTROLS INDIA P. LTD. VS CIT (314 ITR 62) AND THE DECISION OF THE JURISDICTIONAL BENCH OF ITA T INDORE WHICH HAS FOLLOWED THE DECISION OF HON'BLE SUPREME COURT IN CASE OF ROTORK CONTROLS INDIA PVT. LTD. AND OTHER D ECISION RELIED ON BY THE APPELLANT I HOLD THAT THE EXPENSES CHARG ED TO PROFIT AND LOSS ACCOUNT ON PRUDENT BASIS THOUGH ON ESTIMAT E IS ALLOWABLE EXPENDITURE. THE RELEVANT PORTION OF THE ORDERS IS REPRODUCED HERE: 'HELD REVERSING THE DECISION OF THE HIGH COURT TH AT THE VALUE ACTUATORS MANUFACTURED BY THE ASSESSEE WERE SOPHISTICATED GOODS AND STATISTICAL DATA INDICATED THAT EVERY YEA R SOME OF THESE WERE FOUND DEFECTIVE THAT VALUE ACTUATOR BEING A SOPHISTICATED ITEM NO CUSTOMER WAS PREPARED TO BUY A VALVE ACTUATOR WITHOUT A WARRANTY. THEREFORE THE WARRANT Y BECAME AN INTEGRAL PART OF THE SALE PRICE; IN OTHER WORDS THE WARRANTY STOOD ATTACHED TO THE SALE PRICE OF THE PRODUCT. IN THIS CASE THE WARRANTY PROVISIONS HAD TO OE RECOGNIZED BECAUSE THE ASSESSEE HAD A PRESENT OBLIGATION AS A RESULT OF PAST EVENTS RESULTING AN OUTFLOW OF RESOURCES AND A RELIABLE ESTIMATE COULD BE MADE OF THE AMOUNT OF THE OBLIGATION. THEREFORE THE ASSESSEE HAD INCURRED A LIABILITY DURING THE ASSESSMENT YEAR WHICH WAS ENTITLED TO DEDUCTION UNDER SECTION 37 OF THE INCOME TAX ACT 19 61. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 50 THE P RESENT VALUE OF CONTINGENT LIABILITY LIKE THE WARRANTY EXPENSES IF PROPERLY ASCERTAINED AND DISCOUNTED ON ACCRUAL BASIS CAN BE AN ITEM OF DEDUCTION UNDER SECTION 37. THE PRINCIPL E OF ESTIMATION OF THE CONTINGENT LIABILITY IS NOT THE NORMAL RULE. IT WOULD BE DEPEND ON THE NATURE OF THE BUSINESS THE NATURE OF SALES THE NATURE OF THE PRODUCT MANUFACTURED AND SOLD AND THE SCIENTIFIC METHOD OF ACCOUNTING ADOPTED BY THE ASSESSEE. IT WO ULD ALSO DEPEND UPON THE HISTORICAL TREND AND UPON THE NUMBE R OF ARTICLES PRODUCED. A PROVISION IS A LIABILITY WHICH CAN BE MEASURED ONLY BY USING A SUBSTANTIAL DEGREE OF ESTIMATION. A PROVISION IS RECOGNIZED WHEN: (A) AN ENTERPRISE HAS A PRESENT OBLIGATION AS A RESULT OF A PAST EVENT; (B) IT IS PROBABLE THAT AN OUTFLOW OF RESOURCES WILL = BE REQUIRED TO SETTLE THE OBLIGATION AND (C) A RELIABLE ESTIMATE CAN BE MADE OF THE AMOUNT OF THE OBLIGATION. IF THESE CONDITIONS ARE NOT MET NO PROVISION CAN BE R ECOGNIZED. THE PRINCIPLE IS THAT IF THE HISTORICAL TREND INDICATES THAT A LARGE NUMBER OF SOPHISTICATED GOODS WERE BEING MANU FACTURED IN THE PAST AND THE FACTS S110W THAT DEFECTS EXISTED IN SOME OF THE ITEMS MANUFACTURED AND SOLD THEN PROVISION MADE FO R WARRANTY IN RESPECT OF SUCH SOPHISTICATED GOODS WOULD BE ENTITL ED TO DEDUCTION FROM THE GROSS RECEIPTS UNDER SECTION 37. ITAT INDORE IN CASE OF BALAJI NEEMUCH INFRASTRUCTURE 'BUSINESS EXPENDITURE - U/S 37 OF THE INCOME-TAX ACT 1961 -AO MADE ADDITION IN RESPECT OF PROVISION FOR REPAIR AND MAINTENANCE-CIT(A) DELETED THE ADDITIONS-HELD THE ASSESSEE IS UNDER OBLIGATION TO MAINTAIN ROAD FOR 3/5 YEARS AFTER COMPLETION OF SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 51 CONSTRUCTION WORK. FURTHER WHEN AFTER SCIENTIFIC E STIMATION OF MAINTENANCE AND REPAIRS THE ASSESSEE MADE A PROVIS ION BY DEBITING THE PROFIT AND LOSS ACCOUNT AND CREDITING THE PROVISION ACCOUNT THEN THE ACCOUNTING POLICY OF THE ASSESSEE CANNOT BE HELD AS FAULTY AS UNDISPUTEDLY THE ASSESSEE DID NOT DEBI T ANY AMOUNT TO THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF ACTUAL MAINTENANCE AND REPAIR EXPENSES RATHER THE ASSESSEE REVERSED THE EX CESS AMOUNT OF PROVISION THAN THE ACTUAL EXPENDITURE WAS CREDITED TO PROFIT AND LOSS ACCOUNT AND OFFERED AS INCOME AFTER THE END OF 5 TH YEAR - THEREFORE THE CIT(A) WAS QUITE CORRECT AND JUSTIFIED IN FOLLOWING DECISION IN ROTORK CONTROLS INDIA PUT. LTD. (2009) 13 ITJ 589 (SC): (2011) 3 STD 535 AND ITAT IS UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE CONCLUSION DRAWN BY CIT(A). [REFER PARA 48 & 49) 19. WE FURTHER OBSERVE THAT LD. A.O DENIED THE CLAI M OF DEVELOPMENT EXPENSES CLAIMED BY THE ASSESSEE WITHOU T PROVIDING ON RECORD ANY COGENT MATERIAL TO SHOW THAT THE ASSESSE E HAS RECEIVED CASH OVER AND ABOVE THE AMOUNT RECORDED IN THE BOOK S OF ACCOUNTS. NONE OF THE BUYERS OF THE PLOTS IN THEIR STATEMENT RECORDED BY THE LD. A.O HAS STATED ABOUT THE PAYMENT OF CASH TO THE ASSESSEE. THE FACT OF THE MATTER IS THAT WHATEVER THE BUYERS HAVE CONFIRMED IN THEIR STATEMENT RECORDED BEFORE LD. A.O ALL THOSE P AYMENTS ARE DULY RECORDED IN THE RESPECTIVE LEDGER ACCOUNT. IT IS A LSO NOT IN DISPUTE THAT THE EXCESS DEVELOPMENT CHARGES RECOVERED AT RS .61 21 220/- ARE OFFERED TO TAX IN ASSESSMENT YEAR 2015-16 WHICH INCLUDES SUM SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 52 OF RS. 39 21 275/- PERTAINING TO THE ASSESSMENT YEA R 2013-14 AND THE DETAILS OF THE SAME ARE MENTIONED BELOW:- S. NO. NAME OF THE PLOT HOLDER AY OF REGISTRY PLOT NO. BOOKED PLOT AREA IN SQ. FT YEAR WISE DEVELOPMENT CHARGES OFFERED IN AY 2015-16 RATE PER SQ. FT RECEIVED AS DEVELOPMENT CHARGES 1 CHETNA W/O R.K. MISHRA 2009-10 888 2100 1 74 095 82.90 2 SANJAY BADJATIYA 2009-10 145 2800 50 600 18.07 3 VINAY KUMAR TIWARI 2009-10 837 2100 2 83 500 135.00 TOTAL 2009-10 7000 5 08 195 4 GOVIND & VIDYAVATI BAGHORE 2010-11 135 2700 16 800 6.22 5 KAVITA MUNDRA 2010-11 175 3200 9 600 3.00 6 LALITA W/O SURESH KABRA 2010-11 381 2025 3 44 250 170.00 TOTAL 2010-11 7925 3 70 650 7 DEVI KISHAN SHARMA 2012-13 120 2400 4 08 000 170.00 8 DR. SHAILESH J.N. PRASAD 2012-13 124 AND 125 5400 5 11 000 94.63 9 PRAJUN S/O RAJENDRA SONI 2012-13 485 3700 45 500 12.30 10 PUSHPA WASDEV GABA 2012-13 215 2800 3 35 600 119.86 11 SATISH S/O MOHANLAL LAHOTI 2012-13 339 2100 10 500 5.00 12 SEEMA W/O SATISH LAHOTI 2012-13 340 2100 10 500 5.00 TOTAL 2012-13 18500 13 21 100 13 MEETA W/O RAJESH PANWAR 2013-14 421 420 463 8200 13 94 000 170.00 14 SEEMA AND PIYUSH ZALAYA 2013-14 1000 1725 1 22 125 70.80 15 RAJEEV KUMAR NIKHAR 2013-14 991 1725 2 93 250 170.00 16 ANU KUMAR GARGAV 2013-14 957 1725 2 93 250 170.00 17 RAMPUKAR TIWARI 2013-14 122 2400 4 08 000 170.00 18 SATYANARAYAN DHRUV 2013-14 464 4260 2 72 900 64.06 19 ANITA W/O SURESH SHARMA 2013-14 882 2100 3 46 500 165.00 20 NIRMAL S/O RAJENDRA TIWARI 2013-14 986 1725 2 93 250 170.00 21 ANIL MALIK 2013-14 391 2100 3 26 500 155.48 22 AMIT SHANTILAL 2013-14 345 2100 1 71 500 81.67 TOTAL 2013-14 28060 39 21 275 GRAND TOTAL 61 21 220 20. WE ARE SURPRISED TO NOTE THAT THE LD. A.O HAS R AISED NO DOUBT ABOUT THE GENUINENESS OF THE ACTUAL DEVELOPMENT CHA RGES INCURRED SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 53 BY THE ASSESSEE NOR HAS HE POINTED OUT ANY MISTAKE IN THE BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE EXCEPT ABOUT TH E CLAIM OF DEVELOPMENT CHARGES. THE ASSESSEE HAS BEEN CONSIST ENTLY CLAIMING THE ACTUAL DEVELOPMENT CHARGES FROM ASSESSMENT YEAR 2009-10 TILL ASSESSMENT YEAR 2012-13. THOUGH ACTUAL EXPENSES AR E INCURRED SUBSEQUENTLY ALSO BUT EXPENSES ARE BOOKED IN THE PR OFIT AND LOSS ACCOUNT BASED ON A SCIENTIFIC METHOD I.E. REPORT OF TECHNICAL EXPERT. THE RATE OF RS.170/- PER SQ. FT APPLIED BY THE ASSE SSEE AS DEVELOPMENT CHARGES FOR THE AREAS SO SOLD DURING TH E YEAR IS BASED ON THE REPORT OF AN EXPERT ARCHITECT & ENGINEER M/S . MATHUR ASSOCIATES. EVEN LD. A.O HAS ALSO ENDORSED THE COR RECTNESS OF THE ARCHITECT & ENGINEER REPORT. THE ACTION OF THE ASS ESSEE FOR CHANGING THE ACCOUNTING POLICY FOR THE YEAR AND BOO KING THE EXPENSES CALCULATED AT SCIENTIFIC BASIS IS NOT FOUN D TO BE WRONG IN VIEW OF SETTLED JUDICIAL PRONOUNCEMENTS. THIS TRIB UNAL IN THE CASE OF BALAJI NEEMUCH INFRASTRUCTURE PVT LTD (SUPRA) HAS HELD THAT :- .WHEN AFTER SCIENTIFIC ESTIMATION OF MAINTENANCE AND REPAIRS THE ASSESSEE MADE A PROVISION BY DEBITING THE PROFI T AND LOSS ACCOUNT AND CREDITING THE PROVISION ACCOUNT THEN THE ACCOUNTING POLICY OF THE ASSESSEE CANNOT BE HELD AS FAULTY AS UNDISPUTEDLY THE ASSESSEE DID NOT DEBIT ANY AMOUNT TO THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF ACTUAL MAINTENANCE AND REPAIR EXPENSES RATHER THE ASSESSEE REVERSED THE EXCESS AMOUNT OF PROVISION THAN THE ACTUAL EXPENDITURE WAS CREDITED TO PROFIT AND LOSS ACCOUNT AND OFFERED AS INCOME AFTER THE END OF 5 TH YEAR. THEREFORE SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 54 THE CIT(A) WAS QUITE CORRECT AND JUSTIFIED IN FOLLOWING DECISION IN ROTORK CONTROL INDIA PVT LTD [2009] 314 ITR 62 (SC) AND ITAT IS UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH TH E CONCLUSION DRAWN BY CIT(A). [EMPHASIS SUPPLIED]. 21. WE FURTHER OBSERVE THAT IN THE INSTANT CASE LD. A.O HAS PROCEEDED ON GUESS WORK SINCE WITHOUT PLACING ANY M ATERIAL EVIDENCE ON RECORD TO SHOW THAT ASSESSEE HAD EVER R ECEIVED DEVELOPMENT CHARGES IN CASH ON HIS ON MOTION WHICH IN OUR VIEW IS MERELY BASED ON SURMISES AND CONJECTURES DEEMED THA T ASSESSEE WOULD HAVE RECEIVED DEVELOPMENT CHARGES IN CASH AND FURTHER DEEMED THAT THE DEVELOPMENT CHARGES WOULD NOT BE A CHARGE ON THE ASSESSES AS THE SAME WOULD BE RECOVERABLE FROM THE BUYERS OF THE PLOT. FURTHER WE FIND THAT THE LD. A.O FAILED TO A PPRECIATE THE FACT THAT THE ASSESSEE IS IN TO THE BUSINESS OF DEVELOPM ENT OF PLOTS AND THEN SELLING THE PLOTS. THE ASSESSEE PURCHASE PIEC E OF LAND MAKES A PLAN FOR ITS DEVELOPMENT WITH ALL AMENITIES REQUI RED FOR ESTABLISHING THE COLONY WHICH INCLUDES LAND LEVELIN G ROADS INTERNAL ROADS PARKS COMMON AREAS AND OTHER INCIDENTAL EXP ENSES RELATING TO DEVELOPMENT OF LAND TILL IT IS HANDED OVER TO TH E PLOT HOLDERS AND THEN SUBSEQUENTLY FOR MAKING A PARTICULAR COLONY FI T FOR CONSTRUCTING RESIDENTIAL HOUSES. IN ALL THIS PROCE SS DEVELOPMENT SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 55 CHARGES OUGHT TO BE INCURRED. THEY WERE INCURRED A ND WERE CONSISTENTLY CHARGED TO PROFIT & LOSS ACCOUNT. THE CHANGE OF ACCOUNTING POLICY EFFECTED FROM ASSESSMENT YEAR 201 3-14 WAS BASED ON THE ACCOUNTING STANDARD AS-5 ISSUED BY IN STITUTE OF CHARTERED ACCOUNTANTS OF INDIA WHICH PERMITS THE CH ANGE AND WHICH WAS DONE SO TO MAKE APPROPRIATE PRESENTATION OF FINANCIAL STATEMENTS OF THE ENTERPRISE. THE SAME WAS TAKEN U P SINCE THE HIGHEST NUMBER OF PLOTS WERE SOLD BY THE ASSESSEE D URING ASSESSMENT YEAR 2013-14 WHICH WERE 168 IN NUMBER. ALMOST 16% OF SALEABLE AREA WAS SOLD DURING THE YEAR. CHANGE IN ACCOUNTING POLICY IS DULY DISCLOSED IN THE AUDITED FINANCIALS BY WAY OF NOTE. ACTUAL DEVELOPMENT CHARGES INCURRING DURING THE YEA R ARE ALSO REPORTED IN THE BALANCE SHEET. 22. WE FIND THAT THE DEVELOPMENT CHARGES WHICH WERE TAKEN FROM SOME OF THE PURCHASERS OF PLOT AND WERE EXCESS IN N ATURE IN COMPARISON TO THE AMOUNT CHARGED TO OTHER PLOT PURC HASERS THE EXCESS AMOUNT OF RS. 61 21 220/- HAVE ALREADY BEEN OFFERED TO TAX IN ASSESSMENT YEAR 2015-16 AND THE CHART SHOWING YE AR WISE AMOUNT OF INCOME OFFERED DURING ASSESSMENT YEAR 201 5-16 HAS ALREADY BEEN MENTIONED BY US IN THE PRECEDING PARAS . SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 56 23. NOW IN THE GIVEN SITUATION WHERE THE GENUINENES S OF ACTUAL DEVELOPMENT EXPENSES INCURRED BY THE ASSESSEE HAS N EVER BEEN IN DOUBT AT ANY STAGE BY THE REVENUE AUTHORITIES NOR T HE DEPARTMENTAL REPRESENTATIVE COULD CONTROVERT THIS FACT THEN THE NEXT THING TO BE CONSIDERED IS THAT WHETHER THE ASSESSEE OVER CHARGE D THE PROFIT & LOSS ACCOUNT BY CLAIMING THE HIGHER AMOUNT OF ESTIM ATED DEVELOPMENT EXPENSES. 24. TO EXAMINE THIS ASPECT WE HAVE GONE THROUGH THE RECORD WHICH SHOWS THE YEAR WISE DETAIL OF ACTUAL DEVELOPMENT EX PENSES INCURRED AND THE ESTIMATED DEVELOPMENT EXPENSES CHARGED TO P ROFIT & LOSS ACCOUNT. AS DISCUSSED BEFORE FROM ASSESSMENT YEAR 2009-10 TO ASSESSMENT YEAR 2012-13 ASSESSEE WAS CHARGING ACTUA L DEVELOPMENT CHARGE INCURRED DURING THE YEAR TO THE PROFIT & LOSS ACCOUNT. ONLY FROM ASSESSMENT YEAR 2013-14 AFTER M AKING CHANGES IN THE ACCOUNTING POLICY ADOPTED BY THE AS SESSEE ESTIMATED DEVELOPMENT CHARGES WERE BOOKED TO THE PR OFIT & LOSS ACCOUNT. FOLLOWING CHART WILL PROVIDE MORE CLARITY :- PARTICULARS ASSESSMENT YEAR GRAND TOTAL UNIT 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 TOTAL SALABLE AREA SQ. FT. 26 34 265 26 34 265 26 34 265 26 34 265 26 34 265 26 34 265 26 34 265 26 34 265 SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 57 AREA SOLD SQ. FT. 1 41 474 3 11 131 1 34 125 87 750 4 20 573 8 600 12 006 11 15 659 PERCENTAGE OF TOTAL SALABLE AREA SOLD PERCT. 5.37% 11.81% 5.09% 3.33% 15.97% 0.33% 0.46% 42.35% TOTAL DEVELOPMENT EXPENSES RS. 1 15 87 720 2 97 47 218 91 16 040 24 16 100 - - - 5 28 67 078 ESTIMATED DEVELPOMENT EXPENSES RS. - - - - 7 14 97 410 14 62 000 20 41 020 7 50 00 430 ACTUAL EXPENCES INCURRED RS. 1 15 87 720 2 97 47 218 91 16 040 24 16 100 1 94 74 600 1 36 26 544 1 01 17 084 9 60 85 306 25. FROM GOING THROUGH THE ABOVE CHART WE FIND THAT AT THE END OF ASSESSMENT YEAR 2015-16 THE ACTUAL DEVELOPMENT CHAR GES INCURRED BY THE ASSESSEE FROM ASSESSMENT YEAR 2009-10 TO ASS ESSMENT YEAR 2015-16 IS RS. 9 60 85 306/-. DEVELOPMENT CHARGES B OOKED ON ESTIMATED BASIS FROM ASSESSMENT YEAR 2013-14 TO ASS ESSMENT YEAR 2015-16 ARE RS. 7 50 00 430/-. FOR ASSESSMENT YEAR 2014-15 AND ASSESSMENT YEAR 2015-16 THE ESTIMATED DEVELOPMENT E XPENSES SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 58 CHARGED TO PROFIT & LOSS ACCOUNT ARE ONLY RS. 14 62 000/- AND RS. 20 31 020/- AS AGAINST THE ACTUAL EXPENDITURE OF RS . 1 36 26 544/- AND RS. 1 01 17 084/- RESPECTIVELY WHICH SHOWS THAT THE ASSESSEE HAS DULY ADHERED TO THE CHANGED ACCOUNTING POLICIES IMPLEMENTED FROM ASSESSMENT YEAR 2013-14. FOR ASSESSMENT YEAR 2013-14 THERE WAS CERTAIN SPIKE IN THE CLAIM OF DEVELOPMENT EXPENSES BUT THE REVENUE FOR THE YEAR WERE ALSO AT A HIGHER SIDE SINCE AROUND 420573 SQ. FT AREA OF LAND WAS SOLD DURING THE YEAR AS AGAINST 87750 SQ. FT AREA SOLD IN THE IMMEDIATELY PRECEDING YEAR. LD. A.O ALSO FAILED TO APPRECIATE THAT THE ASSESSEE HAD SHO WN A POSITIVE INCOME AT THE END OF THE YEAR AND PAID TAXES THERE ON. WE HAVE ALSO EXAMINED THE AUDITED BALANCE SHEET AND PROFIT & LOSS ACCOUNT AND TREATMENT OF DEVELOPMENT CHARGES INCURRED DURIN G THE YEAR. THE EXCESS AMOUNT CHARGED IN THE PRECEDING YEARS HA S BEEN OFFERED TO TAX IN ASSESSMENT YEAR 2015-16 AND IT WOULD NOT BE JUSTIFIED TO TAX AN INCOME ALREADY OFFERED TO TAX IN THE CORRECT YEAR AS THERE IS NO LOSS TO THE REVENUE DEPARTMENT. 26. IT IS A SETTLED LAW THAT ONCE AN AMOUNT HAS BEE N SUBJECTED TO TAX IN A GIVEN ASSESSMENT YEAR IT CANNOT BE TAXED AGAIN IN ANOTHER ASSESSMENT YEAR. THIS PRINCIPLE EMERGED FROM THE DE CISION OF SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 59 HONBLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRIES LTD. 358 ITR 295 (SC) [2013]. IT WAS HELD THIRDLY THE REAL QUESTION CONCERNIN G US IS THE YEAR IN WHICH THE ASSESSEE IS REQUIRED TO PAY TAX. THERE IS NO DI SPUTE THAT IN THE SUBSEQUENT ACCOUNTING YEAR THE ASSESSEE DID MAKE I MPORTS AND DID DERIVE BENEFITS UNDER THE ADVANCE LICENCE AND THE D UTY ENTITLEMENT PASS BOOK AND PAID TAX THEREON. THEREFORE IT IS NOT AS IF THE REVENUE HAS BEEN DEPRIVED OF ANY TAX. WE ARE TOLD THAT THE RATE OF T AX REMAINED THE SAME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN THE SUBSE QUENT ASSESSMENT YEAR. THEREFORE THE DISPUTE RAISED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT BEST MAY HAVE A MINOR TAX EFFECT. THERE WAS THE REFORE NO NEED FOR THE REVENUE TO CONTINUE WITH THIS LITIGATION WHEN IT WA S QUITE CLEAR THAT NOT ONLY WAS IT FRUITLESS (ON MERITS) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH TO THE PUBLIC COFFERS. 27. THE ABOVE DECISION OF EXCEL INDUSTRIES LTD (SUPRA) HAS BEEN FOLLOWED BY HONBLE P&H HIGH COURT IN THE CASE OF VEE GEE INDUSTRIAL ENTERPRISES IN ITA 187 OF 2014 ORDER DA TED 28.07.2015 AND HELD IN - PARA 8 IT WAS CONCEDED THAT EVEN IN THE PRESENT CASE THE RATE OF TAX REMAINED THE SAME IN BOTH THE ASSESSMENT YEARS I.E. 2005-06 AND 2007- 08. FOLLOWING THE ABOVE JUDGMENT OF THE HONBLE SUP REME COURT IT MUST BE HELD THAT THE DISPUTE RAISED BY THE REVENUE IS ESSE NTIALLY ACADEMIC. THE ISSUE MAY HAVE SOME TAX EFFECT IN THAT IF THE DEPAR TMENT IS CORRECT AND THE AMOUNT OUGHT TO HAVE BEEN BROUGHT TO TAX TWO YEARS EARLIER THERE WOULD BE LOSS OF INTEREST FOR TWO YEARS ON THE AMOUNT OF ` 31 10 000/-. THE DEPARTMENT HAS NOT RAISED THE CLAIM IN THAT REGARD. WE DO NOT WISH TO EXPRESS ANY OPINION AS TO THE RIGHT OF THE DEPARTME NT TO CLAIM INTEREST. 28. THE CLAIM OF THE ASSESSEE IS FORTIFIED BY THE DECIS ION OF HONBLE JURISDICTIONAL INDORE ITAT BENCH IN THE CASE OF BALAJI NEEMUCH SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 60 INFRASTRUCTURE PVT LTD IN ITA 918 TO 920/IND/ 2016 ORDER PRONOUNCED ON 27.09.2017 . IT WAS HELD IN PARA 48 & 49 AS .WHEN AFTER SCIENTIFIC ESTIMATION OF MAINTENANCE AND REPAIRS THE ASSESSEE MADE A PROVISION BY DEBITING THE PROFI T AND LOSS ACCOUNT AND CREDITING THE PROVISION ACCOUNT THEN THE ACCOUNTING POLICY OF THE ASSESSEE CANNOT BE HELD AS FAULTY AS UNDISPUTEDLY THE ASSESSEE DID NOT DEBIT ANY AMOUNT TO THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF ACTUAL MAINTENANCE AND REPAIR EXPENSES RATHER THE ASSESSEE REVERSED THE EXCESS AMOUNT OF PROVISION THAN THE ACTUAL EXPENDITURE WAS CREDITED TO PROFIT AND LOSS ACCOUNT AND OFFERED AS INCOME AFTER THE END OF 5 TH YEAR. THEREFORE THE CIT(A) WAS QUITE CORRECT AND JUSTIFIED IN FOLLOWING DECISION IN ROTORK CONTROL INDIA PVT LTD [2009] 314 ITR 62 (SC) AND ITAT IS UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH TH E CONCLUSION DRAWN BY CIT(A). [EMPHASIS SUPPLIED] [REFER PB 62 & 67] 29. UNDER THESE GIVEN FACTS AND CIRCUMSTANCES OF TH E CASE AND THE JUDGMENTS REFERRED HEREIN ABOVE WE ARE OF THE CONSI DERED VIEW THAT LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE CLAIM OF E STIMATED DEVELOPMENT EXPENSES BOOKED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT AT RS. 7 14 97 410/- ON MATCHING CONCEPT BY ADOPTING SCIENTIFIC METHOD ALLOWABLE U/S 37(1) OF THE ACT AN D THUS THE THEORY ADOPTED BY THE LD. A.O OF THE ASSESSEE HAVING RECE IVED THE DEVELOPMENT CHARGES IN CASH IS JUST IN AIR AND HAS NO LEGS TO STAND FOR SINCE THERE IS NO EVIDENCE TO PROVE IT AND IT I S MERELY ON SURMISES AND CONJECTURES. THE FACT REMAINS THAT TH E ASSESSEE HAD BEEN CONSISTENTLY INCURRING DEVELOPMENT EXPENSES AN D THE SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 61 GENUINENESS OF THE SAME HAS NOT BEEN DOUBTED BY THE REVENUE AUTHORITIES AT ANY STAGE. WE ACCORDINGLY FIND NO R EASON TO INTERFERE IN THE FINDING OF LD. CIT(A) AND THE SAME IS CONFIR MED. WE ACCORDINGLY ORDER SO AND DISMISS ALL THE GROUNDS OF APPEAL RAISED BY THE REVENUE FOR ASSESSMENT YEAR 2013-14. 30. AS REGARDS THE REVENUES APPEAL FOR ASSESSMENT YEAR 2010-11 THE FACTS AND ISSUES REMAIN THE SAME AS WERE DEALT FOR ASSESSMENT YEAR 2013-14 AND WE THUS TAKING A CONSISTENT VIEW CONFIR M THE FINDING OF LD. CIT(A) AND DISMISS THE REVENUES GROUNDS RAISED FOR ASSESSMENT YEAR 2010-11 AND ALLOW THE ASSESSEES CLAIM OF ACTUAL DE VELOPMENT CHARGES U/S 37(1) OF THE ACT AT RS.2 93 76 568/- CLAIMED FO R ASSESSMENT YEAR 2010-11. 31. THE LAST ISSUE IS WITH REGARD TO THE APPLICATIO N MADE BY LD. COUNSEL FOR THE ASSESSEE UNDER RULE 27 OF INCOME-TA X (APPELLATE TRIBUNAL) RULES 1963 WHICH PROVIDES THAT THE RESPONDENT THOUGH HE MAY NOT HAVE APPEALED MAY SUPPORT THE ORDER APP EALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST HIM. THE HON'BLEBLE DELHI HIGH COURT IN THE CASE OF SANJAY SAWHNEY (2020) 116 TAXMANN.COM 701 (DELHI) DATED 01.05.2020 DEALING WITH THE ISSUE OF APPLICATION OF RULE 27 HELD THAT WHERE ASSESSEE SUCCEEDED BEFORE SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 62 COMMISSIONER (APPEALS) IN ULTIMATE ANALYSIS AND WAS THUS NOT AN AGGRIEVED PARTY IN REVENUES APPEAL TRIBUNAL COMM ITTED A MISTAKE BY NOT PERMITTING ASSESSEE (RESPONDENT BEFORE IT) T O SUPPORT FINAL ORDER OF COMMISSIONER (APPEALS) BY ASSAILING FINDIN GS OF C OMMISSIONER (APPEALS) ON ISSUES THAT HAD BEEN DECIDED AGAINST HIM.. IN THE INSTANT CASE FOR ASSESSMENT YEAR 2010-11 THE ASSESSEE CLAIMED ACTUAL DEVELOPMENT EXPENSES AT RS.2 97 47 2 18/-. LD. A.O DISALLOWED THIS CLAIM. IN THE FIRST APPEAL BEFORE L D. CIT(A) ALLOWED THE CLAIM OF RS.2 93 76 558/- AND FOR REMAINING AMO UNT OF RS.3 70 650/- LD. CIT(A) OBSERVED AS UNDER:- 3.19 HOWEVER I AGREE WITH THE VIEW TAKEN BY THE A O THAT THE INCOME SHOULD BE OFFERED IN THE YEAR IN WHICH IT IS RECEIV ED. SINCE THE INCOME TOWARDS THE SALE OF PLOT BASED ON EXECUTION OF RESP ECTIVE SALE DEEDS WAS OFFERED IN ASSESSMENT YEAR 2010-11 IN CASE OF 3 CUS TOMERS THE EXCESS AMOUNT PAID BY THESE CUSTOMERS SHOULD BE CONSIDERED AS INCOME IN ASSESSMENT YEAR 2010-11 OF RS.3 70 650/-. 32. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE AMOUNT OF DEVELOPMENT CHARGES FROM 3 BUYERS AT RS.3 70 650/- HAS ALREADY BEEN OFFERED IN THE RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2015-16 WHICH IS AN UNDISPUTED FACT. THE DIRE CTION OF LD. CIT(A) TAXING SUM OF RS.3 70 650/- FOR ASSESSMENT Y EAR 2010-11 WOULD AMOUNT TO TAXING THE INCOME AGAIN. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 63 33. ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATI VE SUPPORTED THE FINDING OF LD. CIT(A). 34. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. IN VIEW OF RULE 27 OF INCOME-TAX (APPELLATE TRIBUNAL) RULES 1963 AND ALSO IN VIEW OF THE JUDGM ENT OF HON'BLE DELHI HIGH COURT IN THE CASE OF SANJAY SAWHNEY (SUPRA) WE ACCEPT THE APPLICATION OF THE ASSESSEE. 35. AS REGARDS THE ISSUE OF TAXABILITY OF DEVELOPME NT CHARGES RECEIVED BY THE ASSESSEE AT RS. 3 70 650/- LD. CIT( A) HAS HELD THAT THIS SUM IS TO BE TAXED IN ASSESSMENT YEAR 2010-11. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS AMOUNT HAS ALR EADY BEEN OFFERED TO TAX IN THE RETURN OF INCOME FILED FOR A SSESSMENT YEAR 2015-16. 36. IT IS A SETTLED LAW THAT ONCE AN AMOUNT HAS BEE N SUBJECTED TO TAX IN A GIVEN ASSESSMENT YEAR IT CANNOT BE TAXED AGAIN IN ANOTHER ASSESSMENT YEAR. THIS PRINCIPLE EMERGED FROM THE JU DGMENT OF HONBLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRIES LTD. 358 ITR 295 (SC) [2013]. SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 64 IT WAS HELD THIRDLY THE REAL QUESTION CONCERNIN G US IS THE YEAR IN WHICH THE ASSESSEE IS REQUIRED TO PAY TAX. THERE IS NO DI SPUTE THAT IN THE SUBSEQUENT ACCOUNTING YEAR THE ASSESSEE DID MAKE I MPORTS AND DID DERIVE BENEFITS UNDER THE ADVANCE LICENCE AND THE D UTY ENTITLEMENT PASS BOOK AND PAID TAX THEREON. THEREFORE IT IS NOT AS IF THE REVENUE HAS BEEN DEPRIVED OF ANY TAX. WE ARE TOLD THAT THE RATE OF T AX REMAINED THE SAME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN THE SUBSE QUENT ASSESSMENT YEAR. THEREFORE THE DISPUTE RAISED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT BEST MAY HAVE A MINOR TAX EFFECT. THERE WAS THE REFORE NO NEED FOR THE REVENUE TO CONTINUE WITH THIS LITIGATION WHEN IT WA S QUITE CLEAR THAT NOT ONLY WAS IT FRUITLESS (ON MERITS) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH TO THE PUBLIC COFFERS. 37. IN VIEW OF THE ABOVE JUDGMENT AND THE FACT THAT THE INCOME OF RS.3 70 650/- RELATING TO ASSESSMENT YEAR 2010-11 I S OFFERED TO TAX FOR ASSESSMENT YEAR 2015-16 AND IS DULY REPORTED IN THE AUDITED PROFIT & LOSS ACCOUNT AND ITS RELEVANT SCHEDULE WE ARE OF THE VIEW THAT THE FINDING OF LD. CIT(A) OF TAXING THE IMPUGN ED AMOUNT IN ASSESSMENT YEAR 2010-11 DESERVES TO BE SET ASIDE. I N THE RESULT THIS ISSUE RAISED BY THE ASSESSEE THROUGH APPLICATION UN DER RULE 27 OF INCOME-TAX (APPELLATE TRIBUNAL) RULES 1963 IS DECI DED IN FAVOUR OF THE ASSESSEE. 38. IN THE RESULT BOTH THE APPEALS OF THE REVENUE V IDE ITA NO.784 & 786/IND/2018 FOR ASSESSMENT YEAR 2010-11 AND 2013 -14 STANDS DISMISSED AND ASSESSEES APPLICATION UNDER RULE 27 OF INCOME TAX SUNDERDEEP CONSTRUCTION PVT. LTD ITA NO.784 & 786/IND/2018 65 (APPELLATE TRIBUNAL) RULES 1963 FOR ASSESSMENT YEAR 2010-11 IS ALLOWED AS PER TERMS INDICATED ABOVE. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.03.2021. SD/- SD/- ( KUL BHARAT) (MANI SH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 09 MARCH 2021 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR ITAT INDORE/GUARD FILE. BY ORDER ASSTT.REGISTRAR I.T.A.T. INDORE