ACIT, Hyderabad v. Manjeera Estates Pvt. Ltd., Hyderabad

ITA 946/HYD/2010 | 2006-2007
Pronouncement Date: 31-01-2011 | Result: Allowed

Appeal Details

RSA Number 94622514 RSA 2010
Assessee PAN AABCM3700D
Bench Hyderabad
Appeal Number ITA 946/HYD/2010
Duration Of Justice 7 month(s) 9 day(s)
Appellant ACIT, Hyderabad
Respondent Manjeera Estates Pvt. Ltd., Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 31-01-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 31-01-2011
Assessment Year 2006-2007
Appeal Filed On 21-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI N.R.S. GANESAN JUDICIAL MEMBER AND SHRI CHANDRA POOJARI ACCOUNTANT MEMBER ITA NO.946/HYD/2010 ASSESSMENT 2006-07 THE DCIT CIRCLE 16(2) HYDERABAD VS M/S MANJEERA ESTATES (P) LTD. HYDERABAD. (PAN AABCM 3700 D) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E. SUNIL BABU RESPONDENT BY : NONE O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A)-V HYDERABAD DATED 07.04 .2010 AND PERTAINS TO THE ASSESSMENT YEAR 2006-07. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS IN ITS APPEAL: 1. THE CIT(A) ERRED IN DELETING THE ADDITION ON TH E GROUND THAT THE EXPENDITURE IS NOT RELATABLE TO THE ON GOING PR OJECT OF ADITYA TRADE CENTRE. THE CONTENTION OF THE ASSESSE E THAT THE EXPENDITURE IN QUESTION IS PAID FOR OBTAINING VARIO US PROJECTS CONSULTANCY REPORTS IS NOT BASED ON FACTS AVAILABLE ON RECORD. 2. THE CIT(A) OUGHT TO HAVE CONFIRMED THE ACTION O F THE ASSESSING OFFICER AS THE ASSESSEE HAS NOT OBJECTED FOR THE DISALLOWANCE DURING SCRUTINY PROCEEDINGS. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSE E COMPANY FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEARS 2006-07 A DMITTING A TOTAL ITA NO.946 /HYD/2010 M/S MANJEERA ESTATES (P) LTD. HYDERABAD 2 2 INCOME OF RS.1 45 39 735/-. THE SAME WAS ASSESSED U/S 143(3) OF THE IT ACT. DURING THE ASSESSMENT PROCEEDINGS THE ASSESS ING OFFICER FOUND THAT THE ASSESSEE COMPANY INCURRED EXPENDITURE OF RS.20 06 432/- TOWARDS CONSULTANCY CHARGES IN RESPECT OF ITS PROJECT ADITY A TRADE CENTRE AND ALLOCATED THE ABOVE EXPENDITURE TO THE SHOPS SOLD D URING THE YEAR. THE ASSESSING OFFICER FURTHER NOTICED THAT THE ABOVE EX PENDITURE WAS NOT CONSIDERED IN VALUING THE WIP OF THE UNSOLD SHOPS O F THE PROJECT TRADE CENTRE. ON VERIFICATION OF THE DETAILS THE ASSESS ING OFFICER FOUND THAT DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEARS 2006-07 OUT OF THE TOTAL PROJECT AREA OF 62609 SQ. FT. THE ASSESSEE CO MPANY SOLD ONLY 11939 SQ.FT LEAVING 50670 SQ.FT AS UNSOLD AREA. ACCORDIN GLY THE ASSESSING OFFICER ALLOCATED THE CONSULTANCY CHARGES WITH RESPECT TO W IP AT RS.16 23 882/- (UNSOLD AREA OF 50670 SQ.FT. X CONSULTANCY CHARG ES OF 20 06 432/TOTAL AREA OF 62609) AND DISALLOWED THE SAME. 4. ON APPEAL THE CIT(A) OBSERVED THAT THE ABOVE CHARGES WERE NOT PAID FOR PROJECT APPRAISAL OR PROJECT REPORT PE RTAINING TO THE ABOVE PROJECT. RATHER THEY WERE PAID FOR THE FOLLOWING PROJECT CONSULTANCY REPORTS WHEREBY THE ASSESSEE CONSIDERED THE FEASIBI LITY OF EXPLORING THE SETTING UP OF VARIOUS PROJECTS SUCH AS: A) KSA TECHNO PARK (I) PVT. LTD. TOWARDS PROFESSION AL SERVICES PROPOSED FOR MALL FEASIBILITY AND STRATEGY DEVELOPM ENT AT RS.15 19 340/-. B) HANSA RESEARCH (P) LTD. TOWARDS PROFESSIONAL SER VICES MARKET SURVEY IN PRIMARY AND SECONDARY CATCHMENT WITH SEC- A SEC B+VE SEC-B AT RS.1 56 492. C) LEMON DESIGNS (P) LTD. TOWARDS PROFESSIONAL SERV ICES DESIGNS AND BRANDING OF A SPECIALLY MAL FOR KIDS AND MOMS AT RS .3 30 000/-. ITA NO.946 /HYD/2010 M/S MANJEERA ESTATES (P) LTD. HYDERABAD 3 3 ACCORDINGLY THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO ALLOW THE ENTIRE EXPENDITURE AS REVENUE EXPENDITURE. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 5. AT THE TIME OF HEARING ON 15.12.2010 NONE A PPEARED ON BEHALF OF THE ASSESSEE. WE HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE. WE HAVE CAREFULLY GONE THROUGH THE MATERIALS AVAILABLE ON RECORD. IN OUR OPINION THE EXPENDITURE INCURRED TOWARDS CONSULTAN CY CHARGES ARE TO BE APPORTIONED TO THE ENTIRE CONSTRUCTION WERE CARRIE D OUT BY THE ASSESSEE. ADMITTEDLY IN THIS CASE THE ASSESSEE HAS UNDERTAKE N THE CONSTRUCTION WORK 62609 SQ.FT AND IT HAS TO BE APPORTIONED OVER THE ENTIRE PROJECT INSTEAD OF APPORTIONING TO 11939 SQ.FT. WHICH IS N OT CORRECT. THERE IS NO POSITIVE MATERIAL BEFORE US TO SAY THAT THE ENTIRE EXPENDITURE IS ATTRIBUTABLE TO ONLY TO THE PROJECT AREA WHICH WAS SOLD OUT. HE NCE IN OUR OPINION CONSULTANCY CHARGES TO BE APPORTIONED TO THE TOTAL AREA. ACCORDINGLY WE ALLOW THE GROUND TAKEN BY THE REVENUE. 6. IN THE RESULT THE APPEAL OF THE REVENUE IN ITA NO.946/HYD/2010 STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 31. 1.2011 SD/- SD/- N.R.S. GANESAN CHANDRA POOJARI JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 31.1.2011 COPY FORWARDED TO: 1. THE DCIT CIRCLE 16(2) HYDERABAD 2. M/S MANJEERA ESTATES (P) LTD. 304 ADITYA TRADE CENTRE ADITYA ENCLAVE ROAD AMEERPET HYDERABAD 3. CIT(A)-V HYDERABAD. 4. CIT HYDERABAD 5. THE D.R. ITAT HYDERABAD. NP