Income Tax Appellate Tribunal - Delhi
Madhur Malhar Dev. (P) Ltd., Meerut vs Department Of Income Tax on 1 April, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'E
'E' : NEW DELHI
BEFORE SHRI G.C. GUPTA,
GUPTA, VICE PRESIDENT AND
SHRI N.K. SAINI,
SAINI, ACCOUNTANT MEMBER
ITA No.
No.5606/Del/2011
Assessment Year : 2008-
2008-09
Assistant Commissioner of Vs.
Vs. M/s Madhur
Madhur Malhar Developers (P)
Income Tax, Ltd.,
Circle-
Circle-1, 37, Chippi Tank,
Meerut. Meerut.
PAN : AAECM6095L.
(Appellant) (Respondent)
Appellant by : Shri P. Dam Kanunjha, Sr.DR.
Respondent by : Shri Sandeep Sapra, Advocate.
Date of hearing : 24.03.2015
Date of pronouncement : 01.04.2015
ORDER
PER G.C. GUPTA, GUPTA, VP :
This appeal of the Revenue for the assessment year 2008-09 is directed against the order of learned CIT(A), Meerut dated 13th September, 2011.
2. Ground of appeal No.1 of the Revenue is as under:-
"Whether in the facts and circumstances of the cases, the ld. Commissioner of Income Tax (Appeals) has erred in law and facts in deleting the addition of Rs.41,22,220/- relying upon additional evidence without providing opportunity to AO as per Rule 46A(3) of I.T. Rules 1962."
3. Learned DR submitted that the CIT(A) has not required any remand report from the Assessing Officer in this case and, therefore, 2 ITA-5606/Del/2011 there was a violation of Rule 46A of the Income-tax Rules, 1962 in this case.
4. Learned counsel for the assessee submitted that the assessee has not filed any additional evidence and, therefore, there was no issue of calling for the remand report by the CIT(A) from the Assessing Officer.
5. We have considered the rival submissions and have perused the order of the Assessing Officer and the CIT(A). We find that the Revenue could not point out any evidence which could be said to be additional evidence filed by the assessee before the CIT(A). Accordingly, we do not find any merit in ground No.1 of the Revenue's appeal, which is accordingly dismissed.
6. Ground Nos.2 & 3 of the Revenue's appeal are as under:-
"2. Whether in the facts and circumstances of the cases, the ld. Commissioner of Income Tax (Appeals) was justified in law in deleting the addition ignoring the provisions of the section 37 of the I.T. Act 1961 which provides that only those expenses which are not of personal or capital nature and have been incurred wholly and exclusively for business purpose shall be allowed.
3. Whether ld.CIT(Appeal) was justified in accepting the view of the assessee ignoring in the law and fact that contingent liabilities do not constitute as 'expenditure' and cannot be the subject matter of deduction even under the mercantile system of accounting. This get supports from the following cases :-
1) Shri Sajjan Mills Ltd. vs. CIT (1985) 156 ITR 585 (SC).
2) India Molasses Co.Pvt.Ltd. (1959) 37 ITR 66 (SC).
3 ITA-5606/Del/2011
3)_ Madras High Court dated 5/02/2007 in the case of CIT vs. Rotark Controls India Ltd. & others 293 ITR 311."
7. Learned DR submitted that the assessee has claimed expenditure as provision for cost of lift, provision for construction and other development expenses, provision for land cost of parking, stamps and other expenses on parking land and, total of these expenses comes to `41,22,220/-. He submitted that the assessee is following mercantile system of accounting and, therefore, the amount in question could not be allowed as deduction to the assessee as these expenses were not accrued in this year. He referred to the relevant portion of the assessment order in support of the case of the Revenue.
8. Learned counsel for the assessee has opposed the submissions of the learned DR. He submitted that the sale of shops/offices was started during the year and the building under construction did not reach finality. He submitted that the cost of each unit could not be individually/separately worked out. He submitted that there is no mistake in the method adopted by the assessee for calculating the cost of area sold and the estimation of the cost of incomplete work was made on the basis of available circumstances. The cost of lift was already settled between the assessee and its suppliers. The cost of parking space was relatable to the total saleable area developed by the assessee. He submitted that the project has already been completed and its profit/loss has already been accounted for and declared in the return of income by the assessee filed year after year. He relied on the order of the learned CIT(A).
9. We have considered the rival submissions and have perused the order of the Assessing Officer and the learned CIT(A). We find that the basic facts of the case are not in dispute. The units of shops/offices were under development during the year and the sale of units started 4 ITA-5606/Del/2011 during the year. The building under construction did not reach finality and, accordingly, the CIT(A) found substance in the submission of the assessee that the cost of each unit sold could not be individually/separately worked out. The CIT(A) has given a finding that the method adopted by the assessee for calculating the cost of area sold could not be held to be defective in any manner. He further observed that the estimation of the cost of incomplete work was made on the basis of available circumstances. The cost of lift was already settled between the assessee and its suppliers. The CIT(A) has observed that the cost of parking space is relatable to the total saleable area developed. The cost of construction has also been rightly calculated after estimating the cost of incomplete construction worked. The CIT(A) has concluded that the estimation of incomplete development work, cost of lift and parking space has rightly been made by the assessee and made part of cost calculations. We find that the plea of the learned counsel for the assessee that the building project was already completed and its profit/loss has already been accounted for and declared in the return of income filed year after year, could not be controverted on behalf of the Revenue. In these facts of the case, we are of the view that there is no mistake in the order of the CIT(A) in deleting the addition made by the Assessing Officer and, accordingly, the order of learned CIT(A) on this issue is confirmed and ground of appeal Nos.2 & 3 of the Revenue are dismissed.
10. In the result, the appeal of the Revenue is dismissed.
Decision pronounced in the open Court on 1st April, 2015.
Sd/- Sd/-
(N.K. SAINI)
SAINI) (G.C.
(G.C. GUPTA)
GUPTA)
ACCOUNTANT MEMBER VICE
VICE PRESIDENT
VK.
5 ITA-5606/Del/2011
Copy forwarded to: -
1. Appellant : Assistant Commissioner of Income Tax,
Circle-
Circle-1, Meerut.
2. Respondent : M/s Madhu Malhar Developers (P) Ltd., 37, Chippi Tank, Meerut.
3. CIT
4. CIT(A)
5. DR, ITAT Assistant Registrar