Income Tax Appellate Tribunal - Ahmedabad
Surya Developers, Surat vs Department Of Income Tax on 27 October, 2015
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ 'सी', अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
" C " BENCH, AHMEDABAD
ी अ नल चतुव द , लेखा सद य एवं ी कुल भारत, या यक सद य के सम ।
BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER And
SHRI KUL BHARAT, JUDICIAL MEMBER
आयकर अपील सं./I.T.A. No.2612/Ahd/2009
( नधा रण वष / Assessment Year : 2005-06)
The ACIT बनाम/ M/s.Surya Developers
Central Circle-1 Vs. 738, Ajanta Shopping Centre
Surat Ring Road, Surat
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AATFS 9248 R
(अपीलाथ% /Appellant) .. (&'यथ% / Respondent)
अपीलाथ% ओर से / Appellant by : Shri Dinesh Singh, Sr.DR
&'यथ% क) ओर से/Respondent by : None
ु वाई क) तार ख /
सन Date of Hearing 05/10/2015
घोषणा क) तार ख /Date of Pronounce ment 27/10/2015
आदे श / O R D E R
PER SHRI KUL BHARAT, JUDICIAL MEMBER :
This appeal by the Revenue is directed against the order of the Ld.Commissioner of Income Tax(Appeals)-II, Ahmedabad ['CIT(A)' in short] dated 16/06/2009 pertaining to Assessment Year (AY) 2005-06. The Revenue has raised the following grounds of appeal:-
1. The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.68,58,475/- made on account of estimating the profit @ 15% of work-in-progress.ITA No.2612 /Ahd/2009
ACIT vs. M/s.Surya Developers Asst.Year - 2005-06 -2-
2. The Ld.CIT(A) has erred in law and on facts in failing to appreciate that the AO has not taken adverse view with regard to accounting method adopted by the assessee in A.Y.2004-05 as till A.Y.2004-05, neither the project had progressed substantially, nor substantial advances were received by the assessee, while this was not the case for A.Y.2005-06.
3. The Ld.CIT(A) has erred in law and on facts in failing to appreciate that the AO had not disregarded the accounting method adopted by the assessee in A.Y.2006-07 since in the A.Y.2006-07 the project had been completed leaving no closing WIP in the hands of the assessee at the end of the year and therefore profit had been duly shown by the assessee in this A.Y.2006-07.
4. The Ld.CIT(A) has erred in law and on facts in not appreciating the judgment of the HonTDle Supreme Court in the case of Tirathram Ahuja (P) Ltd vs. CIT (180 ITR 428), wherein the HonTDle Supreme Court had confirmed the ratio laid down by the Delhi High Court in the case of Tirathram Ahuja (P) Ltd vs CIT (1973) (103 ITR 15)(Delhi).
5. The Ld.CIT(A) has erred in law and on facts in accepting the plea of the assessee that the Accounting Standard AS-7 is applicable to the contractors and not to the assessee as a developer as the revised AS-7 is applicable to construction activities undertaken by enterprises as contractors as well as on their own account.
6. The Ld.CIT(A) has erred in law and on facts in failing to appreciate that each assessment year being a self contained unit, the profit of one year cannot be shifted to another year as settled by Hon'ble Supreme Court in the case of CIT vs British Paints India Ltd.
7. It is, therefore, prayed that the order of the CIT (A) be set aside and that of the A.O. be restored to the above extent.
ITA No.2612 /Ahd/2009ACIT vs. M/s.Surya Developers Asst.Year - 2005-06 -3-
2. Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 17/12/2007, thereby the Assessing Officer (AO in short) made addition of Rs.68,58,475/- on account of estimating the profit @15% of work-in-progress. The assessee being aggrieved by the assessment order, preferred an appeal before the ld.CIT(A), who after considering the submissions of the assessee allowed the appeal on the basis that the AO has accepted the method of accounting for AYs 2004-05 & 2006-07. He has not given any reason as to why he has adopted a different method of accounting for the year under appeal. Aggrieved by the order of the ld.CIT(A), the Revenue is now in appeal before us.
3. The only effective ground (i.e.ground No.1) in this appeal is against deletion of addition of Rs.68,58,475/-. Ground Nos.2 to 6 are argumentative in nature. Ground No.7 is general in nature which requires no independent adjudication. Therefore, ground Nos.1 to 6 are taken up together and are being disposed of by a consolidated order for the sake of convenience.
4. None appeared on behalf of respondent-assessee despite service of notice of hearing to the assessee. It is recorded in the notice that "notice received, but last time also it was submitted that we have not received ITA No.2612 /Ahd/2009 ACIT vs. M/s.Surya Developers Asst.Year - 2005-06 -4- appeal paper so you are requested to give the paper of (Department- appeal) appeal so it can be argued". Since the notice has been served upon the assessee, the appeal was taken up for hearing ex-parte qua the assessee.
5. The ld.Sr.DR submitted that the ld.CIT(A) was not justified in deleting the addition. He submitted that the AO has pointed out that in the year under appeal, the assessee has received substantial amount.
6. We have heard the ld.Sr.DR, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has decided the issue by observing as under:-
"2.3. I have considered the facts and the submissions. I agree with the appellant's view. It is a fact that the appellant is ot a contractor. He is a developer and developing project for sale and following the project completion method. When the Assessing Officer has accepted method of accounting for AY 2004-05 and 2006-07, he is not justified in rejecting the same for intervening period for AY 2005-06."
6.1. During the course of hearing, a query was raised by the Bench to the Sr.DR to point out the reason for not accepting the method of accounting which was accepted in the earlier year and subsequent year. The ld.Sr.DR except relying on the order of the AO could not ITA No.2612 /Ahd/2009 ACIT vs. M/s.Surya Developers Asst.Year - 2005-06 -5- point out the specific reason for not accepting the method of accounting as declared by the assessee. We find that the ld.CIT(A) has given a finding that the assessee is a developer and developing the project for sale and following the project completion method. This fact is not controverted by the Revenue and even the Revenue is not in appeal against the finding of the ld.CIT(A) that the assessee is a developer. Therefore, we do not see any reason to interfere with the order of the ld.CIT(A), same is hereby upheld. Thus, grounds raised in the Revenue's appeal are dismissed.
7. In the result, Revenue's appeal stands dismissed.
Order pronounced in the Court on Tuesday, the 27th day of October, 2015 at Ahmedabad.
Sd/- Sd/-
(अ नल चतव
ु द ) (कुल भारत)
लेखा सद य या यक सद य
( ANIL CHATURVEDI ) ( KUL BHARAT )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 27/ 10 /2015
ट .सी.नायर, व. न.स./T.C. NAIR, Sr. PS
ITA No.2612 /Ahd/2009
ACIT vs. M/s.Surya Developers
Asst.Year - 2005-06
-6-
आदे श क" # त%ल&प अ'े&षत/Copy of the Order forwarded to :
1. अपीलाथ% / The Appellant
2. &'यथ% / The Respondent.
3. संबं4धत आयकर आयु6त / Concerned CIT
4. आयकर आय6 ु त(अपील) / The CIT(A)-II, Ahmedabad
5. 7वभागीय & त न4ध, आयकर अपील य अ4धकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड; फाईल / Guard file.
आदे शानुसार/ BY ORDER, स'या7पत & त //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad
1. Date of dictation ..13.10.2015 (dictation-pad 5+pages attached at the end of this File)
2. Date on which the typed draft is placed before the Dictating Member ...21.10.2015
3. Other Member...
4. Date on which the approved draft comes to the Sr.P.S./P.S.................
5. Date on which the fair order is placed before the Dictating Member for pronouncement......
6. Date on which the fair order comes back to the Sr.P.S./P.S....... 27.x.15
7. Date on which the file goes to the Bench Clerk.....................27.x.15
8. Date on which the file goes to the Head Clerk..........................................
9. The date on which the file goes to the Assistant Registrar for signature on the order..........................
10. Date of Despatch of the Order..................