Gujarat High Court
Commissioner Of Income Tax vs Dhariya Builders on 1 November, 2006
Author: A.S. Dave
Bench: A.S. Dave
ORDER
Y.R. Meena, Act. C.J.
1. The following substantial questions of law are proposed for admission of these two appeals.
(A) Whether on the facts and circumstances of the case, the ITAT is justified in holding that the Assessing Officer's order is required to be modified by modifying the cost of construction shown by the assessee in its books of account by retaining the addition to the extent of 10% of the cost of construction; however, at the same time finding that the profits declared by the assessee are more than 10% extra cost which have been retained and therefore, no addition is warranted?
(B) Whether on the facts and circumstances of the case, the ITAT is justified in holding that as the profit declared by the assessee including the income received on account of 'on money' as credited in the Profit & Loss Account was more than the addition retained, in effect, there will be no change in the return of income of the assessee and therefore, no addition is warranted?
(C) Whether on the facts and circumstances of the case, the ITAT is justified in holding that the expenditure on account of which the addition is made Under Section 69C of the Act is revenue nature in the case of the assessee and the same is allowable as revenue deduction?
2. The admitted facts that on account of construction, some additions were made, that has been deleted by the CIT (Appeals). The Tribunal has retained 10% addition on account of the investment in the construction but allowed the deduction as that raised cost of construction. The Tribunal has considered the issue as under:
By applying the broad principles as laid down herein above, to the facts and circumstances of the instant case, we are inclined to modify the cost of construction shown by the assessee in its books of account by retaining addition to the extent of 10% of the cost of construction shown by the assessee in the books of account. The Assessing Officer is therefore, directed to retain the addition to the extent of 10%. However, at the very same time, we found that the profit declared by the assessee in both the years are much more than 10% extra cost which we have indicated for retaining. As discussed herein above, the extra cost for which addition is made under section 69C is liable to be allowed as deduction by computing the income from business and profession on account of sale of the building. As the profit declared by the assessee including the income received on account of 'on money' as credited in the Profit & Loss account was more than the addition retained by us, in effect there will be no change in the returned income of the assessee. Therefore, in the result, no addition is warranted.
3. When some addition was made and income was enhanced which was used in the cost of construction, no addition is warranted.
4. No substantial question of law does arise, nor it has been shown that the finding is perverse. There is no justification to interfere in the impugned order.
5. Both these appeals stand dismissed at the admission stage.