Bai Sonabai Hirji Agiary Trust vs The 5Th I.T.O. on 22 September, 2004
23. In the appeal in ITA No. 355/Bang/2024 in respect of A.Y. 2017-18,
the assessee also raised a ground no. 4 in which the assessee had disputed
the addition of Rs. 4.17 crores on the sale of flats in Peenya. The AO had
alleged that the said income was not accounted for by the assessee as
income and therefore the said amount was added to the income of the
assessee. It is the contention of the Ld.AR that the said addition was made
based on the C & AG audit report wherein it was mentioned that the
assessee had earned a profit of Rs. 417.43 lakhs. The assessee submitted
that the figures adopted by the C & AG is not correct and also submitted
that that they have no idea, on what basis the figures were adopted by the
Audit Wing of the C & AG. The assessee submitted that the actual profits
could be about Rs. 2,36,45,956/- which was also considered while
computing the profits and also the same was produced before the AO at the
time of remand report as well as before the Ld.CIT(A) and submitted that the
said profits were accounted in the F.Y. 2018-19 and also the said incomes
were taken up while computing the total income for the A.Y. 2019-20. The
Ld.AR also submitted that the relevant ledger account was also produced
and therefore it would not be correct to make an addition of Rs. 4.17 crores
in respect of the sale of the flats. Alternatively, if exemption u/s. 11 is
allowed, the income of the assessee would be computed u/s. 11 based on
the commercial accounting principles and as per Circular No. 5-P(LXX-6) of
1968 dated 19/06/1968 issued by the CBDT which was also relied on by
the Hon'ble Mumbai ITAT in the case of Bai Sonabai Hirji Agiary Trust vs.
ITO reported in (2005) 93 ITD 70 (Mum) SB. In the earlier paragraphs, we
already held that the income of the assessee is eligible for exemption u/s. 11
of the Act and in that circumstances, the alleged income on the sale of flats
Page 33 of 34
ITA Nos. 354 & 355/Bang/2024
would also be eligible for deduction. Further, it is the case of the assessee
that the income on the sale of flats were already taken into consideration
while making the computation of income and if the said income was already
considered by the assessee, then the same is also not liable to be taxed
under the provisions of the Act. Therefore, we are deleting this addition of
Rs. 4.17 crores in respect of the sale of flats on both the grounds.