Tribunal directs reexamination of land cost, allows appeals for statistical purposes

The CIT(A) directed the AO to delete the disallowance of 20% of site development expenses and deleted disallowances under section 40(a)(ia) for various expenses. However, the CIT(A) added an amount to the income of the assessee due to a discrepancy in the cost of land. The Tribunal set aside the appeal for statistical purposes, instructing a reexamination of the land cost based on impounded documents and partner statements. Both appeals were allowed for statistical purposes.

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Issues:
1. Disallowance of site development expenses.
2. Disallowance under section 40(a)(ia) for marketing commission, office expenses, advertisement, and commission.
3. Addition towards inflation of cost of land.

Issue 1: Disallowance of site development expenses:
The CIT(A) held that no further disallowance of expenses is warranted since the books of account were directed to be estimated. Consequently, the CIT(A) directed the AO to delete the disallowance of 20% of site development expenses amounting to Rs. 8,55,754.

Issue 2: Disallowance under section 40(a)(ia) for marketing commission, office expenses, advertisement, and commission:
The CIT(A) deleted the disallowances made by the AO under section 40(a)(ia) based on the argument that the expenses had already been paid during the year and were not payable as of 31st March. The CIT(A) relied on a decision of the ITAT, Vizag Special Bench to support this stance.

Issue 3: Addition towards inflation of cost of land:
The AO added Rs. 25,97,005 to the income of the assessee due to the discrepancy between the amount debited in the P&L account for the cost of land and the actual cost as per the sale deed. The CIT(A) rejected the books of account and estimated the income of the assessee at 15% of the turnover, allowing for deductions towards remuneration and interest to partners.

The revenue raised objections to the CIT(A)'s decision, arguing that the profit should have been estimated based on the registered document value of the land purchased. The assessee also contested the estimation of net profit at 15% of turnover, highlighting the financial position and expenses incurred. The Tribunal set aside the appeal for statistical purposes, directing the AO to reexamine the cost of land based on impounded documents and statements made by partners during the survey. Consequently, both appeals were allowed for statistical purposes.

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