TaxTMI 
TaxTMI 
2012 (9) TMI 352
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....e expenditure on development had been debited in the trading account without any actual expenditure. II. On the facts and in the circumstances of the case, the Ld. CIT(A), Amritsar has ignored the fact that the provision of the expenditure on development had been added to the closing stock of land without any basis. III. On the facts and in the circumstances of the case, the Ld. CIT(A), Amritsar has ignored the fact that the construction expenses of Rs.9,32,176/- has not been debited proportionately on the basis of area of land sold as divided by the total area of colony. IV. On the facts and in the circumstances of the case, the Ld. CIT(A), Amritsar has ignored the fact that PUDA fees of Rs.6,07,339/- has not been debited on the b....
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....e assessee is engaged in business of real estate and by acting as land developers & colonizers. The assessee firm has developed a colony under the name and style of M/s. Garden Green in village Khankot which has been got approved from Punjab Urban Planning & Development Authority as per approved plan which was filed before the AO. During the year, the assessee has sold plots in the said colony as per copies of sale deeds placed on asstt. record. Out of the available stock, the assessee firm had sold 8738.24 sq.yd. of land for a consideration of Rs.1,79,59,484/-. The AO observed that correct gross profit earned from sale of plots in Shivam Estate has not been correctly reflected therein. By recasting the assessee's trading account in respect....
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....een allowed which is undeniable as per the prescribed PUDA provisions. It was also stated that PUDA fee is fully allowable on mercantile method of accounting being followed by the assessee irrespective of the fact that sale of plot is in huge extent or in small scale. The assessee's counsel argued that construction charges are actually incurred wholly and exclusively for the purpose of running the business are allowable in full. He submitted that the AO ought to have allowed the value of un-saleable land i.e. wastage and there is no justification in deviating it proportionately. Finally, he stated that the AO is not justified in rejecting the provisions for development expenses to the tune of Rs.63,57,825/- whereas these have actually been ....
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....ved that by debiting Rs.63,57,825/- as development charges in the trading account and crediting the same in the stock account does not affect the revenue. Therefore, the Ld. CIT(A) found that there was no infirmity and irregularity with regard to assessee's claim in respect of provision for development charges which duly have been accounted for in the books of account at Rs.63,57,825/-. The assesee is following method consistently and the AO is not justified in enforcing any deviation from the consistent method of accounting being followed by the assessee. He relied upon the decisions of various courts of law - in the case of Bharat Earth Movers vs. CIT reported in (2000) 162 CTR 325 (SC) , Calcutta Co. Ltd. vs. CIT (1959) 37 ITR 1 (SC),....