AI Drafter 
TaxTMI 
TaxTMI 
2014 (4) TMI 386
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....at the learned A.O. has adopted wrong formula in adjusting land owner's share. 5. That entire calculations made by learned A.O. is arithmetically wrong. 6. That learned A.O. is wrong in applying cost method inspite of clear direction of the Hon'ble ITAT. 3. Briefly stated, assessee-company is engaged in real estate development and building activity. The assesseecompany had undertaken building activity at Kamachha in Varanasi and the project was named as 'Kasiraj Apartments and Commercial Complex' which consisted both residential flats and shops. The assessment under section 143(3) was completed originally on 30.03.2001 for A.Y. 1998-99 at Rs.52,55,509/- as against returned income of NIL declared by the assessee. 4. The addition of Rs.52,72,200/- was made on account of working out the closing work in progress after arriving at cost of sale on the property sold during the year. The said assessment was confirmed by the CIT(A). Against the order of the CIT(A), the assessee had filed an appeal before the ITAT. The ITAT vide its order in ITA. No. 334/Hyd/2002 dated 17.09.2002 had set aside the issue of valuation of work in progress to the file of A.O. with certain observation....
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....he assessing authority and cooperate fully in furnishing the information as may be required for properly evaluating the work in progress. With the above background, the present assessment has been framed by the A.O." 6. Considering that A.O. has afforded adequate opportunity to the assessee and assessee expressed its inability to produce books of accounts or any information other than what has been submitted during the earlier proceedings, the Ld. CIT(A) confirmed the working of the A.O. 7. As per the A.O., out of the total area of construction of 97422 sq. ft., the land owners share was 19100 sq. ft. which is roughly 19.6% or 20% of the total area of construction. The A.O. gave the benefit of doubt to the assessee by holding that major part of the addition during the year goes to the area sold and treated 80% of the additions to the area sold and balance 20% to the unsold area i.e., land owners share. In accordance with the direction of the ITAT, the A.O. arrived at the opening work in progress to which, additions made during the year of Rs.36,01,006/- was added. This cost was attributed to the total available saleable area of 75151 sq. ft. (97422 sq. ft. total area - land o....
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....nish either of the plans of the building or the area of apartments and shops in order to analyse which part is having more value or less value, which is one of the contentions raised in the appeal. Not only that when assessee was asked to furnish the area sold and the values the assessee has furnished the following statement :- This statement (table I,II, III was extracted out of the consolidated statement given by the assessee. (un-reconciled area is 13,324 sq.ft.) 10.1 As can be seen from the above, even though the total area supposed to have been sold by the assessee comes to 78,322 sq. ft. in the project, assessee could furnish total area sold only up to 64,998 sq. ft. and the area sold in A.Y. 2003-04 could not be furnished. Thus assessee was unable to furnish the complete details of area sold year-wise in the entire project even at this point of time. 10.2. The main contention raised by the assessee is with reference to the cost of construction. According to the assessee, assessee has constructed part of the premises on its own and later on given the contract to M/s. Easwar Constructions Co. Kolkata vide agreement dated 01.07.1994 and the rates of contract were shown....
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....L account the assessee has spent the following amounts in the respective assessment years : Date Cost of construction as per P & L account. Rs. 31.03.1994 (Assessee) 9,68,743 31.03.1995 (Assessee) 35,24,130 (Contractor) -21,90,150 31.03.1996 (Assessee) - - - (Contractor) 49,26,204 31.03.1997 (Assessee) - -- (Contractor) 55,72,618 31.03.1998 (Assessee) - -- - (Contractor) 35,23,291 10.4. It is admitted that assessee has spent on its own Rs.9,68,743/- up to 31.03.1994 and as per P & L account placed on record for the year ending 31.03.1995, it has spent Rs.35,24,130/-on its own. Thus, an amount of Rs.44,92,873/- was spent by assessee on its own. The area constructed was not spelt at any point of time. It can be for pillars, or it can be for finishing or it can be for any other work except, of course, for finishing works as the nature of material purchased seems to be only cement, iron and steel, sand, bricks as per P & L account. In the year ending 31.03.1995 assessee paid an amount of Rs.21,90,150/- towards payment to contractors. As per the assessment order, assessee got the w....
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....also cannot be relied upon. (This rate for sq. feet is arrived at on the sale proceed shown against the sale of flats and the area sold as per the details furnished by the assessee.) This indicates that assessee is consistently under-reporting the sale price. 10.6. The sale of shop area which assessee contends that has lesser cost of construction also has to be analysed. As per the average price reported against the sale of shops the price in 1997-98 is Rs.699/- per sq. feet, in 1998-99 it is Rs.524/- per sq. feet, in 2000-01 it is Rs.894/- per sq. feet, in 2001-2002 it is Rs.939/- per sq. feet and 2002-2003 it is 898/- per sq. feet. Here also, in the impugned year, the average price of shops sold was at ridiculously low figure of Rs.524/- per sq. feet as against Rs.699/- in the earlier year and above Rs.890/- in later years. This also indicates that even the sale price reported by the assessee on the area of shop sold is not consistent with facts. 10.7. As per the details on record, the opening work in progress was Rs.1,57,43,722/- the cost added during the year was Rs.36,01,006/-. Thus, total cost of the project as on the date was at Rs.1,93,44,728/-. This cost is to be div....