TaxTMI 
TaxTMI 
2016 (4) TMI 1049
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....th the main object of builders and promoters in Asst Year 1998-99. From Asst Year 1999-2000, the business of real estate promoters and developers was started and the assessee was following 'completed contract method'. The assessee had declared sale of flat and plots of land in its profit and loss account and profit derived thereon as income from business. During the course of assessment proceedings, the Learned AO called for the copy of the sale deed in respect of sale of one flat for Rs. 4 lakhs during the asst year under appeal and the same was not filed by the assessee. Accordingly, the Learned AO accepted the sale consideration to be correct and brought the entire sale consideration to tax under the head 'capital gains' without giving any deduction towards cost of acquisition as according to Learned AO, the assessee was only engaged in the business of share trading and real estate promoter & developers activity was not carried out by the assessee and hence the resultant gain needs to be brought to tax only under the head capital gains. The assessee pleaded that it started construction of a housing complex named "Neel Kamal Apartment'. The assessee was selling flats as well as p....
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....sale deeds against which the assessee filed only the IGR of two sales. According to Learned AO, the assessee had not filed the details about the date of acquisition of the plots and the Learned AO accordingly doubted the genuineness of sale of plot and estimated the fair market value of the plot at Rs. 5,00,000/- and added the same as capital gains. According to Learned AO, the second plot wsa sold to Sri Bishnu Sharma for Rs. 1,75,000/- comprising of area of 4 kathas which was purchased in 1999 for Rs. 1,15,000/-. According to Learned AO, the location of the plot is a very prime area and he found that the fair market value of the plot of land sold by one M/s Cradle Computers Pvt Ltd was Rs. 5,80,000/- per katha and accordingly he estimated the sale consideration as Rs. 21,50,000/-. According to Learned AO, the plot sold is only a capital asset and gave deduction towards indexed cost of acquisition and arrived at the capital gain of Rs. 20,09,224/- as against business income of Rs. 1,75,000/- offered by the assessee. It was argued that the plots of land was the trading asset of the assessee and accordingly the assessee had offered the entire sale proceeds as business income. ....
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....respect of the value of those two plots determined by stamp valuation authority for the purpose of registration and apply the same value u/s 50C of the Act to determine the Capital Gain on sale of the plots. Aggrieved, the assessee is in appeal before us on the following grounds:- 1. a) FOR that on the facts and in the circumstances of the case the Ld. CIT(Appeals) erred in upholding the order of the AO. that the profit arising from sale of one Flat and two plots of land was income liable to tax as Capital Gains. b) FOR that the Ld. CIT(A)'s understanding and appreciation of the accounts is erroneous. The accounts during the year were maintained in the same manner as they were regularly maintained in the past. The appellant had been accepted as Real Estate Promoter & Developer in the past and taking of any contradictory view in this year was wrong & unjustified. 2. FOR that the appellant's business being of Real Estate Promoter and Developer and not an investor in Real Estate, the Ld. AO. erred in holding that the appellant was an investor and the profit arising from sale of the Flat and the plots of land was capital gains and not business inco....
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....ot reiterated for the sake of brevity. We find from the paper book filed by the assessee, that the assessee has been engaged in the business of construction, real estate developers and promoters. We also find from the certificate of enlistment given by Siliguri Municipal Corporation dated 12.11.2005 confirming that the assessee is engaged in the business of promoter and developer for the financial year ending 31.3.2006 while renewing the status of the assessee as a promoter and developer. We also find that the assessee has been engaging in the construction of a housing complex wherein both flats as well as plots were sold by the assessee and the profits derived on sale thereon were duly offered to tax as income from business in the earlier years and accepted by the revenue as such. We find that in view of completed contract method of accounting followed by the assessee, the closing stock of work in progress in respect of flats and plots had become Rs Nil as on 31.3.2005 and accordingly the assessee had offered the entire sale consideration of flats and plots as income from business. We also find that the Learned CIT(A) had not disregarded the status of the assessee being a real est....
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.... this appeal is as to whether an addition of Rs. 4,60,858/- on account of disallowance of expenditure for purchase of construction materials could be made in the facts and circumstances of the case. 3.1. The Learned AO observed that the assessee had claimed an expenditure on account of purchase of materials which were used for making boundary walls. According to him, it is not understood for which property, the boundary walls were constructed and hence he disallowed the whole of such expenses of Rs. 4,60,858/- in the assessment. Before the Learned CIT(A), the assessee explained that the expenditure of Rs. 4,60,858/- was incurred on construction of boundary wall and pavement of approach road for the plots of land sold during the relevant year. The entire details of expenditure incurred together with copies of bills and vouchers were filed before the Learned CIT(A). However, the Learned CIT(A) observed that the project was completed two years back and except some flats, all other flats were sold and there was no closing stock of flats lying in the books of the assessee. He further observed that even if any such work as claimed by the assessee was undertaken, the same cannot be att....
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....nditure of Rs. 1,49,140/- was incurred on labour charges for completion of walls and produced the entire muster roll containing the signatures (thumb impressions) of various labourers. The Learned CIT(A) observed that on bare eye examination of the labour payment muster rolls, it is clear that all the vouchers were signed by one person. Accordingly, he upheld the addition made by the Learned AO. Aggrieved, the assessee is in appeal before us on the following ground:- 8. FOR that the Ld. CIT(Appeals) erred in upholding the disallowance of the expenditure of Rs. 1, ,49, 1401- being labour charges incurred for the purpose of business (for completing the boundary wall) on irrelevant considerations. 4.2. The Learned AR drew our attention to pages 114-146 of the Paper Book containing the ledger account of labour charges together with the muster roll of various labourers evidencing the payment thereon and argued that the same are genuine business expenditure incurred by the assessee. In response to this, the Learned DR vehemently supported the orders of the lower authorities. 4.3. We have heard the rival submissions and perused the materials available on record. We have alr....