TaxTMI 
TaxTMI 
2013 (9) TMI 1121
X X X X Extracts X X X X
X X X X Extracts X X X X
....ential layouts and sale of sites. For Assessment Year 2006-07, the assessee filed its return of income on 31.10.2006 declaring income of Rs. 37,34,014. The return was processed under section 143(1) of the Act and the case was taken up for scrutiny. Subsequently, the assessee filed a revised return of income on 11.3.2008 declaring total income of Rs. 2,77,39,713. In the said revised return the additional income increased by Rs. 2,40,05,699 on account of disallowance under section 40(a)(ia) of the Act to the extent of Rs. 2,58,70,699 and claim for allowing of expenditure of Rs. 18,65,000 pertaining to Assessment Year 2005-06 which was disallowed under section 40(a)(ia) of the Act in that year. In the course of assessment proceedings, the assessee vide letter dt.24.12.2008 filed a revised computation of income of Rs. 37,34,014. The assessment was completed by an order under section 143(3) of the Act dt.31.12.2008 wherein the income was accepted at Rs. 37,34,014. 2.2 Subsequently, the CIT-I, Bangalore on examination of the order of assessment for Assessment Year 2006-07 dt.31.12.2008 and the records of assessment, for Assessment Year 2006-07 proposed to revise the said order of assess....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to be erroneous and prejudicial to the interest of the revenue is set aside and the Assessing Officer is directed to make a fresh assessment in the light of my observations above, after giving the assessee a reasonable opportunity of being heard." ITA No.620/Bang/2011 (Assessee's appeal against order under section 263 of the Act dt.21.3.2011 for Assessment Year 2006-07) 3. Aggrieved by the order under section 263 of the Act passed by the CIT-I, Bangalore dt.21.3.2011, the assessee has preferred an appeal before this Tribunal raising the following grounds :- " 1. The order passed by the learned CIT u/s.263 of the Act in so far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case. 2. The learned CIT failed to appreciate that there was no error much less prejudicial to the interest of the revenue in the order passed by the learned Assessing Officer warranting revision u/s.263 of the Act and consequently, the order by the learned CIT is opposed to law and facts of the appellant's case and requires to be cancelled. 3. The learned CIT failed to appreciate that the various issues pointed out in the not....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the main developmental activities like roads, drainage, electricity etc., needs to be carried out on the entire site. Further, in the line of business of the assessee, the customers will select the plots as per their choice and the plots which are in demand will be sold out first. These plots need not be on any part of the project but will spread across the project. The developmental charges are also mainly for the infrastructural facilities like roads etc and expenditure on individual plots is minimal. Therefore, after duly considering the above facts, it is to be concluded that the developmental charges needs to be proportionately distributed for sites sold and sites unsold for arriving at the closing work in progress. The same is worked as under : Total area developed during the year 3,61,600 Sq. ft. Total developmental charges incurred. Rs. 4,12,60,000 Rate per sq. ft. incurred. 4,12,60,000 / 3,61,000 = Rs. 114.10 Per Sq. Ft. Area of unsold sites is 2,21,200 Sq. ft. Developmental charges relating to unsold sites to be taken as closing work in progress 2,21,200 x 114.10 = Rs. 2,52,38,920 Land cost of unsold sites Total Cost / Total land 85,55,060 / 3,84,000 x 2,21,20....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... during which assessments which were completed under section 143(3) subsequent to the impugned assessment year under appeal which returned income was accepted and thus the impugned addition for the assessment year under appeal requires to be deleted in full. 6. Without prejudice to the right to seek waiver before the Hon'ble CCIT, the appellant denies himself liable to be charged to interest under section 234B and 234C of the Act, which requires to be cancelled under the facts and in the circumstances of the appellant's case. 7. Without prejudice the rate of interest under section 234B levied is also not discernable from the orders and both the rate and period are prima facie not in accordance with law. The said levy is contrary to the reasoning of the jurisdictional High Court in the case of T.P. Indira Kumar in 29 DTR 311." 6. The assessee had requested for and was allowed clubbing of both the appeals for Assessment Year 2006-07 i.e. ITA No.620/Bang/2011 (Assessee's appeal against order under section 263 of the Act dt.21.3.2011 for Assessment Year 2006-07) and the appeal in ITA No.48/Bang/2013 - Assessee's appeal against order of CIT(Appeals) - I, Bangalore dt.17....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orised Representative contended that during the assessment proceedings, the assessee had replied to the queries raised by the Assessing Officer and filed a detailed reply which is at pages 7 to 10 of the assessee's paper book compilation. This submission inter alia also contained the details of the quantification of the closing work-inprogress as on 31.3.2006 at Rs. 1,09,29,625 as being out of the cost of land area unsold - viz.2,21,200 sq. ft. @ Rs. 22.27 per sq. ft. i.e. Rs. 49,26,124 and developmental charges incurred and in progress during this year amounting to Rs. 60,03,501. It was submitted by the learned Authorised Representative that the Assessing Officer did not dispute the value of the closing work-in-progress at Rs. 1,09,35,419 as declared by the assessee. The learned Authorised Representative further submitted that merely because the order of assessment does not specify the reasons for accepting the value of closing work - in - progress, that in itself does not give any scope for revision of the order of assessment. Since the facts of the matter was before the Assessing Officer, had the Assessing Officer disputed the quantification and details of closing work-in-pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ancellation of the order under section 263 of the Act dt.21.3.2011. 9.2 Per contra, the learned Departmental Representative supported the impugned order under section 263 of the CIT dt.21.3.2011 and submitted that it is in order since the Assessing Officer in the original order of assessment for Assessment Year 2006-07 dt.31.12.2008 had not brought out anything in the order in regard to the examination / verification of the calculation of closing work-in-progress for the relevant period. In view of this, the learned Departmental Representative prayed that the order passed under section 263 of the Act by the CIT on 21.3.2011 be upheld. 9.3.1 We have heard the rival submissions and perused and carefully considered the material on record. the records of assessment for Assessment Year 2006-07 were called for and were placed before us for perusal. We have perused the records of assessment and the order sheet notings for Assessment Year 2006-07 as placed before us. We find that the Assessing Officer in the course of assessment proceedings has called for various details by Questionnaire I along with notice under section 142(1) of the Act dt.11.9.2008 and additional of details vide Quest....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on record at pages 33 & 34 of the assessee's paper book, it is seen that for the next year i.e. Assessment Year 2007-08, the Assessing Officer has accepted the figure of work-in-progress as reported by the assessee and accepted the income returned while concluding the assessment by order under section 143(3) of the Act dt.6.5.2009. This, in our opinion, gives credence to and fortifies the contention of the assessee that the Assessing Officer has accepted the figure of closing work-in-progress at Rs. 1,09,29,625 for Assessment Year 2006-07 only after examination of the same which implies application of mind in the matter. 9.3.4 Further, as regards the merits of the matter, we are of the view that, as demonstrated by the learned Authorised Representative, if the value of closing work-in-progress is adopted at Rs. 3,01,65,044, it would lead to absolutely high net profit margins of 31.8% in this line of business as against 8.03% of profit declared by the assessee. In the case on hand, the assessee is maintaining regular books of accounts and it is seen that there is no adverseinference drawn or finding rendered by the Assessing Officer in respect of the same. It is imperative that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t is clear from the facts on record that in the order of assessment passed under section 143(3) of the Act on 30.12.2008 both the conditions precedent required for assumption of jurisdiction by the CIT and for invoking the provisions of section 263 of the Act are not present. 9.3.7 The settled position in law as laid down and held by the Hon'ble Apex Court in the case of CIT V Max India Ltd. (295 ITR 282) is that " .... When the Assessing Officer adopts one of the two courses permissible in law and it has resulted in loss of revenue or where two views are possible and the Assessing Officer has taken a view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interest of Revenue, unless the view taken by the Assessing Officer is unsustainable in law. " In the case on hand, we find from the facts on record, the Assessing Officer after examining the assessee's submission on closing work-in-progress has accepted the explanation of the assessee in regard to the figure / valuation of work-in-progress. Thus, we are of the view that the order of the Assessing Officer on this issue cannot be considered as being both erroneous and pre....