AI Drafter 
TaxTMI 
TaxTMI 
2016 (6) TMI 33
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....he ld. CIT(A) erred in restricting the disallowance made u/s. 40A(2)(b) in respect of services rendered to Kukreja Services P Ltd to Rs. 7,50,000/- as against Rs. 9,30,000/- made in the assessment order." 2. The facts in brief are that the assessee filed its return of income on 26.09.2009 declaring Nil income after claiming deduction u/s 80-IB at Rs. 8,47,81,998/-. The case of the assessee was selected for scrutiny and statutory notices u/s 143(2) and 142(1) were issued and duly served upon the assessee vide its order dated on 30.12.2011. The AO framed the assessment u/s 143(3) of the Act at Rs. 53,65,64,541/- by making various disallowances as incorporated in para 13 of the assessment order. 3. The issue raised in ground no.1 is against the deletion of addition of Rs. 52,71,02,218/- by the CIT(A) on the ground that three projects namely, 'Sai Ashish', 'Hari Kunj' and 'Chembur Heights' were not completed during the year on the basis of project completion method regularly followed by the assessee and accepted by the department in the preceding and succeeding years. 3.1 The ld. AO treated the above three projects as completed during the year on the basis of Occupation Certif....
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....er has been completed and sold while three towers are under different stages of completion. The Id.AO treated the sale of one tower as completion of that part of the project. 3.7 Before coming to any definite conclusion, it is necessary to analyse the reasons given by the Id.AO to hold that the projects namely Sai Ashish, Harikunj Heights and Chembur Heights stood completed during the year under consideration. The main reason for considering Sai Ashish project to be completed is that the sanctioned floors of Wing A,B,C,D & E at 6,6,6,6 & 7 respectively were completed by 2008, whereas the appellant received commencement certificate on 18.02.2010 for construction of aclditionall,2,2,O,2 floors respectively. This led the Id.AO to take a view that the project as per the original plan was completed in 2008 and additional permission of fiats as per the commencement certificate dated 18.022010 should not be treated as part of the original project. As against this, the Id.AR of the appellant submitted statement of facts that the revised plan was only on account of litigation in which the Hon'ble High Court has passed a stay order on the debit of TDR in the restricted zone. The origi....
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....ngs. The structure of the building is stilt plus 7 floors. There are four flats on each floor starting from the first floor. The stilt parking area has been constructed on the inner side of the premises whereas on the outer side i.e. on the road side, there are shops. Most of the shops have been sold, as it is apparent from the fact that they were open, whereas few shops were found closed. There is a small landscaped garden with playing equipments for small children in the inner side of the building. On a spot enquiry, the watchman has stated that tile building Sai Ashish is around 4 to 5 years old and all the flats are occupied and there are two flats on the 8th floor of the C and B wing. Photographs of the site as well as the name plate displayed in each wing have been taken. 3.8 As is apparent from the Inspector's report cited at para 7.4 of the assessment order that Chembur Heights project is supposed to be having 14x2=112 flats. Similarly, Harikunj Heights is supposed to be having 84 flats. On the other hand, the, details submitted by the Id.AR of the appellant in the statement of facts clearly indicates that there are 82, 84 & 60 flats in building No.1,2 & 3 of Harikun....
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.... and the remaining 78 are in the stock. Realization against sales till the year end in respect of this project has been Rs. 22.01 crores against the realization upto 31.03,2012 of Rs. 39.99 crores, Similarly, in Harikunj Project, only 76 flats have been sold and the remaining 150 are in the stock, Realization against sales till the year end in respect of this project has been Rs. 28.35 crores against the realization upto 31.03.2011 of Rs. 38.20 crores. In Chembur Heights Project, only 101 flats have been sold and the remaining 325 are in the stock. Realization against sales till the year end in respect of this project has been Rs. 38.04 against the realization upto 31.03.2011 of Rs. 50.42 crores. All these facts clearly indicate that all the three projects are ongoing during the year under consideration and none is complete. For the sake of argument, if any of the projects is assumed to be complete during the year, the profit in respect of that project only should have been worked out by excluding advance in respect of incomplete projects. Therefore, since it is a case where none of the three projects is completed during the year under consideration, there is no occasion for the Id....
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....,92,916/- respectively in respect of the Sai Ashish Project. Similarly, in Hari Kunj Project the advance received till assessment year 2009-2010 were Rs. 28,34,91,800/-, whereas work in progress was Rs. 13,97,48,362/- as against Rs. 48,99,91,273/- and Rs. 30,34,14,437/- in assessment year 2012-2013 on both these accounts. Similarly in Chembur Heights Project the advance for sale of flats had gone up from Rs. 31,04,10,112/- to Rs. 51,58,45,848/-and cost incurred also increased from Rs. 10,45,34,625/- to 26,08,01,188/- over a period of three years. The ld. Counsel for the assessee on the basis of these facts vehemently submitted that the assessee even after the close of financial year under consideration continued to incur the expenditure on the construction of flats in all these three projects and also received the advances against the sale of flat till 2012-2013. All these facts unequivocally proved that these projects were incomplete and the action of the AO in treating these projects as completed and treating the difference between the advance and the cost of construction as income of the assessee was totally wrong and against the principle of accounting as followed by the assess....
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....er: a. The building namely Chembur Heights is a stilt plus 14 floor building and there are two wings namely A and B in the said building with four flats on each wing. On a spot enquiry, the watchman has stated that the building Chembur Heights is 3 to 4 years old. There is a landscape garden. Photographs of the site as well as the name plate displayed in each wing has been taken. b. The building namely Harikunj is situated near Chembur Heights and it is a stilt plus 14 floor building having stilt area for parking. Building has single wing of 84 flats. Landscape garden is located in the premises. On a spot enquiry, the watchman has stated that the building Harikunj is 4 to 5 years old. There is a landscape garden. Photographs of the site as well as the name plate displayed in each wing has been taken. c. The building namely Sai Ashish has A,B, C, D & E wings. The structure of the building is stilt plus 7 floors. There are four flats on each floor starting from the first floor. The stilt parking area has been constructed in the inner side of the premises whereas in the outerside i.e. on the road side, there are shops. Most of the shops have been sold as it is apparent from t....
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.... Flats unsold CHEMBUR HEIGHTS (1) (2) (4) (5) Building No.1 124 0 101 23 Building No.2 (4 Wings i.e., A,B,C and D) 0 302 302 302 It is apparent from the above table that the sanctioned flats in Sai Ashish project were 199 out of which the construction was completed only in respect of 155 flats and 44 flats were still under construction in the said project. Similarly in respect of Hari Kunj project out of total sanction of 226 flats the construction was completed only in respect of 112 flats and 144 flats were under construction. Similarly in the third project namely, Chembur Heights out of 426 only 124 flats were completed and 302 flats were under construction. The above table also reveals the various flats sold out of the completed buildings and remaining unsold at the year end. The ld. AR also filed before us projectwise and yearwise break up of advance received and work in progress from assessment year 2009-10 to 2012-13 to substantiate the fact that these projects were under construction and not completed as observed by AO. The ld. AR also pointed out that the inspector report pertains to only completed buildings....
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....nstruction was undertaken accordingly. It is only after the end of the litigation and vacation of the stay order the assessee got the occupation certificate on 18.02.2010 for the additional floors. We also find that the possession were given to the buyers of the flats as per the original sanction plan whereas the additional floors were still under construction during the year. The total number of flats as per the original plan were 155 to which 44 flats were added after revised occupation certificate obtained from the BMC. In view of above facts, we do not find any infirmity in the order of CIT(A) and further the case of the assessee is fortified by the various decisions relied and referred by the ld. AR during the course of hearing before us. In the case of Hawala Construction Private Ltd. in ITA No5601/Mum/2009 AY 2005-06 dated 05.08.2011, the Tribunal held that a project is completed when a occupation certificate is received in respect of buildings and revenue authorities are not justified in rejecting the project completion method constantly followed by the assessee which was also sustained by the Bombay High Court by dismissing the appeal of the revenue in ITA No 548 of 2012 v....
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.... concern of the assessee of Rs. 7,50,000/- as against Rs. 9,30,000/- made by AO in assessment order. 5.1 The ld. Counsel at the outset pointed out that the issue involved in this ground has been settled by the decision of ITAT in assessment year 2006-07 in assessee's own case in AY 2007-08 and 2008-09 vide order dated 16.01.2015 in ITA No. 1068/Mum/2010, ITA No. 1736/Mum/2010, ITA No. 5536/Mum/2010, ITA No. 5977/Mum/2010 and ITA No. 6180/Mum/2011 and therefore the issue is fully covered in favour of assessee by the decision of the coordinate bench and hence the ground of the revenue be dismissed by following the same. Per contra, ld. DR appeared to be reasonably agreed with the arguments of the ld. AR. 5.2. We have considered the rival submissions and perused the material on record. We find that the similar issue had arisen during the assessment year 2006- 07, 2007-08 and 2008-09 which was decided in favour of the assessee by the Tribunal vide order dated 16.01.2015. The relevant finding of the Tribunal is reproduced as under: "In view of the consistent findings of this Tribunal in a series of decision and in the absence of any specific finding given by the Assessing Offic....