AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 1741
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....cer required the assessee to explain the same. The record shows that the assessee as per reply dated 11/12/2013, which has been extracted by the Assessing Officer in his order, had offered the following justification: The development expenses of Rs. 6267210/- debited in P&L account consist the provision for development made on are sold during the year @ Rs. 500/- per sq. yards in the scheme of assessee naming "Sachivalaya Enclave". The actual development expenses incurred during the year are being debited in the a/c naming "Provision for development expenses". The copy of such ledger a/c consisting the detail of nature of expenses incurred during the year is enclosed herewith. As regarding justification of provisions for development expenses we submit that as per the norms of JDA for Private Township, the developer has to incur several expenses on the development of the scheme such as expenses on internal roads, electrification, water supply and development of public parks and facilities etc. The cost of these expenses is included in the sale price of the plot and separate charges against the development expenses to be incurred by the developer is not being charged in addi....
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....Reliance was also placed in the decisions of different Hon'ble High Courts namely Udaipur Mineral Development Syndicate (P) Ltd. Vs. Dy.CIT (2003) 181 CTR 251 (Raj); CIT Vs Development Trust (P) Ltd. (1991) 99 CTR (All) 247 and Welding Rods Mfg. Co. Vs. CIT (1997) 137 CTR (Guj) 569. 3.1 Considering the submissions, the ld. CIT(A) granted relief holding as under:- "3.1.3 I have duly considered assessee's submission and carefully gone through assessment order. I have also taken a note of factual matrix of the case as well as applicable case laws relied upon. On perusal of assessment order, it is seen that AO at page 2 to 4 of the assessment order has held that during the year a sum of Rs. 62,67,210/- had been debited to the P&L account under the 'Development Expenses' when asked to furnish the complete details and evidences in support of the incurring of such expenditure, the assessee revealed that the said expenditure had not been actually incurred but was debited to the P&L account in the form of provisions for such expenses to be incurred in future. Finally, AO made addition of Rs. 62,67,210/- in total income of the assessee by disallowing 'Provision made for d....
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....h Court in the case of Udaipur Mineral Development Syndicate (P) Ltd. vs. Dy. CIT (2003) 1Q1 CTR (Raj) 251: (2003) 261 ITR 706 (Raj) had an occasion to consider the accrual of liability. It is further submitted that The assessee has shown fulfillment of three elements (i) Reasonableness of the provision (ii) Honesty of Provisioning of expenses (iii) A fair basis/estimation of expenses for making provisions. It is also a fact that the AO has not brought any material to show that the provision made by the assessee is excessive. Further, AO has examined the books of account but books of account were not rejected by him. It is submitted that the assessee has filed complete details of actual expenses and the AO has verified the same with vouchers and no deficiency has been pointed out by him. The provision for the development expenses were made at the same rate which was applied by the assessee in previous year. Therefore, in view of facts and circumstances of the case as well as respectfully following above case laws, addition of Rs. 62,67,210/- made by the AO in total income of the assessee by disallowing 'Provision made for development expenses is hereby deleted. As....
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....hatader scheme and the private Khatedar scheme is governed as per rules and regulations of Rajasthan Land Revenue Act and JDA. The assessee purchases the agriculture land and thereafter it applies to JDA for conversion of land for residential and commercial purpose as per the provision of Rajasthan Land Revenue Act and Jaipur Development Authority. The assessee divides the land in plots of various sizes and carries development activities like construction of road, lying of water supply lines, electricity facility wiring, construction of overhead tanks etc. As per the norms of JDA for Private Township, the developer has to incur several expenses on the development of the scheme such as expenses on internal roads, electrification, water supply and development of public parks and facilities etc. The cost of these expenses is included in the sale price of the plot and separate charges against the development expenses to be incurred by the developer is not being charged in addition to the sale price of the plot taken by the developer. Thus the development work has to be carried out as per the norms and specification of the JDA. The development expenses are par....