TaxTMI 
TaxTMI 
2019 (8) TMI 234
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.... on MCS and NSE. It filed its return of income on 16.08.2012 declaring total income of Rs. 35,61,030/-. During the course of assessment proceedings, the assessee company filed written reply on 24.11.2014 stating that business loss of Futures and Options was not claimed in the original return. Therefore, the revised computation of income reducing the taxable income from 35,61,034/- to 18,04,306/- was filed. The assessee company was required to show cause as to how the loss of Futures & Options by way of filing revised computation is allowable. In compliance thereto the AR of the assessee company repeated the same reply as filed on 24.11.2014. The Assessing Officer referred to the decision of Hon'ble Supreme Court in the case of Goetze India Ltd. Vs. CIT [284 ITR 223] and held that the deduction could not be made without a valid revised return. Since in the instant case the return has not been revised within the meaning of section 139 (5) of the IT Act, 1961 therefore, he rejected the claim of the assessee company. 4. In appeal the Ld. CIT(A) allowed the claim of the assessee by observing as under :- "5. The Ground No. 1 is general in nature. The Ground No. 2, I ....
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....39 (5) and, therefore, following the decision of Hon'ble Supreme Court in the case of Goetz India Limited (supra), he rejected the claim. We find the Ld. CIT(A) following the decision of Hon'ble Supreme Court in the same case allowed the loss claimed by the assessee to be set off against the business profit. We do not find any infirmity in the order of the Ld. CIT(A) in allowing the claim of the assessee on account of loss of future and option by filing a revised computation during the assessment proceedings instead of filing a revised return of income. The Hon'ble Bombay High Court in the case of CIT Vs. Pruthvi Brokers and Shareholders Pvt. Ltd. reported in 349 ITR 336 has held that the appellate authorities have power to consider a claim not made in the return of income. While doing so, the Hon'ble High court has relied on various decisions including the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT reported in 284 ITR 323 and the decision of Hon'ble Delhi High Court in the case of CIT Vs. Jai Parabolic Springs Ltd. (2008) reported in 306 ITR 42. It has been held by the Hon'ble Delhi High Court in the case of Jai Parabolic Springs Ltd. (supra) that....
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....ar party to whom this amount is payable. He, therefore, asked the assessee to produce the bills for purchase of material. In compliance thereto, the assessee company filed bills in the name of Shiv Stone Crushing Company, Shiv Stone Company, Shiv Building Material Centre, Minlus Hi-Tech Builders, Aggarwal and Company, Tech Solutions, Vishnu Timber and Plywood company, A. K. Electrical Works and Narayan Furniture. 10. The Assessing Office on perusal of the bills noted that the bills have been prepared just to create documentary evidence. He observed a particular feature that is noticeable is numbering of these bills. Numbering on these bills has been stamped separately just to show that the bills are actual. He, therefore, issued notices u/s 133(6) to these parties. In most of the cases notices were received back with remarks "no such party exists". The notices were received back in the case of Shiv Store Company, Narayan Furniture, A. K. Electrical Works and Aggarwal and Company. In 3 cases, replies were received from the parties stating that they didn't know any company namely GGC Construction and stated that their name and addresses has been copied just to create docume....
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..../s 154/155 highlighting the error made in the order of assessment by wrongly mentioning the addition of Rs. 4,83,89,009/-instead of Rs. 4,33,89,009/-. A typographical error of 8 was made instead of 3 in recording the figures in the order of assessment. Thus the whole issue in the ground of appeal relates to addition of Rs. 4,33,89,009/- as against Rs. 4,83,89,009/-. The mistake apparent from record was required to be rectified but it seems no rectification order has been passed. I find that the AO did not give any calculation for arriving at the figure of 4,83,89,009/- while at various places he referred to the figure of Rs. 4,33,89,009;-. Thus the addition of Rs. 50,00,000/-is frivolous and required to be deleted at the outset due to typographical errors. After going through the assessment order, I find that the whole discussion made by the AO for making this huge addition of Rs. 4,33,89,009/- (wrongly mentioned as Rs. 4,83,89,009/-) was about not finding confirmation from the creditors and accordingly he made the additions u/s 41 of the IT Act by referring to the creditors of Rs. 5,83,86,165/- out of which sundry creditors of Rs. 4,33,89,009/- were expenses on a....
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....eement between the owners of J-174 Saket New Delhi and assessee. The agreement to build this property was made on 06.05.2010 with Shri. Ram Kishan Singh and after the disputes between these parties, later on settlement agreement was signed by the assessee with Shri. Raghuvinder Singh Director of Asra Buildtech Pvt. Ltd. This property was purchased by the assessee from one Shri. Ram Kishan Singh by registered sale deed dated 17.10.2011 after the collaboration agreement but later on due to disputes assessee has agreement for settlement agreement before the Hon'ble Delhi High Court. The assessee company has paid Rs. 2 crore for buying this property and incurred huge expenditure in construction as depicted in WIP chart filed before the AO and also before me from AY 2009-10 to 2013-14. From perusal of these charts, it can be easily be seen that the expenditure incurred for purchase of the property and construction cost have been separately depicted. The construction cost is only claimed by the assessee against the property sold during that year while the remaining cost of construction is declared in the WIP. The property J-174 was purchased in FY 2010-11 by incurring purcha....
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....in FY 2009-10 and after incurring cost of construction in FY 2009-10 and 2010-11 as on 31.03.2011 amounted to Rs. 1,56,96,614/- which is shown as opening WIP in FY 2011-12. Since this property was totally sold, the closing WIP is NIL and cost of construction incurred during this year of Rs. 1,33,40,890/- was claimed against the sale of this property. Likewise, the third property i.e A-6/18, Vasant Vihar was continuing from earlier years and closing WIP as on 2009-10 was declared of Rs. 1,31,56,093/-. Since this property was partly sold in FY 2010-11 closing WIP was declared at Rs. 48,93,327/-as on 31.03.2011 which is continued in the year in question and cost of construction incurred of Rs. 1,66,39,900/- was claimed against the sale of this property. This shows that the AO though accepted the books of accounts of earlier years, and GP on sale of those properties in earlier years, yet he is denying the expenses incurred during the year. The AO has failed to understand the book results declared from year to year and accepted by him, the whole of the expenditure incurred cannot be disallowed merely because of dispute with owner of J-174. The AO further failed to look....
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..... After selling the remaining floors, it earns profit or / loss. The cost of construction is borne by the assessee company and till the floor is handed over and sold the same is kept under work in progress because of non completion of construction. This method is being followed from several years i.e. since assessment year 2006-07. Referring to paper book pages 84 to 91 he submitted that one of the agreement called as collaboration agreement was made between the owners of J-174, Saket, New Delhi on 6th May 2010. As per terms and conditions the owners have agreed to deliver the ownership transfer rights of entire third floor along with one servant quarter with common toilet on top terrace and two car parking in the stilt area in consideration of construction of a building by the assessee company. The assessee company was entitled to sell the third floor etc. on its own to subsequent buyer. The assessee company was asked to bear the full cost of construction and to pay Rs. 10 lacs non refundable and contractual amount of Rs. 501acs and to construct entire basement, entire ground floor, stilt, entire 1st, 2nd and 3rd floor as per Annexure enclosed. 15.1 Referring to pages 93 of the....
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....the accounts and the balances of the parties relating to building material which were written off now on 31/01/2019 after 3 years of final settlement. 15.3 He submitted that assessing officer has neither raised any query during the assessment proceedings nor informed about the enquiry made by him. The AR however understood the intention of the AO and so has filed detailed reply explaining on the revised claimed computation for claiming loss to be set off against business income, note on construction business and outstanding sundry creditors explaining disputes with owners of J-174 and sundry creditors to whom nothing was paid and also retracted on the surrender made by presuming static creditors whose outstanding balance was already cleared and some of them have already been written off in AY 2015-16 along with various charts and documents, orders of High Court etc. 15.4 He submitted that AO did not refer to all these documents and made the disallowance / additions of all the expenditure and an addition of Rs. 4,83,89,009/- has been made. The AO refers to various enquires made by him and pasted in the assessment order various bills and hurriedly made the addition of Rs. 4,83,....
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....at whole of the expenditure was disallowed merely because of denial of some of the sundry creditors because of disputes with owners of J-174. The AO did not look into the disputes which were settled upto Delhi Court. The CIT(A) has called the details during the course of appellate proceedings of payments made in subsequent years relating to sundry creditors and it was explained that almost all the creditors except J-174 were cleared except few outstanding which were mainly relating to J-174. 15.8 He submitted that even these creditors were written off after the period of 3 years after the final settlement on 29/01/2016 and the entries were made on 31/01/2019 of sundry creditors. The CIT(A) has noticed all these accounts and thereafter deleted the addition. He accordingly submitted that the ground of the revenue is also not tenable as the AO before filing the appeal has not examined his own assessment record and the relevant evidence placed before him. In fact during the course of assessment proceedings as evident from the order sheet, he has not raised any query or provided any material to counter by the assessee. Such evidence relied upon by the AO for making addition/ disal....
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.... same as bogus outstanding. We find the Ld. Counsel for the assessee demonstrated before us that the bills and vouchers, which were referred to by the Assessing Officer, relate to the property relating to J-174 only. He has also filed the relevant documents to show that there was some dispute relating to the said property / project and the matter was ultimately travelled up to the Hon'ble Delhi High Court where it was settled. We find creditors except the creditors relating to property bearing No. J-174 were cleared subsequently. Even the creditors relating to property J-174 were written off after the period of 3 years after the final settlement on 29.01.2016. While we cannot accept the order of the CIT(A) in toto deleting the entire addition, however, from the various details furnished by the assessee we find the expenditure claimed by the assessee as work in progress in respect of a project J-174 is only Rs. 52,85,490/-. We further find the assessee in the subsequent years has also written off this amount alongwith other outstanding creditors. Under these circumstances we are of the considered opinion that out of the total disallowance of Rs. 4,33,89,009/- only the amount of Rs. ....
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....sing Officer accordingly made addition of the same to the total income of the assessee u/s.41 (1) of the IT Act, 1961. He however, has not discussed anything about the subsequent letters of the assessee retracting from the surrender. 22. In appeal the Ld. CIT(A) deleted addition by observing as under :- 7. "Ground No. 4, the AO has made the addition of Rs. 70,79,504/- by referring to earlier letter surrendering the income, but has ignored the subsequent submissions filed before him. By this submission, assessee has not only retracted from the surrender but also filed detailed explanation that creditors were not static as some of the creditors in subsequent period were cleared/squared up/adjusted or written off. List of sundry creditors was filed in which no such creditor was continued during FY 2014- 15. A copy of the letter dated 13.03.2015 duly certified by the AO in which the list of sundry creditors was filed. And before me a separate list of these sundry creditors of Rs. 70,79,504/- was filed showing that out of these creditors to the tune of Rs. 16,62,575/- were already written off and assessee had declared the same as income in FY 2014-15 and creditors t....