TaxTMI 
TaxTMI 
2021 (7) TMI 1186
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....d as business income and should be treated as income from other sources. 3. The assessee has also raised additional ground, which reads as under: 'For that the impugned order dated 18.6.2020 is bad in law and is "liable to be quashed for the same being passed beyond the period fixed under the statute sub-section (2) of Section 263 of the I.T. Act, 1961." 4. At the outset, ld. CIT DR with regard to additional ground raised by the assessee, submitted that in this case proceedings u/s. 263 of the Act for the assessment in question were getting time barred on 31.3.2020. However, the Govt. of India, Gazette Notification dated 31.3.2020 under the Taxation & Other Laws (Relaxation of Certain provisions) Ordinance, 2020 (No. 2 of 2020) extended the time barring date for such matters till 30.6.2020. In view of above Notification of Govt. of India, the order u/s. 263 is passed by Ld. Pr. CIT and, therefore, the additional ground raised by the assessee does not deserve to accept for adjudication, to which, ld. A.R. had no objection. In view of above, we did not accept the additional ground of appeal of the assessee. 5. The assessee before us is engaged in the real estate....
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.... aspects while completing the assessment. He ought to have converted the case from "limited scrutiny" to "complete scrutiny" as per CBDT's instruction No. 20/2-15 dated 29.12.2015, to ascertain whether non-recognition of revenue by following percentage completion method yield any result which prejudicial to the interests of revenue. The assessee had disclosed Nil income for the year under consideration. But, the A.O. had not inquired/investigated the issue in question from revenue's perspective, which ought to have done by him on the facts of the case discussed above. Such failure on part of the A.O. had made the assessment both erroneous and prejudicial to the interests of revenue. 4. Further, in the P & L. account for the year ending 31.03.2015, you had not recognized any revenue from operation. Only 'other income' i.e. interest received during the year under consideration was credited to P & L account. As such, no expense relating to construction activities should have been debited to the P & L account, but the same could have debited following expenditures incurred towards construction of flats under the head other expenses in the P & L account (Schedul....
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....he time of execution of sale deed. iv) Flat booking advance credited under head "other current liabilities" and furnished the breakup of flat booking. v) When the sale was completed, entire taxes for said project were paid in A.Y. 2016-17. vi) There is no revenue loss to the Department. vi. In Assessment year 2014-15, the A.O. had raised demand and on further appeal, the ld. CIT(A) dropped the demand. Reliance was placed on the following decisions: (i) CIT vs. Hyundai Heavy Industries Co. Ltd., 210 CTR (SC) 178. (ii) CIT vs. Bilahari Investment Pvt. Ltd., 215 CTR (SC) 201. Others income Taxation of other income, which includes interest income is taken care in A.Y. 2016-17 and taxation of the same in A.Y. 2015-16 would amount to double taxation and more tax of Rs. 1,90,282/- has been paid and hence, there is no loss to revenue. 6. None of these submissions impressed the learned Pr. Commissioner of Income Tax. Ld. Pr. CIT observed that in "limited scrutiny", the A.O. is required to restrict the scope of enquiry to the issues identified for the purposes whereas if the escapement of income exceeds Rs. 5....
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....der on its own supervision without engaging any building contractor. During this period, the assessee undertook a project namely; Jamuna Residency a residential complex meant for Tata Steel Ltd. He submitted that the case of the assessee was selected for scrutiny under CASS and notices u/s. 143(2) and 143(1) of the Act were issued and in response thereto, the assessee furnished all details/documents/accounts for verification and same were verified and examined by the A.O. Thereafter, assessment u/s. 143(3) was completed accepting the returned income. He submitted that the assessee company followed the project completion method recognised by Revenue AS-7 since its inception. He submitted that the Pr. CIT has made allegation with respect to Jamuna Residency located at Chandikhole meant for Tata Steel Ltd., residential complex having area 106817 sq.ft. The project Jamuna Residency was completely sold to Tata Steel Ltd., as per agreement dated 18.2.2013 and under this agreement, agreed to purchase all the flats along with its entire area by making payment in a phased manner for sale consideration at Rs. 28,00,00,000/-. However, due to some dispute, no advance was received by the assess....
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....ts in the profit and loss account but shown in the balance sheet as advance from customers and once the assessee is claiming TCS in its return of income, simultaneously, the receipts should be shown in the P & L account for taxation purposes. 12. Ld. counsel further drew our attention towards the order of the Ld. CIT(A), Cuttack dated 28.11.2018 against the said order of the Assessing Officer for assessment year 2015-16 and submitted that the addition made by the A.O. after considering the facts and circumstances of the case, of CIT(A), the addition made by the A.O. had been dismissed and deleted by observing that the appellant sale was completed on the revenue from the project was recognised only in A.Y. 2016-17 as the assessee was following the project completion of method of accounting. Ld. counsel further submitted that as per the proposition rendered by Hon'ble Delhi High Court in the case of CIT vs. DLF Universals Ltd. in ITA No. 159 & 326/2010 order dated 21.12.2016, the assessee is doing only project, which was completed in subsequent assessment year 2016-17 and on completion of project, the assessee has offered to tax on the entire income pertaining to the project a....
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....ately succeeding assessment year 2016-17 and all due taxes etc have been paid thereon, which neutralize the revenue recognition, and that the amount of tax paid on completion of project is on higher side. 16. Ld. counsel for the assessee further submitted that the Ld. PCIT has erred in holding that interest earned on advances received from customers cannot be treated as "business income" and should be treated as "income from other sources" which is completely contrary to the settled position of law inasmuch as the advances due to surplus floating fund in shape of Loan to others have been created out of the advanced money received by the assessee from the prospective buyers i.e. Tata Steel Limited. He submitted that the advances due to surplus floating fund in shape of Loan to others and interest accrued thereon were very only and actually utilized for completion of the projects. The differential amount arising out of interest received and interest paid to loan account has been adjusted in Work-in-progress (WIP), thereby the work in progress constituting of difference amount of interest as loss/profit either reduces or increases the work in progress. He submitted that in this yea....
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....e Ld. CIT(A) by passing the first appellate order approving the revenue recognition method adopted by the assessee i.e. project completion method, then the Pr. CIT is not validly empowered to invoke provisions of section 263 of the Act setting aside the first appellate order, which had been passed by the Ld. CIT(A) after considering the entire facts and circumstances of the case. Ld. Counsel placing reliance on the decision of Hon'ble Karnataka High Court in the case of Coffeeday Global Ltd. vs. Addl. Commissioner of Income Tax and others, 433 ITR 321 (Karn) submitted that res judicata does not apply to the tax proceedings but principle of consistency is always respected by the tax authorities, which has not been done by Pr. CIT while passing the impugned order. Ld. counsel has also submitted that the main issue here hinges around the fact that the project completion method followed by the assessee company is proper and correct or not and reply to the said question in favour of the assessee can easily be gathered by the order of Ld. CIT(A) dated 28.11.2018 (supra) for immediately preceding assessment year 2014-15 in the identical facts and circumstances of the case and, therefo....
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.... of the Ld. CIT(A) till date, therefore, we safely presume that the department has accepted the order of the Ld. CIT(A) for the assessment year 2014-15 without any further dispute and litigation. Further, since the project was completed during immediately succeeding assessment year 2016-17 and the assessee offered to tax the income accrued to it from the said project and also paid all due taxes etc. thereon. Therefore, we are unable to agree with the allegation of Pr. CIT that the orders of the authorities below are erroneous and prejudicial to the interest of the revenue. In our humble understanding, Ld. Pr. CIT is not empowered to invoke revisionary powers under section 263 of the Act in such a situation, where a view has been taken by Ld. CIT(A) in the similar facts and circumstances of the case, which has been accepted by the department without any further dispute or litigation. It has been held by Hon'ble Karnataka High Court in the case of Coffeeday Global Ltd. (supra) and other various land mark judgments of Hon'ble Supreme Court and Hon'ble High Courts that the principle of res judicata does not applicable to tax proceedings and principle of consistency must be ....
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....of such income to meet the interest paid and other expenses of the project, then the work in progress at the end of the year has to be increased and consequently same would be brought forward to the next year which ultimately reduce the amount of profit calculated for the subsequent assessment year and such exercise is revenue neutral because the income would be taxed in the year under consideration raising demand of tax and amount of tax would be raised for that period and consequently the tax liability would be decreased due to increase of brought forward work-in-progress by the same amount in the immediately subsequent year raising a refund in favour of the assessee. Therefore, the entire exercise is revenue neutral which is not allowed in the garb of revisionary powers u/s. 263 of the Act. 25. On this issue, we are in agreement with the contention of Ld. CIT DR that the interest income accrued from funds available with the assessee have to be treated as "income from other sources" and this is a well settled proposition of accounting principles and findings of Ld. Pr. CIT in this regard is correct. In this peculiar situation and in the facts and circumstances of the case, the....