TaxTMI 
TaxTMI 
2022 (1) TMI 942
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.... as under:- 1] "On the facts and in the circumstances of the case and in law the learned CIT(A) erred in deleting the disallowance of expenses of Rs. 8,00,22,424/- & reducing the same from the closing work-in-progress carried forward to the next AY. 2014-15 without appreciating the fact that the assessee did not satisfy the condition in clause 'e' of section 47(xiii)(b) of l.T.Act, 1961, since the sales/Turn Over/Gross Receipts in the business of the company in the preceding three years exceeded Rupees Sixty Lakhs " 2] "The appellant prays that the order of the learned CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored" 4. Brief facts of the case are that the AO noted that dur....
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....usiness of the company in any of the 3 previous year preceding the previous year in which the conversion took place should not exceed Rs. 60 lakhs" AO further noted that the company, M/s Aachal Housing Pvt. Ltd. has not filed its return of income and the provisions of the Section 47(xiii)(b) remained to be examined in the hands of the Company i.e M/s Aachal Housing Pvt. Ltd. That in view of the above, the Assessing Officer of the Company is being informed accordingly. He held that since, during the year, the expenses in the hands of Company are shown to have been incurred in the hands of the M/s Aachal Housing LLP., the Work-in-progress at the end of the year is reduced to that extent. Hence the closing WIP is worked out as below:- Cl....
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....rogress at Rs. 38,56,25,373/- in part A-P&L [ profit and loss account for the previous year 2012-13]. In the said P&L account, purchase of Rs. 5,15,71,094/-, interest of Rs. 2,55,26,376/-, commission of Rs. 31,52,973/-, salary and wages of Rs. 11,39,6817- has been debited. To conclude, the transactions for the entire period from 1.4.2012 to 31.03.2013 was incorporated in the single Balance sheet and Profit loss account filed with ITR-5 by assessee LLP as mentioned above. b) The company M/s. Achal Housing Pvt, Ltd. was converted into LLP as Achal Housing LLP on 19/03/2013. No return was filed by the Company. The entire business transactions for the whole year was reflected in the return of LLP. As per appellant, this was done becaus....
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....nly be altered if certain expenses incurred by the Company and debited to work- in- progress before its conversion into LLP was found to be bogus or inflated. From perusal of assessment order, it is found that there is no such finding that any of the expenses debited to Work in progress either by Company or the LLP is false or inflated. f) It is quite possible that the AO having jurisdiction of LLP will be different than the AO having jurisdiction over Company and for that reason the AO of LLP in the present assessment order has mentioned that since the company has not filed return and provisions of section 47(xiii)(b) remained to be explained in the hand of the company and hence the AO of the company is being informed accordingly.....
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....ee to change the figure of work in progress of LLP if any adverse finding regarding genuineness of expenses of Company for the period 1.4.2012 to 18.03.2013 or any other period is given by the AO of the Company. The outcome of violation of provisions of section 47(xiii)(b) on conversion from company to LLP, if any, will have no impact on closing work in progress in the hands of the assessee LLP as on 31.03.2013. It can only create a separate tax liability. To change the figure of work in progress, a finding has to be given that certain expenses booked in work in progress was bogus or inflated. Without that, it is not-possible to change the figure of work in progress for any other reasons. In view of above, the disallowance of expen....
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....order of Ld.CIT(A) is full of conjectures and surmises. Despite observing that there should have been two returns of income, one for the period of company and one for the period of LLP and despite also observing that the AO of the company may be different, he has treated the same as procedural and also assumed jurisdiction over the said possible, AO and allowed the appeal. In our considered opinion, non filing of return for proper period and not in appropriate status is not at all a procedural mistake, it is quite substantial mistake. Moreover, Ld.CIT(A) cannot make a hypothetical order depending upon the order of assumed AO for the company. In our considered opinion, on the facts and circumstances of the case matter needs to be remitted to....