TaxTMI 
TaxTMI 
2022 (3) TMI 771
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....on on the books and in the opinion of the Hon'ble High Court, the issue being based on the fact and details furnished by the appellant company before the CIT(A) and the ITAT for its consideration and that ITAT has considered the details-facts and passed the order, the Hon'ble High Court remanded back the issue of cost of construction to the assessing officer for fresh consideration of facts and details. 3. The learned CIT(A) grossly erred in confirming the order of the Assessing officer by not considering the fact that the Assessing officer exceeded his jurisdiction in considering the two other issues which are prior period expenses and interest disallowance on investment made in Anand Printers and Publishers. 4. Without prejudice, the Ld. CIT(A) failed to peruse the facts and details submitted by the appellant in respect of the prior period expenses and that the appellant had claimed the expenses based on the payments made by it in the relevant year, has not been appreciated by him. 5. The Ld. CIT(A) failed to appreciate the fact that the valuation report was for an ongoing project and that the cost of construction was based on the structure comp....
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....ure to the main report does not indicate any expenses either having been incurred not for the business of the assessee or in the nature of personal expenses. It is not the case of the Assessing Officer to carryout determining expenses which should be disallowed under the pretext as for non-business purposes or on account of personal nature. The prior expenses were not claimed by the assessee as expenses incurred for an earlier year. These expenses were for the earlier year but had crystalised to be paid for in the impugned assessment year. The Assessing Officer deemed it fit disallow the same on the basis that the assessee had changed from mercantile system of accounting to cash system of accounting mid-stream. With the magnitude of expenses incurred, the assessee was within the prescribed limit of 5% thereof to provide for it and pay for it as and when the expenditure crystalised. It is not a case of recurring expenses which actually could be accounted for accurately in view of the various factors involved when the trips therein having been performed later or a claim having been lodged later. The expenses have been controlled on the basis of which it is provided for and therefore ....
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....see and this was not subject matter of appeal before the High Court of Karnataka in ITA No. 1048/Bang/2008 dated 28.8.2013. Being so, the AO is disentitled to adjudicate this ground in the fresh assessment passed consequent to the High Court judgment cited supra. He also drew our attention to the High Court judgment para 5 to 8 which is as follows:- "5. The appeal was admitted on 22/10/2009 to consider the following substantial question of law: Whether the finding of the Tribunal in deleting the addition made by the Assessing Officer as unexplained investment in respect of previous year expenses, differences in cost of building and interest is perverse and arbitrary being contrary to law and material on record? 6. We have heard Mr. Raviraj, for the revenue and Mr. Parthasarathi for the assessee. 7 The short question that arises for our consideration is: Whether the assessee has explained the investment made and the expenses incurred in case of construction of building and whether the interest has to be disallowed or not? 8. So far as this point is concerned, admittedly it is a question of fact. The question whether assessee has ....
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....the assessee. Being so, we do not find infirmity in the method of accounting followed by the assessee and it cannot be disallowed on the reason of prior period expenses incurred by the assessee. Accordingly, we allow this ground taken by the assessee. 6. Ground No. 5 is with regard to addition of Rs. 18,19,322/- and Rs. 91,51,796/- towards unexplained investment in building including interest on borrowings. It was noted by that the depreciation schedule of the assessee indicated the investment in buildings at Rs. 8,64,28,421/- as against which the approved valuer of assessee valued the same properties at Rs. 8,82,47,753/- as follows:- As per Depreciation Chart As per Valuers report Building at Varur Rs. 7,31,79,709 Rs. 7,35,94,450 Add: Mistake in taking Shed Cost Rs. 10,78,327 Building at Varur(APP) Rs. 10,00,000 Rs. 10,00,000 Building at Chitradurga Rs. 8,48,712 Rs. 9,66,566 Building at Chitradurga(APP) Rs. 24,00,000 Rs. 26,08,410 Total Rs. 8,64,28,421 Rs. 8,82,47,753 7. The cost shown in depreciation schedule also includes Rs. 91,51,796/- of interest on loan capitalized. The AO in the original asse....
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.... books of accounts is met out of undisclosed sources and added back to the total income of the assessee. Penalty proceedings under section 271(1)(c) of the Act, are initiated accordingly for furnishing inaccurate particulars of income." 9. In this regard, the assessee submitted that bills and vouchers were submitted by the contractor in the subsequent year and after verification they were accounted for in the subsequent year only. It is also stated that Rs. 37,70,893/- of amount payable to suppliers were shown in the balance sheet under the head loan and advances. The AO has not pointed out any defect in the accounts maintained by the assessee. In fact, the submitted that he has furnished details of bills in annexure-1 & 2 but actually they are not enclosed to the submission. A few case laws were relied on by the assessee. 10. The CIT(Appeals) found that the assessee has not contested the cost estimated by the approved valuer who has valued the cost at Rs. 8,82,47,753/-. The cost shown in the depreciation schedule is only Rs. 8,64,28,421/-. The difference comes to Rs. 18,19,322/-. In fact, there is a shed constructed at Varur, cost of which is not shown in the depreciation sc....