TaxTMI 
TaxTMI 
2023 (4) TMI 225
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....come Tax Act, 1961 of Rs.4,54,86,974/- 2. That the Ld.CIT(Appeals) has erred in law and on facts in deleing other alternative addition made by the AO of Rs.1,77,54,552/- 3. That the Ld.CIT(Appeals) has erred in law and on facts in deleting other alternative addition made by the AO of Rs.4,51,16,680/- 4. that the Ld.CIT(Appeals) has erred in law and on facts in allowing the adjustment of relief granted by the CIT(A) of Rs.18,04,810/- 3. The first issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of deduction under section 80-IB(10) of the Act for Rs. 4,54,86,974/- only. 4. The facts in brief are that the assessee is a private company and engaged in the business of real estate developer and builder. During the year under consideration, the assessee was having five different housing projects. The assessee with respect to one project namely "Vedika E-Series" claimed that its profit is eligible for deduction under section 80IB(10) of the Act. As such, the assessee claimed deduction of Rs. 4,54,86,974/- being 100% of profit derived from such eligible project. The assessee submitted that the project "Vedika E-Series"....
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....name M/s Vedika e series on 8080 sq mtr of land out of the total area admeasuring 32942 Sq. Meters which was allotted plot no. 89 under the town planning scheme approved by GUDA dated 6th of February 2008. Thus, according to the assessee the 1st approval was granted by GUDA dated 6 February 2008 for the housing project which was completed with the BU permission dated 30 March 2012 which is well within the time prescribed under the provisions of law. Thus, it was contended by the assessee that its project is eligible for deduction under the provisions of section 80 IB(10) of the Act. 7. The learned CIT-A after considering the assessment order and submission of the assessee observed that the right in the property was purchased initially by Shri Paras Pandit proprietor of M/s Sheetal Developer wherein the plots were developed and sold. The transaction of developing plots by Shri Paras Pandit proprietor of M/s Sheetal Developer and the development of the housing project are different and independent to each other. Even, the AO in his remand report has admitted that the 1st approval was granted by GUDA dated 6th February 2008 and the BU permission was obtained dated 30 March 2012 whi....
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.... it is revealed that such permission was given for the construction of the office premises and it has nothing to do with the housing project of the assessee. Accordingly, no credence can be given to such permission as given by Panchayat Kudasan in the context of the housing project in dispute. 12.1 At this juncture, it is also important to note that Shri Paras Pandit proprietor of M/s Sheetal Developer has already taken permission from the GUDA in the financial year 2004-05 while developing the plots on the same piece of land. Maybe for that reason, the GUDA has also written the revised approval in the letter dated 6 February 2008 as on earlier occasion, the permission for the development of the plots was granted on the same piece of land. Be that as it may be, GUDA vide letter dated 1 May 2017 has categorically stated that the 1st approval for the housing project was granted as on 6th February 2008. The relevant contents of the letter read as under: Subject:Regarding information of Final Plot No.89, Original Plot No.89 of Town Planning Scheme No.03 (Kobra-Kudasan) of Revenue Survey No.529/A/Paiki of Mouje Kudasan. Ref: Letter No.CIT(A)-8/Misc./2017-18/55 dated....
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....eas in the Bombay High Court decision in the case of Simple Food Products (P.) Ltd. (supra), the subject matter of deduction under Section 80IB of the Act. However, the ratio of both the decisions is that where the deduction is granted for an initial assessment year, the same cannot be rejected for the subsequent assessment years unless the relief for the initial year has withdrawn.-3.We may quote the relevant observations made by the Bombay High Court in Simple Food Products (supra). "According to us. the entire issue is no longer res-Integra. The impugned order of the Tribunal has. after recording that the appellant Assessee relies upon the decision of this Court in Paul Brothers (supra) has not dealt with the same. It gives no finding as to why and in what manner it would not apply to the present facts. Further, we find that distinction which has been made in the impugned order of the Tribunal with regard to Dinshaw Frozen Foods Ltd. (supra) viz. that the assessment in that case has been completed under Section 143(3) of the Act in initial year and it is only in such cases that the Revenue be barred from denying the claim for deduction in the subsequent Assessment Years....
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....f Section 8013 of the Act has not been fulfilled. Therefore, once deduction is granted in the initial Assessment Year, the same would continue for the period of 10 consecutive year unless the relief for initial year is also withdrawn at the time of withholding the relief under Section 80IA/IB of the Act (I) Mr. Bhattad also points out that under the Act, there is distinction between assessment which has been completed under Section 143(3) of the Act and intimation given to Assessee under Section 143(1) of the Act. In support of, he places reliance in Rajesh jhaveri Stock Brokers, (supra) which brings out the distinction, by pointing out that an intimation under Section 143(1) of the Act is only a ministerial act and no examination of the claim is made by the Assessing Officer. However, one must recognize the fact that the aforesaid decision in case of Rajesh jhaveri Stock Brokers (supra) was rendered in the context of reopening of assessments. As against that the decisions of this Court in Paul Brothers (supra) and Dinshaw Frozen Food Ltd. Nagpur (supra) were while dealing with deduction under Chapter VI-A of the Act. This Court in the above two cases has very categoricall....
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....e assessee under Section 10B of the Act i.e. the assessment year 2007- 08, such claim was granted. In the subsequent assessment years also, i.e. in the assessment years 2010-11 and 2011-12, such claim was made and accepted by the Department. We may notice that Section 10B pertains to special provisions in respect of newly established hundred per cent export-oriented undertakings. Sub-section (1) of Section 10B provides for deduction of profits and gains derived by a hundred per cent export-oriented undertaking from the export of articles or things or computer software for a period of ten consecutive years beginning with assessment relevant to the previous year in which the undertaking begins to manufacturer, produce articles or things or computer software from the total income of the assessee. Thus, the provision envisaged is for a period of ten consecutive years commencing from the first year during which the undertaking begins to manufacture or produce articles, things or computer software, as the case may be. When the Revenue therefore, did not question the certification by the Director, Software Technology Park of India, in the initial year of the claim made by the assessee as ....
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.... that the assesse cannot be denied the benefit of the exemption claimed under section 80IB (10) of the Act as deduction was allowed by the revenue in the initial assessment year. Accordingly, we do not find any merit in the appeal filed by the Revenue. Hence, the ground of appeal of the revenue is hereby dismissed. 13. The next issue raised by the revenue is that the learned CIT-A erred in not allocating the common expenses to the eligible and non-eligible units based on the turnover which has resulted higher amount of deduction to the assessee under the provisions of section 80IB(10) of the Act. 14. The AO in his order also observed that the common expenses has not been allocated by the assessee in eligible and non-eligible project properly. This observation was made by the AO alternatively and without prejudice to the fact that the assessee is not eligible for deduction under the provisions of section 80IB (10) of the Act. As per the AO, the assessee has shown identical gross profit ratio for its eligible and noneligible projects i.e. 44.13% and 43.79% of the turnover whereas there was vast difference in the net profit declared by the assessee for its eligible and non-eligi....
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.... projects consistently and in the earlier years as well as in the subsequent year the same has not been disputed by ihe department. Out of 6 projects appellant has one project namely Vedica E series the profits of which are eligible for deduction u/s.80lB(10) of the Act. As per the AO the correct criteria should be the turnover of each project. As per the appellant the turnover is not the most scientific method in their case for the reasons that (a) they have followed the method of allocation on the basis of saleable area consistently , (b) if the method is now changed it has to be changed * for all the years in which the income is recognized of any project, and in some years including the year under consideration after considering the specific allocation of finance cost the profits of eligible project would / increase and fc) the appellant follows percentage of completion method (POCM) and the actual profit of the project can only be ascertained when the project is completed; the turnover on the basis of sales reflected in the earlier years before the final completion may not be a true indicator of the work carried out in the project as in some projects even after fully completing....
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....assessee on the questions raised, starting with the assessment year 1992-93, that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assessee. Consequently, there is no reason for us to take a different view unless there are very convincing reasons, none of which have been pointed out by the learned counsel for the Revenue. 29. In Radhasoami Satsang Saomi Bagh v. CIT [1992] 193 ITR 321/60 Taxman 248 (SC) this Court did not think it appropriate to allow the reconsideration of an issue for a subsequent assessment year if the same "fundamental aspect" permeates in different assessment years. In arriving at this conclusion, this Court referred to an interesting passage from Hoystead v. Commissioner of Taxation, 1926 AC 155 (PC) wherein it was said: "Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the court of the legal result either of the construction of the documents or the weight of certain circumstances. If this were permitted, litigation would have ....
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.... Cost of Sales accounted during the year (COS) 10,51, 29, 172/- 7,60,84,708/- CWIP of the year 32,07,81,601 4,33,95,766 Ratio of COS:CWIP 24.68 : 75.32 63.68 : 36.32 Expenditure allocated by the assessee (7.79cr) 5.99cr 1.80cr Expenditure related to sales 1,47,83,320 1,14,62,400 Expenditure related to CWIP 4,51,16,680 65,37,600 Therefore, as a result of apportionment of the common expenditure between the sales and the CWIP, there is increase of Rs, 5,16,54,280 in Closing WIP of the company. This increase will go to increase of profit of the company in P&L account. Therefore Rs. 5,16,54,280 needs to be added to gross total income admitted. On account of allocation of common expenses the deduction u/s 80IB also gets increased by Rs.65,37,600 which is allowed from Gross Total income. The total income for the year is worked out as under: Gross total income as per working of the assessee 7,13,68,873 Add: Increase in revised CWIP 5,16,54,280 12,30,23,153 Revised working of 80IB deduction Deduction worked out by assessee 4,54,86,974 Add: increase in CWIP of 80IB project 65,37,600 ....
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....) to recognize the income of various projects consistently, which has been accepted by the Department year after year in the earlier years as well in the subsequent years. PCOM is being followed according to the Accounting Standard(AS) - 7 and the Guidance Notes issued by Institute of Chartered Accountants of India (ICA ) in this regard. As per the AS-7 and Guidance Note, according to PCOM revenue is recognized when sales of 25% or more are received and the construction is carried out to this extent. The expenses relating to construction and directly attributable to a particular project is also recognized to the extent of sales by matching principle taken out from WIP. The finance cost, selling and administrative expenses and selling and marketing expense are not part of WIP as per PCOM according to AS-7, AS-16 and Guidance Notes. Para 17 of AS- 7 states as below: " I7. Costs that may be attributable to contract activity in general and can be allocated to specific contracts include: (a) insurance; (b) costs of design and technical assistance that is not directly related to a specific contract; and (c) construction overheads. Such costs are allocated using methods that am s....
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.... the work-in-progress shown at the end of the financial year which will certainly enhance the income of the year in dispute but this closing work in progress will become the opening work-inprogress in the subsequent year and the profit of the subsequent year will be reduced by the same amount of addition made in the year under consideration. Accordingly, in the given facts and circumstances, we do not find any reason to interfere in the finding of the learned CIT-A. Hence, we direct the AO to delete the addition made by him. Thus, the ground of appeal of the revenue is hereby dismissed. 24.2 In the result the appeal filed by the revenue is hereby dismissed. Now Coming to the ITA No. 524/Ahd/2019 for A.Y. 2013-14. 25. The first issue raised by the Revenue is that the Ld. CIT(A) has erred in law and on facts in deleting the disallowance of deduction u/s 80IB(10) of the Income Tax Act, 1961 of Rs. 2,95,62,785/- 26. At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the A.Y 2013-14 are identical to the issues raised by the Revenue in ITA No. 523/Ahd/2018 for the assessment year 2012-13. Therefore, the findings given in 523/Ahd/2018 sha....
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....tion 40A(3) of the Act, the expenditure incurred in cash cannot be allowed as an expenditure. (c) As per the direction of Id. CIT(A), the assessee should have added the expenditure of Rs.82,60,000/- in the closing WIP of the corresponding scheme in the year of expenditure i.e. A.Y. 2009-10. Since, the assessee did not claim the said expenditure by way of addition in WIP in A.Y. 2009-10, the said expenditure cannot be claimed- As held in the assessment order of A.Y. 2009-10, the assessee failed to establish the genuineness of expenses. 8.6 Accordingly, the claim of expenditure of Rs. 11,41,532/- is hereby rejected and the same is added to the total income of the assessee. Penalty proceedings u/s. 271(1)(c) are initiated for furnishing inaccurate particulars of income. 31. Aggrieved assessee carried the matter before the learned CIT-A who deleted the addition made by the AO by observing as under: 8.1 In the course of appellate proceedings, appellant furnished copies of the order of Hon'ble ITAT on this issue in ITA No.17/Ahd/2014 dated 14.06.2017 pertaining to A.Y.2010-11 and order in ITA No. 2310/Ahd/2015 dated 01.02.2018 pertaining to A.Y.2011-12 w....