TaxTMI 
TaxTMI 
2023 (8) TMI 215
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....of cost of construction before the Assessing Officer. 3. On the facts and in the circumstances of the case and in Law, the Ld. CIT(A) erred in admitting additional evidence furnished by the assessee in the form of ledger accounts and other documents without giving an opportunity to the Assessing Officer for verification in contravention of 46A of the I:IT. Rules, 1962" 2. The assessee company is engaged in the business of builders and developers. For the assessment year 2006-07 the assessee filed the return of income on 17/11/2006 declaring income of Rs. 1,07,52,796/-. The return was processed under section 143(1) accepting the return of income. Subsequently, the case was selected for scrutiny and statutory notices were duly served on the assessee. The assessing officer in the first round of assessment proceedings disallowed a sum of Rs. 3,13,38,943 u/s.37(1) while completing the assessment u/s. 143(3). The assessee being aggrieved filed its appeal in which the CIT(A) deleted the addition made by the Assessing Officer, but enhanced the income of the assessee by making a fresh disallowance of Rs. 8,72,05,981/-. Aggrieved, the assessee filed appeal before the Hon'ble ITAT. The ITA....
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....e FSI and TDR considered prudent to develop and construct a composite building known as 'Swaroski' by amalgamating Marwah's plot with the neighboring Plot No. 684 bearing CTS No. E-147, Bandra (West), owned by Nandadeep CHS Limited (Nandadeep), comprising 12 flats. Joint construction proposal was endorsed by members of Nandadeep resulted into a Construction Contract with the Assessee dated 29.04.2004 by virtue of which old members of Nandadeep society would surrender existing old flats and allow demolition of building in consideration of being allotted on ownership basis as and by way of permanent alternative accommodation being a new flat in 'Swaroski Scheme' as per the said contract dated 29.04.2004, Agreement for Grant of Permanent Alternative Accommodation dated 25.05.2007 and individual Contract Letter dated 07.04.2004. Meanwhile during the course of construction and work in progress, certain existing old members transferred their flats to new members. Using FSI and TDR of the Marwah's plot and additional FSI and TDR purchased, the Assessee constructed 22 flats on the joint plot of which: * 12 flats were to be handover to 12 old/ existing members of the N....
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....flat to New Members; (v) Share certificate Number; (vi) Distinctive Number; (vii) Area Sq. Ft. and (viii) Allotted Flats in Swaroski Building; c) The information in the tabular format as stated in (above gives no clue of the happening in this project of the assessee company - for eg. At SI. No. 1, Mr. D.R.Patil is the name of the original member whereas in the column maintained as Name of the New Existing Members the names of (1) Mr. Mahendra Likhite and (2) Mrs. Mughda Likhite is appearing and , in the next column maintained as Name of the Existing Members Transferred flat to New Members is appearing as Mr, Vishal D. Jaisinsgh (31.05.20.05) whose area appears to be 792, but in the last column maintained as Allotted Flats in Swaroski Building the area shown as 702 sq.ft. Neither any explanation was offered for this discrepancy nor was any supporting document attached to throw light on this; d) The entire statement is full of such un-matched names and figures. To enlighten one more example is illustrated here: At SI. No. 2 again Mr. D.R. Patil is the name of the original member whereas in the column maintained as Name of the New Existing Members the names of (1) Mrs. Madhuri Khu....
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....ose of whether the consideration for carrying out the construction work has been duly received from the members directly and as such properly accounted for. Further, the Ld.AR submitted that the Assessing Officer has gone beyond his jurisdiction to give finding with regard to the various terms of the agreement and has also given incorrect finding with regard to the facts. In this regard the Ld.AR drew our attention to the finding given by the CIT(A) in the second round of appellate proceedings where in para 6.8 (page 16) of his order that the Assessing Officer has gone beyond the directions and sustained the disallowance for the reason that some lacuna in the copy of the construction contract without bringing out the nexus with the directions given by the Hon'ble Tribunal. The Ld.AR further submitted that the assessee had submitted all the necessary evidences as per directions of the Hon'ble ITAT to substantiate the claim and the CIT(A), after going through all the necessary evidences has correctly deleted the additions. 11. The ld AR also made a detailed submission before us drawing our attention to the way the accounting is done of the receipts from the members as given below an....
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....ation received by the members for the transfer of rights is in the form of allotment of new flats without any cost. However there are few members who have opted to get some additional space in the new flats and some extra amenities for which the members are required to pay additional amount. The Assessee has accounted for the same and reported it as income in its Profit and Loss Account. The same is evidenced by the table submitted by the ld AR during the course of hearing the entries from which is accounted in ledger accounts which are also part of records submitted - 14. The main reasons for the revenue in the first round of appellate proceedings to disallow the expenses is that the cost of construction which is to be borne by the members should have been received by the assessee and that without showing the receipts the assessee is not entitled to claim the cost of construction towards development of the property as a deduction. In this regard it is important to understand the way income and expenditure is earned / incurred in a redevelopment project. In assessee's case here the income to the assessee is arising out of two sources i.e. one consideration received from the additi....