TaxTMI 
TaxTMI 
2023 (12) TMI 864
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....s of the return filed on the basis of accounts of the appellant under GAAP and not on the basis of accounts converted into IND-AS, as the adoption of IND-AS became West Bengal Housing Infrastructure Development Corporation Limited mandatory for the appellant for the first time with effect from the financial year 2017-18, relevant to the assessment year 2018-19. 3. While passing the order dated 10 June 2021, the AO, as well as the Ld. CIT (Appeals) in his order dated 14 February 2023, have erred in law as well as on facts in adding back a sum of Rs. 45,31,06,825, being alleged inflated cost of land, to the total income of the appellant amounting to Rs. 68,36,94,059/-, under the accounts on conversion to IND-AS ignoring the method of accounting followed by the appellant in the converted IND-AS accounts. 4. That both the AO and the Ld.CIT (Appeals) have erred in ignoring the basic principle of accounting as well as the converted IND-AS Accounts without considering the fact that the said conversion was made, inter alia, applying the Percentage of Completion Method (POCM), whereby the book profit was earned on cost of land sold at actuals, being Rs. 172,46,50,000/- and....
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....Officer based on the financial statement prepared as per GAAP and also considering the cost of land as computed by the assessee based on West Bengal Consultancy Organization Ltd. (WEBCON)'s report and based on the accounting system, consistently adopted by the assessee i.e., percentage of completion method (PCM), came to a conclusion that the assessee had made over statement of cost of land in the profit and loss account to the tune of Rs. 45,31,06,825/- West Bengal Housing Infrastructure Development Corporation Limited and made addition thereto. Relevant extract of the finding of the Assessing Officer in para 5 of the assessment order is extracted below:- "5. A show cause notice vide ITBA/AST/F/143(3)(SCN)/20 21-22/1032672658(1) dated 26.04.2021 was issued to the assessee. The assessee on 10.05.2021, made its submissions against the additions proposed in the order. The assessee claimed that during the year it had changed the accounting standards from GAAP to Ind AS and based on the new standards the cost of land should be Rs. 172,46,50,000/- instead of Rs. 215,55,62,718/-. The assessee claimed that this amount of Rs. 172,46,50,000 doesn't contain the component of pric....
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....ee vehemently argued referring to the detailed written submission as well as the paper book containing 183 pages. He further submitted that both the lower authorities erred in not taking note of the financial statements prepared as per Ind AS and have only based their adjudication on the financial statement prepared as per GAAP. He further submitted that the assessee could not file a revised return because the financial statement as per Ind AS were prepared at a later stage and by that time the time limit to file the return of income had expired. He thus prayed that the matter may be restored to the file of the Assessing Officer who can examine the relevant issue under consideration based on the financial statements prepared as per Ind AS. 5.1. On the other hand, the ld. D/R though supported the order of the lower authorities, but could not controvert the fact that the revised audited financial statement prepared as per Ind AS has not been considered by the Assessing Officer for scrutinising the case of the assessee and did not oppose the request of the ld. Counsel for the assessee if all the issues raised in the instant appeal are restored to the ld. Assessing Officer for afres....
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.... u/s 154) of the Paper Book. In view of the above facts and circumstances the Income and Tax payable thereon should be assessed on the basis of the Accounts as Converted to IND-AS and audited and published in public domain of MCA since the Accounts under GAAP are non est during assessment proceedings. West Bengal Housing Infrastructure Development Corporation Limited 3. GROUNDS OF APPEAL 3. 4 & 5: 1) At the outset the Appellant submits here-in-below the chronology of events in connection with the assessment of income for Assessment Year 2018-19. The Annual Accounts for the Financial Year 2017-18 (AY 2018-19 ) under IND AS are Audited by the Statutory Auditors and duly reviewed by CAG before the same being published in the public domain of MCA. 3) The reasons as to why the Accounts under GAAP had to be cancelled / rejected and instead Accounts under GAAP had to be revised and converted into the Accounts under IND AS have been clearly explained before the AO as well as CIT(A) vide our replies / submissions dated 27.01.2021, 25.02.2021 and 07.05.2021 against the Notices u/s 143(2), 142(1) and the Show Cause Notice, enclosing all the support....
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....n developing the Land acquired by WB Government for New Town Project with developing all infrastructural facilities attached therewith to make the Lands suitable for New Township Project and selling the same as per the instructions of the Government. iii) The Cost of Land sold at actuals appear to be Rs. 1,724,650,152/- as detailed below; - a) The cost of WIP as at 01.04.2017 is Rs. 38,977,430,395 b) Addition to WIP during FY 2017-18 Rs. 743,093,949 (pages 175 to 182 of the Paper Book) Rs. 39,720,524,344 c) Percentage of Land sold till FY 2017-18 (AY2018-19 being 58.4647% of Total Land 193021.17 Cottah and the quantum of Land Sold in the FY 20117-18 is 5002.19 Cottah i.e., 4.43263% of the Land sold till FY 2017-18. As such 4.34% of the Cost of Land wit....
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....sed the assessee's grounds without giving any reasoning before confirming the impugned addition and the order of the ld. CIT(A) is purely a non-speaking one. However, since time limit to file revised return lapsed before the preparation of financial statements as per Ind AS and the ld. Assessing Officer has also not scrutinised the assessee's case on the basis of the revised financial statements as per Ind AS furnished during the course of assessment proceedings, we are of the considered view that the issues raised in the instant appeals deserve to the restored to the Assessing Officer for de-novo adjudication based on the revised financial West Bengal Housing Infrastructure Development Corporation Limited statement as per the Ind AS and scrutiny shall be done in accordance with law. Needless to mention that the assessee shall be provided reasonable and fair opportunity of being heard and to file necessary/relevant documents in support of its claims. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the Court on 16^th October, 2023 at Kolkata. ============= Document 1 Date of Taxable Date of Returned Date of Revise....