TaxTMI 
TaxTMI 
2025 (6) TMI 798
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.... Ltd on account of cancellation/termination of agreements of ten flats. Provisions of the Act ought to have been properly construed and regard being had to facts of the case said addition of Rs. 56500000/- should not have been confirmed. Reasons assigned are wrong and insufficient to justify such addition of Rs. 56500000/- under section 28(iv) of the Act. 2. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming cost of ten flats at Rs. 4325516/- as against cost determined by the appellant of Rs. 61240715/- 3. On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals) erred in confirming value of stock-in- trade / WIP at Rs. 12141795/- instead of as computed by appellant at Rs. 68641795/- 4. The order made under section 143(3) of the Act by the learned Assessing Officer is illegal, bad-in-law, ultra-virus and without allowing reasonable opportunity of the hearing, and without appreciating facts, submission and evidences in their proper perspective and without providing copies of material relied upon and is liable to be set aside an....
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....l the efforts were made by the assessee. Assessee terminated and cancelled the agreement with C.R.B. Capital Markets Ltd and agreed to refund the amount of Rs. 5,65,00,000/- which was paid by C.R.B. Capital Markets to it, against the sale of ten flats. Later assessee came to know that C.R.B. Capital Markets Ltd had undergone liquidation and Hon'ble High of Delhi had appointed an official liquidator in the matter. Assessee furnished one of the correspondence letter dated 18.04.2013 addressed to C.R.B. Capital Markets Ltd describing several miles stones which took place since the year 1996 till the year 2013. Part of this correspondence are reproduce by Ld.AO in his order in para 4.3 from which he observed that assessee has already terminated the agreement with C.R.B. Capital Markets Ltd and that the assessee is ready and willing to refund the amount received by it from C.R.B. Capital Markets Ltd without any interest thereon. 5. Ld.AO also noted that by taking into account the law of limitation, asking the assessee for specific performance or completion of the said contract or handing over the ten flats to C.R.B. Capital Markets does not arise since rights and claims of C.R.B. Cap....
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....roversy to be addressed in the present appeal is, whether the liability accounted for by the assessee in its balance sheet correspondingly increasing the stock in trade/WIP, is a benefit derived by the assessee in the course of its business as alleged by Ld.AO in terms of Section 28(iv) to be treated it as business income. 9. Assessee submitted that the sale transaction took place in the year 1996, by way of an agreement at an agreed value of Rs. 5,91,35,900/-. According to the assessee, sales consideration for these ten flats sold to C.R.B. Capital Markets was also reported in its profit and loss account for the year 2006, which has been subjected to scrutiny assessment u/s. 143(3) wherein income offered by the assessee was accepted, after considering the fact that ten flats were sold to C.R.B. Capital Markets Ltd. Copy of the said assessment order dated 20.11.2008 passed by Additional CIT, range 20(2), Mumbai is placed on record at page 6 of the paper book. From the perusal of the said assessment order for AY 2006-07, it is discernible that department had carried out a survey u/s. 133(A) on the business premise of the assessee on 27.02.2006. It was noted that assessee was deve....
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....f income reveals that in the computation of income under the head profit and gains of business, assessee has indeed shown a net profit of Rs. 5,09,27,870/- Further, when the counsel for the assessee was asked as to how the declaration given has been honored, he stated as under: "In this connection we have to state that the survey action u/s 133A of the Income-tax Act, 1961 was carried out at the business premises on 27.02.2006. it is to confirm the project undertaken by the assessee firm named and styled as 'Arihant Towers' at Mahim was completed and amount of Rs. 5.10 Crs was agreed to be offered for taxation in the Asst. Year 2006-2007. Accordingly, to the promise given at the time of Survey, the assessee offered the amount of Rs. 5.10 Crs as income for the said project in the Asst. Year 2006-2007 since it is following project completion method. The amount as declared by the assessee firm includes Units sold to CRB Capital Market Ltd. and unsold stock of the units as on 31.03.2005. Perusal of return of income and the submission on the point makes it clear that the undertaking given has more or less been fulfilled. However, the fact remains that although ....
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....ion for the accounting treatment given by the assessee in its books of accounts to claim that amount in respect of transaction with CRB had been already been subjected to tax in the earlier year and the same is now reversed by accounting for a liability as payable to CRB owing to cancellation of the agreement and making a corresponding adjustment in the stock in trade/WIP. 12.1 To our mind, following factual position needs to be established with proper documentary evidences- I. Sale consideration forming part of the turnover of the assessee for AY 2006-07 in its profit and loss account and corresponding effect on the closing balance of stock in trade in respect of ten flats sold to CRB. II. Cost of ten flats sold to CRB accounted for in AY 2006-07 for which adjustment were made to stock in trade. III. Treatment of declaration made in the statement in the course of survey of net profit of Rs. 5.10 cores in the books of account for AY 2006-07 along with demonstrating the effect of sale made to C.R.B. Capital Markets which is stated to be forming part of the amount declared by the assessee in the statement recorded in the course of survey. IV. Co....