TaxTMI 
TaxTMI 
TaxTMI 
2023 (4) TMI 1427
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....referred by the Assessee for the Assessment Year 2010-11 and 2012-13 to 2015-16. Since the appeals involve common issues arising from identical set of facts, the same were heard together and are being disposed of by way of common order. 2. We would first take cross appeals for the Assessment Year 2012-13 as it covers most of the issues raised in the appeals. However, where relevant, we would also state facts relevant to appeals for the other assessment years for the sake of brevity and to avoid repetition. Assessment Year 2012-13 3. The Assessee has raised the following grounds in appeal for the Assessment Year 2012-13 [ITA No. 1936/Mum/2022] "1. The Hon. CIT (A) erred in upholding addition of Rs. 29,49,089/- (Rs. 39,39,489/- - Rs. 9,90,400/-), by estimating 45% of on money receipts in respect of non-eligible projects u/s 80IB(10) to be the income of the appellant, not appreciating that such profit element in the on-money receipts could not exceed 20%, which amount is already offered to tax by the appellant and therefore the addition confirmed by the Hon.CIT(A) is not justified and bears to be deleted. 2. The Hon. CIT (A) erred in holding investor booking advances of Rs.&nb....
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....80IB(10) without appreciating that as per section 80A(5) of the Act the benefit of enhanced deduction u/s 80IB(10) is not permitted if the assessee fails to make a claim in its return of income for any deduction. 5. On the facts and in the circumstances of the case and in law, the Ld. CIT (A) has failed to consider the decision of the Hon'ble Apex Court in the case of CIT Vs Mandavi Builders [2021] reported in 133 taxmann.com 414 (SC) wherein SLP filed by the Department was granted by Hon'ble Apex Court against impugned order of Hon'ble Karnataka High Court wherein it was held that when unaccounted money found during search proceedings at premises of assessee-company was treated as business income of assessee by the Assessing Officer, assessee could not be denied deduction under section 80IB(10) in respect of such amount." The grounds raised by the Assessee in the appeal are taken up hereinafter in seriatim along with the connected grounds raised in the cross appeal by the Revenue. 5. Ground No. 1, 2 &3 of Appeal by Assessee and Ground No. 1 & 2 of the Departmental Appeal 6. Ground No. 1 to 3 of appeal by Assessee and Ground No. 1 & 2 of Departmental Appeal are dire....
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....ith Section 143(3) of the Act, the Assessing Officer noted that as against the aforesaid amount of INR 40,46,18,086/-, the Assessee had offered to tax additional income of INR 7,24,58,910/- only in the return of income filed in response to notice issued under Section 153A of the Act. The year-wise break-up of the additional income offered to tax as per the Assessing Officer is as under: Assessment Year Financial Year Cash received as per Statement u/s 132(4) (INR) Additional Income offered in Return u/s 153A (INR) 2007-08 23,77,320/- - 2009-10 2008-09 1,29,53,500/- 2,48,27,400/- 2010-11 2009-10 3,72,66,500/- 1,41,52,520/- 2011-12 2010-11 5,87,03,500/- 2,55,22,890/- 2012-13 2011-12 12,08,07,465/- 22,03,373/- 2013-14 2012-13 7,26,87,800/- 40,82,327/- 2014-15 2013-14 8,12,37,001/- 11,68,800/- 2015-16 2014-15 1,98,47,000/- 5,01,600/- Total Total 40,46,18,086/- 7,24,58,910/- 10. According to the Assessing Officer, for the Assessment Year 201213, additional income of INR 12,08,07,465/- was disclosed during the course of search whereas additional income of only INR 22,03,373/- was offered to tax in the return of income filed in resp....
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....r first appellate proceedings and therefore entire amount of on-money receipts should be taxed in the hands of the Assessee. 13. The Learned Authorised Representative for Assessee submitted that the Assessing Officer had considered the entire cash receipts as income whereas the CIT (A) has restricted such income at 45% of the cash receipts. While doing so the CIT (A) has only granted deduction for the actual expenses as computed by the Assessing Officer in the remand proceedings based upon the seized records. The CIT (A) has failed to appreciate that during search entire record of cash expenses was not seized. He emphasized that the seized records were indicative of the expenditure incurred and did not represent the total of all cash expenditure. He submitted that the Assessee was developing residential units for lower income group at Virar, District Palghar and therefore, in all fairness, the income component of the on-money receipts could not exceed 20%. The Assessee was already offering to tax, a healthy profit percentage as per the audited books of accounts. Year wise net profit percentage of the Assessee as per audited books of accounts is as under. Assessment Year Net Pro....
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....he evidences of cash expenditure having been incurred discovered during the course of search action. During the assessment proceedings, all the entries found in the seized material were reconciled with the cash flow statement, however, the Assessing Officer/CIT(A) proceeded to make the addition on the basis of cash flow statement prepared by the Assessing Officer. 16. We have considered the rival submissions and perused the material on record. 17. We note that the Assessing Officer had accepted the fact that the expenses were incurred in cash but had denied deduction for the same by holding that the Assessee has failed to show that the provisions of Section 30 to 36, 37 and/or 40A(3) of the Act have been complied with. The Assessing Officer had, in paragraph 8.25 of the Assessment Order, distinguished the decisions cited by the Assessee during the assessment proceedings holding that in the cases cited, the income was computed on percentage basis or ratio basis whereas in present case the unaccounted sale and expenditure has been worked out based on the seized documents. However, in our view, given the facts and circumstances of the case, it cannot be said that in the income of th....
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....Vs. P D Abrahm : 20 Taxmann.com 823 (Ker). The CIT (A) has also taken into consideration the abovesaid decisions of Mumbai Bench of the Tribunal in the case of Bhalchandra Trading Pvt. Ltd. (supra), Om Constructions (supra) and Sahakar Developers (supra). We have perused the aforesaid judgments/decisions wherein it has been held that only profit element embedded in cash/on-money receipts could be brought to tax in the hands of the Assessee. Therefore, we find no infirmity in the order passed by the CIT (A) to the extent that the CIT (A) holds that only profit element embedded in the cash receipts is liable to be taxed in the hands of the Assessee. In view of the aforesaid, we reject the contention of the Revenue that entire cash receipts should be brought to tax. 18. This takes us to the issue of computation of profit element. The CIT (A) has concluded that 45% of the on-money receipts are the profit element liable to tax in the hands of the Assessee. The relevant extract of the decision of CIT (A) reads as under: "33. In the present case, the appellant contends that the profit element out of the 'on-money should be computed by applying the rate of 20%. However, no reasonabl....
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....bove, the Assessing Officer is directed to take 45% of the "on- money as the appellant's income for each year, rather than treating the entire amount (as reduced by the stamp duty and registration charges) as suppressed income." (Emphasis Supplied) 19. On perusal of the above we can see, that while estimating the profit at the rate of 45% the CIT (A) has taken into account the Stamp Duty & Registration Charges as well as Other Expenses computed on the basis of ceased material by the Assessing Officer and which have been accepted to have been incurred in cash. However, the CIT (A) has not considered the expenses incurred in cash for purchase of land. We note that while estimating the amount of cash receipts from the Promoters the payments made in cash for purchase of land have been taken into account and deficit of INR 1,75,13,115/- for the Assessment Year 2009-10 has been considered as cash receipt [as noted by the CIT (A) in paragraph 7 of the order and computed in paragraph 10.4 of the Assessment Order]. In our view, since payments in cash for purchase of land were not taken into consideration by the CIT(A), the aforesaid deficit estimated for the Assessment Year 2009-10 an....
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....ontra, the Ld. Departmental Representative relied upon the order passed by the Assessing Officer and the CIT(A), and submitted that the receipt of cash was an independent transaction complete in itself. Since the aforesaid transaction is not recorded in the books of accounts, the on-money receipts cannot be brought to tax as per the method of accounting followed by the Assessee and must be brought to tax in the year of receipt. 23. In rejoinder, the Ld. Authorised Representative for the Assessee submitted that advance received has been offered the tax as and when the project work was completed. Providing clarification in relation to the aforesaid, the Ld. Authorised Representative for the Assessee submitted that out of cash receipts pertaining to the Assessment Year 2012-13 amount of INR 2,11,71,000/- is yet to be offered to tax and furnished the following details vide letter dated 21.03.2023: Assessment Year Amount Received (INR) Amount Refunded (INR) Amount Offered to Tax (INR) Balance Amount to be offered to Tax (INR) A.Y. 2012-13 8,78,79,950 75,21,750 (AY 2014-15) 1,26,18,750 (AY 2015-16) 4,86,68,450 (2019-20) 1,90,71,000 A.Y. 2013-14 5,66,63,....
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....under Section 80IB of the Act in the original return of income. It is admitted position that on-money/cash receipts pertain to project eligible for deduction under Section 80IB(10) of the Act. The additional income on account of on-money receipts enhances the business income derived by the Assessee from the eligible projects and therefore the Assessee is entitled to claim deduction under Section 80IB(10) of the Act in respect of the same. While arriving at the aforesaid conclusion, the CIT (A) has relied upon a number of decisions/judgments including judgment of the Hon'ble Bombay High Court in the case of CIT vs. Sheth Developers Private Limited: [2012] 254 CTR 127 (Bombay)[27-072012] wherein it was held that while computing undisclosed income for block period as per Section 69A read with Section 158BB of the Act the assessee was entitled to claim deduction from its income under section 80-IB of the Act. The aforesaid judgment was relied upon by the Mumbai Bench of the Tribunal while allowing deduction under Section 80IB(10) of the Act to the sister concern of the Assessee in the identical facts and circumstances in the case of Jupiter Construction vs. ACIT, Circle-3, Thane [ITA N....
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....r section 153A of the Act, has held as under: "10. In the present case, it is not in dispute that.................. xx xx 17. In-fact, the Hon'ble Bombay High Court in the case of Sheth Developers (P) Ltd. (supra) was considering the claim of deduction u/s 80IB(10) of the Act in relation to the undisclosed income declared consequent to the search action. In the case before the Hon'ble High Court, it was factually emerging that undisclosed income was earned by the assessee in the course of carrying on his business activity of a 'builder' and the same was accepted by the Department, but the claim of the deduction u/s 80IB(10) was denied in relation to such income. However, the claim was upheld by the Hon'ble Bombay High Court. In the present case, factually, there is no material to negate the assertion of the assessee, which are borne out of the material on record, that the additional income in question has been received in the course of carrying on its business activity of developing the housing project, The Crest' at Pimple Saudagar, Pune, which is eligible for section 80IB(10) benefits. Therefore, in terms of the parity of reasoning laid down by the....
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....ind any infirmity in the order passed by CIT (A) on this issue. Accordingly, Ground No. 3 to 5 raised by the Revenue in the appeal are dismissed. 30. Both the sides had agreed that our findings /adjudication in respect of issues raised in cross appeals for the Assessment Year 2012-13 shall apply mutatis mutandis to the grounds/issues raised in the appeals pertaining to the other assessment years. Accordingly, we proceed to decide the other appeals preferred by Assessee and Revenue Appeal of the Revenue for the Assessment Years 2010-11, 2013-14 and 2014-15 31. Ground No. 1 to 5 raised in these three appeals are identical to the Ground No. 1 to 5 raised in appeal for the Assessment Year 201213. Since Ground No. 1 to 5 raised by the Revenue in appeal for the Assessment Year 2012-13 have been dismissed, Ground No. 1 to 5 raised in all the three appeals raised by the Revenue are also dismissed by adopting the same reasoning. Appeal of the Assessee for the Assessment Year 2013-14 32. Ground No. 1 to 3 raised by the Assessee in appeal for the Assessment Year 2013-14 are identical to Ground No. 1 to 3 raised in appeal for the Assessment Year 2012-13. Ground No. 1 to 3 raised by the ....