TaxTMI 
TaxTMI 
2024 (8) TMI 1639
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....onse to the notice, the Authorized Representative of the assessee appeared time to time before the learned Assessing Officer and the learned Assessing Officer on perusing the submission made by the assessee, made the following additions to the total income of the assessee:- Sr. No. Name Opening WIP Sale Closing WIP Remarks 1. Onkar Society for Engineering and Technological Research and Development 1,35,45,400 Nil Nil Out of Books sale of Rs.1,35,45,400/- 2. Camellia Enducarre Services (P) Ltd. 1,12,29,000 Nil Nil Out of Books Sale of Rs.1,12,29,000/- ` 3. HCL Nonadanga 1,95,56,853/- Nil 41,41,728 Out of Books Sale of Rs.1,54,15,125/- 4. Kalyan Educational Society 10,99,52,163/- 2,99,50,000/- 2,85,27,700/- Out of books sale of Rs.5,14,74,463/- 03. Aggrieved by the above order, assessee went in appeal before the learned CIT (A), where assessee filed its written submission. The learned CIT (A) after considering the submission of the assessee passed detail order in following manner:- "6.2 Ground no. 2, 3 & 4: These pertain to the plea that the AO was not correct in making additions of ....
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.... the appellant does not sell properties. It was explained that the same is evident from Note 17- Revenue from Operations, of the Audited Accounts, wherein the Sales were reported at Rs.0 for the current year and also the preceding year and the entire Revenue from Operations relates to 'Income on Construction Activities'. It was stated that the appellant had not suppressed any sales. It was explained that Schedule 19 contains the details of Cost of Construction in Progress for the current year and the immediately preceding year which was debited in the Profit and Loss A/c and is not in the nature of Opening WIP and Closing WIP. 6.2.2 Regarding the submissions of the appellant, it is noted that the appellant is not into sales of property as a normal builder does but it is engaged in the business of only the construction of the properties and receives the revenue on this account. The appellant is akin to a contractor who constructs buildings/properties on behalf of the person asking it to construct the properties. Thus, the appellant debits the expenses on construction in the P/L account project-wise under the head 'cost of construction in progress'. ....
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.... this extent was justified. On issues of Kalyan Educational Society, it is seen that the appellant has offered income of Rs. 2,99,50,000/- while cost debited to P/L account was Rs. 2,85,27,700/- on this property. Thus, gross profit of 4.75% has been offered on this property. For Camelia Educare Services Pvt Ltd, neither the revenue nor the cost has been shown in P/L account in FY 2011-12. Even in FY 2010-11, appellant offered income of Rs. 1,14,00,100/- while cost debited to P/L account was Rs. 1,12,29,000/- on this property. Thus, gross profit of 1.5% had been offered on this property in FY 2010-11. In any case, since no cost had been debited and no sales had been offered in FY 2011-12, the addition of Rs. 1,12,29,000/- made by the AO on account of this property is hereby deleted. For Onkar Society for Engineering & Technological Research & Development also. neither the revenue nor the cost has been shown in P/L account in FY 2011-12. However, in FY 2010-11, appellant had offered income of Rs. nil while cost debited to P/L account was Rs. 1,35,45,400/- on this property. Thus, no profit had been offered on this property in FY 2010-11. In any case, as the ....
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.... 04. Dissatisfied with the above order, assessee is in appeal before this Tribunal. The first and second grounds of appeal are connected therefore, both are heard together. In the grounds, the assessee stated that the learned CIT (A) heard in upholding the addition of Rs.41,41,708/-being cost of construction paid to HCL for Nonadanga project alleging that assessee has not offered any corresponding sales on this project in the current year. Though it debited the cost of construction of Rs.41,41,728/- in the profit and loss account. On this context, the learned Authorized Representative stated that the learned CIT (A) has duly acknowledged in his order that assessee earns revenue from construction activities and held that Schedule 19 contains the details of cost of construction in progress which was debited to profit and loss account. The learned CIT (A) has also discussed in his order relating to each project which is in following manner:- "1. HCL Nonadanga project: The learned CIT(A) held that the appellant has not offered any sales on HCL Nonadanga project in FY 2011-12 though it had debited this cost at Rs.41,41,728/- to the P/L account for FY 2011- 12. Acc....
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....the audited accounts of the assessee as discussed in the preceding paras. Further, as evident from the appellate order, the learned CIT(A) has sustained the addition of Rs.41,41,728/- incurred in this project on the sole premise that no revenue was reported from this project during the year. No defects were pointed out by him in the expenditure so claimed by the assessee. As such, the expense of Rs.41,41,728/- was not doubted by him. Hence, the addition of Rs.41,41,728/- sustained by the learned CIT(A) w.r.t HCL Nonadanga project is totally unjustified and liable to be deleted. 2. Kalyan Educational Society project. W.r.t the additions deleted by the learned CIT(A) in respect of Kalyan Educational Society, it is submitted that the said addition was rightly deleted by him on the premise that since revenue from this project was reported in the audited accounts for the current year, the cost debited on these projects is allowable. The learned CIT(A) also correctly noticed that gross profit of 4.75% has been offered on this property. However, it is humbly submitted that cost of construction in progress is independent of the revenue generated from the project ....