TaxTMI 
TaxTMI 
2026 (3) TMI 1017
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....heard together due to the common factual issue. With the consent of both the parties ITA No. 5069/Mum/2025 A.Y. 2018-19 is taken as lead case and the decision rendered therein shall apply mutatis mutandis to other appeals before us. 3. The assessee has taken the following grounds: "Grounds 1. Ld. CIT(A) has erred in law and on fact to upheld AO's addition of Rs. 41,14,625/-, on account of remaining profit of project of Welkin Star, only on presumptions-surmises and ignoring the fact that the AO has made addition only on appellant's survey statement and without providing details and evidences of construction cost and other expenses reported by him the para 3.4(i) in assessment order. 2. Ld. CIT(A) has erred in law and on fact to upheld AO's addition of Rs. 20,00,000/-w.r.t. alleged sales of four parking plots without there being a single piece of evidence for sale and receipt of four parking spaces. 3. Ld. CIT(A) has erred in law and on fact to upheld AO's method of valuation of closing stock at market rate of Rs. 9000/- per sq.ft. (commercial rate at Dhansoli), which is contrary of provisions of section 145A of the Act. ....
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.... totaling to Rs. 4,76,31,100/-and total expenses of Welkin Star shown is Rs. 1,39,84,221/- + cost of land Rs. 88,34,400/-(purchased land for welkin star) leading to a profit of Rs. 2,48,12,479/-, however you have shown profit at Rs. 2,06,97,854/- In the return of income. Hence, there is a difference of Rs. 41,14,625/- which should have been offered to tax. Please Explain. Ans. There are 2 shops in stock and 4 parking slots in stock as and when it will be sold it will be shown as a profit, as in general commercial property get more profit than the residential one. The actual profit realized on sale of above property will be offered in year of realization of sale. 3.4 The above submission is not found acceptable on the following grounds: (1) The assessee has stated that the profits will arise on sale of remaining inventory of two shops and four parking lots. However, the above calculation is out of the SALES recognised by the assessee and does not concern the closing stock-in-trade. Thus, from the revenue recognised by the assessee, by deducting the expenses incurred and given the fact that the Occupancy Certificate has been received and no further expenses are to b....
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....bsp; ADD : CLOSING STOCK STAR PROJECT AS ON 31.3.2018 35,85,500.00 TOTAL PROFIT OF STAR PROJECT AS PER ITR BEFORE INTEREST 2,46,55,049.00 7. The Ld. DR relied upon the orders of the revenue authorities and supported the findings recorded therein. 8. We have heard the rival submissions and perused the material available on record. It is observed that during the course of the assessment proceedings, the Ld. AO computed the net profit suo motu without rejecting the books of account of the assessee. During the appellate proceedings, the Ld. AR contended that no details regarding the basis for computing the expenses of Rs. 1,39,84,221/- were ever furnished to the assessee for its explanation. Consequently, the assessee was denied a reasonable opportunity of being heard. It is further noticed that both the Ld. AO as well as the Ld. CIT(A) remained silent regarding the basis of computation of the said expenses of Rs. 1,39,84,221/- while determining the net profit. The Ld. AR further submitted that the said figure was merely adopted from the statement of the partn....
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....r sale. Further, it was presumed that parking space was sold out with the flats sold. Therefore, the sale amount should be offered for taxation. The main question arose here that whether the Stilt parking is sold or not and whether the cost of WIP and or unsold stock is inclusive of cost of parking space or not? The answer of first query is very clear from the statement recorded on oaths that the said stilt parking slot is unsold and the answer of second query is that the valuation of unsold stock should be as per the accounting policies generally accepted by the person and the same is cost or net realizable value whichever is lower. Further, the books of accounts are duly audited by the Chartered Accountants so the doubt on valuation may not be warranted. Moreover, no evidence from bank statements or sales agreements supported the AO's contention. However, it is pertinent to note here that the appellant is a builder and engaged in the business of construction and development of real estate. Further as the project of the appellant had completed and the appellant is in the possession of OC of the project. Therefore, the appellant should recognize the revenue from the unsold inve....
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....respect of the remaining four parking spaces, the Ld. AO determined the value at Rs. 5,00,000/- per parking space on the basis of documents impounded during the course of survey proceedings and accordingly treated the same as deemed sales. The assessee, however, has categorically denied the sale of the remaining four parking spaces. However, it is observed that the assessee has not furnished any documentary evidence, stock details, or records in the books of accounts to substantiate the claim that the said parking spaces remained unsold. Further, considering the fact that the project has already been completed and the Occupation Certificate (OC) has been obtained, it becomes necessary to verify the final status of the parking spaces, particularly whether they remained as unsold inventory, were transferred to the society/community, or were otherwise disposed of. Since these relevant facts have not been properly verified from the records, the issue requires fresh examination. In view of the above facts and in the interest of justice, we deem it appropriate to restore this issue to the file of the Ld. AO for fresh adjudication (de novo) after proper verification of the relevant docume....
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....dispute that the assessee has given advance for acquisition of developments rights of certain properties. The assessee is engaged in the business of property development. The Hon'ble Delhi High Court in case of CIT vs. Dhoomketu Builders & Developers (supra) held that setting up of business is enough for claiming deduction under section 36(1)(iii). It was further held that commencement of the real estate business starts with the acquisition of land or immovable property. Further, single bench of Jaipur Tribunal in Aditya Propcon P. Ltd. (supra) held that purchase and holding of inventory is a business activity. The proviso has been inserted to disentitle claim of interest on funds borrowed for acquisition of capital asset for the period upto the asset is put to use. The term 'put to use' here applies to capital asset only because a capital asset is held to facilitate the business activity and some time it need to be prepared after acquisition for being used to facilitate the business activity. Therefore, the interest on funds borrowed to purchase land ITA NO. 907/MUM/2020 (Α.Υ: 2013-14) M/s. Ashish Land & Property Developers Pvt. Ltd., which is a part of i....
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....plies to capital asset only because capital osset is held to facilitate the business activity and sometimes, it needs to be prepared after it is acquired for being used to facilitate the business activity and in the instant case, the assessee was able to establish that substantial activities had been done in the project, which would go to show that the property purchased has been put to use." 18. The Ld. DR argued in respect of the disallowance of interest expenses for both the assessment years. He submitted that for AY 2018-19, the assessee had merely made an advance towards procurement of land at Ghasholi, which was not reflected under the head of current assets in the books of account. The Ld. DR contended that the asset had not satisfied the condition of being "put to use." Consequently, the interest expenditure claimed by the assessee could not be allowed. However, with respect to Assessment Year 2019-20, the Ld. DR fairly submitted that the said asset had been recorded in the balance sheet under current assets, indicating that the property had been acquired by the assessee. Accordingly, the Ld. DR conceded that the assessee would be eligible to claim the interest expend....