ITO 2(3)(2), MUMBAI v. S.B. ESTATE P. LTD, MUMBAI

ITA 2275/MUM/2009 | 2005-2006
Pronouncement Date: 27-01-2010 | Result: Dismissed

Appeal Details

RSA Number 227519914 RSA 2009
Assessee PAN AAICS0730J
Bench Mumbai
Appeal Number ITA 2275/MUM/2009
Duration Of Justice 9 month(s) 17 day(s)
Appellant ITO 2(3)(2), MUMBAI
Respondent S.B. ESTATE P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 27-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 27-01-2010
Assessment Year 2005-2006
Appeal Filed On 09-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I MUMBAI BEFORE SHRI D. MANMOHAN HONBLE VICE PRESIDENT AND SHRI PRAMOD KUMAR JUDICIAL MEMBER ITA NO.2275/MUM/2009 ASSESSMENT YEAR: 2005-2006 INCOME TAX OFFICER 2(3)(2) RM.NO.581 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020. VS. S.B. ESTATE PVT. LTD. 4 BUBNA CASSA SIR P M RD. MUMBAI 400 001. PAN : AAICS0730J (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. VANDANA SAGAR. SR. A.R. RESPONDENT BY : MR. S.A. MUKADAM O R D E R PER D. MANMOHAN V.P. THIS APPEAL FILED AT THE INSTANCE OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-XXI MUMBAI AND IT P ERTAINS TO ASSESSMENT YEAR 2005-2006. GROUNDS OF THE REVENUE ARE AS UND ER: 1. THE LEARNED CIT (A) HAS ERRED IN DELETING THE ADDITION OF PROFIT ESTIMATED BY THE ASSESSING OFFIC ER @ A10% OF THE ADVANCES RECEIVED FOR THE PROJECT. 2. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING THE DECISION OF THE CIT (A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORE D. 2. FACTS IN SHORT ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF BUILDINGS. THE ASSESS EE STARTED THE PROJECT IN 2004. THE ASSESSEE FOLLOWED PROJECT COMPLETION ME THOD AND ACCORDINGLY DECLARED THE LOSS FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICER FOR THE DETAILED REASONS GIVEN IN ASSESSMENT ORDER INVOKED THE PROVISIONS OF SECTION 145 OF THE ACT TO REJECT THE BOOK RESULT S AND ESTIMATE THE PROFIT AT 10% OF THE ADVANCE RECEIVED. ITA NO.2275/MUM/2009 A.Y.: 2005-2006 2 3. AGGRIEVED ASSESSEE CONTENDED BEFORE THE LEARNED CIT (A) THAT THE CONSTRUCTION HAS JUST COMMENCED IN THE YEAR UNDER C ONSIDERATION AND NOT EVEN 75% OF THE WORK COULD BE COMPLETED TILL MARCH 2007; EVEN QUESTION OF MAKING ADDITION ON ADHOC BASIS IS NOT WARRANTED. PLACING RELIANCE ON SEVERAL DECISIONS OF ITAT IT WAS CONTENDED THAT TH E ASSESSING OFFICER HAVING ACCEPTED PROJECT COMPLETION METHOD IN THE SUBSEQUEN T YEAR THERE IS NO JUSTIFICATION IN ESTIMATING THE INCOME FOR THE YEAR UNDER CONSIDERATION. 4. HAVING REGARD TO THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE COMPANY THE LEARNED CIT (A) DELETED THE ADDITION O F RS.2.78 CRORES AND DIRECTED THE ASSESSING OFFICER TO ACCEPT THE LOSS O F RS.17 500/- AS PER THE REVISED RETURN OF INCOME FILED ON 30.11.2006. 5. AGGRIEVED REVENUE IS IN APPEAL BEFORE US. LEARN ED D.R RELIED UPON ORDER OF THE ASSESSING OFFICER WHEREAS THE LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE PLACED BEFORE US COPIES OF T HE ORDER OF THE ITAT MUMBAI BENCHES IN THE FOLLOWING CASES WHERE THE TRI BUNAL HAD TAKEN A CONSISTENT VIEW THAT AN ASSESSEE WHO WAS FOLLOWING THE PROJECT COMPLETION METHOD CONSISTENTLY INCOME SHOULD NOT BE ESTIMATED IN THE YEARS IN WHICH MAJOR PART OF THE PROJECT IS NOT COMPLETED. 1. PAREKH PROPERTIES PVT. LTD. VS. ACIT (28 SOT 124 ) IN ITA NO.6516(BOM)1995 DT. 20.05.2002 2. SHREEJI TOWN PLANNER PVT. LTD. VS. ITO WARD 9(3) (1) IN ITA NO.3204/MUM/05 DT. 19.06.2006. 3. HAPPY HOME DEVELOPERS VS. ACIT (2001) (115 TAXMA N 309) IN ITA NOS.4521 & 4522/MUM/1997 DT. NOV. 2000. HE HAS INVITED OUR ATTENTION TO THE ORDER PASSED BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE FOR THE SUBSEQUENT ASSESSM ENT YEAR TO SUBMIT THAT THE PROJECT COMPLETION METHOD ADOPTED BY THE ASSESS EE WAS ACCEPTED BY THE ASSESSING OFFICER IN THE PRECEDING YEAR U/S.143(3) OF THE ACT. 6. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT ORDER PASSED BY THE CIT (A) DOES NOT CALL FOR ANY I NTERFERENCE; THEREFORE WE DISMISS THE APPEAL FILED BY THE REVENUE. ITA NO.2275/MUM/2009 A.Y.: 2005-2006 3 PRONOUNCED IN THE OPEN COURT ON THIS THE 27 TH DAY OF JANUARY 2010. SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) SD/- (D. MANMOHAN) (VICE PRESIDENT) MUMBAI DATED 27 TH JANUARY 2010. JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-XXI MUMBA I 4. COMMISSIONER OF INCOME TAX CITY-XXI MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH I MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI ITA NO.2275/MUM/2009 A.Y.: 2005-2006 4 DATE INITIALS 1. DRAFT DICTATED ON 22-01-10 PS 2. DRAFT PLACED BEFORE AUTHOR 25-01-10 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER AM/JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/J M 5. APPROVED DRAFT COMES TO THE SR. PS PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER