2012 (5) TMI 784 - AT - Income Tax

Summary

Issues Involved:
1. Sustenance of addition of Rs. 2,14,50,000/-.
2. Levy of interest u/s 234B and 234C.
3. Correction of license fees amount due to clerical error.

Summary:

1. Sustenance of Addition of Rs. 2,14,50,000/-:
The assessee, engaged in the business as a contractor cum developer, declared a total income of Rs. 2,13,32,028/-. However, the assessment was completed at Rs. 4,28,37,608/- including the disallowance u/s 14A of Rs. 10,000/- and an addition of Rs. 2,14,50,000/- as sale consideration of flats shown as advance. The assessee contended that the advances were received for flats whose possession was not given during the year and followed a consistent method of accounting. The Assessing Officer (A.O.) and CIT(A) held that the sale consideration should be recognized in the year of receipt as all significant risks and rewards had been transferred to the buyers. The Tribunal, however, found that the possession of the flats was given on 1-4-2007, and the assessee consistently followed the same accounting method accepted by the Revenue in past and subsequent years. Thus, the addition of Rs. 2,14,50,000/- was deleted.

2. Levy of Interest u/s 234B and 234C:
The assessee sought consequential relief from the levy of interest u/s 234B and 234C. The Tribunal directed the A.O. to allow consequential relief in light of the deletion of the addition of Rs. 2,14,50,000/-.

3. Correction of License Fees Amount Due to Clerical Error:
The assessee claimed a clerical error in the license fees amount, showing Rs. 1,99,53,314/- in the audited accounts but Rs. 1,83,53,314/- in the return of income. The A.O. rejected the claim based on the Supreme Court decision in Goetze (India) Ltd. v. CIT. The Tribunal found that the assessee had made a mistake and directed the A.O. to rectify the error and ensure legitimate taxes are collected, setting aside the orders of the Revenue Authorities on this account.

Conclusion:
The appeal was partly allowed, with the addition of Rs. 2,14,50,000/- deleted, consequential relief directed for interest u/s 234B and 234C, and the correction of the license fees amount remanded to the A.O. for rectification.