2017 (12) TMI 471 - AT - Income Tax

Addition on account of Profit reworked for Ghaziabad sub-project plotted - Held that - CIT(A) in the present year i.e. AY 2010-11 while passing the impugned order has thus observed that since there is no reason for him to differ from the findings of his Predecessor on this issue. Therefore, in order to maintain the Rule of consistency, respectfully following the decision of the Ld. CIT(A) in the AY 2008-09, the issue in hand was decided in favour of the assessee and AO was rightly directed to delete the addition which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the addition in dispute and reject the ground no. 1 raised by the Revenue. Addition on account of Profits reworked for Meerut sub project - Held that - In order to maintain the Rule of consistency, respectfully following the decision of the Ld. CIT(A) in the AY 2008-09, the issue in hand was decided in favour of the assessee and AO was rightly directed to delete the addition of ₹ 4,37,87,000/-, in respect of plots in Meerut project on account of 98.72% of completion as against 96.04% of completion declared by the assessee, ₹ 16,97,000/- in respect of built up area in Meerut project on account of 60.36% of completion as against 60.23% declared by the assessee, ₹ 9,65,000/- in respect of constructions of Mall in Meerut project on account of adoption of 38.41% of completion as against 35.97% declared by the assessee. Therefore, the Ld. CIT(A), also rightly directed to adopt the loss of ₹ 30.7 lacs on account of percentage completion declared by the assesse at 32.09% as against 32.4% adopted by the AO, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT(A) on the addition in dispute and reject the ground no. 2 raised by the Revenue. Addition being know how fee surrendered - addition u/s Section 40(a)(ia) - Held that - CIT(A) has observed that AO has not considered the above judicial pronouncement on the issue. In view of the above facts and circumstances of the case and judicial pronouncements on the issue, Ld. CIT(A) has rightly held that the second proviso to Section 40(a)(ia) is clarificatory and curative in nature and therefore, the assessee was entitled for claim of deduction and AO was rightly directed to verify the claim of the assessee that the tax has been paid on the above amount by the payee i.e. Ansal Properties and Infrastructure Ltd. in terms of the aforesaid judgments and allow the aforesaid deduction if the tax has indeed been paid by the payee. Respectfully following the precedents, we do not find any infirmity in the finding of the Ld. CIT(A) on the issue in dispute, hence, we uphold the action of the Ld. CIT(A) on this issue, and reject the ground no. 3 raised by the Revenue.

Summary

Issues Involved:
1. Deletion of addition on account of profit reworked for Ghaziabad sub-project plotted.
2. Deletion of addition on account of profits reworked for Meerut sub-project.
3. Deletion of addition on account of know-how fee surrendered.
4. Deletion of addition on account of profits reworked for various sub-projects (Meerut, Karnal) for AY 2011-12.

Detailed Analysis:

1. Deletion of Addition on Account of Profit Reworked for Ghaziabad Sub-Project Plotted:
The Assessing Officer (AO) made an addition of ?19,34,53,000 based on a similar addition made in AY 2008-09. The CIT(A) had deleted this addition for AY 2008-09, and the AO accepted this decision for AY 2009-10. The CIT(A) for AY 2010-11 followed the principle of consistency and deleted the addition. The Tribunal upheld the CIT(A)'s decision, emphasizing the need to maintain consistency in judicial decisions.

2. Deletion of Addition on Account of Profits Reworked for Meerut Sub-Project:
The AO added ?4,37,87,000, ?16,97,000, and ?9,65,000 for different components of the Meerut sub-project, based on the addition made in AY 2008-09. The CIT(A) deleted these additions, following the same rationale as in AY 2008-09. The Tribunal upheld the CIT(A)'s decision, noting that the AO had accepted the CIT(A)'s order for AY 2009-10 and no such additions were made for that year. The Tribunal emphasized the importance of consistency and upheld the deletion of these additions.

3. Deletion of Addition on Account of Know-How Fee Surrendered:
The AO added ?1,26,46,909 on account of know-how fee surrendered. The CIT(A) deleted this addition, relying on the ITAT Agra Bench's decision in Rajiv Kumar Agarwal vs. Addl. CIT, which held that the second proviso to Section 40(a)(ia) is declaratory and curative in nature and has retrospective effect from 1st April 2005. The Tribunal upheld the CIT(A)'s decision, citing the need for a fair, just, and equitable interpretation of the law. The Tribunal also referenced decisions from other ITAT benches that supported the retrospective application of the second proviso to Section 40(a)(ia).

4. Deletion of Addition on Account of Profits Reworked for Various Sub-Projects for AY 2011-12:
The issues in AY 2011-12 were similar to those in AY 2010-11. The AO made additions for profits reworked for sub-projects in Meerut and Karnal. The CIT(A) deleted these additions, following the same rationale as in AY 2010-11. The Tribunal upheld the CIT(A)'s decision, maintaining consistency with its earlier ruling for AY 2010-11.

Conclusion:
The Tribunal dismissed the Revenue's appeals for both AY 2010-11 and AY 2011-12, upholding the CIT(A)'s decisions to delete the additions made by the AO. The Tribunal emphasized the importance of consistency in judicial decisions and the need for a fair, just, and equitable interpretation of tax laws. The Tribunal's decision was pronounced on 06/12/2017.