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TMI Blog2012 (9) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... e debited proportionately on the basis of area of land sold as divided by the total area of colony and deducting cost of non-saleable area of land on proportionate basis of land sold viz-viz total area of land Held that:- A.O. has ignored the rule of consistency when the assessee had been adopting mercantile system of accounting and development expenses have been accounted for on mercantile system basis and have been accepted by the Department in the preceding year. Though by debiting development expenses in the trading account and correspondingly by crediting amount to the closing stock does not affect the revenue. As per PUDA rules, a developer has to account for 40.33% as wastage is not under dispute. PUDA fees and construction charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), Amritsar has ignored the fact that PUDA fees of Rs.6,07,339/- has not been debited on the basis of proportionately on the basis of area of land sold as divided by the total area of the colony. V. On the facts and in the circumstances of the case, the Ld. CIT(A), Amritsar has ignored the fact that Non saleable area in total land measuring 3440.25 sq.yd had been deducted out of total land instead of deducting cost of non-saleable area of land on proportionate basis of land sold viz-viz total area of land. VI. The appellant craves to leave to amend or add any or more grounds of appeal. 3. In C.O. No.19(Asr)/2011, the assessee has raised following grounds of appeal: 1. That the Ld. CIT(A), Amritsar, was justified in deleting the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en correctly reflected therein. By recasting the assessee s trading account in respect of land-holdings in Shivam Estate, it was pointed out to the assessee as against the declared gross profit of Rs.23,35,132/-, the gross profit actually works out at Rs.71,07,640/- as is evident from the recasted trading account and he proposed to make trading addition of Rs.47,52,508/- representing suppression of gross profit. After considering the assessee s reply dated 27.12.2010 and holding it untenable on appropriating the provision for future development amounting to Rs.63,57,825/- on both sides of the trading account, and further appropriating proportionate constructions expenses as well as PUDA fee attributable to the sale of plots of land during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... development expenses to the tune of Rs.63,57,825/- whereas these have actually been incurred as per year-wise details submitted. 6. The Ld. CIT(A) after considering the submissions of the assessee s counsel and on perusal of the facts observed that the AO was not justified in rejecting the book version without pointing out any defects and deficiency in its duly audited books of account maintained by it wherein it has consistently been following Mercantile system of accounting. The auditors have not pointed out any defects or deviation in the financial notes annexed with the audit report under section 44AB of the Act. The counsel for the assessee relied upon the decisions of various courts of law in this regard. It was observed by the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported in (2000) 162 CTR 325 (SC) , Calcutta Co. Ltd. vs. CIT (1959) 37 ITR 1 (SC), M/s. Berger Paints India Pvt. Ltd. 206 ITR 99 and CIT vs. J.K. Chemical Trust, 308 ITR 161 (SC), which are squarely applicable to the facts and circumstances of the instant case. Accordingly, the Ld. CIT(A) reversed the order of the AO for invoking the provisions of section 145(3) of the Act and accordingly deleted the trading addition of Rs.47,52,508/- made by the A.O. 7. We have heard the rival contentions and perused the facts of the case. The Ld. DR appearing for the Revenue relied upon the order of the Assessing Officer. Ld. counsel for the assessee, Sh. P.N. Arora, relied upon the order of the ld. CIT(A) and argued that the AO has completely ignored ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e books of account, the AO is not justified in invoking the provisions of section 145(3) of the Act and therefore no addition is called in the facts and circumstances of the present case. Therefore, we find no infirmity in the order of the ld. CIT(A) who has rightly directed the A.O. delete the addition of Rs.47,52,508/-. Thus, all the grounds of the Revenue are dismissed. 8. As regards grounds in C.O. No.19(Asr)/2011 of the assessee, the same are supportive in nature, in support of the order of the ld. CIT(A) and therefore, the same are dismissed. 9. In the result, the appeal of the Revenue in ITA No.446(As)/2011 and C.O. No.19(Asr)/2011 of the assessee are dismissed. Order pronounced in the open court on 28th June, 2012 - - Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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