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TMI Blog2015 (8) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... n ITA No. 3483/ Mum/2006. 3. That on the facts and in the circumstances of the case of the appellant and in law learned CIT (Appeals)has erred in not directing the deduction of Rs. 29,480,530/ -being the expenditure incurred by the appellant in the subsequent years in relation to income assessed for Assessment Year 1999- 2000/-. 4. All the above grounds of appeal are independent and without prejudice to each other. 5. The Assessing Officer's order being contrary to law, evidence and facts of the case may kindly be set aside, amended or modified in the light of the grounds enumerated above. 6. The appellant craves leave to reserve to himself the right to add to, alter or amend any of the grounds of appeal at or before the time of hearing and to produce such further evidences, documents and papers as may be necessary." ITA 4242/Mum/2012 (AY :2002-03) "1. That on the facts and in the circumstances of the case of the appellant and in law learned CIT (Appeals) has erred in not directing the deletion of the sum of Rs. 21,903,394/- as being double assessment of the income already brought to assessment for Assessment Year 1999-2000. 2. That on the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts refunded by the assessee to CJ Patel (CJP) and M/s. Aryan International Transport (AIT). During the original assessment proceedings, the AO had made a disallowance of Rs. 17 lacs. It was found that the assessee had claimed that it had returned money to CJP and AIT. Aggreived by the order of the AO the assessee preferred an appeal before the First Appellate authority (FAA), who confirmed the order of the AO. 2.1. Before us, the Authorised Representative(AR)submitted that in the first round of litigation the FAA had deleted the addition, that the AO had not challenged the order of the then FAA, that the issue had become final at that point of time, that the AO was not justified in disallowing the same during the second assessment proceedings. He referred to the page no.61 and 62 of the Paper book. Departmental Representative(DR) left the issue to the discretion of the Bench. 2.2. We have heard the rival submissions and perused the material on record.We find that while deciding the appeal for the AY.under appeal on 24.03.2006, the then FAA had dealt with the issue of refunding of money to CJP and AIT as under: During the course of assessment proceedings it was stated by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal also, it is evident that the order of the FAA was not challenged by the AO with regard this issue. In these circumstan ces, addition made by the AO and confirmed by the FAA is held be to unjustified. Reversing the order of the FAA pertaining to the issue under consideration, we decide ground no.1 in favour of the asessee. 3. Next ground of appeal deals with deduction of Rs. 3,66,95,990/, being compensation paid on surrender of flats. As stated earlier, the AO had computed the total income of the asessee at Rs. 5.77 crores in the second round also.One of the items added during the original assessment was about compensation paid on surrender of flats. The issue had travelled up to the Tribunal. 3.1. Before us, the AR contended that in the first round of appeal the issue was decided in favour of the asessee, that the AO had challenged the order of the FAA before the Tribunal, that the Tribunal vide its order dated 18.12.2009 (supra) had decided the issue against the AO, that the AO and the FAA had incorrectly made the addition/upheld the addition in the second round. He referred to the page no.6367 and 2227 of the paper book. DR stated that issue could be decided on mer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was paid to them. It was further submitted that the payments to these persons have been made by account payee cheques/drafts. The copies of the bank account evidencing clearance of cheques issued to those persons were also filed before the CIT(A). The assessee also gave the details of 9 persons to whom the flats of Rs. 7,03,66,767which is much higher than the amount of compensation paid. It was further submitted that in case the compensation of Rs. 3,67,95,990 was to be excluded from the cost of the project, then the receipt of Rs. 7,03,66,767 in respect of sale of these flats included in the receipts should also be excluded. Based on the arguments advanced by the assessee, the CIT(A) called-for a remand report and on the basis of such remand report, directed the Assessing Officer to treat the compensation of Rs. 3,67,95,990 paid to various persons as cost of the project, the profits in respect of which have been assessed in the year under consideration. 21. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us. 22. After hearing the learned DR and on perusal of the orders of the authorities below, we do not find any infirmity in the order of the CITCA) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in respect of compensation were paid to the allottees. After examining the issue, the AO sent his remand report vide his letter dt: 29.8.2005. The relevant part of the said report is reproduced hereunder: "Assessee company has submitted copy of letter from M/s. International Sea Foods Pvt. Ltd. dt. 22.10.1986. On 26.8.2005, assessee's representative submitted that it is difficult to race out the party after almost 20 years. However, we have given you copies of sample receipts received by the party for the payment received by him from time to time. ii) Mrs. S. D. Pardiwala .. iii) Mrs. Kamla J. Gehani iv) Mrs. Vimal S. Thakore v) Dr. C.L. Zaveri & Others vi) Mrs. K. A. Dave vii) M/s. Indo Saigaon Agency viii) Mrs. Manjula Babulal ix) Mr. Bharat R. Gupte In the case of S. No. (ii) to (ix) the assessee has filed copies of the agreement made for the surrender of the flats vide their letter dated 17.5.2004. The same copies of agreement for surrender of flat filed by the assessee's representativeon 26.8.2005. They have also mentioned that the assessee company has considerably received from money than what he has paid. In all assessee has paid Rs. 3,67,95,990/against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellation of bookings, the payment of compensation made is required to be allowed as a deduction on the principle of business expediency. In view of this discussion, the AO is directed to treat the compensation of Rs. 3,67,95,990/- paid to various persons as the cost of the project the profits in respect of which have been assessed for the year under consideration. 23. The learned DR could not controvert the above factual findings given by the CIT(A). We find the only grievance of the Revenue is that the original agreements or confirmations from the parties to whom the compensation for surrendering of incomplete flats has been paid were not furnished for which it was not possible on the part of the Assessing Officer to verify the genuineness. However, we find the assessee has produced the copies of the bank account and the copies of agreements, etc., before the Assessing Officer. Further the assessee by cancelling the agreements has paid compensation of Rs. 3,67,95,990 and by reselling the flats has received an amount of Rs. 7,03,66,767 which has been disclosed as the receipts and which is much higher than the compensation so paid. In this view of the matter and in view of the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d plastering and paintings only. It was stated that the additional evidence filed by it may be considered admissible under Rule 46A of I. T. Rules. Further, it was submitted that even the AO did not give any opportunity to the appellant to file evidence in respect of the claim that the additional ground taken by it and the additional evidence filed in support thereof should be admitted. After considering the submissions of the assessee the FAA held that all the expenses claimed by it in the additional ground of appeal were incurred in F.Y. 200405 and 200506 i.e after the return of income for the AY.under consideration was filed on 20.02.2004, that the ground taken by the assessee could not have been taken earlier before the AO.Referring to the judgment of Jute Corporation of India (187 ITR 688), he admitted the additional grounds raised by the assessee. He decided the issue as under: "The figure of Rs. 3,45,69,104/- given by the appellant now is actual one. When the department has decided to assess the profit arising to the appellant from the project consisting of 34 floors in A. Y. 1999-2000, it is logical that all the expenses relating to the said project as well as all the rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plies of the assessee to the same, he directed the Assessing Officer to consider an amount of Rs. 2,94,80,530 as part of the project cost consisting of 34 floors while computing the profit therefrom. The balance amount was directed to be allocable towards the project involving FSI of 3000 sq. ft. which has been sold by the assessee for Rs. 3.90 crores. 28. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us. 29. After hearing the learned DR and on perusal of the orders of the authorities below, we find the assessee during the course of assessment proceedings has claimed an amount of Rs. 90 lakhs which was incurred in respect of the project consisting of 34 floors after 31st March, 1999. We find the said figure has gone up to Rs. 3,45,69,104 before the CIT(A). We find the CIT(A) called for a remand report from the Assessing Officer who objected the allowability of the expenditure in the A.Y.1999-2000 since these expenses were incurred in financial year 2004-05 and the expenses are in the nature of repairs. Further the Assessing Officer had also " reported that the entire building was occupied by the flat owners long / back. Therefore, question of additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the project.Finally, he held that the AO had rightly taxed the assessee at Rs. 5,77,77, 896/. 4.2. Before us, the AR stated that the asessee was following project completion method, that till AY.200506 it did not calculate profit, that assessment for the AY.19992000 was reopened u/s.147 of the Act holding that all the flats were sold in that year. He referred to the page no.85 of the paper book wherein the AO had calculated the Gross receipts of the project at Rs. 21.46 Crores and expenditure at Rs. 15.69 Crores for the AY.under appeal. He further argued that if the AY.under consideration was to be considered final year then expenditure incurred by it in subsequent years should be allowed, that during the first round of appeal the FAA had admitted additional evidences and had decided the issue in favour of the assessee, that the documents were available to the departmental authorities, that the assessee could not appear before the Tribunal, that the FAA decided the issue after obtaining a report from the AO, that the fact of submission of the remand report by the AO was not brought to the notice of the ITAT, that the dispute was not about the genuineness of the expenditure but ..... X X X X Extracts X X X X X X X X Extracts X X X X
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