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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 ..... ove 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 ₹ 3,67,95,990 and by reselling the flats has received an amount of ₹ 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 detailed discussion by the CIT(A)in his order on this issue, we do not find any infirmity in the same and accordingly, the same is upheld.The FAA had, in the first round,deleted the addition made by the AO,then there was no justification on his part in upholding the same in the second round especially after the order of the Tribunal.Therefore, reversing the order of the FAA on the issue and following the ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be taxed twice - Held that:- The assessee has claimed that the amount in question does not pertain to the year under appeal,therefore the AO is directed to verify the fact and delete it from the computation for the year under consideration,if same has been taxed during the AY.19992000. - Decided in favour of assessee by way of remand. - ITA/4241&4242/Mum/2012 - - - Dated:- 5-8-2015 - Sh. Joginder Singh and Rajendra, JJ. For The Appellant : Shri S. C. Tiwari For The Respondent : Shri Yogesh Kamat-Sr. AR Order PER RAJENDRA, AM Challenging the orders of CIT(A)9, Mumbai, dated 19.3.2012 the assessee has filed the following Grounds of Appeal for the above mentioned two assessment years : ITA 4241/Mum/2012 (AY :1999-00) 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 deduction of ₹ 1,700,000/ - being the amounts refunded by the appellant to Shri C J Patel and M/ s Aryan International Transport allowed by his predecessor order dated 24.03.2006 and accepted by the Department. 2. That on the facts and in the circumstances of the case of the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. Assessee-company, engaged in the business of builders and developers, filed return of income on 31.12.1999, declaring income of ₹ 7.01 lacs. Assessing Officer(AO)completed the assessment u/s.143(3) of the Act on 30.3.2005, determining its total income at ₹ 5.77 crores. It preferred an appeal before the First Appellate Authority (FAA)who granted partial relief. Assessee as well as the AO approached the Tribunal and vide its order, dated 18.12.2009,(ITA No.3568/Mum/06 and ITA/3483/Mum/06)it set aside the order of the AO with regard to certain grounds and certain grounds filed by the assessee were allowed. As the assessee did not appear before the Tribuanl, so it decided the matter on the basis of the material available and after hearing the representative of the Department. The Tribunal set aside ground no.2 and 3 to the file of the AO. It was also held that the project was substantially completed in the AY.19992000 and that the receipt from the projects had to be assessed in the that AY.only. In pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 21,46,98,875/-. It was submitted that this amount included an amount of ₹ 4 Lac from Shri C.J. Patel and ₹ 13 Lac from M/s. Aryan International Transport. Since both these persons were not allotted any flat, the sum of ₹ 17 lacs has been refunded to them in the F. Y. 2004-2005. Accordingly, the receipts of the appellant as on 31.03.99 in respect of the project should be taken only at ₹ 21,29,98,875/-. 4.2 1 have carefully considered the submissions made by the Ld. AR. Vide my letter dated 5.7.2005, the AO was asked to comment on the claim of the appellant regarding exclusion of ₹ 17 lacs from the receipts. Vide his letter dated 29. Dec,2005 the AO submitted that the receipts are required to be taken at ₹ 21,46.98,8751- as appearing in the balance sheet as on 31.03.99. On perusal of the details filed by the appellant, it is seen that the advances of ₹ 21,46,98,875/- included the amount of ₹ 17 lacs received from Shri C.J. Patel and M/s. Aryan International Transport. On perusal of the list of allottees of the flat, it is seen that no flat was allotted to these two persons by the appellant. Therefore, the advances received from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of assessment proceedings submitted before the Assessing Officer that various persons had booked flats with the assessee by paying advances. However, since the project got delayed extraordinarily, some of the persons wanted to terminate their agreements with the assessee. The assessee entered into agreements with them agreeing to pay some compensation to them against which they terminated their agreements in respect of allotment of flats in favour of the assessee. The assessee thereafter allotted those flats which were terminated to some other persons and the sale consideration received was much higher than the compensation paid by the assessee to the original flat owners. The assessee included this compensation of ₹ 3,67,95,990 in the cost of project on account of compensation paid 19. However, the Assessing Officer did not accept the claim of the assessee on the ground that the original agreements entered into by the assessee with the persons to whom compensation was paid were not produced before him to prove as to whether there was any clause existed therein regarding the terms of payment of compensation in the event of termination of the agreement Further the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements entered into with these persons at the time of booking of flats to enable the AO to ascertain whether there was any clause allowing compensation at the time of thetermination of booking. It was the claim of the appellant that the copies of agreement on the basis of which compensation was paid were filed before the AO. Since those copies were not taken note of by the AO during the course of asstt Proceedings, vide letter dt 5.7.2005; the AO was asked to examine the issue after giving opportunity of being heard to the appellant The relevant part of the letter sent to the AO is reproduced hereunder: While computing the total income, the appellant had claimed deduction on account of compensation of ₹ 3,67,95,900/-. The AO did not allow deduction on the ground that the appellant did not submit the original agreements entered into with these persons. Further, the appellant did not submit confirmation from the 9 persons regarding the receipt of compensation. It has been submitted by the Ld. AR before me that the AO did not ask the appellant to furnish these documents. I feel that the issue has not been properly examined by the AO.You are requested to - again examine the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een examined by me.On perusal of various documents filed by the appellant, it is seen that the appellant had paid compensation to various persons, who had cancelled their bookings, through cheques/demand drafts. The appellant has filed copies of agreements on the basis of which these payments have been made before the AO as well as before me. In most of the cases, the sample copies of receipts obtained in respect of payment of compensation to various persons have been filed before the AO.Further, on perusal of copies of various bank accounts filed by the appellant, it is seen that all the cheques issued to various parties have been cleared. In the bank statements, the name of the person to whom the payment in respect of a particular cheque has been made, has been specified. The copies of agreements and the proof having made the payments through cheques are sufficient evidence to support the claim of the appellant of having paid compensation to various parties against cancellation of flats. Since the payments in respect of compensation were made about 18 to 20 years back the inability of the appellant to furnish confirmations from the required persons can be well appreciated. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputed the tax liability. The FAA had, in the first round, deleted the addition made by the AO, then there was no justification on his part in upholding the same in the second roundespecially after the order of the Tribunal. Therefore, reversing the order of the FAA on the issue and following the earlier order of the ITAT, we decide ground no.2 in favour of the asessee. 4. Last effective ground of appeal is about deduction of ₹ 2,94,80,530/being the expenditure incurred by the appellant in the subsequent years in relation to income assessed for the AY.under consideration.Facts of the matter are that during the original assessment proceedings, the asessee claimed that it had incurred certain expenditure in respect of project consisting of 34 floors after 31.03.1999, that the expenditure should be considered a part of the cost of the project. The asessee estimated the cost of the project at ₹ 90 lakhs. The AO did not accept the claim of the asessee on the ground that no supporting evidences were filed to substantiate the claim of estimated expenditure on plastering and painting. 4.1. Before the FAA, in the first round of hearing, an additional ground was raised. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is allocable towards the project involving FSI of 3000 sq.ft. which has been sold by the appellant for ₹ 3.90 crores. Accordingly, the AO is directed to consider the amount or ₹ 2,94,80,530/- as a part of the cost of the project consisting of 34 floors while computing the profit therefrom. This allocation has been done by taking the receipts from the project at ₹ 22,61, 02,956/-. The same will change if the AO changes the figure of receipts from the project after verification. The AO challenged the order of the FAA before the Tribunal, who restored the matter back to the file of the AO for fresh adjudication in following manner: 26. Before CIT(A)it was submitted that the figure of ₹ 90 lakhs given before the Assessing Officer was merely on estimate basis. However, the actual expenditure amounted to ₹ 3,45, 69, 104 which was incurred on the project consisting of 34 floors after 31.3.1999. By filing an additional ground, the assessee claimed deduction of this expenditure. It was submitted that the additional evidence filed by the assessee should be admitted under Rule 46A of the Income-tax Rules,1962 as the Assessing Officer did not give an oppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Assessing Officer to substantiate the expenditure of ₹ 90.00 lakhs. In our opinion the powers of the Assessing Officer during the remand proceedings are limited, Since there is already variation between the figures given before the Assessing Officer and before the CIT(A), therefore, we in the interest of justice, deem, it proper to restore the issue to the file of the Assessing Officer with a direction to give one more opportunity to the assessee to substantiate with evidence to his satisfaction that it has incurred expenditure of ₹ 3,45,69,104 towards cost of the project and which is not in the nature of repairs. The Assessing Officer shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground by the Revenue is accordingly allowed for statistical purposes. FAA held that the AO had issued notice of hearing on 3.3.2010 but the assessee did not attend nor furnished the requisite details before him, that later on three more opportunities were given to the assessee but same were not availed, that the AO issued final show cause dated 1.12.2010 and asked it to furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO had submitted the report and had stated that it was difficult to comment upon the admissibility of additional evidences. Thus, the existence of Remand report is proved. If the assessee had supplied all the papers during the first round of litigation and had requested the AO to refer to the order of the then FAA the AO should have considered the documents. We are unable to understand as to how the AO and the FAA had determined the income of the assessee again at ₹ 5.77 Croresespecially when the Tribunal had allowed relief to the assessee. It is true that the assessee had not appeared before the AO, but the FAA had all the documents to decide the case on merits. But, he confirmed the order of the AO. Considering the peculiar facts of the case, we are of the opinion that in the interest of justice, the matter should be restored back to the file of the AO for fresh adjudication. He would afford a reasonable opportunity of hearing to the assessee, after considering the documentary evidences admitted by the FAA during the first round of litigation. The assessee is directed to appear before the AO and to extend full cooperation.Ground no.3 is decided in favour of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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