9911796707
TMI Blog2016 (1) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee is a promoter and developer of real estate and runs the business under the name and style of 'M/s Uttam Kumar Kundu'. The assessee constructed a residential apartment at 13A/27, Ariff Road, Kolkata - 700 067 on a plot of land measuring 400.687 square meter. The Learned AO observed that as per sanctioned plan that total floor area of 861.34 square meter which includes service area of 215.538 square meter and car parking of 60 square meter was sanctioned to be constructed in Ground plus 4 floors apartments containing 12 flats and 3 car parking spaces. The assessee had maintained the books of accounts such as cash book, ledger, purchase and sales register and bank book for the financial year 2005-06 relevant to Asst Year 2006-07 and the same were produced before the Learned AO during the course of assessment proceedings. The assessee pleaded before the Learned AO that the assessee is not a contractor and hence the Accounting Standard 7 (AS-7) issued by the Institute of Chartered Accountants of India (ICAI) on 'Construction Contracts' is not applicable to the assessee. The assessee chose to offer the income under Completed Contract method i.e as and when the flats ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess purposes have been duly accepted by the Learned AO in the reopened proceedings for Asst Year 2005-06 and placed the copy of the assessment order on record. He also fairly stated that the said order copy was also placed before the Learned CITA by the assessee. In response to this, the Learned DR vehemently supported the order of the Learned AO. 3.5. We have heard the rival submissions and perused the materials available on record. We find that the assessee is engaged in building promotion and development business as promoter and developer. We agree with the contention of the Learned AR that the assessee is not a contractor and hence AS 7 issued by ICAI is not applicable to him. Hence his choice of recognizing revenue under completed contract method is correct. But what is to be seen is in which year the contracts are completed by the assessee. The project is completed by the assessee in Asst Year 2005-06 but the assessee has chosen to recognize the revenue in respect of the projects in Asst Year 2006-07 by declaring sales in respect of 10 flats and car parking space to the tune of Rs. 1,08,79,800/- and declaring profit thereon to the tune of Rs. 6,78,561/-. According to assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has concluded as under:- "On 07.12.2010, it was among other things, explained that the garage is used for the business of the assessee so he didn't take into account while showing WIP. Extracts of KMC records have been furnished showing the business address at 13A/27 Ariff Road, where the flat came up. Besides, the AR produced papers showing Municipal office records show mutation in favour of Smt. Mithu Kundu who is wife of the late brother. ................. In retrospect, my predecessor reopen the case inter alia on the ground that two flats and two garages were not shown in the closing stock and hence the amount pertaining to the sale value of the flats is believed to have escaped assessment. It is gathered by now that there is sale. The WIP does not, therefore, give any undisclosed sales. " This goes to prove that there is no case for making any addition towards undisclosed sale of two flats and profits derived thereon on an estimated basis as the contention of the assessee with regard to the gifts given by him to the widow of his younger brother has been accepted as genuine by the Learned AO in Asst Year 2005-06. Hence we find no infirmity in the order of the Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee during Asst Year 2006-07. The Learned AO also found that the cost of construction of the said flat was not reflected as closing stock of work in progress by the assessee in the balance sheet as on 31.3.2006. The Learned AO further found that the labour charges and cost of materials for the said flat were paid during the financial year 2005-06 which indicated that the said flat was constructed during Financial Year 2005-06 and which had been claimed as deduction by the assessee already in the regular books. According to the Learned AO the sale of flat had been completed in Asst Year 2006-07 and accordingly taxed the sale consideration of Rs. 11,00,000/- as undisclosed income in Asst Year 2006-07. On first appeal, the assessee pleaded before the Learned CIT(A) that the registration deed of flat was executed on 17.7.2008 and capital gains offered to tax in Asst Year 2009-10 by the assessee. The assessee pleaded that the advance of Rs. 11,00,000/- was received only by account payee cheque by the assessee. The Learned CITA appreciated the contentions of the assessee and deleted the addition. Aggrieved, the revenue is in appeal before us on the following ground:- "3. Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Raj) which in turn relied on the decision of the Hon'ble Apex Court in the case of CIT vs Poddar Cement Pvt Ltd and Others reported in 226 ITR 625 (SC) wherein it was held that :- Pages 725,726 of 259 ITR 724(Raj.) "The Tribunal has decided the issue only an the basis of nonregistration of the transfer deed. The Tribunal has taken the view that in the absence of the registration of the sale deed, there is no transfer and no capital gain tax is attracted. Now this controversy has been resolved by their Lordships in the case of CIT v. Poddar Cement Pvt. Ltd [1997] 226 ITR 625. At pages 653, their Lordships observed as under: "We are conscious of the settled position that under the common law, 'owner' means a person who has got valid little legally conveyed to him after complying with the requirements of law such as the Transfer of Property act, Registration Act, etc. But, in the context of section 22 of the Income-tax Act, having regard to the ground realities and further having regard to the object of the Income-tax Act, namely, 'to tax the income', we are of the view , 'owner' is a person who is entitled to receive income from the property in his own right." Following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.2. The Learned AR relied on the order of the Learned CITA. In response to this, the Learned DR relied on the order of the Learned AO. 5.3. We have heard the rival submissions and we find that we have held in the previous grounds contained hereinabove that certain sale of flats had taken place in Asst Year 2005-06 and we have also placed reliance on the assessment order for Asst year 2005-06 for arriving at the conclusion for the ground numbers 1 & 2 raised by the revenue. In view of that decision, we hold that the TDS provisions are applicable to the assessee for Asst Year 2006-07 and hence section 40(a)(ia) of the Act has been rightly invoked on the assessee for Asst Year 2006-07. However, we find that the second proviso to section 40(a)(ia) of the Act which is introduced in the statute with effect from 1.4.2013 has been held to be retrospective in operation by the recent decision of Hon'ble Delhi High Court in the case of CIT vs Ansal Land Mark Township P Ltd reported in 61 taxmann.com 45 (Delhi HC) wherein it was held that :- "Section 40(a)(ia) was introduced by the Finance (No.2) Act, 2004 to ensure that an expenditure should not be allowed as deduction in the hands of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in cash against sale of flats during Asst Year 2006-07 but however the assessee has shown receipts of Rs. 10,00,000/- from Sri K S Panja against a flat although through account payee cheques. The Learned AR asked the assessee regarding the explanation for deposits in the said bank accounts to the tune of Rs. 21,84,240/- being more than the withdrawals to the tune of Rs. 18,62,395/- and the assessee failed to offer any explanation before the Learned AO regarding the same. Hence the Learned AO added the difference as unexplained cash deposits to the tune of Rs. 3,21,845/- . On first appeal, the Learned CITA found that the transactions in the said two bank accounts have been duly reflected by the assessee in his audited accounts filed along with the return of income and hence there is no need to make any separate addition towards the same. Aggrieved, the revenue is in appeal before us on the following ground:- "5. Ld. CIT(A) has erred in law as well as on fact in deleting the addition of Rs. 3,21,845/- on account of difference in deposit and withdrawal from bank. " 6.2. The Learned AR argued that the cash book, bank book and other books of accounts were duly produced before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Akash Assocaites for purchase of flats and payment to Sri Amal Chakraborty was made to acquire his tenancy rights. He also found that the assessee has shown income from Kundu refinery works in the form of share of profit and salary from Kundu Associates in the form of share of profit. He found that apart from these incomes, the assessee has also disclosed income from other soruces in the form of bank interest and income from share trading and income from tanker. He gave a finding that the nexus between borrowed funds and interest free advances to sister concerns were not established by the Learned AO and hence no disallowance of interest could be made. Aggrieved, the revenue is in appeal before us on the following ground:- "6. Ld. CIT(A)has erred in law as well as on fact in deleting the addition of Rs. 1,37,692/- on account of interest on bank loan." 7.2. The Learned AR reiterated the submissions made before the Learned CITA and Learned DR vehemently supported the order of the Learned AO and argued that no evidence is brought on record whether the loans and advances (asset) reflected in the balance sheet of the assessee includes trade advance of Rs. 6 lacs paid to Akash Assoc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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