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TMI Blog2017 (5) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... relief as per the law - Decided in favour of assessee Adjustment to the WIP account - DR opposed the admittance of the additional ground and the papers filed before us - Held that:- We are of the view that it is in the interest of justice the assessee must not be put to difficulty for no mistake of him. In our view it is the duty of the AO to make proper assessment. AO should have examined the past assessments for the details of the altered WIP figures before he complete the current assessment. Considering the above, we are of the view that the AO must remove the mistakes in the assessment and adopt the correct WIP considering the changes made in the past to the said account. In the remand proceedings, AO shall grant reasonable opportun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rounds, namely,- 1. The CIT (A) has erred in laws as well as under the facts and circumstances of the case in confirming the addition of ₹ 21,13,519/- made on account of disallowance of bad debts. 2. The CIT (A) has erred in laws as well as under the facts and circumstances of the case in rejecting the claim of set off of b/f of losses amounting to ₹ 21,04,86,007/- 3. The CIT (A) has erred in laws as well as under the facts and circumstances of the case in rejecting the prayer of your appellant for determining the closing value of work in progress. 4. The CIT (A) has erred in laws as well as under the facts and circumstances of the case in not considering the value of opening working progress as per income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income, the opening WIP be taken at ₹ 9,56,76,408/- as against the 7,81,76,218/- shown in the books of accounts. Consequently, the assessable income be reduced by ₹ 1,74,84,190/- 3. Ld Counsel for the assessee brought our attention to the additional grounds and submitted that the said issues were raised before the CIT(A) and they were not adjudicated on merits on the ground that the AO s order does not speak of them. Otherwise, the taxing of the exempt income and non consideration of assessed WIP in earlier AYs in making the assessments are the two issues raised additionally. In this regard and at the outset ld Counsel for the assessee brought our attention to the said letter dated 1.3.2017 and submitted prayer for admittin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e business of builder and developer. Assessee filed the return of income of ₹ 59,29,220/- and the AO determined the assessed income at ₹ 1,26,57,700/-. While filing the same, the AO erroneously considered the exempt share income in the firm in the computation of income. AO made additions on account of disallowance of bad debts and the provisions of section 35D of the Act. In the assessment order, there is no reference to the facts relating to the b/f losses as well as the changes made by him in the earlier AYs to the WIP account of the assessee. During the FAA proceedings, assessee contested the above additions and also raised the above extracted additional grounds in different words. At the end of the proceeding, FAA deleted ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he interest received from the debtors was reduced from the total expenses and balance is considered as WIP thereby the said interest receipts are assessed to tax under the head profits and gains from business or profession . On examining the WIP accounts of the assessee for various years, we find the claim of the assessee is proper and the assessee entitled to relief on this part of the bad debts too. We direct the AO grant relief as per the law. The assessee relied on the jurisdictional High Court Judgment in the case of Star Chemicals P Ld 313 ITR 126, Padamji Pulp and Paper Mills Ltd ITA 1590/2013 dt 5.8.2015 etc in support of the above. We find the said decision helps the assessee. Accordingly, this part of the issue and related ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamined the past assessments for the details of the altered WIP figures before he complete the current assessment. Considering the above, we are of the view that the AO must remove the mistakes in the assessment and adopt the correct WIP considering the changes made in the past to the said account. In the remand proceedings, AO shall grant reasonable opportunity of being heard to the assessee. Accordingly, relevant grounds and additional grounds are allowed, in principle, for statistical purpose. However, the same is subjected to the finding of the AO in the remand proceedings. Further, on the issue of losses referred to in ground no 2 above, we grant similar direction to the AO in connection with the grounds/additional grounds relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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