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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 ..... count 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 Rs. 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 tax records while determining the taxable income of the year under appeal. 2. Subsequently, during the proceedings before us, Ld Counsel for the assessee furnished the set of additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ught 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 admitting the additional grounds being legal in nature. In support of the same, Ld AR mentioned that the AO has not done the assessment as per the provisions of section 143(3) of the Act. Elaborating the same, Ld AR submitted that it is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 addition of bad debts partly and confirmed that part of the debts which actually are the interest accrued and written off as bad debts. CIT(A) did not admit and adjudicate the additional grounds relating to the adopting of the correct WIP account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 grounds are allowed. 6. Adjustment to the WIP account: it was already discussed that the assessee is a builder and the developer. He follows the project completion method in respect of the projects. In this method, maintaining the WIP account is an essential ingredient of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id 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 the mentioning of the brought forward losses to mention categorically and in accordance with the provisions of section 72 of the Act if the assessee is entitled to the claim of carry forward of said losses. Therefore, AO is directed to examine the records thoroughly and amend the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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