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TMI Blog2017 (6) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee. Accrual of income - income from property development - Held that:- Since no evidence has been produced before the lower authorities to prove the same, the addition was sustained by the ld CITA. The ld AR merely stated that in the appeal for the Asst Year 2004-05, the ld CIT-A had directed the ld AO to consider the revised return filed for the Asst Year 2004-05 wherein the entire income from property sale development have been claimed to be offered to tax on accrual basis. The said statement of the ld AR is reckoned as a statement given across the bar and accordingly, we deem it fit and appropriate, in the interest of justice and fair play, to avoid double taxation, to set aside this issue to the file of the ld AO to verify whether the said consideration has been offered to tax by the assessee in Asst Year 2004-05 and if found to be correct, then the same is to be deleted in the hands of the assessee in Asst Year 2005-06. Accordingly, the Grounds raised by the assessee are allowed for statistical purposes. Gains on sale of assets - Short term capital gain OR business income - Held that:- We are not able to fully appreciate the various contentions raised by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come for the Asst Year 2005-06 was filed on 30.10.2005 declaring total income of Rs Nil after setting off brought forward loss of ₹ 34,53,54,130/-. The ld AO observed that the assessee had claimed deduction towards Inventory, Sundry debtors, Loans /Advances written off in the books amounting to ₹ 6,90,39,000/- net off write back of provisions to the tune of ₹ 3,92,47,000/-. This was reflected as extraordinary item in the profit and loss account by the assessee. The ld AO observed that the assessee computed the profit under income tax act in computation of income as per profit in profit and loss account after extraordinary items instead of profit for the year before extraordinary items which is not in accordance with law for computation of income. The ld AO observed that if the profit for the year before extraordinary items is taken, then the same would be ₹ 10,02,74,000/- thereby resulting in increase in profit by ₹ 6,90,39,000/-. Hence this resulted in disallowance of ₹ 6,90,39,000/- in the assessment. 2.2. Before the ld CITA, the assessee submitted that as per Notes on Accounts contained at Note 9, Schedule 17 of the Annual Report, Sundry De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hority, the said authority considers the entire position including accounts. The authority will not grant revival unless a true, correct and a realistic approach of assets / liabilities is placed before them otherwise the authority does not sanction the scheme. Therefore writing off of obsolete stock, sundry debtors and loans / advances including writing back of liabilities in respect of closed units must be held as incidental to business. 2.3. Before the ld CITA, it was also explained that total amount written off on account of unrealized sundry debtors and advances of closed units was made by excluding provisions of ₹ 3,92,47,000/- made from time to time under each head of account. It was the practice of the assessee company to reduce the book value of debts on account fo provisions made there against. It is well known that provisions for doubtful debts made in the accounts are not allowable under IT Act. Since the entire sundry debtors balance is written off and claimed as bad within the meaning of section 36(2) of the act, it is essential to write back those provisions which was accordingly done by the assessee. It was also submitted that it is well settled that IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the Assessing Officer, however, did not appreciate the exact nature of the said amounts and proceeded to make disallowance of ₹ 645 lakhs on wrong presumption that the amount of ₹ 1826.27 lakhs debited by the assessee to the profit loss account of inventories, sundry debtors, loans and advances write off was a mere provision and not loss. Even the ld. CII(Appeals) could not appreciate the specific submission made on behalf of the assessee before him in support of its case on this issue pointing out the exact nature of relevant amounts debited and credited to the profit loss account and proceeded to uphold the order of the Assessing Officer on this issue merely on the ground that no details whatsoever regarding obsolete stock details, etc, of closed units as well as loss and advances claimed to be written off were filed by the assessee. The claim of the assessee on the issue under consideration thus has been disallowed by the Assessing officer and the disallowance so made has been confirmed by the ld. CIT(Appeals) without properly examining/verifying the same on merit in accordance with law and even the ld. D.R., has not been able to rebut or controvert this p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld CITA held that no proper explanation / reconciliation was furnished before him and accordingly upheld the addition made by the ld AO. Aggrieved, the assessee is in appeal before us on the following ground:- 3.) That on the facts and in the circumstances of the case, Ld. CIT(A) is wrong in dismissing assessee s ground and confirming the addition of ₹ 2,06,151/- as undisclosed income as per TDS certificate. 3.3. The ld AR simply pleaded for setting aside of this issue to the file of the ld AO on the ground that there were certain deposits kept by the assessee with the banks wherein the interest income would be offered to tax on receipt basis and hence there could be some difference in the treatment given by the assessee vis a vis treatment given by the bankers on the interest component. In response to this, the ld DR vehemently relied on the orders of the lower authorities and stated that even before this tribunal, the assessee had not come up with any reconciliation to explain the difference of interest income of ₹ 2,06,151/-. 3.4. We have heard the rival submissions. We find that the ld AR had not furnished any reconciliation for the difference in inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Accordingly, the assessee credited the sum of ₹ 87.32 lacs in its profit and loss account on receipt basis during the financial year 2004-05 relevant to Asst Year 2005-06. The ld AO observed that since the said sum of ₹ 87.32 lacs was not offered to tax by the assessee in Asst Year 2005-06, the same was added to total income of the assessee. It was submitted before the ld CITA and ld AO that assessee had already offered the entire sale consideration of ₹ 401 lacs in Asst Year 2004-05 itself on accrual basis by way of filing the revised return. Hence the taxation of ₹ 87.32 lacs which is already included in ₹ 401 lacs would result in double taxation. The ld CITA brushed aside the contentions of the assessee on the ground that the assessee failed to bring any evidence on record to prove the same and upheld the addition made by the ld AO. Aggrieved, the assessee is in appeal before us on the following grounds:- 4a.) That on the facts and in the circumstances of the case, Ld. CIT(A) is wrong in drawing adverse inference by misleading the assessment year reported in the written submissions is which same income was offered to tax on accrual basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gains u/s 50 of the Act at ₹ 15,69,91,197/-. The ld AO observed that the assessee company had shown these sale of assets as business income. The details of properties sold by the assessee are as below:- a) Deonar TDR ₹ 1,34,51,700 b) 4 Flats at Mitha Tower Co-opt Housing Society ₹ 54,75,000 c) Deonar Land ₹ 5,68,80,000 d) Commercial Wing ₹ 4,03,00,000 e) Worli Factory Office Block ₹ 3,99,00,000 f) Kolkata Unit No. 1 ₹ 14,75,000 g) Kolkata Unit No. 2 ₹ 30,00,000 h) Mangalore Unit ₹ 2,80,497 ₹ 16,07,62,197 The assessee company added back the book value of these assets of ₹ 37,71,000/- in its computation of income. Book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operties also as admittedly all the properties were used only for meeting business exigencies. Accordingly, he prayed for setting aside of this issue to the file of the ld AO. In response to this, the ld DR stated that the directions of the BIFR are not binding on income tax authorities and the income tax act is a self contained code in itself and hence the ld AO had treated the gains as short term capital gains in accordance with the provisions of the Act and if runs contrary to the directions of BIFR, the same cannot be avoided. 5.3. We have heard the rival submissions. At the outset, we are not able to fully appreciate the various contentions raised by the assessee that the BIFR had passed an order directing the income tax department to treat the gains on sale of assets as business receipts so as to give the benefit of set off of the same with the brought forward business loss, in view of the fact that the copy of the BIFR order and its directions are not placed on record before us. Hence we are not in a position to appreciate the contentions of the ld AR in this regard. However, the same would be understood only from the language used by the BIFR in its directions and therea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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