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TMI Blog2020 (1) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... justified in law in confirming the addition of Rs. 54 lakhs in respect of demurrages for delay in execution of the project without considering the terms of joint venture agreement and more so when the appellant maintaining books of account under merchantile system of accounting? 2) Whether the Tribunal was correct in law in holding that the joint development agreement does not constitute an Association of persons and consequently the income is liable for assessment under the status of association of persons? 3. The appellant is a partnership firm which is engaged in the business of real estate development, construction and sale of flats under the name and style of 'The Estate'. The appellant filed its original return of income declaring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 reversed the order of the Commissioner of Income Tax (Appeals) and restored the order passed by the Assessing Officer. In the aforesaid factual background, the appellant has approached this Court. 5. Learned Senior counsel for the appellant submitted that the authorities failed to take into account the joint venture agreement dated 19.09.1992. It is submitted that as per the agreement with the owners, the appellant was supposed to deliver their share of buildings on or before 30.06.1995, however, actual delivery took place on 30.09.1996. It is also pointed out that under the agreement the owners were entitled to a sum of Rs. 12,000/- per day of delay that is an amount of Rs. 3,60,000/- per month. There was a delay of 15 months in comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed, there is a consequent reduction in the value of cost of construction and therefore, the valuation of the closing stock for the year undergoes a change to the extent of Rs. 14,69,820/- which eventually results in reduction of profits to that extent. In support of aforesaid submission, learned counsel for the appellant has placed reliance on the decisions in the case of 'CALCUTTA CO. LTD Vs. CIT' 37 ITR 1(SC), 'BHARAT EARTH MOVERS Vs. CIT 245 ITR 428 (SC), 'METAL BOX COMPANY OF INDIA LTD Vs. THEIR WORKMEN' 73 ITR 53 (SC), 'JIWANRAM SHEODUTTRAI Vs. CIT' 279 ITR 512 (Cal), 'CIT Vs. BURHWAL SUGAR MILLS CO. LTD.' 82 ITR 784 (ALL) AND 'SASSOON J DAVID AND CO. P LTD Vs. CIT' 118 ITR 261 (SC). 6. On the other hand, learned counsel for the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in the books of accounts, therefore, we are not inclined to decide the issue whether the Tribunal was justified in confirming the addition of Rs. 54,00,000/- in respect of demurrages for delay in execution of the project. The Tribunal has failed to take into account the remand report of the Additional Commissioner of Income Tax and joint venture agreement dated 19.09.1992. 8. Therefore, we deem it appropriate to set aside the order passed by the Income Tax Appellate Tribunal. Needless to state that it would be open to the Tribunal to pass such order as it may deem fit in accordance with law. The Tribunal, after affording an opportunity of hearing to the parties, shall decide the appeal preferably within a period of three months from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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