9911796707
TMI Blog2020 (1) TMI 1132X X X X Extracts X X X X X X X X Extracts X X X X ..... or reflected back in the subsequent years, assessing the same in the year under consideration has resulted into double taxation. The AO has not considered the expenditure incurred by the assessee against such receipt. In the present case in the project Grandeur, total value of stock as on 31- 03-2015 was ₹ 6,10,28,779/-. Therefore, deduction on account of cost against the receipt of ₹ 3,96,99,161/- ought to have been allowed instead of assessing the receipt as income. Hence, taking into consideration the facts and circumstances, we find no reason to interfere with the order of the ld. CIT(A). Thus Ground No. 1 of the Revenue is dismissed. Disallowance of commission expenses as bogus - persons could not furnish the details of the flats or project of flat number or person to whom they has allegedly sold the flats - CIT-A granted part relief - HELD THAT:- The onus upon the assessee to prove before the Revenue authorities and to furnish the evidence with regard to rendering of services to whom alleged commission was paid. Since the assessee could not prove the actual rendering of services, therefore, the assessee is not entitled to claim commission expenses. Thus wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistry is done. The AO during the course of assessment proceeding observed that the projects Hanging Garden Project Grandeur have been completed but in the Balance sheet of the company, the advances relating to Project Grandeur amounting to ₹ 3,96,99,161/- are reflected. The AO, thereafter, referred to Accounting Standard and Guidance Note issued by the ICAI and held that a real estate developer is required to follow Percentage completion method. Accordingly, the assessee should have recognized the revenue equivalent to ₹ 3,96,99,161/- being advances received from customers. The AO, thereafter, rejected the books of accounts u/s 145(3) and computed the income by applying Percentage Completion Method and consequently assessed the advances relating to project Grandeur of ₹ 3,96,99,161/- as income of the assessee and made addition for the same. 2.3 In first appeal the ld. CIT(A) at page 8 of order in para 5.3 stated that various High Courts including Rajasthan High Court have held that choice of following a particular method of accounting is on the assessee . The same can t be thrust upon by the department. In the present case, assessee has been reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of accounting. It is noted from the available records that the assessee is regularly following an accounting policy whereby sales is recognized by following project completion method . According to this method, the sales are recognized when the sale deed is executed and possession of the flat is given to the buyer. There is no provision under the Act which makes percentage completion method of accounting in real estate project mandatory as observed by the AO. The Guidance Note issued by the ICAI is recommendatory. The same do not override the choice of method of accounting to be followed by the assessee provided under the Act. The ld.AR of the assessee relied on the decision of ITAT Bangalore Bench in the casde of S.K. Properties vs ITO (supra) holding as under:- appellant firm had recognized the income in respect of sale of plots by adopting completed contract method, whereas the Assessing Officer is of the view that income should be offered to tax received on year to year basis at the stage of receipt of consideration, irrespective of the fact that the title in the plots have been passed on the buyer or not. It is an undisputed fact that the plots forms a part of stock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of the flats or project of flat number or person to whom they has allegedly sold the flats. This proves that they were paid commission only for claiming bogus expenses. 3.2 Brief facts of the case are that during the year assessee claimed commission expenses of ₹ 80,79,385/- in respect of following projects:- Hanging Garden- ₹ 39,04,385/- Grandeur- ₹ 41,75,000/- ₹ 80,79,385/- In assessment proceeding, assessee filed the details of commission expenses. AO issued summons u/s 131 of the Act to some of these persons to verify the claim of expenses. AO at page 15 of order in para 5.2 observed that statements of some of the persons were recorded (at page 17 to 30 of assessment order) from which it is found that these persons are having no knowledge regarding commission work done by them. Moreover, they could not submit the details of the flats or project or flat nos. or persons to whom they had allegedly sold the flats. The AO further held that the persons are used as entry providers for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld. CIT(A) restricted the disallowance to one person who had denied the receipt of commission of ₹ 1.00 lac and had allowed the relief to other persons by holding that those persons were assessed to tax. Tax has been deducted at source and out of 07 persons whose statements were recorded, 06 persons accepted the fact of receipt of commission. After verifying the statements recorded by the AO in respect of total commission payment made by the assessee of ₹ 25,79,385/-, we found that statements of those persons summoned u/s 131 of the Act were recorded on oath and as per their statements it is found that these persons have no knowledge at all regarding the commission work done by them. They could not furnish the details of flats or projects or flat number or persons to whom they had allegedly sold the flats. One of them even denied any receipt of commission from the assessee company. It was confirmed from the statements of 05 persons namely mentioned as under:- (a) Paridhi Jain (b) Ritu Jain (c) Swena Jain (d) Jagarti Jain (e) Shivani Jain It is noted that these persons either reside outside Jaipur or are housewives and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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