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TMI Blog2021 (7) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... which was eligible for deduction under section 80 IB(10) of the Act. Likewise, the AO made the addition with respect to its commercial projects on the reasoning that the assessee has declared higher cost in the commercial project then the residential project. The view of the AO was based on the reasoning that there was no amenity to be provided with respect to commercial projects. Whether the basis adopted by the AO for estimating the profit is sustainable in the eyes of law? - The answer stands in negative. It is because the books of accounts of the assessee were duly audited and no defect was pointed out by the AO. There can be several factors for having shown lesser profit in the project. One of the major factor as highlighted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2008-2009. 2. The assessee has raised the following ground of appeal: 1. The learned Commissioner of Income Tax (Appeals) - I!, Baroda ( hereinafter referred to as the CIT(A) ) erred in fact and in law in confirming the action of Deputy Commissioner of Income Tax Circle-2(2), Baroda ( hereinafter referred to as the AO ) in rejecting the books of accounts without pointing out any defects in the same. 2. The learned CIT(A) erred in fact and in law in confirming the action of AO in estimating Gross Profit @ 30% from residential units and 40% in case of Commercial units thereby making a total addition of ₹ 10,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to its residential project at ₹ 671.51 and the selling price per unit per square feet at ₹ 877.47 only. Likewise the cost shown by the assessee including the land with respect to the commercial project stands at ₹ 751.06 square feet and selling rate stands at ₹ 1,175.69 per square feet. As per the AO the cost of construction shown by the assessee with respect to the commercial projects which is higher than the residential project is not satisfactory. It is for the reason that the assessee has to provide several amenities with respect to the residential projects whereas no such amenity is required with respect to commercial projects. As such the assessee with respect to commercial projects has to provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit rate of M/s. Pratham Developers in which the assessee has claimed deduction u/s. 80 IB(10) and has shown profit on around 30% cannot be applied, is without any basis. The Assessing Officer has made the estimation of profit on the basis of assessee's own sister concern which is building projects in almost same vicinity. Appellant has not been able to demonstrate in any manner that how the profit rate in his case should be lower than the neighboring projects. The assessee was asked for the explanation why the profit in the case where claim u/s. 80 18(10) is higher rate of profit as compared to the project undertaken as shown 23.47% in the case of residential projects and 36.12% in the case commercial project The only argument of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- in respect of commercial units sold (40-36.12% on sales of ₹ 1,34,47,287/-) and addition of ₹ 5,61,700 in respect of residential units sold (30-23.47% on sales of ₹ 86,04,400}. Considering the total facts, it is held that the action of the Assessing Officer does not call for any interference and the addition made by him is confirmed. 6. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 7. The learned AR before us filed a paper book running from pages 1 to 102 and submitted that the assessee during the assessment proceedings has produced audited financial statements, books of accounts, bills, vouchers, cash book, ledger accounts and the bank book which were verified by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities below that the cost of land in the project of the sister concern was lesser than the cost incurred by it, was not doubted by them (the authorities below). 9.2 However, the AO has made the addition after recording the finding that the assessee has shown lesser profit with respect to its residential project in comparison to the project of its sister concern which was eligible for deduction under section 80 IB(10) of the Act. Likewise, the AO made the addition with respect to its commercial projects on the reasoning that the assessee has declared higher cost in the commercial project then the residential project. The view of the AO was based on the reasoning that there was no amenity to be provided with respect to commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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