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TMI Blog2024 (1) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer to consider the issue afresh considering the submission made before the Ld. CIT(A). Appeal filed by the Revenue stands allowed for statistical purposes. - SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI ANUBHAV SHARMA, JUDICIAL MEMBER For the Appellant : Sh. M.M. Agrawal, CA For the Respondent : Sh. Surendra Pal, CIT(DR) ORDER PER SHAMIM YAHYA, AM, This appeal by the Revenue is directed against the order of the Ld. CIT(A)-1, Agar, dated 30.07.2019 for the Assessment Year 2014-15. 2. The grounds of appeal reads as under:- 1. That the Ld. CIT (A)-1, Agra has erred in law and facts in deleting the addition of Rs. 5,17,61,420/- because the applied percentage completion method in assessment order is correct as the Project Completion Method was not in existence before 01.04.2003. 2. That the decision of Ld. CIT (A)-1, Agra is not acceptable as the same is against the principles of Accounting Standard adopted by Institute of Chartered Accounts of India. 3. That the assessment order dated 26.12.2016 passed under section 143(3) of the IT Act, 1961 is as per law and addition of Rs. 5,17,61,420/-made by applying the Percentage Comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 27,51,990/- vii. Depreciation 13,23,232/- viii. Finance charges (interest etc.) 4,08,98,375/- ix. Salary (Construction) 33,48,498/- Total 5,17,61,420/- Above mentioned expenses may not be allowed as the same is treated to be included in estimated cost of the project, no further revenue expenses (above expenses) may be allowed. 4. However, vide its reply dated 21.12.2016 the assessee has stated that some expense have been capitalized and included in closing stock. But during the assessment proceedings assessee could not furnished/produced supporting evidence for the same: Therefore, considering the statement and reply given by the director Shri Shayam Sunder Bansal during survey and post survey proceedings and reply and details filed during the assessment proceedings it is clear that the assessee not shown his actual profit and debited unallowable expenses to calculate the profit as per percentage completio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n submissions and copies of ledger accounts of the expenses were produced and submitted by the appellant and there is no evidence on record which may indicate that any discrepancy in those was noticed or pointed out by the A.O. 6.4 Therefore, in light of the above discussion, it can be seen that during the assessment proceedings, the evidences regarding the expenses were produced by the appellant and no specific bill/voucher or expense has been pin-pointed by the A.O. as to be non-genuine or incurred not for the purpose of business. As regards the A.O.'s contention that AS-7 has not been followed by the appellant-company, I am in agreement with the appellant that this accounting standard is prescribed by the ICAI in respect of accounting of Construction Contracts and not for the appellant, who is a real-estate developer. Further, if we refer to the table given by the appellant at Paragraph no. 4.3 of its written submission dated 27.12.2017( reproduced above), it is seen that:- Out of expenses of Rs. 5,17,61,420/- disallowed by the A.O., as much as Rs. 1,96,82,204/- have already been capitalized by the appellant in its books of account, and another Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2016 is reproduced below:- 9. The question now is why the profit declared by the assessee is not in accordance with the letter dated 15.02.2014 by the Managing Director of the company and why the profit declared by the assessee is not in vicinity of profit of Rs. 5 crore estimated in the said letter. In this regard, please note that the letter dated 15.02.2014 issued by Managing Director was not in complete peace of mind and he made calculation mistakes, which are quite apparent and open for full verification. Firstly, the calculation was made on the basis of sale of entire area of 439,560 square feet. He thus estimated profit on the basis of area which was not even booked, whereas profit can be worked on the basis of area sold (Whether sale deed has been made or not). The assessee has recognised revenue on the basis of sale of 24220 square feet in respect of registry executed and 221,850 square feet in respect of Advance booking as per Percentage Completion Method, which is the actual area sold. Even till the date of this letter, the assessee has huge unsold area and no profit on unsold area can be recognized under any method of accounting (this is not the case of contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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