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TMI Blog2024 (9) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the directing the Assessing Officer to apply provision of Section 43CA of the Act for two flats only (i.e. flat no. B5 304 and AI 801) without appreciating the facts that during the assessment proceedings, even after repeated opportunities, the assessee has failed to produce the supporting documents and justification. 3. On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of Rs. 7,0027,585/- without appreciating the facts that during the assessment proceedings, even after repeated opportunities, the assessee has failed to produce the supporting documents and justification." 3. Brief facts of the case relating to the three grounds being common for a decision in the appeal are that the assessee company is engaged in the business of real estate development. During the year under consideration, it was continued to run the construction project in collaboration with M/s Gopal Das Estates and Housing P. Ltd. and M/s Ardee Mechanical Industries Delhi P. Ltd. The project for development is located in Ardee City at Gurugram. All the parties, namely, M/s Gopal Das Estates and Housing P. Ltd. and M/s Ardee Mechanical Industries Delhi P. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er square feet from all the flat buyers whether the sale thereof falls in its own account or in the account of the developer. Therefore the receipt of this EDC charges from flat buyers should have been made part of assessee's turnover and claimed as expense on payment. Instead the assessee is taking the EDC receipt to WIP directly without routing it through its profit and loss account. This is not as per the accounting norms as laid down for preparation of statement of profit and loss in the provisions of Schedule Ill to the Companies Act, 2013. This is more so when there is nothing on record to suggest as for how Rs. 85 per sq.ft. are being charged as EDC whereas the assessee must have paid the EDC at some per acre rate of land under development. In its reply the assessee has stated that it has received a sum of Rs,4, 35,75,250/- from various flat buyers and out of this amount of Rs. 2,55,36,111/- has been paid to HUDA and balance amount of Rs. 1,80,39,139/- has been booked as expenditure. A glance at the table of work in progress would show that this amount of Rs. 1,80,39,139/- has not lead to any increase in the value of WIP and on the contrary the value of WIP as on 01.04.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther shown to the AO that the treatment in the accounts of the EDC was in total conformity with the guidance notice issued by the ICAI in this regard. Reference was invited to the observations in this context contained on page 524 of the Compendium of Guidance Notes dealing with the treatment of expenditure during the construction period issued by the ICAI. 7. After considering the above submissions, the ld. CIT (A) after going through the order of the AO and the submissions of the assessee, deleted the addition of Rs. 1,80,39,139/- made on this count by the AO in assessment order. 8. Aggrieved, the revenue is in appeal before us. 9. At the time of hearing, ld. DR submitted that the assessee is in business of real estate and joint owner of the project sharing the profit at the ratio of 85:15. He submitted that the assessee has collected EDC as per the agreement from the flat owners and charged directly to the WIP account without routing thru the profit and loss account. He submitted and relied on the orders of AO and also relied on the decision of Vipul Ltd, (2022) 197 ITD 556 and Greater Mohali Area Development Authority (P&H) (2018) 93 taxmann.com 441. He submitted that in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... water pipes and other related civil works. Charged the same to the WIP and relevant payments made to HUDA were charged to the WIP account. From the submissions, we observe that the EDC is nothing but an advance collected to provide common facilities and other services to the prospective flat owners and such provision of services are reimbursable, the same was collected in advance. As and when it is executed, the same are charged to the WIP. Since the project under consideration is not yet completed, the collected advance cannot be charged to profit and loss account. Further, the assessee has collected the same for providing the common services on the approval of HUDA, this is only on the basis of reimbursement and there is no profit element. Therefore, it cannot be form part of Profit and loss Account. Therefore, the findings of ld CIT(A) are just and proper. Therefore, the case law relied by the ld DR also distinguishable. Hence, the grounds raised by the revenue are dismissed. 13. With regard to the second ground as raised in this appeal is with reference to the deletion of the addition made u/s. 43CA of the Act in a sum of Rs. 6,29,30,146/-, the relevant facts are, AO observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Al-801. The NFAC has exercised co-terminus powers for assessment and after a critical examination of the facts and figures directed the deletion of the addition and only partly allowed the ground with the following observations at pages 39 and 40 of the impugned order:- "In view of this the Ground of Appeal is partly allowed and the A.O. is directed to apply provision of Section 43CA of IT ACT 1961 for flat no. B5-304 and Al-801 (appearing in Assessment order in serial number 24 & 57). It is also reiterated that while disallowing the amount the assessee share in the profit sharing ratio should be taken into consideration. Grounds raised by the appellant regarding this issue are partly allowed." 18. He submitted that the matter was remitted to the AO for verification and orders. No error in that direction of the NFAC being perceptible the order as passed in this behalf by NFAC merits to be confirmed. The Ld. CT-DR had however argued that this issue ought to be verified by the AO. It is submitted that since the NFAC had remitted the matter to the AO for the correct determination of the addition and that the AO verified the fact while granting appeal effect the issue on merits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions of the assessee, ld CIT(A) after verification of the material on record directed to delete the addition proposed by the AO in assessment order. 23. Aggrieved, the revenue is in appeal. 24. At the time of hearing, ld DR heavily relied on the findings of AO. 25. On the other hand, ld AR submitted that the addition as made by the AO was ex facie erroneous and unwarranted. It was made due to non- application of mind. The deletion of the same by the NFAC is fit and proper and so that order may please be conformed while rejecting the ground raised in this behalf. 26. Considered the rival submissions and material available on record. We observe that the AO made the addition by observing that the assessee has not provided the PAN details of the buyers of 14 flats. Mere non submission of the PAN details will not lead to disallowance u/s 68 of the Act. The ld CIT(A) has considered the relevant facts on record and deleted the addition, since the assessee had already brought on record the relevant details before AO as well as CIT(A). Therefore, we do not see any reason to disturb the findings of ld CIT(A) and accordingly, the ground raised by the revenue is dismissed. 27. Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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