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TMI Blog2024 (12) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover is deleted. Decided in favour of assessee. - Shri Mahavir Singh, Vice President And Shri S. Rifaur Rahman, Accountant Member For the Assessee : Shri R.S. Ahuja, Advocate, Shri Pushpdeep Singh For the Revenue : Shri Javed Akhtar, CIT DR ORDER PER S. RIFAUR RAHMAN,AM: 1. This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax Appeals/National Faceless Appeal Centre (NFAC) [hereinafter referred to as ld. CIT (A)] dated 09.01.2024 for Assessment Year 2014-15. 2. Brief facts of the case are, assessee filed its return of income on 30.11.2014 declaring total income of Rs. 7,77,85,440/- and book profit of Rs. 7,72,47,609/-. The case was selected for scrutiny and the regular assessment under section 143(1) of the Income-tax Act, 1961 (for short the Act ) was passed with the assessed income of Rs. 7,82,09,700/-. Based on the information received from Office of Directorate General of GST Intelligence, Delhi Zone that assessee has shown gross receipts in its ITR much less than the receipt declared by the DG GSTI, Delhi Zone Unit, it was observed that there was under declaration of gross receipts to the extent of Rs. 36,62,41,517/-. The AO observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, AO rejected the same with the observation that assessee has not submitted relevant copies of documentary evidences in support of their claim mentioned in the reconciliation statement. Accordingly, he rejected the reconciliation statement submitted by the assessee. Accordingly, he treated the additional receipt detection by DG GSTI, Delhi as business income for the current assessment year. The AO observed that proportion of sale attributed to the land owner for Rs. 7,61,56,255/- and the balance under reported receipt of Rs. 29,00,85,262/- i.e. Rs. 36,62,41,517/- minus Rs. 7,61,56,255/- is treated as business income for the current assessment year under consideration and he applied the profit @ 10% on the above under reported receipts to the extent of Rs. 2,90,08,526/- and added to the income of the assessee. 5. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT(A) and even before ld. CIT (A), assessee has submitted that all information relevant for the issue under consideration was submitted before the AO. However ld. CIT (A), after considering the assessee s submissions and findings in the assessment order, sustained the additions made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, 1988, under the name of M/s Vidhi Constructions (P) Ltd. and later its name was changed to M/s Aarone Developers Pvt. Ltd. w.e.f. 22.09.2007 and the assessee has regularly been assessed to Income Tax since incorporation. He submitted that the assessment for the assessment year 2011-12, 2012-13, 2013-14, 2014-15, 2017-18 and 2018-19 was completed U/s 143(3) of the Act. He submitted that the company is engaged in the business of Construction development of Properties by way of outright purchase or through Collaboration and during the year, the company was engaged in the construction and development of its projects at Delhi and Indore. He further submitted that the assessee filed its return of income, for the year under consideration, u/s 139 (1) of the Act on 30.11.2014 and the same was assessed u/s 143(3) of the Income Tax Act. Thereafter, the Assessing Officer received the information from the office of The Director General, GSTI, Delhi reporting therein the variation in turnover worked out as per Service Tax Laws vis-a-vis the same appearing in the audited financial statements consequent to that the assessment is reopened by issue of notice u/s 148 of the Act. 7.1 Ld. AR for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept adoption of computation mechanism as per Service Tax Rules. 7.3 He further submitted that the AO completed the assessment u/s 147 of the Act for the year under consideration on 30.03.2022, by making a trading addition of Rs. 2,90,08,5261- [i.e. 10% of (Rs.36,62,41,517-7,61,56,255)] on estimation basis by partly accepting the reconciliation statement submitted, without rejecting the books of accounts of the assessee as follows: Returned Income Rs.7,74,81,350/- Add : Estimated Profit @ 10% on Rs. 29,00,85,262/- Rs.2,90,08,526/- Assessed income Rs.10,64,89,876/- 7.4 Further, It is submitted that the Assessee submitted a detailed reconciliation of the difference between the turnover as per Audited statements and turnover as per Service Tax, which is reproduced by the AO on Page 4 to 6 of Assessment order. Further he submitted that the AO has disputed only 3 figures, which are as follows: a. Expenses on which service tax is paid under reverse charge : Rs. 1,23,44,953/- In this regard it is submitted that as per service tax, Notification No.30/2012 dated 20th June 2012, the service tax is also payable on certain specified expenses under reverse charge mechanism (ReM) therefore they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he agreements of sale or any other legally enforceable documents are realised at the reporting date in respect of each of the contracts. Thus, he submitted that under percentage of completion method, no revenue is recognized (irrespective of the fact that advances from customers have been received) unless at least 25% of the construction has been completed, at least 25% of the area has been sold and at least 10% of the sale value has been received from the customer. Whereas, in case of builders/ developers (treated as Service Provider), As per Service Tax Act, turnover is calculated as per rule 3 of. 'The Point of Taxation Rules 2011 which states that the point of taxation shall be,- a) The time when the invoice for the service provided or agreed to be provided is issued. b) in a case, where the person providing the service, receives a payment before the time specified in clause (a), the time, when he receives such payment, to the extent of such payment. He submitted that as the assessee is a real estate developer, it sold the properties on the basis of agreement to sell/sale deed and no invoice is raised, thus as per the above rule, turnover under the Service Tax Act, in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ples, from the turnover computed by the office of the Director General, GSTI, Delhi, during assessment proceedings and this reconciliation, cannot be ignored out rightly without assigning any reason. Therefore, he submitted that the Assessing Officer erred in treating the advances received in excess of revenue recognised of Rs. 28,70,66,225/- and expenditure where service tax is paid under reverse charge mechanism of Rs. 1,23,44,953/- totalling to Rs. 29,00,85,262/-(28, 70,66,225+ 12,344,953) as variation in turnover of the assessee company because of the following: The amounts of Rs. 28,70,66,225/- are the fresh advances against sale of property/plotslf1ats in excess of the revenue recognized as per POCM. The assessee company has already recognised revenue as per the POCM on the fresh advances received against sale of property/plotslf1ats and therefore this cannot be treated as business income. The amount of Rs. 1,23,44,953/- are the expenses debited on which service tax is paid under reverse charge mechanism as per the Notification NO.30/2012 dated 20th June 2012 and these expenses debited in the profit and loss account cannot be treated as the business income. 7.6 It is submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s reproduced below :- S.No. Particulars Page No. of Paper Book Filed before Ld. AO vide Acknowledgement Number Filed before Ld. CIT (A) vide Acknowledgement Number 1 Reconciliation of Turnover 14 397960481210322 Dated 21.03.2022 544532241071223 Dated 07.12.2023 2 Detail of fresh advances 15-21 397960481210322 Dated 21.03.2022 544532241071223 Dated 07.12.2023 3 Copy of Agreements 22-67 267341951280222 Dated 28.03.2022 397960481210322 Dated 21.03.2022 544532241071223 Dated 07.12.2023 4 Summary of Revenue and PCOM Charts 68-81 267341951280222 Dated 28.03.2022 544532241071223 Dated 07.12.2023 5 Point of taxation rule 3 and notification 82-88 544532241071223 Dated 07.12.2023 6 Details of expenses on which reverse charge is applicable. 89-117 308396661080322 Dated 08.03.2022 544532241071223 Dated 07.12.2023 7 Assessment Order u/s 147 in matter of Aero Promoters Private Limited ASSESSMENT YEAR : 2015-16 118-124 468123231290322 Dated 29.03.2022 544532241071223 Dated 07.12.2023 10. Considering the facts on record, we observed that the turnover declared on the Service Tax Act which is based on receipt of advances not based on completion of project. The determination of gross revenue is diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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