Credence Property Developers P.Ltd, ... vs Department Of Income Tax

बनाम/ Room No.802, 8th Floor, 702, Natraj, Old CGO Annexe Bldg. Vs. M.V.Road, Junction, M.K.Road, Western Express Highway, Mumbai-400020 Andheri(East), Mumbai-400069 (राजःव /Revenue) (िनधा()रती /Assessee) P.A. No.AABCC9387Q

राजःव क+ ओर से / Revenue by Shri. R.N. D'souza-DR िनधा()रती क+ ओर से / Assessee by): Shri Dipen Tanna

सुनवाई क+ तार-ख / 27/01/2015 Date of Hearing : घोषणा क+ तार-ख / 27/01/2015 Date of Pronouncement : आदे श क+ तार-ख / Date of Order: 28/01/2015

आदे श / O R D E R

PER JOGINDER SINGH (Judicial Member):

The Revenue is aggrieved by the impugned order dated 24/01/2013 of the ld. First Appellate Authority, Mumbai, on the ground that the ld. Commissioner of Income tax (Appeals) erred in holding that the assessee was carrying on with inventory of

2 M/s Credence Property Developers Pvt. Ltd.

both flats and construction WIP and no sale was offered allowing of interest as revenue expenditure without appreciating the fact that the assessee was having only one project for the last many years and completed different buildings in different years, consequently, finance cost/interest of tune of Rs.59,73,002/- should be capitalized and added to the WIP/inventory of closing stock.

2. At the time of hearing, ld. DR. Shri R.N. D'souza, advanced his arguments which are identical to the ground raised by further submitting that relief was granted to the assessee without appreciating the facts in proper prospective as no sale was offered by the assessee during the relevant time and the assessee was having only one project for the last many years. 2.1. On the other hand, the ld. counsel for the assessee, Shri Dipen Tanna, defended the conclusion arrived at in the impugned order by submitting that the work was stayed by the Hon'ble Court.

2.2. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee is engaged in the construction business, declared loss of Rs.94,16,324/- in his return filed on 30/09/2009, and assessment was completed on 30/12/2011 determining total income at Rs.2,08,71,798/-. The assessee as per profit & loss account showed income of Rs.4,91,546/- mainly due to write back of sundry balances. It was noted by the Assessing Officer that during the relevant period, there was no active business done by the assessee and the flats shown in the closing stock work constructed few years back, thus, the purchase of cement amounting to Rs.49,000/-, incurring labour expenses to the tune of Rs.910/- were not sufficient to do construction work, 3 M/s Credence Property Developers Pvt. Ltd.

there were no expenses on purchase of steel, bricks, badarpur/sand and stones etc, meaning thereby, no construction activity was carried out during the year, consequently, he treated the written back expenses as income of the current year and disallowed the expenses claimed on account of provision for doubtful loans and advances as business expenses. Similarly, payment of interest and business loss, determined by the assessee, as no activity was carried out, were disallowed.

2.2. On appeal, before the ld. Commissioner of Income tax (Appeals), the facts/claim of the assessee were duly examined and after placing reliance upon various judicial pronouncements, relief was granted. The Revenue is aggrieved and is in appeal before this Tribunal. We find that so far as denial of revenue expenses of Rs.99,07,875/- on the ground that no business/construction activity was carried out by the assessee, is concerned, we are not satisfied with the reasoning contained in the assessment order. The assessee itself disallowed of Rs.4,17,34,598/- and merely made a claim of Rs.99,07,870/-and due to legal dispute between the land owners and the assessee, the Hon'ble High Court granted stay vide order dated 06/05/2004 and due to that reason no major construction/sale activities could be carried out. At the same time, maintenance activity was carried out by the assessee. It is also noted that for Assessment Year 2008-09, assessment was completed u/s 143(3) wherein no such disallowance was made. The sale/construction could not be carried out due to the reasons of stay by the Hon'ble High Court which was beyond the control of the assessee. Thus, we find no infirmity in the conclusion drawn by the ld. Commissioner of Income tax 4 M/s Credence Property Developers Pvt. Ltd.

(Appeals). Identical is the situation for bringing to tax the amount of Rs.2,03,80,252/- more specifically, when the assessee furnished the details and even the Assessing Officer did not examine the computation of income. In view the facts/reasoning/judicial pronouncements contained in the impugned order, the stand of the ld. Commissioner of Income tax (Appeals) is affirmed.

Finally, the appeal of the Revenue is dismissed. This Order was pronounced in the open court in the presence of ld. representatives from both sides at the conclusion of the hearing on 27/01/2015.

आदे श क+ घोषणा 2दनांकः 27/01/2015 को क+ गई ।

Sd/- Sd/- (N.K.Billaiya) (Joginder Singh) लेखा सदःय / ACCOUNTANT MEMBER याियक सदःय / JUDICIAL MEMBER

मुंबई Mumbai; 2दनांक Dated : 28/01/2015 f{x~{tÜ? P.S/.िन.स.

आदे श क+ ूितिल प अमे षत/Copy षत of the Order forwarded to :

1. अपीलाथ= / The Appellant

2. ू>यथ= / The Respondent.

3. आयकर आयु?(अपील) / The CIT, Mumbai.

4. आयकर आयु? / CIT(A)- , Mumbai

5. वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai

6. गाड( फाईल / Guard file.

आदे शानुसार/ ार BY ORDER, स>या पत ूित //True Copy//

उप/ उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अिधकरण, मुब ं ई / ITAT, Mumbai