DATTANI CONSTRUCTION,MUMBAI vs. ITO WARD 42(1)(2), MUMBAI
Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI OM PRAKASH KANT () & SHRI RAJ KUMAR CHAUHAN () Assessment Year: 2011-12
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated
29.01.2025 passed by the Ld. Commissioner of Income-tax
(Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld.
CIT(A)’] for assessment year 2011-12, raising following grounds:
1. On the facts and circumstances of the case and in law, Id.
CIT(A) erred in confirming the action of Ld. AO in reopening the assessment by issue of notice u/s. 148, which is illegal and bad- in-law or otherwise void for want of juri iction.
On the fact CIT(A) erred i in receipts as for the reason 3. On the fact CIT(A) erred compensation income from reasons ment 4. On the fact CIT(A) erred disallowance 9,17,014/- by for the reason 5. On the fact CIT(A) erred disallowance by transferrin reasons ment 6. On the fact CIT(A) erred disallowance Rs. 15,37,36 progress for order or othe 2. Briefly stated, t partnership firm, is development. For the its return of income income of ₹4,64,557 and in pursuance th the Income-tax Act, duly issued and comp ts and circumstances of the case and in in confirming the action of Ld. in treating per 26AS Rs.4,05,826/- as income of the ns mentioned in the impugned order or oth ts and circumstances of the case and in in confirming the action of Ld. AO n received by the appellant Rs.48,50 others Sources instead of business inco tioned in the impugned order or otherwise ts and circumstances of the case and in in confirming the action of Ld. AO of Sales Promotion Expense amount y transferring the same to Capital work-i ns mentioned in the impugned order or oth ts and circumstances of the case and in in confirming the action of Ld. AO of Financial Expense amounting to Rs. 2 ng the same to Capital work-in- progre tioned in the impugned order or otherwise ts and circumstances of the case and in in confirming the action of Ld. AO of General Administration Expense am 67/- by transferring the same to Capit r the reasons mentioned in the erwise. the facts of the case are that s engaged in the business e year under consideration, th e on 30th September, 2011, d /-. The said return was select ereof, statutory notices under t 1961 (hereinafter referred to as plied with. Dattani Construction 2 law the Id. g difference e appellant, herwise. law the Id. in treating 0,000/- as ome for the e. law the Id. in making ting to Rs. in- progress herwise. law the Id. in making 23,74,386/- ess for the e. law the Id. in making mounting to tal work-in- impugned the assessee, a of real estate he assessee filed declaring a total ted for scrutiny, the provisions of s “the Act”) were 2.1 Subsequently, t 143(3) of the Act o Assessing Officer ma inter alia, included— receipts as per Fo comprising interest ₹3,82,492/-, and (ii) head “Income from capitalised by transfe 3. On further appe the assessee. 4. Aggrieved, the a grounds as reproduce 5. Before us, the L containing pages 1 to 6. Before us, the L assessee does not w appeal. Accordingly, 7. Ground No. 2 o made on account of No. 26AS, amounting the assessment was completed on 21st March, 2014, where ade certain additions and disallo —(i) an addition on account of t orm No. 26AS amounting t income of ₹23,334/- and re a disallowance of expenses cla Other Sources”, which were er to “Capital Work-in-Progress” eal, the Ld. CIT(A) partly allowe assessee is in appeal before us b ed above. Ld. counsel for the assessee file o 55. Ld. counsel for the assessee sub wish to press ground Nos. 1, same are dismissed as infructuo f the assessee’s appeal pertains the difference in receipts as re g to ₹4,05,826/–. Dattani Construction 3 d under section ein the learned owances. These, the difference in to ₹4,05,826/-, ental income of aimed under the directed to be . ed the appeal of by way of raising ed a Paper Book bmitted that the 3 and 6 of the ous. s to the addition eflected in Form
1 The brief facts r 26AS placed at pages received certain sum for tax deducted at so Name of the party Selvel Publicity An Consultants Pvt. Ltd. Kavveri Telecom Infrastructure Ltd. Aditi Fastfood Pvt. Ltd Total 7.2 The Assessing receipts aggregating only a sum of ₹6,42, in the return of in comprising rent of ₹3 undisclosed. 7.3 During the cou submitted that it ha from Selvel Publicity any payment from Ka amount of TDS credi that, since the TDS same amount was ta claimed to have offer credit for the entire T relevant to this issue are that, a s 32 to 35 of the Paper Book, th s by way of rent and interest, a ource (TDS), as summarised bel Nature of receipt Total amount paid/credited Total deducte nd Rent 6,00,000/- 60,000 m Rent 4,24,992/- 42,499 . Interest 23,334/- 2,334/
10,48,326/–
1,04,83
Officer observed that agains to ₹10,48,326/–, the assessee
,500/– under the head “Miscell ncome. Consequently, the ba
3,82,492/– and interest of ₹23,3
urse of assessment proceeding ad, in fact, received only rent and Consultants Pvt. Ltd. and h avveri Telecom Infrastructure Ltd ited in its favour. The assessee of ₹42,499/– was reflected in aken as income. In this manne red total income of ₹6,42,499/
TDS of ₹1,04,834/–.
Dattani Construction
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as per Form No.
he assessee had along with credit low:
tax ed
Total
TDS deposited
/-
60,000/-
/-
42,499/-
-
2,334/-
33
1,04,833
t the aforesaid e had disclosed laneous Income”
alance amount,
334/–, remained gs, the assessee of ₹6,00,000/–
had not received d., except for the thus contended n its name, the er, the assessee
– while availing
4 The Assessing satisfactory. He was credit for the entire T upon it to declare the Accordingly, he tre comprising rent of undisclosed income a assessee. 7.5 Before the Ld. rental income or the Telecom Infrastructu either in the current no addition was wa contention of assesse “5.2 Ground proceedings, shown in 26A was the amou the part of t respect of the Apart from t showing that However, dur that appellan offered to tax reflected in portion of the made paymen uploaded the to the appe appears to be claimed the T
Officer, however, did not find of the view that since the assess
TDS amount of ₹1,04,834/–, it e corresponding gross receipts o eated the differential sum o
₹3,82,492/– and interest of and added the same to the tota
CIT(A) the assessee again rei interest income was received fr ure Ltd. and Aditi Fastfood Pvt. L year or in the subsequent yea arranted. The Ld. CIT(A) howev ee observing as under:
of Rs.3,82,492/-. During the course of appellant has submitted that differen
AS of the appellant had neither received t unt in anyway receivable by them. The on the appellant was that the correspond e rent which was not related was claime that appellant has not submitted any t the addition made by the AO was ring the assessment proceedings, AO ha nt has not restricted its TDS claim to t x but claimed full TDS corresponding to 26AS statement whereas appellant of corresponding income to tax. The parties nts to the appellant had deducted TDS th said information in their TDS returns cor llant's PAN. Therefore, whatever AO e true as appellant stated that it had e
TDS amount. However, it failed to prove to Dattani Construction
5
the explanation see had claimed was incumbent of ₹10,48,326/–.
of ₹4,05,826/–,
₹23,334/–, as al income of the terated that no om M/s Kavveri
Ltd. respectively ar and therefore, ver rejected the of appellate nce of rent the sum nor nly error on ing TDS in ed by them.
documents erroneous.
as observed the amount the amount ffered only s who have hereon have rresponding contended erroneously o whom this TDS belongs for taxation i appellant is Rs.3,82,492/
sustained. Gr
7.6 We have carefu and perused the mat arises for considerati credit of tax deduc reflected in Form corresponding incom
7.7 It is an admitte sum of ₹10,48,326/–
assessee, comprising
The case of the ass received from Kavve credit of TDS appeari
Fastfood Pvt. Ltd., it was received apart fro
7.8 In our consider at the level of the A ascertain—(i) wheth impugned amount a towards the assessee or actually paid by th
Officer may also veri to and who has offered the correspond in their returns. In view of that conten rejected and addition made by t
- on account house property income round of no.3 is therefore, dismissed.”
ully heard the rival submission terial available on record. The c ion is whether the assessee is e cted at source (TDS) in respe
No.
26AS, without havin me to tax in the year under consi ed position that as per Form N
– has been shown as receipts in g rent of ₹4,24,992/– and intere sessee, however, is that no ren eri Telecom Infrastructure Ltd., ing in its favour. Likewise, with has been contended that no i om the TDS component.
red opinion, this issue necessit
Assessing Officer. The Assessin her the alleged deductor ha as rental expenditure in its bo e, or (ii) the quantum of amount, he said deductor to the assessee ify from the respective deducto
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ing amount ntion of the the AO of e is being ns of the parties controversy that entitled to claim ect of amounts ng offered the deration.
o. 26AS, a total the name of the st of ₹23,334/–.
nt was actually except for the h respect to Aditi interest amount ates verification ng Officer shall as claimed the ooks of account
, if any, credited e. The Assessing rs whether only the TDS amount was and no other amount
7.9 If, upon such v than the TDS has bee
Assessing Officer sha
26AS in favour of the income of ₹42,500/–
similar course of act from Aditi Fastfood P
7.10 Accordingly, th
Assessing Officer f necessary verification fit from the concer thereafter decide th affording due opportu
7.11 The ground No.
statistical purposes.
8. Ground Nos. 4
disallowance of s
₹9,17,014/– and fin
The Assessing Officer under the head “In s finally adjusted or settled betw t was either paid or payable.
verification, it is found that no en received or is receivable by th all grant credit of the TDS reflec e assessee, after taking into acc from M/s Kavveri Telecom Infra tion shall be adopted in respec
Pvt. Ltd.
is ground of appeal is restored for fresh adjudication, after n and making such inquiries as rned deductors. The Assessin he issue in accordance with unity of being heard to the asses
. 2 of the appeal of the assesse and 5 of the assessee’s appea sales promotion expenses ninacial expenses amounting to r treated the said expenditures a ncome from Other Sources” a Dattani Construction
7
ween the parties, o amount other he assessee, the cted in Form No.
count the rental astructure Ltd.. A t of the interest to the file of the r carrying out may be deemed ng Officer shall law and after ssee.
ee is allowed for al pertain to the amounting to o ₹22,74,836/–.
as not allowable and accordingly directed that the sam
Work-in-Progress (CW
8.1 The brief facts that the assessee
“Miscellaneous Incom
₹18,31,596/–, gener and financial expense assessee that, in earl been followed where deductible under th balance 30% was cap to the assessee’s real the AO in earlier year
8.2 However, for t
Assessing Officer de entire amount of c specifically—sales pr donation of ₹9,14,5
₹50,20,998/– (after financial expenses of 8.3 In appeal, the l
[CIT(A)] granted par accepted the asses me be capitalised by way of tra
WIP).
relevant to the issue under co e had debited certain exp me”, comprising sales promoti ral administrative expenses of es of ₹23,74,386/–. It was the c lier assessment years, a consiste eby 70% of such expenses w e head “Income from Other So pitalised as Capital Work-in-Prog l estate projects. This practice w rs.
the year under consideration viated from this practice and certain expenses to Capital W romotion expenses of ₹9,17,0
502/–), general administrativ allowing depreciation of ₹4, f ₹23,74,386/–—aggregating to ₹
learned Commissioner of Incom rtial relief to the assessee. T ssee’s contention with respe
Dattani Construction
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ansfer to Capital onsideration are penses against on expenses of f ₹51,24,557/–, contention of the ent practice had were claimed as ources” and the gress pertaining was accepted by n, the learned transferred the Work-in-Progress,
14/– (excluding ve expenses of 68,573/–), and ₹83,12,398/–.
me Tax (Appeals)
The Ld. CIT(A) ect to general administrative expen as deduction, with th
Work-in-Progress. Ho to the sales promoti sustaining the disallo
8.4 Before us, the Book page 29 and 3
promotion expenses a reference said detail i
“DATTANI CONSTRUCT
SCHEDULE FORMING T
ACCOUNT FOR THE YEA
Miscellaneous Income
Particulars
Rent Recd
Compensation
Sales Promotion Expe
Particulars
Advertisement
Donations
“DATTANI CONSTRUCT
SCHEDULE FORMING T
ACCOUNT FOR THE YEA
Financial Expenses
Particulars nses and directed that 70% the he remaining 30% to be capita wever, he declined to extend si ion expenses and financial exp owance of those items..
Ld. counsel for the assessee re
31 of the Paper Book where de and investment expenses is prov is reproduced as under :
TIONS
THE PART OF PROFIT & LOSS
AR ENDED MARCH 31, 2011
Rs. Ps.
60
00
60
nses
Schedule No.
00
00 1831596.00
Total
00 TIONS THE PART OF PROFIT & LOSS AR ENDED MARCH 31, 2011 s
Schedule N
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ereof be allowed alised as Capital imilar treatment penses, thereby eferred to Paper tail of the sales vided. For ready
. 4
No. 6
Discount
Brokerage
Interest
8.5 We have given submissions advance on record, and duly below. The material engaged in the busi ordinary course of expenditure includ promotion expenses.
discount, and intere relatable to ongoing r
8.6 It is evident fr consistently following years, wherein 30% o heads is capitalised balance 70% is cla incurrence. This acc in preceding asses
Department and n assessments. The pr precedents, mandate
Rs. Ps.
00
00 2374386.00 1824761.00 2374386.00 Total 2374386.0 n our thoughtful consideratio ed by both parties, perused the y considered the findings of l facts are not in dispute. T iness of real estate developme its operations, incurs variou ding financial, administrative . The financial expenses comp est components, some of whi real estate projects. rom the record that the asse g a uniform accounting metho of the expenditure incurred und as part of Capital Work-in-Pr aimed as revenue deduction ounting treatment, being consi ssment years, has been acc not found fault with in e rinciple of consistency, recogn s that a settled accounting prac Dattani Construction 10 0 0 00 on to the rival material placed the authorities The assessee is ent and, in the us categories of e, and sales prise brokerage, ich are directly essee has been odology over the der the aforesaid rogress and the in the year of istently followed cepted by the earlier scrutiny ised by judicial ctice accepted in prior years cannot b unless there is a mat 8.7 The learned As consistent practice expenditure to Capita expenses are relata learned CIT(A), whi accepted the assess expenses but mainta financial expenses. 8.8 The question whether such sales treated wholly as cap merits treatment as by the assessee in ea 8.9 We find that advertisement and p overall business vis alongwith expenses f by its very nature, c project but contribut business as a whole. has already been di be arbitrarily disturbed in a s terial change in facts or law. ssessing Officer, however, dev and directed the transfer al Work-in-Progress, on the reas ble to the projects under dev ile appreciating the past pa see’s contention in respect of ained the disallowance of sales that, therefore, arises for de s promotion and financial ex pital in nature or whether a pro revenue expenditure, as consi arlier years. the sales promotion expe publicity expenditure incurred sibility and brand presence o for publicity of projects also. Su cannot be confined exclusively tes to the general promotion o . The donation component, on isallowed separately by the As Dattani Construction 11 ubsequent year viated from this of the entire oning that such velopment. The attern, partially f administrative promotion and etermination is xpenses can be oportion thereof istently followed enses comprise to enhance the of the assessee uch expenditure, to a particular f the assessee’s the other hand, ssessing Officer, and therefore, does n the financial expe discount—partly rela the projects and part of the business. 8.10 In our consider following a method capital work and clai has been accepted i departure in the yea contrary finding tha Further, as rightly expenditure is allow capitalised and allow years would be reven rates applicable. 8.11 In view of the principles of consis justification for the d the partial disallow therefore, set aside t and direct the Asses consistently followed capitalise 30% of th not form part of the present dis enses—comprising brokerage, ate to financing arrangements tly to the general working capit red opinion, where an assessee of apportioning part of such ming the balance as revenue, an in earlier years, there is no v ar under consideration in the at the method results in distor contended by the assessee wed as a deduction in the p wed as part of the project cost nue-neutral in effect, given the u foregoing, and bearing in m stency and revenue neutrality deviation made by the Assessin wance sustained by the learn the findings of the learned CIT(A sing Officer to adopt the accou d by the assessee in earlier ye he sales promotion and financ Dattani Construction 12 spute. Similarly, interest, and connected with tal requirements e is consistently expenditure to nd such method valid reason for absence of any rtion of income. e, whether the present year or t in subsequent uniformity of tax mind the settled y, we find no ng Officer or for ned CIT(A). We, A) on this issue unting treatment ars—namely, to ial expenses as Capital Work-in-Prog deductible expenditu 8.12 Accordingly, we this issue and direct capitalise 30% of t expenses as Capital the balance 70% as r 8.13 The ground No allowed. 9. The ground No. required to be adj infructuous. 10. In the result, th statistical purposes. Order pronoun (RAJ KUMAR C JUDICIAL M Mumbai; Dated: 12/11/2025 Rahul Sharma, Sr. P.S.
gress and to allow the ba ure for the year under considerat set aside the findings of the le t the Assessing Officer to allow the sales promotion and inv
Work-in-Progress, while permitti revenue expenditure.
o. 4 and 5 of the appeal of th
. 7 is being general in nature a udicated upon and same is he appeal of the assessee is pa ced in the open Court on 12/ CHAUHAN)
(OM PRAK
MEMBER
ACCOUNTA
Dattani Construction
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alance 70% as tion.
arned CIT(A) on the assessee to vestment-related ing deduction of he assessee are and same is not s dismissed as artly allowed for 11/2025. d/-
KASH KANT)
ANT MEMBER
Copy of the Order forward
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
////
ded to :
BY ORDER
(Assistant Re
ITAT, Mu
Dattani Construction
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R, gistrar) umbai