PR COMMISSIONER OF INCOME TAX vs. M/S ANKIT CHIRAG DEVELOPERS PVT LTD

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ITA/1/2024HC RajasthanRJHC01065934202319 February 2024Author: MANINDRA MOHAN SHRIVASTAVA,MUNNURI LAXMAN2 pages
AI SummaryPartly Allowed

What did the High Court hold?

The Tribunal decided the issues as follows: Questions 1 and 3 were answered against the appellant (Revenue) in light of this Court's judgment in CIT Central Jaipur Vs. Unique Builders and Developers and connected matters, which was upheld by the Supreme Court via dismissal of SLP. This implies the ITAT's decision to delete the addition under the percentage of completion method and its direction regarding the project completion method for suppressed sales were upheld. Question of Law No. 2 was answered in favour of the appellant (Revenue) and against the assessee, relying on the Supreme Court's decision in Shree Choudahry Transport Company Vs.Income Tax Officer. This means the disallowance made by the AO under Section 40(a)(ia) was upheld. The appeal was partly allowed.

What were the facts?

This appeal concerns the assessment years not specified in the provided text. The appellant is the Principal Commissioner of Income Tax, Udaipur, and the respondent is M/s Ankit Chirag Developers Pvt Ltd. The appeal challenges an order passed by the Income Tax Appellate Tribunal (ITAT). The present appeal is disposed of in terms of a prior order dated 04.09.2023 in D.B. Income Tax Appeal no.12/2019, which dealt with similar issues for the same assessee. The prior order addressed three substantial questions of law framed by the revenue. The ITAT's decision on two of these questions was confirmed, while the third question was decided in favour of the revenue.

What were the issues?

The Tribunal had to decide three substantial questions of law: 1. Whether the ITAT was justified in confirming the deletion of an addition of Rs.6,22,52,685/- made by the Assessing Officer (AO) by applying the percentage of completion method, rejecting the assessee's accounting method, which is prescribed under Accounting Standards AS-7 & AS-9. 2. Whether the ITAT's decision confirming the deletion of disallowance made by the AO under Section 40(a)(ia) of the Income Tax Act was perverse, contrary to the Supreme Court's decision in Palam Gas Services Vs CIT, and conceded by the assessee before the ITAT. 3. Whether the ITAT was justified in directing the AO to compute income arising from suppression of sales receipt by applying the project completion method. Assessee's contentions are not explicitly recorded for each issue. The Revenue argued that the ITAT erred in deleting the addition related to the percentage of completion method and in directing the AO to use the project completion method for suppressed sales. The Revenue also argued that the disallowance under Section 40(a)(ia) should not have been deleted. The Revenue relied on the Supreme Court decision in Shree Choudahry Transport Company Vs.Income Tax Officer for issue 2.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[2024:RJ-JD:8573-DB] HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Income Tax Appeal No. 1/2024 Pr Commissioner Of Income Tax, Udaipur. ----Appellant Versus M/s Ankit Chirag Developers Pvt Ltd, 54-55, Rajdeep, New Fatehpura, Udaipur. ----Respondent For Appellant(s) : Mr. K.K. Bissa For Respondent(s) : Mr. Harshvardhan Singh HON'BLE THE CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA HON'BLE MR. JUSTICE MUNNURI LAXMAN

Order 19/02/2024

1.

With the consent of the parties, this appeal is finally disposed off in terms of the order dated 04.09.2023 passed in D.B. Income Tax Appeal no.12/2019 [Principal Commissioner of Income Tax (Central), Jaipur Vs. M/s Ankit Chirag Developers Pvt. Ltd.] and connected matter wherein, it has been held as below: xxx “3. For the purpose of convenience, three substantial questions of law, which have been framed by the appellant in Income Tax Appeal No.12/2019 are reproduced as follows:

“1. Whether on the facts and circumstances of the case the ld. ITAT was justified in law in confirming the decision of the CIT(A) of deleting the addition of Rs.6,22,52,685/-made by the AO by applying percentage of completion method which is prescribed under Accounting Standards AS-7 & AS-9 after rejecting the method of accounting adopted by the assessee?

2.

Whether on the facts and circumstances of the case the decision of the ld. ITAT does not suffer from perversity of law in confirming the

[2024:RJ-JD:8573-DB] (2 of 2) [ITA-1/2024] decision of the CIT(A)of deleting the disallowance made by the AO u/s 40(a)(ia) of the Income Tax which is contrary to the decision of the Hon’ble Supreme Court in the case of Assessee before ITAT?

3.

Whether on the facts of and circumstances of the case the Hon’ble ITAT was justified in law in directing the AO to compute income arising from suppression of sales receipt by applying project completion method on?”

4.

Questions No.1 & 3 herein are answered against Developers and other connected matters [2017 (5) TMI 1505 (Rajasthan High Court)]. It has been brought to our notice that the SLP preferred against the said judgment has been dismissed by the Hon’ble Supreme Court vide order dated 31.07.2023 i.e. Special Leave to Appeal (C) No.13072/2018 – Commissioner of Income Tax II Jaipur Vs. M/s. Rama Ajit Builders & Developers.

5.

In the light of above, the D.B. Income Tax Appeal No.11/2019 stands dismissed.

6.

As far as Question of Law No.2 is concerned, the same is answered in favour of the appellant-Revenue and against the assessee, in the light of the judgment passed by the Hon’ble Supreme Court in Shree Choudahry Transport Company Vs.Income Tax Officer [2020 (8) TMI 23 (Supreme Court)].

7.

The D.B. Income Tax Appeal No.12/2019 stands partly allowed in above terms.”

2.

In the result, the present appeal stands party allowed in the above terms. (MUNNURI LAXMAN),J (MANINDRA MOHAN SHRIVASTAVA),CJ 14-jayesh/-

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