PATEL OSWAL HOUSING,PUNE vs. ADDL. CIT (A) - 4, KOLKATA

The captioned appeal at the instance of assessee pertaining to A.Y. 2016-17 is directed against the order dated 10.02.2025 of Addl/JCIT(A)-4 Kolkata passed u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) arising out of Assessment Order dated 01.12.2018 passed u/s.143(3) of the Act.

The sole grievance of the assessee is against the disallowance of Rs.9,79,600/- incurred towards Stamp duty and Registration expenses.

At the outset, ld. Counsel for the assessee submitted that genuine expenses incurred towards Stamp duty and Registration at Rs.9,79,600/- have been debited to the Profit and Loss Account and that the revenue has been recognised on the basis of Percentage Completion Method (PCM) and income has been offered to tax. Therefore, the impugned disallowance deserves to be deleted.

On the other hand, ld. Departmental Representative vehemently argued supporting the orders of the lower authorities and also submitted that if the assessee has recognised the revenue on Percentage Completion Method, then it would also have estimated the expenses. Further ld. Departmental Representative also submitted that the Stamp duty and Registration expenses are not appearing in the income tax return filed.

I have heard the rival contentions and perused the record placed before me. I observe that the assessee is a Partnership firm engaged in the business as Builder. Income of Rs.24,51,660/- declared in the income tax return for A.Y. 2016-17 furnished on 16.10.2016. After the case been selected for Limited Scrutiny by valid serving of notices u/s.142(1) and 143(2) of the Act, assessment proceedings were carried out. Ld. Assessing Officer has only made the addition by disallowing Stamp duty and Registration expenses of Rs.9,79,600/- observing that the estimated project cost used for the purpose of computation of Percentage Completion is inclusive of Sales and Promotion expenses. Same is the finding of ld. CIT(A).

I observe that the assessee is showing the revenue based on the Percentage Completion Method and cost portion is adjusted in the figure for closing work-in-progress and the other indirect expenses incurred during the year are duly reflected in the Profit and Loss Account. Ld. Assessing Officer has not disputed the correctness of the opening and closing work-in-progress. Further, ld. Assessing Officer has also not taken into account that the Stamp duty and Registration expenses which have been included under the head “Duties and Taxes” and duly reflected in the income tax return. Ld. Assessing officer has observed that the assessee has claimed for the Sales Promotion expenses. This observance of the ld. Assessing Officer is not supported by any specific observations from the Books of Account of the assessee regularly maintained. I have gone through the computation of income and Income and Expenditure account and the relevant schedules of the income tax return filed by the assessee and notice that the expenses of Stamp duty and Registration expenses have been duly reflected in the income tax return under the head “Duties and Taxes” and the net profit from the Kothrud site along with loss incurred in Shivajinagar site have been aggregated and offered to tax in the computation of income. I am therefore of the considered view that the impugned disallowance of Rs.9,79,600/- is uncalled for. Finding ld. CIT(A) is set aside and effective grounds of appeal raised by the assessee are hereby allowed.

In the result, appeal of the assessee is allowed.