DEPUTY COMMISSIONER OF INCOME-TAX, PANVEL CIRCLE, PANVEL vs. M/S. GOPI RESORTS PVT.LTD, RAIGAD

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ITA 333/PUN/2019Status: DisposedITAT Pune24 August 2022AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT(A) had accepted the assessee's submissions without proper verification of the proportion of area sold to total area and the total cost incurred. Therefore, the matter was remitted for fresh consideration.

What were the facts?

The Revenue appealed against the CIT(A)'s order which allowed the assessee's claim for construction cost expenditure. The Assessing Officer had disallowed this cost, treating it as part of closing work-in-progress.

What were the issues?

Whether the CIT(A) erred in allowing construction cost as expenditure without verifying the proportionality to area sold and total cost incurred.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI INTURI RAMA RAO & SHRI PARTHA SARATHI CHAUDHURY

For Respondent: Shri Hitendra B. Ninawe
Hearing: 22.08.2022Pronounced: 24.08.2022

ORDER

PER INTURI RAMA RAO, AM:

1.

This is an appeal filed by the Revenue directed against the order of ld. Commissioner of Income Tax (Appeals)- 20, Mumbai [‘the CIT(A)’] dated 30.11.2018 for the assessment year 2012-13.

2.

The Revenue raised the following grounds of appeal :-

1. “On the facts and circumstances of the case, and in law, the Ld.CIT(A) erred in not appreciating the fact that there is disparity between the base and parameter considered for the revenue recognition and the construction cost to be claimed as expenditure in respect of the revenue recognized”

2. “On the facts and circumstances of the case, and in law, the Ld.CIT(A) erred in not appreciating the fact that the AO followed uniform criteria for the recognition of revenue as well as the cost of the construction in order to recognize the correct profit for the year under consideration." 3. The order of the CIT(A) may be vacated & that of the Assessing Officer may be restored 4. The appellant craves leave to add, amend, alter or delete any ground of appeal

.”

3. Briefly, the facts of the case are as under : The respondent-assessee is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of real estate development. The return of income for the assessment year 2012-13 was filed on 26.09.2012 declaring total income of Rs.2,88,16,804/-. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax-12(2)(2), Mumbai (‘the Assessing Officer’) vide order dated 30.03.2015 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) by disallowing the cost of construction as expenditure by treating, as part of the closing work-in-progress.

4. Being aggrieved by the assessment order, an appeal was filed before the ld. CIT(A), who vide impugned order allowed the claim of the respondent-assessee company by holding as under :-

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