ACIT, NEW DELHI vs. M/S SHEETAL INTERNATIONAL PVT. LTD,, NEW DELHI

This appeal by the revenue is preferred against the order of the CIT(A)-1, New Delhi dated 16.10.2015 pertaining to A. Y. 2010-11.

The substantive grievance of the revenue read :- 1 On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,28,28,990/- made by the AO on account of excess claim of deduction/exemption u/s 86 without appreciating the fact that the M/s Mayfield Projects (AOP) has mentioned in its return of Income and Tax Audit Report (Form No. 3CD) for the A. Y. 2010-11 that assessee company is having share of 42.284%. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,28,28,990/- by holding that the assessee has mentioned only one profit sharing ratios in the e-filed return as the system accepts only one ratio without appreciating the fact that even in the Tax Audit Report (Form No. 3CD) of M/s Mayfield Projects only one profit sharing ratios is mentioned. 3.On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,28,28,990/- without considering or rebutting the judgements given by his predecessor in the case of assessee for the A.Y. 2006-07 to 2009- 10 on identical issue, wherein the Ld. CIT(A) had rejected the claim of the assessee regarding having two different profit sharing ratios for two different projects, despite the fact that it was mentioned in the assessment order.

The elements in ground No.1 to 3 relate to the same issue.

The assessee is a member of AOP i.e. M/s. Mayfield Projects. While scrutinizing the return of income the Assessing Officer noticed that the assessee has claimed exemption of its income u/s. 86 of the Act from the AOP to the tune of Rs.21639161/-. The Assessing Officer noticed that the assessee is having share from AOP @ 42.284% whereas the profits declared from the AOP was on a higher side. The assessee was asked to explain the same. In its reply the assessee explained that the AOP is having two type of land in respect of two projects and the share agreement is different for both the projects. It was further explained that the AOP has distributed amongst the members their respective shares of profit in the ratio mentioned in the AOP agreement for both the projects.

The reply of the assessee did not find any favour with the Assessing Officer who was of the firm belief that the profit share of the assessee has been determined @ 42.284% and has attained finality in previous assessment years i.e. A.Y.2006-07 to 2009-10. The Assessing Officer accordingly treated the share of assessee at Rs.93,98,797/- and the amount of Rs.12,82,990/- was treated as income from other sources. 6. The assessee strongly agitated the matter before the CIT(A) and filed copy of revenue distribution account of M/s. Mayfield Projects explaining the revenue sharing ratio of the different members of M/s. Mayfield Projects in the two projects as under :-

It was explained that the shares of the members of the AOP was based on the addendum to agreement for joint development agreement. It was explained that the assessee was having share of revenue at the rate of 42.284% in one of the project and 48.803% in section project. It was further explained that in the assessment of the AOP the share of the assessee has been accepted at the rate of 42.284% and 48.803% for both the projects. The assessee also filed a statement of revenue distribution by the AOP to substantiate its claim of having received share of revenue from both the projects at Rs.21639161/-. The assessee strongly contended that the share profit of Rs.21639161/- is eligible for exemption u/s. 86 of the Act.

After considering the facts and the submissions and after going through the assessment of the AOP and considering the statement of revenue distribution the CIT(A) observed that the share of revenue of members determined by AOP cannot be disturbed by the Assessing Officer in individual assessment of the AOP member without bringing any advance material on record. The CIT(A) concluded by holding that as per the revenue distribution certificate issued by the AOP the share of the revenue of the assessee for the year under consideration comes to Rs.21639161/- and the same is eligible for exemption u/s 86 of the Act. 9. Aggrieved by this the revenue is before us. 10. The DR read the operative part of the assessment order and placed strong reliance on the findings of the Assessing Officer. 11. Since, none appeared on behalf of the assessee and having heard the DR, we have carefully perused the orders of the authorities below. There is no dispute that the AOP was having two projects on land measuring 307.950 acres and 23.896 acres. It is also not in dispute that the assessee was having revenue share at the rate of 42.284% in the project on land measuring 307.950 acres and 48,803% in the land measuring 23.896 acres. The statement of revenue distribution by the AOP M/s. Mayfield Project is as under :-

The CIT(A) has given a categorically finding that as per the assessment order in the case of AOP the share of the assessee has been accepted @ 42,284% and 48.803% for both the projects. The CIT(A) also categorically held that the assessment order as well as the order of the CIT(A) in the case of AOP has been considered by him and the revenue sharing ratio for both the projects have been accepted.

A perusal of the revenue distribution by the AOP clearly show that the share of revenue of the assessee from both the projects is Rs.21639161/-. Since this share has been distributed by the AOP which has been accepted in the assessment of the AOP the assessee is eligible for exemption u/s. 86 of the Act in respect of this share of profit of Rs.21639161/-.

Considering the facts in totality we do not find any reason to interfere with the findings of the CIT(A).

In the result, the appeal filed by the revenue is dismissed.