NIKUNJ DEVELOPERS,THANE vs. ACIT CIR 4, THANE

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ITA 3330/MUM/2017Status: DisposedITAT Mumbai14 January 2020AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee could not provide sufficient justification or evidence for the expenses and profit estimations. Both parties agreed to remit the issues back to the Assessing Officer for further examination and evidence submission.

What were the facts?

The assessee debited professional fees against a non-taxable housing project. The Assessing Officer disallowed 50% of these fees, attributing them to the non-taxable project. The assessee also failed to justify the estimated net profit declared for another project.

What were the issues?

Whether professional fees were correctly allocated to a non-taxable project and whether the estimated net profit declared was justified.

Which sections of the Income-tax Act were involved?

Section 80IB(10),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

For Appellant: Shri Rahul K. Hakani, AR
Hearing: 14.01.2020Pronounced: 14.01.2020

आदेश / O R D E R महावीर ससुंह, न्याययक सदस्य/ PER MAHAVIR SINGH, JM:

1.

This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-3, Mumbai in Appeal No. 86-THN/15-16 dated 03.02.2017. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle-4, Thane (in short ACIT/ AO) for AY 2012-13 vide dated 30.03.2015, under 2 | P a g e Nikunj Developers 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).

2.

The first issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of 50% of professional fee amounting to ₹10,98,365/- considering the same against the tax free housing project i.e. building No.5 instead of building No.6 which is taxable income. In this assessee has raised the following ground No.1: -

“1. The Ld. CIT(A) erred in law and in facts by disallowing 50% of professional fees amounting to ₹10,98,365/- incurred by the appellant firm, treating the same as expenses incurred for tax free housing project (building No.5) instead of building No.6.”

3.

We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the AO during the course of assessment proceedings noticed that the assessee has debited the professional fee of ₹21,96,730/- against Veena Saaz building No.6 which is a non-taxable unit of the assessee. The AO noted that the entire professional fee cannot be attributed to non-taxable project as the same has to be considered against taxable project because, the assessee is maintaining separate accounts for each project and 50% of the professional fee should be attributed to Veen Saaz building No.5 which is claimed as exempt. The assessee could not file any details hence, the AO treated the 50% of professional fee at ₹10,98,365/- relatable to Veena Saaz building No.5 which is claimed exempt under section 80IB(10) of the Act and 3 | P a g e Nikunj Developers 50% of the professional fee. Aggrieved, assessee preferred the appeal before CIT(A), who also confirmed the disallowance on the same reasoning that the assessee could not file the details before the Assessing Officer.

Aggrieved, assessee came in appeal before Tribunal.

4.

We noted that the assessee could not submit any explanation or justification in support of claim of expenses in respect of professional fee towards Veena Saaz building No. 6 as to why these are expenses relatable to Veena Saaz building No.

6. Now, both the parties, agreed that the issue can be remitted back to the file of the AO so that the assessee can lead evidence or justify with explanation in support of this claim of expenses towards Veena Saaz Building No.6. This issue is remitted back to the file of the AO and set aside the order of CIT(A) and that of the AO.

5.

The next issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in enhancing the estimated net profit declared by assessee from 15% to 18% in respect of Veena Saaz Building No.6. For this assessee has raised the following ground No. 2:-

“2. The Ld. CIT(A) erred in law and in facts by confirming additions amounting to ₹39,61,883/- made by the AO by enhancing the estimated net profit from 15% to 18% in respect of building No.6”

6.

We have heard rival contentions and gone through the facts and circumstances of the case. We noted that in this issue

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