DCIT, CIRCLE-1, MUZAFFARPUR vs. M/S ASHA REALTY DEVELOPERS PVT LTD, MUZAFFARPUR
Facts
The Revenue appealed against three additions deleted by the CIT(A). The first involved ₹3.96 Crores added by the AO for short revenue recognition under the Percentage Completion Method. The second concerned ₹40.97 Lakhs added under Section 43CA for differences between stamp duty value and actual sale value. The third was an addition of ₹27,758 for interest on service tax and TDS.
Held
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s deletion of all three additions. It confirmed that the AO's calculation under the Percentage Completion Method had a conceptual error. It also agreed that the stamp duty value for Section 43CA should be based on the date of agreement execution, not sale deed registration, and that interest on service tax and TDS is an allowable deduction.
Key Issues
1. Whether the CIT(A) correctly deleted the addition for revenue recognition under the Percentage Completion Method. 2. Whether the addition under Section 43CA for the difference between stamp duty value and sale value was rightly deleted, considering agreements were executed in prior years. 3. Whether interest on service tax and TDS is an allowable deduction.
Sections Cited
43CA, 43CA(1)
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Income Tax Appellate Tribunal, “PATNA” BENCH, PATNA
Before: SHRI DUVVURU RL REDDY, VP & SHRI RAJESH KUMAR, AM
Per Rajesh Kumar, AM:
This is an appeal preferred by the Revenue against the order of the Commissioner of Income-tax (Appeals), Patna-2 (hereinafter referred to as the “Ld. CIT(A)”] dated 29.06.2020 for the AY 2015-16.
At the outset, we observe from the appeal folder that there is a delay of 149 days in filing the appeal by the department in support of which a condonation petition was filed. It was stated in the condonation petition that the delay has occurred due to time taken in obtaining the administrative approvals from the competent authorities, which took quite a long time and accordingly, the delay being beyond the control may be condoned. The ld. AR, on the other hand, did not oppose the condonation of delay. Considering the reasons cited before us, we are inclined to condone the delay and admit the appeal for hearing.
3.1. The facts in brief are that during the course of assessment proceedings, the learned AO noted that the assessee has recognized the revenue short by ₹3,96,94,241/- in the books of accounts and accordingly, recalculated the Revenue to be recognized as per the Percentage Completion Method and thus, made an addition of ₹3,96,94,241/-, ias per detail herein:-
Name of Project Total Booked Area as Cost of Chargeable Total Sale Diff. the stage salable area % of construction sale as value project area total shown sailable area Asha 100% 27436 26826 97.78 43,270000 4,50,06,000 4,50,06,000 Vihar completed Asha 100% 33868 33868 100 6,00,19,604 7,50,11,000 7,50,11,000 vihar Phase-II Asha 100% 14088 14088 100 2,67,04,291 33,37,68,000 3,37,68,000 Plaza S.G. 97.37% 19825 14684 74.07 4,75,58,147 3,74,24,102 3,84,34,500 10,10,398 Smriti B.L. 27.12% 22355 7641 34.18 1,79,05,051 65,21,687 2,40,47,530 1,75,25,843 Singhania Asha 22.11% 46165 8754 18.98 19069421 Nil 2,11,58,000 2,11,58,000 Vihar Ph- III 3,96,94,241 3.2. The learned AO made the addition to the total income of the assessee.
3.3. In the appellate proceedings, the learned CIT (A) allowed the appeal of the assessee by observing and holding as under:-
“3. Addition on the basis of turnover adopted by the appellant in PERCENTAGE COMPLETION METHOD has been made by the AO of Rs. 3,96,94,221/-. The AO has applied PERCENTAGE COMPLETION METHOD for determining the turnover to be recognized by the appellant in his profit and loss account on the basis of books of accounts and submissions made by the appellant at the time of scrutiny. The AO has
The next issue raised by the Revenue is against the order of learned CIT (A) deleting the addition of ₹40,97,800/-as made by the learned AO u/s 43CA of the Act in respect of various plots sold by the
4.1. The facts in brief are that the learned AO during the course of assessment proceedings, called upon the assessee to produce the sale deeds which were registered during the relevant year. The assessee furnished all the deeds along with complete details and the learned AO computed the difference between the stamp duty value and actual value at ₹40,97,800/- in respect of 15 flats at page no.3 and added the same u/s 43CA(1) of the Act.
4.2. In the appellate proceedings, the learned CIT (A) deleted the addition by holding that the learned AO has wrongly computed the difference between the sale value and stamp duty value of the flats by ignoring the fact that the agreements in these flats were executed in the earlier assessment years and therefore, the sale value in the year in which the agreements were executed were to be taken. The learned CIT (A) accordingly deleted the addition by observing and holding as under:-
““1. I have gone through the assessment order and the submission of the AR. The addition on account of difference in MVR has been done by the AO on the basis of criteria of u/s 43CA of difference in the agreement/sale value of the property and the Municipal value given in the agreement for stamp duty purpose. The AO has compared the agreement value of the flats sold by the assessee with the stamp duty value and determined a difference of Rs. 40,97,800/- which is the basis of addition. I have gone through the order of the AO and corresponding submission by the appellant. The appellant has emphasized that the provisions of Sec. 43CA has been interpreted by the AO in isolation of the PROVISO to that Section. The appellant has further argued that the proviso to this section gives a relief to the assessee, where the agreement has been executed before the date of actual sale deed and such agreement has been accompanied with consideration other than in cash in such cases the MVR value on the date of such agreement shall prevail over the MVR value as in the actual sale agreement. The appellant has produced a complete list, detail, bank accounts, copy of agreements, MVR notifications of Govt. of Bihar and copy of sale deeds which is placed on record and the verification of the same reveals that there is no taxable differential amount covered u/s 43CA of I.T Act 1961. L am therefore of the view that the addition of AO is not legally correct. Hence the addition of Rs. 40,97,800/- is here by deleted.”
The issue raised in ground no.3, is against the deletion of addition by the learned CIT (A) as made by the learned AO on account of interest amounting to ₹27,758/-, which was added by the learned AO on account of interest on service tax and TDS. After perusing the facts on record and the appellate order, we find that the interest on service tax and TDS is not penal in nature and is liable to be allowable deduction under the Act as admissible deduction. Accordingly, we dismiss the appeal of the Revenue on this issue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 09.12.2025.
Sd/- Sd/- (DUVVURU RL REDDY) (RAJESH KUMAR) (VICE PRESIDENT) (ACCOUNTANT MEMBER) Patna, Dated: 09.12.2025 Sudip Sarkar, Sr.PS
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Patna
