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Income Tax Appellate Tribunal, ‘A’ BENCH : CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI INTURI RAMA RAO]
आदेश / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER
This is an appeal filed by the Revenue directed against the order of the Commissioner of Income Tax (Appeals)-14, Chennai (‘CIT(A)’ for short) dated 12.10.2018 for the Assessment Year (AY) 2013-2014. The Revenue raised the following grounds of appeal: 2.
‘’1. The order of the learned CIT(A) is contrary to facts and circumstances of the case.
The Ld. CIT(A) erred in deleting the additions of Rs.1,92,12,840/- and directed to adopt 8% as per provisions of section 44AD for computin9 the income based on the submissions made by the assessee which is not in conformity with the remand report.
2.1 The Ld. CIT(A) ought to have appreciated the fact that the remand report was submitted after getting confirmation to the extent of Rs.79,29,075/- only out of the total additions made of Rs.1,92,12,840/- based on the additional documents submitted by the assessee during remand proceedings.
3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored’’.
The brief facts of the case are as under:
The respondent-assessee namely M/s. Kumaran Nagar Estate, is a Partnership firm constituted under the Partnership Act. It is engaged in the business of real estate. The return of income for the AY 2013-14 was filed on 31.03.2015 disclosing total income of Rs.24,65,290/-. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Non Corporate Circle-13(1), Chennai (hereinafter called “AO”) vide order dated 30.03.2016 passed u/s. 143(3) of the Income Tax Act, 1961 (in short ‘the Act’) at total income of �2,16,77,530/- after making the following disallowance:-
Disallowance of Land Development expenses : 1,22,15,800/- Disallowance of Salary expenses : 16,98,157/- Disallowance of Sales Promotion Advertising & Stationery Expenses : 27,47,299/- Disallowance of Travel Expenses : 8,00,196/- Disallowance of Road relaying expenses : 17,50,786/-
Being aggrieved by the above additions, the assessee preferred an appeal before ld. CIT(A), who vide impugned order partly allowed the appeal by directing the Assessing Officer to estimate the income under the provisions of Section 44AD of the Act by adopting profit of 8% and to allow excess estimated profit salary and interest paid to its partners.
Being aggrieved by the order of the CIT(A), the Revenue is in appeal before us in the present appeal. It is submitted that the provisions of Section 44AD of the Act had no application since assessee is not engaged in the business of civil construction or civil contractor. It is further submitted that the ld. CIT(A) had failed to consider the remand report submitted by the Assessing Officer. Thus, it is prayed that the order of the ld. CIT(A) should be set aside.
On the other hand, the ld. Authorised Representative placed 6. reliance on the order of the ld. CIT(A).
We heard the rival submissions and perused the material on 7. record. It is an undisputed fact that the assessee is in the business of real estate, therefore the provisions of Section 44AD of the Act have no applicability to an assessee engaged in the real estate business.
The ld. CIT(A) had clearly fell in error in applying the provisions of Section 44AD of the Act to the case on hand. Further, we find that the Assessing Officer had submitted remand report vide his letter dated 28.08.2018 which was not considered by the ld. CIT(A). On this set of facts, the order of the ld. CIT(A) cannot be sustained and therefore we set aside the order of the ld. CIT(A) and remit this matter back to the file of the ld. CIT(A) for denovo adjudication after affording due opportunity of hearing to the assessee.
In the result, the appeal of the Revenue is partly allowed 8. for statistical purpose.
Order pronounced on 9th day of August, 2019, at Chennai.