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IN THE INCOME-TAX APPELLATE TRIBUNAL “F” BENCH MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER (Assessment Year 2011-12) M/s Skyline Prashasti JCIT Range-27(3) (Formerly known as M/s. Sky Mumbai. Star Skyline Oasis, Premier Road, Vs. Nr. Vidyavihar Station, Ghatkopar (W), Mumbai -400086. PAN: ABCFS0618M Appellant Respondent (Assessment Year 2011-12) JCIT Range-27(3) M/s Skyline Prashasti Mumbai. (Formerly known as M/s. Sky Vs. Star Skyline Oasis, Premier Road, Nr. Vidyavihar Station, Ghatkopar (W), Mumbai -400086. PAN: ABCFS0618M Appellant Respondent Appellant by : Shri Mahavir Jain & Prateek Jain (AR) Respondent by : Shri T.A. Khan (Sr-DR) Date of Hearing : 17.05.2018 Date of Pronouncement : 17.05.2018 Order under section 254(1) of Income–tax Act PER PAWAN SINGH, JUDICIAL MEMBER;
These cross appeal are directed against the order of ld. Commissioner of Income-Tax (Appeals)-25 [ld. CIT(A)], Mumbai for Assessment Year 2011-12 in the matter of assessment passed under section 143(3) dated & 3616/M/16- M/s Skyline Prashasti 28.03.2014. The assessee in its appeal has raised the following grounds of appeal:
1. On the facts and circumstances of the case and in law, the learned CIT(A) erred in affirming the decision of Assessing Officer for disallowing proportionate interest expenditure and municipal taxes which are in proportion to the non let out area to total constructed area, while calculating "Income form House property".
2. On the facts and circumstances of the case and in law, the learned CIT(A) erred in affirming the decision of the Assessing Officer for disallowing proportionate expenditure which is in proportion to the non let out area to total constructed area, while calculating 'Business Income'. 3. On the facts and circumstances of the case, the learned CIT(A) erred in affirming the decision of Assessing Officer for assessing interest income of Rs. 78,849/- separately under the head "Income from other sources" instead of netting with interest payable as done by your appellant.
The Revenue in its cross appeal has raised the following grounds of appeal:
1. On the facts and circumstances of the case & in law, the Ld. CIT(A) has erred in directing to delete the addition of Rs. 54,83,185/- made on account of estimation of net profit @ 8% of the WIP by following the decision of the Hon'ble ITAT in the assessee' s own case for the A.Y 2007-08 without appreciating the fact that the assessee was a builder and developer and accordingly profit of the assessee was to be computed as per AS-7 on percentage completion method on an estimated basis as borne out in the order U/S 143(3) of the I.T Act.
2. The appellant prays that the order of the CIT(A) on the above grounds be reversed and that of the Assessing officer be restored.
At the outset of hearing the ld. Authorized Representative (AR) of the assessee submits that grounds of appeal
in both the appeals are covered in favour of assessee and against the revenue in assessee’s own case for Assessment Year 2009-10 & 2010-11. The ld AR for the assessee filed the copy of order of Tribunal in assessee’s own case for Assessment Year 2009-10 & 2010-11 in 7741/M/2012 and ITA No.
2. ITA No.2293 & 3616/M/16- M/s Skyline Prashasti 2416/M/2015 for AY 2009-10 and 2010-11 respectively. On going through the copy of the decision the ld DR for the revenue conceded that the ground of appeal in both the appeals are covered in favour of assessee.
In Ground No.1 to 3 relates to confirming the disallowance of proportionate interest expenditure and municipal taxes to non let out area and not allowing the expenditure from non let out area while calculating business income and assessing interest income separately as business income. We have noted that identical ground of appeal was raised by assessee in appeal for Assessment Year 2009-10. The Co-ordinate Bench of this Tribunal while considering the identical ground passed the following order:
“8. We have heard both the parties and perused carefully the relevant material on record as placed before us. The undisputed facts of the case are that the assessee is engaged in the business of construction of properties for the purpose of letting out. Till the year end 31.03.08 the assessee constructed and completed six floors out of total 8 floors thereby completing construction of 3,15,000 sq. ft. till the year end. Whereas the area let out during the year was only to 2 parties namely M/s. Vodafone Essar Ltd. approximately 40,000 sq. ft. and M/s. Indus Tower Ltd. of 11,819 sq. ft. thus aggregating to 51,819 sq. ft. which worked out to 16.45% of the total area constructed. We find merit in the argument of the Ld. A. R. that even if the notional rent in respect of the area which is not let out during the year is taken, the assessee will be entitled to vacancy allowance as per section 23 of the Act and proviso to section 23 provides for deduction of municipal taxes under the head income from house property on Similarly, provisions of section 24, 2nd proviso and explanation to section 24 provided for deduction of interest incurred on the borrowed capital for the construction of the property and no restriction of any kind whatsoever has been provided in the said section. After carefully going 3 & 3616/M/16- M/s Skyline Prashasti through the facts of the case and arguments of both the parties, we are of the considered view that the interest and municipal taxes have to be allowed in toto and cannot be restricted in proportion to the area let out during the year. The intention of the assessee is very clear that the property was constructed for the purpose of letting out and in the subsequent year the entire property was let out. The ground no 1 raised by the assessee is allowed and AO is directed accordingly.”
Therefore, considering the decision of Co-ordinate Bench in assess’s own case and following the principle of consistency, the ground of appeal raised by assessee is allowed. addition of Rs. 54,83,185/- added on account of estimated Net Profit @ 8% of work-in-progress. The ld. AR of the assessee submits that ground of appeal raised by revenue is also covered in favour of assessee and against the revenue in assessee’s own case for AY 69/Mum/2013. On going through the copy of decision, the ld. DR for the Revenue has conceded that decision of Assessment Year 2009-10 is against the Revenue.
However, the ld. DR for the Revenue relied upon the order of Assessing Officer.
We have noted that the Revenue has raised the similar ground of appeal except variation of figure of disallowance on estimated basis. We have further noted that the Co-ordinate Bench of Tribunal by following the decision in assessee’s own case in dated ITA No.2293 & 3616/M/16- M/s Skyline Prashasti 31.07.2012 and in ITA No. 6580/Mum/2007 for AY 2003-04 dated 11.05.2016 passed the following order:
21. Having heard rival contentions of both the parties and perused the material on record and after carefully perusing decisions of the co-ordinate bench of the Tribunal, we observe that the identical issue has been decided by the co-ordinate bench of the Tribunal in the earlier years in favour of the assessee. The Ld. CIT(A) also allowed the appeal of the assessee by holding that the assessee was not holding the work in progress as stock in trade but as capital work in progress and accepted the contention of the assessee that assessee has no profit on the said construction which can be estimated by applying the percentage completion method. We, therefore, following the decision of the co-ordinate benches of the Tribunal and maintaining the consistency therewith, uphold the order of the Ld. CIT(A) and dismiss the appeal of the Revenue.
Therefore, considering the decision of Co-ordinate Bench and following the principle of consistency, the ground of appeal raised by Revenue is dismissed.
In the result, appeal filed by assessee is allowed and by Revenue is dismissed.
Order pronounced in the open court on 17.05.2018.