WEST BENGAL HOUSING INFRASTRUCTURE DEVELOPERMENT CORPORATION LTD.,KOLKATA vs. THE PR. CIT, KOLKATA-5, KOLKATA, KOLKATA

O R D E R

PER Waseem Ahmed, Accountant Member:

W.B.H.I.D.Cor.Ltd. Vs. Pr. CIT Kol-5 Page 2 2. Though assessee has raised as many as 4 grounds of appeal

, however as per our considered view sole and substantial ground of appeal is that Ld. Pr. CIT erred in holding the order framed by Assessing Officer u/s 143(3) of the Act as erroneous in so far as prejudicial to the interest of Revenue.

3. Briefly, the facts are that assessee in the present case is a limited company and engaged in business of land development, housing and creation infrastructure facilities and sale of fully developed plots of land. The assessee in the year under consideration has filed its return income declaring total income of ₹3,36,21,470//- only. Subsequently the case was selected under scrutiny on the basis of CASS Module and accordingly notice u/s. 143(2) / 142(1) were issued and served upon assessee. The assessment was framed by the AO u/s. 143(3) of the Act after making various additions /disallowances to the total income of assessee vide order dated 02.03.2015 at a total income of Rs. 176,76,82,590.00 Subsequently Ld. Pr. CIT u/s 263 of the Act observed that there is a defect/ error in the assessment order passed by AO which is prejudicial to the interest of Revenue. It was observed by Ld. Pr. CIT that the assessee has shown an amount of ₹2,54,14,000/- receivable from West Bengal State Electricity Distribution Co. Ltd. (WBSEDCL for short) in its balance-sheet. The aforesaid amount was adjusted against the project cost and without crediting the same in profit and loss account. Therefore the amount of ₹2,54,14,000/- receivable from WBSEDCL was not considered by the AO in computing the total income of assessee. Accordingly, Ld. Pr. CIT issued a notice u/s 263 of the Act vide No. F. No. PCIT,Kol-5/263/M/s WBIDC Ltd./2016-17/6512 dated 13.01.2017 for treating the order passed by AO as erroneous in so far as prejudicial to the interest of Revenue. In compliance thereto, assessee submitted that the impugned issue of ₹2.54 cores being the amount receivable from WBSBDCL was duly considered by the AO during the course of assessment proceedings u/s. 143(3) of the Act.

W.B.H.I.D.Cor.Ltd. Vs. Pr. CIT Kol-5 Page 3 4. As such the assessee has incurred cost of laying the permanent electrical infrastructure with a view to ensure ultimate supply of electricity to various consumers at their individual plots which was classified under the head “project cost (WIP)” in its asset side of the balance-sheet. Such project cost was never claimed as expenses in the profit and loss account. Therefore, the amount of cost receivable from WBSEDCL in connection with such project was reduced from the project cost. Therefore, the amount receivable from WBSEDCL cannot be treated as revenue in the hands of assessee. However, Ld. Pr. CIT disregarded the contention of assessee and held the order passed by AO erroneous in so far prejudicial to the interest of revenue by observing as under:- “Regarding the sum of Rs.2,54,14,000/- which was receivable from (WBSEDCL), the amount was adjusted with the project cost. The assessee follows mercantile system and the amount receivable should have been routed through Profit & Loss account. Moreover, the amount is revenue receipt and has nothing to do with the project cost. The tripartite agreement is not relevant in this regard. I, therefore, hold that the assessment order is erroneous and prejudicial to the interest of revenue in this respect.

5. The assessment order is set aside u/s.263 and the AO is directed to complete the assessment after making addition of Rs.2,54,14,000/- as mentioned above. The AO is also directed that while doing so, he shall provide a reasonable opportunity of being head to the assessee.” Aggrieved by this, the assessee has come up in appeal before us.