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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: SRI SANJAY GARG & SRI SANJAY AWASTHI
order
: September 23rd, 2024 ORDER
Per Sanjay Awasthi, Accountant Member:
In this case the appellant is aggrieved with an order u/s 263 of the Income Tax Act, 1961 (in short the 'Act') dated 30.03.2023 passed by the Pr. Commissioner of Income Tax, Kolkata-2 [hereinafter referred to Ld. 'Pr. CIT']. It is seen that through the impugned order the ld. Pr. CIT has revised an order u/s 143(3) of the Act dated 26.03.2021. Through the impugned order, ld. Pr. CIT has directed for an amount of Rs. 2,19,48,063/- to be taxed as an alleged shortfall in “work-in-progress” (in short ‘WIP’) inventory. On this account he has held the assessment order to be erroneous and prejudicial to the interests of the Revenue. Aggrieved with this order, the appellant is in appeal before us.
I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. It is seen that along with Form-36, very cryptic and general grounds of appeal have been filed which have been later, vide letter dated 03.07.2023 been elaborated with a request for admission of additional grounds of appeal. Since the so-called additional grounds of appeal are actually more relevant in deciding the issue at hand the same need to be extracted for reference: “1. For that, the action of the Ld. PCIT, Kol-2, in passing the Order u/s 263 of the Act on the ground of the original Assessment Order being erroneous insofar as it is prejudicial to the interest of the Revenue, in view of alleged loss of its subsidiary, Trimurti Kunj Pvt. Ltd. having been set off for the purpose of computation of income of the appellant, even though there was no such set-off made by the appellant company, is arbitrary, unjustified, unwarranted and illegal.
2. For that, the Ld. PCIT, Kol-2 arbitrarily arrived at a difference of Rs. 2,19,48,063/- in the closing inventory WIP, even though there is no such difference, and the assumption of jurisdiction u/s 263 on the basis of such erroneous understanding of facts is arbitrary, unjustified, unwarranted and illegal.
3. For that, the Ld. PCIT, Kol-2, arbitrarily arrived at a conclusion on the basis of Note-30 of the Audited Financial Statement for the year ended March 31, 2018, of the appellant that the appellant had adjusted loss of the subsidiary company with its profits, and such action of the Ld. PCIT, Kol-2, is arbitrary, unjustified, unwarranted and illegal.
4. For that, the original assessment u/s 143(3) having been passed after calling for full details and specifically the details regarding the valuation of closing inventory WIP, the original order so passed cannot be said to be either erroneous or prejudicial to the interest of the Revenue, and thus the assumption of jurisdiction by the Ld. PCIT, Kol-2, is arbitrary, unjustified, unwarranted and illegal.
5. For that, the Show Cause Notice u/s 263 was issued without any application of mind and without considering the records of the original assessment, and as such, the Show Cause Notice as well as the Order u/s 263 is arbitrary, unjustified, unwarranted and illegal.
6. For that, the Ld. PCIT, Kol-2, erred in improving the Show Cause Notice while passing the Order u/s 263 and such action of the Ld. PCIT is arbitrary, unwarranted, unjustified and illegal, and the Order u/s 263 of the Act is liable to be quashed and/or set aside.
7. For that, the Order u/s 263 is liable to be quashed and/or set aside.”
Page 2 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd.
Before getting into the maintainability, or otherwise of the impugned order it would be necessary to extract the relevant portions from the impugned order: “2.1. On examination of the assessment records and Books of accounts for the year ended 31.03.2018, it is observed that the assessee was engaged in Real Estate Business during the year and its project work was not completed during the relevant year. Thus, no sale was made during the year and all expenditure related to the business activity were debited to Profit and Loss Account and transferred to closing inventory Work-in-progress (WIP). From the Audited Accounts, it is observed that following expenses were debited in Profit & Loss Account: (a) Cost of raw material consumed: Rs. 7,00,80,844/- (b) Project Expenses: Rs. 10,73,61,814/- and (c) Finance Cost: Rs. 8,43,06,411/- Thus, total expenditure debited for operating purpose was Rs. 26,38,49,069/- (Rs. 7,22,80,844 + Rs. 10,73,61,814 + Rs. 8,43,06,411). Thus, closing inventory WIP as on 31.03.2018 including raw material consumed of the assessee should be Rs. 99,06,09,990/- (i.e. opening inventory WIP Rs. 62,54,26,305 + total expenses debited in P&L A/c for operating purpose Rs. 26,39,49,069 + Inventory of transferor subsidiary company M/s Trimurti Kunj Pvt. Ltd, transferred on scheme of amalgamation, Rs. 10,12,34,616/-). Other income and other expenditure will be excluded from this computation as it is not related to operating purpose of the assessee. However, it was observed from the P&L A/c that closing inventory WIP as on 31.03.2018 was shown as Rs. 96,86,61,927 (Note no. 21). Hence, there is a difference of Rs. 2,19,48,063/- (Rs. 99,06,09,990 - Rs. 96,86,61,927/-) on account of dosing inventory WIP. It was further observed from Note no. 30 of the financial statement that in term of the scheme of amalgamation, all assets and liabilities of the assessee company’s subsidiary company Trimurti Kunj Pvt. Ltd. had been vested with the assessee w.e.f. appointed date i.e. 1st April, 2016. The scheme has accordingly been given effect to this financial statement. The loss of the subsidiary company for the F.Y. 2019-17 has been accounted for directly in the statement of Profit & Loss Account. Thus, it is clear from the above that loss of the transferor company, M/s Trimurti Kunj Pvt. Ltd. for the F.Y. 2016-17, under the scheme of amalgamation, were transferred to the assessee company in this financial year i.e. F.Y. 2017-18, which resulted in the difference of Rs. 2,19,48,063/-, as discussed above. However, the assessee should file revised return for the F.Y. 2016-17 after due date and the loss of the transferor company will be allowed to the assessee in the F.Y. 2016-17 pertaining to the A.Y. 2017-18 though I it is filed after due date. Page 3 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. The loss pertaining to the F.Y. 2016-17 can’t be directly accounted in this financial statement i.e. F.Y. 2017-18. This resulted in excess carry forward of loss for the A.Y, 2018-19 to the tune of Rs. 2,19,48,063/-. Therefore, the assessment order dated 26.03.2021, prima facie, appears to be erroneous in so far as it is prejudicial to the interest of revenue. ……………………………………………… ……………………………………………… 4.7. In view of the above, the under-statement of inventory to the tune of Rs. 2,19,48,063/- in the hands of the assessee company for relevant financial year have been found. This short fall in inventory in WIP has resulted from the directly setting off losses of amalgamated company M/s. Trimurti Kunj Pvt. Ltd. through reduced inventory transfer in the closing WIP of the assessee company. Though it was the mandate of the assessing officer to enquire and bring to tax this short fall in inventory in the Profit & Loss account, since the assessment being under ‘Complete Scrutiny' with criteria as Income from real estate business, Investment/advances/loans, Contract received or fees and Sales turnover/receipts. By not taxing the short fall in the closing WIP inventory to the extent of Rs. 2,19,48,063 the assessment order has become erroneous and prejudicial to the interest of revenue. The Assessing officer has failed to carry out requisite enquiry and verification with respect to closing WIP inventory and the short fall as above. The assessment order is therefore held as erroneous and prejudicial to the interest of revenue and deserves to be set aside.” 2.1. Thus, the trigger for this entire exercise is Note no. 30 in the financial statement of the company which also deserves to be extracted: “30. in terms of the scheme of amalgamation (hereinafter called the scheme) pursuant to provisions of Section 230 to 232. 233 and other applicable provisions of the Companies Act. 2013 between the company and its subsidiary company Trimurti Kunj Private Limited, engaged in Real Estate Development sanctioned by the Hon'ble NCLT. Kolkata vide its order dated 17th August, 2018 the entire Assets and Liabilities of the Subsidiary Company have vested with the company w.e.f. appointed date i.e. 1st April, 2016. The scheme has accordingly been given effect to in this financial statement. The Amalgamation has been accounted for under the pooling of interest method prescribed by AS 14 on "Accounting of Amalgamation". The loss of the Subsidiary Company for the FY 2016-17 has been accounted for directly in the statement of Profit & Loss. The Company has taken over all the assets and liabilities of Trimurti Kunj Private Limited at their respective Book Values In terms of the said scheme the entire equity share capital of Trimurti Kunj Private Limited comprised of 10.000 equity shares of Rs 10 each held by the Company have been cancelled and no new shares have been issued by the Company.”
Page 4 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. 2.2. The appellant has admitted to the facts as have been laid out in the impugned order but has vehemently denied the conclusion thereon, but has assailed the findings in the impugned order that tend to allege that there was an attempt to suppress facts or even to report any income which is less than whatever is legally correct. In fact, it is seen that the appellant has made extensive efforts to convince the ld. Pr. CIT that the allegation of any suppression of taxable income is not correct and most importantly it has been attempted to demonstrate through a paper book running into 575 pages that not only has this amount been duly reflected in the books of accounts but this was also a subject matter of enquiry before the ld. AO at the time of scrutiny assessment. To a pin-pointed query from the Bench the appellant has filed written submissions which deserve to be extracted: “In this regard the appellant submits that this specific query was raised during the course of original assessment proceeding by the National E- Assessment Centre, vide letter dated March 12, 2021 [DIN: ITBA/AST/F/17/2020-21/1031428822(1)], where a specific query was raised in Point No. 2(i) as under: “(i) It is seen from “Note on income from Real Estate Business”, the assessee company has stated that Finance Cost amounting to Rs. 6,23,58,347/- has been capitalised under the head work-in-progress whereas in the balance sheet the finance cost shows as Rs. 7,93,84,506/-. PL reconcile and explain.” In response to the aforesaid specific query, the appellant, vide its reply dated March 15, 2021, duly explained the same and full details of the aforesaid amount of Rs. 2,19,48,064.83 was given which is as under: Break-up of finance cost charged to Profit & Loss Account On account of Mutual Fund 60,21,941.00 On account of Fixed Deposit 11,83,536.63 On account of project at Kharagpur 1,47,42,587.20 2,19,48,064.83 Thus the full details of. the claim of expenditure on account of finance charges was before the Assessing Officer at the time of completion of original assessment under Section 143(3) of the Act and after taking into account such response, which is specifically recorded in assessment order in paragraph 3, the said explanation was accepted and the assessment was completed.
Page 5 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. Thus even though full details were already given during the course of hearing as directed by this Hon'ble Tribunal, the appellant is giving further details as under. An amount of Rs. 60,21,941/- was related to finance charges on account of investment in mutual fund and income (of Rs 931,964.26) from the said mutual fund is reflected in the profit & loss account and in this regard Note No. 21 at page 17 of the financials can be relied upon. A sum of Rs. 11,83,536.63 was related to the interest expenditure in relation to fixed deposit, income (of Rs 136,823.00) from which fixed deposit was booked in the profit 86 loss account and in this regard Note No. 21 at page 17 of the financials can be relied upon. In so far as Rs. 1,47,42,587.20 is concerned, the said interest is related to a project, MOU for which was executed between one Green Valley Properties India Pvt. Ltd. 8e Ors. and Orbit Projects Pvt. Ltd., for development of 968 cottahs of land at Kharagpur. Subsequently there was a transfer agreement between Orbit Projects Pvt. Ltd. and Trimurti Kunj Private Limited (subsequently got merged with the appellant – Trimurti Grihanirman Private Limited as per NOLT order dated 17.08.2018) on July 18, 2013 and a fresh agreement dated August 16, 2016 was entered into between the aforesaid party and the appellant by virtue of which the agreement was cancelled and in pursuance of the said cancellation, the interest was not capitalised on and from the financial year 2016-17. The relevant evidence in this regard in the form of copy of the agreement, copy of the cancellation agreement and copy of the transfer agreement are enclosed herewith for your ready reference. Therefore the aforesaid amount of Rs 2,19,48,064.63 which was charged to the profit & loss account is eligible to be claimed as an item of expenditure under Section 36(l)(iii) and/or Section 37 of the Act.” 2.3. The ld. D/R supported the order of ld. Pr. CIT and additionally averred that since the matter pertained to a question of accounting procedure then it would be best left to the ld. AO to work out the exact details, at the time of giving effect to the impugned order.
We have carefully considered the documents filed and the contentions of both the ld. AR/DR and also gone through the impugned order and written submissions filed by the ld. A/R. Right at the outset, it needs to be mentioned that a specific question pertaining to finance cost was put before the assessee at the time of assessment proceedings which were responded to by the appellant. Both the queries (as per notice dated 12.03.2021 and the response dated 15.03.2021) have been mentioned in the paper book filed before us to Page 6 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. demonstrate that while the exact impugned amount was not under consideration but that portion of statement of accounts which pertains to this issue was very much a matter of enquiry. The relevant portions are extracted as under: “1. It is seen from "Note on Income from Real Estate Business", the assessee company has stated that Finance cost amounting to Rs. 6,23,58,347/- has been capitalized under the head work-in-progress whereas in the Balance Sheet, the finance cost shows as Rs.7,93,84,506/-. Please reconcile and explain. Reply: In connection with above, details of finance cost as shown in Note No.- 22 of Balance Sheet as at 31.03.2018 along with its chargeability to WIP and P/L/ Account is enclosed.
In note 21 of Balance Sheet, the assessee company has stated that inventory of transferor company transferred an amount of Rs.10,12,34,616/- on amalgamation is added to the wok-in progress whereas in the Amalgamation order, it is seen that inventory of Rs.9,96,36,069/- has been transferred to Transferee company i.e., assessee company. Please explain and show cause why the excess amount of Rs.15,98,547/- should not be added to the total income. Reply: In connection with above, details of inventory of Trimurti Kunj Pvt. Ltd. is enclosed. Since amount of Rs.15,98,547/- (Rupees Fifteen Lakhs Ninety Eight Thousand Five Hundred and Forty Seven only) incurred during FY 2016-17 as per copy of Audited Balance Sheet of Trimurti Kunj Pvt. Ltd. enclosed., the same should not be added to the total income.
Kindly provide the details of the following expenses, along with supporting documentary evidences: (i) Payment to Contractors Rs.5,41,86,229/-. Reply: Details of payment to Contractors along with bills exceeding Rs.10,00,000/-(Rupees Ten Lakhs only) is enclosed. (ii) Project Assignment cost Rs.80,00,000/-. Reply: Details of Project Assignment Cost along with Nomination Agreement is enclosed. (iii) TDS on Site overheads Rs.1,65,00,000/-. Reply: Details of Site overheads along with TDS payment Challan is enclosed.
Kindly provide details and Bills and Vouchers for addition on Fixed Assets. Page 7 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. Reply: Details of addition on Fixed Assets along with bills is enclosed. Trimurti Grihanirman Pvt. Ltd. Financial Year: 2017-2018 Assessment Year: 2018-2019 Details of Finance Cost Amount Interest Expenses 79,384,506.63 Loan Closure Charges 1,069,827.00 Loan Processing Fees 3,006,550.00 Guarantee Commission paid 845,528.00 84,306,411.63 Less: Charged to Work in Progress 62,358,347.00 Charged to Profit & Loss Account 21,948,064.63 Breakup of finance cost charged to Profit & Loss Account On account of Mutual Fund 6,021,941.00 On account of Fixed Deposit 1,183,536.63 On account of Project at Kharagpur 14,742,587.20 21,948,064.83” 3.1. It is evident that the appellant has made a presentation in the accounts considering the fact of merger of one M/s. Trimurti Kunj Pvt. Ltd. with the assessee company with effect from 01.04.2016, NCLT order dated 17.08.2018 (through which the entire assets and liabilities of the subsidiary company have vested with the appellant with effect from 01.04.2016) and the giving of effect in the audited accounts to these two factors after following the relevant Accounting Standards. It is visible from the voluminous accounts filed before us that the impugned amount has been duly accounted for and a plausible explanation was put forth before the ld. Pr. CIT also. It is also clearly visible that the issue of valuation of closing inventory of WIP has been duly accounted for as it should be, given the circumstances, in the books of accounts. It is also evident that the ld. AO had occasion to examine the expenses claimed pertaining to the value of WIP and was apparently convinced with the explanations submitted and hence, did not take any adverse view in the matter.
Page 8 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. 3.2. At this juncture, the law relating to the provisions of Section 263 of the Act deserve to be recapitulated. Before we embark upon an enquiry on the facts and issues agitated before us to find out whether the action u/s 263 of the Act, deserves to be taken against the assessee or not. It is pertinent to take note of this section, which reads as under: ““263(1) The Commissioner may call for and examine the record of any proceeding under this Act, and if he considers that any order passed therein by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. [Explanation.- For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988 by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commissioner or the Income Tax Officer on the basis of the directions issued by the Joint Commissioner under section 144A; (ii) an order made by the Joint Commissioner in exercise of the powers or in the performance of the functions of an Assessing Officer conferred on, or assigned to, him under the orders or directions issued by the Board or by the Chief Commissioner or Director General or Commissioner authorized by the Board in this behalf under section 120; (b) “record shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Commissioner; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Commissioner under this sub-section shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in such appeal. (2) No order shall be made under sub-section (1) after the expiry of two years from the end of the financial year in which the order sought to be revised was passed. (3) Notwithstanding anything contained in sub-section (2), an order in revision under this section may be passed at any time in the case of an order
Page 9 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. which has been passed in consequence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.- In computing the period of limitation for the purposes of sub- section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded.” 3.3. A bare perusal of the sub-Section1 would reveal that powers of revision granted by Section 263 of the Act to the ld. Commissioner have four compartments. In the first place, the ld. Commissioner may call for and examine the records of any proceedings under this Act. For calling of the record and examination, the ld. Commissioner was not required to show any reason. It is a part of his administrative control to call for the records and examine them. The second feature would come when he will judge an order passed by an AO on culmination of any proceedings or during the pendency of those proceedings. On an analysis of the record and of the order passed by the AO, he formed an opinion that such an order is erroneous in so far as it is prejudicial to the interests of the Revenue. By this stage the ld. Commissioner would not require the assistance of the assessee. Thereafter the third stage would come. The ld. Commissioner would issue a show-cause notice pointing out the reasons for the formation of his belief that action u/s 263 of the Act is required on a particular order of the AO. At this stage the opportunity to the assessee would be given. The ld. Commissioner has to conduct an inquiry, as he may deem fit. After hearing the assessee, he will pass the order. This is the 4th compartment of this section. The learned Commissioner may annul the order of the AO. He may enhance the assessed income by modifying the order. He may set aside the order and direct the AO to pass a fresh order. 3.4. Furthermore, in the case of Mrs. Khatiza S. Oomerbhoy vs. ITO reported in 100 ITD 173 (Mum. Trib.) the fundamental principles regarding the application of provisions of Section 263 of the Act have been lucidly dealt with. This may be discussed.
Page 10 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. The ITAT Mumbai Bench in the case of Mrs. Khatiza S. Oomerbhoy (supra) addressed this issue elaborately after referring to number of cases on revisionary powers vested in the Commissioner of Income-tax under section 263 of the Act and summed up the fundamental principles emerging from several cases as under: (i) The CIT must record satisfaction that the order of the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. Both the conditions must be fulfilled. (ii) Sec. 263 of the Act cannot be invoked to correct each and every type of mistake or error committed by the Assessing Officer and it was only when an order is erroneous that the section will be attracted. (iii) An incorrect assumption of facts or an incorrect application of law will suffice the requirement of order being erroneous. (iv) If the order is passed without application of mind, such order will fall under the category of erroneous order. (v) Every loss of revenue cannot be treated as prejudicial to the interests of the Revenue and if the Assessing Officer has adopted one of the courses permissible under law or where two views are possible and the Assessing Officer has taken one view with which the does not agree. If cannot be treated as an erroneous order, unless the view taken by the Assessing Officer is unsustainable under law (vi) If while making the assessment, the Assessing Officer examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determine the income, the Commissioner of Income-tax, while exercising his power under section 263 of the Act is not permitted to substitute his estimate of income in place of the income estimated by the Assessing Officer. (vii) The Assessing Officer exercises quasi-judicial power vested in his and if he exercises such power in accordance with law and arrive at a conclusion,
Page 11 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. such conclusion cannot be termed to be erroneous simply because the Commissioner of Income-tax does not fee stratified with the conclusion. (viii) The Commissioner of Income-tax, before exercising his jurisdiction under section 263 of the Act must have material on record to arrive at a satisfaction and (ix) If the Assessing Officer has made enquiries during the course of assessment proceedings on the relevant issues and the assessee has given detailed explanation by a letter in writing and the Assessing Officer allows the claim on being satisfied with the explanation of the assessee, the decision of the Assessing Officer cannot be held to be erroneous simply because in his order he does not make an elaborate discussion in that regard. These observations were extracted in full with approval in the following cases- the relevant para numbers are indicated against each order captured below- (i) Colour Publications (P.) Ltd. v. Pr. CIT [2018] 97 taxmann.com 116 (Mum - Trib.)-Para.16. (ii) Mukesh Jayantilal Kanakhara v. CIT/Dy. CIT [2017] 88 taxmann.com 866 (Rajkot - Trib.)-Para.8. (iii) Subhash Kabini Power Corpn. Ltd. v. CIT [2015] 58 taxmann.com 166 (Bang.-Trib) Quoted in CIT v. Subhash Kabini Power Corpn. Ltd. [2016] 69 taxmann.com 394/240 Taxman 514/385 ITR 592 (Kar.)-para.3. (iv) Adani Wilmar Ltd. v. Dy. CIT [2017] 81 taxmann.com 459 (Ahd. - Trib.)- Para.10. (v) DLF Commercial Developers Ltd. v. CIT [2014] 49 taxmann.com 487/151 ITD 563 (Delhi - Trib.)- Para.13. (vi) N.T.P.C. Ltd. v. Dy. CIT [2012] 22 taxmann.com 247/54 SOT 177 (Delhi) (URO) -Para.12. (vii) Eldeco Infrastructure & Properties Ltd. v. CIT [2012] 23 taxmann.com 17/52 SOT 207 (Delhi) (URO) - Para.7.
Page 12 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. (viii) Hulas Rahul Gupta v. CIT [2012] 24 taxmann.com 191/53 SOT 301 (Delhi) (URO)-Para.14. (ix) Rain Commodities Ltd. v. Dy. CIT [2011] 9 taxmann.com 128 (Hyd.)- Para.5.1. (x) Fabindia Overseas (P.) Ltd. v. Dy. CIT [2011] 10 taxmann.com 70 (Delhi)- Para.8. (xi) Rajiv Agnihotri v. CIT [2009] 125 TTJ 428 (Delhi)-Para.5. (xii) Ahalya Trading (P.) Ltd. v. CIT [2008] 22 SOT 68 (Mum.)- Para.6. 3.5. Considering the totality of facts and circumstances, and the discussion above [especially point ‘ix’ of para 3.4 (supra)], it deserves to be held that the appellant has duly shown the value of WIP in the accounts as was required to be done considering the merger of M/s. Trimurti Kunj Pvt. Ltd. with it and the subsequent NCLT order (supra) and thus, there does not appear to be any understatement of income on this account. However, more importantly since the ld. AO had also examined this issue at the stage of assessment proceedings, as has been discussed earlier in this order, the impugned order cannot be legally sustained, especially keeping in view the authorities discussed (supra). With these findings, the impugned order is quashed and the appeal of the assessee is allowed.
In the result, the appeal filed by the assessee is allowed. Order pronounced in the open Court on 23rd September, 2024. Sd/- Sd/- [Sanjay Garg] [Sanjay Awasthi] Judicial Member Accountant Member Dated: 23.09.2024 Bidhan (P.S.)
Page 13 of 14 I.T.A. No.: 525/KOL/2023 Assessment Year: 2018-19 Trimurti Grihanirman Pvt. Ltd. Copy of the order forwarded to:
1. 1. Trimurti Grihanirman Pvt. Ltd., 1, Garstin Place, Kolkata, West Bengal, 700001.
2. PCIT, Kol-2, Kolkata.
3. CIT(A)- 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata
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