THE ACIT, KOCHI vs. M/S.JOMER PROPERTIES & INVESTMENTS P. LTD, KOCHI

O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by Revenue for Assessment Year (AY) 2011-12 arises out of the order of learned Commissioner of Income Tax (Appeals)-1, Cochin [CIT(A)] dated 29-05-2017 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143(3) of the Act on 28-03-2014. At the time of hearing, none appeared for assessee and accordingly, the appeal was proceeded with able assistance of Ld. Sr. DR who pleaded for restoration of assessment order. The sole 2 - grievance of the revenue is deletion of addition of Rs.64.64 Crores as made by Ld. AO while framing the assessment. The assessee is engaged as builder. 2.1 The relevant facts are that the assessee’s sole project Jomer Symphony reported completion to the extent of 28.78%. The corresponding area sold was 53.28% and remaining area of 47.72% was unsold. The project was Service apartment project cum commercial complex. Bud due to slowdown, the project was converted into service apartment, commercial space and a hotel project. Due to mounting loans, the assessee sold portion of project to M/s ITC Limited and almost half of the built-up space to M/s ITMA. M/s ITMA and the assessee had common shareholders. The rate per sq. ft. for ITMA was Rs.927/- per Sq. Ft. whereas for M/s ITC, it was almost 5 times i.e., Rs.4207/- per sq. ft. Accordingly, the assessee was directed to justify the discrepancies. 2.2 The assessee justified the differential on the ground that the area sold to M/s ITC was commercial / professional space whereas area sold to M/s ITMA was space designated for a hotel project. The sale made to M/s ITMA was for skeleton civil structure which was just beams, columns and roof slabs whereas the area sold to M/s ITC was complete single floor locate at third floor. As per terms, the same was to be transferred on ‘warm shell’ concept. The contract price includes the cost to be incurred for the value addition of simple civil structure into a fully finished office space. 2.3 However, Ld. AO alleged that the sale made to M/s ITMA was at much lesser price. The sale made to M/s ITC was not for a complete structure. The additional payments to be made to assessee to 3 - complete the project would further increase the sale price of M/s ITC. After comparing the terms of two contracts and drawing various other conclusion, Ld. AO made an addition of Rs.65.89 Crores to the income of the assessee. However, in the final computation of income, Ld. AO has made an addition of Rs.64.64 Crores. 2.4 During appellate proceedings, the documents submitted by the assessee were subjected to remand proceedings and two remand reports dated 30.09.2014 and 01.12.2014 were forwarded by Ld. AO. The copies of the same is on record. In remand report dated 30.09.2014, Ld. AO arrived at conclusion that it would not be proper and justifiable to apply the selling price of M/s ITC for a fully completed office area to a semi-constructed building civil structure sold on ‘as is where is’ basis to M/s ITMA. In second remand report also, no adverse conclusion has been drawn against the assessee. Following the same and considering appellate order of earlier year in assessee’s own case, Ld. CIT(A) deleted the impugned additions. Aggrieved, the revenue is in further appeal before us.