BALDEV INFRA PROJECTS PVT LTD,JAGDALPUR vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(1), RAIPUR

Brief facts of the case: The Assessee had filed Return of Income showing Nil income for A.Y.2013-14 on 26.09.2013. The assessee is in the business of Civil Contract and assessee has also developed housing project. Assessee’s turnover from Civil Contract business was Rs.37,76,76,279/- and from housing project Rs.3,12,00,000/-. The assessee had claimed profit from housing project of Rs.93,78,038/-. The assessee claimed deduction under section 80IB(10) of the Act for the profit of Rs.93,78,038/- earned from housing project. Before the Assessing Officer(AO) submitted that no separate books of accounts are maintained for contract business and housing business. The AO calculated the profit for 80IB(10) project in the proportion of profit earned by the assessee. The calculation of the AO as under: Total receipts from building sale as well as contract Rs.40,88,76,279/- Amount of building sale therein Rs.3,12,00,000/- Percentage of building sale 7.63% Profit as per P & L A/c Rs.67,62,456/- 7.63% of the profit of Rs.67,62,456/- Rs.5,15,975/-

Therefore, AO restricted the assessee’s claim for deduction under section 80IB(10) only to Rs.5,15,975/- and added the remaining amount. The ld.CIT(A) confirmed the addition.

Before us, the ld.Authorised Representative(ld.AR) of the assessee filed copy of the Balance Sheet, Profit & Loss Account, Form 10CCB. The ld.AR submitted that for A.Y. 2012-13, similar kind of calculation was done by assessee and it has been accepted by the Department. The ld.AR submitted that the housing building project was already completed and therefore, there was no major expenditure. The assessee has followed scientific method and books of accounts of the assessee are audited. Therefore, assessee has made the correct claim of deduction.

The ld.Departmental Representative(ld.DR) for the Revenue relied on the orders of the Lower Authorities.

We have heard both the parties and perused the records. The facts are as under: Sale of housing project Rs.3,12,00,000/- Contract Receipts Rs.37,76,76,279/- Total Rs.40,88,76,279/- 7. The assessee considered following common expenses: Total common administrative Expenses Rs.1,76,17,564/- Total common finance Expenses Rs.1,52,53,399/- Total common administrative depreciation Rs.66,19,745/- Rs.3,94,90,708/- Total 8. The assessee allocated the common expenses as under: 3,94,90,708 x 3,12,00,000 = *30,13,406/- 40,88,76,279

The assessee arrived at eligible profit under section 80IB(10) at Rs.93,78,038/-. We have perused the Income & Expenditure Account filed by the assessee in the paper book. There are following heads which have not been considered by the assessee while allocating the expenditure.

Employee Benefit Expenses/Work Contract/Construction Expenses. Work Contract/Construction Expenses Rs.196,980,296/- Employee Benefit Expenses Rs.140,686,481/-

The ld.AR has not given any reason for not considering these expenses. It was merely submitted that the project was already complete. As per the audit report, the company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. If as claimed in the Audit Report, the company has maintained full particulars including quantitative details and situation of fixed assets, then what prevented assessee from submitting these details either before the AO or before the ld.CIT(A) or before this Tribunal! No details have been submitted before any of the Authorities. Rather assessee claimed before AO that no separate books of accounts maintained.

The Employee Benefit Expenses of Rs.14,06,86,481/- contains Director’s Remuneration of Rs.15 lakhs. Director is common for all projects, therefore, Director’s Remuneration has to be allocated to the 80IB project also, but assessee has not allocated the same. The assessee has admitted that there was sale of housing project during the year, it means certain employees were engaged in the marketing and sale activity of the housing project, but no expenditure has been allocated for eligible project. The details of employee expenditure as per schedule are as under: Employee Benefits 2012-13 (Amount in Rs.) 2011-12 Salaries, Wages, Payment To Contractors & 138,080,170.00 97,963,744.00 Other Benefits to Employees Contribution to Provident Fund and ESIC 1,10,6311.00 636,529.00 Directors Remuneration 1,500,000.00 360,000.00 13. This shows that the apportionment formulae used by assessee is defective. Similarly, in Schedule 19 following expenditures are seen were auditor has given the heads as under: Work Contract/Construction Expenses 2012-13 (Amount in Rs.) 2011-12 Borewell & Motor Pump 49,250.00 - Lift Equipments 642,600.00 - Labour Tax 274,297/- - Bricks & Pipes 8,684,240.00 11,966,760.00 Cement 23,068,403.52 18,067,035.29 Electrical Fittings & Installations & Other 4,703,092.69 1,439,037.94 Charges General Contract Expenses 843,673.36 4,609,006.71 Metal & Sand 43,802,214.25 26,313,648.75 Repairs & Maintenance 7,62,7268.43 4,215,337.41 Steel & Sheets 32,968,627.92 63,579,363.13 Suffering Plates & Expansion Joint Sheets 545,113.00 1,936,3243.93

Therefore, on the facts and circumstances, we are of the opinion that assessee failed to explain the reasons for not allocating certain expenditures which ought to have been allocated. The onus was on the assessee to prove that there is no diversion. However, in this case as we have mentioned in the earlier para, assessee failed to apportion the expenditures and also assessee failed to submit quantitative details of those expenditures. In these circumstances, the AO has rightly apportioned the expenditure based on the profit

In the result, appeal of the Assessee is Dismissed. Order pronounced under Rule 34(4) of Appellate Tribunal Rules, 1963. Sd/- Sd/- (RAVISH SOOD) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 27th Dec, 2022 / SGR* आदेशक��ितिलिपअ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Applicant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-I, Raipur. 4. The Pr. CIT-I, Raipur. 5. DR, ITAT, “Raipur” Bench. गाड�फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे/ITAT, Pune.