MAJESTIC PROPERTIES PVT. LTD.,NEW DELHI vs. PR. CIT, CENTRAL- 3, NEW DELHI

PER SHAMIM YAHYA, ACCOUNTANT MEMBER :

This appeal by the assessee is directed against the order of the ld.

Pr.CIT (Central)-3, New Delhi dated 05.03.2018 pertaining to the assessment year 2013-14.

./2018 a) The penalty u/s 271B should have been initiated in the assessment order passed by AO which was not done. b) The amount of loss on sale of towers at Jaipur project at Rs.8069180/- which was debited to profit & loss account should have been disallowed being capital in nature. c) The amount of service tax at Rs.2126345/- which was not paid before the due date of ITR should have been disallowed u/s 43B.”

“(i) As per the tax audit report in Form 3CD, the accounts for A.Y. 2013-14 of company were audited on 30 03.2015, whereas under the provisions of section 44AB of the Act, the audit should have been completed on or before the due date of filing of return which was 30.09.2013. Therefore, for failing to get accounts audited as required u/s 44AB within the specified date, the penalty proceedings u/s 271B should have been initiated in the assessment order passed by AO which was not done, leading to passing of an erroneous order in so far as it was prejudicial to the interest of Revenue. (ii) It was further observed that as per para 21 (a) of the tax audit report filed by the assessee, a capital expenditure of Rs.80,69,180/- on account of loss on sale of tower at Jaipur, has been debited to Profit and Loss a/c for A.Y. 2013-14. However, the said amount of capital loss has not been disallowed by the AO while framing the assessment u/s 143(3) completed on 30.03.2016. The capital expenditure- of Rs.80,69,180/- cannot be allowed u/s 37 of the Act and is liable to be disallowed and be added to the income of assessee for A.Y 2013-14 which was not done by the AO, leading to passing of an erroneous order in so far as it was prejudicial to the interest of Revenue. (iii) It was further seen that as per para 26(i)(B)(9b) of tax audit report, statutory liabilities of Rs.22,36,295/ - on account of service tax of Rs.21,26,345/- and WCT of Rs.22,194/- was not paid on or before due date of filing of return of income u/s 139(1) of the Act. Therefore, the statutory liabilities of Rs.22,36,295/- not paid within the due date of filing of return of income u/s 139(1) of the Act cannot be allowed u/s 43B and is liable to be disallowed and be added to the income of assessee for A.Y 2013-14. However, the AO had allowed such deduction as claimed by the

(i) Assam State Warehousing Corporation vs. CIT 288 ITR 25 (Gau); (ii) Manohar Lal vs. DCIT 53 TTJ 105 (JP); and (iii) ACIT vs. Madan Roller Flour Mills Ltd. 71 ITD 274 (ASR). satisfaction of AO, hence revision order passed by ld. Pr.CIT on this account is not sustainable.

6.2 As regards second issue of non-disallowance of capital loss, ld. Counsel for the assessee submitted that this issue has been raised in view of the audit objection. For this, he referred to paper book page no.54 where this item was pointed out by the audit party as ‘incorrect allowance of capital expenditure’. Ld. Counsel for the assessee in this regard referred to following case laws for the proposition that revision u/s 263 is not permissible on the basis of the objection of the audit party :-

(i) CIT vs. Sohana Woollen Mills 296 ITR 0238 (P&H); (ii) Paramjit Sing vs. Pr. CIT (2018) 48 CCH 0199 (Chd) (iii) M/s. Refex Industries Ltd. vs. DCIT, dated 09.09.2014 (Chennai); (iv) Sartaj Singh vs. Pr. CIT (2016) 179 TTJ 0017 (ASR)(UO); (v) Jaswinder Singh vs. CIT (2012) 150 TTJ 0033 (Chd); (vi) Vikram Kaswan vs. CIT (2016) 46 CCH 0561 (Chd.)

Furthermore, ld. Counsel of the assessee submitted that assessee is in a business of real estate and the impugned loss in any case is revenue loss.

6.3 As regards third issue of non-payment of statutory liabilities on account of service-tax and WCT, ld. Counsel of the assessee fairly submitted that he will not be contesting this ground.