INCOME TAX ACT, 1961

Section 145A

Accounting method - Valuation of closing stock - Absence of details with regard to actual expenditure incurred on sold plots and unsold plots -

Assessee engaged in real estate development purchased land of 52 acres and developed some parts of thereof development expenses were debited to Profit & Loss Account. The unsold area, according to assessee, was not developed and hence development cost should not be apportioned among unsold area of 1,22,375 sq.yds. AO took the view that assessee had developed entire land, including plots remained unsold and understated work-in-progress.Held: AO assessee had incurred expenditure for development of roads, levelling of land, drainage, water tank, street lights, parks, etc., for laying plots, and hence assessee could not argue that no expenditure was incurred for unsold plots. In the absence of details with regard to actual expenditure incurred on sold plots and unsold plots, there was no option except to resort for estimation of income and arrive at value of closing stock. Accordingly, estimation of income @ 15% was reasonable.

REFERRED :

FAVOUR : Partly in assessee.

A.Y. :

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