INCOME TAX ACT, 1961

Section 143

Assessment - Addition to income - Difference between Form 26AS and the amount shown in Profit and Loss Account -

Assessee was engaged in the business of real estate and assessment was completed under limited scrutiny assessment guideline. While doing so, AO made addition being the difference in the amount shown in the profit and loss account and the amount shown in Form 26AS. It was submitted before AO that assessee had entered into a joint development agreement with M/s. D. The income of the said project was offered to tax following the percentage of completion method. However, AO turned down the submission pointing out that the assessee was only a landowner. Form 26AS clearly showed the sale of immovable property. Held: It was the case of assessee that an agreement was entered with an intention of developing the property jointly as business venture and the income from the said activity was offered to tax by the following the percentage of completion method. AO was of the view that assessee cannot adopt percentage of completion method as it was not in the business of developing the property but only was landowner of property. Entries in the books of account clearly goes to show that assessee was only a partner in the development of scheduled property of agreement. No addition can be made based on a mere difference between Form 26AS and amount shown in the profit and loss account and in absence of any reconciliation and corroborative evidence. It was not the case of the Revenue that there was leakage of revenue during the period of joint development, it was a case of tax neutral. Thus, no addition was warranted.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2016-17

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