- (1.)IN this appeal by the Revenue Under Section 260a of the IT Act, 1961 (for short the Act), the order dt. 15th Nov. , 1999 passed by the Tribunal, Jabalpur Bench, in ITA No. 488/jab/1997 relating to asst. yr. 1992-93, is assailed.
(2.)FOR the assessment year in question, the assessee had returned a total income of Rs. 1,27,000. The AO did not accept the said return and completed the assessment -under Section 143 (3) of the Act by order dt. 24th Feb. , 1995, by taking recourse to Section 145 of the Act.
(3.)THE assessee was a builder-cum-contractor, engaged in executing construction contracts for others and also constructing flats/shops as a building developer. The method of accounting adopted by the assessee was as follows : The value of land purchased for putting up the building with flats/shops intended for sale, was treated as a capital expense and debited to the balance sheet. When it commenced construction in the said plot of land, the cost of material and labour (construction cost) was treated as revenue expenditure and debited to the Pandl a/c. When the flat or shop in the building was sold with the proportionate share in the plot of land on which the building was constructed, the proportionate actual cost of the land was debited to the Pandl a/c; and out of the sale proceeds received by sale of the flat/shop, the actual proportionate cost of land were shown as the sale price of the land component and the balance of sale price as the cost of the flat/shop. According to the assessee, there was no profit in regard to the sale of undivided share of the land. The difference between the actual cost of construction and the amount received as sale price towards construction was shown as the profit of the assessee.