Y.R. Meena, J. - (1.) THIS appeal is directed against the judgment and order of the Tribunal dated July 28, 2000. The appeal has been admitted in terms of the following question : "Whether there was any material before the Tribunal to hold that the loss claimed by the assessee was an artificial one or an attempt to reduce tax liability and the Tribunal's suppositions that the affairs of the assessee were not real or genuine or were sham and make believe or a colourable device or that the assessee had resorted to any dubious method or subterfuge are based on any material and whether such conclusion is otherwise unreasonable and perverse ?"
(2.) THE petitioner is a public limited company within the meaning of the Companies Act, 1956. THE relevant assessment year is 1991-92 for which the year ending is March 31, 1991. THE system of accounting is mercantile. THE assessee is an investment company and used to carry on the business, inter alia, of financing and dealing in shares sector. During the financial year 1985-86, this company took up a building construction project as a business venture. THE company purchased a plot of land together with the building thereon at premises No. 42A and B, Ballygunge Circular Road, Calcutta, for a price of Rs. 12 lakhs. The said property was then in the occupation and possession of the petitioner known as Duncan Agro Industries Ltd., as a tenant. The petitioner agreed with the said company to give vacant possession of the building in consideration of the said company provides to it one flat of the new building free of cost. The construction was started in the financial years 1986-87 and completed on 1991-92, that is, the year under consideration. A total of 17 flats were constructed in the new building. Out of 17, 15 were sold for a consideration of Rs. 89,62,200. The agreements to sell these flats were entered into between the periods 1986-88. In those agreements there was no clause for escalation due to subsequent rise in the price of the materials or otherwise. Due to escalation of the price the assessee suffered a loss of Rs. 12,35,740 in the said building construction project and claimed it before the Assessing Officer. He rejected the claim of the assessee. According to him, the loss is artificial and the assessee might have recovered the loss from the buyers of the flat on one pretext or the other. He further stated that the matter has already been referred to the Valuation Officer under Section 133(6) of the Income-tax Act, 1961 but that report has not been received so far till the date of the assessment. He ignored the loss and further took the view that the loss or profit shall be further subject to reassessment after the receipt of the valuation report.
(3.) IN appeal before the Commissioner of INcome-tax (Appeals), the Commissioner of INcome-tax (Appeals) has allowed the loss claimed by the assessee. IN the appeal before the Tribunal, the Tribunal has reversed the view taken by the Commissioner of INcome-tax (Appeals). From the perusal of record it appears that the assessee has incurred the expenditure on the construction as under : ;