Vel Engineering Consultants (P) Ltd., CHENNAI V. ACIT, CHENNAI

CO 134/CHNY/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6557 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 05-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: V S JAYAKUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH A CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 1328/MDS/2011 ASSESSMENT YEAR : 2003-04 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-III(4), CHENNAI. V. M/S. VEL ENGINEERING CONSULTANTS PVT. LTD., NO.7, 11 TH MAIN ROAD, VIJAYA NAGAR, VELACHERY, CHENNAI-600 042. [PAN : AABCV6288P] (APPELLANT) (RESPONDENT) A N D C.O. NO. 134/MDS/2011 (IN ITA NO. 1328/MDS/2011) ASSESSMENT YEAR : 2003-04 M/S. VEL ENGINEERING CONSULTANTS V. THE ASSISTANT COMMISSIONER PVT. LTD., OF INCOME-TAX, NO.7, 11 TH MAIN ROAD, COMPANY CIRCLE-III(4), VIJAYA NAGAR, VELACHERY, CHENNAI. CHENNAI-600 042. (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI SHAJI P. JACOB, SR. DR ASSESSEE BY : SHRI V. S. JAYAKUMAR,ADVOCATE DATE OF HEARING : 20-10-2011 DATE OF PRONOUNCEMENT : 21-10-2011 I.T.A. NO. 1328/MDS/2011 & CO NO. 134/MDS/2011 2 O R D E R PER BENCH : ITA NO.1328/MDS/2011 IS AN APPEAL FILED BY THE REV ENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-III, CHENNAI IN ITA NO. 139/09- 10/A.III DATED 27-04-2011 FOR THE ASSESSMENT YEAR 2 003-04. C.O. NO. 134/MDS/2011 IS THE CROSS OBJECTION FILED BY THE AS SESSEE IN THE REVENUES APPEAL IN ITA NO. 1328/MDS/2011. 2. SHRI SHAJI P. JACOB, LEARNED SR. DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI V.S. JAYAKUMAR, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IN THE REVENUES APPEAL, THE REVENUE HAS RAISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE C ASE. 2. THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT T HE AMOUNT UNDER DISPUTE WAS ONLY AN ADVANCE. 2.1 IT IS SUBMITTED THAT THE ASSESSEE NEITHER FOL LOWED THE WORK COMPLETION METHOD NOR THE PERCENTAGE COMPLETIO N METHOD. THE REVENUE RECOGNITION POLICY OF THE ASSESSEE DISC USSED IN THE ASSESSMENT ORDER VIZ., THE REVENUE FROM THE CONTRAC TS UNDERTAKEN IS RECOGNIZED UPON THE INSPECTION AND APPROVAL OF T HE WORK BY THE CUSTOMERS CANNOT BE ACCEPTED AS IT IS NOT A RECOGNI ZED PRINCIPLE OF ACCOUNTING AND WOULD NOT BRING OUT THE REAL INCO ME OF THE ASSESSEE FOR TAXATION IN THE RESPECTIVE PREVIOUS YE AR. 2.2 IT IS FURTHER SUBMITTED THAT IN THE SCHEDULE FORMING PART OF THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE DELETE D THE WORK-IN- PROGRESS AMOUNTING TO ` 13,10,000/- AND CARRIED ON THE SAME TO I.T.A. NO. 1328/MDS/2011 & CO NO. 134/MDS/2011 3 THE SUBSEQUENT YEAR. FURTHER, THE RECEIPT CLAIMED AS ADVANCE IS A RECEIPT FOR THE WORK COMPLETED. HENCE THE CLAIM AS RECEIPT IN ADVANCE IS NOT CORRECT STATEMENT OF FACT, WHICH THE LEARNED CIT(A) HAS FAILED TO CONSIDER. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCE D AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BE SET ASIDE A ND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. IT WAS SUBMITTED BY THE LEARNED DR THAT IN THE C OURSE OF ASSESSMENT IT WAS NOTICED THAT THERE WAS A MISMATCH BETWEEN THE TDS C ERTIFICATE FURNISHED BY THE ASSESSEE ALONG WITH ITS RETURN AND THE INCOME REPOR TED IN THE PROFIT & LOSS ACCOUNT. IT WAS THE SUBMISSION THAT IN THE PROFIT & LOSS ACC OUNT THE ASSESSEE HAD SHOWN AN INCOME OF ` 35,82,619/- WHEREAS IN THE TDS CERTIFICATE THE AMO UNT SHOWED WAS ` 48,01,563/-. IT WAS THE SUBMISSION THAT CONSEQUENTL Y THE DIFFERENCE OF ` 12,18,944/- WAS TREATED AS THE INCOME OF THE ASSESS EE. IT WAS THE SUBMISSION THAT ON APPEAL THE LEARNED CIT(A) HAD DELETED THE ADDITI ON ON THE GROUND THAT THIS DIFFERENCE HAD BEEN SHOWN AS WORK-IN-PROGRESS AND T HE INCOME FROM THE SAME HAD BEEN DISCLOSED BY THE ASSESSEE IN ITS RETURN FOR TH E ASSESSMENT YEAR 2004-05. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD ALSO DIRECTED THAT CREDIT TO THE TDS WAS LIABLE TO BE GIVEN ONLY FOR THE ASSESSMENT YEAR 2004-05. IT WAS THE SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE REVERSED. HE VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. I.T.A. NO. 1328/MDS/2011 & CO NO. 134/MDS/2011 4 5. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). IT WAS THE SUBMISSION THAT THE INCOME HAD BEEN OFFERED TO TAX AND THE DIFFERENCE WAS ONLY ON ACCOU NT OF THE FACT THAT THE WORK HAD NOT BEEN CERTIFIED BY M/S. IVRCL INFRASTRUCTURE AND PROJECTS LTD. FOR WHOM THE WORK WAS DONE. IT WAS AGREED THAT THE AMOUNT WAS D ISCLOSED IN THE ASSESSMENT YEAR 2004-05. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF PARA 4.2 OF THE ORDER OF THE LEARNED CIT(A) SHOWS THAT THE ASSESSEE HAS D ISCLOSED THE INCOME RECEIVED FROM THE PROJECT WORK DONE FOR M/S. IVRCL INFRASTRU CTURE AND PROJECTS LTD. IT IS ALSO AN UNDISPUTED FACT THAT THE AMOUNTS HAVE BEEN SHOWN AS WORK-IN-PROGRESS DURING THE ASSESSMENT YEAR 2003-04 AND THE INCOME F ROM THE CONTRACT HAS BEEN SHOWN IN THE ASSESSMENT YEAR 2004-05. IN THE CIRCU MSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) THAT THE ADD ITION ON THIS COUNT CANNOT BE MADE IN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2003 -04 IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. WE ARE ALSO OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) THAT AS PER SECTION 199 OF THE INCOM E TAX ACT, 1961 THE CREDIT OF THE TDS CAN BE GIVEN ONLY IN THE YEAR IN WHICH THE INCOME HAD BEEN OFFERED TO TAX. CONSEQUENTLY, THE FINDING OF THE LEARNED CIT(A) IN DIRECTING THAT THE CREDIT OF THE TDS CAN BE GIVEN ONLY IN THE ASSESSMENT YEAR 2004-0 5 IS ALSO UPHELD. IN THE CIRCUMSTANCES, THE APPEAL BY THE REVENUE IS DISMISS ED. I.T.A. NO. 1328/MDS/2011 & CO NO. 134/MDS/2011 5 7. IN THE CROSS OBJECTION THE ASSESSEE HAS CHALLENG ED THE ACTION OF THE LEARNED CIT(A) IN HOLDING THAT THE CREDIT FOR THE TDS WAS L IABLE TO BE GIVEN ONLY FOR THE ASSESSMENT YEAR 2004-05. AS IT IS NOTICED THAT THE INCOME FROM THE CONTRACT HAS BEEN OFFERED ONLY IN THE ASSESSMENT YEAR 2004-05, T HE CREDIT OF THE TDS CAN BE GIVEN ONLY IN THE YEAR IN WHICH THE INCOME IS OFFER ED AND CONSEQUENTLY THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE IS ON A RIGHT F OOTING AND DOES NOT CALL FOR ANY INTERFERENCE. IN THE CIRCUMSTANCES, THE CROSS OBJEC TION FILED BY THE ASSESSEE IS DISMISSED. 8. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AN D THE CROSS OBJECTION FILED BY THE ASSESSEE STAND DISMISSED. 9. THE ORDER WAS PRONOUNCED IN THE COURT ON 21/10/1 1. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 21 ST OCTOBER, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE