M/s. Rio Tinto Exploration (I) Pvt. Ltd., New Delhi V. DCIT, New Delhi

CO 168/DEL/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3714 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 10 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-04-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DEEPALI CHANDRA
• Assessee Lawyers: SANDEEP KARHAIL ADVS
• Keywords: Rule of consistency; Question of law
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBE R & SHRI P. MAHARISHI, ACCOUNTANT MEMBER ITA NO.-5562/DEL/2014 ( ASSESSMENT YEAR: 2007-08) DCIT CIRCLE 15(1) NEW DELHI. VS RIO TINTO EXPLORATION (I) PVT. LTD. APT. NO. 100, A/5, GROUND FLOOR, THE CAPITAL COURT, OLD OF PALME MARG, MUNIRKA, NEW DELHI. 110067 PAN NO. AABCA1913A & CROSS OBJECTION NO. 168/DEL/2015 (IN ITA NO.-5562/DEL/2014) ( ASSESSMENT YEAR: 2007-08) RIO TINTO EXPLORATION (I) PVT. LTD. APT. NO. 100, A/5, GROUND FLOOR, THE CAPITAL COURT, OLD OF PALME MARG, MUNIRKA, NEW DELHI. 110067 PAN NO. AABCA1913A VS DCIT CIRCLE 15(1) NEW DELHI. ASSESSEE BY SH. NAGESHWAR RAO & SH. SANDEEP KARHAIL, ADVS. REVENUE BY SMT. DEEPALI CHANDRA, CIT (DR) DATE OF HEARING 05.04.2018 DATE OF PRONOUNCEMENT 05.04.2018 ITA NO. 5562/DEL/2014 & CO NO. 168/DEL/2015 RIO TINTO EXPLORATION (I) PVT. LT D. 2 ORDER PER JOGINDER SINGH, J.M. THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 25.07.2014 OF THE LD. FIRST APPELLATE AUTHORITY, NE W DELHI, WHEREAS THE ASSESSEE HAS ALSO FILED CROSS OBJECTION AGAINST THE AFOREMENTIONED IMPUGNED ORDER. FIRST WE SHALL TAKE UP THE APPEAL OF THE REVENUE, WHEREIN THE ONLY GROUND PERTAINS TO DE LETING THE DISALLOWANCE OF PROVISION FOR WORK IN PROGRESS AMOU NTING TO RS. 18,27,27,697/- IGNORING THE FACT THAT THE PROVISION MADE WAS AN UNASCERTAINED LIABILITY AND HENCE, NOT ALLOWABLE AS PER SECTION 37(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) . 2. DURING HEARING, THE LD. CIT(DR) SMT. DEEPALI CH ANDRA DEFENDED THE ADDITION MADE BY THE LD. AO BY ADVANCI NG ARGUMENTS WHICH ARE IDENTICAL TO THE GROUND RAISED. OUR ATTE NTION WAS INVITED TO THE CONCLUDING PARA OF THE LD. CIT (A) BY ARGUING T HAT THE FACTUAL ASPECT WAS IGNORED BY THE LD. FIRST APPELLATE AUTHO RITY. HENCE, THE CLAIM WAS WRONGLY ALLOWED BY HIM. 2.1 ON THE OTHER HAND, SHRI NAGESHWAR RAO ALONGWIT H SHRI SANDEEP KARHAIL, LD. ADVOCATES FOR THE ASSESSEE CLA IMED THAT IN EARLIER YEAR THE ISSUE IN HAND WAS DECIDED IN FAVOU R OF THE ASSESSEE BY THE LD. FIRST APPELLATE AUTHORITY AND THE MATTER WAS CARRIED IN THE ITA NO. 5562/DEL/2014 & CO NO. 168/DEL/2015 RIO TINTO EXPLORATION (I) PVT. LT D. 3 APPEAL BEFORE THE TRIBUNAL BY THE REVENUE, WHEREIN THE APPEAL OF THE REVENUE WAS DISMISSED AND ON FURTHER APPEAL THE HON BLE HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL. IT WAS ALS O CONTENDED THAT EVEN ON THE RULE OF CONSISTENCY THE DEPARTMENT IS N OT EXPECTED TO TAKE A DIFFERENT VIEW. OUR ATTENTION WAS INVITED T O PAGES 62, 122 & 126 OF THE PAPER BOOK. 2.2 WE HAVE CONSIDERED THE SUBMISSIONS OF LD. DR A ND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S IN BRIEF ARE THAT THE ASSESSEE DECLARED LOSS OF RS. 15,28,51,180/- IN ITS RETURN FILED ON 30.10.2007 WHICH WAS PROCESSED U/S 143(1) OF THE AC T. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THEREAFT ER THE ASSESSMENT WAS MADE U/S 143(3) OF THE ACT AT A LOSS OF RS. 15,28,13,605/- ON 30.10.2009. LATER ON IT WAS NOTI CED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 18,27,27,697/ - TOWARDS PROVISION FOR WORK IN PROGRESS. THE LD. AO WAS OF THE VIEW THAT AS THE PROVISION MADE WAS NOT AN ASCERTAINED LIABILITY , THEREFORE, THE SAME WAS DISALLOWED AND ADDED BACK TO THE RETURNED LOSS OF THE ASSESSEE COMPANY. 2.3 ON APPEAL BEFORE THE LD. CIT (A), CONSIDERING VARIOUS JUDICIAL PRONOUNCEMENTS AND THE FACTUAL MATRIX THE DISALLOWANCE ITA NO. 5562/DEL/2014 & CO NO. 168/DEL/2015 RIO TINTO EXPLORATION (I) PVT. LT D. 4 MADE BY THE LD. AO WAS DELETED. THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 2.4 IF THE OBSERVATION MADE IN THE ASSESSMENT ORDE R, IMPUGNED ORDER AND THE DECISIONS CITED BEFORE US, I F KEPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT FOR AY 200 1-02 (PAGES 62 OF THE PB) IDENTICAL ISSUE WAS RAISED BEFORE THE LD. C IT (A), WHEREIN THE ISSUE WAS FINALLY DECIDED IN FAVOUR OF THE ASSESSEE . IT WAS OBSERVED BY THE LD. CIT (A) (PAGE 122 OF THE PB) THAT THE PROVISIONS FOR PROJECT WORK IN PROGRESS AMOUNTING TO RS. 1,61,80,1 56/- REPRESENTS EXPENSES ACTUALLY INCURRED/CRYSTALLIZED DURING THE NORMAL COURSE OF BUSINESS. ACCORDINGLY, THE SAME B EEN CLAIMED AS A DEDUCTION WHILE COMPUTING THE TOTAL TAXABLE IN COME FOR THE SUBJECT ASSESSMENT YEAR 2001-02 . 2.5 IT IS FURTHER NOTED THAT THE MATTER WAS CARRIE D IN APPEAL BEFORE THE TRIBUNAL BY THE REVENUE ON THE ISSUE OF NON-APPRECIATION THE PROVISION CONTAINED IN SECTION 35E OF THE ACT. THE TRIBUNAL VIDE ORDER DATED 26.09.2008 (ITA NO. 4908/DEL/2005) DISM ISSED THE APPEAL OF THE REVENUE. THEREAFTER THE REVENUE FILE D APPEAL BEFORE THE HONBLE HIGH COURT. THE HONBLE HIGH COURT VID E ORDER DATED 28.01.2010 CONSIDERED THE MATTER, WHEREIN THE REVEN UE RAISED THE ISSUE BY CONTENDING THAT THE LD. CIT (A) DID NOT AP PRECIATE THE PROVISION CONTAINED IN SECTION 35E OF THE ACT WHICH ACCORDING TO THE ITA NO. 5562/DEL/2014 & CO NO. 168/DEL/2015 RIO TINTO EXPLORATION (I) PVT. LT D. 5 REVENUE WAS CLEARLY APPLICABLE. THE CONTROVERSY BE FORE THE HONBLE HIGH COURT WAS WITH RESPECT TO APPLICABILITY OF SEC TION 35E OF THE ACT. THE HONBLE HIGH COURT AFFIRMED THE VIEW TAKEN BY T HE TRIBUNAL. IT WAS HELD THAT NO SUBSTANTIAL QUESTION OF LAW AROSE FOR CONSIDERATION. BEFORE US NO CONTRARY DECISION WAS CITED BY THE REV ENUE. TILL THE STAGE THE STAND TAKEN BY THE LD. FIRST APPELLATE AU THORITY HAS ATTAINED FINALITY, THEREFORE, EVEN ON THE RULE OF CONSISTENC Y THE ASSESSEE IS HAVING THE CASE IN ITS FAVOUR. IF THIS ISSUE IS AN ALYZED WITH RESPECT TO PRINCIPLE OF CONSISTENCY, IT IS ALSO NOTED THAT IN EARLIER ASSESSMENT YEARS, AS DISCUSSED ABOVE, THE DISALLOWANCE MADE BY THE AO WAS EITHER DELETED BY THE LD. FIRST APPELLATE AUTHORITY OR BY THE TRIBUNAL AS IS EVIDENT FROM THE ORDERS OF THE EARLIER ASSESS MENT YEARS. IN VIEW OF THESE UNDISPUTED FACTS, THE LD. ASSESSING OFFICE R IS EXPECTED TO FOLLOW THE PRINCIPLE OF CONSISTENCY UNLESS AND UNTI L CONTRARY MATERIAL/FACTS ARE BROUGHT ON RECORD. ON THE ISSUE OF CONSISTENCY, WE ARE SUPPORTED BY FOLLOWING DECISIONS:- I. PARSHURAM POTTERY WORKS LTD. VS ITO 106 ITR 1 (SC) II. SECURITY PRINTERS 264 ITR 276(DEL.) III. CIT VS NEO POLYPACK PVT. LTD. 245 ITR 492 (DEL.) IV. CWT VS ALLIED FINANCE PVT. LTD. 289 ITR 318 (DEL.) V. BERGER PAINTS INDIA LTD. VS CIT 266 ITR 99 (SC) VI. DCIT VS UNITED VANASPATI (275 ITR 124) (AT)(CHANDIG ARH ITAT) VII. UNION OF INDIA VS KUMUDINI N. DALAL 249 ITR 219 (SC ) VIII. UNION OF INDIA VS SATISH PANNALAL SHAH 249 ITR 221 ITA NO. 5562/DEL/2014 & CO NO. 168/DEL/2015 RIO TINTO EXPLORATION (I) PVT. LT D. 6 IX. B.F.VARGHESE VS STATE OF KERALA 72 ITR 726 (KER.) X. CIT VS NARENDRA DOSHI 254 ITR 606 (SC) XI. CIT VS SHIVSAGAR ESTATE 257 ITR 59 (SC) XII. PRADIP RAMANLAL SETH VS UOI 204 ITR 866 (GUJ.) XIII. RADHASWAMY SATSANG VS CIT 193 ITR 321 (SC) XIV. AGGARWAL WAREHOUSING & LEASING LTD. 257 ITR 235 (MP ) 2.6 THE SUM AND SUBSTANCE OF THE AFORESAID JUDICIAL PRONOUNCEMENTS IS THAT ON THE BASIS OF PRINCIPLE OF JUDICIAL DISCIPLINE, CONSISTENCY HAS TO BE FOLLOWED AND ONCE IN A PARTIC ULAR YEAR, IF ANY VIEW IS TAKEN, IN THE ABSENCE OF ANY CONTRARY MATER IAL, NO CONTRARY VIEW IS TO BE TAKEN AS FINALITY TO THE LITIGATION I S ALSO A PRINCIPLE WHICH HAS TO BE FOLLOWED. BEFORE US, NO CONTRARY FACTS OR ANY ADVERSE MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE, THER EFORE, WE FIND NO INFIRMITY IN THE FINDING/CONCLUSION OF THE LD. FIRS T APPELLATE AUTHORITY. WE AFFIRM HIS VIEW BEING UNCONTROVERTED ON FACTS. R ESULTANTLY THE APPEAL OF THE REVENUE IS DISMISSED. 3. NOW, WE SHALL TAKE UP THE CROSS OBJECTION (168/ DEL/2015). DURING HEARING THE LD. COUNSEL FOR THE ASSESSEE CON TENDED THAT IF THE APPEAL OF THE REVENUE IS DISMISSED THEN THE ASSESSE E MAY BE PERMITTED NOT TO PRESS THE CROSS OBJECTION RAISED B Y THE ASSESSEE. SINCE, WE HAVE DISMISSED THE APPEAL OF THE REVENUE, UPHOLDING THE ORDER OF THE LD. CIT (A), THEREFORE, THE CROSS OBJE CTION OF THE ASSESSEE IS DISMISSED AS NOT PRESSED. ITA NO. 5562/DEL/2014 & CO NO. 168/DEL/2015 RIO TINTO EXPLORATION (I) PVT. LT D. 7 FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED AS NO T PRESSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT, AT THE CONCLUSION OF THE HEARING, IN THE PRESENCE OF LD. DR ON 05.04. 2018. SD/- SD/- (P. MAHARISHI) (JOGINDER S INGH) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 05.04.2018 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI THIS ORDER WAS DIRECTLY DICTATED ON COMPUTER TO THE P.S. 05.04.2018 DRAFT DICTATED ON 05.04.2018 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 05.04.2018 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 06.04.18 KEPT FOR PRONOUNCEMENT ON 05.04.18 FILE SENT TO THE BENCH CLERK 06.04.18 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.