Sugam Construction Pvt. Ltd., Ahmedabad V. The Dy.CIT, Circle-4(1)(1), Ahmedabad

CO 19/AHD/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0553 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 7 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 30-01-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA; G M THAKOR AR ITA NO AHD ITA
• Keywords: Tax effect; Set aside
• Section: 142(1); 37(1); 143(1); 250; 80IA; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI MANISH BORAD, AM AND SHRI AMARJIT SINGH , JM / I.T.A. NO.2444/AHD/2015 ( / ASSESSMENT YEAR: 2011-12) M/S. SUGAM CONSTRUCTION P. LTD. 4 TH FLOOR, ARUN COMPLEX OPP CU SHAH COLLEGE, ASHRAM ROAD, AHMEDABAD-380014. / VS. . / I.T.A. NO.3377/AHD/2014 ( / ASSESSMENT YEAR: 2010-11) . / VS. M/S. SUGAM CONSTRUCTION P. LTD. 4 TH FLOOR, ARUN COMPLEX OPP CU SHAH COLLEGE, ASHRAM ROAD, AHMEDABAD-380014. CO. NO.19/AHD/2015 (ARISING OUT OF ITA. NO. 3377/AHD/2014) ( / ASSESSMENT YEAR: 2010-11) M/S. SUGAM CONSTRUCTION P. LTD. 4 TH FLOOR, ARUN COMPLEX OPP CU SHAH COLLEGE, ASHRAM ROAD, AHMEDABAD-380014. / VS. . ./ ./PAN/GIR NO. : AACCS6759H ( /APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 16/09/2019 /DATE OF PRONOUNCEMENT: 17/09/2019 REVENUE BY: SHRI VINO D TANWANI (DR) ASSESSEE BY: SHRI P. M. MEHTA & G. M THAKOR (AR) ITA. NO.2444/AHD/2015 ITA. NO.3377/AHD/14 CO. NO.19/AHD/2015 A.Y. 2010-11 2 / O R D E R PER AMARJIT SINGH, JM: THE REVENUE AS WELL AS ASSESSEE HAVE FILED THE ABOV E MENTIONED APPEAL AS WELL AS CROSS-OBJECTION AGAINST THE DIFFE RENT ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-XIV AND CIT(A) -8, AHMEDABAD [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2010-11 & 2011-12. ITA. NO.3377/AHD/2014 2 . THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 24.09.2014 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-XIV, AHMEDABAD [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2010-11. 3. WE HAVE HEARD THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. DURING COURSE OF HEARING, LD. DR FOR THE RE VENUE SUBMITTED THAT TAX EFFECT INVOLVED IN THIS APPEAL FILED BY THE REVENUE IS LESS THAN RS. 50 LACS AND IN VIEW OF LATEST CBDT CIRCULAR NO. 3/2018 DATE D 11-7-2018, AND ALSO MODIFIED CIRCULAR NO. 17/2019 DATED 08/08/2019, APP EAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND NEEDS TO BE DISMISS ED. THE LD. DR, FURTHER ARGUED THAT, THE ISSUE INVOLVED IN THIS APPEAL IS A PPEARS TO BE COVERED BY EXCEPTION PROVIDED UNDER CLAUSE (E) OF SUBSEQUENT C IRCULAR AND THEREFORE, IF REQUIRED THE REVENUE SHALL BE ALLOWED TO FILE MISCE LLANEOUS APPLICATION TO RE-CALL THE ORDER. WE, FIND THAT, THE CBDT, RECEN TLY HAD ISSUED A CIRCULAR NO. 3/2018 DATED 11-7-2018, SUPERSEDING ITS EARLIER CIRCULAR NO. 21/2015 AND ENHANCED MONETARY LIMIT FOR FILING APPEAL BEFORE VA RIOUS APPELLATE AUTHORITIES AND ACCORDINGLY, ENHANCED MONETARY LIMI T TO RS.20,00,000/- FOR FILING APPEAL BEFORE THE TRIBUNAL. FURTHER, THE BOA RD HAS ISSUED ONE MORE ITA. NO.2444/AHD/2015 ITA. NO.3377/AHD/14 CO. NO.19/AHD/2015 A.Y. 2010-11 3 CIRCULAR VIDE CIRCULAR NO.17/2019 DATED 08/08/2019 AND ENHANCED MONETARY LIMIT FOR FILING APPEAL BEFORE APPELLATE T RIBUNAL TO RS. 50,00,000/- . FURTHER, IN THE SAID CIRCULAR, THE CBDT HAD INSTR UCTED ITS OFFICERS TO FILE APPLICATION FOR WITHDRAWAL OF APPEAL ALREADY FILED OR NOT TO PURSUE PENDING APPEALS. WE, THEREFORE, BY TAKING INTO ACCOUNT THE CBDT CIRCULAR NO. 3/2018 DATED 11-7-2018 AND CIRCULAR NO.17/2019 DATE D 08/08/2019 AND ALSO CONSIDERING THE FACT THAT TAX EFFECT INVOLVED IN TH E PRESENT APPEAL IS LESS THAN THE AMOUNT OF MONETARY LIMIT FIXED BY THE CBDT FOR NOT FILING APPEAL, DISMISSED APPEAL FILED BY THE REVENUE AS NOT MAINTA INABLE. WE, FURTHER NOTED THAT THE CO-ORDINATE BENCH OF ITAT, AHMEDABAD A BENCH IN ITA. NO. 1398/AHD/2004, VIDE ORDER DATED 14/08/2019 HAS PASSED DETAILED ORDER CONSIDERING NEW CIRCULAR ISSUED BY THE CBDT AND HEL D THAT EXCEPT AMENDMENT TO PARA 3 OF THE CIRCULAR NO.3/2018 DATED 11/07/2018, ALL OTHER PORTIONS OF THE CIRCULAR NO.03/2018 (SUPRA) HAVE RE MAIN IN FACT, THEREFORE, THIS CIRCULAR IS APPLICABLE EVEN FOR PENDING APPEAL S AND ACCORDINGLY, REJECTED THE ARGUMENTS OF THE REVENUE THAT THE EFFE CT OF THE CIRCULAR SHALL COME INTO FORCE FROM THE DATE OF ISSUE OF THIS CIRC ULAR. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CAS E AND ALSO TAKEN NOTE OF CIRCULARS ISSUED BY THE CBDT INCLUDING CIRCULAR NO. 17/2019 DATED 08/08/2019, AND ALSO BY FOLLOWING THE DECISION OF C O-ORDINATE BENCH, WE DISMISSED APPEAL FILED BY THE REVENUE AS NOT MAINTA INABLE. HOWEVER, WE KEEP OPEN OPTION TO THE REVENUE TO FILE A MISCELLAN EOUS APPLICATION, IF NECESSARY, IN CASE THE ISSUES INVOLVED IN THE PRESE NT APPEAL COMES WITHIN 3 EXCEPTIONS AS PROVIDED IN PARA 10 OF SAID CIRCULAR AND CLAUSE (E) OF SUBSEQUENT CIRCULAR. IN THE RESULT, APPEAL FILED BY THE REVENUE IS HERE BY DISMISSED. ITA. NO.2444/AHD/2015 ITA. NO.3377/AHD/14 CO. NO.19/AHD/2015 A.Y. 2010-11 4 CROSS-OBJECTION NO.19/AHD/2015 4. SINCE THE APPEAL OF THE REVENUE HAS ORDERED TO BE D ISMISSED ON ACCOUNT OF TAX EFFECT, THEREFORE, THE LD. REPRESENT ATIVE OF THE ASSESSEE DID NOT PRESS THE PRESENT CO, HENCE, THE PRESENT CO IS ALSO HEREBY ORDERED TO BE DISMISSED BEING NOT PRESSED. ITA. NO.2444/AHD/2015 5. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 18.05.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-8, AHMEDABAD [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y.2011-12. 6 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1 THE ORDER PASSED BY THE LD. CIT(A) IS AGAINST THE LAW, EQUITY AND JUSTICE. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHELDING DISALLOWANCE OF INTEREST MADE BY THE AO. CONSIDERING AS EXCESSIVE PAYMENTN TO THE PERSONS SPECIFIED U/S 40A(2)(B) OF THE ACT OF RS.24,11,165/ -. 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHELDING DISALLOWANCE U/S 37(1) OF THE ACT OF BUSI NESS PENALTY BEING FOR CONTRACTUAL BREACH OF RS.50,000/- MADE BY THE LD. AO. 4. THE APPELLANT CRAVES LIBERTY, TO ADD, AMEND, ALT ER OR MODIFY ALL OR ANY GROUNDS OF APPEAL BEFORE FINAL APPEAL. 7. THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONAL GROUNDS : - 1. IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE LD. CIT(A) ERRED IN DISMISSING THE ASSESS EES GROUND NO.2 RAISED BEFORE HIM FOR NOT GRANTING DEDU CTION ITA. NO.2444/AHD/2015 ITA. NO.3377/AHD/14 CO. NO.19/AHD/2015 A.Y. 2010-11 5 U/S 80-IA OF THE I.T. ACT, WHEN THE ASSESSEE IS ELI GIBLE FOR THE SAME. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEF ORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 8. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME ON 29.09.2011 DECLARING TOTAL INCOME TO THE TUNE OF RS.15,79,940/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE I.T. ACT , 1961. THE CASE WAS SELECTED FOR SCRUTINY. NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED UPON THE ASSESSEE. ON VERIFICATION, IT W AS FOUND THAT THE ASSESSEE HAS PAID THE INTEREST TO EIGHT PARTIES @ 24% PER AN NUM WHOSE NAMES ARE HEREBY MENTIONED BELOW.:- SR. NO. NAME AMOUNT OF INTEREST 1 P. G. SHRINAGARPURE 340583 2 NICOLIAN INC. 3110629 3 BHAILAL B. PATEL 118044 4 NICOLIAN SECURITY & FINANCE PVT. LTD. 1794918 5 TITAN TECHNOLOGIES PVT. LTD. 1390741 6 RAHUL B. PATEL 169007 7 VARUN B. PATEL 24423 8 ISHAN INFRATECH PVT. LTD. 285150 TOTAL 7233495 9. SINCE THE INTEREST WAS VERY HIGH, THEREFORE, THE AO TREATED THE INTEREST PAYABLE @ 16% PER ANNUM AND REMAINING 8% WAS ADDED TO THE INCOME OF THE ASSESSEE U/S 40A(2)(B) OF THE I.T. ACT. THE BUS INESS PENALTY IN SUM OF RS.57,500/- WAS ALSO DISALLOWED AND ADDED TO THE IN COME OF THE ASSESSEE U/S 37(1) OF THE I. T. ACT. IT WAS ALSO OBSERVED TH AT THE ASSESSEE DEPOSITED EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUNDS AFTE R THE DUE DATE OF ITA. NO.2444/AHD/2015 ITA. NO.3377/AHD/14 CO. NO.19/AHD/2015 A.Y. 2010-11 6 TIME, THEREFORE, THE PAYMENT AMOUNT IN SUM OF RS.23 ,338/- WAS ALSO DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.40,71,940/- . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DISM ISSED THE ADDITIONAL GROUND OF THE ASSESSEE ON THE BASIS OF THIS FACT TH AT THE SAME GROUND WAS NOT ORIGINATED FROM THE ASSESSMENT ORDER. THE OTHER CLA IM WHICH HAS BEEN RAISED ABOVE WHILE RAISING THE GROUND WAS ALSO DECL INED. FEELING AGGRIEVED, THE ASSESSEE FILED THE PRESENT APPEAL BEFORE US. ADDITIONAL GROUNDS:- 10. WE HAVE HEARD THE LD. REPRESENTATIVE OF THE PARTIES AND PERUSED THE RECORD. AT THE VERY OUTSET, THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT THE CLAIM OF THE ASSESSEE IN VIEW OF THE PROVI SIONS U/S 80-IA OF THE ACT WAS NOT TAKEN INTO CONSIDERATION BEFORE THE AO AND THE CIT(A) DISMISSED THE ADDITIONAL GROUND ON THE BASIS OF THIS FACT THE SAME WAS NOT GENERATED FROM THE ASSESSMENT ORDER, THEREFORE, IN THE SAID C IRCUMSTANCES, THE ADDITIONAL GROUND IS LIABLE TO BE REMANDED BEFORE T HE AO IN THE INTEREST OF JUSTICE. THE LD. REPRESENTATIVE OF THE ASSESSEE HAS ALSO ARGUED THAT THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED BY THE HONB LE ITAT IN THE EARLIER YEAR BY VIRTUE OF ORDER DATED 21.12.2012 BUT THE CL AIM IN THIS YEAR WAS NOT CONSIDERED, HENCE, THE CLAIM OF THE ASSESSEE IS LIA BLE TO BE ALLOWED AND ADJUDICATED IN THE INTEREST OF JUSTICE. HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SA ID CONTENTION AND ARGUED THAT THE CLAIM OF THE ASSESSEE IS NOT JUSTIF IABLE IN VIEW OF THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF KATIRA CONSTRUCTION LTD. VS. UNION OF INDIA (2013) 31 TAXM ANN.COM 250 (GUJ). KEEPING IN VIEW, THE ARGUMENT ADVANCED BY THE LD. R EPRESENTATIVE OF THE PARTIES, WE FIND THAT THE ASSESSEE HAS CLAIM ED THE ADJUDICATION OF CLAIM U/S 80-IA OF THE ACT BY VIRTUE OF LETTER DATE D 24.03.2014. THE RELEVANT ITA. NO.2444/AHD/2015 ITA. NO.3377/AHD/14 CO. NO.19/AHD/2015 A.Y. 2010-11 7 PARA NO. 6 IS HEREBY REPRODUCED BELOW.:- 6. ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INFRASTRUCTURE DEVELOPMENT. ASSESSEE COMPANY HAS CLAIMED DEDUCTION U/S 80IA (4) OF THE ACT FOR FIRST TIME IN A.Y. 2003-04. ASSESSEE IS ENTITLE FOR DEDUCTION FOR 10 ASSESSMENT YEAR. THIS BEING NINTH YEAR, ASSESSEE IS ENTITLE FOR DEDUCTION IN THE YEAR UNDER REFERENCE. HON'BLE ITAT AHMEDABAD HAS ALLOWED, DEDUCTION U/S 80IA (4) OF THE ACT IN EARLIER YEARS TO THE ASSESSE E. UNDER CIRCUMSTANCES, YOUR GOODSELF IS REQUESTED TO ALLOW THE DEDUCTION AS PER PROVISION OF LAW FOR THE YEAR UNDER REFERENCE. EVEN CBDT VIDE ITS CIRCULAR (14- XXXV), 11-4-1955 CAST DUTY ON THE ASSESSING OFFICER TO ADVISE AND ALLOW THE DEDUCTION/REBATE WHICH ASSESSE E IS ENTITLE AND NOT CLAIMED IN RETURN OF INCOME CONSIDERING THAT ASSESSING OFFICER HAS TO PLAY FAIR AND IN ACCORDANCE WITH LAW. CONSIDERING THE FACT, YOU ARE REQUESTED TO ALLOW DEDUCTION/S 80-IA (4) OF THE ACT. 11. THE ASSESSEE FILED THE LETTER ON 24.03.2014 BUT THE AO PASSED THE ORDER DATED ON 28.03.2014 WITHOUT DISCUSSING THE CL AIM OF ADDITIONAL GROUND OF ASSESSEE. SUBSEQUENTLY, THE ASSESSEE FILE D AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THIS GROUND ON THE BASIS OF TH IS FACT THE SAME WAS NOT ORIGINATED FROM THE ASSESSMENT ORDER. ANYHOW IN THE INTEREST OF JUSTICE, THIS GROUND IS LIABLE TO BE ADJUDICATED AT THE END OF THE AO. ACCORDINGLY, WE SET ASIDE THE FINDING OF THE CIT(A) ON ALL THE I SSUES AND RESTORE THE ISSUE BEFORE THE AO TO EXAMINE AFRESH BY GIVING AN OPPORT UNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, W E DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO.1 TO 4 12. THE ISSUE NO. 1 TO 4 RAISED IN THE APPEAL ON MERITS IS CONSEQUENTIAL IN NATURE. NO DOUBT, WOULD BE LIABLE TO BE DECIDED ON THE BASIS OF THE DECISION OF AO ON ADDITIONAL GROUND. ACCORDINGLY, WE SET ASI DE THE FINDING OF THE ITA. NO.2444/AHD/2015 ITA. NO.3377/AHD/14 CO. NO.19/AHD/2015 A.Y. 2010-11 8 CIT(A) ON ALL THE ISSUES AND RESTORE THE ISSUE BEFO RE THE AO TO DECIDE THE ISSUE AFRESH IN VIEW OF THE DECISION OF THE ISSUE R AISED IN THE ADDITIONAL GROUND. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FA VOUR OF THE ASSESSEE AGAINST THE REVENUE. 13 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND CO FILED BY THE ASSESSEE ARE HEREBY ORDERED TO BE DISMISSED AND APP EAL FILED BY THE ASSESSEE BEARING ITA. NO.2444/AHD/2015 IS HEREBY AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17/09/2019 SD/- SD /- (MANISH BORAD) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER AHMEDABAD ' DATED : 17/09/2019 VIJAY/SR. PS ITA. NO.2444/AHD/2015 ITA. NO.3377/AHD/14 CO. NO.19/AHD/2015 A.Y. 2010-11 9 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. # ( ) / THE CIT(A)- 4. # / CIT 5. $% & ''() , () , DR/AR, ITAT, MUMBAI 6. & *+ , / GUARD FILE. / BY ORDER, $ ' //TRUE COPY// (ASSISTANT REGISTRAR) ITAT, AHMEDABAD