K N R Constructions Limited, Hyderabad V. Dy.CIT, Central Circle-3, Hyderabad

CO 3/HYD/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8720 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-06-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 24-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M RAVIDNRA SAI; MPB REDDY
• Assessee Lawyers: SALIL KAPOOR VIKAS J AIN; GURDEV CHAWLA
• Keywords: Unexplained cash credit; Capital asset; Depreciation; Opportunity of being heard; Principle of natural justice; Right to appeal; Unabsorbed depreciation
• Section: 143(3); 2(14); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBE R AND SMT ASHA VIJAYARAGHAVAN, JUDICIAL MEMBE R ITA NO.98/HYD/2012 : ASSESSMENT YEAR 2007-08 M/S. KNR CONSTRUCTIONS LTD., HYDERABAD ( PAN - AAACK 8316 L ) V/S ADDL. COMMISSIONER OF INCOME-TAX RANGE 2, HYDERABAD. (APPELLANT) (RESPONDENT) C.O. NO.03/HYD/2013 (IN ITA NO.98/HYD/2012) : ASSESSMENT YEAR 200 7-08 DY. COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE 3, HYDERABAD V/S M/S. KNR CONSTRUCTIONS LTD., HYDERABAD ( PAN - AAACK 8316 L ) . (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI SALIL KAPOOR, VIKAS JAIN & GURDEV CHAWLA DEPARTMENT BY : S/SHRI MPB REDDY & M.RAVIDNRA SAI(CIT-DR) ITA NO.44/HYD/2013 : ASSESSMENT YEAR 2007-08 M/S. IRMAC SERVICES INDIA LIMITED , HYDERABAD ( PAN - AAACI 7389 D ) V/S ASST. COMMISSIONER OF INCOME - TAX CIRCLE 2(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : S HRI D.V.ANJANEYULU, DEPARTMENT BY : S/SHRI MPB REDDY & M.RAVIDNRA SAI(CIT-DR) DATE OF HEARING 0 2.0 5 .2013 DATE OF PRONOUNCEMENT 21.06.2013 ITA NO.98/HYD/2012 & CO THEREIN & ITA 44/HYD/2013 M/S. KNR CONSTRUCTIONS, HYDERABAD 2 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THERE ARE THREE MATTERS IN THIS BUNCH. WHILE THE APPEAL OF THE REVENUE, BEING ITA NO.98/HYD/2012 AND CROSS-OBJ ECTION OF THE ASSESSEE, BEING C.O.NO.3/HYD/2013 ARE DIRECTED AGAI NST THE ORDE4R OF COMMISSIONER OF INCOME-TAX(APPEALS) III, HYDERABAD DATED 27.12.2011, THE OTHER APPEAL BEING ITA NO.44/HYD/2012 IS DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) DATED 1 4.11.2012 FOR THE ASSESSMENT YEAR 2007-08. SINCE THESE MATTERS ARE I NTERLINKED, THEY ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. M/S. K.N.R. CONSTRUCTIONS ASSESSEES APPEAL : ITA NO.98/HYD/2012 AND : ASSESSMENT YEAR 2007-08 REVENUES CO : C.O. NO.03/HYD/2013 (IN ITA NO.98/HYD/2012) 2. FACTS OF THE CASE LEADING TO THE FILING OF THE PRESENT APPEAL BY THE ASSESSEE AND THE CROSS OBJECTION BY THE REVENUE ARE THAT THE ASSESSEE ENGAGED IN THE BUSINESS OF WORKS CONTRACTS , HAS FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 ON 24.10.200 7 ADMITTING A TOTAL INCOME OF RS.20,21,95,340, AND THE SAME WAS PROCESS ED UNDER S.143(1) OF THE ACT. SUBSEQUENTLY, IN THE SCRUTINY ASSESSMEN T THAT ENSUED, ASSESSMENT WAS COMPLETED ON A TOTAL INCOME OF RS.2 0,45,15,769, VIDE ORDER DATED PASSED UNDER S.143(3)OF THE ACT, AFTE R MAKING THE FOLLOWING TWO DISALLOWANCES- (A) LUMP SUM DISALLOWANCE OF EXPENDITURE UNDER THE HEAD S OF TRANSPORT CHARGES, REPAIRS AND MAINTENANCE, SPREADI NG AND ASSORTMENT EXPENSES AND OTHER WORK EXPENSES ON THE GROUND ITA NO.98/HYD/2012 & CO THEREIN & ITA 44/HYD/2013 M/S. KNR CONSTRUCTIONS, HYDERABAD 3 THAT THEY ARE SELF-MADE VOUCHERS AND NON-VERIFIABLE DUE TO LACK OF PROPER DETAILS OF RECIPIENTS AND THEIR ADD RESSES. RS.20,00,000 (B) DISALLOWANCE OF PROVISIONS FOR DEFECTIVE LIABIL ITY PERIOD - RS.1,45,409 SUBSEQUENT TO THE SCRUTINY ASSESSMENT AS ABOVE, A S URVEY OPERATION UNDER S.133A WAS CONDUCTED IN THE PREMISES OF THE A SSESSEE COMPANY AND THEREAFTER A NOTICE WAS ISSUED UNDER S.148 OF T HE ACT ON 29.3.2010, AND IN THE RE-ASSESSMENT THAT WAS ULTIMATELY COMPLE TED UNDER S.143(3) READ WITH S.147 OF THE ACT, ASSESSEES TOTAL INCOME WAS DETERMINED AT RS.77,21,72,253, AFTER MAKING THE FOLLOWING ADDITIO NS/DISALLOWANCES- SL. NO. PARTICULARS AMOUNT RS. 1. ADDITION BY TREATING THE AGRICULTURAL INCOME AS UNEXPLAINED CASH CREDIT 1,75,000 2. DISALLOWANCE FROM THE INTEREST PAID ON MOBILIZATION RECEIVED BY THE COMPANY, FOR NOT CHARGING INTEREST ON THE ADVANCES GIVEN TO THE SUB-CONTRACTORS OF THE COMPANY, @ 14% ON AN AMOUNT OF RS.13,45,33,363 1,88,34,670 3. A LUMPSUM DISALLOWANCE OF EXPENDITURE OVER AND ABOVE THE LUMPSUM ADDITION MADE BYH THE ACIT IN EARLIER SCRUTINY ASSESSMENT ORDER U/S. 143(3) 75,00,000 4. CONSI D ERIN G THE SALE PROCEEDS BOTH, ACTUALLY RECEIVED BY THE COMPANY, AND ALSO THE AMOUNT ALLEGED BY THE ASSESSING OFFICER TO HAVE BEEN RECEIVED BY THE COMPANY, AS SHORT TERM CAPITAL GAINS 54,11,46,794 3. ON APPEAL, THE CIT(A) GRANTED PARTIAL RELIEF AN D THUS PARTLY ALLOWED THE APPEAL. AGAINST THE ADDITIONS SUSTAINED BY THE CIT(A), ASSESSEE IS IN APPEAL, WHEREAS THE REVENUE FILED CR OSS-OBJECTIONS CONTESTING THE RELIEFS GRANTED BY THE CIT(A). ITA NO.98/HYD/2012 & CO THEREIN & ITA 44/HYD/2013 M/S. KNR CONSTRUCTIONS, HYDERABAD 4 4. EFFECTIVE GROUNDS OF THE ASSESSEE IN ITS APPEA L READ AS FOLLOWS- IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE C ASE THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - III (C.LT AP PEALS) IS ERRONEOUS AND INVALID ON THE FOLLOWING GROUNDS : 1. THE LEARNED C.LT (APPEALS) IS NOT JUSTIFIED IN NOT DISPOSING THE PETITION OF THE APPELLANT ASSESSEE FILED UNDER RULE 46A OF INCOME TAX RULES FOR CROSS EXAMINATION OF VARIOUS PARTIES, WIT HOUT GIVING SPEAKING OR REASONED ORDER AND THERE BY DISPOSING O F THE APPEAL WITHOUT INVITING APPELLANT ARGUMENTS ON MERITS. 2. THE LEARNED C.LT (APPEALS) IS NOT JUSTIFIED IN UPHO LDING THE ACTION OF THE A.O, IN TAKING THE SALE CONSIDERATION OF RS. 60,00,75,0001- IN SALE DEEDS BETWEEN IRMAC SERVICES INDIA LTD., AND PBEL R EAL ESTATE INDIA (P) LTD FOR ASSESSMENT OF CAPITAL GAINS OF THE APPE LLANT COMPANY, INSTEAD OF TAKING THE SALE CONSIDERATION OF RS. 13,89,06,2501- IN AGPA BETWEEN THE APPELLANT COMPANY AND IRMAC, WITHOUT PR OPERLY APPRAISING THE DEFINITION OF SECTION 45, SECTION 2( 14), AND SECTION 2(47) OF INCOME TAX ACT AND THEIR IMPLICATIONS ON T RANSFER OF CAPITAL ASSET BETWEEN APPELLANT COMPANY AND IRMAC AND ARRIV ING AT CAPITAL GAINS OF RS. 54,11,46,794/ IN THE HANDS OF THE ASSESSEE COMPANY, BY MAKING ALLEGATIONS, ASSUMPTIONS AND SURMISES ON THE BASIS OF STATEMENTS RECORDED IN THE BACK OF COMPANY AND LETT ERS OBTAINED WHICH ARE NOT FURNISHED TO THE COMPANY IN RIGHT TIM E. 3. THE LEARNED C.I.T (APPEALS) IS NOT JUSTIFIED IN UPH OLDING THE ACTION OF THE A.O IN DISALLOWING THE CLAIM OF THE A SSESSEE FOR EXEMPTION OF CAPITAL GAINS OF RS. 7,25,53,044/- ON SALE OF AGRICULTURE LANDS WHICH ARE EXEMPTED CAPITAL ASSET ULS 2(14) III (A) AND (B) OF INCOME TAX ACT. THIS EXEMPTED CAPITA L GAINS OFRS 7,25,53,044/- WAS ALREADY INCLUDED IN CAPITAL GAINS OF RS. 54,11,46,794/ ADDED BY THE A.O. 4. THE LEARNED C.LT (APPEALS) IS NOT JUSTIFIED IN UPHO LDING THE ADDITION MADE BY THE ASSESSING OFFICER HYPOTHETICAL LY CALCULATING INTEREST @ 14 % ON BUSINESS ADVANCES OF RS.L3,45,33,363/- GIVEN BY THE COMPANY TO ITS SUB-CONTRACTORS, FOR THE PURP OSE EXECUTION OF SUB-CONTRACT WORKS GIVEN TO THEM FOR THE PURPOSE OF THE BUSINESS OF THE COMPANY, WHICH COMES TO RS.1,88,34,6701- AND THEREBY DISALLOWING THIS AMOUNT FROM THE HEAD OF EX PENDITURE ' INTEREST AND FINANCE' CHARGES DEBITED TO THE P&L AC COUNT, THUS LEADING TO ADDITION OFRS.1,88,34,6701-. 5. THE LEARNED CIT (APPEALS) IS NOT JUSTIFIED IN UPHOL DING THE ACTION OF THE A.O BY MAKING A LUMPSUM DISALLOWANCE OF EXPE NDITURE OF RS.75,00,0001- OVER AND ABOVE THE LUMPSUM ADDITION OF RS.20,00,0001 ALREADY MADE BY THE ASSISTANT COMMISSIONER OF INCOME TAX IN HIS SCRUTINY ASSESSMENT D/S 143(3) VIDE HIS ORDER DATED 31.3.2009 ON THE SAME GROUND. ITA NO.98/HYD/2012 & CO THEREIN & ITA 44/HYD/2013 M/S. KNR CONSTRUCTIONS, HYDERABAD 5 6. THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONSIDERING THE AGRICULTURAL INCOME FOR S.1,75,020 AS UNEXPLAINED CASH CREDIT. 7. . DURING THE COURSE OF THE PROCEEDINGS BEFORE US, ASS ESSEE RAISED THE FOLLOWING ADDITIONAL GROUNDS AND PRAYED FOR ADMISSI ON OF THE SAME AND ADJUDICATION THEREON- 1) THAT THE NOTICE ISSUED U/S. 148 AND THE ASSESSM ENT ORDER DATED 31.12.2010 PASSED BY THE ASSESSING OFFICER AR E ILLEGAL, BAD IN LAW & WITHOUT JURISDICTION. 2) THE ADDITIONS MADE ARE UNJUST, ILLEGAL, BAD IN L AW, AGAINST THE PRINCIPAL OF NATURAL JUSTICE & HIGHLY EXCESSIVE . 3) THAT THE MATERIAL COLLECTED AT THE BACK OF APPEL LANT HAS NOT BEEN CONFRONTED TO THE APPELLANT & NO OPPORTUNITY T O CROSS EXAMINING THE WITNESSES HAS BEEN ALLOWED. 4) THE ASSESSMENT HAS BEEN COMPLETED WITHOUT GIVING REASONABLE AND PROPER OPPORTUNITY TO THE APPELLANT. 5) THAT IN VIEW OF THE FACTS AND CIRCUMSTANCES OF T HE CASE THE AO & CIT(A) HAS ERRED IN LAW & ON FACTS IN NOT APP RECIATING THAT SALE CONSIDERATION OF RS.46,11,68,750/- WAS NE VER RECEIVED & ACCRUED TO THE APPELLANT & AS SUCH THE A LLEGED INCOME ADDED IN THE HANDS OF APPELLANT ARE WITHOUT ANY BASIS & IS PURELY ON PRESUMPTIONS. 6) THAT THE ADDITION/DISALLOWANCE MADE ARE ILLEGAL, UNJUST AND BAD IN LAW AND ARE BASED ON MERE SURMISES AND CONJUNCTURES AND THE SAME CANNOT BE JUSTIFIED BY AN Y MATERIAL ON RECORD. 7) THAT THE EVIDENCE FILED AND MATERIALS AVAILABLE ON RECORD HAVE NOT BEEN PROPERLY CONSTRUED AND JUDICIOUSLY INTERPRETED, HENCE THE ADDITION/DISALLOWANCE MADE I S UNCALLED FOR. 5. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTE D THAT THE ADDITIONAL GROUNDS RAISED ARE OF LEGAL NATURE AND T HEY GO TO THE ROOT OF THE MATTER AND THEREFORE, THE SAME MAY BE ADMITTED, SINCE INADVERTENTLY THE SAME COULD NOT BE RAISED EARLIER BEFORE THE LOW ER AUTHORITIES. ITA NO.98/HYD/2012 & CO THEREIN & ITA 44/HYD/2013 M/S. KNR CONSTRUCTIONS, HYDERABAD 6 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND, HAS NOT SERIOUSLY DISPUTED THE ADMISSION OF THE ADD ITIONAL GORUNDS RAISED BY THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PA RTIES AND WE HAVE PERUSED THE DECISIONS ON WHICH RELIANCE IS PLA CED FROM BOTH THE SIDES. THE TRIBUNAL WHILE DEALING WITH THE SUBJEC T-MATTER OF THE APPEAL IN EXERCISE OF ITS POWER, IT MAY ALLOW THE PARTY TO TAKE UP A NEW GROUND OF APPEAL. IN OTHER WORDS, THE TRIBUNAL HAS POWER TO P ERMIT THE ASSESSEE TO RAISE A NEW GROUND OF APPEAL, NOT SET FORTH IN THE MEMORANDUM OF APPEAL, EVEN WITHOUT FORMAL AMENDMENT OF THE GROUND S SET FORTH IN THE MEMORANDUM OF APPEAL PROVIDED THAT A NEW GROUND DOE S NOT INVOLVE A FURTHER INVESTIGATION INTO THE FACTS. THIS POWER OF TRIBUNAL IS SPELT OUT IN RULE 11 OF ITAT RULES, 1963. HON'BLE PUNJAB & HARY ANA HIGH COURT HAS HELD IN THE CASE OF VIJAY KUMAR JAIN V. CIT (99 ITR 349) THAT THE TRIBUNAL MAY ALLOW A PARTY TO PRESS A GROUND WHICH HE DOES N OT PRESS BEFORE THE FIRST APPELLATE AUTHORITY ALTHOUGH HE HAS TAKEN AND INCLUDED IN THE GROUNDS OF THE FIRST APPEAL. THE PROPOSITION OF LAW ON THE ISSUE OF ADMISSION OF ADDITIONAL OR NEW GROUNDS BY FIRST APP ELLATE AUTHORITY WAS LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF JUTE CORPORATION OF INDIA LTD. V. CIT(187 ITR 668) AND IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. V. CIT (229 ITR 383) WHEREIN IT WAS HELD THAT THE SAME WILL APPLY TO APPEAL BEFORE TRIBUNAL. HON'BLE ALLAH ABAD HIGH COURT IN THE CASE OF CIT V. MOHD. AYYUB & SONS AGENCY (197 ITR 6 37) HAS HELD THAT THE POWER OF THE TRIBUNAL TO PERMIT ANY PARTY TO TH E APPEAL TO RAISE THE QUESTION OF JURISDICTION, WHICH GOES TO THE ROOT OF THE MATTER AND DOES NOT INVOLVE FURTHER INVESTIGATION INTO FACTS, CANNOT BE DISPUTED ON THE PLAIN READING OF RULE 11 OF THE ITAT RULES, 1963. INDEED ON SUCH A PLEA BEING TAKEN, THE TRIBUNAL IS UNDER A STATUTORY OBLIGATION NOT ONLY TO ENTERTAIN THE PLEA BUT ALSO TO DECIDE THE SAME AFTER PROVIDIN G SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE OTHER SIDE. SIMILAR VIEWS HAV E BEEN TAKEN BY HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. MAHA LAXMI SUGAR MILLS CO. ITA NO.98/HYD/2012 & CO THEREIN & ITA 44/HYD/2013 M/S. KNR CONSTRUCTIONS, HYDERABAD 7 LTD.(200 ITR 275); BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF AHMEDABAD ELECTRICITY CO. LTD. V. CIT (199 ITR 351) AND IN THE CASE OF BABY SAMUEL V. ASSTT. CIT(262 ITR 385); AND BY THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF MEWAR SUGAR MILLS LTD. V. CIT (203 ITR 415) WHEREIN IT HAS HELD THAT WHEN AN ISSUE WAS NOT SPEC IFICALLY TAKEN IN THE MEMORANDUM AND GROUNDS OF APPEAL BUT MENTIONED IN T HE WRITTEN SUBMISSIONS FILED BEFORE THE TRIBUNAL AND SPECIFICA LLY ARGUED AT THE TIME OF THE FINAL HEARING OF THE APPEAL, THE TRIBUNAL CA NNOT REFUSE TO ADJUDICATE UPON THAT ISSUE ON THE MERITS OF THE GROUND THAT NO SUCH GROUND HAS BEEN TAKEN SPECIFICALLY IN THE GROUNDS OF APPEAL. HON'BL E SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA) HAS HELD: ...THE POWER OF THE TRIBUNAL IN DEALING WITH APPEA LS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PURPOSE OF ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIE S IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE I N ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT O F A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE T HE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TA XED OR A PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUES TION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THE ITEM. THERE I S NO REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE CIT(A). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CROSS-OBJECTIONS BEFORE THE TRIBUNAL. THE TRIBUNAL SHOULD NOT BE PREVENTED FROM CONSIDERI NG QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS, ALTHOUGH NOT RAISED EARLIER. THE VIEW THAT THE TRIB UNAL IS CONFINED ONLY TO ISSUES ARISING OUT OF THE APPEAL B EFORE THE CIT(A) IS TOO NARROW A VIEW TO TAKE OFF THE POWERS OF THE TRIBUNAL. THUS, THE SETTLED LEGAL POSITION, WHICH EMERGES FRO M THE AFORESAID JUDICIAL PRONOUNCEMENTS, IS THAT THE PURPOSE OF ASSESSMENT P ROCEEDING IS TO TAX/ASSESS THE TAXABLE LIABILITY/INCOME OF THE ASSE SSEE CORRECTLY IN ACCORDANCE WITH LAW AND IF THE ASSESSEE IS ENTITLED TO CERTAIN RELIEF, DEDUCTION OR BENEFIT, THE ASSESSEE SHOULD NOT BE DE NIED OR DEPRIVED OF IT, EVEN IF THE CLAIM PERTAINING TO THE SAME IS MADE FO R THE FIRST TIME BEFORE THE TRIBUNAL DURING PENDENCY OF APPEAL BEFORE IT. I N THE PRESENT CASE, THE ITA NO.98/HYD/2012 & CO THEREIN & ITA 44/HYD/2013 M/S. KNR CONSTRUCTIONS, HYDERABAD 8 ISSUES RAISED IN ADDITIONAL GROUNDS ARE THE LEGAL I SSUES WHICH GO TO THE ROOT OF THE MATTER AND FOR DECIDING THESE LEGAL ISS UES NO NEW FACTS ARE REQUIRED TO BE CONSIDERED AS ALL THE FACTS ARE ALRE ADY RECORDED IN THE ORDERS OF THE AUTHORITIES BELOW. IN THIS VIEW OF TH E MATTER, RESPECTFULLY FOLLOWING THE DECISION OF THE APEX COURT, WE ADMIT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE. HOWEVER, THE SAID GROUNDS RAISE A LEGAL ISSUE, AND THE SAME HAVING NOT BEEN RAISED BEFORE THE FIRS T APPELLATE AUTHORITY, THE CIT(A) HAS NO OCCASION TO EXAMINE THE MATTER ON THAT LEGAL ASPECT. WE ACCORDINGLY, SET ASIDE THE IMPUGNED ORDER OF THE CIT(A), AND RESTORE THE MATTER TO THE FILE OF THE CIT(A), WITH A DIRECT ION TO EXAMINE THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE BEFORE US , AND THEN DISPOSE OFF THE APPEAL BEFORE HIM AFRESH ON THE MERITS THEREOF. AT THIS STAGE, WE REFRAIN FROM ADJUDICATING ON OTHER GROUNDS RAISED B Y THE ASSESSEE, AS THE LEGAL ISSUE IN THE FIRST PLACE, IS TO BE DECIDED FI RST BY THE CIT(A). 8. THE GROUNDS TAKEN BY THE REVENUE IN ITS CROSS-O BJECTIONS ARE AS FOLLOWS- 1. ADDITION OF EXPENDITURE TOWARDS EVICTION CHARGE S AND DEVELOPMENT CHARGES OF RS.44,81,25,000/-. 2. THE LD. CIT(A) HAS DELETED THE ADDITION WITH REG ARD TO LAND TRANSACTION ON PROTECTIVE BASIS, ON THE GROUND THAT SUBSTANTIVE ADDITION MADE IN THE HANDS OF M/S. KNR CONSTRUCTIONS LTD. HAS BEEN UPHELD BY LD. CIT(A). 3. THE CONFIRMATION OF THE SAME BY THE LD. CIT(A) W AS CHALLENGED BEFORE ITAT A BENCH BY THE OTHER ASSES SEE I.E. M/S. KNR CONSTRUCTIONS LTD., HYDERABAD 4. THUS IT IS PRAYED BEFORE HONBLE ITAT THAT IN TH E EVENT OF DELETION OF THE ADDITION IN THE HANDS OF M/S. KNR CONSTRUCTIONS LTD., DIRECTIONS MAY PLEASE BE GIVEN TO TAX THE SAME IN HANDS OF M/S. IRMAC SERVICES INDIA LTD. , HYD A.Y. 2007-08. 5. ACCORDINGLY THIS CROSS OBJECTION IS FILED BEFORE HONBLE ITAT HYDERABAD A BENCH HYDERABAD REQUESTING FOR CONSIDERATION WHILE DECIDING THE ISSUE IN THE CASE OF M/S. K.N.R. CONSTRUCTIONS LTD., IN ITA NO.98/HYD/2011-01 2. ITA NO.98/HYD/2012 & CO THEREIN & ITA 44/HYD/2013 M/S. KNR CONSTRUCTIONS, HYDERABAD 9 IN VIEW OF OUR DECISION ON THE APPEAL OF THE ASSESS EE, IN THE CONTEXT OF THE ADMISSION OF THE ADDITIONAL GROUNDS RAISED BY T HE ASSESSEE, IN PARA 5 ABOVE, WHEREBY WE HAVE SET ASIDE THE ORDER OF THE C IT(A) AND RESTORED THE MATTER TO THE FILE OF THE CIT(A) FOR FRESH ADJU DICATION, IN THE FIRST PLACE, ON THE LEGAL ISSUES INVOLVED IN THE ADDITION AL GROUNDS RAISED, AND THEREAFTER ON THE MERITS OF THE OTHER GROUNDS, THE CO OF THE ASSESSEE HAS BECOME INFRUCTUOUS. AS SUCH IT IS REJECTED. 9. IN THE RESULT, WHILE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES, CROSS OBJECTIONS OF THE REVEN UE, BEING INFRUCTUOUS, IS DISMISSED. M/S. IRMAC SERVICES INDIA LIMITED , HYDERABAD ASSESSEES APPEAL : ITA NO.44/HYD/2013 10. IN THIS APPEAL BY THE ASSESSEE, IN WHOSE HANDS PROTECTIVE ADDITION CORRESPONDING ADDITION ON SUBSTANTIVE BASI S HAS BEEN MADE IN THE CASE OF M/S. K.N.R. CONSTRUCTIONS, EFFECTIVE GR OUNDS FO THE ASSESSEE READ AS FOLLOWS- THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS IN LA W, CONTRARY TO FACTS AND AGAINST THE PRINCIPLES OF EQUITY AND NATU RAL JUSTICE. 02. THE LOWER AUTHORITIES FAILED TO APPRECIATE THE FACT THAT THE DISALLOWANCE OF DEPRECIATION RS 18,01,855 AGINST TH E CLAIM OF RS. 35,88,530.80/REPRESENTS DEPRECIATION ON WDV AT THE BEGINNING OF THE YEAR AND NO EXCESS DEPRECIATION WAS CLAIMED ON FIXED ASSETS AS ALLEGED BY LOWER AUTHORITIES. 03. NON CONSIDERATION OF UNABSORBED DEPRECIATION L OSS OF RS. 22,02,058/- ALLEGING IT TO BE BUSINESS LOSS IS AGAI NST FACTS WHICH IS AVAILABLE ON RECORD AND THEREFORE DISALLOWANCE OF C ARRY FORWARD DEPRECIATION AS BUSINESS LOSS IS UNJUSTIFIED. 04. THE ADDITION OF RS 1,02,00,000/- INVOKING THE P ROVISIONS OF SEC 68 EVEN AFTER SHOWING THAT THE AMOUNTS WERE REC EIVED THROUGH ACCOUNT PAYEE CHEQUES FROM LIMITED COMPANIE S FOR THE BUSINESS PURPOSE, EVIDENT FROM BANK STATEMENTS, APA RT FROM THE ITA NO.98/HYD/2012 & CO THEREIN & ITA 44/HYD/2013 M/S. KNR CONSTRUCTIONS, HYDERABAD 10 FACT THAT PART OF THE LOAN WERE REPAID AND, THEREFO RE THE VERY ADDITION IS UNSUSTAINABLE IN LAW. 05. THE LOWER AUTHORITIES OUGHT TO HAVE SET OFF THE ENTIRE CARRY FORWARD LOSS AGAINST THE INCOME ASSESSED, AS THE AP PELLANT CLAIMED CARRY FORWARD LOSS TO THE EXTENT OF INCOME DISCLOSED AND THEREFORE THE CARRY FORWARD LOSS AMOUNTING TO RS. 1 3,70,793/SHALL BE SET OFF. 06. THE APPELLANT CRAVE TO SUBMIT THAT, ALL THE FAC TS AND CONTENTIONS RAISED IN THE STATEMENT OF FACTS ACCOMP ANIED BY THESE GROUNDS SHALL BE TREATED AS PART AND PARCEL OF THES E GROUNDS AND SHALL BE DEALT WITH. . 11. WE HEARD BOTH SIDES AND PERUSED THE IMPU GNED ORDERS OF THE LOWER AUTHORITIES. IT HAS BEEN THE CONTENTION OF T HE LEARNED COUNSEL FOR THE ASSESSEE BEFORE US, THAT THE CIT(A) HAS DISPOSE D OF THE ABOVE ISSUE IN APPEAL BEFORE HIM EX-PARTE, WITHOUT GIVING ADEQU ATE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE FIND MERIT IN THIS CON TENTION OF THE ASSESSEE. IN THE INTERESTS OF JUSTICE, WE ACCORDINGLY SET ASI DE THE IMPUGNED ISSUE TO THE FILE OF CIT(A) WITH A DIRECTION TO GIVE TO GIVE ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE, AND READJUDICATE ON THE IS SUES INVOLVED IN THE ABOVE GROUNDS BEFORE HIM, IN ACCORDANCE WITH LAW AN D AFTER CONSIDERING ALL THE RELEVANT ASPECTS OF THE MATTER. THE ASSESSE E TOO IS DIRECTED TO COOPERATE BY COMPLYING WITH THE NOTICES OF THE CIT( A), AND ENABLE HIM IN THE EARLY DISPOSAL OF THE APPEAL, FAILING WHICH THE CIT(A) WOULD BE AT LIBERTY TO DRAW HIS OWN INFERENCES AND DISPOSE OF T HE APPEAL ONCE AGAIN EX-PARTE. WE DIRECT ACCORDINGLY. 12. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.98/HYD/2012 & CO THEREIN & ITA 44/HYD/2013 M/S. KNR CONSTRUCTIONS, HYDERABAD 11 13. TO SUM UP, WHILE BOTH THE APPEALS OF TH E ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES, THE CROSS-OBJECTI ON OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 21.6.2013 \ SD/- SD/- ( ASHA VIJAYARAGHAVAN ) ( CHANDRA POOJARI ) JUDICIAL MEMBER ACCOUNTANT MEMBER. DT/- 21 ST JUNE, 2013 COPY FORWARDED TO: 1. 2. 3 4. M/S. KNR CONSTRUCTIONS LTD., KNR HOUSE, 3 RD & 4 TH FLOOR, PLOT NO.114, PHASE I, KAVURI HILLS HYDERABAD 500 003. M/S. IRMAC SERVICES INDIA LIMITED , C/O. M/S. ANJA NEYULU & CO., CHARTERED ACCOUNTANTS, 30, BHAGYALAKSHMI NAGAR , GANDHI NAGAR HYDERABAD 500 080 HYDERABAD ADDL. COMMISSIONER OF INCOME-TAX, RANGE 2, HYDERAB AD ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE 2(10< HYDE RABAD 5. 6. COMMISSIONER OF INCOME-TAX(APPEALS) III, HYDERABAD COMMISSIONER OF INCOME - TAX II , HYDERABAD 7 . DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD B.V.S.