M/s. J & K Cooperative Housing Corporation Ltd., Jammu V. The Deputy Commissioner of Income tax, Jammu

CO 9/ASR/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7580 (ITAT-AMRITSAR)
• Duration Of Justice: 4 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-09-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 22-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R L CHHANALIA
• Keywords: Retrospective amendment
• Section: 43B; 143(3); 263; 28; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NOS.479, 495 & 496(ASR)/2011 ASSESSMENT YEAR:2005-06, 2005-06 & 2006-07 PAN :AAAFJ6591R THE DY.COMMR. OF INCOME-TAX, VS. M/S. J & K CO-OPE RATIVE HOUSING CIR.II, JAMMU. CORPORATION LTD. JAMMU. (APPELLANT) (RESPONDENT) C.O. NOS. 9, 10 & 11(ASR)/2012 (ARISING OUT OF I.T.A. NOS.479, 495 & 496(ASR)/2011 ) ASSESSMENT YEAR:2005-06, 2005-06 & 2006-07 M/S. J & K CO-OPERATIVE HOUSING VS. DY.COMMR. OF IN COME-TAX, CORPN. LTD. JAMMU. CIR.2, JAMMU. (APPELLANT) (RESPONDENT) DEPARTMENT BY:SH. R.L. CHHANALIA, DR ASSESSEE BY:NONE DATE OF HEARING:25/09/2012 DATE OF PRONOUNCEMENT:27/09/2012 ORDER PER BENCH ; THESE THREE APPEALS OF THE REVENUE ARISE FROM DIFF ERENT ORDERS OF CIT(A), JAMMU, DATED 27.06.2011, 01.07.2011 & 01.07 .2011 FOR THE ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 2 ASSESSMENT YEARS 2005-06, 2005-06 & 2006-07 RESPECT IVELY. THE ASSESSEE IN ALL THE REVENUES APPEALS HAS FILED CROSS OBJECTION S. 2. THE REVENUE IN ITA NO.479(ASR)/2011 HAS RAISED F OLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING DISALLOWANCE MADE U/S 40(A)(IA) O F THE INCOME- TAX ACT, 1961 WHEN THE NET PROFIT RATE ESTIMATED HA S NOTHING TO DO WITH THE PROVISIONS OF TAX DEDUCTED AT SOURCE. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN NOT FOLLOWING THE ORDER OF HIS PREDECESSOR WHO HAD CONFIRMED THE ACTION OF THE AO IN MAKING DISALLOWAN CE U/S 40(A)(IA) IN THE CASE OF M/S. CONSTRUCTION ENGINEER , SRINAGAR FOR THE A.Y. 2006-07 WHERE THE LD. CIT(A) HAD HIMSELF A PPLIED NET PROFIT RATE OF 10% ON GROSS RECEIPTS. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS NOT ERRED IN HOLDING THAT THE DISALLOWAN CE MADE ON ACCOUNT OF VIOLATION OF SECTION 40(A)(IA) OF THE IN COME TAX ACT, 1961 IS COVERED BY THE APPLICATION OF NET PROFIT RA TE. 3. THE REVENUE IN ITA NO.495(ASR)/2011 HAS RAISED F OLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN NOT APPRECIATING THE FACT THAT THE METHOD OF ACCOUNTING EMPLOYED BY ASSESSEE DOES NOT REFLECT TRUE AND CORR ECT RESULTS. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN NOT APPRECIATING THE FACT THAT THE ASSESSE E HAD DEBITED EXPENDITURE ONLY WHERE AS CREDITS ( SO CALLED ADVAN CES) ARE NOT BEING ACCOUNTED IN ITS BOOKS OF ACCOUNT. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN APPLYING NET PROFIT OF 3% ON TRANSFER FEE RECEIVED ON ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 3 SALE OF PLOTS/SHOPS, THE ENTIRE AMOUNT OF WHICH WAS REQUIRED TO BE TAXED. 4. THE REVENUE IN ITA NO.479(ASR)/2011 HAS RAISED F OLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN NOT APPRECIATING THE FACT THAT THE METHOD OF ACCOUNTING EMPLOYED BY ASSESSEE DOES NOT REFLECT TRUE AND CORR ECT RESULTS. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN NOT APPRECIATING THE FACT THAT THE ASSESSE E HAD DEBITED EXPENDITURE ONLY WHERE AS CREDITS ( SO CALLED ADVAN CES) ARE NOT BEING ACCOUNTED IN ITS BOOKS OF ACCOUNT. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN APPLYING NET PROFIT OF 3% ON TRANSFER FEE RECEIVED ON SALE OF PLOTS/SHOPS, THE ENTIRE AMOUNT OF WHICH WAS REQUIRED TO BE TAXED. 5. THE ASSESSEE IN C.O. NO.9(ASR)/2012 HAS RAISED F OLLOWING GROUNDS: 1) THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING T HE DISALLOWANCE OF RS.2,25,792/- U/S 36A(VA) READ WITH SECTION 2(24 ) OF THE INCOME-TAX ACT, 1961, IGNORED THE JURISDICTIONAL IT AT BENCH DECISION IN THE CASE OF M/S. PROXIMA STEELS PVT. LT D. ITA NO.208(ASR)/2008 DATED 12.09.2008. 6. THE ASSESSEE IN C.O. NO.10(ASR)/2012 HAS RAISED FOLLOWING GROUNDS: 1. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER FOR INVOKING THE PROVISIONS OF SE CTION 145(3) OF THE INCOME-TAX ACT, 1961 AND REJECTING THE BOOKS OF ACCOUNTS AS THE ASSESSEE CONSISTENTLY FOLLOWED PROJECT COMP0 LETION METHOD OF ACCOUNTING. ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 4 2. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING TH E ADDITION OF RS.6,33,348/- BEING 3% ON SALE CONSIDERATION. 3. THE CIT(A) OUGHT TO HAVE CONSIDERED THAT ACCOUNT ING STANDARD (AS) 7 (REVISED 2002) IS NOT APPLICABLE TO BUILDERS /DEVELOPERS. 7. THE ASSESSEE IN C.O. NO.11(ASR)/2012 HAS RAISED FOLLOWING GROUNDS: 1. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER FOR INVOKING THE PROVISIONS OF SE CTION 145(3) OF THE INCOME-TAX ACT, 1961 AND REJECTING THE BOOKS OF ACCOUNTS AS THE ASSESSEE CONSISTENTLY FOLLOWED PROJECT COMP0 LETION METHOD OF ACCOUNTING. 2. THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING TH E ADDITION OF RS.6,73,477/- BEING 3% ON SALE CONSIDERATION. 3. THE CIT(A) OUGHT TO HAVE CONSIDERED THAT ACCOUNT ING STANDARD (AS) 7 (REVISED 2002) IS NOT APPLICABLE TO BUILDERS /DEVELOPERS. 8. IN THE PRESENT CASES, THE ASSESSEE HAD FILED ADJ OURNMENT APPLICATION BUT NONE WAS PRESENT TO PURSUE THE SAID ADJOURNMENT APPLICATION ON THE DATE OF HEARING. IN THE ADJOURNMENT APPLICATION, NO SUFF ICIENT CAUSE FOR ADJOURNMENT WAS MENTIONED AND THEREFORE, THE SAID A PPLICATION FOR ADJOURNMENT IS REJECTED AND THE CASES ARE DECIDED O N MERITS AFTER HEARING THE LD. DR. 9. FIRST OF ALL, WE TAKE UP APPEAL OF THE REVENUE I N ITA NO.479(ASR)/2011. BRIEF FACTS ARE THAT THE ORIGINA L ASSESSMENT IN THE PRESENT CASE WAS COMPLETED ON 31.12.2007. SUBSEQUENTLY, AN ORDER U/S 263 OF THE ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 5 INCOME-TAX ACT, 1961 ( IN SHORT, THE ACT) WAS PAS SED ON 13.03.2009 HOLDING THE ORIGINAL ASSESSMENT AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THE AO WAS DIRECTED TO MAKE A FRESH ASSESSMENT AS PER DIRECTIONS CONTAINED IN THE ORDER PASSED U/S 263 OF THE ACT. THE OPERATIVE PART OF THE ORDER U/S 263 OF THE ACT IS REPRODUCED FOR THE SAKE OF CLARITY AS UNDER: PARA-4.1.2. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED COPIES OF CHALLANS VIDE WHICH THE TAX DEDUCTED AT SOURCE WAS DEPOSITED IN THE CENTRAL GOVERNMENT ACCOUNT. THE DETAILS OF THE AMOU NT ON WHICH SUCH TAX WAS DEDUCTED AND DEPOSITED WAS ALSO FILED. FURT HER, THE LD. COUNSEL FOR THE ASSESSEE HAS HIMSELF CONCEDED THAT THE ASSESSEE SOCIETY FAILED TO DEDUCT AND DEPOSIT TAX ON CONTRAC T AMOUNT OF RS.17,29,798/- AND THESE PAYMENTS WERE SUBJECT TO T HE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT, 1961, THE ADMISSION OF THE LD. COUNSEL FOR THE ASSESSEE CLEARLY REVEALS THE I NACTION OF THE AO ON THE ISSUE. THE FAILURE OF THE AO TO CONDUCT ENQUIRY RESULTED IN UNDER ASSESSMENT OF THE INCOME TO THE EXTENT OF RS.17,29, 798/- WHICH WAS REQUIRED TO BE ADDED U/S 40(A)(IA) THUS MAKING THE ORDER PASSED BY HIM AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS O F REVENUE. 4.1.3 IN FACT, FURTHER PERUSAL OF THE DOCUMENTS FAI LED DURING THE PROCEEDINGS REVEALS THAT CONTRACT PAYMENT OF RS.24, 01,025/- WERE PAID/CREDITED TO THE ACCOUNT OF THE DEDUCTEES ON OR BEFORE 27.01.2005. HOWEVER, TDS AMOUNTING TO RS.21,019/- WAS DEPOSITED BY THE ASSESSEE ON 30.09.2005. AS PER THE PROVISIONS OF SE CTION 40(A)(IA) OF THE INCOME TAX ACT, 1961, TDS RELATING TO PAYMENTS MADE IN THE MONTH OF MARCH CAN BE DEPOSITED AFTER THE DUE DATE BUT BEFORE THE DUE DATE FOR FILING OF RETURN FOR THE RELEVANT ASSESSME NT YEAR BUT IN RESPECT OF ALL OTHER PAYMENTS, MADE UPTO THE MONTH OF MARCH , OF A PARTICULAR PREVIOUS YEAR, IS REQUIRED TO BE DEPOSITED ON OR BE FORE 31 ST MARCH OF THE RELEVANT PREVIOUS YEAR, IN ORDER TO AVOID INVOK ING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THUS, ON THE CONTR ACT PAYMENT OF RS.24,01,025/-, IN ORDER TO TAKE ADVANTAGE OF THE P ROVISO TO SECTION 40(A)(IA) OF THE ACT, TDS WAS REQUIRED TO BE PAID O N OR BEFORE ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 6 31.03.2005, WHICH THE ASSESSEE FAILED TO DEPOSIT BY SUCH DATE AND THUS THE SAID CONTRACT PAYMENTS ALSO FELL WITHIN THE AMBIT OF THE SAID SECTION AND WERE REQUIRED TO BE DISALLOWED AND ADDE D BACK TO ITS INCOME. DURING THE PROCEEDINGS U/S 143(3) THE AO FA ILED TO CONDUCT THE REQUISITE ENQUIRY AND THEREAFTER MAKE ADDITION TO THE INCOME OF THE ASSESSEE, THUS, MAKING THE ORDER PASSED BY HIM AS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE. THE UNDERSIGNED HAS GONE THROUGH THE EXPLANATION OF FERED BY THE LD. COUNSEL FOR THE ASSESSEE AND IN THE LIGHT OF THE PR OVISIONS OF SECTION 36(1)(VA) OF THE ACT, IT IS OBSERVED THAT THE EXPLA NATION OFFERED BY HIM IS NOT ACCEPTABLE. THE SAID PROVISIONS CLEARLY STAT E THAT IN CASE OF EMPLOYEES SHARE OF PROVIDENT FUND RECEIVED BY THE ASSESSEE, THE DEPOSIT HAS TO BE MADE WITHIN THE STATUTORY TIME LI MITS AS PRESCRIBED BY THE RELEVANT AUTHORITY. WHILE AS IN RESPECT OF T HE EMPLOYERS CONTRIBUTION, DISALLOWANCE IS TO BE MADE UNDER THE PROVISIONS OF SECTION 43B(B) OF THE ACT ONLY IF THE SAID DEPOSIT IS MADE AFTER THE DUE DATE OF FILING OF RETURN OF INCOME, THE LD. COUNSEL IS THEREBY TRYING TO TAKE ADVANTAGE OF SECTION 43(D) WHEN THE DEFAULT PE RTAINS TO SECTION 36(1)(VA) OF THE ACT. NONE OF THE JUDICIAL AUTHORIT IES RELIED UPON BY THE ASSESSEE DIRECTLY DEAL WITH THE PROVISIONS OF S ECTION 36(1)(VA) OF THE ACT AND ARE THUS NOT REQUIRED TO BE COMMENTED U PON. THE ONLY FACT WHICH EMERGES FROM THE PROCEEDINGS, IS THAT THE ASS ESSEE DEPOSITED AN AMOUNT OF RS.2,25,797/- RECEIVED BY IT AS EMPLOYEE S SHARE OF CONTRIBUTION TOWARDS PROVIDENT FUND AFTER THE PRESC RIBED DUE DATE, AS MENTIONED IN SECTION 36(1)(VA) AND THEREFORE, WAS N OT ENTITLED TO THE DEDUCTION OF THE SAID AMOUNT. THE AO WITHOUT TAKING THESE FACTS INTO CONSIDERATION PASSED THE ASSESSMENT ORDER THUS REND ERING THE ORDER ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVEN UE IN TERMS OF SECTION 263 OF THE INCOME TAX ACT, 1961. 10. THE ORDER UNDER SECTION 263 OF THE ACT, WAS NOT CHALLENGED BY THE ASSESSEE IN FURTHER APPEAL. THE AO AFTER CONSIDERI NG THE SUBMISSIONS OF THE ASSESSEE MADE THE ADDITION VIDE HIS ORDER DATED 08. 12.2009 AS UNDER: ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 7 I) DISALLOWANCE U/S 40(A)(IA) RS.41,30,823/- II) DISALLOWANCE U/S 36(1)(VA) RS. 2,25,797/- 11. BEFORE THE LD. CIT(A), THE ASSESSEE RELIED UPON THE DECISION OF THE ITAT, HYDERABAD BENCH IN THE CASE OF M/S. TEJA CONS TRUCTIONS IN ITA NO.308/HYDERBAD/2009 DATED 23.10.2009 AND ITAT AMRI TSAR BENCH IN THE CASE OF RESHI CONSTRUCTION CO. SRINAGAR IN ITA NO.4 62(ASR)/2008 FOR THE A.Y. 2005-06, DATED 22.07.2009 AND MANY OTHER DECIS IONS AVAILABLE IN THE ORDER OF THE LD. CIT(A). THE LD. CIT(A) CONSIDERING THE SAID DECISIONS DELETED THE DISALLOWANCE OF RS.41,30,823/-. 11.1. AS REGARDS THE DISALLOWANCE OF RS.2,25,797/-, THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER KEEP ING IN VIEW THE DECISION RELIED UPON BY HIM IN PARA 4(F) OF HIS ORDER. 12. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERI AL AVAILABLE ON RECORDS. THE DISALLOWANCE OF RS.41,30,823/- MADE I S COVERED BY THE DECISIONS OF THE ITAT, HYDERABAD BENCH IN THE CASE OF M/S. TEJA CONSTRUCTIONS IN ITA NO.308/HYDERBAD/2009 DATED 23. 10.2009 AND ITAT AMRITSAR BENCH IN THE CASE OF RESHI CONSTRUCTION CO . SRINAGAR IN ITA NO.462(ASR)/2008 FOR THE A.Y. 2005-06, DATED 22.07. 2009. THEREFORE, IN THE ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 8 FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION AND WE FIND NO INFIRMITY IN HIS ORDER. THU S, ALL THE GROUNDS OF THE REVENUE ARE DISMISSED. 13. AS REGARDS THE SOLITARY GROUND TAKEN BY THE ASS ESSEE IN ITS C.O., THE AO DISALLOWED EMPLOYEES SHARE OF CONTRIBUTION OF RS.2,25,797/- SINCE THE SAME HAD BEEN PAID BY THE ASSESSEE AFTER EXPIRY OF THE DUE DATE AS PRESCRIBED UNDER THE E.P.F. ACT. THE LD. CIT(A) FOLLOWING THE DECISION OF VARIOUS BENCHES OF THE TRIBUNAL CONFIRMED THE ACTION OF THE A.O. 14. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERI ALS AVAILABLE ON RECORD. THERE IS NO DISPUTE TO THE FACT THAT THE AS SESSEE HAD MADE PAYMENT TO THE EMPLOYEES CONTRIBUTION OF PROVIDENT FUND AFTER DUE DATE PRESCRIBED UNDER THE E.P.F. ACT, BUT BEFORE THE DUE DATE OF FI LING OF THE RETURN OF INCOME. ON IDENTICAL ISSUE, THE ITAT, AMRITSAR BENC H, IN THE CASE OF ACIT RANGE-II, JALANDHAR VS. M/S. PROXIMA STEEL FORGE P. LTD. JALANDHAR, IN ITA NO.280(ASR)/2008 FOR THE A.Y.2004-05, DATED 12.09. 2008 DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY DISMISSING THE APPEAL OF THE REVENUE. THE RELEVANT PART OF THE DECISION OF M/S. PROXIMA STEEL FORGE P. LTD. JALANDHAR (SUPRA) IS REPRODUCED FOR THE SAKE OF CLARITY AS UN DER: ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 9 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE CONTENTION OF THE LD. DR IS T HAT THE IN THIS CASE SECTION 36(1)(VA) OF THE ACT IS APPLICABLE WHICH RE ADS AS FOLLOWS: 36(1) THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWING CLAUSES SHALL BE ALLOWED IN RESPECT OF THE MATTERS DEALT WITH THEREI N, IN COMPUTING THE INCOME REFERRED TO IN SECTION 28- (I) (IA) . (IB) .. (II) .. (IIA) (III) (IV) (V) (VA) ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH THE PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (2 4) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. THE ARGUMENT OF THE LD. DR IS MISCONCEIVED IN VIEW OF THE PROVISIONS OF SECTION 43B OF THE ACT. SECTION 43B STARTS IN NO N-OBSTANTE CLAUSE WHICH READS AS FOLLOWS: 43B. NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, A DEDUCTION OTHERWISE ALLOWA BLE UNDER THIS ACT IN RESPECT OF (A) ANY SUM PAYABLE BY THE ASSESSEE BY WAY OF TAX, DUTY, CESS OR FEE, BY WHATEVER NAME CALLED, UNDER ANY LAW FOR THE TIME BEING IN FORCE, OR] (B) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF EMPLOYEES, [OR] (C) ANY SUM REFERRED TO IN CLAUSE (II) OF SUB-SECTI ON (1) OF SECTION 36 ,] [OR] (D) ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON ANY LOAN OR BORROWING FROM ANY PUBLIC FINANCIAL INSTITUTION [OR A STATE ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 10 FINANCIAL CORPORATION OR A STATE INDUSTRIAL INVESTM ENT CORPORATION], IN ACCORDANCE WITH THE TERMS AND COND ITIONS OF THE AGREEMENT GOVERNING SUCH LOAN OR BORROWING [, O R] (E) ANY SUM PAYABLE BY THE ASSESSEE AS INTEREST ON ANY [LOAN OR ADVANCES] FROM A SCHEDULED BANK IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THE AGREEMENT GOVERNING SUCH LOAN [OR ADVANCES],] [OR] (F) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDIT OF HIS EMPLOYEE,] SHALL BE ALLOWED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSES SEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMP LOYED BY HIM) ONLY IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PA ID BY HIM : PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO ANY SUM [***] WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FO R FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF S UCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUC H RETURN. SINCE SECOND PROVISO WHICH READS AS FOLLOWS: PROVIDED FURTHER THAT NO DEDUCTION SHALL , IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SU CH SUM HAS ACTUALLY BEEN PAID IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36, AND WHERE SUCH PAYMENT HAS BEEN MADE OTHERWISE THA N IN CASH, THE SUM HAS BEEN REALISED WITHIN FIFTEEN DAYS FROM THE DUE DATE. DELETED BY FINANCE ACT, 2003 W.E.F. 1.4.2004 AND TH E ASSESSEE IS REQUIRED TO MAKE PAYMENT BEFORE FURNISHING RETURN O F INCOME AS PER SUB-SECTION (1) OF SECTION 139 OF THE INCOME-TAX AC T. IN THE PRESENT ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 11 CASE, THE DUE DATE FOR FILING THE RETURN OF INCOME WAS 31.10.2004 AND THE PAYMENT OF E.P.F. WAS MADE BEFORE 31.10.2004 AS EVIDENCED FROM THE CHART SHOWN IN THE FACTS OF THE CASE. AS SUCH, THE ASSESSEE HAS MADE THE PAYMENT WITHIN DUE DATE AS MENTION IN THE PROVISO TO SECTION 43B OF THE ACT AND THE ASSESSEE IS ENTITLED FOR DEDUCTION AND IT CANNOT BE TREATED AS INCOME OF THE ASSESSEE. HENCE , THE LD. CIT(A) WAS JUSTIFIED IN ALLOWING THE GROUND OF THE ASSESSE E. WE ALSO PLACE RELIANCE ON THE JUDGMENT OF HONBLE UTTARAKHAND HIG H COURT IN THE CASE OF CIT VS. DESH RAKSHAK AUSHDHALAYA LTD. REPO RTED IN (2008) 218 CTR 7, WHEREIN IT HAS BEEN HELD AS UNDER: HELD, WHEN SECTION 43B WAS INCORPORATED IN THE I.T . ACT, 1961, AND CONTAINED THE SECOND PROVISO, THE INTENTI ON OF THE LEGISLATURE APPEARS TO BE THAT THE DEDUCTION SHOULD BE GIVEN ONLY IF THE DEPOSITS ARE MADE WITHIN DUE DATES UNDE R THE ENACTMENT UNDER WHICH THE SAME WERE REALISED FROM EMPLOYEES AND REQUIRED TO BE DEPOSITED SO THAT THAT EMPLOYER MAY NOT EARN INTEREST ETC. IN HIS OWN ACCOUNT AND D EPRIVE THE GOVERNMENT OF THE SAME. HOWEVER, LATER THE LEGISLAT URE APPEARS TO HAVE REALIZED THAT WHENEVER SUCH AMOUNT IS DEPOSITED UNDER THE GOVERNMENT TREASURY, IN ANY CAS E IT CANNOT BE SAID TO BE TAXABLE INCOME OF THE EMPLOYER/ASSESS EE, AND HAS TO BE DEDUCTED. THAT MIGHT BE THE REASON DUE TO WHI CH THE LEGISLATURE OMITTED THE SECOND PROVISO TO SECTION 4 3B THROUGH FINANCE ACT, 2003, WHICH CAME INTO FORCE W.E.F. IS T APRIL, 2004.EXPRESSLY IT IS NOT PROVIDED IN THE FINANCE AC T, 2003, THAT THE DELETION IS RETROSPECTIVE. THEREFORE, THE COURT HAS TO SEE WHETHER IMPLIEDLY THE DELETION IS RETROSPECTIVE OR NOT ? THE AMENDMENT WHICH SIMPLY REMOVES THE AMBIGUITY, AND C URATIVE IN NATURE, IMPLIEDLY HAS RETROSPECTIVE EFFECT. THE DELETION OF SECOND PROVISO TO SECTION 43B IS RETROSPECTIVE IN N ATURE. THAT BEING SO, IT CANNOT BE SAID THAT THE TRIBUNAL HAS C OMMITTED ANY ERROR OF LAW IN DELETING THE ADDITION OF RS. 2,98,9 24/- MADE BY THE AO, WHICH WAS THE AMOUNT DEPOSITED BY THE ASSES SEE ON ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 12 ACCOUNT OF PROVIDENT FUND DEDUCTION OF ITS EMPLOYEE S, IN THE GOVERNMENT ACCOUNT. IN VIEW OF THE ABOVE, WE DISMISS THE APPEAL OF THE REVENUE. 14.1. IN VIEW OF THE DECISION OF HONBLE PUNJAB & H ARYANA HIGH COURT IN THE CASE OF CIT VS. LAKHONI INDIA LTD. REPORTED IN (2010) 188 TAXMAN 132 IN FAVOUR OF ASSESSEE, WE DIRECT THE A.O. TO ALLOW THE CLAIM OF THE ASSESSEE AND DELETE THE ADDITION SO MADE. ACCORDINGLY, THE O RDER OF THE LD. CIT(A) IS REVERSED TO THAT EXTENT. THUS, ALL THE GROUNDS OF C.O. NO.9 OF THE ASSESSEE ARE ALLOWED. 15. NOW, WE TAKE UP APPEAL OF THE REVENUE IN ITA NO .495(ASR)/2011 AND C.O. NO.10 OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06, AS UNDER: THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS IN THE BUSINESS OF DEVELOPING AND FINANCING OF CO-OPERATIVE HOUSING PR OJECTS. THE AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE REJECTE D THE BOOKS OF ACCOUNT BY OBSERVING AS UNDER: THE ABOVE ANSWER OF THE ASSESSEE IS NOT ACCEPTABLE . THE MAIN BUSINESS OF THE ASSESSEE IS TO DEVELOP THE NEW RESI DENTIAL COLONIES, MARKETS , MALLS, FLATS, AND THEIR ANCILLARY SUPPORT S .WHILE CARRYING OUT ALL THOSE ACTIVITIES, SOCIETY CHARGES PREMIUM ON AL L OF THEM. IN ADDITION TO THIS IT ALSO CHARGES RENT, LEASED RENT AND OTHER MAINTENANCE CHARGES. WHILE FIXING THE PREMIUM OF PL OTS, FLATS, SHOPS ETC. THE ELEMENT OF PROFIT IS ALWAYS INCLUDED AS SO CIETY IS NOT CARRYING OUT ANY CHARITY BY ALLOTTING THEM AT A LOSS OR AT T HE COST PRICE. MAJORITY OF LANDS UNDER THE OCCUPATION OF SOCIETY H AVE BEEN ACQUIRED BY PURCHASE FROM THE LAND LORDS. ACCORDINGLY LAND P URCHASED DEVELOPED BY THE SOCIETY HAS TO BE TREATED AS STOCK IN TRADE AND ITS ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 13 TRANSFER TO ANY OTHER PERSON HAS TO BE TREATED AS S ALE AND THE PREMIUM CHARGED ON SUCH TRANSFER HAS TO BE TREATED AS INCOM E OF THE ASSESSEE. FURTHER THE NON INCLUSION OF THE PREMIUM RECEIVE D ON SALE / LEASED OUT PROPERTIES DOES NOT CONFIRM TO THE ACCOUNTING S TANDARD 7 (AS-7). AS-7 RECOGNIZES TWO TYPES OF ACCOUNTING FOR DETERMI NING THE PROFITS DERIVED OUT OF THE CONSTRUCTION WORKS/REAL ESTATE D EVELOPMENT. THE FIRST METHOD IS PERCENTAGE OF COMPLETION METHOD AND SECOND ONE IS COMPLETED CONTRACT METHOD. HOWEVER, THE INTERNATION AL STANDARDS COMMITTEE HAS REVISED THE INTERNATIONAL ACCOUNTING STANDARDS (IAS- II) AND SCRAPPED THE COMPLETED CONTRACT METHOD. THU S, THE ASSESSEE WAS REQUIRED TO ADOPT THE PERCENTAGE OF COMPLETION METHOD AS PROVIDED IN AS-7. HOWEVER, THE ASSESSEE HAS NOT DON E SO. HENCE, THE ACCOUNTS PREPARED BY THE ASSESSEE DO NOT REFLECT TH E TRUE PROFIT EARNED BY IT FROM THE BUSINESS IT HAS BEEN CARRYING ON. 15.1. THE AO AFTER DEDUCTING REFUNDS RECEIVED BY THE ASS ESSEE, APPLIED NET PROFIT RATE OF 3% AND MADE AN ADDITION OF RS.23,7 2,752/-. HE FURTHER ADDED THE TRANSFER FEE CHARGED BY THE ASSESSEE FROM CLIEN TS TO THE TUNE OF RS.2,86,000/- IN RESPECT OF SIDHARA PROJECT AND SWA RAN VIHAR PROJECT. 15.2. THE LD. CIT(A) RELIED UPON THE DECISION OF TH E HONBLE SUPREME COURT IN THE CASE OF CIT VS. REALEST BUILDERS & SER VICES LTD. 307 ITR 202. THE OBSERVATIONS MADE BY THE LD. CIT(A) IN PARA 5(A ) & 5(B) OF THE ORDER ARE REPRODUCED AS UNDER FOR THE SAKE OF CLARITY: 5(A) THE HONBLE SUPREME COURT HAS CONFIRMED THE D ECISION OF THE HONBLE COURT ALLOWING THE APPEAL OF ASSESSEE ON TH E BASIS OF CONSISTENCY MERELY FOR THE REASON THAT THERE WAS NO EXAMINATION BY A.O. AS TO WHETHER THERE WAS ANY UNDER REPORTING OF THE PROFITS. IN THE SAME JUDGMENT OF THE HONBLE SUPREME COURT HAS HELD THAT IF THE A.O. COMES TO THE CONCLUSION THAT AS PER METHOD OF ACCOUNTING ADOPTED BY ASSESSEE RESULTED IN UNDER REPORTING OF PROFITS., IT WAS ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 14 OPEN TO THE DEPARTMENT TO INSIST OR CHANGE IN THE M ETHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE. 5(B) IN VIEW OF THE ABOVE DISCUSSION AND THE FACT T HAT NO INCOME WAS SHOWN BY THE ASSESSEE FROM SALE OF PROFITS THE TRAN SFER HAS ALSO TAKEN PLACED IN RESPECT OF PLOTS WORTH RS.2,08,25,603/- I N SIDHRA AND SWARAN VIHAR PROJECTS UNDER THE PLEA OF FOLLOWING P ROJECT COMPLETION METHOD. IT IS CLEAR THAT EACH PROJECT UNDERTAKEN IS SEPARATE PROJECT AND THE PROFIT OF SUCH PROJECT HAS TO BE TAKEN INTO CONSIDERATION. IT IS ALSO SEEN THAT THE PROCESS OF DEVELOPING COLONIES A FTER ACQUIRING THE LAND IS A CONTINUOUS PROCESS FOR THE ASSESSEE AND T HERE IS NO REASON TO DEFER SHOWING THE PROFITS OF A PROJECT WHICH HAS B EEN TRANSFERRED TO THE BUYERS. IN VIEW OF THIS, THE A.OS ACTION IN RE JECTING THE BOOKS AND ESTIMATING THE PROFITS IS AFFIRMED. 15.3. AS REGARDS THE APPLICATION OF NET PROFIT OF 3 %, IT WAS OBSERVED BY THE LD. CIT(A) THAT IN RESPECT OF PROJECTS AT KALUCHAK, KUD, DEVIKA VIHAR AND PEER BAGH NO SALE HAS TAKEN PLACE AS PER THE ASSESS EE. IN RESPECT OF MISHRIWALA PROJECT ALSO THE SAME POSITION IS THERE . IT WAS ALSO ARGUED THAT THE ASSESSEE CORPORATION BEING CONTROLLED BY THE GO VERNMENT DID NOT EVEN GIVE POSSESSION TO ANY OF THE BUYERS TILL THE CONVE YANCE IS DONE. IN VIEW OF THIS THERE COULD NOT BE A SALE OR TRANSFER EVEN IN TERMS OF SECTION 2(47) OF I.T. ACT. IT IS UNDISPUTED THAT IN RESPECT OF SIDHRA AND SWARAN VIHAR PROJECT THE TRANSFER HAS ALSO TAKEN PLACE AND THE TRANSFER CHAR GES HAVE BEEN RECEIVED BY THE ASSESSEE. THE TOTAL OF THE CONSIDERATION RECEIV ED BY THE ASSESSEE IS RS.2,11,11,603/- I.E. RS.2,08,25,603/- + 2,86,000). THE APPLICATION OF NET PROFIT RATE OF 3% AS ADOPTED BY THE A.O. HAS TO BE APPLIED ON THIS AMOUNT OF ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 15 RS.2,11,11,603/- WHICH COMES TO RS.6,33,348/- TO WH ICH EXTENT THE ADDITION MADE BY THE A.O. IS CONFIRMED. 16. WE HAVE HEARD THE LD. DR AND PERUSED THE FACTS OF THE CASE. WE CONCUR WITH THE VIEWS OF THE LD. CIT(A) AS REGARDS THE REJECTION OF BOOKS OF ACCOUNT AND ESTIMATION OF INCOME IN VIEW OF THE DEC ISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. REALEST BUILDE RS & SERVICES LTD. 307 ITR 202. THE ORDER OF THE LD. CIT(A) QUITE REASONED AND THEREFORE, WE DO NOT INTERFERE IN THE SAME. 16.1 AS REGARDS THE ESTIMATION OF INCOME OF RS.6,3 3,348/-, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SA ME IS UPHELD. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, ALL THE GROUNDS OF T HE REVENUE AND THAT OF ASSESSEE IN THE C.O. ARE DISMISSED. 17. NOW, WE TAKE UP APPEAL OF THE REVENUE IN ITA NO .496(ASR)/2011 AND C.O. NO.11(ASR)/2012 OF THE ASSESSEE FOR THE A.Y. 2 006-07. THE FACTS IN THE PRESENT APPEAL OF THE REVENUE AND C.O. OF THE ASSES SEE ARE IDENTICAL TO THE FACTS OF CASE IN REVENUES APPEAL IN ITA NO.495(ASR )/2011 AND C.O. NO.10(2012 OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 DECIDED BY US HEREINABOVE. SINCE THE FACTS OF THE PRESENT APPEAL OF THE REVENUE AND C.O. OF THE ASSESSEE ARE IDENTICAL TO THE FACTS IN REVEN UES APPEAL IN ITA ITA NOS.479,495 & 496(ASR)/2011 CO NOS.9 TO 11(ASR)/2012 16 NO.495(ASR)/2011 AND C.O. NO.10(ASR)/2012 FOR THE A .Y. 2005-06 AND THEREFORE, OUR DECISION IN THE APPEAL OF THE REVENU E FOR THE ASSESSMENT YEAR 2005-06 AND C.O. OF THE ASSESSEE APPLY TO THE PRESE NT ASSESSMENT YEAR I.E. 2006-07. ACCORDINGLY, THE REVENUES APPEAL AND C.O. OF THE ASSESSEE FOR THE A.Y. 2006-07 ARE DISMISSED. 18. IN THE RESULT, THE APPEALS OF THE REVENUE IN IT A NOS. 479, 495 & 496(ASR)/2011 ARE DISMISSED AND THE C.O.NO.9(ASR)/2 012 OF THE ASSESSEE IS ALLOWED WHEREAS C.O. NOS. 10 & 11(ASR)/2012 OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH SEPTEMBER, 2012. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27TH SEPTEMBER, 2012 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. THE J & K COOPERATIVE HOUSING COR PORATION LTD. JAMMU. 2. THE DCIT, CIR.2, JAMMU. 3. THE CIT(A), JAMMU. 4. THE CIT, JAMMU. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.