M/s Goa Shipyard Ltd., Vasco V. Dy. Commissioner of Income Tax, Circle-2, Margao., Margao

ITA 11/PAN/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93573 (ITAT-PANAJI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 14-07-2015
• Assessment Year: misc
• Appeal Filed On: 06-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANAND S MARATHE LD

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI, HON'BLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 10/PNJ/2015 : (A.Y 2010 - 11) ASST. COMMISSIONER OF INCOME TAX, CIRCLE 2(1), PANAJI, GOA (APPELLANT) VS. GOA SHIPYARD LTD., VADDEM HOUSE, VASCO - DA - GAMA, GOA (RESPONDENT) PAN : AAACG7569F ITA NOS. 11 & 12/PNJ/2015 : (A.YS 2009 - 10 & 2010 - 11) GOA SHIPYARD LTD., VADDEM HOUSE, VASCO - DA - GAMA, GOA (APPELLANT) PAN : AAACG7569F VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 2, MARGAO, GOA (RESPONDENT) ASSESSEE BY : PRAMOD Y. VAIDYA, ADV. REVENUE BY : ANAND S. MARATHE, LD. DR DATE OF HEARING : 14/07/2015 DATE OF PRONOUNCEMENT : 14/07/2015 O R D E R PER GEORGE MATHAN : 1. ITA NO. 10/PNJ/2015 IS AN APPEAL FILED BY THE REVENUE AND ITA NO. 12/PNJ/2015 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), PANAJI IN ITA NO. 185/MRG/12 - 13 DT. 22.10.2014 FOR THE A.Y 2010 - 11 AND ITA NO. 11/PNJ/2015 IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A), PANAJI IN ITA NO. 450/MRG/11 - 12 DT. 22.10.2014 FOR THE A.Y 2009 - 10. SHRI 2 ITA NOS. 10 TO 12/PNJ/2015 (A.YS. 2009 - 10 & 2010 - 11) PRAMOD Y. VAIDYA, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI ANAND S. MARATHE, LD. DR REPRESENTED ON BEH ALF OF THE REVENUE. ITA NO. 11/PNJ/2015 : 2. IN THE ASSESSEES APPEAL FOR THE A.Y 2009 - 10 IT WAS SUBMITTED BY THE LD. AR THAT THE ONLY ISSUE WAS AGAINST THE ACTION OF LD. CIT(A) IN NOT GRANTING TDS CREDIT OF RS . 1,51,50,638/ - . IT WAS THE SUBMISSION THAT THE ASSESSEE HAD DEPOSITS WITH CANARA BANK. IT WAS THE SUBMISSION THAT THE SAID TDS AMOUNT OF RS.1,51,50,638/ - RELATED TO AN INCOME OF RS. 6,68,60,715/ - AND THIS INCOME HAD BEEN OFFERED BY THE ASSESSEE TO TAX D URING A.Y 2007 - 08. HOWEVER, THE TDS CERTIFICATE HAD BEEN ISSUED BY THE BANK ONLY DURING THE RELEVANT ASSESSMENT YEAR. IT WAS THE SUBMISSION THAT AS THE INCOME HAD ALREADY BEEN OFFERED TO TAX, THE BENEFIT OF TDS WAS LIABLE TO BE GRANTED TO THE ASSESSEE. 3. IN REPLY, THE LD. DR SUBMITTED THAT THE INCOME HAD NOT BEEN OFFERED TO TAX DURING THE RELEVANT ASSESSMENT YEAR. IT WAS THE SUBMISSION THAT IF THE ASSESSEE WAS ABLE TO PROVE THAT THE ASSESSEE HAD OFFERED THE INCOME TO TAX IN THE A.Y 2007 - 08, THEN, IT WAS OPEN TO THE ASSESSEE TO CLAIM THE BENEFIT OF THE TDS FOR THE A.Y 2007 - 08. IT WAS THE SUBMISSION THAT AS PER THE PROVISIONS OF SEC. 199 OF THE ACT, THE BENEFIT OF TDS CAN BE GIVEN ONLY IN THE YEAR IN WHICH THE INCOME RELATING TO THE TDS IS OFFERED TO T AX. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE AO HAS DISALLOWED THE TDS CREDIT OF RS.1,51,50,638/ - ON THE INCOME OF RS. 6,68,60,715/ - SINCE THE INCOME RELATING TO THE TDS HAS NOT BEEN OFFERED TO TAX IN THE RELEVANT ASSESSMENT YEAR. THE AO HAS REFERRED TO THE PROVISIONS OF SEC. 199 OF THE ACT READ WITH RULE 37BA(3) OF THE I.T RULES. ADMITTEDLY, A PERUSAL OF THE PROVISIONS OF SEC. 199 OF THE ACT 3 ITA NOS. 10 TO 12/PNJ/2015 (A.YS. 2009 - 10 & 2010 - 11) ALONGWITH THE SAID RULE 37BA(3) CLEARLY SHOWS THA T THE BENEFIT OF TDS IS TO BE GIVEN IN THE YEAR IN WHICH THE INCOME HAS BEEN OFFERED TO TAX. THE AO ABSOLUTELY ERRED IN STOPPING AT THE DENIAL OF THE GRANT OF CREDIT. THE LOGICAL END OF THE CLAIM WOULD BE TO GRANT THE ASSESSEE THE BENEFIT OF TDS IN THE Y EAR IN WHICH THE INCOME HAS BEEN OFFERED TO TAX . THE ASSESSEE HAS SPECIFICALLY CLAIMED THAT THE INCOME HAS BEEN OFFERED TO TAX DURING THE A.Y 2007 - 08. IN THESE CIRCUMSTANCES, THE AO IS DIRECTED TO VERIFY THE ASSESSEES CLAIM THAT IT HAS OFFERED THE INCOM E IN RELATION TO THE SAID TDS IN THE EARLIER YEARS AND IF IT IS FOUND TO BE CORRECT, ALLOW THE CREDIT OF TDS IN THOSE RELEVANT ASSESSMENT YEARS. IN THE CIRCUMSTANCES, THIS ISSUE IS RESTORED TO THE FILE OF THE AO WITH THE LIBERTY TO THE ASSESSEE TO PRODUCE PROOF IN REGARD TO THE YEAR IN WHICH THE ASSESSEE HAS OFFERED THE RELEVANT INCOME FOR TAXATION IN RESPECT OF THE TDS CREDIT CLAIM ED WHICH SHALL BE CONSIDERED BY THE AO AND IF FOUND CORRECT, THE BENEFIT BE GRANTED TO THE ASSESSEE IN THOSE YEAR/S . 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 1 2 /PNJ/2015 : 6. IN THE ASSESSEES APPEAL FOR THE A.Y 2010 - 11 IT WAS SUBMITTED BY THE LD. AR THAT THE ONLY ISSUE WAS AGAINST THE ACTION OF LD. CIT(A) IN NOT GRANTING EXPENDITURE CLAIMED REPRESENTING LIQUIDATED DAMAGES TO THE EXTENT OF RS.7,96,09,300/ - DEDUCTED BY THE INDIAN COAST GUARD. I T WAS THE SUBMISSION THAT IN RESPECT OF ONE OF THE VESSELS SUPPLIED BY THE ASSESSEE TO THE INDIAN COAST GUARD, MORE SPECIFICALLY (YARD 1205) THERE WAS SUBSTANTIAL DELAY IN THE DELIVERY OF THE VESSEL WHICH HAD RESULTED IN LIQUIDATED DAMAGES OF RS.7,96,09, 300/ - REPRESENTING 5% OF THE VALUE OF THE VESSEL. IT WAS THE 4 ITA NOS. 10 TO 12/PNJ/2015 (A.YS. 2009 - 10 & 2010 - 11) SUBMISSION THAT THE VESSEL WAS TO BE DELIVERED DURING THE RELEVANT ASSESSMENT YEAR AND AS ONLY 46.08% OF THE VESSEL WAS COMPLETED AS ON 31.3.2010, THE LIABILITY REPRESENTING THE LIQUIDATED DAMAG ES WAS AN ASCERTAINED LIABILITY. IT WAS THE SUBMISSION THAT THE ASCERTAINED LIABILITY WAS ALSO FIXED AS PER THE TERMS OF THE CONTRACT AT A MAXIMUM OF 5% OF THE COST OF THE VESSEL. IT WAS THE SUBMISSION THAT THE SAID AMOUNT OF RS. 7,96,09,300/ - WAS 5% OF THE COST OF THE VESSEL WHICH HAD BEEN CLAIMED BY THE ASSESSEE AS LIQUIDATED DAMAGES AS ON 31.3.2010 AS THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. IT WAS THE SUBMISSION THAT AS THE LIABILITY AROSE AS ON 31.3.2010, THE ASSESSEE HAD CLAIMED THE LIQUIDATED DAMAGES. 7. IN REPLY, THE LD. DR SUBMITTED THAT THERE WAS NO CRYSTALLIZATION OF THE LIABILITY. IT WAS THE SUBMISSION THAT THE ASSESSEE STILL HAD AN OPTION OF REQUESTING FOR WAIVER OF THE LIQUIDATED DAMAGES AS ON 31.3.2010. IT WAS THE SUBM ISSION THAT THERE WERE ALSO OTHER CLAUSES FOR LIQUIDATED DAMAGES IN THE CONTRACT. IT WAS THE SUBMISSION THAT THE CONTRACT ALSO SPECIFIED THAT IF THE DELAY OCCURRED FOR MORE THAN 6 MONTHS, THEN, RE - NEGOTIATIONS WOULD BE REQUIRED BETWEEN THE OWNER , BEING TH E INDIAN COAST GUARD AND THE SUPPLIER, BEING THE ASSESSEE. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) ON THIS ISSUE WAS LIABLE TO BE CONFIRMED. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON A SPECIFIC QUERY FROM THE BENCH AS TO WHEN THE INDIAN COAST GUARD HAD DEDUCTED THE LIQUIDATED DAMAGES, THE LD. AR DREW OUR ATTENTION TO PG. 28 OF THE PAPER BOOK WHICH SHOWED THAT THE INDIAN COAST GUARD HAD DEDUCTED LIQUIDATED DAMAGES AS ON 31.3.2013. A PERUSAL OF THE LETTER FROM THE DY. CONTROLLER OF DEFENCE ACCOUNTS (NAVY) DT. 31.3.2013 CLEARLY SHOWS THAT THE BILLS ARE DT. 31.3.2013 AND THERE ARE TWO BILLS FOR RS. 7,96,09,300/ - TOTALLING TO RS. 15,92,18,600/ - AND AFTER CONSIDERING THE 5 ITA NOS. 10 TO 12/PNJ/2015 (A.YS. 2009 - 10 & 2010 - 11) CONTRACT, AN AMOUNT OF RS. 7,96,09,300/ - HAS BEEN RECOVERED AS PER THE CONTRACT ARTICLE 5.1.2 AND AS APPROVED BY THE CGHQ. ADMITTEDLY, THE TOTAL DAMAGES WAS TO AN EXTENT OF RS. 15,92,18,600/ - AND THE FINAL LIQUIDATED DAMAGES RECOVERED IS ONLY RS. 7,96,09,300/ - , BUT THIS HAS HAPPENED ONLY ON 31.3.2013. CONSEQUENTLY, IT C ANNOT BE SAID THAT THE LIABILITY TO PAY THE LIQUIDATED DAMAGES HAD ARISEN AFTER 31.3.2010. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE LD. CIT(A) ON THIS ISSUE IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. HOWEVER, TH E ASSESSEE IS AT LIBERTY TO CLAIM THE LOSS IN YEAR IN WHICH IT IS BILLED AND CRYSTALLISED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 1 0 /PNJ/2015 : 10. IN RESPECT OF GROUND NO. 1 OF REVENUES APPEAL IT WAS SUBMITTED BY THE LD. DR THAT THE ISSUE WAS AGAINST THE ACTION OF LD. CIT(A) IN DIRECTING THE AO TO GRANT CREDIT OF TDS WHICH WAS NOT REFLECTING IN 26AS . IT WAS THE SUBMISSION THAT THE TDS WAS EITHER NOT DEDUCTED BY THE RESPECTIVE DEDUCTOR OR THE DE DUCTED TDS AMOUNT HAD NOT BEEN REMITTED TO THE GOVERNMENT ACCOUNT. IT WAS THE SUBMISSION THAT HE HAD NO OBJECTION IF THE ISSUE WAS RESTORED TO THE FILE OF THE AO FOR VERIFICATION AND RE - ADJUDICATION. TO THIS, THE LD. AR DID NOT RAISE ANY OBJECTION. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF PARA 4.2 OF THE ORDER OF THE LD. CIT(A) CLEARLY SHOWS THAT THE LD. CIT(A) HAS DIRECTED THE AO TO VERIFY THE ORIGINAL TDS CERTIFICATE AND THEN ALLOW CREDIT FOR THE SAME. WE ARE GIVEN TO UNDERSTAND THAT THIS VERIFICATION HAS ALSO NOT BEEN DONE BY THE AO. IN THE CIRCUMSTANCES, W E ARE OF THE VIEW THAT THIS ISSUE IS LIABLE TO BE RESTORED TO 6 ITA NOS. 10 TO 12/PNJ/2015 (A.YS. 2009 - 10 & 2010 - 11) THE FILE OF THE AO FOR RE - ADJUDICATION. THE AO SHALL VERIFY THE ORIGINAL TDS CERTIFICATE AND IF THE AMOUNT IS NOT SHOW ON THE 26AS, THEN, THE AO IS DIRECTED TO VERIFY THE SAME WITH THE DEDUCTOR S AND IF IT IS FOUND THAT THE CLAIM OF THE ASSESSEE IS CORRECT, THEN, THE AO SHALL GRANT THE ASSESSEE THE BENEFIT OF THE TDS AS CLAIMED BY THE ASSESSEE. IN THE RESULT, GROUND NO. 1 OF THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 12. IN RESPEC T OF GROUND NO. 2 OF REVENUES APPEAL IT WAS THE SUBMISSION THAT THE ISSUE WAS AGAINST THE ACTION OF LD. CIT(A) IN DIRECTING THE AO TO APPLY SURCHARGE AT 7.5% AS AGAINST 10% IN RESPECT OF THE DIVIDEND DISTRIBUTION TAX. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE AO AND THE LD. AR THAT OF THE LD. CIT(A). IT WAS THE SUBMISSION THAT THE DIVIDEND RELATES TO A.Y 2009 - 10. DIVIDEND WAS DECLARED IN AUGUST, 2010 AND CONSEQUENTLY THE RATE AS ON 1.4.2010 WAS LIABLE TO BE APPLIED. IT WAS THE SUBMISSION THAT AS ON 1.4.2010 THE SURCHARGE U/S 115O WAS REDUCED FROM 10% TO 7.5% ON THE DIVIDEND DECLARED, DISTRIBUTED AND PAID DURING THE YEAR. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE REVENUE HAS NOT BEEN ABLE TO POINT OUT HOW THE FINDING OF THE LD. CIT(A) IS ERRONEOUS. IN FACT, THE LD. CIT(A) HAS DIRECTED THE AO TO TAKE THE SURCHARGE AS ON 1.4.2010. ADMITTEDLY, THE SURCHARGE AS ON 1.4.2010 U/S 115O IS ONLY 7.5%. IN THE CIRCUMSTANCES, THE FINDING OF THE LD. CIT(A) ON THIS ISSUE STANDS CONFIRMED. CONSEQUE NTLY, GROUND NO. 2 OF THE REVENUES APPEAL STANDS DISMISSED. 14. IN RESPECT OF GROUND NO. 3 OF REVENUES APPEAL IT WAS SUBMITTED BY THE LD. DR THAT THE ISSUE WAS AGAINST THE ACTION OF LD. CIT(A) IN HOLDING THAT THE DISALLOWANCE OF PRIOR PERIOD EXPENSES SH OULD NOT BE MADE AND THERE WAS NO LOSS OF REVENUE ON THIS ISSUE. IT WAS THE SUBMISSION THAT THE AO HAD IN THE COURSE OF 7 ITA NOS. 10 TO 12/PNJ/2015 (A.YS. 2009 - 10 & 2010 - 11) THE ASSESSMENT DISALLOWED PRIOR PERIOD EXPENSES CLAIMED BY THE ASSESSEE. IT WAS THE SUBMISSION THAT THE PRIOR PERIOD EXPENSES WERE NOT LIABLE TO BE ALLOWED AS THE SAME DID NOT RELATE TO THE RELEVANT ASSESSMENT YEAR AND THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 15. IN REPLY, THE LD. AR SUBMITTED THAT THE EXPENDITURE WERE IN RELATION TO THE VARIOUS PARTS WHICH HAD BEEN SUPPLIED BY THE ASSESSEE TO THE INDIAN COAST GUARD FOR WHICH THE CONFIRMATION AND BILLS WERE RECEIVED ONLY SUBSEQUENTLY. IT WAS THE SUBMISSION THAT THE ASSESSEE HAS BEEN FOLLOWING SIMILAR MANNER OF ACCOUNTING FOR THE PAST MANY YEARS. IT WAS THE SUBMISSI ON THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE CONFIRMED. 16. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ADMITTEDLY, THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THESE EXPENSES RELATING TO VARIOUS TRANSACTIONS CORRESPOND TO THE IMMEDIATELY PRECEDING ASSESSMENT YEAR AS PER THE CLAIM OF THE LD. AR. THE SAID EXPENDITURE THOUGH INCURRED DURING THE EARLIER ASSESSMENT YEAR COULD BE BILLED DURING THE RELEVANT ASSESSMENT YEAR ONLY AS THE CONFIRMATION HAD BEEN RECEIVED FROM THE INDIAN COAST GUARD SUBSEQUENTLY. ADMITTEDLY, THE SAID EXPENDITURE RELATES TO THE PRECEDING ASSESSMENT YEAR AND THE ASSESSEE IS FOLLOWING MERCANTILE SY STEM OF ACCOUNTING. CONSEQUENTLY, THE SAID EXPENDITURE CANNOT BE ALLOWED DURING THE RELEVANT ASSESSMENT YEAR. HOWEVER, THE AO IS DIRECTED TO VERIFY AND ALLOW THE EXPENDITURE IN THE ASSESSMENT YEAR TO WHICH THE SAID EXPENDITURE RELATES AS THE GENUINENESS OF THE EXPENDITURE IS NOT DISPUTED. IN THE RESULT, GROUND NO. 3 OF THE REVENUES APPEAL STANDS ALLOWED WITH THE ABOVE STATED DIRECTIONS 17. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 8 ITA NOS. 10 TO 12/PNJ/2015 (A.YS. 2009 - 10 & 2010 - 11) 18. IN THE RESULT, THE ASSESS EES APPEAL BEING ITA NO. 11/PNJ/2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND ITA NO. 12/PNJ/2015 STAND S DISMISSED AND REVENUES APPEAL BEING ITA NO. 10/PNJ/2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 14/07 /2015. S D / - (N.S. SAINI) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 1 4 /07/ 201 5 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 9 ITA NOS. 10 TO 12/PNJ/2015 (A.YS. 2009 - 10 & 2010 - 11) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 14/07/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 15/07/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 15/07/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 15/07/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 15/07/2015 SR.PS 6. DATE OF PRONOUNCEMENT 14/07/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 15/07/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER