ADIT, New Delhi V. M/s. Hyundai Engineering & Construction Co. Ltd., New Delhi

ITA 1109/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87068 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN

Judgement Text

ITA NO.1109/DEL/2012 ASSTT.YEAR: 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.1109/DEL/2012 ASSESSMENT YEAR : 2006-07 ADIT, VS HYUNDAI ENGINEERING & CONSTRUCTI ON CIRCLE-1(2), CO. LTD., 576, SAMRAT HOTEL, INTERNATIONAL TAXATION, CHANAKYAPURI, ROOM NO.410, NEW DELHI-110021 DRUM SHAPED BUILDING, (PAN: AAACH2622L) I.P. ESTATE, NEW DELHI-110003 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI T. VASANTHAN, SR. DR RESPONDENT BY : NONE DATE OF HEARING: 11.3.2015 DATE OF PRONOUNCEMENT: O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THE ABOVE APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-XXIX, NEW DELHI DATED 30.12.2011 IN APP EAL NO. 136/08-09 FOR ASSTT. YEAR 2006-07. 2. THE REVENUE HAS RAISED SOLE GROUND IN THIS APPEA L WHICH READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT(APPEAL) HAS ERRED IN DELETING THE ADDITION OF R S. ITA NO.1109/DEL/2012 ASSTT.YEAR: 2006-07 2 26,87,986/- ON ACCOUNT OF DISALLOWANCE OF LOSS RELA TING TO 'TALCHER TRANSMISSION LINE' AND IGNORING THE FACT T HAT THE ASSESSEE HAD ITSELF DECLARED THAT THE SAID PROJECT HAS BEEN COMPLETED, AND THE FINDING OF THE AO THAT THE ASSES SEE WAS NOT CORRECT IN SHOWING SEPARATELY LOSS OF RS 26,87,986/ - AT THAT STAGE AND IN THE CIRCUMSTANCES. 3. APROPOS ABOVE GROUND OF THE REVENUE, LD. DR SUBM ITTED THAT THE CIT(APPEAL) HAS ERRED IN DELETING THE ADDITION OF R S. 26,87,986/- ON ACCOUNT OF DISALLOWANCE OF LOSS RELATING TO 'TALCHER TRANSMISS ION LINE'. LD DR FURTHER CONTENDED THAT THE CIT(A) IGNORED THE FACT THAT TH E ASSESSEE HAD ITSELF DECLARED THAT THE SAID PROJECT HAS BEEN COMPLETED. LD. DR S UPPORTING THE ASSESSMENT ORDER SUBMITTED THAT THE CONCLUSION OF THE AO THAT THE ASSESSEE WAS QUITE JUSTIFIED IN HOLDING THAT EITHER THE TOTAL EXPENSES SHOULD HAVE BEEN BOOKED AS WORK-IN-PROGRESS OR THE NET EXPENSE OF RS. 26,87,98 6/- WAS TO BE DISALLOWED AND ACCORDINGLY NET LOSS WAS RIGHTLY DISALLOWED DURING THE ASSESSMENT PROCEEDINGS WHICH WAS DELETED BY THE CIT(A) ON WRONG PREMISE. LD. DR FINALLY PRAYED THAT THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING TH AT OF THE AO. WHEN THE CASE WAS CALLED FOR HEARING, NEITHER THE ASSESSEE NOR HI S REPRESENTATIVE APPEARED BEFORE US AND THERE IS NO ADJOURNMENT APPLICATION B EFORE US. ON CAREFUL CONSIDERATION AND PERUSAL OF THE IMPUGNED ORDER AND OTHER RELEVANT MATERIAL, WE FIND IT APPROPRIATE TO PROCEED WITH THE ORDER IN AB SENCE OF ASSESSEE AFTER HEARING THE LD. DR ON BEHALF OF THE APPELLANT REVENUE. 4. AT THE VERY OUTSET, WE NOTE THAT THE CIT(A) GRAN TED RELIEF FOR THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND CONCLUSION:- ITA NO.1109/DEL/2012 ASSTT.YEAR: 2006-07 3 5.2 IT IS CLEAR FROM THE FACT THAT THE APPELLANT HAS CARRIED OUT THE WORK OF REMOVAL OF SOIL DURING THE YEAR UNDER APPEAL, THE PROJECT COULD NOT BE SAID TO HAVE CEASE D TO EXIST. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT. R EGARDING THE RECOVERY MADE BY PGCIL, M/S BEST AND CROMPTON A ND M/S JYOTHI STRUCTURES LTD., IT IS UNDISPUTED THAT EITHE R THESE AMOUNTS HAD ALREADY BEEN OFFERED TO TAX BY THE APPE LLANT IN EARLIER YEARS OR DEDUCTION WAS NOT CLAIMED BY IT IN EARLIER YEARS PENDING SETTLEMENT OF BILLS. FURTHER, THE SUB -CONTRACT EXPENSES WERE DIRECTLY INCURRED IN RELATION TO THE PROJECT AND THERE IS NO REASON TO DISALLOW SUCH EXPENSES. THE C ONTENTION OF THE AO THAT THE ENTIRE EXPENSES SHOULD HAVE BEEN SH OWN AS WORK-IN-PROGRESS IS NOT CORRECT BECAUSE THE APPELLA NT WAS NOT TO RECEIVE ANY FURTHER PAYMENT FROM PGCIL IN RESPEC T OF SUCH EXPENSES AND, THEREFORE, THERE WAS NO QUESTION OF B OOKING IT AS WORK-IN-PROGRESS IN THE BOOKS OF ACCOUNT. IT IS ALS O NOT IN DOUBT THAT LIABILITY FOR THE EXPENSES CLAIMED BY TH E APPELLANT HAD CRYSTALLIZED DURING THE YEAR UNDER APPEAL. 5.3 HAVING CONSIDERED SUBMISSIONS OF THE APPELLANT , I AM OF THE VIEW THAT THE PROJECT COULD NOT BE SAID TO HAVE CEASED TO EXIST AND THE EXPENSE BOOKED BY THE APPELLANT WERE OF SUCH NATURE THAT WOULD NOT RESULT INTO ANY REVENUE FOR T HE APPELLANT AND, THEREFORE, COULD NOT BE BOOKED AS WORK-IN-PROG RESS EITHER. ACCORDINGLY, IT IS HELD THAT THE ACTION OF THE LD. AO WAS NOT CORRECT TO DENY THE LOSS OF RS. 26,87,986/- CLA IMED BY THE APPELLANT ON THIS PROJECT. THIS GROUND OF APPEAL IS ALLOWED. 5. IN VIEW OF ABOVE, WE ARE IN AGREEMENT WITH THE C ONCLUSION OF THE CIT(A) THAT THE PROJECT COULD NOT BE SAID TO HAVE CEASED T O EXIST AND THE EXPENSES CLAIMED BY THE ASSESSEE WAS OF SUCH NATURE THAT WOU LD NOT RESULT INTO ANY REVENUE FOR THE ASSESSEE AND THEREFORE THE SAME COU LD NOT BE BOOKED AS WORK IN PROGRESS. ACCORDINGLY, WE NOTE THAT THE AO WAS NOT CORRECT TO DENY THE AMOUNT OF LOSS AS CLAIMED BY THE ASSESSEE ON TALCHER TRANS MISSION LINE PROJECT. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE CIT(A) WAS R IGHT IN DELETING THE ADDITION WHICH WAS MADE BY THE AO WITHOUT ANY LOGICAL REASON ING AND THUS WE ARE ITA NO.1109/DEL/2012 ASSTT.YEAR: 2006-07 4 UNABLE TO SEE ANY INFIRMITY, PERVERSITY OR ANY OTHE R VALID REASON TO INTERFERE WITH THE IMPUGNED ORDER AND WE UPHOLD THE SAME. ACCORDI NGLY, SOLE GROUND OF THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.03.2015. SD/- SD/- (S. V. MEHROTRA) (CHANDRAMOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 16TH MARCH 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. C.I.T.(A) 4. C.I.T. 5. DR BY ORDER ASSTT.REGISTRAR