Vijayasree Construction, Warangal, Hyderabad V. JCIT, Warangal Range, Warangal

ITA 1112/HYD/2011

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6018 (ITAT-HYDERABAD)
• Duration Of Justice: 5 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 09-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Tax effect
• Section: 40A(3); 143(3)

Judgement Text

ITA NO 1175 OF 2011 VIJ AYA SREE CONSTRUCTIONS WARANGAL PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1175/HYD/2011 (ASSESSMENT YEAR: 2007-08) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1 WARANGAL VS M/S. VIJAYA SREE CONSTRUCTIONS H.NO.5-9-118 HANAMKONDA WARANGAL PAN: AABFV 3579 J ITA NO.1112/HYD/2011 (ASSESSMENT YEAR: 2007-08) M/S. VIJAYA SREE CONSTRUCTIONS H.NO.5-9-118 HANAMKONDA WARANGAL PAN: AABFV 3579 J VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1 WARANGAL FOR REVENUE : SHRI A. SITARAMA RAO, DR FOR ASSESSEE : SHRI S. RAMA RAO O R D E R PER SMT. P. MADHAVI DEVI, J.M. BOTH ARE CROSS APPEALS FOR THE A.Y 2007-08. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI RM, CARRYING ON BUSINESS OF CIVIL CONTRACTS, FILED ITS RETURN OF INCOME FOR THE A.Y 2007-08 ON 31.10.2007 ADMITTING TOTAL IN COME OF RS.19,38,460. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, CERTAIN INFORMATION WAS CALLED FOR. THE AO CONSIDERED THE INFORMATION AVAILABLE AND THE BOOKS OF ACCOUNTS PRO DUCED BY THE ASSESSEE AND FINALIZED THE ASSESSMENT BY MAKING A D ISALLOWANCE DATE OF HEARING : 23.03.2017 DATE OF PRONOUNCEMENT : 31.03.2017 ITA NO 1175 OF 2011 VIJ AYA SREE CONSTRUCTIONS WARANGAL PAGE 2 OF 4 OF 15% OF THE EXPENDITURE DEBITED BY THE ASSESSEE TO WARDS LABOUR CHARGES, METAL LABOUR CHARGES AND EARTH WORK RESPEC TIVELY AND ALSO MADE A DISALLOWANCE OF EXCESS CLAIM FOR SALARY OF 3,24,000 AND PAYMENT IN CASH EXCEEDING RS.20,000 TO A SINGLE PARTY ON THE SAME DAY TO THE EXTENT OF RS.14,70,639 BEING 20% OF 70,36,843 AND DISALLOWANCE U/S 40(A)(IA) OF THE ACT FOR NON D EDUCTION OF TAX AT SOURCE ON PAYMENTS MADE FOR B.T. TRANSPORT AND M ETAL TRANSPORT CHARGES. AGGRIEVED BY THESE ADDITIONS AND THE CONSEQUENTIAL ASSESSMENT, THE ASSESSEE FILED AN APP EAL BEFORE THE CIT (A) WHO GRANTED PARTIAL RELIEF BY DELETING THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT. THE BALANCE OF THE ADDITIONS WERE CONFIRMED BY THE CIT (A). AGGRIEVED BY THE RELIEF GRANTED BY THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US IN ITA NO.1175/HYD/2 011 AND AGGRIEVED BY THE CONFIRMATION OF THE ADDITIONS BY T HE CIT (A) THE ASSESSEE IS IN APPEAL IN ITA NO.1112/HYD/2011. 3. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE REVENUES APPEAL IS LIABLE TO BE DISMISSED BOTH ON MERITS AS WELL AS ON THE GROUND THAT THE TAX EFF ECT IS LESS THAN RS.10.00 LAKHS. ON PERUSAL OF THE ASSESSMENT ORDERS AND ALSO THE ORDER OF THE CIT (A), WE FIND THAT THE DISALLOWANCE MADE BY THE AO U/S 40 (A)(IA) IS A SUM OF RS.15,62,667 AND THEREFO RE, THE TAX EFFECT ON THE SAME WOULD BE LESS THAN RS.10.00 LAKH S. FURTHER, WE ALSO FIND THAT THE ENTIRE AMOUNT HAS BEEN PAID AND THERE WAS NOTHING PAYABLE AS ON 31 ST MARCH, 2006. THEREFORE, THIS ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE DECIS ION OF THE HON'BLE SPECIAL BENCH IN THE CASE OF MERILLYN SHIP PING & TRANSPORT VS. ADD.CIT IN ITA NO.477/VIZ/2008 DATED 29.03.2012 WHICH HAS BEEN CONFIRMED BY THE HON'BLE ALLAHABAD H IGH COURT IN ITA NO 1175 OF 2011 VIJ AYA SREE CONSTRUCTIONS WARANGAL PAGE 3 OF 4 THE CASE OF CIT VS. VECTOR SHIPPING SERVICES LTD RE PORTED IN 357 ITR 647 AND THE SLP (2013)262 CTR (ALL)545 FILED BY THE REVENUE AGAINST THE DECISION OF THE HON'BLE ALLAHABAD HIGH COURT HAS BEEN DISMISSED BY THE HON'BLE SUPREME COURT. IN VIE W OF THE SAME, REVENUES APPEAL IS DISMISSED. 4. AS REGARDS THE ASSESSEES APPEAL, WE FIND THAT T HE ASSESSEE IS AGGRIEVED BY THE DISALLOWANCE OF 15% OF THE EXPENDITURE ON ACCOUNT OF LABOUR CHARGES, METAL LAB OUR CHARGES AND EARTH WORK AND ALSO AGAINST DISALLOWNACE MADE U /S 40A(3) OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE BEING IN THE BUSINESS OF CIVIL CONTRACT WO RK COULD NOT PRODUCE ALL THE VOUCHERS FOR THE LABOUR CHARGES AND THEREFORE, HAD MAINTAINED SELF MADE VOUCHERS AND DISALLOWANCE OF 15% OF THE SAME IS EXCESS. THEREFORE, HE PRAYED THAT THE D ISALLOWANCE MAY BE RESTRICTED TO 5% OF THE EXPENDITURE ONLY. 5. THE LEARNED DR HOWEVER, SUBMITTED THAT THIS ADDI TION WAS AGREED TO BY THE LEARNED COUNSEL FOR THE ASSESS EE BEFORE THE AO AND THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE AN Y EVIDENCE IN SUPPORT OF THE SELF MADE VOUCHERS. THEREFORE, ACCOR DING TO HIM, THE GROUND NEED TO BE REJECTED. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE DISALLOWANCE OF THE EXP ENDITURE WAS ON ACCOUNT OF SELF-MADE VOUCHERS MAINTAINED BY THE ASS ESSEE. IT CANNOT BE RULED OUT THAT THE ASSESSEE MAY HAVE CLAI MED EXCESS OF EXPENDITURE AND THEREFORE, SOME PART OF THE EXPENDI TURE IS TO BE DISALLOWED. THE ASSESSEE HAS NOT PRODUCED ANY EVIDE NCE TO ITA NO 1175 OF 2011 VIJ AYA SREE CONSTRUCTIONS WARANGAL PAGE 4 OF 4 SUBSTANTIATE HIS CLAIM TO RESTRICT THE DISALLOWANCE TO 5% OF THE EXPENDITURE. THE DISALLOWANCE OF EXPENDITURE AT 15% OF THE EXPENDITURE ON ACCOUNT OF LABOUR AND METAL LABOUR C HARGES AND ALSO EARTH WORK. THE ASSESSEES GROUND IS ACCORDING LY REJECTED. 7. AS REGARDS GROUND NO.3 AGAINST THE DISALLOWANCE U/S 40A(3) OF THE ACT, IT IS FAIRLY CONCEDED BY THE LEA RNED COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO JUSTIFY THE PAYMENT OF CASH IN EXCESS O F RS.20,000 TO THE SAME PARTY ON THE SAME DAY AND THEREFORE, THE A SSESSEE HAD AGREED TO THE ADDITION BEFORE THE AO. TAKING THE SA ME INTO CONSIDERATION, WE REJECT THE ASSESSEES GROUND OF A PPEAL. 8. IN THE RESULT, BOTH ASSESSEES APPEAL AS WELL AS THE REVENUES APPEAL ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2017. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 31 ST MARCH, 2017. VINODAN/SPS COPY TO: 1 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-1 AAYAK AR BHAVAN, STATION ROAD, WARANGAL 2 M/S. VIJAYA SREE CONSTRUCTIONS, H.NO.5-9-118 HANA MKONDA WARANGAL 3 CIT (A)-VI HYDERABAD 4 CIT VI HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER