ACIT, Circle - 3, Darjeeling V. Sri Nanu Shome, Darjeeling

ITA 1126/KOL/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78436 (ITAT-KOLKATA)
• Duration Of Justice: 5 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 15-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 30-06-2009
• Court: TRIBUNAL
• Department Lawyers: A K DAS
• Assessee Lawyers: N O N E
• Keywords: Recovery proceedings; Depreciation
• Section: 147; 148

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , . . . . ! ! ! ! /AND ' #!' ' #!' ' #!' ' #!' , ) [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM] !$ / I.T.A NO.1126/KOL/2009 #% &'/ ASSESSMENT YEAR: 2004-05 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. SHRI NA NU SHOME CIRCLE-3, SILIGURI (PAN AIMPS4409D) ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 30.07.2014 DATE OF PRONOUNCEMENT: 30.07.2014 FOR THE APPELLANT: SHRI A. K. DAS, JCIT, SR. DR FOR THE RESPONDENT: N O N E / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF CIT(A), SILIGURI IN APPEAL NO. 155/CIT(A)/SLG/07-08 DATED 27.03.2009. ASSESSMENT WAS FRAMED BY DCIT, CIRCLE-3, SILIGURI U/S. 143(3)/147 OF THE INCOME-TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2004-05 VIDE HIS ORDER DATED 28.12 .2007. 2. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING THREE GROUNDS: 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A), SILIGURI WAS JUSTIFIED IN ALLOWING THE APPEAL OF THE ASSESSEE WITHOUT ANY MAT ERIALS ON RECORD. 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A), SILIGURI WAS JUSTIFIED IN ALLOWING THE APPEAL OF THE ASSESSEE WITHOUT CONSIDERING THE FACTS BROUGHT ON RECORD BY THE AO. 3. THAT THE APPELLANT LEAVE TO ADD, AMEND OR ALTER THE GROUNDS OF APPEAL, IF ANY. 3. FROM THE GROUNDS IT IS NOT CLEAR WHICH IS THE IS SUE, THE REVENUE WANTS TO CHALLENGE. ON QUERY FROM THE BENCH EVEN LD. SR. DR COULD NOT CLAR IFY THE SAME. NONE APPEARED ON BEHALF OF ASSESSEE AT THE TIME OF HEARING BEFORE US. WE DISP OSE OF THIS APPEAL AFTER HEARING LD. SR. DR. 4. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE RELEVANT AY 2004-05 ON 31.10.2004. THE AO NOTICED DURING THE E ARLIER RECOVERY PROCEEDINGS THAT ASSESSEE HAS RECEIVED AN ARBITRATION AWARD FROM PWD, NATIONA L HIGHWAY DIVISION FOR AN AMOUNT OF RS.1,22,88,258/- AND THE SAME WAS NOT DECLARED IN T HE RETURN OF INCOME. ACCORDINGLY, A NOTICE U/S. 148 OF THE ACT WAS ISSUED TO REOPEN THE ASSESS MENT U/S. 147 OF THE ACT. IN RESPONSE TO NOTICE U/S. 148 OF THE ACT, ASSESSEE FILED RETURN O F INCOME DISCLOSING ADDITIONAL INCOME OF RS.7,40,982/- I.E. 6.03% OF THE ARBITRATION AWARD R ECEIVED BY THE ASSESSEE APART FROM THE REGULAR 2 ITA NO.1126/K/2009 SHRI NANU SHOME AY 04-05 INCOME AS DECLARED IN THE ORIGINAL RETURN. THE AO TREATED THE ENTIRE ARBITRATION AWARD AS INCOME OF THE ASSESSEE FOR THE RELEVANT YEAR. AGGR IEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO APPLIED THE PROFIT RATE AT 10% OF THE T OTAL ARBITRATION AWARD AND DIRECTED THE AO TO RECOMPUTE THE INCOME BUT DELETED THE ADDITION MADE ON ACCOUNT OF ARBITRATION AWARD OF RS.92,62,974/- AND INTEREST ON DELAYED PAYMENT OF T HIS ARBITRATION AWARD OF RS.30,25,285/- BY OBSERVING AS UNDER: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. AR AND ALSO PERUSED THE ASSESSMENT ORDER AND THE COPY OF THE ARBITRATION AW ARD AND ORDER OF THE HIGH COURT PRODUCED. IN VIEW OF THE DECISION OF THE ARBITRATOR AND SUBSEQUENT ORDER OF THE HIGH COURT, THE ASSESSEE RECEIVED ARBITRATION AWARD OF R S.92,62,974/- AND INTEREST ON DELAYED PAYMENT OF RS.30,25,285/-. REGARDING THE YEAR OF RE CEIPT AND TAXABILITY OF THE INTEREST AMOUNT WAS NOT QUESTIONED BY THE ASSESSEE EITHER DU RING THE ASSESSMENT PROCEEDNGS OR IN THE APPELLATE PROCEEDING. THE ONLY DISPUTE TO BE DECIDED WHETHER THE WHOLE ARBITRATION AWARD INCLUDING INTEREST TO BE TREATED AS INCOME O F THE ASSESSEE OR A PERCENTAGE OF THE SAME HAS TO BE TREATED AS NET INCOME. THIS ISSUE HAS BEEN SETTLED IN THE AFORESAID DECISI ONS CITED BY THE LD. AR IN HIS SUBMISSION. HOWEVER, THE LD. AO HAS TRIED TO DISTIN GUISH THE FACT OF THE CASE OF GOVINDA CHOUDHURY & SONS (SUPRA) WITH THE FACT OF THE PRESE NT CASE. HOWEVER, IN HIS ORDER, HE DID NOT DISCUSS WHEN THE ACTUAL CLAIM OF THE EXPENS ES ON ACCOUNT OF THE CONTRACT EXECUTED, WAS MADE BY THE ASSESSEE AND DULY ALLOWED BY THE DEPARTMENT. AT THE TIME OF FRAMING THE ASSESSMENT ORDER, VERIFICATION OF RECOR DS OF THE RELEVANT PERIOD OF EXECUTION OF THE WORK (AGAINST WHICH THE ARBITRATION AWARD WA S RECEIVED) COULD HAVE BEEN MADE. BUT NO SUCH EFFORT WAS MADE. WITHOUT DOING SO, THE LD AO HAS MADE ONLY A PASSING REMARK THAT ALL THE CLAMS WERE MADE BY THE ASSESSE E. IN ABSENCE OF SUCH INFORMATION, THE AO S DIRECTED TO APPLY NET PROFT @ 10% OF THE TOT AL ARBITRATION AWARD INCLUDING INTEREST AS NET INCOME OF THE ASSESSEE FROM THE ARB ITRATION AWARD RECEIVED BY THE ASSESSEE IN ADDITION TO THE OTHER INCOME DISCLOSED BY THE ASSESSEE IN HIS RETURN. THE RATE OF 10% IS TAKEN FROM THE CASES RELIED ON BY THE LD AR IN HIS SUBMISSION. NO FURTHER DEDUCTION IN RESPECT OF DEPRECIATION, INTEREST ON C APITAL AND REMUNERATION TO THE PARTNERS S ALLOWABLE OUT OF THE NET INCOME TO BE DETERMINED FROM THE ARBITRATION AWARD. AGGRIEVED, REVENUE CAME IN APPEAL BEFORE US. 6. WE HAVE HEARD LD. SR. DR AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT NOW BEFORE US THE LD. SR. DR COULD NOT PO INT OUT ANY DEFECT IN THE ORDER OF CIT(A). THIS ARBITRATION AWARD WAS ON THE ORDER OF HONBLE CALCUTTA HIGH COURT IN GA NO. 396 OF 2003 AND THE TOTAL AMOUNT RECEIVED READS AS UNDER: I) PRINCIPAL SUM IN TERMS OF THE AWARD RS.92,6 2,974.00 II) ADD: INTEREST THEREON (478602.25 + 2546682.30) RS.30,25,284.55 RS.1,22,88,258.55 EVEN THE REVENUE COULD NOT DISPUTE THAT THE ISSUE I S NOT COVERED BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOVIND CHOWDHURY & SON S VS. CIT (1993) 203 ITR 881 (SC) AS THE REVENUE COULD NOT RAISE ANY ISSUE IN THE GROUND S OF APPEAL AND EVEN NOW BEFORE US LD. SR. DR COULD NOT POINT OUT HOW THE ARBITRATION AWARD AN D INTEREST ON THE SAME IS TAXABLE IN ENTIRETY. IN SUCH CIRCUMSTANCES, WE FEEL THAT THE ISSUE IS COVERED BY THE DECISION OF HONBLE 3 ITA NO.1126/K/2009 SHRI NANU SHOME AY 04-05 SUPREME COURT IN THE CASE OF GOVIND CHOWDHURY & SON S, SUPRA. RESPECTFULLY FOLLOWING THE SAME, WE DISMISS THIS APPEAL OF REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 8. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- , . . . . , ' #!' ' #!' ' #!' ' #!' , (P. K. BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH JULY, 2014 -. #/0 #1 JD.(SR.P.S.) 2 +##3 43&5- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT ACIT, CIRCLE-3, SILIGURI 2 +,)* / RESPONDENT SHRI NANU SHOME, ASHRAMPARA, SILIGURI, DIST. DARJEELING. 3 . # ( )/ THE CIT(A), SILIGURI 4. 5. # / CIT SILIGURI 3:#; +# / DR, KOLKATA BENCHES, KOLKATA ,3 +#/ TRUE COPY,