Dy.CIT, Central Circle-3, Hyderabad V. M/s A M R India Ltd., Hyderabad

ITA 1149/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82567 (ITAT-HYDERABAD)
• Duration Of Justice: 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 06-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKAR RAO
• Assessee Lawyers: A V RAGHURAM; Y P RAO
• Keywords: Unexplained expenditure; Depreciation; Document seized; Documents seized
• Section: 43B; 133(6); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 1149/HYD/2014 ASSESSMENT YEAR 2010-11 THE DEPUTY CIT CENTRAL CIRCLE-3 HYDERABAD VS. M/S. AMR INDIA LTD. HYDERABAD PAN: AADCA3750D APPELLANT RESPONDENT APPELLANT BY: SRI D. SUDHAKAR RAO RESPONDENT BY: SRI A.V. RAGHURAM AND SRI Y.P. RAO DATE OF HEARING: 20.10.2014 DATE OF PRONOUNCEMENT: 26.11.2014 O R D E R PER ASHA VIJAYARAGHAVAN, JM: THE APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VII, HYDERABAD DATED 28.3.2014 FOR ASSESSMEN T YEAR 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT THE TOTAL INCOME O F THE ASSESSEE WAS ASSESSED AT RS. 260,67,86,152 BY THE ASSESSING OFFI CER AS AGAINST THE INCOME RETURNED AT RS. 49,86,89,978 FOR THE ASSESSMENT YEA R 2010-11, UNDER CONSIDERATION. THE AO HAS MADE THE FOLLOWING ADDIT IONS AS SUMMARISED IN THE TABLE AT PARA 10.2 OF THE ASSESSMENT ORDER: PARTICULARS ADDITION (RS.) INCOME RETURNED 49,86,89,978 SUB-CONTRACTORS RETURNED UNSERVED 64,76,71,669 NO REPLIES FROM THE SUB CONTRACTORS 78,31,08,618 DISALLOWANCES U/S. 40(A)(IA) 4,62,49,007 DISALLOWANCE U/S. 43B OF THE ACT VAT PAYABLE SERVICE TAX PAYABLE 30,30,75,063 EARLIER YEAR TDS DISALLOWANCE ALLOWED THIS YEAR 32, 25,53,865 DISALLOWANCE OF DEPRECIATION 53,37,952 TOTAL INCOME ASSESSED 260,67,86,152 I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 2 3. THE ASSESSEE IS A PUBLIC LIMITED COMPANY EXECUTING MAJOR CONTRACTS. THE TURNOVER OF THE COMPANY IS AROUND 1000 CRORES D URING THE RELEVANT PREVIOUS YEAR. IN THE COURSE OF THE ASSESSMENT PROC EEDINGS, THE AO MADE ENQUIRIES REGARDING THE SUB-CONTRACT WORKS GIVEN BY THE COMPANY. THE AO HAD ISSUED LETTERS SEEKING INFORMATION U/S 133(6) O F THE ACT TO 107 SUB- CONTRACTORS SEEKING DETAILS, BUT RECEIVED RESPONSE IN ONLY 25 CASES. THE AO ACCEPTED THESE 25 CASES. OF THE BALANCE 82 CASES, T HE AO FOUND THAT IN 38 CASES THE NOTICES WERE RETURNED UNSERVED. THE AMOU NT INVOLVED IN THESE SUB-CONTRACTORS TOTALLED TO RS. 67.76 CRORES. THE A O DOUBTED THE EXISTENCE OF THE SUB-CONTRACTORS AND DISALLOWED THE ENTIRE SUB-C ONTRACT EXPENSES OF RS. 64.76 CRORES AND ADDED IT TO THE INCOME RETURNED (P ARA 5 OF THE ASST. ORDER). OF THE BALANCE 44 LETTERS, THE AO OBSERVED THAT THE SE WERE SERVED ON THE SUBCONTRACTORS BUT NO REPLIES WERE RECEIVED. THE SU B-CONTRACT EXPENSES TOTALLED TO RS. 78.31 CRORES PERTAINING TO THESE 44 SUB-CONTRACTORS. THE AO DISALLOWED THIS EXPENDITURE AND RS. 78.31 CRORES WA S ADDED TO THE INCOME RETURNED. 4. THE AO MADE DISALLOWANCE U/S 40(A)(IA) TO THE TUNE OF RS. 4.62 CRORES SINCE THE TDS AMOUNT WAS NOT REMITTED TO THE GOVT. A/C BEFORE THE DUE DATE OF FILING OF RETURN. THE AO ALSO MADE A D ISALLOWANCE OF RS. 30.30 CRORES U/S 43B. THESE WERE THE STATUTORY PAYMENTS C LASSIFIED AS OUTSTANDING AS PER SECTION 43B, AS PER THE AUDIT REPORT ENCLOSE D WITH THE RETURN. THE BREAKUP OF THIS AMOUNT OF RS. 31.25 CRORES IS - VAT PAYABLE RS. 20,56,796, SERVICE TAX PAYABLE RS. 30,10,18,267. THE ASSESSEE CONTENDED THAT THE SERVICE TAX IS NOT PASSED THROUGH THE P&L A/C AND THE SAME NEED NOT BE CONSIDERED FOR DISALLOWANCE. THE AO, HOWEVER, DID NOT ACCEPT T HE CONTENTION AND MADE THE DISALLOWANCE. THE COMPANY HAD CLAIMED SET OFF OF DISALLOWANCE OF RS. 33,36,74,170 TOWARDS DISALLOWANCE MADE IN EARLIER Y EAR MADE U/S 40(A)(IA). THE AO, HOWEVER, NOTICED THAT IN THE EARLIER YEARS I.E., FOR AY 2008- 09 AND 2009-10 ONLY AN AMOUNT OF RS. 3,19,23,596 AND RS. 5 ,38,78,801 RESPECTIVELY TOTALLING TO RS. 8.58 CRORES WAS ONLY DISALLOWED U/ S 40(A)(IA). THE AO FURTHER OBSERVED THAT DURING THE SUBMISSIONS MADE BEFORE TH E CIT(A) FOR THE EARLIER YEAR, THE ASSESSEE HAD CONTENDED THAT ONLY AN AMOUN T OF RS. 1,11,20,305 IS DISALLOWABLE FOR AY 2008-09. THE AO, THEREFORE, CO NSIDERED SET OFF OF ONLY RS. 1,11,20,305 AND ADDED BACK THE BALANCE AMOUNT O F RS. 32,25,53,865. I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 3 5. FINALLY THE AO ALSO DISALLOWED DEPRECIATION TO THE TUNE OF RS. 54,37,952 AS PER SEPARATE WORKING ENCLOSED WITH THE ASSESSMENT ORDER WHEREIN THE BIFURCATION BETWEEN THE ASSETS PURCHASE D PRIOR TO 01.10 AND AFTER 01.10 WAS MADE. 6. BEFORE THE CIT(A) IT WAS SUBMITTED THAT ALL THE ISS UES ON WHICH THE AO MADE ADDITIONS/ DISALLOWANCE WERE CONSIDERED IN DETAIL IN THE EARLIER ASSESSMENT YEARS 2007-08, 2008-09 AND 2009-10 AND A DETAILED ORDER HAS BEEN PASSED BY THE LEARNED CIT(A)-V, HYDERABAD, FOR A.Y. 2009-10 VIDE ORDER DATED 28.03.2013 IN ITA NO. 0327/DCIT/CC-J/CI T(A)-V/HYD/2012-13. THE ABOVE APPELLATE ORDER WAS PASSED AFTER OBTAININ G REMAND REPORT ALSO FROM THE AO. 7. THE ASSESSEE ALSO FILED DETAILED INFORMATION GIVING THE ENTIRE BREAK- UP OF THE TOTAL TURNOVER OF 1053.05 CRORES INDICATI NG THE MAIN CONTRACTORS AND WHETHER IT WAS GOVT./PUBLIC SECTOR UNIT/PRIVATE COMPANY. THE TOTAL CONTRACT VALUE AND THE CONTRACT AMOUNT CONSIDERED A S PART OF THE TURNOVER' FOR FY 2009-10, WHETHER' A CONTRACT WORK WAS EXECUT ED AND THE NAMES OF THE SUB-CONTRACTOR WHEREVER DEPLOYED AGAINST EACH M AIN CONTRACT. THE ASSESSEE STATED THAT DISALLOWANCE OF ENTIRE SUB-CON TRACT EXPENDITURE RESULTS IN ABNORMALLY HIGH PROFIT IN RESPECT OF THE WORKS I N' QUESTION, EVEN 100% IN MANY OF THE CASES, WHICH IS NOT POSSIBLE IN THIS LI NE OF BUSINESS. THE DETAILS OF THE PRINCIPAL CONTRACTOR IN RESPECT OF THE WORK SUB -CONTRACTED TO THE ABOVE PERSONS, GROSS VALUE OF THE WORK TAKEN ON CONTRACT, TOTAL DISALLOWANCE OUT OF SUCH AMOUNT, COMMISSION ALREADY OFFERED AS INCOME/V ALUE OF WORK EXECUTED ON ITS OWN AND THE RATE OF PROFIT FROM THE SAID WOR K CONSIDERING THE TOTAL DISALLOWANCE MADE BY THE AO AND THE COMMISSION/PROF IT ON OWN WORKS COMPUTED AT AVERAGE RATE OF PROFIT DISCLOSED IN THE P&L ACCOUNT WERE SUBMITTED SUB-CONTRACTOR WISE. 8. THE CIT(A) OBSERVED THAT THE INFORMATION FILED AS I NDICATED WAS ON SIMILAR LINES AS FILED FOR EARLIER YEAR AY 2009-10 AND WHICH WAS DISCUSSED IN DETAIL CASE WISE IN THE APPELLATE ORDER. THE ASSES SEE REITERATED EARLIER ARGUMENTS WHICH WERE THREEFOLD AS UNDER: I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 4 (A) THE DISALLOWANCE OF SUB-CONTRACT EXPENDITURE WOULD RESULT IN 100% OF PROFIT IN MOST OF THE CASES AND IT WOULD BE ABNORMALLY HIGH WHICH IS NOT PRACTICAL OR REALIZABLE IN ANY BU SINESS. THE EXPENDITURE ON ACCOUNT OF SUB-CONTRACT IS A DIRECT EXPENDITURE INTIMATELY CONNECTED WITH ITS BUSINESS OF CIVIL CON TRACTS, THE RECEIPTS FROM WHICH WERE DULY ACCOUNTED FOR AND ACC EPTED BY THE DEPARTMENT. THERE CANNOT BE INCOME WITHOUT ANY EXPE NDITURE. MAJORITY OF ITS WORKS WERE TAKEN ON SUB-CONTRACT BA SIS AND THE NET PROFIT DECLARED BY THE ASSESSEE WAS ABOUT 8.55% OF NET CONTRACT RECEIPTS WHICH IS WELL WITHIN THE ACCEPTED NORM OF CIVIL CONTRACT BUSINESS ESPECIALLY IN VIEW OF THE FACT THAT ONLY A BOUT 30% OF THE WORKS REPRESENTED DIRECT CONTRACT AND 70% OF TURNOV ER WAS ON ACCOUNT OF EXECUTION OF WORK THROUGH SUB-CONTRACTS. (B) WHEREVER WORKS WERE SUB-CONTRACTED EXCEPT FOR SUB C ONTRACT EXPENDITURE, NO OTHER EXPENDITURE WAS CLAIMED AGAIN ST SUCH WORK. THE PAYMENTS WERE MADE BY CROSSED CHEQUES ISS UED IN THE NAMES OF THE PARTIES CONCERNED AND THE SAME WERE EN CASHED. THERE IS NEITHER ANY ALLEGATION THAT THE ASSESSEE N EITHER RECEIVED BACK SUCH AMOUNTS NOR WAS ANY EVIDENCE BROUGHT ON R ECORD TO THAT EFFECT. NO EVIDENCE WAS ALSO BROUGHT ON RECORD THAT THE IMPUGNED WORKS WERE NOT EXECUTED OR ANY OTHER EXPEN DITURE OF THE SAME NATURE IN RESPECT OF THE SAME WORK WAS SEP ARATELY CLAIMED. (C) THE SOLE GROUND OF DISALLOWANCE WAS THAT EITHER TH E LETTERS WERE NOT RECEIVED OR NO REPLY WAS RECEIVED WHERE THE LET TERS WERE SERVED. THIS ALONE CANNOT BE THE GROUND FOR ADDITIO N WHEN THE PAYMENTS WERE GIVEN THROUGH CHEQUES, TDS WAS DEDUCT ED AND CORRESPONDING RECEIPTS WERE OFFERED AS INCOME. NO C OGENT MATERIAL WAS BROUGHT ON RECORD TO HOLD THAT EITHER ANY RECEIPT WAS NOT ACCOUNTED FOR OR THE WORKS IN RESPECT OF WH ICH INCOME WAS OFFERED BY THE ASSESSEE, WERE NOT ACTUALLY CARR IED OUT BY THE ASSESSEE. WHERE RECEIPTS ARE NOT DISPUTED, CORRESPO NDING EXPENSES (CONTRACT WORK) CANNOT BE DISALLOWED JUST AS THERE CANNOT BE ANY SALE WITHOUT A CORRESPONDING PURCHASE IN A TRADING CONCERN. I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 5 9. A SNAP SHOT OF PROFIT RATE RESULTING FROM THE DISAL LOWANCE OF ENTIRE SUB-CONTRACT EXPENDITURE WAS SUBMITTED AS UNDER: TOTAL AMOUNT OF DISALLOWANCE (RS.) RESULTANT PROFIT RATE FROM THE WORKS CONCERNED (%) 54,50,26,083 99 - 100 84,01,346 90% AND MORE BUT LESS THAN 99% 9,10,37,773 80% AND MORE BUT LESS THAN 90% 10,92,15,666 70% AND MORE BUT LESS THAN 80% 18,20,86,015 60% AND MORE BUT LESS THAN 70% 6,78,29,395 50% AND MORE BUT LESS THAN 60% 10,24,29,892 40% AND MORE BUT LESS THAN 50% 14,63,24,493 30% AND MORE BUT LESS THAN 40% 17,84,29,624 LESS THAN 30% 10. THE CIT(A) HELD THAT THERE IS MERIT IN THE ARGUMENT OF THE ASSESSEE THAT ONE CANNOT CONSIDER THE RECEIPT AS INCOME AND ALSO DISALLOW THE ENTIRE RELATED EXPENDITURE WITHOUT PROVING THAT EITHER THE RECEIPT WAS UNDER SOME OTHER ACCOUNT OR NO WORK WAS ACTUALLY DONE. HE ALSO OBSERVED THAT DISALLOWANCE OF SUB-CONTRACT EXPENSES AS DONE BY TH E AO WOULD GIVE DISTRACTED RESULTS OF PROFITS OF NEARLY 90% IN SOME CASES AND AT ANY RATE PROFITS IN EXCESS OF 30% TO 90% OF WORKS, WHEN THE ACCEPTED NORMS OF CIVIL CONTRACTS IS FOR A PROFIT MARGIN OF 10% TO 12% ON D IRECT WORKS. ANY TENDER DOCUMENT AND ANY COSTING ESTIMATION MADE WOULD ALSO INDICATE PROFIT MARGINS IN THIS REGION. UNDER THE CIRCUMSTANCES, IN TERMS OF THE EARLIER APPELLATE ORDER PASSED FOR AY 2009-10 IN THE CASE O F THE ASSESSEE, THE CIT(A) DIRECTED THE AO TO ESTIMATE THE PROFIT OF THE ASSES SEE-COMPANY @ 12.5% ON DIRECT CONTRACT WORKS (12.5% OF RS. 328.04 CRORES) AND @ 8% ON SUB-CONTRACT WORKS UNDERTAKEN BY THE ASSESSEE (8% OF RS. 725.02 CRORES). 11. THE CIT(A) HELD THAT NO DISALLOWANCE OF RS. 30.30 C RORES ON ACCOUNT OF 43B IS NECESSARY, AS EVEN OTHERWISE THE ENTIRE A MOUNT WAS REMITTED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME AND NO S EPARATE ALLOWANCE OF DEPRECIATION AS EXPENDITURE IS BEING ENTERTAINED AS INCOME IS BEING ESTIMATED AND CONSEQUENTLY THE QUESTION OF MAKING A N ADDITION ON ACCOUNT OF DISALLOWING OR REWORKING DEPRECIATION TO THE TUN E OF RS. 54.37 LAKHS ALSO DOES NOT ARISE. I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 6 12. THE CIT(A) OBSERVED THAT THE DISALLOWANCE U/S 40(A) (IA) TO THE TUNE OF RS. 4.62 CRORES WAS MADE ON ACCOUNT OF NON REMIT TANCE OF TAX DEDUCTED AT SOURCE TO GOVT. A/C. THIS WAS ON ACCOUNT OF INTE REST PAYABLE AS SEEN FROM PARA 7 OF THE ASSESSMENT ORDER. SINCE, NO SEPARATE ALLOWANCE OF ANY EXPENDITURE INCLUDING INTEREST IS BEING MADE AND IN COME IS BEING ESTIMATED, NO SEPARATE DISALLOWANCE OF INTEREST EXPENDITURE ON ACCOUNT OF PROVISIONS OF SECTION 40(A)(IA) IS, THEREFORE, NECESSARY. 13. AS REGARDS THE DISALLOWANCE OF RS. 32.24 CRORES REP RESENTING THE CLAIM MADE IN THE COMPUTATION STATEMENT IN RESPECT OF THE DISALLOWANCE MADE U/S 40(A)(IA) IN EARLIER YEARS, THE CIT(A) OBSERVED THA T THE ASSESSEE HAD STATED THAT THIS IS RELATABLE TO SUB-CONTRACT EXPENSES WHI CH WERE DISALLOWED BY THE AO ON ACCOUNT OF VIOLATION OF TDS PROVISIONS. THE A CTUAL AMOUNT WHICH WAS DISALLOWED IN FY 2008-09 WAS RS. 33.36 CRORES. THE ASSESSEE HAD MADE THE TDS PAYMENT ON 17.09.2009. A DETAILED STATEMENT WAS FURNISHED. THE ASSESSEE, THEREFORE, CLAIMED THAT THIS EXPENDITURE WAS, THEREFORE, RIGHTLY CLAIMED BY IT WHILE FILING THE RETURN FOR AY 2010-1 1, SINCE IT HAD REMITTED TDS AMOUNT DURING THE RELEVANT PREVIOUS YEAR. 14. THE CIT(A) FURTHER HELD THAT THE INCOME FOR AY 2009 -10 WAS DECIDED ON ESTIMATED BASIS IN THE APPELLATE ORDER FOR AY 20 09-10 AND ALL OTHER EXPENSES ARE DEEMED TO BE ALLOWED INCLUDING SUB-CON TRACT EXPENSES. HENCE, NO SEPARATE DEDUCTION OR DISALLOWANCE WAS CALLED FO R. THUS, THERE IS NO DISALLOWANCE WHICH IS SUBSISTING FOR THE EARLIER AY 2009-10 TO BE CLAIMED BY THE ASSESSEE IN THE CURRENT AY 2010-11 ON PAYMENT B ASIS. SECONDLY, FOR THE CURRENT ASSESSMENT YEAR 2010-11 TOO, THE INCOME IS ESTIMATED @ 12.5% ON DIRECT CONTRACTS AND @ 8% ON SUB-CONTRACT CONSIDERI NG THE TOTAL WORKS OF RS. 1,050 CRORES. ACCORDINGLY, THERE ARE NO SEPARATE AD JUSTMENTS BEING MADE EITHER ON ACCOUNT OF ALLOWANCES OR DISALLOWANCES. T HUS, SINCE THE BOOK RESULT IS REJECTED AND INCOME IS BEING ESTIMATED, THE INCO ME TAX ADJUSTMENTS NORMALLY MADE IN THE COMPUTATION OF INCOME STATEMEN T TO THE NET PROFIT AND TAXABLE INCOME BY THE ASSESSEE ARE NO MORE RELE VANT. ACCORDINGLY, NO DISALLOWANCE IS THEREFORE REQUIRED TO BE MADE ON TH IS ACCOUNT. 15. THE CIT(A) CONCLUDED THAT THE INCOME OF THE ASSESSE E IS TO BE ESTIMATED @ 12.5% ON DIRECT CONTRACT WORKS AND @ 8% ON SUB-CONTRACT WORKS. I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 7 ALL OTHER EXPENSES ARE DEEMED TO HAVE BEEN ALLOWED AND NO FURTHER DISALLOWANCES ARE ALSO CALLED FOR. 16. AGGRIEVED BY SUCH ORDER OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS: (A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, THE CIT(A) ERRED IN RESORTING TO ESTIMATION EVEN IN RES PECT OF SO CALLED SUB-CONTRACTORS, WHO EITHER DENIED HAVING DONE ANY WORK OR DENIED RECEIPT OF SUB-CONTRACT PAYMENTS . (B) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE CIT(A) ERRED IN DELETING THE DISALLOWANCES U/S. 40( A)(IA). (C) THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 17. THE LEARNED DR SUBMITTED THAT THE FINDINGS OF THE S PECIAL AUDIT WERE NOT REFERRED TO BY THE LD. CIT(A) NOR THE PAYMENTS ALLEGED TO HAVE BEEN MADE IN THE GUISE OF SUB-CONTRACTS WERE CONFIRMED, EVEN THOUGH ADDL.CIT REPORTED THAT THE SAME MAY BE KEPT OUT OF PURVIEW O F ESTIMATION WHILE DECIDING THE APPEALS. HE ALSO SUBMITTED THAT SUB CO NTRACTS ALLEGEDLY EXECUTED BY FAMILY MEMBERS AND RELATIVES SHOULD HAV E BEEN DISALLOWED WHILE ESTIMATING THE INCOME. HE REFERRED TO VARIOUS FACTS AS POINTED OUT BY THE A.O. AND REFERRED TO THE ORDERS OF LD. CIT(A) A ND HIS FINDINGS ON EACH ISSUE. 18. LD. COUNSEL, HOWEVER, SUBMITTED THAT A.O. HAS ACCEP TED THAT BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE ARE COMPLICA TED SO THE MATTERS WERE REFERRED TO SPECIAL AUDIT WHOSE REPORT, EVEN THOUGH WAS AVAILABLE, WAS NOT CONSIDERED BY THE A.O. FULLY. MOREOVER, IT WAS SUBM ITTED THAT ASSESSEE HAS GOT THE WORK EXECUTED THROUGH SUB CONTRACTS AS ASSE SSEE ITSELF COULD NOT UNDERTAKE THE CONTRACTS, IN VIEW OF THE INCREASE IN BUSINESS ACTIVITY AND TURNOVERS AND THE FACT THAT THE MAIN CONTRACTORS PA ID THE AMOUNTS ON COMPLETION OF WORK ITSELF PROVE THAT WORK WAS EXECU TED BY THE ASSESSEE. IN VIEW OF THIS, LD. CIT(A) ESTIMATED THE INCOME, AS C ONSIDERED BY THE ITAT IN SIMILAR CASES AND PARTICULARLY RELIED ON THE COORDI NATE BENCH DECISION IN THE CASE OF KNR CONSTRUCTIONS VS. DCIT, CIT(A)-2 IN MA. NOS. 113 & 114/HYD/2012 I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 8 DATED 12.10.2012. IN VIEW OF THIS, ASSESSEE IS NOT OBJECTING TO ESTIMATION OF INCOME. 19. WE FIND THAT THE ISSUE IS COVERED BY THE EARLIER OR DER OF THE TRIBUNAL IN ASSESSEE'S OWN CASE IN ITA NOS. 1153, 1154 AND 1 155/HYD/2013 AND CO NOS. 53, 54 AND 55/HYD/2013 DATED 5 TH SEPTEMBER, 2014 WHEREIN IT HAS BEEN HELD AS FOLLOWS: '6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE PAPER BOOK PLACED ON RECORD. THERE IS NO DISPUT E WITH REFERENCE TO THE FACT THAT A.O. DISALLOWED VARIOUS AMOUNTS ONLY OF SUB-CONTRACTS GIVEN BY ASSESSEE AND IN SOME CASES MONIES SEEMS TO HAVE DEPOSITED OR ADVANCED TO THE D IRECTORS OF THE ASSESSEE COMPANY. BE THAT AS IT MAY, BOTH TH E A.O. AS WELL AS ADDL. CIT IN THE REMAND REPORT AGREED THAT ASSESSMENT OF INCOME AS WAS DONE BY THE A.O. WAS VARYING FROM 43.71% TO 70.90% OF THE TOTAL TURNOVER AND THEREFORE, ADDL . CIT IN HIS REMAND REPORT DATED 19.02.2013, SUGGESTED TO THE LD . CIT(A) THAT REASONABLE ESTIMATION CAN BE RESORTED. HOWEVER , IN THE REPORT THERE WAS NO SPECIFICATION OF ANY CLINCHING EVIDENCE AGAINST THE ASSESSEE REGARDING NON-EXECUTION OF WOR K OR UNEXPLAINED EXPENDITURE. THE REPORT OF THE ADDL. CI T PLACED IN PAPER BOOK AT PAGE NO. 94 TO 98 PARTICULARLY WIT H REFERENCE TO FINAL CONCLUSION IS AS UNDER: KEEPING IN VIEW THE NON-GENUINENESS OF THE SUB-CON TRACT PAYMENTS AS ESTABLISHED BY A.O. AFTER DETAILED DISC USSION IN THE ASSESSMENT ORDER BUT AT THE SAME TIME KEEPING I N VIEW THE SUBMISSION MADE BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT THE PROFIT IS ASSESSED AT ABNORMALLY HIGH AT 7 0.9% OF THE TURNOVER & CERTAIN BACK TO BACK CONTRACT CONSTITUTE S MAJOR PART OF THE TURNOVER, THE LD. CIT(A) MAY DECIDE THE ISSUE ON MERITS AND CONSIDER ESTIMATING THE INCOME IF THE FI NDING OF THE AO IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT IS HELD TO BE UNREASONABLE. HOWEVER, WHEREVER THERE I S CLINCHING EVIDENCE AGAINST THE ASSESSEE REGARDING N ON- EXECUTION OF WORK OR UNEXPLAINED EXPENDITURE, IT IS REQUESTED THAT THE SAME SHOULD BE UPHELD AND SHOULD BE KEPT O UT OF THE PURVIEW OF ESTIMATION IF THE LD. CIT(A) DECIDES TO ESTIMATE THE INCOME. 6.1 THEREFORE, THERE IS NO OBJECTION FOR ESTIMATIO N OF INCOME BY THE REVENUE. MOREOVER, THE GROUNDS AS RAI SED BY THE REVENUE ARE ALSO NOT ON THE ISSUE OF RESORTING TO ESTIMATION AFTER REJECTING THE BOOKS OF ACCOUNTS. T HE ONLY ISSUE WHICH THE REVENUE IS CONTENDING THAT THE LD. CIT(A) SHOULD HAVE EXCLUDED THE AMOUNTS ON WHICH THERE IS CLINCHI NG EVIDENCE AGAINST THE ASSESSEE REGARDING NON-EXECUTI ON OF I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 9 WORK OR UNEXPLAINED EXPENDITURE. NEITHER THE A.O. N OR THE ADDL. CIT(A) IN THE REMAND REPORT INDICATED OR QUAN TIFIED THE AMOUNTS ON WHICH THERE WAS CLINCHING EVIDENCE AGAIN ST THE ASSESSEE. IN FACT, LD. CIT(A) ALSO CONSIDERED THIS ISSUE AND HIS FINDINGS ARE AS UNDER : REASONS FOR ESTIMATION: AFTER A CAREFUL ANALYSIS OF THE SUBMISSIONS AND EVI DENCES FILED BY THE APPLICANT FROM TIME TO TIME VIS-A-VIS THE FA CTS OF THE CASE, I AM OF THE OPINION THAT THERE IS CONSIDERABL E FORCE IN THE CONTENTION OF THE APPELLANT WITH REGARD TO DISALLOW ANCE OF SUB-CONTRACT EXPENDITURE. AS IS EVIDENT FROM THE DE TAILED SUB- CONTRACT SUBMISSIONS MADE BY THE APPELLANT, WITH RE GARD TO THE GROUNDS OF DISALLOWANCE OF SUB-CONTRACT EXPENDI TURE, SUCH DISALLOWANCE MADE BY THE AO WAS PRIMARILY BASED ON CERTAIN PRESUMPTIONS, SUSPICION AND ON THE GROUND OF UNVERI FIABLE NATURE OF EXPENDITURE. IT IS AN UNDISPUTED FACT THA T ALL THE RECEIPTS IN RESPECT OF THE WORKS GIVEN ON SUB-CONTR ACT WERE OFFERED AS INCOME BY THE APPELLANT AND NO SUPPRESSI ON OF RECEIPTS WAS NOTICED EITHER DURING THE COURSE OF SE ARCH OR ASSESSMENT PROCEEDINGS. EVEN THE AO HAS ACCEPTED SU CH RECEIPTS AS INCOME OF THE APPELLANT. NEITHER THE SP ECIAL AUDITOR HAD GIVEN ANY ADVERSE FINDING, WITH ANY COG ENT EVIDENCE, NOR THE AO HAD BROUGHT ANY CLINCHING EVID ENCE ON RECORD TO PROVE THAT EITHER THE WORK WAS NOT ACTUAL LY EXECUTED OR ANY OTHER WORK EXPENDITURE WAS DEBITED IN ITS BOOKS, IN ADDITION TO THE SUB-CONTRACT EXPENDITURE, IN RESPECT OF WORKS SUBLET TO SUCH SUB-CONTRACTORS. FURTHER, T HE AO INFERRED FROM THE SEIZED DOCUMENTS ENCLOSED AS ANNE XURE-I TO III TO THE ASSESSMENT ORDER THAT THE APPELLANT MANI PULATED ITS ACCOUNTS TO INFLATE SUB-CONTRACT EXPENDITURE. HOWEV ER, THE DETAILED SUBMISSIONS OF THE APPELLANT THAT EVEN ASS UMING, WITHOUT ADMITTING, THAT ALL THE ENTRIES THEREIN WER E AIMED AT MANIPULATING THE BOOKS OF ACCOUNT, THE NET EFFECT O F SUCH ENTRIES WOULD GO TO INCREASE THE INCOME OF THE APPE LLANT COMPANY, BUT NOT OTHERWISE, AS ALLEGED BY THE AO, W AS ALSO NOT CONTROVERTED BY THE AO. A CAREFUL READING OF SU CH INFORMATION CLEARLY SUBSTANTIATES THE APPELLANT'S C ONTENTIONS. ALL THE PAYMENTS WERE MADE TO THE SUB-CONTRACTORS T HROUGH BANKING CHANNELS AND AS RIGHTLY ARGUED BY THE APPEL LANT THERE WAS NEITHER, ANY ALLEGATION THAT THE APPELLAN T RECEIVED BACK SUCH AMOUNTS, NOR WAS ANY EVIDENCE TO THAT EFF ECT FOUND/GATHERED, EITHER DURING THE SEARCH OR ASSESSM ENT PROCEEDINGS. EVEN OTHERWISE IT IS A SETTLED PRINCIP LE OF LAW THAT WHEN THE RECEIPTS/INCOME, IN RESPECT OF THE WORKS G IVEN ON SUB-CONTRACT, ARE ACCEPTED, THE CORRESPONDING EXPEN DITURE FOR EARNING SUCH INCOME CANNOT BE DISALLOWED IN FULL EV EN ASSUMING THAT THE SUB-CONTRACTS WERE NOT ESTABLISHE D TO THE FULLEST SATISFACTION OF THE AO. DESPITE SUBMISSIONS OF ONE-TO- ONE CORRELATION OF THE PROJECTS EXECUTED, THE AO FA ILED TO I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 10 ASSESS THE IMPACT OF THE DISALLOWANCE OF THE EXPEND ITURE RELATING TO A PROJECT IN TOTO. THE DISALLOWANCE OF THE ENTIRE EXPENDITURE, RELATING TO THE ACTUAL EXECUTION OF WO RK, THE INCOME FROM WHICH IS ADMITTED BY THE APPELLANT AND ACCEPTED BY THE AO, RESULTED IN ABNORMALLY HIGH PRO FITS. IT IS A FACT THAT APART FROM THE SUB-CONTRACT EXPENDITURE, NO OTHER EXPENDITURE WAS CLAIMED ON SUCH WORKS. THE FACTUAL ANALYSIS OF PROFITS RESULTING FROM SUCH DISALLOWANCE, FILED BY THE APPELLANT, WAS ALSO NOT CONTROVERTED BY THE AO. THE DISALLOWANCE OF MOST OF THE SUB-CONTRACT EXPENDITUR E HAS LED TO A SITUATION WHERE THE ASSESSED INCOME WAS ABOUT 30.29% OF THE NET CONTRACT RECEIPTS, FOR THE AY 2007-08, WHIC H IS IMPOSSIBLE TO ACHIEVE IN THIS LINE OF BUSINESS. IN FACT, THE ADDITIONAL CIT, CENTRAL RANGE-2, HYDER ABAD, HAS CONCURRED WITH THIS VIEW, IN HIS FORWARDING COMMENT S VIDE LETTER DATED 19.02.2013 FOR THE AY 2008-09 & 09-10. FURTHER, IT IS ALSO AN UNDISPUTED FACT THAT DESPITE A THOROU GH SEARCH AT THE PREMISES OF THE APPELLANT, NO ASSETS OVER AND A BOVE THOSE RECORDED IN THE BOOKS WERE FOUND TO JUSTIFY THE HUG E ADDITIONS/ DISALLOWANCES MADE IN THE IMPUGNED ASSES SMENT. THE AO FAILED TO ESTABLISH ANY NEXUS BETWEEN THE AL LEGED SUPPRESSED INCOME AND CORRESPONDING INVESTMENTS IN ASSETS. HOWEVER, IT IS ALSO A FACT THAT THE APPELLANT COULD NOT ESTABLISH THE ENTIRE SUB-CONTRACT EXPENDITURE TO TH E SATISFACTION OF THE AO. NEITHER THE APPELLANT NOR T HE AO/HAD CONCLUSIVELY PROVED THAT BOOKS MAINTAINED BY THE AP PELLANT ARE RELIABLE AND RESULTS SHOWN THERE OFF REFLECT TH E TRUE AND CORRECT INCOME OF THE APPELLANT. THE AO EVEN AFTER SPECIAL AUDIT HAD NOT BROUGHT OUT ANY CLINCHING EVIDENCE FO R NON EXECUTION OF WORK AND BOGUS NATURE OF EXPENDITURE. IN VIEW OF THE ABOVE FACTS, I AM OF THE OPINION THAT IT IS A FIT CASE FOR REJECTION OF BOOKS AND CONSEQUENT ESTIMATION OF INC OME, PRESUMING THAT SUB-CONTRACT WORKS INCLUDING BACK-TO -BACK WERE EXECUTED BY THE APPELLANT COMPANY ITSELF. IN F ACT, THE ADDITIONAL CIT, CENTRAL RANGE-2, VIDE HIS LETTER DA TED 19.02.2013, RECOMMENDED ALTERNATIVELY FOR ESTIMATIN G THE INCOME AND WHEREVER CLINCHING EVIDENCE WAS AVAILABL E AGAINST THE APPELLANT REGARDING NON-EXECUTION OF WO RK OR UNEXPLAINED EXPENDITURE, THE SAME SHOULD BE KEPT OU T OF THE PURVIEW OF ESTIMATION, WHILE DECIDING THE APPEAL. H OWEVER, AS SEEN FROM THE RECORD, NO CLINCHING EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE WORKS WERE NOT A CTUALLY EXECUTED. SIMILARLY, AS IS EVIDENT FROM THE ASSESSM ENT ORDER ITSELF, NO ADDITION HAS BEEN MADE ON ACCOUNT OF UNE XPLAINED EXPENDITURE. AS THE APPELLANT IS IN THE BUSINESS OF CIVIL CONTRA CTS, ENDS OF JUSTICE WOULD BE MET IF THE INCOME FROM BUSINESS IS ESTIMATED. ACCORDINGLY, I DIRECT THE AO TO ESTIMATE @ 12.5% IN RESPECT OF RECEIPTS ON ACCOUNT OF CONTRACTS RECEIVED DIRECTLY BY THE I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 11 APPELLANT FROM THE CONTRACTEES, IN WHICH CASE, THE APPELLANT COMPANY ITSELF WILL BE THE MAIN CONTRACTOR AND @ 8% ON WORKS TAKEN ON SUB-CONTRACT FROM PRINCIPAL CONTRACTORS. O N SIMILAR FACTS, IN THE APPELLANT'S OWN CASE FOR A.Y. 2008-09 AND 2009- 10, THE ADDL. CIT, CENTRAL RANGE ALTERNATIVELY RECO MMENDED FOR ESTIMATION OF INCOME. THE DETAILS OF SUB-CONTRA CTS RECEIVED AND EXECUTED FOR THE AY 2007-08, IS SHOWN IN THE TA BULAR FORM AS UNDER : DESCRIPTION CONTRACT RECEIPTS (RS.) TO BE ESTIMATED NOW (%) TOTAL INCOME ESTIMATED NOW FOR TAXATION(RS.) SUB CONTRACT RECEIVED FROM OTHERS 333388010 8% 26671041 DIRECT WORKS RECEIVED 2547050154 12.50 318381269 TOTAL TURNOVER 2880438164 TOTAL 345052310 THIS RATE OF PERCENTAGE IS ADOPTED BASED ON THE VAR IOUS JUDICIAL DECISIONS FROM TIME TO TIME AND ALSO THE DECISION BY HON'BLE ITAT, HYDERABAD IN THE CASE OF KNR CONSTRUC TIONS VS DCIT, C-2, IN MA NOS. 113 & 114/HYD/2012, DATED 12. 10.2012. THE OBSERVATIONS OF THE HON'BLE TRIBUNAL IS AS UNDE R: ...... , THE ARGUMENT OF THE ASSESSEE COUNSEL IS TH AT THE ASSESSEE IS ALSO UNDERTAKEN SUB CONTRACT FROM OTHER CONTRACT ORS. HOWEVER, THE AO NOT CONSIDERED THE SAME SINCE THE A SSESSEE FAILED TO FURNISH THE AGREEMENT OR WORK ORDERS OR CONFIRMATION FROM THE SUB- CONTRACTORS TO PROVE THA T THE ASSESSEE HAS TAKEN SUB-CONTRACT. IN THE EVENT, ASSE SSEE HAS EXECUTED CONTRACT ON SUB CONTRACT BASIS, THE PROFIT MARGIN CANNOT BE SAME AS CONTRACTS EXECUTED ON OWN. IF THE ASSESSEE IS ABLE TO PROVE THAT IT HAS CARRIED OUT THE SUB CO NTRACT AND ON THAT CONTRACT THE PERCENTAGE OF PROFIT TO BE EST IMATED 8% SINCE THE ASSESSEE HAS TO FOREGO CERTAIN PROFIT ON SUB-CONTRACT BASIS AND THE PROFIT CANNOT BE SAME AS IN THE CASE OF MAIN CONTRACTS GOT AND EXECUTED BY ASSESSEE OWN. HENCE W E DIRECT THE AO TO RE-COMPUTE THE PROFIT ON MAIN CONTRACT AT 12.5% AS HELD BY TRIBUNAL IN THE CASE CITED SUPRA AND ON SUB CONTRACT 8% OF THE CONTRACT RECEIPT ... IN THE INSTANT CASE, THE AO HAS NOT DISPUTED THE SU B-CONTRACTS RECEIVED BY THE APPELLANT. HE HAS ONLY DISPUTED THE SUB- CONTRACTS GIVEN TO OTHERS. THIS OFFICE HAS OBTAINED THE DETAILS OF WORK ORDERS RELATING TO SUB-CONTRACTS RECEIVED B Y THE APPELLANT, WHICH WERE FURNISHED BY THE APPELLANT DU RING THE COURSE OF APPELLATE PROCEEDINGS. HENCE, THE ABOVE M ETHOD OF 8% ON SUB-CONTRACTS RECEIVED BY THE APPELLANT IS SQ UARELY APPLICABLE IN THIS CASE, AND IS ACCORDINGLY ESTIMAT ED, WHICH IS SHOWN IN THE ABOVE TABLE. I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 12 IT IS FURTHER CLARIFIED THAT THIS ESTIMATION DIRECT ED ABOVE TAKES CARE OF THE SHORTCOMINGS/DISCREPANCIES NOTICED WITH REGARD TO VARIOUS CONTRACT WORKS OF THE APPELLANT FOR THE AY 2007-08. THEREFORE, NO FURTHER DISALLOWANCE/STATUTORY DEDUCT IONS ENVISAGED IN SECTION 30 TO 43D OF THE ACT, IS CALLE D FOR SEPARATELY, SINCE, THE ESTIMATION TAKES CARE OF THE ABOVE STATUTORY DISALLOWANCES/DEDUCTIONS. HOWEVER, IT MAY BE CLARIFIED THAT IF IT IS FOUND BY THE AO THAT INCOME, DETERMINED BY ADOPTING THE PERCENTAGE AS DI RECTED ABOVE, IS LESS THAN THE TOTAL INCOME RETURNED, THEN SUCH RETURNED INCOME SHOULD BE ADOPTED FOR THE PURPOSE O F COMPUTATION OF INCOME AND THE DISALLOWANCE OF INTER EST AND DISALLOWANCE U/S 438 UNDER ADDITION NOS.VII & VIII RESPECTIVELY, SHOULD ALSO BE CONSIDERED FOR DETERMINING THE TOTAL INCOME. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED, SUBJEC T TO MY OBSERVATIONS AS ABOVE. 6.2 BASED ON THE ABOVE IN A.Y. 2008-09, SIMILAR DI RECTIONS WERE GIVEN IN OTHER YEARS. BEFORE US, REVENUE COULD NOT POINT OUT ANY OF THOSE CLINCHING EVIDENCES WHICH ARE TO BE EXCLUDED FROM THE TURNOVE R OR TO BE BROUGHT TO TAX SEPARATELY. IN THE ABSENCE OF ANY QUANTIFICATION OF THE AMOUNTS EITHER BY THE A.O. OR BY THE ADDL. CIT IN THEIR REPORTS OR BEFORE US BY ANY PART ICULAR MEANS, WE ARE NOT IN A POSITION TO DIFFER FROM THE ORDERS OF THE LD. CIT(A) GIVEN ON THE FACTS. LD. CIT(A) SEEMS TO HAVE EXAMINED ALL THE ISSUES, ACCEPTED PART OF THE FINDI NGS OF THE A.O. THAT THE SUB-CONTRACTS ARE ONLY NAME SAKE. HOW EVER, HE DID NOT AGREE FOR DISALLOWANCE OF ENTIRE SUB-CONTRA CT EXPENDITURE WHEN THE PROJECT WAS UNDERTAKEN BY THE ASSESSEE AND CONTRACT RECEIPTS WERE ACCOUNTED FOR. IN VIEW O F THIS, AS BOTH THE AUTHORITIES OF REVENUE ACCEPTED THE ESTIMA TION OF INCOME AND AS LD. CIT(A) RESORTED TO ESTIMATION BAS ED ON THE NORMS ALREADY BEEN FORMED IN THIS REGARD I.E., ESTI MATION OF INCOME AT 12.5% ON THE MAIN CONTRACTS AND 8% ON SUB - CONTRACTS UNDERTAKEN, WE DO NOT SEE ANY REASON TO I NTERFERE WITH THE ORDER OF THE LD. CIT(A). AS SEEN FROM THE CONSEQUENTIAL ORDERS PASSED BY THE A.O. EXCEPT IN A .Y. 2007- 08 WHERE INCOME RETURNED IS MORE THAN THE ESTIMATIO N, IN OTHER YEARS THE ASSESSED INCOME IS MORE THAN THE IN COME RETURNED BY THE ASSESSEE. IN VIEW OF THIS, WE UPHOL D THE ORDERS OF LD. CIT(A). SINCE REVENUE HAS NOT QUESTIONED THE ESTIMATION AT THE ABOVE RATES AND SINCE NO EVIDENCE HAS BEEN FILED TO ESTABLISH THE CLINCHING EVIDENCE OF NON-EX ECUTION OF CONTRACT WORK OR UNEXPLAINED EXPENDITURE, THE GROUN DS RAISED BY THE REVENUE DO NOT REQUIRE ANY CONSIDERATION ON MERITS. ACCORDINGLY, THEY ARE REJECTED. I.T .A. NO. 1149/HYD/2014 M/S. AMR INDIA LTD. ==================== 13 20. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDIN ATE BENCH (SUPRA), WE DISMISS GROUND NO. 1 OF THE DEPARTMENT. 21. WITH RESPECT TO GROUND NO. 2, WE FIND THE HONBLE A .P. HIGH COURT IN THE CASE OF INDWELL CONSTRUCTIONS VS. CIT, 232 ITR 776 (AP) HELD AS FOLLOWS: 'THE PATTERN OF ASSESSMENT UNDER THE INCOME-TAX ACT IS GIVEN BY SECTION 29 WHICH STATES THAT THE INCOME FROM PRO FITS AND GAINS OF BUSINESS SHALL BE COMPUTED IN ACCORDANCE W ITH THE PROVISIONS CONTAINED IN SECTIONS 30 TO 43D. SECTION 40 PROVIDES FOR CERTAIN DISALLOWANCES IN CERTAIN CASES NOTWITHSTANDING THAT THOSE AMOUNTS ARE ALLOWED GENE RALLY UNDER OTHER SECTIONS. THE COMPUTATION UNDER SECTION 29 IS TO BE MADE UNDER SECTION 145 ON THE BASIS OF THE BOOKS REGULARLY MAINTAINED BY THE ASSES-SEE. IF THOSE BOOKS ARE NOT CORRECT OR COMPLETE, THE INCOME-TAX OFFICER MAY REJECT THOSE B OOKS AND ESTIMATE THE INCOME TO THE BEST OF HIS JUDGMENT. WH EN SUCH AN ESTIMATE IS MADE IT IS IN SUBSTITUTION OF THE IN COME THAT IS TO BE COMPUTED UNDER SECTION 29. IN OTHER WORDS, AL L THE DEDUCTIONS WHICH ARE REFERRED TO UNDER SECTION 29 A RE DEEMED TO HAVE BEEN TAKEN INTO ACCOUNT WHILE MAKING SUCH AN ESTIMATE. THIS WILL ALSO MEAN THAT THE EMBARGO P LACED IN SECTION 40 IS ALSO TAKEN INTO ACCOUNT.' 22. RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE JURI SDICTIONAL HIGH COURT, WE CONFIRM THE ORDER OF CIT(A) ON THIS ISSUE AND DISMISS THE GROUND RAISED BY THE DEPARTMENT. 23. IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH NOVEMBER, 2014. SD/ - (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER HYDERABAD, DATED THE 26 TH NOVEMBER, 2014 TPRAO COPY FORWARDED TO: 1. THE DEPUTY CIT, CENTRAL CIRCLE - 3, 8 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. AMR INDIA LTD., # 8 - 3 - 833, PLOT NO. 37 & 38, PHASE - I, KAMALAPURI COLONY, HYDERABAD. 3. THE CIT(A) - VII, HYDERABAD. 4. THE CIT (CENTRAL), HYDERABAD. 5. THE DR B BENCH, ITAT, HYDERABAD