DCIT, V. M/s Jharkhand Police Housing Corpn. Ltd.,

ITA 115/RAN/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85446 (ITAT-RANCHI)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 14-03-2014
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ORAM JCITLD

Judgement Text

1 ITA NO.115/RAN/14 CO NO.01/RAN/14 JHARKHAND POLICE HOUSING CORPORATION LIMITED INCOME TAX APPELLATE TRIBUNAL, CIRCUIT BENCH, RANCHI BEFORE HON'BLE SHRI H.L. KARWA, PRESIDENT , AND HON'BLE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO . 115 /RAN/2014 A.Y 200 7 - 08 D.C.I.T CIRCLE - 1 RANCHI VS. M/S. JHARKHAND POLICE HOUSING CORPORATION LIMITED PAN: AAB CJ0526E ( DEPARTMENT ) ( ASSESSEE ) C.O NO. 01 /RAN/14 [ITA NO. 1 15 /RAN/2014 A.Y 200 7 - 08 ] M/S. JHARKHAND POLICE HOUSING VS. D.C.I.T CIRCLE - 1 RANCHI CORPORATION LIMITED ( CROSS OBJECTOR ) ( DEPARTMENT ) FOR THE DEPARTMENT : SHRI CHOUDHARY ORAM, JCIT/LD.DR FOR THE A SSESSEE : NONE DATE OF HEARING : 02 - 12 - 2014 DATE OF PR ONOUNCEMENT: 02 - 12 - 2014 ORDER SHRI B.R. BASKARAN, ACCOUNTANT MEMBER : THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 10 - 12 - 2013 PASSE D BY LD CIT(A), RANCHI AND THEY RELATE TO THE ASSESSMENT YEAR 2007 - 08. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN DELETING THE ADDITION OF RS.28.51 CRORES, BEING THE INCREMENTAL VALUE OF WORK IN PROGRESS, ASSESSED BY THE 2 ITA NO.115/RAN/14 CO NO.01/RAN/14 JHARKHAND POLICE HOUSING CORPORATION LIMITED ASSESSING OFFICER . THE ASSESSEE HAS FILED THE CROSS OBJECTIONS TO SUPPORT THE ORDER OF LD CIT(A). 3. THE ASSESSEE HAS MOVED A PETITION SEEKING ADJOURNMENT. HOWEVER WE ARE NOT INCLINED TO GIVE ADJOURNMENT AND ACCORDINGLY REJECTED THE SAID REQUEST. ACCORDINGLY, WE PRO CEED TO DISPOSE OF THESE APPEALS EX - PARTE, WITHOUT THE PRESENCE OF THE ASSESSEE. 4. WE HEARD LD D.R AND PERUSED THE RECORD. THE ASSESSEE IS A STATE GOVERNMENT UNDERTAKING AND IS ENGAGED IN THE BUSINESS OF CONSTRUCTION, MAINTENANCE, RENOVATION OF BUILDIN GS FOR POLICE FORCE IN JHARKHAND. THE AO NOTICED THAT THE ASSESSEE HAS SHOWN THE VALUE OF WORK IN PROGRESS (WIP) AS AN ASSET IN THE BALANCE SHEET, I.E., THE OPENING AND CLOSING VALUE OF WIP WERE NOT DEBITED/CREDITED TO THE PROFIT AND LOSS ACCOUNT. THE AS SESSEE SUBMITTED THAT IT WAS CARRYING ON THE CONSTRUCTION WORK FOR STATE GOVERNMENT. ACCORDINGLY, IT WAS SHOWING THE ADVANCE RECEIVED FROM THE GOVERNMENT AS LIABILITY AND THE WIP AS ASSET. ONCE THE PROJECT IS COMPLETED , THE WIP ACCOUNT IS CLOSED BY TRA NSFERRING THE SAME TO THE ADVANCE RECEIVED FROM GOVERNMENT ACCOUNT AND ACCORDINGLY THE ACCOUNT IS SETTLED. THE AO WAS NOT CONVINCED WITH THE SAID EXPLANATIONS AND ACCORDINGLY ASSESSED THE DIFFERENCE BETWEEN THE CLOSING VALUE OF WIP AND OPENING VALUE OF WIP AMOUNTING TO RS.28.51 CRORES AS THE INCOME OF THE ASSESSEE. 5. IN THE APPELLATE PROCEEDINGS, THE LD CIT(A) NOTICED THAT THE ASSESSEE HAS BEEN RECEIVING COMMISSION TO THE EXTENT OF 3% ON THE VALUE OF WORK DONE. IN THIS REGARD, THE ASSESSEE FURNISH ED A LETTER FROM THE GOVERNMENT OF JHARKHAD IN THE FORM OF MEMORANDUM DATED 05 - 02 - 2002, WHEREIN THE ABOVE FACT WAS CLEARLY BROUGHT OUT. THE ASSESSEE SUBMITTED THAT IT WAS NOT CARRYING ON ANY INDEPENDENT CONTRACT WORK, BUT ONLY EXECUTING THE ORDERS OF THE GOVERNMENT ON GETTING COMMISSION OF 3%. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS BEEN FOLLOWING THE ACCOUNTING PRACTICE OF 3 ITA NO.115/RAN/14 CO NO.01/RAN/14 JHARKHAND POLICE HOUSING CORPORATION LIMITED SHOWING WIP AS AN ITEM OF ASSET AND THE ADVANCE RECEIVED FROM GOVERNMENT AS AN ITEM OF LIABILITY TILL THE COMPLETION OF THE P ROJECT. ON COMPLETION OF THE PROJECT, BOTH THE ITEMS SHALL BE SET OFF. ACCORDINGLY, THE LD CIT(A) HELD THAT THE AO WAS NOT CORRECT IN PRESUMING THAT THE ASSESSEE HAS BEEN CARRYING ON INDEPENDENT CONSTRUCTION WORK. ACCORDINGLY HE DELETED THE IMPUGNED ADD ITION. 6. ON PERUSAL OF RECORD AND THE ORDER PASSED BY LD CIT(A), WE NOTICE THAT THE FIRST APPELLATE AUTHORITY HAS CONSIDERED ALL RELEVANT MATERIALS AND ACCORDINGLY REACHED THE CONCLUSION THAT THE ASSESSEE HAS BEEN UNDERTAKING WORKS ON BEHALF OF THE GO VERNMENT OF JHARKHAND AND WAS GETTING A COMMISSION INCOME OF 3% ON THE VALUE OF WORK. FURTHER THE LD CIT(A) HAS ALSO GIVEN A FINDING THAT THE WIP AMOUNT IS ADJUSTED AGAINST THE ADVANCE AMOUNT AFTER THE COMPLETION OF THE PROJECT. SINCE THE ASSESSEE HAS BE EN FOLLOWING THE ABOVE SAID ACCOUNTING PRACTICE CONSISTENTLY AND SINCE NOTHING WAS BROUGHT ON RECORD TO SHOW THAT THE ASSESSEE HAS BEEN MAKING PROFITS OUT OF THE CONSTRUCTION WORKS OVER AND ABOVE THE COMMISSION INCOME OF 3%, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.28.51 CRORES MADE BY THE AO. ACCORDINGLY, WE UPHOLD HIS ORDER ON THIS ISSUE. 7. SINCE WE HAVE DISMISSED THE APPEAL OF THE REVENUE, THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO LIABLE TO BE DISM ISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DISMISSED. PRONOUNCED ACCORDINGLY ON 02 - 12 - 2014 SD/ - SD/ - [ H.L. KARWA ] [ B.R. BASKARAN ] PRESIDENT ACCOUNTANT MEMBER DT. 02 - 12 - 2014 4 ITA NO.115/RAN/14 CO NO.01/RAN/14 JHARKHAND POLICE HOUSING CORPORATION LIMITED PLACE : RANCHI PP, SR. PS COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT : 2 THE RESPONDENT: 3..T HE CIT, 4.THE CIT(A), 5.DR, ITAT CIRCUIT BENCH, RANCHI 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT. REGISTRAR 5 ITA NO.115/RAN/14 CO NO.01/RAN/14 JHARKHAND POLICE HOUSING CORPORATION LIMITED 1. DATE OF DICTATION ....... ORDER DRAFTED BY MEMBER CONCERN IN HIS LAPTOP 2.12.14 2. DATE ON W HICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ........................OTHER MEMBER .............................. 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. ..................... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BE FORE THE DICTATING MEMBER FOR PRONOUNCEMENT................................. 02.12. 2014................................................... 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S ................ 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK ....................................... 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ......................................... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER ........................ ......................................................................... 9. DATE OF DESPATCH OF THE ORDER ..............................................................