ACIT, Circle-10(1), Hyderabad V. M/s. Cyberabad Development Authority, Secunderabad

ITA 1193/HYD/2011

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2532 (ITAT-HYDERABAD)
• Duration Of Justice: 6 year(s) 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-02-2018
• Assessment Year: 2003-2004
• Appeal Filed On: 17-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D PRASADA RAO
• Assessee Lawyers: S RAMA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER I.T.A. NO. 1193/HYD/2011 ASSESSMENT YEAR: 2003-04 ASST. COMMISSIONER OF INCOME TAX, CIRCLE-10(1), HYDERABAD VS M/S. CYBERABAD DEVELOPMENT AUTHORITY, SECUNDERABAD [PAN: AAALH0058D] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI D. PRASADA RAO, DR FOR ASSESSEE : SHRI S. RAMA RAO, AR DATE OF HEARING : 12-02-2018 DATE OF PRONOUNCEMENT : 14-02-2018 O R D E R PER B. RAMAKOTAIAH, A.M. : THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-VI, HYDERABAD, DATED 14-03-2011. REVENUE HAS RAISED THE FOLLOWING GROUND : 2. THE CIT(A) IS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW DEVELOPMENT FUND OF RS. 2,54,10,002 SIMPLY BECAUSE THE ASSESSEE FOLLOWS MERCANTILE SYSTEM OF ACCOUNTING. EVEN IF THE ASSES SEE FOLLOWS MERCANTILE SYSTEM, IF THE EXPENDITURE TO BE INCURRED IS NOT UT ILIZED AND NOT SPECIFIC, THE CLAIM OF EXPENDITURE CANNOT BE ALLOWED. THE AS SESSEE HAS INCURRED ONLY RS. 44,84,118 FROM THE DEVELOPMENT FUND AND TH E REMAINING AMOUNT OF RS. 2,54,10,002 HAS NOT BEEN UTILIZED HENCE THE SAME COULD NOT BE GIVEN CREDIT. FURTHER DEVELOPMENT FUND IS A FUND A ND IS NOT AN EXPENDITURE AND IF THE ASSESSEE DO NOT SPEND THE AM OUNT, THE ASSESSEE CANNOT CLAIM IT AS EXPENDITURE. GROUND NOS. 1 & 3 ARE GENERAL IN NATURE. I.T.A. NO. 1193/HYD/2011 :- 2 - : 2. DURING THE COURSE OF PRESENT PROCEEDINGS, REVENUE HAS FILED ADDITIONAL GROUNDS THAT CIT(A) OUGHT NOT HAVE ADMITTED THE EVIDENCE OF G.O.M.S. NO. 530 OF GOVT. OF A.P. DT. 28- 09-1998, WHICH WAS NOT PRODUCED DURING THE SCRUTINY PROCEEDIN GS NOR THE CIT(A) GIVEN ANY OPPORTUNITY UNDER RULE 46A. THESE BEING LEGAL GROUNDS, THEY ARE ADMITTED. 3. LD.DR SUBMITTED THAT CIT(A) HAS ERRED IN ALLOWING T HE EXPENDITURE WHICH WAS EARMARKED TOWARDS DEVELOPMENT FU ND AND NOT ACTUALLY SPENT. IT WAS THE CONTENTION THAT ASSESSEE HAS INCURRED ONLY AN AMOUNT OF RS. 44,84,118/- DURING TH E YEAR AND THE BALANCE AMOUNT, HAVING NOT BEEN SPENT, SHOULD NOT BE CONSIDERED AS UTILIZED. THEREFORE, THE ORDER CIT(A ) IS NOT CORRECT. 4. LD. COUNSEL SUBMITTED THAT BY VIRTUE OF THE G.O., THE GOVERNMENT HAS ORDERED THAT ALL THE DEVELOPMENT CHARGES COLLECTED SHALL BE KEPT IN A SEPARATE ACCOUNT AND 85% OF THE CH ARGES SHALL BE UTILIZED FOR IMPLEMENTATION OF MASTER PLAN ETC., AND THEREFORE, THE AMOUNTS EARMARKED SHOULD BE CONSIDERED AS UTILIZED AND IN FACT THESE AMOUNTS ARE UTILIZED LATER ON. IT WAS ALSO FU RTHER SUBMITTED THAT NO CONSEQUENTIAL ORDER HAS BEEN ISSUED BY THE AO EVEN THOUGH CERTAIN AMOUNT WAS BROUGHT TO TAX BY THE AO . IT WAS FURTHER SUBMITTED THAT ASSESSEE GOT MERGED WITH HUDA/HMDA IN 2008 AND MOST OF THE DEMANDS WERE COLLECTED OR APPROP RIATED IN THE HANDS OF HUDA/HMDA. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSE D THE DOCUMENTS PLACED ON RECORD. IT IS TRUE THAT THE G.O. WAS NOT PLACED BEFORE THE AO AND CIT(A) HAVE NOT ASKED FOR ANY REMAN D REPORT. I.T.A. NO. 1193/HYD/2011 :- 3 - : MOREOVER, WE WERE INFORMED THAT THE ORDER OF HMDA RELI ED ON BY THE LD.CIT(A) WAS NOW SET ASIDE TO THE FILE OF AO, AS TH E ISSUE OF REGISTRATION WAS RECENTLY ADJUDICATED AND ALL ASSESSMEN TS HAVE BEEN RESTORED TO THE FILE OF AO BY THE ORDER DT. 31-10- 2017 IN THE CASE OF HMDA. FURTHER, IT WAS ALSO NOTICED THAT ASSESSE E NO LONGER EXISTS AS A SEPARATE AUTHORITY, HAVING BEEN MERGED WI TH HMDA, WAY BACK IN 2008 ITSELF, WHEREAS THE AO HAS PASSED THE ORDER IN THE NAME OF CYBERABAD DEVELOPMENT AUTHORITY ITSELF AND THE LD.CIT(A) DID NOT NOTICE THE CHANGE IN JURISDICTION O F THE AUTHORITY EVEN THOUGH APPEAL WAS FILED BY THE SECRETARY, HMDA FO R CYBERABAD DEVELOPMENT AUTHORITY. AO IS DIRECTED TO TAKE THE MERGED AUTHORITY AS ASSESSEE FOR TAXING THE AMOUNTS ARI SING IN THE HANDS OF ERSTWHILE AUTHORITY AND EXAMINE THE G.O., AN D DECIDE THE ISSUE BOTH ON FACTS AND ON LAW, AFTER GIVING DUE OPP ORTUNITY TO ASSESSEE. 6. IN THE RESULT, APPEAL OF REVENUE IS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH FEBRUARY, 2018 SD/- SD/- (V. DURGA RAO) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 14 TH FEBRUARY, 2018 TNMM I.T.A. NO. 1193/HYD/2011 :- 4 - : COPY TO : 1. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-10(1), HYDERABAD. 2. M/S. CYBERABAD DEVELOPMENT AUTHORITY, HUDA COMMERCIAL COMPLEX, TARNAKA, SECUNDERABAD. 3. CIT(APPEALS)-VI, HYDERABAD. 4. CIT-V, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.