ACIT, CHENNAI V. M/s. Tamil Nadu Police Housing Corporation Ltd., CHENNAI

ITA 1240/CHNY/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 64694 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER] I.T.A.NOS.1240 & 1241/MDS/2012 ASSESSMENT YEARS : 2007-08 AND 2008-09 THE ACIT COMPANY CIRCLE III(1) CHENNAI VS M/S TAMIL NADU POLICE HOUSING CORPORATION LIMITED NO.132, EVR SALAI KILPAUK CHENNAI 600 010 [PAN AAACT 2920R] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHAJI P. JACOB, ADDL. CIT RESPONDENT BY : SHRI SATYA RANJAN DHAL, CA DATE OF HEARING : 20-12-2012 DATE OF PRONOUNCEMENT : 21-12-2012 O R D E R PER BENCH: THESE ARE THE APPEALS FILED BY THE RE VENUE AGAINST SEPARATE ORDERS OF THE CIT(A)-III, CHENNAI, DATED 10.2.2012, PASSED IN ASSESSMENT YEARS 2007-08 AND 2008-09. 2. IN BOTH THE ASSESSMENT YEARS GROUND NO.1 & 6 ARE GE NERAL IN NATURE AND HENCE, REQUIRES NO ADJUDICATION BY US . I.T.A.NO. 1240 & 1241/12 :- 2 -: 3. IN GROUND NOS.2,3 & 4 OF BOTH THE ASSESSMENT YEARS THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) ERRED I N DELETING THE DISALLOWANCE OF INTEREST PAID ON THE ADVANCE FROM D GPS OFFICE. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER DISALLOWED ` 44,16,850/- IN ASSESSMENT YEAR 2007-08 AND ` 40,85,357/- IN ASSESSMENT YEAR 2008-09 ON ACCOUNT OF INTEREST PAYMENT CLAIMED BY THE ASSESSEE TO DGPS OFFICE ON THE GROUND THAT THE ASSESSEE HAS MADE ONLY PROVISION OF INTEREST A ND HAS NOT ACTUALLY PAID THE INTEREST AND HENCE, THE SAME WAS NOT ALLOW ABLE U/S 43B OF THE ACT. 5. THE ASSESSEE CONTESTED THE DISALLOWANCE BEFORE THE CIT(A) AND SUBMITTED THAT THE INTEREST PROVIDED BY THE AS SESSEE WAS NEITHER FROM AN INSTITUTION NOR FROM A CORPORATION NOR FROM A SCHEDULED BANK AS MENTIONED IN SECTION 43B OF THE ACT AND THEREFOR E, WAS NOT COVERED U/S 43B OF THE ACT. HENCE, THE DISALLOWANCE MADE B Y THE ASSESSING OFFICER WAS NOT PROPER IN BOTH THE ASSESSMENT YEARS . 6. THE CIT(A), AFTER CONSIDERING THE ABOVE SUBMISSIONS OF THE ASSESSEE, HELD THAT THE AMOUNTS RECEIVED FROM THE D GPS OFFICE WAS NEITHER A PUBLIC FINANCIAL INSTITUTION NOR A STATE FINANCIAL CORPORATION NOR A STATE INDUSTRIAL INVESTMENT CORPORATION NOR A SCHEDULED BANK AS PER CLAUSES (D) AND (E) OF SECTION 43B OF THE ACT A ND THE SAME IS NOT I.T.A.NO. 1240 & 1241/12 :- 3 -: COVERED BY THE PROVISIONS OF SECTION 43B OF THE ACT . ACCORDINGLY, HE HELD THAT THE INTEREST PAYABLE CANNOT BE DISALLOWE D U/S 43B OF THE ACT IN BOTH THE ASSESSMENT YEARS. 7. THE DR SUPPORTED THE ORDERS OF THE ASSESSING OFFICE R AND THE A.R SUPPORTED THE ORDERS OF THE CIT(A). 8. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING TH E MATERIALS ON RECORD, WE FIND THAT THE UNDISPUTED FA CTS ARE THAT THE ASSESSING OFFICER DISALLOWED INTEREST PAYMENT OF ` 44,16,850/- IN ASSESSMENT YEAR 2007-08 AND ` 40,85,357/- IN ASSESSMENT YEAR 2008- 09 BY THE ASSESSEE TO THE DGPS OFFICE BY INVOKING THE PROVISIONS OF SECTION 43B OF THE ACT ON THE GROUND THAT PAYMENT O F THE INTEREST WAS NOT MADE BY THE ASSESSEE DURING THE CONCERNED FINA NCIAL YEARS. 9. THE CIT(A) HELD THAT THE INTEREST PAYMENT MADE BY THE ASSESSEE TO DGPS OFFICE WAS NOT A PAYMENT TO ANY P UBLIC FINANCIAL INSTITUTION OR STATE FINANCIAL CORPORATION OR A STA TE INDUSTRIAL INVESTMENT CORPORATION OR A SCHEDULED BANK AS PER T HE CLAUSES (D) AND (E) OF SECTION 43B OF THE ACT AND HENCE, NO DIS ALLOWANCE OF INTEREST CAN BE MADE BY INVOKING THE PROVISIONS OF SECTION 43B OF THE ACT. I.T.A.NO. 1240 & 1241/12 :- 4 -: 10. NO MISTAKE IN THIS FINDING OF THE CIT(A) COULD BE P OINTED OUT BY THE DR. NO MATERIAL COULD BE BROUGHT ON RECORD TO SHOW THAT THE INTEREST PAYMENT MADE BY THE ASSESSEE TO DGPS OFF ICE WAS COVERED UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. IN THE ABSENCE OF ANY SUCH MATERIAL BEING BROUGHT ON RECORD, WE DO NOT FI ND ANY GOOD REASON TO INTERFERE WITH THE ORDERS OF THE CIT(A) F OR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. THUS, THE GR OUNDS OF APPEAL OF THE ASSESSEE FOR BOTH THE ASSESSMENT YEARS UNDER C ONSIDERATION ARE DISMISSED. 11. GROUND NO.5 OF BOTH THE APPEALS IS THAT THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF ` 1,50,83,750/- AND ` 1,15,42,376/- IN ASSESSMENT YEARS 2007-08 AND 2008-09, RESPECTIVELY, BEING PAYMENT OF WAGES TO TEMPORARY STAFF AS SUPERVISION CHARGES U/S 40(A) OF THE ACT. 12. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DEBITED ` 1,50,83,750/- IN ASSESSMENT YEAR 2007-08 AND ` 1,15,42,376/- IN ASSESSMENT YEAR 2008-09 AS NMR WAGES UNDER PETTY S UPERVISION CHARGES @ 2.5% WITHIN THE SANCTIONED ESTIMATE AMOU NT IN THE WORK- IN-PROGRESS ACCOUNT. THE ASSESSING OFFICER OBSERVE D THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON THE ABOVE PAYMENT AND THEREFORE, HE DISALLOWED THE CLAIM OF EXPENDITURE TO THE ASSE SSEE BY INVOKING THE PROVISIONS OF SECTION 40(A) OF THE ACT. I.T.A.NO. 1240 & 1241/12 :- 5 -: 13. ON APPEAL BEFORE THE CIT(A), THE ASSESSEE SUBMITTE D THAT THE SAID AMOUNT HAS NOT BEEN DEBITED TO THE PROFIT & LOSS ACCOUNT AND THE ASSESSEE DID NOT CLAIM ANY DEDUCTION IN RESPEC T OF THE SAME IN COMPUTING ITS BUSINESS INCOME FOR BOTH THE ASSESSME NT YEARS. IT WAS ALSO SUBMITTED THAT THE PAYMENT WAS TOWARDS WAGES T O TEMPORARY WORKERS UNDER NOMINAL MUSTER ROLL WHICH WAS OUTSIDE THE PURVIEW OF SECTION 40(A) OF THE ACT. 14. THE CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE, HELD THAT ON COMPLETION OF THE PROJECT SU PERVISION CHARGES @ 7.5% OF THE TOTAL WORK-IN-PROGRESS INCURRED DURING THE YEAR WAS ACCOUNTED FOR AS REVENUE IN THE PROFIT & LOSS ACCOU NT. THUS, IT WAS CLEAR THAT NO PART OF THE COST INCURRED AND ACCOUNT ED FOR IN THE WORK- IN-PROGRESS WAS DEBITED TO THE PROFIT & LOSS ACCOUN T AND SUCH EXPENDITURE WAS NOT CLAIMED AS DEDUCTION, THEREFORE , THE PROVISIONS OF SECTION 40(A) ARE NOT APPLICABLE TO THE ASSESSEE. HE, THEREFORE, HELD THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS NOT JUSTIFIED AND DELETED THE SAME FOR BOTH THE ASSESSMENT YEARS. 15. THE DR SUPPORTED THE ORDERS OF THE ASSESSING OFFICE R WHEREAS THE A.R OF THE ASSESSEE SUPPORTED THE ORDE RS OF THE CIT(A). 16. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSIN G THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE UND ISPUTED FACTS ARE I.T.A.NO. 1240 & 1241/12 :- 6 -: THAT THE ASSESSEE HAS DEBITED ` 1,50,83,750/- IN ASSESSMENT YEAR 2007-08 AND ` 1,15,42,376/- IN ASSESSMENT YEAR 2008-09 TOWARDS PAYMENT OF WAGES TO TEMPORARY STAFF AS SUPERVISION CHARGES IN THE WORK-IN-PROGRESS ACCOUNT. THE ASSESSING OFFICER OB SERVING THAT THE ASSESSEE HAD NOT DEDUCTED TDS ON SUCH PAYMENT, DISA LLOWED THE CLAIM FOR EXPENDITURE TO THE ASSESSEE BY INVOKING THE PR OVISIONS OF SECTION 40(A) OF THE ACT. 17. THE CIT(A) DELETED THE DISALLOWANCE BY OBSERVING TH AT 7.5% OF THE WORK-IN-PROGRESS INCURRED DURING THE YEAR WA S ACCOUNTED AS REVENUE IN THE PROFIT & LOSS ACCOUNT AND THEREFORE, NO PART OF THE COST INCURRED AND ACCOUNTED UNDER WORK-IN-PROGRESS WAS D EBITED TO THE PROFIT & LOSS ACCOUNT AND SUCH EXPENDITURE WAS NOT CLAIMED AS DEDUCTION. HE HELD THAT THE PROVISIONS OF SECTION 40(A) ARE NOT APPLICABLE TO THE ASSESSEES CASE. 18. NO DEFECT IN THIS FINDING OF THE CIT(A) COULD BE PO INTED OUT BY THE DR. THE DR COULD NOT BRING ANY MATERIAL ON R ECORD TO SHOW THAT THE ASSESSEE HAD CLAIMED A SUM OF ` 1,50,83,75/- IN ASSESSMENT YEAR 2007-08 AND ` 1,15,42,376/- IN ASSESSMENT YEAR 2008-09 AS EXPENDITURE IN THE PROFIT & LOSS ACCOUNT. IN ABSEN CE OF ANY SUCH MATERIAL BEING BROUGHT ON RECORD, WE DO NOT FIND AN Y GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDERS OF THE CIT(A). THEREFORE, I.T.A.NO. 1240 & 1241/12 :- 7 -: THE GROUNDS OF APPEAL OF THE REVENUE FOR BOTH THE ASSESSMENT YEARS ARE DISMISSED. 19. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 21 ST OF DECEMBER, 2012, AT CHENNAI. SD/- SD/- (SATBEER SINGH GODARA) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER DATED: 21 ST DECEMBER, 2012 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR