ASST CIT 10(3), MUMBAI V. HAWARE CONSTRUCITON P.LTD, NAVI MUMBAI

ITA 1509/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5117 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 13-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P BAIRAGRA SHRI S K MUTSADDI
• Assessee Lawyers: A C TEJPAL
• Keywords: Deemed dividend

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H B ENCH, MUMBAI , , !' #$% , !& ! ' BEFORE SHRI VIJAY PAL RAO, JM AND SHRI N.K. BILLAIYA, AM ./ I.T.A. NO. 1509 &3820/MUM/2012 ( ( ( ( ( / ASSESSMENT YEARS : 2008-09 & 2009-10 THE ACIT 10(3), AAYAKAR BHAVAN, MUMBAI-400 020 M/S. HAWARE CONSTRUCTION PVT. LTD., 413-416, VARDHMAAN MARKET, SECTOR NO. 17, VASHI, NAVI MUMBAI-400 075 ./ I.T.A. NO. 814 &2643/MUM/2012 ( ( ( ( ( / ASSESSMENT YEARS : 2008-09 & 2009-10 M/S. HAWARE CONSTRUCTION PVT. LTD., 413-416, VARDHMAAN MARKET, SECTOR NO. 17, VASHI, NAVI MUMBAI-400 075 THE ACIT 10(3), AAYAKAR BHAVAN, MUMBAI-400 020 ) !& ./ * ./PAN/GIR NO. :AABCH 3858F ( )+ /APPELLANT ) .. ( ,-)+ / RESPONDENT ) )+ . ! / APPELLANT BY : ` SHRI J.P. BAIRAGRA SHRI S.K. MUTSADDI ,-)+ / . ! /RESPONDENT BY : SHRI A.C. TEJPAL / 01& / DATE OF HEARING :13.11.2013 23( / 01& / DATE OF PRONOUNCEMENT :20.11.2013 !4 / O R D E R PER BENCH: THESE CROSS APPEALS BY THE REVENUE AND THE ASSESSEE FOR A.Y 2008-09 & 2009-10 RESPECTIVELY ARE DIRECTED AGAINST THE SEPARATE ORDERS HAWARE CONSTRUCTIONS PVT. LTD. 2 OF LD. CIT(A)-22 DT. 16.12.2011 AND 7.3.2012 RESPEC TIVELY. AS ALL THESE APPEALS INVOLVED COMMON GROUNDS, THEY WERE HEARD TO GETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF C ONVENIENCE AND BREVITY. ITA NOS. 1509 & 3820/M/12A.YRS.2008-09 &09-10 REVE NUES APPEAL 2. THE SUBSTANTIVE COMMON GROUNDS RAISED BY THE REV ENUE FOR BOTH THE ASSESSMENT YEARS ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING PROJECT COMPLE TION METHOD FOLLOWED BY THE ASSESSEE INSTEAD OF PERCENTAGE COMP LETION METHOD RECOMMENDED BY THE REVENUE, NOTWITHSTANDING THE FAC T THAT NO ACCOUNTING STANDARD IS RECOGNIZED BY THE INCOME TAX ACT AND IGNORING THE PRINCIPLES OF MERCANTILE SYSTEM OF ACC OUNTING WHERE REVENUE AND EXPENSES EARNED/INCURRED DURING THE FIN ANCIAL YEAR RELEVANT TO ASSESSMENT YEAR ARE REQUIRED TO BE BROU GHT TO TAX IN THE SAME YEAR. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE AO TO ALL OW DEDUCTION U/S 801B(1O) AFTER DUE VERIFICATION WHEN ASSESSEE HAS N OT FULFILLED THE CONDITIONS STIPULATED UNDER THE ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION M ADE U/S 2(22)(E) WHEN THE CROSS TRANSACTIONS BETWEEN THE ASSESSEE CO MPANY AND M/S. HAWARE ENGINEERS AND BUILDERS PVT.LTD., CLEARL Y DEPICT THAT THE ENTIRE JUSTIFICATION IS ONLY AN AFTERTHOUGHT TO PROTECT ITSELF FROM PURVIEW OF PROVISIONS OF SECTION 2(22)(E). 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THE ISSUES RAISED BY THE REVENUE IN BOTH THE APPEAL S HAVE BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSEE S OWN CASE FOR A.YRS 2005-06 AND 2007-08. 4. THE LD. DEPARTMENTAL REPRESENTATIVE FAIRLY CONCE DED TO THIS SUBMISSION. HAWARE CONSTRUCTIONS PVT. LTD. 3 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. WE FIND THAT THE ASSESSING OFFICER HAS FOLLOWED THE FI NDINGS OF HIS PREDECESSOR WHILE REJECTING THE ASSESSEES METHOD O F ACCOUNTING OF PROJECT COMPLETION METHOD. THE AO HAS GIVEN HIS FI NDING AT PARA-5.8 ON PAGE-4 OF HIS ORDER. THE LD. CIT(A) HAS ALLOWED T HE APPEAL IN FAVOUR OF THE ASSESSEE FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE AND THIS FINDING OF THE LD. CIT(A) CAN BE FOUND AT PARA-4 ON PAGE-3 OF HIS ORDER. WE HAVE ALSO THE BENEFIT OF THE ORDER OF TH E TRIBUNAL PASSED IN ASSESSEES OWN CASE FOR A.YRS. 2005-06 TO 2007-08 V IDE ITA NOS. 5601/M/09, 688/M/10 AND 1547/M/09. THE LD. CIT(A) HAS EXTRACTED THE FINDINGS OF THE TRIBUNAL FOR A.Y. 2005-06 AT PARA-4 OF HIS ORDER. AS NO DISTINGUISHING FACTS HAVE BEEN BROUGHT ON RECORD BE FORE US AND THE LD. DR HAS FAIRLY CONCEDED THAT THE ISSUE HAS BEEN DECI DED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL, RESPECTFULLY FOLLOWING TH E FINDINGS OF THE TRIBUNAL, NO INTERFERENCE IS CALLED FOR. GROUND NO . 1 FOR BOTH THE YEARS IS DISMISSED. 6. GROUND NO. 2 RELATES TO ALLOWABILITY OF DEDUCTIO N U/S/ 80IB(10) OF THE ACT. 7. THIS ISSUE HAS BEEN CONSIDERED BY THE AO AT PARA -6 OF THE ASSESSMENT ORDER AND AT PARA 6.3 THE AO HAS OBSERVE D THAT ASSESSEES CLAIM FOR DEDUCTION U/S. 80IB(10) WAS REJECTED BY HIS PREDECESSOR IN A.Y. 2006-07 AND 2007-08. FOLLOWING THE FINDINGS O F HIS PREDECESSOR, THE AO REJECTED THE CLAIM OF DEDUCTION U/S. 80IB(10 ) FOR THE YEARS UNDER CONSIDERATION. 8. THE LD. CIT(A) WHILE DECIDING THE APPEAL OF THE ASSESSEE HAS FOLLOWED THE FINDINGS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2006-07 AND 2007-08. THE DISCUSSION FINDS PLACE AT PARA-9 OF CIT(A)S HAWARE CONSTRUCTIONS PVT. LTD. 4 ORDER WHEREIN THE LD. CIT(A) HAS EXTRACTED THE FIND INGS OF THE TRIBUNAL. AS NO DISTINGUISHING FACTS HAVE BEEN BROUGHT ON REC ORD BEFORE US AND THE LD. DR HAS FAIRLY AGREED THAT THE ISSUE HAS BEEN DE CIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN ASSESSEES OWN CASE WHI CH HAS BEEN FOLLOWED BY THE LD CIT(A), WE DO NOT FIND ANY REASON TO INTE RFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 2 FOR BOTH THE YEARS IS DISMISSED. 9. GROUND NO. 3 RELATES TO THE DELETION OF THE ADDI TION MADE U/S. 2(22)(E) OF THE ACT. 10. THE AO HAS CONSIDERED THIS ISSUE AT PARA-8 ON P AGE-6 OF HIS ORDER AND AT PARA-8.2 THE AO OBSERVED THAT IN A.Y. 2007-0 8 DEEMED DIVIDEND U/S. 2(22)(E) WAS ASSESSED IN THE HANDS OF THE ASSE SSEE AND AT PARA 8.9 THE AO HAS OBSERVED THAT THE FACTS OF THE CASE ARE THE SAME AS DURING THE FINANCIAL YEAR 206-07 AND ADDED RS. 26,94,86,800/- AS DEEMED DIVIDEND. 11. THE LD. CIT(A) HAS CONSIDERED THE GRIEVANCE OF THE ASSESSEE AT PARA-6 ON PAGE-19 OF HIS ORDER AND AT PARA-6.3 ON P AGE-28, THE LD. CIT(A) HAS EXTRACTED THE FINDINGS OF THE TRIBUNAL IN ASSES SEES OWN CASE VIDE ITA NO. 1547/M/11 DT. 5.8.2011. AS THE ADDITIONS OF DE EMED DIVIDEND WERE DELETED BY THE TRIBUNAL IN A.Y. 2007-08, THE LD. CI T(A) DIRECTED THE AO TO FOLLOW THE DIRECTIONS OF THE TRIBUNAL AND DELETE THE ADDITIONS MADE U/S. 2(22)(E) OF THE ACT. AS NO DISTINGUISHING FACTS HAV E BEEN BROUGHT ON RECORD BEFORE US AND AS THE AO FOLLOWED THE FINDING S OF HIS PREDECESSOR FOR A.Y. 2007-08 IN WHICH YEAR THE ADDITIONS HAVE B EEN DELETED BY THE TRIBUNAL (SUPRA) AND THE LD. CIT(A) HAS FOLLOWED TH E FINDINGS OF THE TRIBUNAL, WE DO NOT FIND ANY REASON TO INTERFERE WI TH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 3 FOR BOTH THE YEARS IS ALSO DISMISSED. 12. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. HAWARE CONSTRUCTIONS PVT. LTD. 5 ITA NOS. 814 & 2643/M/12A.YRS.2008-09 &09-10 ASSES SEES APPEAL 13. THE COMMON GROUND IN BOTH THE YEARS ARE AS UNDE R: NOT DECIDING THE GROUND TAKEN BY THE APPELLANT, IN RESPECT OF THE AO HOLDING A VIEW THAT THE AGREEMENTS DT. 16 .4.2007 BETWEEN HAWARE ENGINEERS & BUILDERS PVT. LTD. 9HEBP L) & AGREEMENT DT. 23.4.2007 BETWEEN THE APPELLANT AND HEBPL ARE DEVISED AGREEMENTS IN THE NATURE OF AFTER THOUGHT TO ESCAPE THE RIGORS OF SECTION 2(22)(E) OF THE I.T . ACT. DETAILED SUBMISSIONS AGAINST THE ABOVE VIEWS AS ADO PTED BY THE AO IN THIS REGARD WERE FURNISHED TO THE CIT(A), WHICH HE HAS NOT DEALT WITH/DISPOSED OF WHILE DECIDING THE A PPEAL 14. AS THE ADDITIONS MADE U/S. 2(22)(E) OF THE ACT HAVE BEEN DELETED IN REVENUES APPEAL, THE GRIEVANCE OF THE ASSESSEE FOR BOTH THE YEARS BECOME OTIOSE AND ACCORDINGLY DISMISSED. 15. IN THE RESULT, THE APPEALS FILED BY THE REVENUE AND THE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH NOVEMBER, 2013 . !4 / 3( &! 5 6 7 20.11.2013 3 / 8 SD/- SD/- ( VIJAY PAL RAO ) ( N.K. BILLAIYA ) /JUDICIAL MEMBER !& / ACCOUNTANT MEMBER MUMBAI; 6 DATED 20/11/2013 . . ./ RJ , SR. PS HAWARE CONSTRUCTIONS PVT. LTD. 6 !4 !4 !4 !4 / // / ,0 ,0 ,0 ,0 9!(0 9!(0 9!(0 9!(0 / COPY OF THE ORDER FORWARDED TO : 1. )+ / THE APPELLANT 2. ,-)+ / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. ;8 ,0 , , / DR, ITAT, MUMBAI 6. 8< = / GUARD FILE. !4 !4 !4 !4 / BY ORDER, -0 ,0 //TRUE COPY// > >> > / ? ? ? ? (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI