The Assistant commissioner of Income Tax 1, BHILAI(CG) V. M/s Kulkarni & Sahu Associaltes, BHILAI(CG)

ITA 154/BIL/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2438 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHITAL SHASHWAT VERMA
• Assessee Lawyers: D K DUTTA

Judgement Text

, RA IPUR IN THE INCOME TA X A PPELLA TE TRIBUNA L, RA IPUR BEFORE S/SHRI MUKUL SHRAW AT ( JM) SHAMIM YAH Y A (AM) , , ./ I.T.A. NO. 154/BIL/2012 ( / ASSESSMENT YEAR : 2009 - 2010 ) THE ACIT - 1, 32/32, BUNGLOWS, BHILAI / VS. M/S. KULKARNI & SAHU ASSOCIATES, B - 495, C.S.SMRITI NAGAR, BHILAI ./ ./ PAN/GIR NO. : AAEFK 9416 C ( / AP PELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SMT. SHITAL SHASHWAT VERMA / RESPONDENT BY : SHRI D.K.DUTTA / DATE OF HEARING : 11 - 02 - 2016 / DATE OF PRON OUNCEMENT : 12 - 02 - 2016 / O R D E R PER MUKUL SHRAWAT, JM THIS IS AN APPEAL FILED BY THE REVENUE EMANATING FROM AN ORDER OF THE LD CIT(A), RAIPUR DATED 8.6.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. 2. THE ONLY GROUND RAISED BY THE REVEN UE IS REPRODUCED HEREUNDER: W HETHER IN THE LAW AND ON FACTS & CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.91,79,231/ - MADE BY THE AO ON ACCOUNT OF PROVISION MADE IN P&L ACCOUNT TOWARDS ROAD WORK MAINTENANCE 2 I.T.A. NO.154/BIL/2012 ASSESSMENT YEAR :2009 - 2010 2. WH I LE PASSING THE ORDER U/S.143(3) OF THE ACT DATED 7.12.2011, IT WAS FOUND BY THE ASSESSING OFFICER THAT THE ASSESSEE FIRM IS IN ROAD CONSTRUCTION BUSINESS. THE ASSESSEE HAD EXECUTED THE ROAD CONSTRUCTION CONTRACT FOR PW D, CHHATISGARH AND PMGSY , CHHATTISG ARH. I T WAS FOUND THAT THE ASSESSEE HAD MADE PROVISION OF RS.3,00,41,408/ - TOWARDS ROAD WORK MAINTENANCE . I T HAS ALSO BEEN NOTED BY THE AO THAT SIMILAR PROVISION WAS MADE IN THE PRECEDING YEAR AMOUNTING TO RS.2,08,62,177/ - . THE EXPLANATION OF THE ASS ESSEE WAS THAT AS PER THE CONTRACT PROCESS, AN OBLIGATION FOR REPAIR AND MAINTENANCE OF THE ROAD CONSTRUCTED, HENCE, THE PROVISION WAS MADE AT A FIXED RATE OF 15% ON THE CONTRACT RECEIPTS PERTAINING TO PW D CONTRACT AND 10% PERTAINING TO PMGSY CONTRACT. TH E ASSESSEE WAS UNDER OBLIGATION TO REPAIR AND MAINTENANCE OF ROADS CONSTRUCTED BY IT, RESPECTIVELY FOR 3 TO 5 CONSECUTIVE YEARS. T HE AO WAS NOT CONVINCED AND HELD THAT THE NATURE OF THE LIABILITY WAS A CONTINGENT LIABILITY, THEREFORE, NOT ALLOWABLE. T HE AO HAS ALSO MENTIONED THAT IN THE PAST ASSESSMENT YEARS, THE IMPUGNED PROVISION WAS DISALLOWED. A CCORDINGLY, ADDITION OF RS.91,79,231/ - WAS MADE. WH EN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE LD CIT(A) HAS FOLLOWED FEW DECISIONS A ND HELD AS UNDER: . IN THE COURSE OF APPEAL PROCEEDINGS, THE LD. COUNSEL FOR THE APPELLANT CONTENDED THAT AS PER TERMS AND CONDITIONS OF THE CONTRACT, THE FIRM IS RESPONSIBLE FOR PERFORMANCE OF THE WORK CARRIED OUT BY IT FOR A PERIOD OF THREE YEARS AND PE RF ORMANCE SECURITY WAS REQUIRED TO BE FURNISHED IN THE SHAPE OF BANK GUARA NTEE FOR PERIOD OF 36 MONTHS. IF THE CONTRACTOR FAILS TO SUBMIT BANK GUARANTEE, THEN 15% OF THE AMOUNT OF THE BILL SHALL BE DEDUCTED FROM HIS BILL. HE FURTHER SUBMITTED THAT THIS ISS UE HAS BEEN DECI DED IN ITS FAVOUR BY THE HON'BLE JURISDICTIONAL TRIBUNAL IN APPELLANT'S OWN CASE IN ITA NO. 212/NAG/2006 DATED: 06.01.2006 FOR A.YR. 2003 - 04 AND THE DECISION OF THE HON'BLE TRIBUNAL IS BINDING IN THE SUBSEQUENT 3 I.T.A. NO.154/BIL/2012 ASSESSMENT YEAR :2009 - 2010 ASSESSMENT YEAR VIDE APPEAL I N ITA NO.61/ BLPR/2009. COPIES OF THE SE ORDERS WERE FIELD. ON THE BASIS OF ELABORATE SUBMISSIONS MADE, THE APPELLAN T CONTENDED THAT THE DISALLOWANCE MADE BY THE AO IS NOT JUSTIFIED. FINALLY, THE APPELLANT ALSO RELIED ON THE FOLLOWING CASES: - BHARAT ERATH MOVER VS C1T (2000) 245 ITR 428 UNION OF INDIA VS KAMLAKSHI FINANCE CORPORATION LTD. AS QUOTED IN FINANCE OFFICER, MAHARSHI DAYANAND UNVERSITY VS ITO 113 IT J (DEL) 914 AGRAWAL HOUSING & LEASING LTD VS CIT 257 ITR 235 (MP) 3.4 I HAVE GONE THROUGH THE OBSERVATIONS OF THE AO AND SUBMISSIONS OF THE APPELLANT. THE ISSUE OF PERFORMANCE GUARANTY HAS BEEN CONSISTENTLY DECIDED BY THE HON'BLE JURISDICTIONAL TRIBUNAL IN THE APPELLANT'S FAVOUR. THERE IS NO CHANGE IN THE FACTS OF THE CASE. AS PER THE SPECIAL CONDITION INGRAINED IN THE CONTRACT TERMS AND CONDITIONS, THE APPELLANT WAS REQUIRED TO MAINTAIN PERFORMANCE OF THE WORK EXECUTED FOR A PERIOD OF THREE YEARS. THEREFORE, THOUGH QUANTIFICATION IS DEFERRED, THE LIABILITY STANDS CREATED ON THE DAT E OF AGREEMENT AND THUS, IT CANNOT BE SAID TO BE A CONTINGENT LIABILITY. THE DECISION OF THE HON'BLE TRIBUNAL IS BINDING ON THE UNDERSIGNED. UNDER THESE CIRCUMSTANCES, THE DISALLOWANCE MADE BY THE AO IS CANCELLED AND THE APPEAL IS ALLOWED. 3. AFTER HEARI NG THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE FOUND THAT THIS ISSUE IS NOW SQUARELY COVERED FIRSTLY BY THE ORDER OF THE RESPECTIVE CO - ORDINATE BENCH PRONOUNCED IN ASSESSEES OWN CASE BEARING ITA NO.212/NAG/2006 DATED 6.`1.2006 FOR A.Y. 2003 - 04 AS NOTED BY THE LD CIT(A). S ECONDLY, THIS VERY ISSUE HAS ALSO BEEN CONSIDERED BY HONBLE JURISDCITIONAL HIGH COURT OF BILASPUR, WHEREIN, IN A BUNCH OF CASES, ASSESSEES CASE WAS LISTED AS TAX CASE NO.36 OF 2012 AND 37 OF 2012 APPELLANT - DCIT VS RESPONDENT - M/S. KU LKARNI & SAHU ASSOCIATES, JUDGMENT DATED 12.11.2013. I N THIS DECISION, THE HONBLE HIGH COURT HAS HELD THAT IT WAS A COMMON KNOWLEDGE THAT THE ROADS GET DETERIORATED WITH THE PASSAGE OF TIME, HENCE, REPAIR IS REQUIRED. T HE LIABILITY WAS, THEREFORE, AN AS CERTAINED LIABILITY WITH A REASONABLE CERTAINTY, HENCE, ALLOWABLE AS PER LAW. RESPECTFULLY FOLLOWING THE PAST HISTORY OF THE CASE AS WELL AS THE JUDGMENT OF 4 I.T.A. NO.154/BIL/2012 ASSESSMENT YEAR :2009 - 2010 HONBLE HIGH COURT (SUPRA), WE FIND NO FOR CE IN THIS GROUND OF APPEAL OF THE REVENUE. HENCE, WE R EJECT THE SAME. 4. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 /02./2016 . SD/ - SD/ - ( , ) ( , ) SHAMIM Y AHY A , ACCOUNT ANT MEMBER MUKUL SHRA WA T , JUDICIAL M EM BER RAIPUR , DATED 12 / 02 /20 1 6 . . ./ PARIDA , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT : 2. / THE RESPONDENT : 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT , RAIPUR 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SR. PS, ITAT, CAMP: RAIPUR