M/s Rohit Kumar Das Construction Pvt. Ltd, Bhubaneswar V. ACIT, Bhubaneswar

ITA 154/CTK/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4451 (ITAT-CUTTACK)
• Duration Of Justice: 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 24-03-2011
• Court: TRIBUNAL
• Department Lawyers: M R
• Assessee Lawyers: S C BHADRA
• Keywords: Business income; Depreciation

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK ( ) BEFORE . . , , HONBLE SHRI K.K.GUPTA, ACCOUNTANT MEMBER. /AND . . . , S HRI K.S.S.PRASAD RAO , JUDICIAL MEMBER / I.T.A.NO. 154/CTK/2011 / ASSESSMENT YEAR 2002 - 03 M/S.ROHIT KUMAR DAS CONSTRUCTION PVT. LTD., B - 3, B.D.A.DUPLEX COLONY, BARAMUNDA, BHUBANESWAR. PAN: AABCR 1816 R - - - VERSUS - ASST.CO MMISSIONER OF INCOME - TAX, CIRCLE 2(1), BHUBANESWAR. ( /APPELLANT ) ( / RESPONDENT ) / FOR THE APPELLANT : / SHRI S.C.BHADRA, AR / FOR THE RESPONDENT: / SHRI M.R.PANIGRAHI, DR / ORDER . . , , SHRI K.K.GUPTA, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE AGITATES THE ACTION OF THE LEARNED CIT(A) IN DISMISSING THE ASSESSEES CONTENTION SEEKING RECTIFICATION U/S.154 PETITIONED BEFORE THE ASSESSING OFFICER ON THE APPEAL EFFECT GIVEN BY THE ASSESSING OFFICER IN PURSUANCE TO AN ORDER OF THE TRIBUNAL DT.21.2.2006. 2. THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE IS A CIVIL CONTRACTOR HAVING HUGE TURNOVER AND RETURNED INCOME FROM CONTRACT RECEIPTS OTH ER THAN JOINT VENTURE RECEIPTS AND INCOME INCIDENTAL TO THE BUSINESS OF CIVIL CONTRACTS. THE ESTIMATION OF INCOME ON THE BASIS OF GROSS RECEIPTS AS ASSESSED BY THE ASSESSING OFFICER WAS CONSIDERED BY THE FIRST AND SECOND APPELLATE AUTHORITIES WHEN FOR THE IMPUGNED ASSESSMENT YEAR THE TRIBUNAL WAS PLEASED TO HOLD THAT INCOME FROM CONTRACT RECEIPTS BE BROUGHT TO TAX AT 12% AND THEREAFTER SUFFER DEPRECIATION. AS PER THE TRIBUNALS ORDER, THE ASSESSING OFFICER WAS DIRECTED TO RECOMPUTED THE BUSINESS INCOME OF T HE I.T.A.NO.154/CTK/2011 2 ASSESSEE AT 12% BEFORE DEPRECIATION WHICH WAS GIVEN APPEAL EFFECT BY THE ASSESSING OFFICER WHEN THE ASSESSING OFFICER CONSIDERED THE GROSS RECEIPTS AT 29..07 CRORES TO BE REDUCED BY MATERIALS SUPPLIED BY THE DEPARTMENT AT 13,68,000 OF WHICH 12% NET INCOME WAS SUBJECTED TO DEPRECIATION COMPUTING THE NET PROFIT AT 26,91,690.OTHER RECEIPTS BEING SUB - CONTRACT RECEIPTS WAS ADDED THERETO AMOUNTING TO 41,81,328.IT WAS POINTED OUT BY THE ASSESSEE PETITIONER U/S.154 THAT THE GROSS RECEIPTS AMOUNTING TO 29.07 CRORES INCLUDED A SUM OF 5.47 CRORES AS RECEIP TS FROM JOINT VENTURES WHICH HAVE BEEN ROUTED THROUGH THE PROFIT & LOSS ACCOUNT AS RECEIPTS AND PAYMENTS WITHOUT EFFECTING ITS TAXABILITY AT 12%. THE ASSESSING OFFICER REJECTED THE ASSESSEE - PETITIONERS CONTENTION BY INDICATING THAT THE TRIBUNAL HAD NOT SP ECIFIED SUCH ADDITION AND DELETION INSOFAR AS THE OTHER INCOME HAS NOT BEEN GIVEN NATURE OF INCOME AS INCIDENTAL TO BUSINESS. ON APPEAL, THE LEARNED CIT(A) FURTHER AGGRAVATED THE ISSUE BY INDICATING THAT THE TRIBUNAL HAD NOT DIRECTED THAT THE NATURE OF INC OME HAS TO BE ESTABLISHED BEYOND DOUBT FOR RENDERING ITS TAXABILITY @12% CONFIRMED THE ASSESSING OFFICERS DISMISSAL OF ASSESSEES PETITION. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT A MISTAKE APPARENT FROM RECORD WAS NOTED BY THE ASSESSING OFFICER ITSELF IN VIEW OF THE FACT THAT THE DIFFERENT HEADS UNDER WHICH THE TOTAL GROSS RECEIPTS ACCUMULATED TO 29,.07 CRORES WAS SEPARATELY CONSIDERED FOR TAXATION BEING INTEREST ON INVESTMENT AND DEPOSITS, PETTY MISC. RECEIPTS , INSURANCE CLAIM TO BE TA XED AS NON - BUSINESS INCOME AT 41,81,328. THEREFORE, THE RECEIPT OF 5.47 CRORES WAS GLARING FOR NOT TO BE CONSIDERED FOR TAXATION AS BUSINESS INCOME IN VIEW OF THE CONTRA ENTRY SUGGESTING EXPENSES INCURRED FOR RAISING A CLAIM FOR THE JOINT VENTURE WAS INS CRIBED IN THE PROFIT & LOSS ACCOUNT ITSELF. IN OTHER WORDS 12% TAXATION THERE ON WAS NOT THE INTENTION OF THE TRIBUNAL ON I.T.A.NO.154/CTK/2011 3 THE SAME PROFIT & LOSS ACCOUNT CONSIDERED BY IT WHEN THEY RESTORED AND DIRECTED THE ASSESSING OFFICER TO TAX @12% OF THE BUSINESS INCO ME. THE JOINT VENTURE IS BEING TAXED SEPARATELY WHICH WAS NOTED BY THE TRIBUNAL AND ALSO NOTED BY THE ASSESSING OFFICER INSOFAR AS THE JOINT VENTURE HAS BEEN TAXED SEPARATELY BY THE ASSESSING OFFICER, CIRCLE XV, CHENNEI, A COPY OF WHICH HAS BEEN ENCLOSED I N THE PAPER BOOK AT PAGES 36 TO 42. HE SUBMITTED THEREFORE THAT THE INCOME COULD NOT BE TAXED UNLESS IT HAS BEEN CLAIMED SEPARATELY AND WOULD RESULT IN TAXATION THEREOF TWICE WHICH WAS BROUGHT TO THE NOTICE OF THE ASSESSING OFFICER U/S.154.THE LEARNED CIT( A) ERRED IN MISINTERPRETING THE ORDER OF THE TRIBUNAL INSOFAR AS IT WAS NEVER THE CASE OF THE ASSESSEE BEFORE THE TRIBUNAL THAT THE OTHER INCOME WAS NOT BUSINESS INCOME OF THE ASSESSEE. HE PRAYED THAT A PROPER DIRECTION MAY BE GIVEN TO BRING INTO TAX THE A PPROPRIATE INCOME @12% IN ACCORDANCE WITH THE PROVISIONS OF LAW AS CONFIRMED BY THE TRIBUNAL. 4. THE LEARNED DR SUBMITTED THAT THE TRIBUNAL HAS NOT SPECIFICALLY DIRECTED THE ASSESSING OFFICER TO SEGREGATE THE OTHER INCOME BEING INCOME FROM JOINT VENTURE A ND INCOME FROM INTEREST ON FIXED DEPOSITS HELD AS MARGIN, SCRAP SALES, INSURANCE CLAIMS. RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF T.S. BALARAM, ITO V. VOLKART BROS. [ 82 ITR 50 (SC) ], THE LEARNED DR SUBMITTED THAT A DEBATABLE ISSUE CANNOT BE CONSIDERED FOR RECTIFICATION U/S.154 INSOFAR AS THE MISTAKE TO BE RECTIFIED MUST BE AN OB VIOUS AND PATENT MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISH ED BY A LONG - DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO VIEWS. THE ASSESSEE OUGHT TO HAVE CLARIFIED THE POSITION BY ADDRESSING THE SAME TO THE TRIBUNAL WHO IN THEIR COMPOSITE ORDER FOR THREE AYS INCLUDING THE IMPUGNED ASSESSMENT YEAR DIRECTED THE ASSESSING OFFICER TO TAX BUSINESS INCOME AT 12%. THE LEARNED COUNSEL FOR THE ASSESSEE STATES THE INCOME I.T.A.NO.154/CTK/2011 4 SUGGESTING THAT THE JOINT VENTURE RECEIPTS WAS NOT PART OF THE OTHER INCOME IN VIEW OF THE FACT THAT THE ENTIRE RECEIPTS CREDITED IN THE PROFIT & LOSS ACCOUNT WERE ON THE BASIS OF BILLS RAISED BY INCURRING THE EXACT AMOUNT CLAIMED IN THE EXPENSES BY THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS, WE ARE PREVAILED UPON BY THE LEARNED DRS SUGGESTION THAT A RECTIFICATION CAN ONLY BE CARRIED OUT U/S.154 WHEN A MISTAKE IS APPARENT FROM RECORD. WE DO FIND THAT A PERCENTAGE HAS BEE N FIXED ON GROSS RECEIPTS CONSIDERED BY THE ASSESSING OFFICER ON THE DIRECTION OF THE TRIBUNAL AT 29.07 CRORES WHICH INCLUDES 5.47 CRORES BEING RECEIPTS ON ACCOUNT OF JOINT VENTURE AND NOT OF THE ASSESSEE AS SUCH. THIS FACT WAS ALSO BEFORE THE ASSESSING OFFICER IN THE LIGHT OF THE FACT THAT THE ENTIRE RECEIPTS OF JOINT VENTURE HAS BEEN CLAIMED BY THE ASSESSEE BY CLAIMING THE EXPENSES AND IDENTIFYING THE EXPENSES AS BELONGING TO THE JOINT VENTURE WHICH ONLY COULD BE RECONSIDERED AND NOT REQUIRED FOR TAXATION @12%.IN OTHER WORDS, THE SAME INCOME CANNOT BE TAXED TWICE WAS BEFORE THE TRIBUNAL WHO DIRECTE D THE ASSESSING OFFICER TO TAX @12% ONLY ON BUSINESS INCOME WHEN THE ASSESSEE HAD SOUGHT TO AGITATE THE ADOPTION OF AN ESTIMATION OF INCOME BY THE ASSESSING OFFICER ON THE TOTAL RECEIPTS FOR ALL THREE AYS WHICH INCLUDES THE IMPUGNED ASSESSMENT YEAR AS WE LL. THE LEARNED COUNSEL HAS SUGGESTED THAT THE RECEIPTS ON ACCOUNT OF SUB - CONTRACT RECEIPTS, SALE OF SCRAPS, INSURANCE CLAIM ARE NOT CONSISTENT INSOFAR AS THE TRIBUNAL HAD CLEARLY INDICATED THE GROSS CONTRACT RECEIPTS WERE TO BE TAXED @12%.THE LEARNED COUN SEL HAS ALSO SUBMITTED THAT THE JOINT VENTURE RECEIPTS ARE SEPARATELY TAXED BY THE ASSESSING OFFICER AT CHENNAI WHICH COPY OF THE ORDER HAS BEEN PLACED IN THE PAPER BOOK THEREFORE CLEARLY INDICATES THAT A MISTAKE APPARENT ON RECORD HAS CREPT IN THE APPEAL EFFECT ORDER GIVEN BY THE I.T.A.NO.154/CTK/2011 5 ASSESSING OFFICER WHEN HE SOUGHT TO TAX THE GROSS RECEIPTS WITHOUT INDICATING AS TO HOW 5.47 CRORES EXPENSES CLAIMED HAVE BEEN DISALLOWED. A CONTRA ENTRY THEREFORE, COULD NOT BE SUBJECTED TO TAXATION WAS NEVER THE INTENTION OF TH E TRIBUNAL IN THE FIRST PLACE. THE NATURE OF INCOME WHETHER BUSINESS OR OTHERWISE MAY BE A DEBATABLE POINT BUT WAS NOT PETITION ED U/S.154 BY THE ASSESSEE. THE RECEIPTS FROM JOINT VENTURE WAS CLARIFIED BY HIGHLIGHTING THE SAME IN THE PETITION U/S.154 BY THE ASSESSEE WHEN THE DIRECTION OF THE TRIBUNAL WAS ADHERED TO BY IDENTIFYING THE AMOUNTS TO BE SUBJECTED TO ON ESTIMATION AT 12%. WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAD CLARIFIED THE NATURE OF INCOME BEING MACHINERY HIRE PAYMENTS RECEIPTS FROM J OINT VENTURES, INCOME FROM OTHER SOURCES WHICH INCLUDED INTEREST ON INVESTMENT AND DEPOSITS, INSURANCE CLAIM ETC., THEREFORE, WAS RIGHTLY CONSIDERED FOR APPLICATION U/S.154 BUT DISMISS ED BY THE ASSESSING OFFICER HOLDING THAT THE TRIBUNAL HAD NOT IDENTIFIED THE JOINT VENTURE RECEIPTS NOT TO BE INCLUDED FOR COMPUTATION OF TAXATION @12% AS THE BUSINESS RECEIPTS. WE ARE OF THE CONSIDERED VIEW THAT AN ASSESSMENT ON ESTIMATION REQUIRES CONSIDERATION ON THE STRENGTH THAT INCOME HAS TO BE DETERMINED FROM RECEIPTS W HICH HAVE BEEN RENDERED TO TAX BY THE ASSESSEE AND NOT THAT ALL RECEIPTS BECOME INCOME. IT MAY BE DEBATABLE ABOUT THE NATURE OF INCOME WHETHER BUSINESS OR OTHERWISE BUT RECEIPTS WHICH HAVE BEEN RENDERED TO TAX ELSEWHERE AND ACCEPTED BY THE DEPARTMENT, THER EFORE, CANNOT BE BROUGHT TO TAXATION UNDER THE GARB OF INTERPRETATION OF THE TRIBUNALS ORDER WHICH ORDER IS SILENT ABOUT THE TAXATION OF A PARTICULAR RECEIPT WHETHER AS BUSINESS INCOME OR HAVING BEEN RENDERED TO TAX ELSEWHERE. THE PRINCIPLE OF NATURAL JUS TICE CLEARLY INDICATES THAT THE SAME COULD NOT BE TAXED TWICE WAS SOUGHT TO BE PUT FORTH BY THE ASSESSEE - PETITIONER U/S.154 WHICH HAS BEEN REJECTED ON MISINTERPRETATION OF THE TRIBUNALS ORDER. IN THE LIGHT THEREFORE, WE DIRECT THE I.T.A.NO.154/CTK/2011 6 ASSESSING OFFICER TO DEL ETE THE ESTIMATION OF INCOME @12% INCOME ON 5.47 CRORES BEING THE JOINT VENTURE RECEIPTS RENDERED TO TAXATION BY THE ASSESSEE AT CHENNAI. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON DT. 21 ST APRIL, 2011 S D/ - S D/ - ( . . . ) , ( K.S.S.PRASAD RAO), JUDICIAL MEMBER ( . . ) , , (K.K.GUPTA), ACCOUNTANT MEMBER. ( ) DATE: 21 ST APRIL, 2011 - COPY OF THE ORDER FORWARDED TO: 1 . / THE APPELLANT : M/S.ROHIT KUMAR DAS CONSTRUCTION PVT. LTD., B - 3, B.D.A.DUPLEX COLONY, BARAMUNDA, BHUBANESWAR. 2 / THE RESPONDENT: ASST.COMMISSIONER O F INCOME - TAX, CIRCLE 2(1), BHUBANESWAR. 3 . / THE CIT, 4 . ( )/ THE CIT(A), 5 . / DR, CUTTACK BENCH 6 . GUARD FILE . / TRUE COPY, / BY ORDER, [ ] SENIOR PRIVATE SECRETARY ( ), ( H.K.PADHEE ), SENIOR.PRIVATE SECRETARY.