M/s. Safal Engineer & Associates, Ahmedabad V. The Addl.CIT.,Range-9, Ahmedabad

ITA 1605/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85595 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Question of law; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI N. S. SAINI, ACCOUNTANT MEMBER. ITA. NO. 1488/AHD/2011 (ASSESSMENT YEAR:2007-08) ACIT(OSD), CIRCLE-9, AHMEDABAD AP PELLANT VS. M/S. SAFAL ENGINEERS & ASSOCIATES TOP FLOOR, SARTHIK AVENUE, FUN REPUBLIC, SATELLITE ROAD, AHMEDABAD RESPONDENT PAN: AANFS3214K ITA. NO. 1605/AHD/2011 (ASSESSMENT YEAR:2007-08) M/S. SAFAL ENGINEERS & ASSOCIATES TOP FLOOR, SARTHIK AVENUE, FUN REPUBLIC, SATELLITE ROAD, AHMEDABAD APPELLAN T VS. ADDL. CIT, RANGE-9, AHMEDABAD RESPONDENT I.T.A. NOS. 1488 & 1605/AHD/11 FOR A.Y. 07-08 (ACIT (OSD) VS. M/S. SAFAL ENGINEERS & ASSOCIATES) PAGE 2 / BY REVENUE :SHRI ROOPCHAND, SR. D.R. / BY ASSESSEE : SHRI P. M. MEHTA, A.R. /DATE OF HEARING :28.01.2015 !' /DATE OF PRONOUNCEMENT : 30.01.2015 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THESE APPEALS OF ASSESSEE AND REVENUE ARE ARISING O UT FORM THE ORDERS OF CIT(A)-XV, AHMEDABAD, DATED 28.0 1.2010 FOR THE ASSESSMENT YEAR 2007-08. SO, THEY ARE BEIN G DISPOSED OF BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONV ENIENCE. 2. IN ITA NO. 1488/AHD/2011, REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUND: 1) THE LD. COMMISSIONER OF INCOME-TAX (A)-XV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.7,00,000/- MADE BY THE ASSESSING OFFICER REGARDING PENDING EXPENDITURE OF PV SETS/PV SHEETS. 2.1 IN ITA NO. 1605/AHD/2011, ASSESSEE HAS FILED TH E APPEAL ON THE FOLLOWING GROUND: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE APPELLANTS CASE, THE DEPARTMENTAL AUTHORITIES HAVE ERRED IN CONSIDERING IT A FIT CASE FOR DISALLOWANCE OF APART OF LABOUR EXPENSES AND THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN CONFIRMIN G SUCH DISALLOWANCE OF A SUM OF RS.5,67,614 OUT OF I.T.A. NOS. 1488 & 1605/AHD/11 FOR A.Y. 07-08 (ACIT (OSD) VS. M/S. SAFAL ENGINEERS & ASSOCIATES) PAGE 3 DISALLOWANCE OF RS.8,51,420 WHICH WAS MADE BY THE ASSESSING OFFICER. 3. FIRST WE TAKE REVENUES APPEAL IN ITA NO. 1488/AHD/2011. 3.1 IN THIS CASE, THE REVENUE HAS COME IN APPEAL ON ACCOUNT OF ADDITION DELETED BY CIT(A) AND MADE BY THE ASSES SING OFFICER. THE ASSESSMENT YEAR IN THE APPEAL IS 2007 -08. THE TAX EFFECT ON THE DELETED ADDITIONS IS LESS THAN TH E THRESHOLD LIMIT, I.E. RS.4 LACS. THE APPEAL HAS BEEN FILED O N 26.05.2011. 4. WE FIND THAT THE TAX EFFECT IN THIS CASE IS LESS THAN RS.4 LACS. AS PER THE RECENT CBDT INSTRUCTION NO.5/2014 DATED 10.07.2014, THE REVENUE IS NOT PERMITTED TO FILE A PPEAL BEFORE THE TRIBUNAL IF THE TAX EFFECT IS LESS THAN RS. 4 L AVD. WE FIND SUPPORT FROM THE DECISION OF HONBLE SUPREME COURT DATED 25.03.2011 IN ITA NOS. 3 TO 5/2010. LD. DEPARTMENT AL REPRESENTATIVE FOR THE REVENUE SUBMITTED THAT INS TRUCTION NO. 5/2014 IS NOT APPLICABLE FOR THE APPEALS FILED PRI OR TO ISSUE OF THE SAID INSTRUCTIONS. IT IS ALSO SUBMITTED THAT THE FULL BENCH OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CI T VS. VIRENDRA CONSTRUCTION CO., 239 CTR 1, HELD THAT REVISED MONETARY LIMITS ARE NOT APPLICABLE TO THE PENDING APPEALS, AND IT IS IN FAVOUR OF THE REVENUE. 4.1 WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH T HE MATERIAL AVAILABLE ON RECORD. INSTRUCTION NO.5/201 4 DATED 10.07.2014 HAS REVISED THE MONETARY LIMIT FOR FIL ING THE I.T.A. NOS. 1488 & 1605/AHD/11 FOR A.Y. 07-08 (ACIT (OSD) VS. M/S. SAFAL ENGINEERS & ASSOCIATES) PAGE 4 APPEAL BY THE DEPARTMENT BEFORE INCOME-TAX APPELLAT E TRIBUNAL, HONBLE HIGH COURTS AND HONBLE SUPRE ME COURT. MONETARY LIMIT FOR FILING THE APPEAL BEFORE THE TRI BUNAL IS RS. 4 LACS; BEFORE HONBLE HIGH COURT RS. 10 LACS AND BE FORE HONBLE SUPREME COURT RS. 25 LACS. HONBLE SUPREME COURT IN THE ORDER DATED 25.03.2011 REFERRED TO ABOVE HAS HELD AS UNDER:- IT IS STATED THAT THE TAX IMPACT IN THE PRESENT CASES IS LESS THAN RS. 10.00 LACS. THE DEPARTMENT HAS R ECENTLY ISSUED AN INSTRUCTION BEARING NO. 3/2011 DATED 09.02.2011, WHICH IS IDENTICAL TO ITS EARLIER INSTRUCTION BEARING NO. 5/2008 DATED 15.05.2008 EXCEPT THAT IN SO FAR AS THE HIGH COURT IS CONCE RNED, THE MONETARY LIMIT IN RESPECT OF APPEALS WHERE T HE QUESTIONS OF LAW RAISED NEED NOT TO BE ANSWERE D, HAS BEEN RAISED FROM RS. 4.00 LACS TO RS. 10.00 LACS . THE DIVISION BENCH OF THIS COURT IN ITA NO. 89/1999 DECIDED ON 28.01.2011 HAS ALREADY HELD THAT THE INSTRUCTION BEARING NO. 5/2008 DATED 15.05.2008 WOULD APPLY EVEN TO THE OLD PENDING REFERENCES AND APPEALS. THIS PRINCIPLE WOULD THUS NATURALLY EQUA LLY APPLY TO THE INSTANT INSTRUCTION BEARING NO.3/2011 DATED 09.02.2011, AS WELL. THE TAX EFFECT BEING LESS THAN RS. 10.00 LACS, THE QUESTION OF LAW DOES NOT REQUIRE TO BE ANSWERED. THE APPEALS ARE DISPOSED OF ACCORDINGLY. 4.2 HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DELHI RACE CLUB LTD. IN ITA NO. 128/2008 DATED 03.03.20 11 HAS HELD AS UNDER:- THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS R S. 4,65,860/-. AS PER THE RECENT GUIDELINES OF THE CBDT, APPEAL IN THOSE CASES WHERE THE TAX EFFECT IS LE SS THAN RS. 10.00 LACS, ARE NOT TO BE ENTERTAINED. THIS COURT IN THE CASE OF CIT, DELHI-III VS. M/S P.S . JAIN & CO., BEING ITA NO. 179/1991 DECIDED ON 2 ND AUGUST, I.T.A. NOS. 1488 & 1605/AHD/11 FOR A.Y. 07-08 (ACIT (OSD) VS. M/S. SAFAL ENGINEERS & ASSOCIATES) PAGE 5 2010 HAS TAKEN A VIEW THAT SUCH CIRCULAR WOULD ALSO APPLY TO PENDING CASES. 4.3 IN VIEW OF THE ABOVE, INSTRUCTION NO. 5/2014 DA TED 10.07.2014 WILL APPLY TO ALL PENDING APPEALS. RESPECTFULLY FOLLOWING THE PRECEDENT, IT IS HELD THAT THE APPEA L IS NOT MAINTAINABLE IN THE INSTANT CASE AS THE TAX EFFE CT IS LESS THAN RS.4 LACS. ACCORDINGLY, IT IS HELD THAT APPEA L FILED BY THE REVENUE IS NOT MAINTAINABLE. 5. AS A RESULT, APPEAL FILED BY REVENUE IS DISMISSE D. SINCE WE DISMISS REVENUES APPEAL ON TECHNICAL POINT, SO WE ARE REFRAINING OURSELVES TO COMMENT ON THE MERIT OF ISS UE AT HAND. 6. NOW WE TAKE ASSESSEES APPEAL IN ITA NO. 1605/AHD/2011. 6.1 ASSESSEE FIRM IS IN BUSINESS OF PROJECT DEVELOP MENT ETC. FOR IMMOVABLE PROPERTY. ASSESSING OFFICER OBSERVED THAT LABOUR COST WAS PROPORTIONATELY HIGHER AS COMPARED TO USUA L RATE IN REAL ESTATE BUSINESS. HE HAS SHOWN HIGHER LABOUR P AYMENTS IN COMPARISON TO THE PAYMENT FOR MATERIALS. THE ENTIR E LABOUR EXPENDITURE OF RS.38,48,068/- WITH REGARD TO SAKET- II PROJECT PLUS RS.18,28,063/- WITH REGARDS TO SAKET-III PROJE CT WERE CLAIMED TO BE INCURRED BY ASSESSEE. THE SAME COULD NOT BE VERIFIED BECAUSE ALL PAYMENTS WERE NOT THROUGH CHEQ UES AND CASH PAYMENTS HAVE ALSO BEEN MADE. ACCORDINGLY, DISALLOWANCE WAS MADE ON THIS ACCOUNT. IN APPEAL, CIT(A) RESTRICTED THE DISALLOWANCE TO 10% OF LABOUR EXPENS ES OF I.T.A. NOS. 1488 & 1605/AHD/11 FOR A.Y. 07-08 (ACIT (OSD) VS. M/S. SAFAL ENGINEERS & ASSOCIATES) PAGE 6 RS.56,76,131/-. TAKING ALL FACTS AND CIRCUMSTANCES, DISALLOWANCE IS RESTRICTED TO 5% INSTEAD OF 10% DON E BY CIT(A). ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 7. AS A RESULT, REVENUES APPEAL IS DISMISSED WHILE ASSESSEES APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF JANUARY, 2015. SD/- SD/- (N. S. SAINI) (SHAILENDR A KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMB ER TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. ,, - / CONCERNED CIT 4. -- / CIT (A) 5. &12 %, , / DR, ITAT, AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # , 9/ , , ;