DCIT, Gurgaon V. M/s. ICI C&C JV, Gurgaon

ITA 1652/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1367 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 29-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL SENIOR
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.1652/DEL./2016 (ASSESSMENT YEAR : 2011-12) DCIT, CIRCLE 1 (1), VS. M/S. ICI C&C JV, GURGAON. 2 ND FLOOR, BLOCK 2, VATIKA BUSINESS PARK, SECTOR 49, SOHNA ROAD, GURGAON. (PAN : AAAAI4184N) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SMT. NAINA SOIN KAPIL, SENIOR DR DATE OF HEARING : 26.08.2019 DATE OF ORDER : 11.09.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, DCIT, CIRCLE 1(1), GURGAON (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 25.01.2016 PASSED BY THE COMMI SSIONER OF INCOME - TAX (APPEALS)-1, GURGAON QUA THE ASSESSM ENT YEAR 2011-12 ON THE GROUNDS INTER ALIA THAT :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. C IT (A) HAS ERRED IN DELETING THE ADDITION OF RS.2,60,01,52 2/- MADE BY THE ASSESSING OFFICER BY ADOPTING PERCENTAGE OF COMPLETION METHOD (POCM) AS PER AS-7.. ITA NO.1652/DEL./2016 2 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : ASSESSEE IS A JOINT VENTURE COMPANY ENGA GED IN INSTALLATION AND CIVIL CONSTRUCTION OF TRANSMISSION LINES IN THE STATE OF U.P. AND WORK CONTRACT HAD BEEN AWARDED TO IT BY ISOLUX INGENERIA S.A.-MAN-JV WHO HAS RECEIVED WORK CONTRACT FROM UP POWER TRANSMISSI ON COMPANY LTD.. ASSESSING OFFICER (AO) MADE ADDITION OF RS.2 ,60,01,522/- BY APPLYING AS 7 WHEREAS ASSESSEE HAS TAKEN PERCENTA GE OF COMPLETION METHOD BASED ON PERCENTAGE OF TOTAL BUDGETED COST T HAT WAS ACTUALLY INCURRED BY END OF THE GIVEN YEAR. AO PROCEEDED TO CONCLUDE THAT THE CALCULATION OF REVENUE RECOGNITION BY PERCENTAGE CO MPLETION METHOD, THE BUDGETED REVENUE IS TAKEN AS RS.60,70,48,846/- AND CALCULATED REVENUE AS PER AS 7 AS UNDER :- BUDGETED COST RS.56,78,47959/- CUMULATIVE ACTUAL COST RS.6,72,53,820/- CUMULATIVE ACTUAL COST TO BE CONSIDERED FOR AS- 7 RS.6,72,53,820/- %AGE COMPLETION RS.6,72,53,820/- / 5,67,48,47,959 X 100 = 11.84% REVENUE AS PER AS-7 11.84% OF 60,70,48,846/- = RS.7,18,96,629/- 3. SO, DECLINING THE CONTENTIONS RAISED BY THE ASSE SSEE THAT CONTRACT VALUE HAS BEEN REDUCED FROM RS.82 CRORES TO RS.60 C RORES, AO TAKEN THE CONTRACT REVENUE AS RS.9,78,98,151/- INSTEAD OF RS. 7,18,96,629/- TAKEN BY THE ASSESSEE AND MADE ADDITION OF RS.2,60,01,522 /-. ITA NO.1652/DEL./2016 3 4. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION BY ALLOWING TH E APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF FILING THE PRESENT APPEAL. 5. ASSESSEE HAS NOT PREFERRED TO PUT IN APPEARANCE DESPITE ISSUANCE OF THE NOTICE AND CONSEQUENTLY, WE PROCEEDED TO DEC IDE THE PRESENT APPEAL WITH THE ASSISTANCE OF THE LD. DR AS WELL AS ON THE BASIS OF DOCUMENTS AVAILABLE ON THE FILE. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. FROM THE GROUNDS RAISED BY THE REVENUE, ORDER PA SSED BY THE LOWER REVENUE AUTHORITIES, ARGUMENTS ADDRESSED AND FACTS & CIRCUMSTANCES OF THE CASE, THE SHORT QUESTION ARISE S FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER BUDGETED REVENUE OF THE PROJECT HAS BEEN REDUCED FROM RS.82.68 CRORES TO RS.60.70 CRORES? 8. UNDISPUTEDLY, ORIGINAL VALUE OF THE CONTRACT WAS RS.82.68 CRORES. BEFORE AO, THE ASSESSEE HAS NOT PRODUCED ANY EVIDEN CE WHATSOEVER TO PROVE THE FACT THAT THE ORIGINAL VALUE OF THE CONTR ACT WAS REDUCED FROM RS.82.68 CRORES TO RS.60.70 CRORES. PERUSAL OF THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) DOES NOT DISCLOSE IF EVID ENCE TO PROVE THIS FACT ITA NO.1652/DEL./2016 4 WAS BROUGHT ON RECORD WHO HAS RATHER PROCEEDED TO D ELETE THE ADDITION ON THE GROUND THAT IN SUCH EVENTUALITY, THE AO HAS OPTION TO GO WITH ONE SET OF FIGURE I.E. EITHER ORIGINAL BUDGETED REV ENUE AND ORIGINAL BUDGETED COST OR REVISED BUDGETED REVENUE OR REVISE D BUDGETED COST AND THE AO WAS NOT JUSTIFIED IN PICKING AND CHOOSING TH E ORIGINAL BUDGETED REVENUE AND REVISED BUDGETED COST TO APPLY AS-7. 9. HOWEVER, WE ARE CONVINCED THAT IN CASE THE BUDGE TED REVENUE OF THE PROJECT HAS BEEN REDUCED FROM RS.82.68 CRORES T O RS.60.70 CRORES THEN ADDITION MADE BY AO IS NOT SUSTAINABLE. IN TH ESE CIRCUMSTANCES, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE IS REQ UIRED TO BE VERIFIED BY THE AO AND ASSESSEE SHALL PRODUCE THE NECESSARY EVI DENCE IN THIS REGARD IN THE FORM OF COMMUNICATION OR SOME SUPPLEMENTARY CONTRACT ETC. IN CASE, ORIGINAL BUDGETED REVENUE IS VERIFIED TO BE R EDUCED FROM RS.82.68 CRORES TO RS.60.,70 CRORES THEN NO ADDITION IS SUST AINABLE, OTHERWISE ASSESSMENT ORDER PASSED BY THE AO SHALL PREVAIL. C ONSEQUENTLY, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTI CAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF SEPTEMBER, 2019. SD/- SD/- (PRASHANT MAHARISHI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 TH DAY OF SEPTEMBER, 2019 TS ITA NO.1652/DEL./2016 5 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-1, GURGAON. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.