Starworth Infrastructure And Construction Ltd, Bangalore V. The Deputy Commissioner of Income Tax, Circle-12(3), Bangalore

ITA 1713/BANG/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9047 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 28-07-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 03-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHINI MISRA
• Assessee Lawyers: V SRINIVASAN
• Keywords: Wholly owned subsidiary; Set aside

Judgement Text

ITA NO.1713/BANG/2017 STARWORTH INFRASTRUCTURE AND CONSTRUCTION LTD., BAN GALORE IN THE INCOME TAX APPELLATE TRIBUNAL BBENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO.1713/BANG/2017 ASSESSMENT YEAR: 2011-12 STARWORTH INFRASTRUCTURE AND CONSTRUCTION LTD. 130/1, ULSOOR ROAD BANGALORE-560 042 PAN NO : AANCS0437M VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-12(3) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SRI V. SRINIVASAN, A.R. RESPONDENT BY : SMT. PRIYADARSHINI MISRA, D.R. DATE OF HEARING : 28.07.2020 DATE OF PRONOUNCEMENT : 07.08.2020 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 27.3.2017 PASSED BY LD. CIT(A)-6, BENGALURU A ND IT PERTAINS TO THE ASSESSMENT YEAR 2011-12. THE GROUND S URGED BY THE ASSESSEE RELATE TO THE ADDITION OF RS.15.00 LAK HS MADE BY THE A.O., BEING THE DISALLOWANCE MADE ON ESTIMATED BASIS, OUT ITA NO.1713/BANG/2017 STARWORTH INFRASTRUCTURE AND CONSTRUCTION LTD., BAN GALORE PAGE 2 OF 8 OF EXPENDITURE CLAIMED TOWARDS PURCHASE OF CEMENT A ND PURCHASE OF OTHER MATERIALS. 2. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE COMPANY IS A 100% SUBSIDIARY OF M/S. PURAV ANKARA LTD., A LISTED COMPANY AND IS ENGAGED IN THE BUSINE SS OF CIVIL CONSTRUCTION. THE RETURN FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2011-12 WAS TAKEN UP BY THE A.O. FOR SCRUTINY. THE A.O. NOTICED THAT THE DIRECT EXPENSES CLAIMED BY THE ASS ESSEE INCLUDED PURCHASE OF CEMENT AND PURCHASES OF OTH ER MATERIALS. THE A.O. CALLED FOR THE DETAILS FROM TH E ASSESSEE. ACCORDING TO THE A.O., THE ASSESSEE WAS NOT HAVING COMPLETE VOUCHERS AND MOST OF THE BILLS WERE SELF-MADE. ACCO RDINGLY, THE A.O. DISALLOWED A SUM OF RS.5.00 LAKHS OUT OF CEMEN T PURCHASE EXPENSES AND RS.10.00 LAKHS OUT OF OTHER MATERIALS PURCHASED. ACCORDINGLY, THE A.O. MADE ADDITION OF RS.15.00 LAK HS IN AGGREGATE. THE SAME WAS CONFIRMED BY LD. CIT(A) AND HENCE THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 3. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS FUR NISHED ALL THE DETAILS WITH REGARD TO THE PURCHASE OF CEMENT A ND OTHER ITA NO.1713/BANG/2017 STARWORTH INFRASTRUCTURE AND CONSTRUCTION LTD., BAN GALORE PAGE 3 OF 8 MATERIALS BEFORE THE A.O, VIDE ITS LETTER DATED 3.2 .2014 FURNISHED BEFORE THE A.O. INVITING OUR ATTENTION TO THE COPY OF THE SAID LETTER AND ALSO THE ANNEXURES ATTACHED THE RETO, THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS FURNISHED COMP LETE DETAILS OF MATERIALS PURCHASED AND OTHER DIRECT COSTS INCUR RED IN CONSTRUCTION ACTIVITIES. FURTHER, THE ASSESSEE HAS ALSO FURNISHED EXTRACT OF PURCHASE REGISTER, WHICH CONTAINED THE DETAILS OF SUPPLIERS NAME, ITEMS PURCHASED, PURCHASE ORDER NU MBER, INWARD RECEIPT VOUCHER NUMBER AND DATE OF RECEIPT O F MATERIALS. THE ASSESSEE ALSO FURNISHED THE DETAILS OF SUPPLIER S, WHO HAVE SUPPLIED THE MATERIALS ALONG WITH THEIR RESPECTIVE TIN NUMBERS. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS MADE A LL THE PAYMENTS TO THE SUPPLIERS THROUGH BANKING CHANNELS ONLY. HE SUBMITTED THAT THE BOOKS OF ACCOUNTS OF THE ASSESSE E HAVE BEEN AUDITED. HE SUBMITTED THAT THE AO HAS NOT FOUND FA ULT WITH ANY OF THESE DETAILS. HE SUBMITTED THAT ALL THE PU RCHASES ARE SUPPORTED BY VOUCHERS, BOOKS OF ACCOUNTS, SUBSIDIAR Y REGISTERS AND ALSO BY THE PAYMENTS MADE THROUGH BANKING CHANN ELS. ACCORDINGLY, THE LD. A.R. SUBMITTED THAT THE A.O. W AS NOT ITA NO.1713/BANG/2017 STARWORTH INFRASTRUCTURE AND CONSTRUCTION LTD., BAN GALORE PAGE 4 OF 8 JUSTIFIED IN MAKING ADHOC DISALLOWANCE, WITHOUT POI NTING OUT ANY MISTAKES EITHER IN THE BOOKS OF ACCOUNTS OR IN THE DETAILS FURNISHED BY THE ASSESSEE. 4. THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAS ALS O MADE DETAILED SUBMISSIONS BEFORE LD. CIT(A), INTER-ALIA, CONTENDING THAT THE ADHOC DISALLOWANCE MADE BY THE AO, WITHOUT POINTING OUT DEFECTS IN THE BOOKS OF ACCOUNTS, IS NOT JUSTIF IED. HE SUBMITTED THAT THE LD. CIT(A) ALSO DID NOT EXAMINE THE DETAILS FURNISHED BY THE ASSESSEE AND ACCORDINGLY CONFIRMED THE DISALLOWANCE. THE LD. A.R. PLACED HIS RELIANCE ON T HE DECISION RENDERED BY HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. S.S.P. (P) LTD. (2011) 14 TAXMANN.COM 87, WHEREIN THE HONBLE PUNJAB & HARYANA HIGH COURT HAS HELD TH AT ADHOC DISALLOWANCE MADE WITHOUT THERE BEING ANY MATERIAL TO JUSTIFY SUCH DISALLOWANCE AND WITHOUT POINTING OUT DEFICIEN CIES IN THE CLAIM OF THE ASSESSEE, IS NOT JUSTIFIED. ACCORDINGL Y, THE LD. A.R. PRAYED FOR DELETION OF THE DISALLOWANCES MADE BY TH E A.O. AND CONFIRMED BY LD. CIT(A). ITA NO.1713/BANG/2017 STARWORTH INFRASTRUCTURE AND CONSTRUCTION LTD., BAN GALORE PAGE 5 OF 8 5. ON THE CONTRARY, THE LD. D.R. SUBMITTED THAT THE A.O. WAS CONSTRAINED TO MAKE THE ADHOC DISALLOWANCE, SINCE T HE ASSESSEE WAS NOT HAVING COMPLETE VOUCHERS AND MOST OF THE BI LLS WERE SELF-MADE. THE ASSESSEE DID NOT FURNISH DOCUMENTARY EVIDENCES IN SUPPORT OF ITS CLAIM BEFORE LD. CIT(A) ALSO. ACC ORDINGLY, THE LD. D.R. SUBMITTED THAT THE DISALLOWANCES MADE BY T HE A.O. SHOULD BE UPHELD. 6. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE R ECORD. WE NOTICE THAT THE A.O. HAS MADE A GENERAL OBSERVAT ION IN THE ASSESSMENT ORDER TO THE EFFECT THAT THE ASSESSEE WA S NOT HAVING COMPLETE VOUCHERS AND MOST OF THE BILLS WERE SELF-M ADE. WE NOTICE THAT THE ABOVE SAID OBSERVATION IS CONTRARY TO THE DETAILS FURNISHED BY THE ASSESSEE BEFORE THE A.O. ALONG WIT H LETTER DATED 3.2.2014. THE SAID DETAILS WOULD SHOW THAT T HE ASSESSEE HAS FURNISHED COMPLETE DETAILS OF MATERIALS COST AN D OTHER DIRECT COSTS, ALONG WITH COPY OF EXTRACT OF PURCHAS E REGISTER. A PERUSAL OF THE SAME WOULD SHOW THAT IT CONTAINS THE DETAILS OF SUPPLIERS NAME, PURCHASE VALUE, NATURE OF ITEM PUR CHASED, PURCHASE ORDER NUMBER, MATERIAL RECEIPT NUMBER AND MATERIAL ITA NO.1713/BANG/2017 STARWORTH INFRASTRUCTURE AND CONSTRUCTION LTD., BAN GALORE PAGE 6 OF 8 RECEIPT DATE. FURTHER, THE ASSESSEE HAS ALSO FURNIS HED THE DETAILS OF SUPPLIERS ALONG WITH THEIR RESPECTIVE TI N NUMBER. IT IS ALSO STATED THAT THE PAYMENTS HAVE BEEN MADE TO ALL PURCHASES THROUGH BANKING CHANNELS ONLY. THUS, WE NOTICE THA T THE ASSESSEE HAS FURNISHED ALL THE RELEVANT DETAILS REL ATING TO THE PURCHASE OF MATERIALS. FURTHER, THE PURCHASES OF M ATERIALS HAVE BEEN CORROBORATED BY THE PURCHASE REGISTER AND THE PAYMENTS MADE THROUGH BANKING CHANNELS. IT IS ALSO SUBMITTED THAT ALL THE SUPPLIERS ARE HAVING TIN NUMBERS, MEAN ING THEREBY, THE SUPPLIERS HAVE ALSO BEEN IDENTIFIED. WE NOTICE THAT THE ASSESSEE HAS FURNISHED THE COMPLETE DETAILS BEF ORE THE A.O. TO PROVE THE PURCHASE OF MATERIALS. WE NOTICE THAT THE A.O. DID NOT EXAMINE ANY OF THE DETAILS FURNISHED BY THE ASS ESSEE. IF THE AO HAD ANY DOUBT ABOUT THE EXPENDITURE, HE SHOULD H AVE CONDUCTED FURTHER ENQUIRIES TO FIND OUT GENUINENESS OF CLAIM MADE BY THE ASSESSEE. ON THE CONTRARY, WE NOTICE T HAT THE AO HAS PROCEEDED TO MAKE ADHOC DISALLOWANCE BY MAKING GENERAL OBSERVATIONS. IT IS ALSO PERTINENT TO NOTE THAT THE A.O. HAS ALSO NOT POINTED OUT ANY SPECIFIC DEFICIENCIES, WHICH MA Y DISENTITLE ITA NO.1713/BANG/2017 STARWORTH INFRASTRUCTURE AND CONSTRUCTION LTD., BAN GALORE PAGE 7 OF 8 THE ASSESSEE TO CLAIM THE EXPENSES. ACCORDINGLY, TH E DECISION RENDERED BY HONBLE PUNJAB& HARYANA HIGH COURT IN T HE CASE OF S.S.P. (P) LTD. (SUPRA) WOULD SUPPORT THE CONTENTIO NS OF THE ASSESSEE. WE ALSO NOTICE THAT THE LD. CIT(A) HAS AL SO FAILED TO EXAMINE THE DETAILS FURNISHED BY THE ASSESSEE BEFOR E HIM. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT T HE ADHOC DISALLOWANCE MADE BY THE A.O. AND CONFIRMED BY LD. CIT(A) IS NOT JUSTIFIED. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ABOVE SAID ADHOC DISALLOWANCE OF RS.15.00 LAKHS. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07.08.2020. SD/- (PAVAN KUMAR GADALE ) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 7 TH AUG, 2020. VG/SPS ITA NO.1713/BANG/2017 STARWORTH INFRASTRUCTURE AND CONSTRUCTION LTD., BAN GALORE PAGE 8 OF 8 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.