M/S. LINGTEC CONSTRUCTORS L P, MUMBAI V. THE CIT(A) XXI, MUMBAI

ITA 1778/MUM/2006

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70600 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 31-07-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 16-03-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY SHRIVASTAVA
• Keywords: Additional evidence; Bad and doubtful debts
• Section: 234B

Judgement Text

, IN THE IN IN THE IN IN THE IN IN THE INCOME TAX APPELLATE TRIBUNAL COME TAX APPELLATE TRIBUNAL COME TAX APPELLATE TRIBUNAL COME TAX APPELLATE TRIBUNAL L BENCH, L BENCH, L BENCH, L BENCH, MUMBAI MUMBAI MUMBAI MUMBAI . , !' !' !' !' , . BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI B. R B. R B. R B. RAMAKOTAIAH AMAKOTAIAH AMAKOTAIAH AMAKOTAIAH, AM , AM , AM , AM & && & SHRI SHRI SHRI SHRI VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO, ,, , JM JMJM JM ./ I.T.A. N I.T.A. N I.T.A. N I.T.A. NO. O.O. O.1778/MUM/2006 1778/MUM/2006 1778/MUM/2006 1778/MUM/2006 ( #$ #$ #$ #$ % % % % / ASSESSMENT YEAR : 2002-03) LINGTEC CONSTRUCTORS LP C/O- J.K. DOSHI & CO., 19 KHETAN BHAVAN, 198J TATA ROAD MUMBAI-400020 $ $ $ $ / VS. COMMISSIONER OF INCOME TAX(APPEALS)-XXI, MITTAL COURT, NARIMAN POINT MUMBAI-400020 & ./ '' ./ PAN/GIR NO. :AAAFL8057A ( &( / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( )*&( / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) &( &( &( &( + + + + / APPELLANT BY : MR. HIRO RAI )*&( )*&( )*&( )*&( , ,, , + + + + /RESPONDENT BY : MR. AJAY SHRIVASTAVA $ $ $ $ , ,, , - - - - / DATE OF HEARING : 31 ST JULY 2013 .% .% .% .% , ,, ,- - - - /DATE OF PRONOUNCEMENT: 8 TH AUGUST 2013 / / O R D E R PER : !' , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 27.12.2005 OF COMMISSIONER OF INCOME TAX(APPEALS) F OR THE ASSESSMENT YEAR 2002-03. 2. THE ASSESSEE HAS FILED THE CONCISE GROUNDS AS UN DER: 1. THE LEARNED CIT(APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF AN AMOUNT OF ` 155,12,01 ,251/- AS INCOME OF THE APPELLANT. 2. WITHOUT PREJUDICE TO GROUND NO. 1 ABOVE, THE LE ARNED CIT(APPEALS) WAS NOT JUSTIFIED IN DISALLOWING THE C LAIM OF BAD DEBTS OF ` 155,12,01,251/- WHILE COMPUTING THE INCOME OF THE APPELLANT. THE REASONS GIVEN BY HIM I N THIS REGARD ARE INCORRECT, UNWARRANTED AND UNJUSTIFIED. ITA NO. 1778/M/2006 LINGTEC CONSTRUCTORS LP 2 3. THE LEARNED CIT(APPEALS) WAS NOT JUSTIFIED IN C ONFIRMING THE LEVY OF INTERESTS U/S 234B AND 234A. 3. THE ASSESSEE IS A LIMITED PARTNERSHIP FIRM INCOR PORATED AND ORGANISED UNDER THE LAWS OF STATE OF DELAWARE. THE ASSESSEE HAS UNDERTAKEN THE JOB OF OFFSHORE CONSTRUCTION WORK AN D ONSHORE SERVICES IN CONNECTION WITH PHASE-II OF DABHOL POWER COMPANY AND ATTACHED LIQUEFIED NATURAL GAS (LNG) UPLOADING, STORAGE AND REGASIFICATION FACILITY. DURING THE ASSESSMENT PROCEEDING THE AO F OUND THAT IN THE NOTES FILED WITH THE RETURN OF INCOME, IT WAS STATE D THAT THE AMOUNT OF BILLS FOR APRIL TO JUNE 2001, HAVE NOT BEEN TAKEN I NTO ACCOUNT DUE TO NON-RECEIPT. THE AO ASKED THE ASSESSEE TO FILE THE DETAILS AND EXPLAINED AS TO WHY THE AMOUNT OF INVOICES RAISED D URING THE PERIOD IS NOT TAKEN INTO ACCOUNT AS INCOME. THE ASSESSEE HAS SUBMITTED THAT THE PROJECT HAD RUN INTO SERIOUS HURDLES AND ALL CO NTRACTS WERE TERMINATED. THE ACCOUNTS WERE FINALISED ONLY IN MAR CH 2004, OVER THREE YEARS AFTER THE PROJECT HAD RUN INTO VARIOUS HURDLES THEREFORE, THE AMOUNTS COVERED IN THE INVOICES IN QUESTION WER E CLEARLY NOT RECOVERABLE. ACCORDINGLY, THE SAID AMOUNT WAS NOT I NCLUDED IN THE REVENUE FOR THE YEAR. THE AO DID NOT ACCEPT THE CON TENTION OF THE ASSESSEE AND OBSERVED THAT IN THE EARLIER YEAR THE REVENUE WAS BOOKED ON PERCENTAGE OF COMPLETION METHOD BUT THE E XPENSES WERE BOOKED ON ACTUAL BASIS. FOR THE ASSESSMENT YEAR UND ER CONSIDERATION, THE AO NOTED THAT THE ASSESSEE DID NOT BOOK ` 155,1 2,01,251/- AS REVENUE FOR WHICH BILLS WERE RAISED FROM APRIL TO J UNE 2001 DESPITE THE ITA NO. 1778/M/2006 LINGTEC CONSTRUCTORS LP 3 EXPENSES DURING THE PERIOD AMOUNTING TO ` 278,72,60 ,000/- WERE BOOKED. THE AO ACCORDINGLY MADE AN ADDITION OF ` 15 5,12,01,251/- AS INCOME OF THE ASSESSEE. ON APPEAL, THE CIT(A) CONFI RM THE ORDER OF THE ASSESSING OFFICER. THE ASSESSEE HAS ALSO RAISED AN ALTERNATIVE GROUND OF BAD DEBTS OF THE SAID AMOUNT BEING UNRECOVERABLE BUT THE CIT(A) DISMISSED THE SAME ON THE GROUND THAT THE ASSESSEE NEITHER DECIDED TO TREAT AS BAD DEBT NOR CLAIMED DEDUCTION U/S 36(2 ) OF THE ACT BECAUSE THE AMOUNT IN QUESTION HAS NOT BEEN DEBITED TO THE ACCOUNT OF THE DABHOL POWER COMPANY AND THERE IS ALSO NO SU BSEQUENT WRITING OF THE AMOUNT IN THE ASSESSEES BOOKS FOR THE ASSES SMENT YEAR UNDER CONSIDERATION. 4. BEFORE US THE LD. AR OF THE ASSESSEE HAS FILED A N APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE ALONG WITH THE ADD ITIONAL EVIDENCE IN THE SHAPE OF LEDGER ACCOUNTS OF DABHOL POWER COMPAN Y IN THE BOOKS OF THE ASSESSEE AS WELL AS AN AFFIDAVIT OF THE CHAR TERED ACCOUNTANT, EXPLAINING THE CIRCUMSTANCES AND REASONS FOR NOT PR ODUCING THE SAID EVIDENCE BEFORE THE AUTHORITIES BELOW. THE LD. AR H AS SUBMITTED THAT THE ASSESSEE HAS WRITTEN OF THE AMOUNT AS BAD DEBT IN THE ACCOUNTS AS IT IS CLEAR FROM THE LEDGER ACCOUNT OF DABHOL POWER COMPANY WHEREAS THE CIT(A) HAS REJECTED THE ALTERNATIVE GROUND RAIS ED BY THE ASSESSEE FOR ALLOWING THE CLAIM OF BAD DEBT ON THE GROUND TH AT THE ASSESSEE HAS NOT WRITTEN OF THE AMOUNT. THUS THE LD. AR HAS SUBM ITTED THAT THE MATTER MAY BE REMITTED TO THE RECORD OF THE ASSESSI NG OFFICER TO ITA NO. 1778/M/2006 LINGTEC CONSTRUCTORS LP 4 EXAMINE AND CONSIDER THE RELEVANT EVIDENCE IN SUPPO RT OF THE CLAIM OF THE ASSESSEE. 5. ON THE OTHER HAND, THE LD. DR HAS VEHEMENTLY OBJ ECTED TO THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND SUBMI TTED THAT WHEN THE ASSESSEE HAS NOT CONSIDERED THE AMOUNT IN QUESTION AS INCOME THEN THE CLAIM OF BAD DEBT IS NOT ALLOWABLE. HE HAS RELI ED UPON THE ORDER OF THE AUTHORITIES BELOW. 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD WE FIND THAT AS FAR AS THE ALTER NATIVE CLAIM OF THE ASSESSEE REGARDING BAD DEBT THE, CIT(A) HAS REJECTE D THE SAME ON THE GROUND THAT THE AMOUNT IN QUESTION HAS NOT BEEN DEB ITED TO THE ACCOUNTS OF THE DPC AND THERE IS NO SUBSEQUENT WRIT ING OF THE SAID AMOUNT IN THE ASSESSEES BOOKS OF ACCOUNT FOR THE Y EAR UNDER CONSIDERATION. THE ASSESSEE HAS FILED THE COPIES OF LEDGER ACCOUNTS OF DABHOL POWER COMPANY TO SHOW THAT THE AMOUNT IN QUE STION WAS DEBITED IN THE ACCOUNT OF DPC AND THEREAFTER IT WAS WRITTEN OF. SINCE THE SAID ADDITIONAL EVIDENCE HAS NOT BEEN EXAMINED BY THE AUTHORITIES BELOW THEREFORE IN THE INTEREST OF JUSTICE WE REMIT THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER TO EXAMINE AND CONS IDER THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND THEN DECIDE THE ISSUE AS PER LAW. 7. THE OTHER ISSUES RAISED IN THIS APPEAL ARE KEPT OPEN. ITA NO. 1778/M/2006 LINGTEC CONSTRUCTORS LP 5 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF AUGUST 2013 / , .% 0 1$2 8 TH 3 - , 3 SD/- SD/- ( . ) (B. RAMAKOTAIAH) ACCOUNTANT MEMBER ( !' ) # (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 8 TH AUGUST 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI