ITO wd- 10[1], Pune V. Sumedha Earthmovers Company, Pune

ITA 1793/PUN/2012

• Counselvise Citation: 179324514 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 07-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1793/PN/2012 (ASSTT.YEAR : 2009-10) ITO, WARD-10(1), PUNE .. APPELLANT VS. SUMEDHA EARTHMOVERS COMPANY, BAZARPETH, DEHUGAON HAVELI, PUNE 412101 PAN NO. ABKFS9101N .. RESPONDENT ASSESSEE BY : SHRI SUNIL GANOO REVENUE BY : SRI S.P. WALIMBE DATE OF HEARING : 09-01-2014 DATE OF PRONOUNCEMENT : 21-01-2014 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 27-06-2012 OF THE CIT(A)-V, PUNE RELATING TO ASSESSMENT YEAR 2009-10. 2. THE ONLY EFFECTIVE GROUND BY THE REVENUE READS A S UNDER : WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.2,18,44,752/ - WHEN THE INCOME HAS ACCRUED AND ARISEN DURING THE YEAR UNDER REFERENC E AND TDS HAS BEEN DEDUCTED BY THE DEDUCTOR DURING THE YEAR UNDER REFERENCE? 3. FACTS OF THE CASE, IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT WHILE THE ASSESSEE FIRM HAS CLAIMED TDS OF RS. 7,67,695/- THE CORRESPONDING CONTRACT RECEIPT WAS NOT INCLUDED IN THE P & L A/C . ACCORDINGLY, THE A.O. CONFRONTED THE ASSESSEE AND ASKED TO FURNISH E XPLANATION FOR NOT 2 INCLUDING THE CONTRACT RECEIPT IN THE P&L A/C. THE ASSESSEE SUBMITTED THAT IT IS DOING THE WORK OF CONTRACT FOR GOVERNMEN T DEPARTMENTS AND GOVERNMENT AUTHORITIES HAD DEDUCTED TDS ON THE BASI S OF BUDGET ALLOCATED FOR THE WORK TO BE COMPLETED DURING THE R ELEVANT FINANCIAL YEAR AND THEREFORE PROFORMA R.A. BILL WAS MADE BY T HEM ON WHICH TDS OF RS.767,695/- WAS DEDUCTED. SINCE, THE TDS WAS DEDUCTED DURING THE IMPUGNED FINANCIAL YEAR, THE SAME WAS OF FERED FOR TAXATION. HOWEVER, THE CORRESPONDING RECEIPT AS PER PROFORMA R.A. BILL WAS NOT SHOWN IN THE P&L A/C. THE ASSESSEE ALSO SUBMITTED THAT NO R.A BILL WAS SUBMITTED BY IT TO THE GOVERNMENT DEPARTMENT AS NO WORK WAS COMPLETED. THE ASSESSING OFFICER DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE AND MADE THE ADDITION OF RS.2,18,44,752/. 4. BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THAT DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DI RECTED THE ASSESSEE TO RECONCILE THE FIGURE OF GROSS CONTRACT RECEIPTS AS APPEARING IN 26AS AND AS APPEARING IN BOOKS OF ACCOUNT. THE ASSESSEE VIDE ITS WRITTEN SUBMISSIONS DATED 06-09-2011 AND 05-10-2011 SUBMITT ED THE RELEVANT RECONCILIATION STATEMENTS. THE ASSESSEE EXPLAINED TO THE ASSESSING OFFICER THAT THE AMOUNT OF RS . 3,38,78,853.00 ALLEGED TO BE PAID TO THE ASSESSEE AS PER 26AS WAS IN FACT PAID IN SUBSEQUENT YEAR AND THE CONCERNED DEPARTMENT HAS MADE PROVISION OF THE SAID AMOUNT FOR SOME TECHNICAL PROBLEM. IT WAS ALSO POINTED OUT THAT THE AMOUNT OF T.D.S. ON THE SAID ALLEGED PAYMENT WAS PAID ON 17/06/2009. IN SUPPORT OF THIS CONTENTION, THE ASSESSEE FILED COPY OF RELEVAN T PROVISIONAL R.A. BILL OF GOSIKHURD LIFT IRRIGATION DIVISION; AMBADI [BHANDARA] . IT WAS SUBMITTED THAT FROM THE SAID PROVISIONAL BILL I T IS CLEAR THAT THE 3 WORK WAS TO BE COMMENCED ON 24-03-2009 AND WAS TO B E COMPLETED BEFORE 23-03-2011. IT WAS ALSO EXPLAINED TO THE AS SESSING OFFICER THAT IT WAS HUMANLY IMPOSSIBLE TO EXECUTE THE SAID WORK WITHIN LESS THAN A WEEK'S TIME. THE ASSESSEE FURTHER SUBMITTED THAT DU E TO MISINTERPRETATION OF THE PROVISIONS OF SECTION 198 OF THE I. T. ACT 1961, THE T.D.S. AMOUNT OF RS.7,67,695.00 AND AMOUN T OF RS.1,12,66,406.00 ON ACCOUNT OF STATE TAXES WERE E RRONEOUSLY CONSIDERED IN GROSS RECEIPTS FOR THE YEAR UNDER CON SIDERATION. 4.1 THE ASSESSEE SUBMITTED THAT THE ASSESSING OFFIC ER HOWEVER CONSIDERED THE 26AS STATEMENT AS SACROSANCT WITHOUT CONSIDERING THE PROVISIONS OF SECTION 199[3] AND RULE 37 BA [3] AND MADE AN ADDITION OF RS.2,18,44,752.00 [3,38,78,853.00 MINUS TDS 7,67,695.00 MINUS STATE TAXES 1,12,66,406.00]. IT WAS SUBMITTE D THAT THE ASSESSEE HAS OFFERED THE SAID AMOUNT OF RS.2,18,44,752.00 AS ITS RECEIPTS IN THE A.Y. 2010-11 AND HAS ALSO RIGHTLY PAID THE TAX ON T HE SAME. THE ASSESSEE SUBMITS THAT AS PER THE CALCULATIONS OF TH E LEARNED ASSESSING OFFICER ON GROSS RECEIPTS OF RS.11,38,00,000.00 THE NET PROFIT WORKS OUT TO RS.2,81,39,432.00 WHICH WORKS OUT TO 25% WHI CH IS ABSURD IN CASE OF BUSINESS OF CIVIL CONTRACTOR WHO UNDERTAKES GOVERNMENT CONTRACTS ONLY AND HENCE DESERVES TO BE REJECTED. THIS ANOMALY IS DUE TO THE FACT THAT THE ASSESSING OFFICER HAS ADDED GR OSS RECEIPTS TO THE INCOME, WITHOUT GIVING ANY REDUCTION FOR THE EXPEND ITURE REQUIRED TO BE INCURRED FOR EXECUTION OF THE SAID CONTRACT. IF THE REASONING OF THE ASSESSING OFFICER IS ACCEPTED THEN THE GROSS RECEIP TS WILL BE TAXED IN THE YEAR UNDER CONSIDERATION AND THE CORRESPONDING EXPENDITURE WOULD BE DEDUCTED IN NEXT YEAR, WHICH CANNOT BE SUPPORTED UNDER ANY 4 PRINCIPLE OF ACCOUNTANCY OR LAW. RELYING ON VARIOUS DECISIONS IT WAS SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING O FFICER SHOULD BE DELETED. 4.2 BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE THE LD.CIT(A) DELETED THE ADDITION OF RS.2,18,44,752/- BY HOLDING AS UNDER : 5. AFTER CAREFUL CONSIDERATION OF THE FACTS OF THE C ASE AS WELL AS REPLY OF THE APPELLANT, IT IS SEEN THAT THE APPELLANT FIRM HAS CLAIMED TDS OF RS.7,67,695/- AS THE GOVERNMENT DEPARTMENT HA S DEDUCTED THE TAX AT SOURCE. THE CORRESPONDING CONTRACT RECEIPT WA S NOT SHOWN BY THE APPELLANT FIRM AS NO WORK WAS COMPLETED IN RESPECT OF THAT AMOUNT. THE GOVERNMENT DEPARTMENT HAD DEDUCTED TDS ON THE BASIS OF PROFORMA R. A. BILL ON THE BASIS OF BUDGET ALLOCA TED FOR THE FINANCIAL YEAR. SINCE NO WORK WAS CARRIED OUT DURING THE FINAN CIAL YEAR IN RESPECT OF PROFORMA R.A. BILL THE APPELLANT HAS NOT SH OWN THE RECEIPT IN THE PRESENT FINANCIAL YEAR BUT THE SAME WAS SHOWN IN THE NEXT FINANCIAL YEAR. THE DETAILS OF CONTRACT RECEIPTS FOR THE NEXT FINANCIAL YEAR RELEVANT TO A.Y. 2010-11 IS AS UNDER: 6. THE DETAILS OF CONTRACT RECEIPT FOR F.Y. 2008-09 (A.Y. 2009-10) ARE AS UNDER : PARTICULARS TDS CONTRACT RECEIPTS AS PER RA BILL CONTRACT RECEIPTS ACCOUNTED FOR IN BOOKS OTHER RECOVERIES RA BILL I SONDYA TOLA 4,53,050 1,99,93,377 1,99,93,377 RA BILL II SONDYA TOLA 11,01,625 4,86,15,389 4,86,15,389 RA BILL III SONDYA TOLA 2,56,339 1,13,12,381 1,13,12,381 PROFORMA RA BILL SONDYA TOLA 7,67,695 3,38,78,853 7,67,695 PARTICULARS TDS CONTRACT RECEIPTS ACCOUNTED FOR IN BOOKS R.A BILL I SONDYA TOLA (REFER PAGE NO.2) -- 3,10,78,427** R.A. BILL II SONDYA TOLA 83,842 37,00,000 R.A. BILL III SONDYA TOLA 2,26,600 1,00,00,000 R.A. BILL OF MIDC PUNE 68,921 30,71,363 R.A. BILL OF MIDC PUNE 88,200 39,30,494 R.A. BILL OF MIDC PUNE 1,99,769 89,03,674 R.A. BILL OF MIDC PUNE 51,962 23,15,606 R.A. BILL OF MIDC PUNE -- 3,95,702 TOTAL 7,19,924 6,33,95,266 5 RECOVERIES IN PROFORMA RA BILL ROYALTY 92,33,675 92,33,675 VAT TAX & OTHER 20,32,732 20,32,731 TOTAL 25,78,709 11,38,00,000 9,19,55,248 1,12,66,406 7. FROM THE ABOVE DETAILS IT CAN BE SEEN THAT NO TDS HAS BEEN SHOWN IN RESPECT OF CONTRACT RECEIPT FOR RS.3,10,78 ,427/- AS TDS WAS CLAIMED IN THE PRESENT F.Y., I.E. 2008-09. WHEN CONFRONTED THAT HOW THE AMOUNT OF RS.3,38,78,853/- HAS BEEN INCLUDED IN THE AMOUNT OF RS.3,10,78,427/-, THE APPELLANT FILED THE FOL LOWING SUBMISSIONS : 8. THUS, FROM THE ABOVE RECONCILIATION IT IS CLEAR T HAT THE CORRESPONDING AMOUNT OF RS.3,38,78,853/- PERTAINING T O TDS OF RS.7,67,695/- HAS BEEN OFFERED FOR TAXATION IN A.Y. 2 010-11 AS THE WORK WAS CARRIED OUT IN THE NEXT FINANCIAL YEAR. THE REFORE, ADDITION OF RS.2,18,44,752/- IS NOT WARRANTED IN A.Y. 2009-10 AS N O WORK WAS CARRIED OUT IN THIS YEAR. TAXING THE AMOUNT OF RS.2,1 8,44,752/- WILL AMOUNT TO TAXING THE SUM TWICE. ON MATCHING PRINCIPL E TOO, THE AMOUNT IS LIABLE TO BE TAXED IN THE NEXT FINANCIAL Y EAR AS WORK WAS CARRIED OUT BY THE APPELLANT FIRM IN THE NEXT FINAN CIAL YEAR AND CORRESPONDING EXPENDITURE WAS CLAIMED IN THAT YEAR TO O. THEREFORE, ACTION OF THE ASSESSING OFFICER MAKING ADDITION OF RS.2, 18,44,752/- IN THE PRESENT ASSESSMENT YEAR I.E. 2009-10 CANNOT BE UPHE LD. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS. 2,18,44,752/-. GROUND NO. 1 & 2 IS THUS ALLOWED. 5. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE REVE NUE IS IN APPEAL BEFORE US. PARTICULARS AMOUNT AMOUNT THE AMOUNT OF PROVISIONAL BILL AS OF 31-03-2009 3,38,78,853 LESS : TDS AS OF 31-03-2009 OFFERED IN EARLIER YEAR 7,67,695 LESS: VAT & OTHER RECOVERIES OFFERED IN EARLIER YEAR 1,12,66,406 TOTAL RECOVERIES 1,20,34,101 TOTAL AMOUNT DISALLOWED BY AO IN A.Y. 2009-10 WHICH IS REQUIRED TO BE TAXED IN A.Y. 2010-11 2,18,44,752 AMOUNT OF ROYALTY DEDUCTED IN EARLIER YEAR AND NOW REFUNDED BY PRINCIPAL IN F.Y. 2009-10, WHICH IS OFFERED AS INCOME FOR THE A.Y. 2010-11 92,33,675 ACTUAL BILL ACCOUNTED FOR IN BOOKS IN F.Y. 2009-10 3,10,78,427 6 5.1 WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAV E ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. THE LD. DEP ARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT THE FINDING GIV EN BY THE LD.CIT(A) THAT THE CORRESPONDING AMOUNT OF RS.3,38, 78,853/- PERTAINING TO TDS RS.7,67,695/- HAS BEEN OFFERED FO R TAXATION IN THE A.Y. 2010-11 AND THE WORK WAS CARRIED OUT IN THE NE XT FINANCIAL YEAR. 5.2 WE FIND BEFORE THE ASSESSING OFFICER THE ASSESS EE HAD RECONCILED THE FIGURES OF GROSS CONTRACT RECEIPTS A S APPEARING IN 26AS AS WELL AS IN THE BOOKS OF ACCOUNT. WE FURTHER FIN D THE ASSESSEE HAD EXPLAINED BEFORE THE ASSESSING OFFICER THAT AS PER THE PROVISIONAL BILL THE WORK WAS TO BE COMMENCED ON 24-03-2009 AND WAS TO BE COMPLETED ON 23-03-2011. IT WAS ACCORDINGLY EXPLAI NED THAT IT WAS HUMANLY IMPOSSIBLE TO EXECUTE THE WORK WITHIN LESS THAN A WEEKS TIME. WE FIND THE ASSESSING OFFICER HAS NOT CONSID ERED THE SAME. FROM THE DETAILS FURNISHED BY THE ASSESSEE DURING T HE COURSE OF HEARING BEFORE US WE FIND OTHER THAN TDS AND OTHER GOVERNMENT TAX THE ASSESSEE HAS NOT RECEIVED ANY AMOUNT TOWARDS TH E CONTRACT RECEIPT. FURTHER, NOTHING HAS BEEN BROUGHT ON RECORD THAT TH E ASSESSEE HAS CARRIED OUT THE CONTRACT WORK DURING THE YEAR OR EV EN STARTED THE CONTRACT WORK. UNDER THESE CIRCUMSTANCES AND IN AB SENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICE BY THE LD. DEPARTMENTAL REPRESENTATIVE AGAINST THE REASONED ORDER PASSED BY THE LD.CIT(A), WE FIND NO INFIRMITY IN THE SAME. ACCORDINGLY, THE SAME IS UPHELD. GROUND RAISED BY THE REVENUE IS DISMISSED. 7 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21-01-2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED : 21 ST JANUARY 2014 SATISH COPY OF THE ORDER IS FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT(A)-V, PUNE 4. THE CIT-V, PUNE 5. D.R. B BENCH, PUNE 6. GUARD FILE BY ORDER // TRUE COPY // SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE