ACIT, CHENNAI V. M/s. Shri Housing Pvt Limited, CHENNAI

ITA 1892/CHNY/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4673 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 20-07-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 17-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K E B RENGARAJAN JR
• Assessee Lawyers: K VENKATESH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI N. S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO.1892/MDS/2008 ASSESSMENT YEAR : 2003-04 THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-VI(2), CHENNAI. V. M/S. SHRI HOUSING P. LTD., NO. 5F, 5 TH FLOOR, MOOKAMBIKA COMPLEX, LADY DESIKA ROAD, MYLAPORE, CHENNAI-600 004. (PAN : AAGCS5948A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.E. B. RENGARAJAN, JR. STANDING COUNSEL RESPONDENT BY : SHRI K. VENKATESH O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(APPEALS)-IX, CHENNAI IN ITA NO. 501/05-06 DATED 23.06.2008 FOR THE ASSESSMENT YEAR 2003-04. 2. SHRI K.E.B.RENGARAJAN, JR. STANDING COUNSEL REPRE SENTED ON BEHALF OF THE REVENUE AND SHRI K. VENKATESH, CHIEF MANAGER, TAXAT ION OF THE ASSESSEE REPRESENTED ON BEHALF OF THE ASSESSEE. I.T.A. NO. 1892/MDS/2008 2 3. IN THE REVENUES APPEAL THE REVENUE HAS RAISED T HE FOLLOWING GROUNDS : 1. THE ORDER OF THE LEARNED CIT(A) IS CONTRARY TO LAW AND FACTS OF THE CASE. 2.1 THE LEARNED CIT(A) ERRED IN UPHOLDING THAT EXP ENSES OF ` 30,70,052/- ARE ALLOWABLE, EVEN THOUGH THE ASSESSEE WAS FOLLOWING PROJECT COMPLETION METHOD OF ACCOUNTING, RELYING UPON THE HON'BLE MUMBAI TRIBUNAL IN THE CASE OF JCIT V. K. RAHEJA PV T. LTD. (102 ITD 414). 2.2 THE LEARNED CIT(A) FAILED TO APPRECIATE THAT T HE SPECIAL BENCH OF THE MUMBAI TRIBUNAL IN THE CASE OF WALL STREET CONS TRUCTION LTD. V. JCIT(102 TTJ 505) HAS DECIDED THE IMPUGNED ISSUE IN FAVOUR OF THE REVENUE AND THIS DECISION, BEING RENDERED LATER TO THE DECISION RELIED UPON BY THE LEARNED CIT(A), PREVAILS OVER THE EARLI ER DECISION CITED IN 102 ITD 414. 2.3 HAVING REGARD TO THE FACT THAT THE DECISION OF THE HON'BLE MUMBAI TRIBUNAL IN THE CASE OF WALL STREET CONSTRUCTION LT D. V. JCIT (102 TTJ 505) WAS RENDERED BY A SPECIAL BENCH, THE LEARNED C IT(A) OUGHT TO HAVE SEEN THAT THE DECISION IN THE CASE OF WALL STR EET CONSTRUCTION LTD. HAS GREATER BINDING FORCE THAN THE RELIED UPON DECI SION. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 4. IT WAS SUBMITTED BY THE LEARNED DR THAT IN THE C OURSE OF ASSESSMENT, THE ASSESSING OFFICER HAD DISALLOWED VARIOUS EXPENSES C LAIMED HOLDING THAT THE I.T.A. NO. 1892/MDS/2008 3 EXPENSES WERE RELATED TO THE PROJECT AND AS THE ASS ESSEE WAS FOLLOWING COMPLETED CONTRACT METHOD THE EXPENSES COULD BE ALL OWED ONLY WHEN THE INCOME FROM THE RELATED PROJECTS WERE DECLARED. 5. IN REPLY, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE EXPENSES CLAIMED WERE NOT PROJECT RELATED EXPENSES BUT WERE GENERAL ADMINISTRATIVE EXPENSES. IT WAS THE SUBMISSION THAT THE LEARNED CI T(A) WAS RIGHT IN DELETING THE DISALLOWANCE. HE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSING OFFICER HAS DISALLOWED THE EXPENSES ON THE GROUND THAT IT RELATED TO THE RESPECTIVE PROJECTS O NLY. WHICH IS THE RESPECTIVE PROJECT TO WHICH THE EXPENSES RELATE HAS NOT BEEN I DENTIFIED BY THE ASSESSING OFFICER. IT IS ONLY A BLANKET DISALLOWANCE OF THE EXPENDITURE. IT HAS BEEN ACCEPTED BY THE ASSESSING OFFICER THAT THE ASSESSEE IS FOLLOWING THE COMPLETED CONTRACT METHOD. ONCE IT IS ACCEPTED THAT THE ASSE SSEE IS FOLLOWING THE COMPLETED CONTRACT METHOD AND THE ACCOUNTS OF WHICH ARE BEFOR E THE ASSESSING OFFICER, A DISALLOWANCE OF THE GENERAL EXPENSES, MORE SO THE A DMINISTRATIVE EXPENSES IN REGARD TO THE RUNNING OF THE COMPANY CANNOT BE DISA LLOWED BY MAKING A STATEMENT THAT THE EXPENSES RELATE TO RESPECTIVE PR OJECTS. IF THE ASSESSING OFFICER WISHES TO MAKE ANY DISALLOWANCE FROM THE GENERAL EX PENSES AND HOLDS IT AS RELATING ANY PARTICULAR PROJECT, IT IS FOR THE ASSE SSING OFFICER TO IDENTIFY AS TO WHICH PROJECT THE ASSESSING OFFICER WANTS TO LINK THE SAI D EXPENSES. THIS HAS ALSO NOT I.T.A. NO. 1892/MDS/2008 4 BEEN DONE BY THE ASSESSING OFFICER. IN FACT, BEFOR E THE LEARNED CIT(A) THE ASSESSEE HAS BROUGHT OUT THE NATURE OF THE EXPENSES AND THE LEARNED CIT(A) HAS ALSO CONSIDERED THE NATURE OF THE EXPENSES TO HOLD THAT THE EXPENSES WHICH HAVE BEEN DISALLOWED EXCEPT IN REGARD TO THE INTEREST AN D FINANCE CHARGES THE OTHER EXPENSES ARE GENERAL IN NATURE AND ARE NOT SPECIFIC ALLY RELATED TO ANY PROJECT EXPENSES. THIS FACTUAL FINDING OF THE LEARNED CIT( A) HAS NOT BEEN DISLODGED BY THE REVENUE. AS THIS FINDING HAS NOT BEEN DISLODGE D, THE FACT THAT THE EXPENSES WHICH HAD BEEN DISALLOWED BY THE ASSESSING OFFICER ARE GENERAL EXPENSES IN NATURE REMAINS AND THE SAME ARE ALLOWABLE IN THE YE AR IN WHICH IT IS CLAIMED AS INCURRED. IN THE CIRCUMSTANCES WE FIND NO ERROR IN THE FINDING OF THE LEARNED CIT(A) WHICH CALLS FOR ANY INTERFERENCE. IN THE CI RCUMSTANCES, THE FINDING OF THE LEARNED CIT(A) STANDS CONFIRMED. THE APPEAL OF THE REVENUE IS DISMISSED. 7. THE ORDER WAS PRONOUNCED IN THE COURT ON 22/7/20 11. SD/- SD/- (N. S. SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 22 ND JULY, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE