The DCIT, Anand Circle, Anand V. M/s. Khambhalia Wind Farm Developers Ltd. (Formerly Known as Elecon Wind Farm Developers Ltd.), Anand

ITA 1980/AHD/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4109 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 29-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LALIT P JAIN
• Keywords: Maximum Marginal Rate; Fair market value
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER THE DCIT, ANAND CIRCLE, 204, 3 RD FLOOR, S.P. PATEL COMPLEX, NEAR OLD C.K. HALL, MAYFAIR ROAD, ANAND - 388001 (APPELLANT) VS M/S. KHAMBHALIA WIND FARM DEVELOPERS LTD. (FORMERLY KNOWN AS ELECON WIND FARM DEVELOPERS LTD.), AN AND SOJITRA ROAD, VALLABH VIDYANAGAR, ANAND - 388120 PAN: AACCE5646B (RESPONDENT) REVENUE BY : S H RI LALIT P JAIN , SR. D . R. ASSESSEE BY: SHRI TUSHAR HEMANI, A.R. DATE OF HEARING : 22 - 01 - 2 019 DATE OF PRONOUNCEMENT : 15 - 02 - 2 019 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS REVENUE S APPEAL FOR A.Y. 2011 - 12 , ARI SES FROM ORDER OF THE CIT(A) - 4, VADODARA DATED 30 - 03 - 2 016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 1980 / A HD/20 16 A SS ESSMENT YEAR 2011 - 12 I.T.A NO. 1980 /AHD/20 1 6 A.Y. 2011 - 12 PAGE NO D CIT VS. M/S. KHAMBHALIA WIND FARM DEVELOPERS LTD. 2 2. IN THIS CASE , RETURN OF INCOME DECLARING INCOME OF RS. 12 , 71 , 845/ - WAS FILED ON 2 0 TH SEP, 2011. SUBSEQUENTLY, THE CASE WAS SELECTED U/S 143(2) OF THE ACT ON 1 ST AUGUST, 2012. THE FURTHER FACT S OF THE CA S E ARE DISCUSSED UNDER THE PARTICULAR GROUNDS OF APPEAL AS UNDER: - GROUND NO. 1 (D ISALLOWANCE U/S. 40A(2)(B) OF THE ACT) 3. DURING SCRUTINY ASSESSMENT THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS MADE PURCHASES OF MATERIAL T O THE AMOUNT OF RS. 8 , 06 , 60 ,810/ - FORM V EER ENERGY & INFRASTRUCTURE LTD. T HE ASSESSING OFFICER HAS FURTHER NOTICED THAT SHRI YOGESH M SHAH AND S HRI PRAKSH C SHAH , WERE MD & EXECUTIVE D IRECTOR IN THE VEER ENERGY AND INFRASTRUCTURE LTD AND THEIR INTEREST S IN THE ASSESSEE COMPANY HA D BEEN DISCLOSED IN THE RELATED PARTY DISCLOSURE ANNEXED TO THE NOTES IN THE ACCOUNT OF M/S VEER ENERGY AND INFRAST R U CTU RE LTD. THE ASSESSING OFFICER OBSERVED THAT THE SAID CONCERN WAS A RELATED PARTY TO T HE ASSESSEE AND SHRI PRAKASH C SHAH WAS HOLDING 48.2% SHARE - HOLDING IN THE ASSESSEE COMPANY. THEREFOR E , THE ASSE SSING OFFICER WAS OF THE VIEW THAT VEER ENERGY AND INFRASTRUCTURE LTD WAS AS PERSON SPECIFIED IN SECTION 40A(2)(B) OF THE ACT. ON FURTHER VERIF ICATION, THE ASSESSING OFFICER NOTICED THAT VEER ENERGY AND INFRASTRUCTURE LTD HAD MADE PURCHASE S OF MATERIAL FRO M KINETIC SYNERGY PV T. LT D AND SUPPLIED THE S AME MATERIAL TO THE ASSESSEE BY INCREASING THE COST OF MATERIAL BY 15% OVER THE COST OF ITS PURCHASE. THE ASSESSING OFFICER OBSERVED THAT T HE VEER ENERGY AND INFRASTRUCTURE PV T. LTD. HAD SOLD THE SAME MATERIAL TO THE ASSESSEE COMPANY A FTER PURCHASING T HE SAME FROM KINETIC SYNERGY PVT. LTD . THEREFORE THE ASSESSING OFFICER HELD THAT THE ASSESSEE H A S ADOPTED A COLOURALE DEVICE TO DIVERT ITS PROFIT TO THE ASSOCIATE CONCERN NAMELY M/S. VEER ENERGY AND INFRASTRUCTURE LTD CONSEQUENTLY PAYMENT OVER THE COST I.T.A NO. 1980 /AHD/20 1 6 A.Y. 2011 - 12 PAGE NO D CIT VS. M/S. KHAMBHALIA WIND FARM DEVELOPERS LTD. 3 PRICE @ 15% OF THE PURCHASE S WAS DISALLOWED U/S. 40A(2)(B) OF THE ACT AND AMOUNT OF RS. 1 , 72 , 93 ,49 4/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. RELEVANT PART OF THE DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 3.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING O FFICER. I HAVE ALSO CONSIDERED THE REMAND REPORT OF THE ASSESSING OFFICER AND THE REJOINDER FILED BY THE LD. AUTHORIZED REPRESENTATIVE IN RESPONSE TO THE REMAND REPORT. FROM THE DETAILS FILED BEFORE ME IT TRANSPIRES THAT THE APPELLANT COMPANY AND VEIL HAVE COMMERCIAL AND BUSINESS RELATION, WHICH IS SPELT OUT BY TERMS OF AGREEMENT WITH THEM. WHATEVER PURCHASES AND SALES ARE MADE BETWEEN THEM ARE DUE TO LEGITIMATE BUSINESS NEEDS OF EITHER OF THEM AND THE BENEFIT DERIVED TO BOTH PARTIES FROM SAID TRANSACTION I S NOT IN ANY MANNER EXCESSIVE OR UNREASONABLE. I AGREE WITH THE CONTENTIONS OF THE AUTHORIZED REPRESENTATIVE THAT THE ASSESSING OFFICER HAS NOT MADE ANY FINDING OF ILLEGITIMATE BUSINESS NEEDS OF THE APPELLANT NOR ANY INSTANCE OF BENEFIT BEING DERIVED FROM THE SAID TRANSACTIONS, WHICH CAN BE CONSIDERED UNREASONABLE OR EXCESSIVE IN ANY WAY. IT IS ALSO BROUGHT TO MY NOTICE THAT M/S. VEIL WAS CHARGING SIMILAR MARKED UP RATES OF 15% FOR SALES TO OTHER THIRD PARTIES ALSO AND THE ASSESSING OFFICER HAS NOT BEEN ABL E TO CONTROVERT THE SAME. LD. AUTHORIZED REPRESENTATIVE HAS ALSO CONTENDED THAT THE PROVISIONS CONTAINED IN SECTION 40(A)(2)(B) OF THE ACT ARE MEANT TO ENCOUNTER EVASION OF TAX THROUGH EXCESSIVE OR UNREASONABLE PAYMENTS TO RELATIVES OR ASSOCIATE CONCERNS A ND THE ASSESSING OFFICER SHOULD EXERCISE HIS JUDGMENT IN A REASONABLE AND FAIR MANNER. HOWEVER IN THE PRESENT CASE, THE LD. AO HAS FAILED TO DO SO. THE FINANCIAL STATEMENTS AND INCOME TAX RETURNS OF BOTH COMPANIES ARE PLACED BEFORE ME ALONG WITH THE WRITTE N SUBMISSION DATED 9.6.2015 VIDE ANNEXURE - 3 AND ANNEXURE - 11. FROM THE SAME IT TRANSPIRES THAT BOTH COMPANIES ARE PROFIT MAKING AND ARE IN COMMON TAX BRACKET. THE EXPENDITURE FOR ONE IS INCOME FOR THE OTHER AND VICE VERSA. SINCE COMMON TAX RATES APPLY TO BOTH, THERE CANNOT BE ANY ESCAPEMENT OR EVASION OF TAX LIABILITY IN THIS CASE. HE HAS ALSO SUBMITTED THAT COMPARATIVE FINANCIAL OF BOTH COMPANIES FOR A.Y.2011 - 2012 REVEALS THAT BOTH ARE IN THE SAME TAX BRACKET. THE SAME ARE TABULATED HEREUNDER: - PARTICULA RS KHAMBHALIA WIND FARM DEVELOPERS LTD AMOUNT (RS.) VEER ENERGY INFRASTRUCTURE LTD. AMOUNT (RS.) TOTAL TURNOVER 15,34,74,646/ - 43,79,82,572/ - NET PROFIT AS PER P & L (BEFORE TAX) 12,71,845/ - 5,19,95,736/ - TOTAL INCOME (AS PER IT RETURN) 12,71, 845/ - 4,63,36,626/ - TAX ON TOTAL INCOME 3,93,002/ - 1,02,05,432/ - THE CONTENTIONS OF THE AUTHORIZED REPRESENTATIVE ARE CORRECT AS CAN BE SEEN FROM THE TABLE ABOVE. I AM IN AGREEMENT WITH THE LD. AUTHORIZED REPRESENTATIVE THAT IN CIT VS. V.S. DEMPO & CO. (P) LTD. [2011] 196 TAXMAN 193 (BOMBAY), THE HON'BLE BOMBAY HIGH COURT HELD THAT IF THE ASSESSEE AND ITS SUBSIDIARY ARE IN THE SAME TAX BRACKET AND PAY SAME RATE OF TAX, THERE IS NO QUESTION OF DIVERSION OF FUNDS BY PAYING HIGHER RATE TO THE SUBSIDIA RY COMPANY AND THEREFORE, NO DISALLOWANCE I.T.A NO. 1980 /AHD/20 1 6 A.Y. 2011 - 12 PAGE NO D CIT VS. M/S. KHAMBHALIA WIND FARM DEVELOPERS LTD. 4 CAN BE MADE U/S 40A(2). FACT OF THE PRESENT CASE ARE IDENTICAL WITH THE FACTS OF COMMISSIONER OF INCOME - TAX - 1 VS INDU NISSAN OXO CHEMICAL INDUSTRIES LTD. [2014] 45 TAXMANN.COM 478 (GUJARAT). 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, LD. COUNSEL HAS SUBMITTED PAPER BOOK CONTAINING CONTAINING DETAIL OF SUBMISSION MADE BEFORE ASSESSING OFFICER AND LD. CIT(A) . HE CONTENDED T HAT LD. CIT(A) HAS RIGHTLY ADJUDICATED THE CASE IN FAVOUR OF THE ASSESSEE AND THE ASSESSING OFFICER HAS FAILED TO BRING ANY COMPARABLE CASES AS TO ASCERTAIN THE FAIR MARKET VALUE OF THE SIMILAR GODS SOLD BY THE OTHER CONCERN . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF ASSESSING OFFICER. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSEE HAS MADE CERTAIN PURCHASES AS ELABORATED IN THIS ORDER FROM VEER ENERGY AND INFRASTRUCTURE PVT. LTD . T HE ASSESSING OFFICER MADE DISALLOWANCE U/S. 40A(2) (B) OF TH E ACT ON THE GR OUND THAT ASSESSEE HA S MADE PURCHAS ES AT HIGHER PRICES FROM THE SAID CONCERN . WITH THE ASSISTANCE OF LEARNED COUNSEL WE HAVE GONE THROUGH THE MATERIAL ON RECORD AND OBS ERV ED AS UNDER: - (I) IT IS NOTICED THAT VEIL HAS SOLD SIMILAR PRODUCT TO A UNRELATED PARTY ( GLOBAL WINDFALL FARM ) AT THE SAME RATE AT WHICH IT HA S SOLD THE SAME TO THE ASSESSEE . IN THIS REGARD R ELEVANT MATERIEL IN THE FORM OF INVOICE WAS SUBMITTED BEFORE THE LD. CIT(A) AND THE LD. CIT(A) HAS CALLED REMAND REPORT FROM THE ASSESSING OFFICER AND THE ASSESSING OFFICER COULD NOT CONTROVERT THE ABOVE MATERIAL FACT THAT ON SAME RATE THE GOODS WAS SOLD TO THE UNRELATED PARTY. I.T.A NO. 1980 /AHD/20 1 6 A.Y. 2011 - 12 PAGE NO D CIT VS. M/S. KHAMBHALIA WIND FARM DEVELOPERS LTD. 5 (II) IT IS UNDISPUTED FACT THAT ASSESSEE AND VEIL W ERE ASSESSED AT T HE SAME RATE OF TAX . THE LD. COUNSEL HAS ALSO PLACED RELIANCE ON THE DECI SI ON OF PCIT VS . GUJARAT GAS FINANCE SERVICES LTD. (2015) 60 TAXMAN. COM 483 (GUJARAT) WHEREIN IT IS HE LD THAT B OTH W ERE ASSESSED TO TAX AT MAXIMUM MARGINAL RATE THEREFORE IT COULD NOT BE SAID THAT SERVICE CHARGES WERE PAID AT UNREASONABLE RATE TO EVADE TAX (III) THE ASSESSING OFFICER ALSO FAILED TO BRING OUT ANY COMPARABLE CASES TO ASCERTAIN THE FAIR MARKET VALUE OF SIMILAR MATERIAL . THE LD. COUNSEL HAS PLACED RELI ANCE ON THE DECISION OF CIT VS SARJ AN REALIT IES LTD. (2014) 50 TAXMAN.COM 52 (GUJ). AFTER CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD. CIT(A). THEREFORE THIS GROUND OF APPEAL OF REVENUE IS DISMISSED . GROUND NO. 2 (DISALLOWANCE U/S. 43(2) OF RS. 10 , 88 , 901/ - ) 7. ON SCRUTINY, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS DEBITED RS. 32 , 96 , 353 ON ACCOUNT OF VAT EXPENSES IN T HE P & L A/C. ON VERIFICATION, THE ASSESSING OFFICER NOTICED THAT IN THE VAT RETURN FILED WITH THE VAT AUTHO RITY, T HE ASSESSEE HAS DECLARED VAT OF RS. 22 , 07 , 45 2 / - WHEREAS IN THE P & L A/C FI L E D WITH THE RETURN OF INCOME , IT HAD CLAIMED VAT EXPENSES OF RS. 32 , 96 , 353/ - . IN THIS CONNECTION, THE ASSESSEE EXPLAINED THAT THEY HAVE FILED VAT RETURN ON THE BASIS OF SCH EDULE RATE METHOD AS IN FUTURE , THEY ARE ELIGIBLE F OR BENEFIT OF EXCESS CREDIT OF V AT. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AND HELD THAT CLAIM OF EXPENDITURE OF RS. 10 , 88 , 901/ - DEBITED IN THE P & L A/C WAS NOT AN I.T.A NO. 1980 /AHD/20 1 6 A.Y. 2011 - 12 PAGE NO D CIT VS. M/S. KHAMBHALIA WIND FARM DEVELOPERS LTD. 6 ALLOW ABLE THEREFORE THE SAID EXPENSES WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. RELEVANT PART OF DECISION OF LD. CIT(A) IS REPRODUCED AS UNDER: - 4.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED AUTHORIZED REPRESENTATIVE AND THE ORDER OF THE ASSESSING OFFICER. REGARDING DISALLOWANCE OF VAT EXPENSES OF RS.10,88,901/ - THE APPELLANT HAS SUBMITTED THAT IT FOLLOWED LUMP SUM METHOD FOR CALCULATION OF VAT EXPENSE IN ITS BOOKS OF ACCOUNTS UNDER WHICH VAT WAS 2% OF TOTAL WORKS CONTRACT SALE UNDER COMPOSITE SCHEME PLUS INPUT VAT CREDIT WHICH WAS NOT RECEIVABLE AS PER THE SAID SCHEME. THE SAME WORKED OUT AT RS. 15,82,624/ - (2% OF WCT) AND RS.17,13,729/ - (WHICH WAS INPUT VAT CREDIT PERTAINING TO MOTA GUNDA SUBSTATION PURCHASES WHICH WAS SHOWN AS RECEIVABLE IN BOOKS OF ACCOUNTS). THIS TOTALED RS.32,96,353/ - WHICH WAS TRANSFERRED AS EXPENSE IN THE PROFIT AND LOSS ACCOUNT FOR THE FINANCIAL YEAR 2010 - 2011. HOWEVER IN THE VAT RETURN OF THE APPELLANT, VAT WAS TO BE SHOWN AS PER SCHEDULE RATE METHOD WHICH AMOUNTED TO RS.22,07,452/ - , UNDER WHICH THE SALES AND PURCHASE TURNOVER WAS CALCULATED AS PER THE VAT ACT AND ACCORDINGLY VAT LI ABILITY WAS DETERMINED ON SALES TURNOVER AND VAT INPUT CREDIT RECEIVABLE WAS DETERMINED ON PURCHASE TURNOVER. THE APPELLANT HAS SUBMITTED SUMMARY OF VAT AS PER BOOKS OF ACCOUNTS, ANNUAL VAT RETURN FOR F.Y.2010 - 2011 AND EXTRACT OF GUJARAT VAT ACT, 2003 VIDE 'ANNEXURE - 8' OF ITS WRITTEN SUBMISSION DATED 9.6.2015. FROM THE SUBMISSIONS IT IS CLEAR THAT THE VAT AS PER VAT RETURN WAS LESS BECAUSE CREDIT OF INPUT VAT PAID ON PURCHASES OF RS.10,88,901/ - WAS SHOWN AS CREDIT RECEIVABLE WHICH IS TO BE CARRIED FORWARD F OR SET OFF AGAINST FUTURE VAT LIABILITY. IT HAS BEEN CONTENDED BY THE LD. AUTHORIZED REPRESENTATIVE THAT THE SAID INPUT VAT CREDIT WILL NOT AVAILABLE AS IT IS LAID DOWN IN THE VAT ACT FOR LUMP SUM METHOD AND COMPOSITION SCHEME. THEREFORE, THE SAID AMOUNT W ILL ANYWAY NOT BE ADMISSIBLE BY VAT DEPARTMENT IN FUTURE AT THE TIME OF VAT ASSESSMENT. IT HAS BEEN VEHEMENTLY ARGUED BY THE AUTHORIZED REPRESENTATIVE THAT FOLLOWING THE CONCEPT OF CONSERVATISM AND PRUDENCE, THE APPELLANT COMPANY HAS RIGHTLY CLAIMED THE INPUT CREDIT OF RS.10,88,901/ - AS EXPENSE AND INCLUDED THE SAME AS VAT EXPENSE IN ITS BOOKS OF ACCOUNTS FOR THE SAID FINANCIAL YEAR. THE TREATMENT GIVEN BY THE APPELLANT IS IN ACCORDANCE WITH THE CONVENTION OF CONSERVATISM AND DOCTRINE OF PRUDENCE IN ACCOUNTING. . I AM INCLINED TO ACCEPT THE CONTENTIONS OF LD. AUTHORIZED REPRESENTATIVE. WHEN IT IS VERY WELL CLEAR THAT INPUT VAT CREDIT WOULD NOT BE ADMISSIBLE IN FUTURE, THERE IS NO POINT IN OVERSTATING ASSETS (I.E. RECEIVABLE) AND U NDERSTATING EXPENSE. THIS TREATMENT IS CONTRADICTORY TO THE PRINCIPLES OF ACCOUNTING. FURTHER SINCE THE VAT INPUT CREDIT WAS PERTAINING TO FY 2010 - 2011, IT ONLY MAKES MOST SENSE WHEN THE SAME IS TREATED AS EXPENSE IN THE SAME YEAR TO WHICH IT RELATE S. THE ASSESSING OFFICER HAS NOT GIVEN ENOUGH REASON FOR DISALLOWING THE SAME IN THE ASSESSMENT ORDER. IF THE ASSESSING OFFICER'S TREATMENT OF RECOGNIZING ONLY RS.22,07,452/ - AS VAT EXPENSE IN PROFIT AND LOSS ACCOUNT WAS TO BE ACCEPTED, THEN IT WOULD AMOU NT TO OVERSTATEMENT OF ASSETS BY RS.10,88,901/ - WHICH IS IN GROSS CONTRAVENTION WITH THE PRINCIPLES OF ACCOUNTING. THEREFORE, THE VAT CLAIMED BY THE APPELLANT COMPANY OF RS.32,96,353/ - IS CORRECT EXPENSE FOR IT FOR THE SAID A.Y.2011 - 12 AND THE DISALLOWANCE MADE BY THE LD. ASSESSING OFFICER AMOUNTING TO RS.10,88,901/ - IS ERRONEOUS AND WITHOUT ANY FACT FINDING AND WITHOUT APPRECIATING THE NATURE OF TRANSACTION AND PROVISIONS OF LAWS LAID DOWN IN THIS RESPECT. THEREFORE, THE SAID DISALLOWANCE U/S 43B AMOUNTI NG TO RS.10,88,901/ - IS DIRECTED TO BE DELETED. THIS GROUND OF APPEAL IS ALSO ALLOWED. I.T.A NO. 1980 /AHD/20 1 6 A.Y. 2011 - 12 PAGE NO D CIT VS. M/S. KHAMBHALIA WIND FARM DEVELOPERS LTD. 7 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. IT IS NOTICED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAD D EBITED VAT EXPENSES OF RS. 32 , 96 , 353/ - IN ITS P & L A/C. HOWEVER, THE ASSESSEE HAS SHOWN VAT UNDER OUTPUT TAX IN THE ANNUAL VAT RETURN AT RS. 22 , 07 , 452/ - , THEREFORE, THE ASSESSING OFFICER HAS DISALLOWED THE DIFFERENCE OF RS. 108890 1 / - BY CONSIDERING THE S AME TO BE INADMISSIBLE UNDER THE INCOME IT ACT. IN THIS REGARD IT IS OBSERVED THAT T HE ASSESSEE COMPANY WAS ENGAGED IN INFRASTRUCTURE DEVELOPMENT BUSINESS WHICH CONSISTS OF COMPOSITE WORK CONTRACT SALE AND THE ASSESSEE WAS LIABLE TO PAY SERVICES TAX AND V AT AS PER RULES OF COMPOSITION SCHEME OF WORK CONTRACT. IN RESPECT OF COMPOSITE WORK CONTRACT THE IN PUT CREDIT OF NORMAL MATERIAL WAS NOT AVAILABLE FOR SET OFF AGAINST THE SAID CONTRACT PAYABLE OF ITS WORK CONTRACT SALE . THE VAT LIABILITY IS DETERMINED ON SALES AND IN PUT TAX CREDIT RECEIVABLE IS DETERMINED ON PURCHASES . UNDER THE ABOVE CIRCUMSTANCES AFTER CONSIDERING THE FINDING OF THE LEARNED CIT APPEAL , WE DO NOT FIND ANY MERIT ON THIS G ROUND OF APPEAL OF THE REVENUE, THEREFORE , THE SAME IS DISMIS SED. 10. IN THE RES UL T, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 15 - 02 - 201 9 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCO UNTANT MEMBER I.T.A NO. 1980 /AHD/20 1 6 A.Y. 2011 - 12 PAGE NO D CIT VS. M/S. KHAMBHALIA WIND FARM DEVELOPERS LTD. 8 AHMEDABAD : DATED 15 /02 /2019 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,