The ACIT,Navsari Circle, Navsari V. M/s. Naranlala Pvt. Ltd., Navsari

ITA 2044/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1244 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 15-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 02-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NO: 2044/AHD/2013 (ASSESSMENT YEAR: 2010-11) ASSTT. COMMISSIONER OF INCOME-TAX, NAVSARI CIRCLE, NAVSARI V/S M/S. NARANLALA PVT. LTD. NEAR RAILWAY STATION, VIJALPORE, NAVSARI (APPELLANT) (RESPONDENT) PAN: AAACN7719C APPELLANT BY : SHRI PRASOON KABRA, SR. D. R. RESPONDENT BY : NONE ( )/ ORDER DATE OF HEARING : 15-06-201 6 DATE OF PRONOUNCEMENT : 20-06-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE REVENUE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE LD. CIT(A), VALSAD DATED 31.05.2013 PE RTAINING TO A.Y. 2010-11. ITA NO. 2044 /AHD/2013 . A.Y. 2010-1 1 2 2. THE SHORT GRIEVANCE OF THE REVENUE RELATES TO THE D ELETION OF THE ADDITION OF RS. 64,34,956/-. 3. THE ASSESSEE COMPANY IS ENGAGED IN THE MANUFACTURIN G AND SALE OF DISTILLERY AND ALCOHOL BASED CHEMICAL PLANT AND THE IR EQUIPMENT. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE HAS REDUCED AN AMOUNT OF RS. 64,34,956 /- FROM ITS SALE CLAIMING IT TO BE RETENTION MONEY RETAINED BY THE C USTOMERS OUT OF THE CONTRACT AMOUNT. 4. THE ASSESSEE WAS ASKED TO JUSTIFY ITS STAND. ASSESS EE FILED A DETAILED REPLY VIDE LETTER DATED 20.12.2012 STATING THAT THE ASSESSEE IS EXECUTING TURNKEY CONTRACTS UNDER WHICH IT HAS TO M ANUFACTURE THE PLANT ON THE BASIS OF CUSTOMERS REQUIREMENTS, INST ALL THE SAME AT PREMISES OF THE CUSTOMER AND COMMISSION THE SAME. T HE ASSESSEE HAS TO ENSURE THAT THE PLANT SO MANUFACTURED AND INSTAL LED WORKED PROPERLY DURING THE GUARANTEE PERIOD STATED IN THE CONTRACT. THE CUSTOMERS RETAIN 10% AS RETENTION MONEY OUT OF TH E CONTRACT AMOUNT. THIS AMOUNT IS RELEASED AFTER THE SPECIFIED GUARANTEE PERIOD, WHICH RANGES FROM 3 TO 12 MONTHS AFTER THE DATE OF COMMISSIONING OF THE PLANT. DURING THIS GUARANTEE PERIOD, IF DEFECT S ARE NOTICED IN THE WORKING OF THE PLANT, THE ASSESSEE HAS TO ATTEND TO THE DEFECTS AND RECTIFY THE SAME AND NO SEPARATE CHARGE IS MADE FOR THIS PURPOSE. IT WAS EXPLAINED THAT DUE TO THIS CONTRACT, THE RETENT ION MONEY IS REDUCED FROM THE SALES AND THE SAME IS OFFERED FOR TAXATION IN SUBSEQUENT YEARS WHEN THE MONEY IS RECEIVED. 5. THIS EXPLANATION OF THE ASSESSEE DID NOT FIND ANY F AVOUR WITH THE A.O. WHO WAS OF THE FIRM BELIEF THAT SINCE THE ASSESSEE IS MAINTAINING ITS ITA NO. 2044 /AHD/2013 . A.Y. 2010-1 1 3 BOOKS OF ACCOUNTS ON MERCANTILE SYSTEM OF ACCOUNTIN G, ALL INCOME ACCRUED DURING THE YEAR HAS TO BE ACCOUNTED FOR. TH E A.O. ADDED THE AMOUNT OF RS. 64,34,956/- AND COMPLETED THE ASSESSM ENT. 6. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED WHAT HAS BEEN STATED BEFORE THE ASSESSING AUTHORITY . AF TER CONSIDERING THE FACTS AND THE SUBMISSIONS AND THE PAST HISTORY OF T HE ASSESSEE, THE LD. CIT(A) HELD AS UNDER:- 4.1 DECISION: - THIS ISSUE SQUARELY COVERED BY THE DECISIONS OF M Y PREDECESSOR IN THE CASE OF THE APPELLANT FOR THE AS STT. YEARS 2002-03, 2005-06 AND 2006-07 VIDE APPELLATE ORDERS NO. (1) C IT(A)/VLS/95/05-06 DATED 14.12.2005, (2) CIT(A)/VLS/180/07-08 DATED 14 .07.2008 AND (3) CIT(A)/VLS/ /08-09 DATED 17.03.2009 IN FAVOUR OF T HE APPELLANT. THIS ISSUE IS ALSO DECIDED BY ME IN THE CASE OF THE APPE LLANT FOR THE ASSTT. YEARS 20078-08, 2008-09 AND 2009-10 VIDE APPELLANT ORDERS NO. (1) CIT(A)/VLS/238/09-10 DATED 29.10.2010, (2) CIT(A)/V LS/305/10-11 DATED 31.03.2011 AND (3) CIT(A)/VLS/240/11-12 DATED 20.03 .2013 . FOLLOWING THE PRECEDENCE OF THE EARLIER YEARS ORDER, THE APPE LLANT GET RELIEF IN THIS GROUND OF APPEAL. THE APPELLANT DIRECTED TO FURNISH THE DETAILS OF RS. 64,34,956/- SHOWING THAT THE APPELLANT WAS SUFFERED TAX IN THE ASSTT. YEAR 2010-11. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLO WED. 7. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. NONE A PPEARED ON BEHALF OF THE ASSESSEE IN SPITE OF NOTICE, WE DECIDED TO P ROCEED EX PARTE. THE LD. D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O . 8. HAVING HEARD THE LD. D.R., WE HAVE CAREFULLY PERUSE D THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE FIRST APPELLATE AUTHORITY HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE CONSID ERING THE PAST HISTORY AS MENTIONED HEREINABOVE. A PERUSAL OF THE DECISION OF THE LD. ITA NO. 2044 /AHD/2013 . A.Y. 2010-1 1 4 CIT(A) SHOWS THAT HE HAS DIRECTED THE ASSESSEE TO F URNISH THE DETAILS OF RS. 64,34,956/- TO SHOW THAT THE AMOUNT WAS SUFF ERED TAX IN THE ASSESSMENT YEAR 2010-11, IN OUR CONSIDERED OPINION, THERE APPEAR TO BE A TYPO ERROR INSTEAD OF ASSESSMENT YEAR 2010-11, IT SHOULD BE FINANCIAL YEAR 2010-11 RELEVANT TO ASSESSMENT YEAR 2011-12 I.E. IMMEDIATELY SUCCEEDING ASSESSMENT YEAR TO THE YEAR UNDER CONSIDERATION. 9. THUS, MODIFYING THE FINDINGS OF THE LD. CIT(A), WE DIRECT THE ASSESSEE TO DEMONSTRATE THAT THE RETENTION MONEY HAS BEEN OFFERED TO TAX AS INCOME IN SUBSEQUENT YEAR, THE A.O IS DIRECTED TO V ERIFY THE SAME AND DECIDE THE ISSUE AFRESH KEEPING IN MIND THAT THERE SHOULD NOT BE DOUBLE TAXATION OF THE SAME AMOUNT. WITH THIS MODIF ICATION, THE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STAT ISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 20 - 06 - 2 016. SD/- SD/- (RAJPAL YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD