Macro Marvel Projects Limited, CHENNAI V. DCIT, CHENNAI

ITA 2093/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8193 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 18-01-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 28-10-2015
• Court: TRIBUNAL
• Department Lawyers: A B KOLI JCIT
• Assessee Lawyers: T BANUSEKARC A
• Keywords: Principle of natural justice

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , ! ' #! ' $ . %& ' () BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NOS.2092 & 2093 /MDS./2015 ( / ASSESSMENT YEAR :2005-06) M/S.MACRO MARVEL PROJECTS LTD ., 813,GLENDEN PLACE, POONAMALEE HIGH ROAD, KILPAUK, CHENNAI 600 010. VS. DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE IV(1), CHENNAI. PAN AACCM 8816 D ( *+ / APPELLANT ) ( ,-*+ / RESPONDENT ) / APPELLANT BY : MR.T.BANUSEKAR,C.A / RESPONDENT BY : MR.A.B.KOLI,JCIT, D.R / DATE OF HEARING : 18.01.2016 ! /DATE OF PRONOUNCEMENT : 20.01.2016 . / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO APPEALS OF THE ASSESSEE ARE DIRECTED A GAINST THE SEPARATE ORDER OF THE COMMISSIONER OF INCOME TAX (A PPEALS)-8, ITA NOS.2092, 2093/MDS/2015 2 CHENNAI, BOTH ORDER DATED 31.08.2015 PERTAINING TO ASSESSMENT YEAR 2005-06. SINCE CERTAIN ISSUES IN THESE APPEALS ARE COMMON NATURE, THESE APPEALS ARE CLUBBED TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ASSESSEE HAS RAISED THE GROUND THAT DISALLO WANCE U/S.40(A)(IA) OF THE ACT IS INCORRECT. WITHOUT PRE JUDICE TO THE ABOVE, THE ASSESSEE HAS RAISED AN ALTERNATIVE CONTENTION T HAT THE DISALLOWANCE MADE U/S.40(A)(IA) OF THE ACT TO BE CO NSIDERED AS PART OF BUSINESS PROFIT OF THE ASSESSEE OF THE ELIGIBLE PR OJECTS SO AS TO GRANT DEDUCTION U/S.80-IB(10) OF THE ACT. ITA NO.2092/MDS./2015 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE CLAIMED AN EXPENDITURE OF ` 1,96,89,532/-. IT IS IN THE NATURE OF CONTRACT PAY MENT ON WHICH THERE WAS NO DEDUCTION OF TAX AT SOURCE AT THE TIME OF PAYMENT. ACCORDING TO THE AO, IT ATTRACTS THE PROV ISIONS OF THE SECTION 40(A)(IA) OF THE ACT AND THE SAME WAS DISAL LOWED BY THE AO AND CONFIRMED BY THE CIT(A). AGAIN, THE ASSESSEE I S IN APPEAL BEFORE US. ITA NOS.2092, 2093/MDS/2015 3 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS ON RECORD. IN OUR OPINION, THE ISSUE IS SQUARELY COVE RED BY THE ORDER OF THE SPECIAL BENCH OF ITAT (VIZAG BENCH), IN THE CAS E OF MERILYN SHIPPING AND TRANSPORTERS VS. ADDL.CIT (136 ITD 23) (VIZAG SB), WHEREIN IT WAS HELD THAT THE PROVISIONS OF THE SECT ION 40(A)(IA) ARE APPLICABLE ONLY TO THE EXPENSES THAT ARE PAYABLE AND OUTSTANDING AT THE END OF THE CLOSE OF THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR AND NOT TO THE AMOUNT ALREADY PAID. THE SAME VIEW WAS TAKEN BY THE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT V S. M/S.VECTOR SHIPPING SERVICES (P) LTD IN ITA NO.122 OF 2013 DAT ED 09.07.2013 BY HOLDING THAT SEC.40(A)(IA) IS NOT APPLICABLE WHEN T HERE IS NO OUTSTANDING BALANCE AT THE END OF THE CLOSE OF THE YEAR RELEVANT TO THE ASSESSMENT YEAR AND SLP FILED BY THE REVENUE IN SU PREME COURT OF INDIA IN CC NO.8068/2014 DATED 02.07.2014 IS ALSO D ISMISSED. BEING SO, IN OUR OPINION AN AMOUNT OUTSTANDING AT THE END OF THE CLOSE OF THE ASSESSMENT YEAR IS NOT TO BE ALLOWED AS BUSINES S EXPENDITURE IN VIEW OF PROVISIONS 40(A)(IA) OF THE ACT. FURTHER, WE MAKE IT CLEAR THAT THE AO SHOULD CONSIDER ONLY PAYMENT WHICH IS NOT SU BJECT TO TDS FOR DISALLOWANCE AND NOT SHORT DEDUCTION OF TDS. SINCE WE HAVE ITA NOS.2092, 2093/MDS/2015 4 FOLLOWED THE ORDER OF THE SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING AND TRANSPORTERS VS. ADDL.CIT CITED SUPRA AND ALSO THE JUDGEMENT OF ALLAHABAD HIGH COURT IN THE CASE OF CI T VS. M/S.VECTOR SHIPPING SERVICES (P) LTD CITED SUPRA, ALSO THE JUD GEMENT OF KERALA HIGH COURT IN THE CASE OF SHRI THOMAS GEORGE MUHOO T IN ITA NO.278 OF 2014 VIDE ORDER DATED 3 RD DAY OF JULY 2015, WE HAVE NOT CONSIDERED THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI D.UMAPATHY IN ITA NO.2435/MDS./2014 VIDE ORDER DATE D 14.08.2015. FURTHER REGARDING THE ALTERNATE SUBMISSION OF THE A UTHORIZED REPRESENTATIVE TO CONSIDER THE DISALLOWANCE MADE U/ S.40(A)(IA) OF THE ACT, IF ANY TO BE CONSIDERED AS PART OF THE BUSINES S PROFIT IN VIEW OF THE JUDGEMENT OF BOMBAY HIGH COURT IN THE CASE OF C IT VS. GEM PLUS JEWELLERY INDIA LTD., WHEREIN IT WAS HELD THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S.10A WITH REFERENCE TO ADD ITION OF DISALLOWANCE OF PF/ESIC PAYMENTS AS THE PLAIN CONSE QUENCE OF THE DISALLOWANCE AND ADD BACK MADE BY THE A.O IS AN INC REASE IN THE BUSINESS PROFITS OF THE ASSESSEE. IN OUR OPINION, T HIS PLEA OF THE ASSESSEES COUNSEL TO BE UPHELD IN VIEW OF THE JUDG EMENT. WE ORDERED ACCORDINGLY. ITA NOS.2092, 2093/MDS/2015 5 ITA NO.2093/MDS./2015 5. THE ASSESSEE HAS RAISED THE GROUNDS AS FOLLOWS: - 1. FOR THAT THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CAS E TO THE EXTENT PREJUDICIAL TO THE INTEREST OF THE APPELLANT AND AT ANY RATE IS OPPOSED TO THE PRINCIPLES OF EQUITY, NATURAL JUSTICE AND FAIR PLAY. 2. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE ORDER OF THE ASSESSING OFFICER IS WITHOUT JURISDICTION. 3. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER ERRED IN COMPUTING THE P ROFIT ELIGIBLE FOR DEDUCTION U/S.80-IB(10). 4. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE ELIGIBLE BUILT UP AREA OF THE PROJECT RIV ERVIEW COUNTRY IS 82,740 SQ. FT. AS AGAINST 57,405 SQ. FT. STATED BY THE ASSESSI NG OFFICER. 5. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT DISALLOWANCE U/S.40A(3) OUGHT TO BE INCLUDED I N CALCULATING PROFITS FROM ITA NOS.2092, 2093/MDS/2015 6 ELIGIBLE PROJECTS AND HENCE ERRED BY NOT GIVING PRO PORTIONATE DEDUCTION U/S.80-LB(10) ON THE SAID DISALLOWANCE. 6. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE ASSESSING OFFICER OUGHT NOT TO HAVE INCLUD ED THE INCOME FROM OTHER PROJECTS AND OTHER INCOME IN CALCULATING THE ELIGIB LE PROFITS U/S.80-IB(10). 7. FOR THAT THE COMMISSIONER OF INCOME TAX (APPEALS ) FAILED TO APPRECIATE THAT THE CONSTRUCTION AREA OF OTHER PROJECTS WHICH ARE NON 80-IB(10) PROJECTS ARE NOT TO BE TAKEN INTO ACCOUNT IN DETERMINING THE DEDUCTION U/S.80-IB(10). 8. FOR THAT THE APPELLANT OBJECTS TO THE LEVY OF IN TEREST ULS.234B. 6. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT(A) CHALLENGING THE COMPUTATION OF E LIGIBLE INCOME FOR DEDUCTION U/S.80-IB(10) OF THE ACE AND LEVY OF INTE REST U/S.234B OF THE ACT, CONSEQUENT TO GIVING EFFECT TO THE ORDER OF TH E TRIBUNAL IN ITA NOS.116/MDS./2011 & 1685/MDS./2010 DATED 27.11.201 2. IN THAT APPEAL BEFORE THE CIT(A), ASSESSEE CHALLENGED THE O RDER OF THE ASSESSING OFFICER WITH REGARD TO BUILT-UP AREA OF THE PROJECT RIVERVIEW COUNTRY. HOWEVER, AS SEEN FROM THE ORD ER OF THE CIT(A), THERE IS NO SPECIFIC FINDINGS ON THE ISSUE RAISED B Y THE ASSESSEE. AS SUCH, WE ARE NOT IN A POSITION TO APPRECIATE THE OR DER OF THE CIT(A) ITA NOS.2092, 2093/MDS/2015 7 WHICH IS VERY CRYPTIC ONE. ACCORDINGLY, WE REMIT T HE ENTIRE ISSUE IN DISPUTE TO THE FILE OF THE CIT(A) TO GIVE FINDING W ITH REFERENCE TO THE ISSUE RAISED BY THE ASSESSEE IN ITS APPEAL BEFORE T HE CIT(A). THIS APPEAL OF THE ASSESSEE IS REMITTED TO THE FILE OF T HE CIT(A) FOR DENOVO CONSIDERATION. 7. IN THE RESULT, THE APPEALS OF THE ASSESSEE IN IT A NO.2092/MDS./2013 AND ITA NO.2093/MDS./2015 ARE A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY THE 20 TH OF JANUARY,2016 AT CHENNAI. SD/- SD/- ( ' #! ' $ . %& ) ( DUVVURU RL REDDY ) ( ( ' # $ % ) ) &'()*+,)-.//0),12- JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 20 TH JANUARY,2016 . K S SUNDARAM. 34-- 56-76 /COPY TO: - 1. /APPELLANT 2. /RESPONDENT 3. - 8-&2 /CIT(A) 4. - 8 /CIT 5. 69:- ; /DR 6. :<-= /GF