M/s. PRESTRESS (INDIA) P. LTD., MUMBAI V. ITO - 1(2)(2), MUMBAI

ITA 2178/MUM/2007

• Counselvise Citation: 217819914 RSA 2007
• Duration Of Justice: 6 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 30-07-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 15-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A
• Assessee Lawyers: P J PARDIWALA
• Keywords: Commercial expediency; Revenue expenditure; Capital expenditure
• Section: 43B; 80IB; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C , MUMBAI BEFORE SHRI RAJENDRA SINGH , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO S . 2178/M/07 , 7157 & 7158/M/08 ASSESSMENT YEAR S : 2003 - 04, 2004 - 05 & 2005 - 06 M/S. PRESTRESS (INDIA) P VT. LTD. 303 ELPHINSTONE HOUSE, 17 MURZBAN ROAD, MUMBAI - 400 001 PAN: AA AC P2076J VS. THE INCOME TAX OFFICER 1(2)(2) AAYAKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : S/ SHRI P.J. PARDIWALA & NITESH JOSHI REVENUE BY : SHRI R.A. PANT, D.R. DATE OF HEARING : 30.07.13 DATE OF PRONOUNCEMENT : 30.09.13 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: WITH THIS COMMON ORDER WE WILL DISPOSE OF F ABOVE TITLED THREE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDERS OF THE CIT(A) DATED 08.01.07 & 10.10.08 & 13.10.2008 RELEVANT TO ASSESSMENT YEAR S 2003 - 04, 2004 - 05 & 2005 - 06 RESPECTIVELY. ITA NO. 2178/M/07 (ASSESSMENT YEAR 2003 - 04) GROUND NO.1: 2. VIDE GROUND NO. 1 , THE ASSESSEE HAS ASSAILED THE FINDINGS OF THE LD. CIT(A) CONFIRMING ADDITIONS OF RS.1 8 , 4 75/ - AND RS.1 , 15 , 762 / - WITH RESPECT TO PAYMENT OF PF CONTRIBUTIONS UNDER SECTION 43B OF THE INCOME TAX ACT. ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 2 3. AS PER THE APPLICABLE PROVISIONS FOR THE YEAR U NDER CONSIDERATION THE CONTRIBUTION TO PF OF THE EMPLOYEES WAS REQUIRED TO BE MADE ON OR BEFORE DUE DATE TO DO SO . THE AO NOTED THAT THE CONTRIBUTION TO PF WAS PAID BY THE ASSESSEE BELATEDLY . HENCE HE MADE THE ABOVE NOTED ADDITIONS. THE LD. CIT(A) CONFI RMED THE ADDITIONS. 4 . THE CONTENTION OF THE LD. A.R. , BEFORE US , HAS BEEN THAT THE CONTRIBUTION TO PF WAS MADE BEFORE THE DUE DATE INCLUSIVE OF THE GRACE PERIOD OF FIVE DAYS. ON THE OTHER HAND LD. DR HAS RELIED UPON THE AUTHORITIES BELOW. 5 . WE HAV E CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES AND ALSO GONE THROUGH THE RECORDS. 6 . THE LD. CIT(A) HAS CONFIRMED THE ADDITION HOLDING THAT THE GRACE PERIOD WAS ALLOWABLE ONLY UNDER THE PROVIDENT FUND ACT AND NOT UNDER THE INCO ME TAX ACT AND THAT THE SAID GRACE PERIOD WAS VALID FOR PF PROCEEDINGS ONLY AND NOT FOR INCOME TAX ACT PURPOSES. 7. AS PER THE SECOND PROVISO TO SECTION 43B OF THE INCOME T AX A CT WHICH WAS IN FORCE BEFORE 01.04.04 , THE PAYMENT OF CONTRIBUTION TO PF WAS ALLOWABLE AS AN EXPENDITURE , IF THE SAME WOULD HAVE BEEN DEPOSITED BY THE EMPLOYER ON OR BEFORE THE DUE DATE BY WHICH THE ASSESSEE IS REQUIRED TO DEPOSIT THE SAME IN THE RELEVANT FUND UNDER THE RELEVANT ACT. 8. SO IT IS APPARENT THAT NO DUE DATE HAS BEE N PRESCRIBED UNDER THE INCOME TAX ACT RATHER THE DUE DATE IS TO BE THE DATE WHICH IS PRESCRIBED UNDER THE PROVIDENT FUND ACT. 9. IT IS AN ADMITTED CASE OF BOTH THE PARTIES THAT THE PAYMENT WAS DEPOSITED BY THE ASSESSEE WITHIN THE GRACE PERIOD PROVIDED U NDER THE RELEVANT ACT WHICH ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 3 MEANS THAT THE ASSESSEE DID NOT COMMIT ANY DEFAULT OR DELAY UNDER THE PROVISIONS OF THE PROVIDENT FUND ACT AND IT CAN BE SAFELY SAID THAT THE PAYMENT WAS MADE WITHIN THE DUE DATE AS PRESCRIBED BY THE PROVIDENT FUND ACT. UNDER S UCH CIRCUMSTANCES THE ASSESSEE HAS MADE THE PAYMENT WITHIN THE DUE DATE AS PER THE REQUIREMENT OF SECTION 43B READ WITH SECTION 36 (1) (VA) OF THE I NCOME T AX A CT. IT MAY BE FURTHER OBSERVED THAT THE SAID PROVISO REQUIRING THE CONTRIBUTION TO BE MADE BEFORE THE DUE DATE OF DEPOSIT UNDER THE RELEVANT ACT HAS BEEN OMITTED VIDE FINANCE ACT, 2003 W.E.F. 01.04.04. THE PURPOSE OF THE SAID PROVISO WAS ONLY THAT THE EMPLOYER SHOULD NOT DELAY IN MAKING THE CONTRIBUTION TOWARDS PROVIDENT FUND OF THE EMPLOYEES. SO WH EN THE ASSESSEE HAD MADE A PAYMENT WITHIN THE GRACE PERIOD , THEN IT CAN BE SAFELY SAID THAT THE ASSESSEE HAD MADE THE PAYMENT WITHIN THE DUE DATE U NDER THE PROVIDENT FUND ACT , THE REQUIREMENT OF SECTION 43B (AS WAS APPLICABLE DURING THE RELEVANT YEAR) THU S WAS DEEMED TO BE COMPLIED WITH. HENCE THIS GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE AND THE ADDITIONS MADE ON THIS GROUND ARE HEREBY ORDERED TO BE DELETED. GROUND NO.2 & ADDITIONAL GROUND : 10 . VIDE GROUND NO.2, THE ASSESSEE HAS CHALLENGED THE CONF IRMATION OF DISALLOWANCE OF RS.26.20 LAKHS CLAIMED AS LOSS INCIDENTAL TO BUSINESS OF THE ASSESSEE. ALONG WITH GROUND NO.2, THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND VIDE WHICH HE HAS CHALLENGED THE DISALLOWANCE OF RS.1,04,80,141/ - BEING THE AMOUNT DUE FROM M/S. TECHNO CONSTRUCTIONS IN RESPECT OF SECUNDERABAD RAILWAY PROJECT . THE ADDITION OF RS. 26.20 IS A PART OF THE CLAIM AMOUNT O F R S . 1,04,80,141/ - RAISED THROUGH ADDITIONAL GROUND. SO THROUGH THE ADDITIONAL GROUND, THE ASSESSEE HAS RAISED AN A LTERNATE CLAIM TO THE THAT OF GROUND NO.2. ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 4 11 . THE ASSESSEE ENTERED INTO A JOINT VENTURE AGREEMENT WITH M/S. TECHNO CONSTRUCTIONS , SECUNDERABAD FOR GAUGE CONVERSION OF MUDKHED - SECUNDERABAD SECTION BRIDGE NO.433 (EXG.1X12.20 M.STEEL GIRDERS) AT KM 432/2 - 3 A ND BRIDGE NO.434 (EXG.21X18.3M STEEL GIRDER) AT KM.432/11 - 433/2 BETWEEN BASAR & FAKHIRABAD STATIONS AND STRENGTHENING OF EXISTING FOUNDATION AND SUBSTRUCTURE AND CASTING AND LAUNCHING OF PSC GIRDER IN SUPER - STRUCTURE FOR WBG LOADING STANDARDS DULY REMOVING THE EXISTING MG STEEL GIRDERS INCLUDING PROVIDING ONE ADDITIONAL SPAN OF 1X18.30 M PSC FOR BRIDGE NO.434. THE PROFIT SHARE WAS AGREED TO BE AT THE RATE OF 46% FOR THE ASSESSEE AND 54% FOR THE OTHER PARTY. THE ABOVE SAID CONTRACT WAS COMPLETED IN THE FINA NCIAL YEAR 2002 - 03. THE 20% OF THE TOTAL AMOUNT OF RS.1,04,80,141/ - DUE FROM THE SAID PARTY M/S. TECHNO CONSTRUCTIONS AMOUNTING TO RS.26.20 LAKHS WAS CLAIMED AS LOSS DUE TO NO ACCOUNTS COMING FORWARD FROM THE OTHER PARTY. IT WAS FURTHER CONTENDED THAT T HE OTHER PARTY WAS NOT COOPERATING TO REFUND THE MONEY AND THEREFORE 20% OF THE BALANCE WAS WRITTEN OFF. PROVISION FOR WRITING OF F THE BALANCE LOSS WAS ALSO MADE IN THE SUBSEQUENT YEARS . THE AO HOWEVER OBSERVED THAT THIS WAS THE CAPITAL INVESTMENT MADE B Y THE ASSESSEE IN THE JOINT VENTURE AND THE SAME COULD NOT BE WRITTEN OFF AS REVENUE LOSS. HE THEREFORE DISALLOWED THE ASSESSEES CLAIM FOR THE LOSS OF RS.26.20 LAKHS AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. 12 . IN FIRST APPEAL, THE LD. CIT(A) OBSERVED THAT AS IT WAS APPARENT FROM THE ACCOUNT OF THE ASSESSEE THAT M/S. TECHNO CONSTRUCTIONS PAID RS.48,55,261/ - IN CASH DURING FY: 2002 - 03 AND ALSO INCURRED EXPE NSES OF RS.2,21,990/ - ON BEHALF OF THE APPELLANT/ASSESSEE . THEREFORE THE APPELLANT COULD NOT UNILATERALLY CLAIM THAT THE INVESTED FUNDS WERE NOT COMING BACK TO IT AND F URTHER THAT D URING THE YEAR UNDER REFERENCE , THE BUSINESS RELATIONSHIP BETWEEN THE APPELLANT AND M/S. T ECHNO CONSTRUCTIONS CONTINUED. T HE APPELLANT HAD MADE CA PITAL ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 5 CONTRIBUTION TO THE JOINT VENTURE AND NOT THE REVENUE EXPENDITURE. THE LD. CIT(A) THEREFORE CONFIRMED THE DISALLOWANCE MADE BY THE A.O. 13 . BEFORE US THE LD. A.R. HAS SUBMITTED THAT THE AMOUNT IN QUESTION WAS ADVANCED TO M/S. TECHNO CONST RUCTIONS DURING THE COURSE OF BUSINESS. THOUGH IT WAS AN ADMITTED FACT THAT CERTAIN AMOUNTS WERE RECEIVED AND EXPENSES WERE INCURRED , BUT AN AMOUNT OF RS.1,04,80,141/ - WAS OUTSTANDING AGAINST THE SAID M/S. TECHNO CONSTRUCTIONS AS ON 01.04.04 . THEREAFTER THE ASSESSEE DID NOT RECEIVE ANY AMOUNT FROM THE SAID M/S. TECHNO CONSTRUCTIONS . AN AMOUNT OF RS.26. 2 0 LAKHS WAS WRITTEN OFF AS BUSINESS LOSS DURING THE YEAR UNDER CONSIDERATION AND THE BALANCE AMOUNT WAS WRITTEN OFF DURING THE SUBSEQUENT YEARS. HE HAS F URTHER SUBMITTED THAT WHATEVER INTEREST WAS RECEIVED BY THE ASSESSEE ON THE INVESTMENTS/ ADVANCE MADE TO M/S. TECHNO CONSTRUCTIONS DURING THE PRECEDING YEARS, THE SAME WAS OFFERED FOR TAX IN THE RELEVANT YEARS . HIS CONTENTION HAS BEEN THAT SINCE THE ADVANC ES WERE MADE IN THE COURSE OF BUSINESS AND DUE TO BUSINESS EXIGENCIES, THE SAME WERE REVENUE EXPENDITURE. ON THE OTHER HAND THE CONTENTION OF THE LD. D.R. HAS BEEN THAT THE SAID EXPENDITURE WAS IN THE NATURE OF CAPITAL EXPENDITURE. 14 . WE HAVE CONSIDER ED THE SUBMISSIONS OF THE LD. REPRESENTATIVES OF THE PARTIES. 1 5 . IT HAS BEEN CLAIMED BY THE ASSESSEE THAT THE CONTRACT IN QUESTION WAS COMPLETED DURING THE FINANCIAL YEAR 2002 - 03 ITSELF. AFTER THE COMPLETION OF THE CONTRACT THE ASSESSEE HAS NOT RECEIV ED ANY AMOUNT FROM M/S. TECHNO CONSTRUCTIONS DESPITE ITS BEST EFFORTS. SINCE THERE WAS NO LIKELIHOOD OF THE RECOVERY OF THE AMOUNT , H ENCE THE 1/5 TH OF THE DUE AMOUNT WAS WRITTEN OFF DURING THE FINANCIAL YEAR IN QUESTION AND THE REMAINING WAS WRITTEN OFF I N SUBSEQUENT YEARS. THE ADVANCES WERE MADE IN THE COURSE OF BUSINESS. IT HAS ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 6 BEEN CLAIMED THAT THE ASSESSEE HAS NOT RECEIVED ANY AMOUNT OUT OF THE ENTIRE DUE AMOUNT TILL DATE. NOW IT IS ALMOST A SETTLED LAW THAT IF THE LOANS AND ADVANCES ARE MADE DURING THE COURSE OF BUSINESS OR ON ACCOUNT OF COMMERCIAL EXPEDIENCY AND THERE IS A NEXUS BETWEEN THE BUSINESS INTERESTS AND THE ADVANCES MADE BY THE ASSESSEE THEN THE SAME IS TO BE TREATED AS REVENUE EXPENDITURE . R ELIANCE IN THIS RESPECT CAN BE PLACED ON THE H ON'BLE MADRAS HIGH COURT'S JUDGMENT IN THE CASE OF INDIAN COMMERCE AND INDUSTRIES CO. P. LTD. VS. CIT (213 ITR 513) , ON HON'BLE SUPREME COURT'S JUDGMENT IN THE CASE OF PATNAIK & CO. LTD VS. CIT (161 ITR 365), AND ON HON'BLE JURISDICTIONAL HIGH COURT'S JUDGMENT IN THE CASE OF CIT VS. INVESTA INDUSTRIAL CORPORATION LTD . (119 ITR 360). 16. HOWEVER, IT IS AGAIN A MATTER OF FACT TO BE ESTABLISHED AS TO WHETHER THE SAID ADVANCES WERE MADE BY THE A SSESSEE DURING THE COURSE OF BUSINESS OR DUE TO COMMERCIAL EXPEDIENCY AND THERE WAS A NEXUS BETWEEN THE ADVANCES MADE AND THE BUSINESS INTERESTS OF THE ASSESSEE. THE ISSUE IS THUS RESTORED BACK TO THE FILE OF THE AO FOR A FRESH EXAMINATION IN THIS RESPECT . IF THE ASSESSEE WILL BE ABLE TO SHOW THAT THE ADVANCES WERE MADE DURING THE COURSE OF BUSINESS OR DUE TO COMMERCIAL EXPEDIENCY AND THE SAME HAD A NEXUS WITH THE BUSINESS INTERESTS OF THE ASSESSEE , THEN THE LOSS WILL BE ALLOWED AS A REVENUE LOSS. NEEDLE SS TO SAY THAT THE AO WILL GIVE PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE AND NECESSARY DOCUMENTS , IF SO , REQUIRED. IT IS MADE CLEAR THAT IF THE AO WILL BE OF THE VIEW THAT THE ENTIRE AMOUNT OF RS.1,04,80,141/ - IS TO BE TREATED AS BUSINESS LO SS FOR THE RELEVANT YEAR , THEN THE ASSESSEE WILL NOT BE ENTITLED TO CLAIM ANY PART OF IT IN THE SUBSEQUENT YEARS. THIS ISSUE IS ACCORDINGLY ALLOWED IN FAVOUR OF THE ASSESSEE FOR STATISTICAL PURPOSES. ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 7 GROUND NO.3: 1 7 . VIDE GROUND NO.3, THE ASSESSEE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.8,38,543/ - MADE BY THE AO TREATING THE SAME AS TO BE THE PROFIT OF THE ASSESSEE FROM THE JOINT VENTURE. DURING THE ASSESSMENT PROCEEDINGS THE AO CALLED FOR THE RECORD S AND DETAILS O F ACCOUNTS FROM THE ASSESSEE RELATING TO THE JOINT VENTURE PROJECT. HE ALSO ISSUED SUMMONS UNDER SECTION 131 OF THE INCOME TAX ACT TO THE LEAD PARTNER M/S. TECHNO CONSTRUCTIONS. HOWEVER, THE SAID PARTY DID NOT RESPOND. THE AO ALSO CALLED FOR THE RECORDS FROM THE RAILWAYS , WHICH CONFIRMED THAT A SUM OF RS.45, 48 ,298/ - WAS PAID TO M/S. TECHNO CONSTRUCTIONS FOR THE WORK IN QUESTION. THE AO OBSERVED THAT IN THE ABSENCE OF ANY DETAIL S OF ACCOUNTS FROM THE ASSESSEE COMPANY AS WELL AS FROM THE JOINT VENTURE PAR TNER M/S. TECHNO CONSTRUCTIONS, T HE VERSION OF THE ASSESSEE COULD NOT BE ACCEPTED. HE THEREFORE ASSESSED THE EXPENSES AT THE RATE OF 60% OF THE CONTRACT RECEIPT AMOUNT OF RS.45, 48 ,298/ - AND ACCORDINGLY CALCULATED THE PROFIT AT RS.18,22,919/ - . HE FURTHER CALCULATED THE SHARE OF THE ASSESSEE AT THE RATE OF 46% AT RS.8,38,543/ - AND ADDED BACK THE SAID SUM INTO THE INCOME OF THE ASSESSEE. 1 8 . IN FIRST APPEAL THE LD. CIT(A) OBSERVED THAT IT WAS APPARENT FROM THE RECORD THAT THE RAILWAYS PAID RS.45, 48 ,298/ - TO THE M/S. TECHNO CONSTRUCTIONS FOR THE JOINT VENTURE WORK DONE BY IT WITH THE APPELLANT. NEITHER THE SAID JOINT VENTURE OFFERED THE INCOME FOR TAX NOR THE ASSESSEE OFFERED ITS SHARE OF INCOME FOR TAX. HE THEREFORE UPHELD THE ACTION OF THE AO IN ASSESSI NG THE SHARE OF THE ASSESSEE IN PROFITS OUT OF THE JOINT VENTURE. 1 9 . BEFORE US THE LD. A.R. HAS SUBMITTED THAT THE JOINT VENTURE OF THE ASSESSEE WITH M/S. TECHNO CONSTRUCTIONS NEITHER CAN BE CALLED AS AN ASSOCIATION OF PERSONS (AOP) NOR IT CAN BE SAID TO BE A PARTNERSHIP FIRM. THE ASSESSEE DID NOT ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 8 RECEIVE ANY SHARE OUT OF THE PROFITS EARNED BY THE JOINT VENTURE HENCE WAS NOT LIABLE TO PAY ANY TAX. 20. IN OUR VIEW THIS CONTENTION OF THE LD. A.R. IS NOT ACCEPTABLE. IT IS APPARENT ON THE RECORD THAT T HE ASSESSEE ENTERED INTO A JOINT VENTURE WITH M/S. TECHNO CONSTRUCTIONS FOR EXECUTING THE WORK CONTRACT OF RAILWAYS RELATING TO BRIDGES. IT IS ALSO APPARENT ON THE RECORD THAT A SUM OF RS.45,48,298/ - WAS RECEIVED BY THE SAID JOINT VENTURE OF THE ASSES SEE FROM THE RAILWAYS. WHEN TWO OR MORE PERSONS JOIN IN COMMON PURPOSE OR COMMON ACTION, THE OBJECT OF WHICH IS TO PRODUCE INCOME, PROFITS OR GAINS THEN SUCH ASSOCIATION OF PERSONS HAS BEEN MADE ASSESSABLE TO INCOME TAX UNDER THE PROVISIONS OF SECTION 2( 3)(1) READ WITH SECTION 4 OF THE INCOME TAX ACT. EVEN THE DEFINITION OF PARTNERSHIP FIRM AS DEFINED U NDER THE INDIAN PARTNERSHIP ACT IS AKIN TO THAT OF ASSOCIATION OF PERSONS, THE ONLY CONDITION IS THAT THE SAID ASSOCIATION HAS BEEN FORMED TO DO BUSINESS FOR THE PURPOSE OF EARNING PROFITS OR GAINS. THE JOINT VENTURE OF THE ASSESSEE WITH M/S. TECHNO CONSTRUCTIONS CAN BE SAID TO FALL IN THE DEFINITION OF P ARTICULAR P ARTNERSHIP F IRM AS DEFINED UNDER SECTION 8 OF THE INDIAN PARTNERSHIP ACT WHICH PRESCRIBE S THAT A PERSON MAY BECOME A PARTNER WITH ANOTHER PERSON IN PARTICULAR ADVENTURES OR UNDERTAKINGS. SO IT CANNOT BE SAID THAT THE INCOME OF THE JOINT VENTURE OF THE ASSESSEE WITH M/S. TECHNO CONSTRUCTIONS WAS NOT ASSESSABLE TO INCOME TAX AS PER THE PROVISI ONS OF INCOME TAX ACT. IT IS ALSO A FACT ON THE FILE THAT THE SAID JOINT VENTURE DID NOT OFFER ANY INCOME FOR TAX. HENCE IN OUR VIEW THE ACTION OF THE AO IN ASSESSING THE SHARE OF THE ASSESSEE OUT OF THE PROFITS OF THE JOINT VENTURE WAS WELL JUSTIFIED. 2 1. AT THIS STAGE, THE LD. A.R. HAS SUBMITTED THAT THE AO HA S CALCULATED THE PROFITS AT A VERY HIGHER RATE AS COMPARED TO AVERAGE RATE OF PROFITS OF THE PRECEDING YEARS AS PER THE ACCOUNTS OF THE ASSESSEE. THE LD. A.R. IN THIS RESPECT ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 9 HAS RELIED UPON A CHART PRODUCED AT PAGE 73 OF THE PAPER BOOK TO SHOW THAT THE NET PROFIT RATIO OF THE ASSESSEE FOR THE FINANCIAL YEARS 1999 - 2000 TO 2002 - 03 IS WORKED OUT AT 6.36%. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE AO HAS CALCULATED THE PROFIT ON ESTIMATIO N BASIS ONLY. UNDER SUCH CIRCUMSTANCE WE RESTORE THE ISSUE TO THE FILE OF THE AO FOR REWORKING OF THE SHARE OF THE ASSESSEE OUT OF THE PROFIT OF THE JOINT VENTURE BY TAKING INTO CONSIDERATION THE SUBMISSIONS AND DOCUMENTS RELIED UPON BY THE ASSESSEE IN TH IS RESPECT AND ASSESS THE INCOME ON THIS ISSUE ACCORDINGLY. GROUND NO.4: 22 . THE FOURTH GROUND IS RELATING TO DISALLOWANCE OF COMMON EXPENSES OF RS.12,30,000/ - PAID TO ASSOCIATE CONCERNS. AO FOUND THAT THE ASSESSEE HAD DEBITED RS.12,30,000/ - IN THE PRO FIT AND LOSS ACCOUNT AS SHARE IN COMMON EXPENSES. THE AO OBSERVED THAT THE ASSESSEE HAD NOT PROVIDED THE NECESSARY DETAILS OF THE SAID EXPENSES AND EVEN THE ASSESSEE COULD NOT ESTABLISH THE JUSTIFICATION FOR THE SAME. HE THEREFORE ADDED THE SAME INTO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) ALSO OBSERVED THAT THE ASSESSEE HAD NOT FURNISHED THE BASIS OF ALLOCATION OF EXPENSES AND THE NECESSARY DETAILS OF THE EXPENSES. HENCE HE CONFIRMED THE ACTION OF THE AO DISALLOWING THE CLAIM OF THE ASSESSEE IN THIS RESPECT. 23 . BEFORE US THE LD. A.R. HAS SUBMITTED THAT THIS ISSUE IS COVERED BY THE JUDGMENT OF THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE OWN CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2001 - 02 PASSED IN ITA NO. 6890/M/2004 DATED 11.04.08. THE COPY OF THE SAID JUDGMENT HAS BEEN PLACED ON PAGE 8 OF THE PAPER BOOK BEFORE US. ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 10 24. WE HAVE PERUSED THE SAID JUDGMENT. IN THE SAID APPEAL VIDE GROUND NO.3, THE SIMILAR ISSUE WAS RAISED BEFORE THE ITAT BY THE REVENUE AGAINST THE DELETION OF DISALLOWANCE OF COM MON EXPENSES BY THE CIT(A). WHILE DEALING WITH THE ISSUE, THE CO - ORDINATE BENCH OF THIS TRIBUNAL OBSERVED THAT THE ASSESSEE FOR THAT RELEVANT YEAR HAD PRODUCED NECESSARY DETAILS BEFORE THE LD. CIT(A) AS DISCUSSED IN PARAGRAPH NO.5.2 OF THE ORDER OF THE LD . CIT(A) FOR ASSESSMENT YEAR 2001 - 02 AND FURTHER DISCUSSED BY THE ITAT IN PARAGRAPH 24 OF THE SAID JUDGMENT. THE LD. A.R. HAS ALSO BROUGHT OUR ATTENTION TO ANOTHER ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005 - 06 WHEREIN THE CL AIM OF THE EXPENSES REGARDING COMMON EXPENSES HAS BEEN ALLOWED BY THE AO AFTER APPRECIATION OF THE ENTIRE DETAILS SUBMITTED BY THE ASSESSEE. WHILE ALLOWING THE SAID CLAIM THE AO HAD CATEGORICALLY OBSERVED THAT THE DEFICIENT DETAILS THAT LED TO ADDITION LA ST YEAR HAVE BEEN FILED BY THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR BEFORE HIM I.E. 2005 - 06. 25. IN THE CASE IN HAND THE CLAIM HAS BEEN DISALLOWED FOR WANT OF NECESSARY DETAILS AS WELL AS DISCREPANCIES IN PROFIT AND LOSS ACCOUNT AS COMPARED TO THE AUDIT REPORT. UNDER SUCH CIRCUMSTANCES , WE RESTORE THIS ISSUE TO THE FILE OF THE AO WITH AN OPPORTUNITY TO THE ASSESSEE TO SUBMIT THE NECES SARY DETAILS TO THE AO. THE AO, AFTER EXAMINATION OF THE NECESSARY DETAILS AND WITH DUE REGARD TO THE FINDINGS GIVE N BY THE CO - ORDINATE BENCH OF THIS TRIBUNAL RELEVANT TO ASSESSMENT YEAR 2001 - 02, VIDE ITA NO.6890/M/2004 DATED 11.04.08 , IS DIRECTED TO MAKE A FRESH ASSESSMENT IN THIS REGARD. NEEDLESS TO SAY THAT THE AO WILL GIVE PROPER OPPORTUNITY TO THE ASSESSEE TO PRE SENT ITS CASE AND SUBMIT THE NECESSARY DETAILS , IF ANY , REQUIRED. ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 11 GROUND NO.5 26 . VIDE GROUND NO.5, THE ASSESSEE HAS ASSAILED THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF DEDUCTION OF RS. 1,45,823/ - UNDER SECTION 80 IA(4) OF THE INCOME TAX ACT. 27. T HE AO DISALLOWED THE CLAIM OF THE ASSESSEE OF RS. 1,45,823/ - UNDER SECTION 80IB OBSERVING THAT THE SAME HAD NOT BEEN CLAIMED BY THE ASSESSEE IN THE COMPUTATION OF TOTAL INCOME . E VEN THE ASSESSEE HAD NOT PRODUCED ANY DETAIL S IN T HIS RESPECT. HE THEREFORE DISALLOWED THE SAID CLAIM. BEFORE THE LD. CIT(A) , THE ASSESSEE CLAIMED THAT THE SAID DEDUCTION WAS NOT CLAIMED UNDER SECTION 80IB RATHER THE SAME WAS ACTUALLY CLAIMED UNDER SECTION 80IA(4) AS THE ASSESSEE WAS ENGAGED IN INF RASTRUCTURE DEVELOPMENT TO CONSTRUCT THE BRIDGE. THE LD. CIT(A) HOWEVER OBSERVED THAT THE ASSESSEE DID NOT FURNISH ANY EVIDENCE REGARDING CONSTRUCTION OF BRIDGE RATHER THE CONTRACT WAS FOR REPAIRING OF THE RAILWAY BRIDGES. HE THEREFORE DISALLOWED THE CLA IM. 28. BEFORE US THE LD. A.R. HAS SUBMITTED THAT THE ASSESSEE WAS ENGAGED IN INFRASTRUCTURE DEVELOPMENT TO CONSTRUCT THE BRIDGES AND THE WORK WAS NOT RELATED TO MERE REPAIR OF THE BRIDGES. ON THE OTHER HAND THE LD. D.R. HAS RELIED UPON THE AUTHORITIES BELOW. 29. IN OUR VIEW, THE AUTHORITIES BELOW HAVE REJECTED THE CLAIM OF THE ASSESSEE WITHOUT EXAMINATION OF THE MATTER IN DETAIL. HENCE WE RESTORE THIS ISSUE TO THE FILE OF THE AO TO EXAMINE IT AFRESH AS PER LAW BY GIVING PROPER OPPORTUNITY TO THE AS SESSEE TO PRESENT ITS CASE. GROUND NO.6 3 0 . VIDE GROUND NO.6, THE ASSESSEE HAS CHALLENGED THE LEVY OF INTEREST UNDER SECTION 234D OF THE INCOME TAX ACT. SINCE MOST OF THE ISSUES HAVE BEEN ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 12 RESTORED TO THE FILE OF THE AO FOR FRESH EXAMINATION , HENCE THE QUESTION OF LEVY OF INTEREST UNDER SECTION 234D , BEING CONSEQUENTIAL, IS LEFT OPEN TO BE DECIDED BY THE AO IN VIEW OF THE FRESH ASSESSMENT TO BE MADE BY HIM AS PER OUR DIRECTIONS GIVEN ON VARIOUS ISSUES. ITA NO.7157/M/08 (ASSESSMENT YEAR 2004 - 05) GROUND NO.1: 31. VIDE GROUND NO. 1 OF THIS APPEAL THE ASSESSEE HAS ASSAILED THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS.26.20 LAKHS CLAIMED AS DEDUCTION BEING LOSS INCIDENTAL TO BUSINESS AS WRITTEN OFF IN THE BOOKS OF ACCOUNTS. W E HAVE ALR EADY DEALT WITH THIS ISSUE VIDE GROUND NO.2 ABOVE IN APPEAL NO.2178/M/07 . W E HAVE RESTORED THE ISSUE TO THE FILE OF THE AO FOR FRESH EXAMINATION. THIS CLAIM OF RS.26.20 LAKHS AS D EDUCTION IS OUT OF THE TOTAL WRITTEN - OFF AMOUNT OF RS.1,04,80,141/ - AS CLAI MED VIDE ADDITIONAL GROUND DEALT WITH BY US AS ABOVE ALONG WITH GROUND NO.2 OF THE ASSESSEES APPEAL FOR ASSESSMENT YEAR 2003 - 04. IN VIEW OF OUR OBSERVATIONS MADE ABOVE RELATING TO THE ISSUE IN QUESTION , THE MATTER IS RESTORED TO THE FILE OF THE AO FOR T HIS YEAR ALSO. WE HAVE ALREADY MADE IT CLEAR THAT IF THE AO WILL BE OF THE VIEW THAT THE ENTIRE AMOUNT OF RS.1,04,80,141/ - IS TO BE TREATED AS BUSINESS LOSS FOR THE YEAR A.Y. - 2003 - 04 , THEN THE ASSESSEE WILL NOT BE ENTITLED TO SUCH A CLAIM OF DEDUCTION FOR SUBSEQUENT YEARS INCLUDING THIS YEAR. THIS GROUND NO.1 OF THIS APPEAL IS THEREFORE ALLOWED FOR STATISTICAL PURPOSES. GROUND NO.2 : 3 2 . VIDE GROUND NO.2 OF THIS APPEAL THE ASSESSEE HAS CONTESTED THE DISALLOWANCE OF C LAIM OF COMMON EXPENSES OF RS.1 5 , 30 , 0 00/ - PAID TO ASSOCIATE CONCERNS. WE HAVE ALREADY DEALT WITH THIS ISSUE IN GROUND NO.4 ABOVE OF THE ITA NO . 2178/M/07, 715 7 & 7158/M/08 M/S. PRESTRESS (INDIA) PVT. LTD. 13 ASSESSEES APPEAL FOR ASSESSMENT YEAR 2003 - 04. IN VIEW OF OUR FINDINGS GIVEN ABOVE RELATING TO THE ISSUE UNDER CONSIDERATION , THIS ISSUE IS ACCORDINGLY RE STORED TO THE FILE OF THE AO AND THE AO TO DECIDE IT ACCORDINGLY. ITA NO. 7158/08 (ASSESSMENT YEAR 2005 - 06) 33. THE SOLE GROUND TAKEN IN THIS APPEAL IS RELATING TO DISALLOWANCE OF RS.26,27,035/ - BEING LOSS AS WRITT EN OFF IN THE BOOKS OF ACCOUNTS. IN VI EW OF OUR OBSERVATIONS MADE ABOVE , WHILE DEALING WITH GROUND NO.2 OF THE APPEAL OF THE ASSESSEE RELEVANT TO ASSESSMENT YEAR 2003 - 04 AND GROUND NO.1 OF THE APPEAL OF THE ASSESSEE RELEVANT TO ASSESSMEN T YEAR 2004 - 05 , THE MATTER IS RESTORED TO THE FILE OF THE AO. ACCORDINGLY T HE AO IS DIRECTED TO DECIDE THE ISSUE FOR THIS YEAR ALSO AND ASSESS THE INCOME AS PER OUR OBSERVATIONS MADE ABOVE. 3 4 . IN THE RESULT ALL THE THREE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN T HE OPEN COURT ON 30.09. 2013. SD/ - SD/ - ( RAJENDRA SINGH ) ( SANJAY GARG ) ACCOUNTANT MEMBER JUDIC IAL MEMBER MUMBAI, DATED: 30.09. 2013. * KISHORE COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.