ACIT, Coimbatore V. P.C.Mathew & Sons, Coimbatore

ITA 2218/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86364 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 05-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: R SRINIVASAN
• Section: 143(3); 147

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! # $ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 2218/MDS/2014 ( / ASSESSMENT YEAR: 2007-08) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-III 63, RACE COURSE ROAD, COIMBATORE-641 018. VS M/S. P.C.MATHEW & SONS 16/2, PALAKKAD-COIMBATORE ROAD, B.K.PUDUR, KUNIAMUTHUR, COIMBATORE-641 018. PAN:AAFFP9361G ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : DR.B.NISCHAL, JCIT /RESPONDENT BY : MR. R.SRINIVASAN, C.A. /DATE OF HEARING : 4 TH MARCH, 2015 /DATE OF PRONOUNCEMENT : 20 TH MARCH, 2015 / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBAT ORE DATED 10.06.2014 FOR THE ASSESSMENT YEAR 2007-08 AR ISING OUT OF THE ORDER PASSED UNDER SECTION 143(3) READ W ITH SECTION 147 OF THE ACT. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL:- 2 ITA NO.2218 /MDS/2014 1. THE CIT(A) HAS ERRED IN LAW IN ALLOWING A PART OF THE CONTRACT RECEIPT AS ADVANCE. 2. THE CIT(A) OUGHT TO HAVE OBSERVED THAT THE ASSESSEE SHOULD HAVE ACCOUNTED FOR THE ENTIRE CONTRACT RECEIPT OF ` 3,11,27,585/- IN THE FY 2006-07 ITSELF AS HE HAS CLAIMED FULL CREDIT OF TDS OF ` 6,98,503/- IN RESPECT OF THE ENTIRE CONTRACT RECEIPTS IN THE ASSESSMENT YEAR 2007- 08. 3. THE CIT(A) OUGHT TO HAVE OBSERVED THAT AS THE ASSESSEE HAS CLAIMED FULL CREDIT OF TDS THE ENTIRE CONTRACT RECEIPTS SHOULD BE ACCOUNTED IN THAT YEAR ITSELF. 3. THE ASSESSING OFFICER WHILE COMPLETING THE ASSES SMENT MADE ADDITION OF ` 33,60,997/- HOLDING THAT ASSESSEE HAS UNDERSTATED CONTRACT RECEIPTS. ASSESSING OFFICER CAME TO SUCH CONCLUSION BASED ON THE TDS CERTIFICATE WHERE IN THE ASSESSEE CLAIMED ENTIRE TDS OF ` 6,98,503/- IN THE ASSESSMENT YEAR 2007-08 ITSELF ON THE TOTAL CONTRAC T RECEIPTS OF ` 3,11,27,585/-. HOWEVER, THE ASSESSEE HAS SHOWN ` 33,60,997/- MOBILIZATION ADVANCE AS CONTRACT RECEI PTS OUT OF ` 3,11,27,585/-. ON APPEAL, COMMISSIONER OF INCOME T AX (APPEALS) DELETED THE ADDITION AGAINST WHICH THE RE VENUE IS IN APPEAL BEFORE US. 4. DEPARTMENTAL REPRESENTATIVE SUBMITS THAT ASSESSE E SHOULD HAVE ACCOUNTED FOR THE ENTIRE CONTRACT RECEI PTS SINCE IT 3 ITA NO.2218 /MDS/2014 HAS CLAIMED THE ENTIRE TDS IN THE ASSESSMENT YEAR 2 007-08. SINCE THE ASSESSEE HAS NOT ACCOUNTED FOR PART OF CO NTRACT RECEIPTS ON THE PRETEXT AS ADVANCES. THE ASSESSING OFFICER HAS RIGHTLY TREATED SUCH ADVANCES AS INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08. 5. COUNSEL FOR THE ASSESSEE PLACES RELIANCE ON THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 6. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHOR ITIES. THIS ASPECT OF THE MATTER HAS BEEN CONSIDERED BY TH E COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER I N PARA 5 TO 7 AS UNDER:- 5. GROUND NO.3 TO 6 : THESE GROUNDS OF APPEAL ARE AGAINST THE ACTION OF THE ASSESSING OFFICER IN MAKI NG ADDITION OF INCOME RECEIVED ON ACCOUNT OF MOBILIZAT ION ADVANCE AS CONTRACT RECEIPTS. THE APPELLANT SUBMITT ED THAT HE HAS BEEN CONSISTENTLY ACCOUNTING THE MOBILI ZATION ADVANCE RECEIVED PRIOR TO THE COMMENCEMENT OF WORK AS ADVANCE AND ADJUSTING AS AND WHEN THE BILLS ARE SUBMITTED AND RECEIVED AND THEREFORE, THE ACTION OF THE ASSESSING OFFICER IN TREATING THE MOBILIZATION ADVA NCE AS CONTRACT RECEIPTS FOR THE YEAR IS A DEVIATION ON TH IS CONSISTENT ACCOUNTING SYSTEM FOLLOWED BY THE APPELL ANT. THE APPELLANT SUBMITTED THE DETAILS OF MOBILIZATION ADVANCE AND THE RECONCILIATION BETWEEN THE RECEIPTS AS PER THE BOOKS AND TDS CERTIFICATES. THE MOBILIZATION ADVANCE AS PER THE BALANCE SHEET AS ON 31.03.2007 WAS RS.35,68,998/-. I HAVE ALSO EXAMINED THE SUBSEQUENT RECEIPTS FOR THE ASST. YEAR 2008-09. THE MOBILIZATION ADVANCE WAS ADJUSTED TO THE CONTRACT RECEIPTS FOR THE ASST. YEAR 2008-09. AS SEEN FROM THE DETAILS FURNISHED BY THE APPELLANT WHATEVER DET AILS ARE SUBMITTED AFTER COMPLETION OF A PARTICULAR STAG E OF 4 ITA NO.2218 /MDS/2014 WORK, A PORTION OF MOBILIZATION ADVANCE RECEIVED EARLIER IS ADJUSTED AGAINST SUCH BILLS ON PRO-RATA BASIS AND BALANCE OF PART BILLS IS SETTLED. AS SEEN FROM THE ACCOUNT, THE APPELLANT WILL BE OFFERING THE GRO SS RECEIPTS FOR INCOME PURPOSES WHEREAS THE TDS IS DEDUCTED ONLY ON THE NET RECEIPTS BY THE CONTRACTEE M/S. IBS SOFTWARE SERVICE (P) LTD. 6. THE 1 ST TWO PAYMENTS SHOWN IN THE TDS CERTIFICATE ON 01.09.2006 AND 15.09.2006 TOTALLING TO RS.70,15,758 /- ARE PURELY IN THE NATURE OF MOBILIZATION ADVANCE. A S SEEN FROM THE ACCOUNT OF' MOBILIZATION ADVANCE, AS ON 31.03.2007 AN AMOUNT OF RS.34,46,760/- WAS TRANSFER RED TO CONTRACT RECEIPTS. THE BALANCE AMOUNT OF RS.35,68,998/- REMAINS AS MOBILIZATION ADVANCE AS A T THAT YEAR AND WILL BE ADJUSTED IN THE SUBSEQUENT YE AR'S CONTRACT RECEIPTS BASED ON THE PRO-RATA ADJUSTMENT. 7. I HAVE EXAMINED THE PAYMENT RECEIPT SHOWING THE GROSS RECEIPTS AND DEDUCTION TOWARDS MATERIALS SUPP LIED, TDS AND MOBILIZATION ADVANCE FOR THE YEAR ENDED 31.03.2007 AND 31.03.2008. ON AN EXAMINATION OF THE DETAILS, IT IS VERY CLEAR THAT THE CONTRACTEE HAS G IVEN THE MOBILIZATION ADVANCE AND HAS RECOVERED THE SAME WIT H DEDUCTION IN THE BILL AMOUNTS IN THE SUBSEQUENT YEA RS. IT IS A CONSISTENT SYSTEM OF ACCOUNT FOLLOWED BY THE APPELLANT AND WILL NOT RESULT IN ANY REVENUE LOSS O VER THE YEARS. THE ASSESSING OFFICER HAS TREATED A PART OF THE MOBILIZATION ADVANCE AS CONTRACT RECEIPTS, SINCE TH E APPELLANT HAS CLAIMED THE ENTIRE TDS [EVEN ON MOBILIZATION ADVANCE] FOR THE ASST. YEAR 2007-08. CONSIDERING THE DISCUSSION, THE ASSESSING OFFICER I S DIRECTED TO DELETE THE ADDITION. THESE GROUND OF AP PEAL ARE ALLOWED. 7. ON GOING THROUGH THE ABOVE ORDER OF THE COMMISSI ONER OF INCOME TAX (APPEALS), WE DO NOT FIND ANY VALID REASON TO INTERFERE IN DELETING THE ADDITION. IT IS A FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT ON AN EXAMINATION OF THE DETAILS THAT CONTRACTEE HAS GIVE N 5 ITA NO.2218 /MDS/2014 MOBILIZATION ADVANCE AND HAS RECOVERED THE SAME WI TH DEDUCTION IN THE BILL AMOUNTS IN SUBSEQUENT YEARS. IT IS THE SPECIFIC FINDING OF THE COMMISSIONER OF INCOME TAX (APPEALS) THAT IT IS A CONSISTENT SYSTEM OF ACCOUNTING FOLLOW ED BY THE ASSESSEE AND IT WILL NOT RESULT IN ANY REVENUE LOSS OVER THE YEARS. THE REVENUE FAILED TO REBUT THE ABOVE FINDI NGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) WITH ANY EVIDE NCE ON RECORD. THUS, WE UPHOLD THE ORDER OF THE COMMISSION ER OF INCOME TAX (APPEALS) AND REJECT THE GROUNDS RAISED BY THE REVENUE. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2015 AT CHENNAI. SD/- SD/- ( . ) ( ( *+ ) ( A.MOHAN ALANKAMONY ) ( CHALLA NAGENDRA PRASAD ) - / ACCOUNTANT MEMBER * - / JUDICIAL MEMBER * /CHENNAI, / /DATED 20 TH MARCH, 2015 SOMU 12 32 /COPY TO: 1. APPELLANT 2. RESPONDENT 3. 4 () /CIT(A) 4. 4 /CIT 5. 2 7 /DR 6. /GF .