M/s. Ramprastha Estate (P) Ltd., New Delhi V. DCIT, New Delhi

ITA 2225/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3093 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 26-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Keywords: Agreed addition
• Section: 139(5)

Judgement Text

PAGE | 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P.SAHU, ACCOUNTANT MEMBER ITA NO. 2225/DEL/2016 (ASSESSMENT YEA R: 2012-13) R AMPRASTHA ESTATE (P.) LTD., C-10, C-BLOCK, MAIN MARKET, VASANT VIHAR, NEW DELHI-110057. PAN-AADCR3869E VS DC IT, CIRCLE-15(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH. RAJESH JAIN, CA RESPONDENT BY SH. S.R.SENAPATI, SR.DR DATE OF HEARING 12.03.2018 DATE OF PRONOUNCEMENT 15.03.2018 ORDER PER BHAVNESH SAINI, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD.CIT(A)-7, NEW DELHI DATED 08.03.2016 FOR AY 2012 -13, CHALLENGING THE UPHOLDING OF ADDITION OF RS.1,03,57,150/- U/S 40(A) (IA) OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) MADE BY THE AO ON ACCOUNT OF NON-DEDUCTION OF TDS. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE COMPA NY FILED RETURN OF INCOME DECLARING LOSS OF RS.14.93 CRORES. THE MAIN OBJECTS OF THE COMPANY ARE TO CARRY ON THE BUSINESS OF DEVELOPERS, COLONIZER, BUILDERS, CONTRACTORS, AGENTS IN REAL ESTATE. DURING THE COURSE OF ASSESSMENT PROCEEDING S, THE ASSESSEE FILED REVISED COMPUTATION OF ITS INCOME VIDE LETTER DATED 23.07.2 014, WHEREIN IT HAS DISALLOWED AN AMOUNT OF RS.1,03,57,150/- WHICH IS P AYMENT TO M/S DHANNA NANDU SONS CIVIL CONTRACTORS ON WHICH TDS WAS NOT D EDUCTED WITHIN THE PERIOD ALLOWED. THE DETAILS OF WHICH WERE PLACED O N RECORD. THE AO DISALLOWED THE AMOUNT IN QUESTION U/S 40(A)(IA) OF THE ACT. I T IS ALSO NOTED THAT THE ITA NO. 2225/DEL/2016 PAGE | 2 ASSESSEE DID NOT REVISE THE RETURN WITHIN THE TIME ALLOWABLE U/S 139(5) OF THE ACT. PENALTY PROCEEDINGS WERE ALSO INITIATED. 3. THE ASSESSEE CHALLENGED THE ADDITION BEFORE LD.C IT(A). THE SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED IN THE APPELLATE ORD ER IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THE REVISED COMPUTATION OF INCOME VIDE LETTER DATED 23.07.2014 WAS FILED BEFORE THE AO DISALLOWING THE AMOUNT U/S 40(A)(IA) WHERE NO TDS WAS DEDUCTED WHICH WAS MISCONCEIVED. IT WAS FURTHER CLAIMED THAT THE ASSESSEE DID NOT CLAIM THE AMOUNT IN QUESTION AS EX PENSES BUT DEBITED THE SAME IN THE CURRENT ASSETS UNDER THE HEADING INVEN TORIES, SCHEDULE-14 UNDER THE SUB-HEADING WORK IN PROGRESS OF RS.3,50,27,74 ,261/-. THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE DEBI TED ALL THE PROJECT EXPENSES LIKE PURCHASE OF LANDS, INCIDENTAL EXPENSES OR DEVE LOPMENT OF LAND LIKE PAYMENT MADE TO THE CONTRACTORS TO WORK IN PROGRESS AND DID NOT CLAIM THE SAME IN THE P&L A/C AS EXPENDITURE. SINCE THE ASSE SSEE DID NOT CLAIM EXPENSES IN THE P&L A/C, THEREFORE, WRONG OFFER WAS MADE TO DISALLOW THE EXPENSES UNDER MISTAKEN FACTS. THERE IS NO BAR IN CLAIMING THE DEDUCTION NOW. 4. LD.CIT(A) CONSIDERING THE EXPLANATION OF THE ASS ESSEE AND MATERIAL ON RECORD CONFIRMED THE ADDITION, HIS FINDING IN PARA 4.2 OF THE ORDER IS REPRODUCED AS UNDER:- 4.2. I HAVE CAREFULLY CONSIDERED THE ORDER PASSED BY THE AO AND THE SUBMISSIONS FILED BY THE LD. AR. DURING ASSESSMENT PROCEEDINGS, THE APPELLANT FURNISHED A REVISED COMPUTATION OF INCOME DISALLOWING AN AMOUNT OF RS.1,03,57,150/- WITHIN THE MEANING OF SE CTION 40(A)(IA) OF THE ACT. THE SUBMISSION OF THE LD. AR THAT PROVISIONS O F SECTION 40(A)(IA) SHALL NOT GET ATTRACTED AS THE SAID EXPENDITURE IS NOT CL AIMED IN THE P & L A/C IS NOT A VALID EXPLANATION. IT IS EVIDENT FROM SCHEDUL E 19 OF THE BALANCE SHEET THAT THE SAID EXPENDITURE IS CLAIMED BY WAY OF PURC HASES WHICH HAS GONE ITA NO. 2225/DEL/2016 PAGE | 3 TO ENHANCE THE CLOSING STOCK (WIP) DISCLOSED AT THE END OF THE YEAR. IN EFFECT, THEREFORE, THE EXPENDITURE IS CLAIMED, AS I T IS DEBITED AS PURCHASES IN THE CURRENT ASSET ACCOUNT. THE IMPUGNED EXPENDIT URE OF RS.1,03,57,150/- IS EMBEDDED IN THE WIP WHICH IS VA LUED AT COST AT THE END OF THE YEAR. IT IS ONLY BECAUSE OF THE PRESENTA TION OF THE ACCOUNTS THAT THE IMPUGNED AMOUNT IS NOT SHOWN AS EXPENSE CLAIMED IN THE P & L A/C BUT DEBITED TO CURRENT ASSETS UNDER SCHEDULE 14 OF THE BALANCE SHEET. AS MENTIONED ABOVE SCHEDULE 19 OF THE SAME BALANCE SHE ET SHOWS THAT THE SAID EXPENDITURE IS ACCOUNTED FOR UNDER THE HEAD CH ANGE IN INVENTORIES OF FGS/WIP/SIP. THE MISCHIEF OF SECTION 40(A)(IA) IS S QUARELY APPLICABLE IN THE FACTS OF THE CASE AS IT IS A TECHNICAL DISALLOWANCE OF EXPENDITURE WHERE TDS HAS NOT BEEN DEDUCTED AS PER PROVISIONS OF LAW. IN VIEW THEREOF, THE REVISED COMPUTATION OF INCOME FILED BY THE APPELLAN T IS IN ORDER. IT IS EVIDENT THAT THE APPELLANT IS AGITATING THE ISSUE I N APPEAL ONLY BECAUSE THE AO INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) WITH REFERENCE TO THE IMPUGNED DISALLOWANCE. THE RELIANCE PLACED BY THE LD.AR ON THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IS OF NO HELP AS THE FACTS ARE DISTINGUISHABLE. IN THE INSTANT CASE, THE ISSUE IS NOT OF SOURCE OF INCOME BUT OF A DISALLOWANCE ON ACCOUNT OF INFRACTION OF P ROVISIONS OF SECTION 195 OF THE ACT. IN VIEW THEREOF, NO INTERFERENCE IS CAL LED FOR WITH THE DISALLOWANCE AND THE SAME IS CONFIRMED. THIS GROUN D OF APPEAL IS RULED AGAINST THE APPELLANT. 5. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBM ISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO PAPER BOOK PAGE 3 4 WHICH IS LETTER DATED 23.07.2014 THROUGH WHICH THE ASSESSEE MADE SURRENDE R OF AMOUNT IN QUESTION FOR TAXES. PAPER BOOK PAGE 8 IS P&L A/C TO SHOW NO SEPARATE CLAIM OF DEDUCTION HAVE BEEN MADE OF THE AMOUNT IN QUESTION. HE HAS SUBMITTED THAT THE ASSESSEE WAS FOLLOWING PERCENTAGE COMPUTATION M ETHOD AND DEBITED THE AMOUNT IN QUESTION TO WORK IN PROGRESS. HE HAS SUB MITTED THAT TILL DATE, THE ASSESSEE DID NOT DEBIT THE AMOUNT IN QUESTION IN P& L A/C. HE HAS RELIED UPON ITA NO. 2225/DEL/2016 PAGE | 4 THE ORDER OF ITAT, HYDERABAD BENCH IN THE CASE OF ADITYA HOUSING & INFRASTRUCTURE DEVELOPMENT CORPORATION P.LTD. VS DC IT [2014] 42 CCH 0072 (HYD. TRIB.) IN WHICH IT WAS HELD THAT DISALLOWANCE CAN BE MADE ONLY OUT OF AMOUNTS CLAIMED IN THE P&L A/C. 6. ON THE OTHER HAND, LD. SR. DR RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE COM PANY WAS CARRYING ON BUSINESS OF DEVELOPERS, COLONIZERS, BUILDERS, CONTR ACTORS AND IS IN REAL ESTATE BUSINESS. THE AO DURING THE COURSE OF EXAMINATION OF THE ISSUE, VERIFICATION OF THE BOOKS OF ACCOUNTS AND MATERIAL ON RECORD, FOUND THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON THE AMOUNT IN QUESTION, THEREFORE, IT IS DISALLOWABLE U/S 40(A)(IA) OF THE ACT. THE ASSESSEE IN RESPONSE THE RETO FILED A LETTER DATED 23.07.2014 (PAPER BOOK PAGE 34) IN WHICH THE ASSESS EE ADMITTED THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON THE AMOUNT IN QUES TION AS PER LAW AND THE SAME NEEDS TO BE DISALLOWED. THE ASSESSEE FILED ST ATEMENT OF EXPENSES PAYABLE. THE ASSESSEE, THEREFORE, OFFERED A SUM OF RS.1,03,57,150/- TO BE DISALLOWED IN THE COMPUTATION OF INCOME, BEING INAD VERTENTLY LEFT OUT. THE ASSESSEE ALSO FILED REVISED COMPUTATION OF INCOME T O THE FACT AND ALSO STATED THAT THE AMOUNT IS OFFERED FOR TAX SUBJECT TO NO PE NAL ACTION. THE AO IN VIEW OF THE ADMISSION OF THE ASSESSEE TO PAY TAX ON THE IMP UGNED AMOUNT ACCEPTED THE OFFER OF THE ASSESSEE AND MADE THE ADDITION OF THE IMPUGNED AMOUNT ON AGREED BASIS. IT IS WELL-SETTLED LAW THAT NO APPEAL LIES ON AGREED ADDITIONS. WE RELY UPON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF JIWAT LAL PURPAPSHI 65 ITR 261 (BOM.) , DECISION OF KERALA HIGH COURT IN THE CASE OF VAMA DAVAN ITA NO. 2225/DEL/2016 PAGE | 5 BHANU 330 ITR 559 (KER.) AND DECISION OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF BANTA SINGH KARTAR SINGH 125 ITR 239 (P&H). LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION OF THE HONBLE SU PREME COURT IN THE CASE OF NTPC VS CIT [1998] 229 ITR 383 (SC) AND SUBMITTED THAT TAX CAN BE LEVIED AT INCOME EARNED BY THE ASSESSEE. HE HAS SUBMITTED TH AT THE ASSESSEE MADE A WRONG OFFER FOR TAXING THE AMOUNT IN QUESTION BEFOR E THE AO. LD.CIT(A) CONSIDERED THE EXPLANATION OF THE ASSESSEE WHETHER PROVISION OF SECTION 40(A)(IA) OF THE ACT, ARE ATTRACTED IN THIS CASE. LD.CIT(A) NOTED FROM SCHEDULE 19 OF THE BALANCE SHEET THAT THE SAID EXPENDITURE I S CLAIMED BY WAY OF PURCHASES WHICH HAS GONE TO ENHANCE THE CLOSING STO CK (WIP) DISCLOSED AT THE END OF THE YEAR. IT WAS FOUND THAT, IN EFFECT, THE EXPENDITURE IS CLAIMED AS IT IS DEBITED AS PURCHASES IN THE CURRENT ASSET ACCOUNT. THE IMPUGNED EXPENDITURE IS EMBEDDED IN THE WORK IN PROGRESS WHICH IS VALUED AT COST AT THE END OF THE YEAR. LD.CIT(A) IN VIEW OF THESE FACTS FOUND THAT IT IS ONLY A CASE OF PRESENTATION OF THE ACCOUNTS THAT THE IMPUGNED AMOU NT IS NOT SHOWN AS EXPENSES CLAIMED IN THE P&L A/C BUT DEBITED TO CURR ENT ASSETS UNDER SCHEDULE 14 OF THE BALANCE SHEET. SCHEDULE 19 OF THE BALAN CE SHEET SHOWS THAT THE SAID EXPENDITURE IS ACCOUNTED FOR UNDER THE HEAD CHANGE IN INVENTORIES OF FG/WIP/SIP. LD.CIT(A), THEREFORE, CORRECTLY NOTED THAT THE ASSESSEE MADE CLAIM OF THE EXPENDITURE ON WHICH NO TDS HAS BEEN D EDUCTED, THEREFORE, IT IS DISALLOWABLE. LD. COUNSEL FOR THE ASSESSEE DID NOT DISPUTE THE FINDING OF FACT RECORDED BY LD.CIT(A) AND ADMITTED THAT THE AMOUNT IN QUESTION IS DEBITED TO WORK IN PROGRESS. IN CASE OF BUILDERS/ CONTRACTORS / REAL ESTATE BUSINESS, THE PURCHASE OF MATERIAL FOR THE PURPOSE OF BUSINESS IS AN ESSENTIAL ITEM FOR COMPLETION OF THE CONTRACT, THEREFORE, ALL THE PURC HASES MADE ARE EXPENDITURE ITA NO. 2225/DEL/2016 PAGE | 6 RELATED TO THE BUSINESS. THEREFORE, MERE MAKING EN TRIES IN A DIFFERENT WAY WOULD NOT ABSOLVE THE ASSESSEE FROM DEDUCTING TDS O N MATERIAL SO PURCHASES FROM CIVIL CONTRACTOR FOR THE PURPOSE OF BUSINESS. THESE FACTS, THEREFORE, SHOW THAT THERE IS NO MISTAKEN FACTS IN MAKING OFFER TO SURRENDER AMOUNT IN QUESTION BEFORE THE AO. IN THESE CIRCUMSTANCES, TH E ASSESSEE CANNOT RESILE FROM HIS STATEMENT AND ADMISSION MADE BEFORE THE AO . THE FACTS AND CIRCUMSTANCES CLEARLY JUSTIFY THE ORDERS OF THE AUT HORITIES BELOW IN MAKING THE ADDITION. SINCE THE ASSESSEE AGREED FOR ADDITION B EFORE THE AO AND THERE WAS NO JUSTIFICATION TO WITHDRAW FROM THE OFFER OF SURR ENDER, NO INTERFERENCE IS CALLED FOR IN THE MATTER. APPEAL OF THE ASSESSEE IS NOT MAINTAINABLE IN THE PRESENT FORM AND HAS NO MERIT AS WELL. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. PRONOUNCED IN THE OPEN COURT ON 15.03.2018. SD/- SD/- (L.P.SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:- 15 TH MARCH, 2018 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI