The ACIT, Circle-5, Baroda V. M/s. Shiv Construction Co., Baroda

ITA 2778/AHD/2009

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80300 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-08-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 09-10-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL

Judgement Text

, , , , , , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., ! ! ! ! ' #$, BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER !./ I.T.A. NO.2778/AHD/2009 ( & '& & '& & '& & '& / / / / ASSESSMENT YEAR : 2005-06) THE ASST.CIT CIRCLE-5 RACE COURSE CIRCLE BARODA 390 007 / VS. M/S.SHIV CONSTRUCTION CO. 3, SONALI SOCIETY WATER TANK ROAD KARELIBAUG, BARODA ( !./)* !./ PAN/GIR NO. : AAKFS 6031 P ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY : SHRI NIMESH YADAV, SR.DR ,-(+ / . / RESPONDENT BY : SHRI M.K.PATEL, AR ' 0 / $1 / / / / DATE OF HEARING 26/08/2014 23' / $1 / DATE OF PRONOUNCEMENT 28/08/2014 4 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD.COMMISSIONER OF INCOME TAX(APPEALS)-V, BARODA (CIT(A) IN SHORT) DATED 17/07/2009 PERTAINING TO ASSESSMENT Y EAR (AY) 2005-06. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED I DELETING THE ADDITION MADE AMOUNTING TO RS. 1,62,49,087/- ON ACCOUNT OF DIFFERENCE BETWEEN THE CONTRACT RECEIPTS AS PER RETURN OF INCOME AND TDS CERTIFICATES AMOUNTING TO 1,80,54,53 7/- BY DIRECTING THE ASSESSING OFFICER TO ADOPT 10% PROFIT OF RS.1,80,54,537/-. ITA NO.2778/AHD /2009 THE ASST.CIT VS. M/S.SHIV CONSTRUCTION CO. ASST.YEAR 2005-06 - 2 - 2) THE LD.CIT FAILED TO APPRECIATE THE FACT THAT THE C ONTACTS FOR WHICH THE ASSESSEE HAD ENTERED INTO THE JOINT VENTUE AGRE EMENTS HAD BEEN CARRIED OUT BY THE ASSESSEE FIRM AND THE CORRESPOND ING ASSESSEE WERE ALREADY PART OF THE EXPENSES DEBITED TO PROFIT & LOSS ACCOUNT. 3) THE CIT(A FURTHER FAILED TO APPRECIATE THAT THE ASS ESSEE ITSELF HAS CLAIMED THE ENTIRE TDS ON RS.1,80,54,537/- IN RETUR N OF INCOME. RELIEF CLAIMED IN APPEAL. THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND TAT TH E ORDER OF THE A.O. MAY BE RESTORED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 31/12/2007, THEREBY THE ASSESSING OFFICER (AO IN SHORT) MADE ADDITION ON ACCOUNT OF CONTRACT RECEIPTS OF RS.1,80 ,54,537/-, DISALLOWANCE U/S.40(A)(IA) OF THE ACT OF RS.8,06,91 2/-, ADDITION ON ACCOUNT OF LABOUR CHARGES OF RS.4,88,057/-, DISALLO WANCE OF MOTOR VEHICLE EXP./TELEPHONE EXP. OF RS.67,560/- AND ADDI TION ON ACCOUNT OF STAFF WELFARE EXPENSE OF RS.64,617/-. AGAINST THI S, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A). BEFORE THE LD.CIT(A) THE ONLY GROUND PRESSED WAS WITH REGARD TO THE ADDITION ON ACCOUNT OF CONTRACT RECEIPTS. THE LD.CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, PARTLY ALLOWED THE APPEAL. WHILE PARTLY ALLOWING THE APPE AL, THE LD.CIT(A) DIRECTED THE AO IN RESPECT OF THE CONTRACT RECEIPTS TO TAKE MARGIN OF PROFIT @ 10% AND MADE ADDITION OF RS.18,05,450/- AGAINST T HE ADDITION OF RS.1,80,54,537/-. AGAINST THE ORDER OF THE LD.CIT (A), NOW THE REVENUE IS IN APPEAL BEFORE US. ITA NO.2778/AHD /2009 THE ASST.CIT VS. M/S.SHIV CONSTRUCTION CO. ASST.YEAR 2005-06 - 3 - 3. THE ONLY EFFECTIVE GROUND IS AGAINST THE DELETIO N OF ADDITION OF RS.1,62,49,087/- AND DIRECTING THE AO TO ASSESS TH E MARGIN OF PROFIT @ 10% OF THE ENTIRE AMOUNT. 3.1. THE LD.SR.DR SUBMITTED THAT THE ORDER OF THE L D.CIT(A) IS NOT JUSTIFIED AS THE AO HAS GIVEN A FINDING THAT THE AS SESSEE-FIRM HAD RECEIVED GROSS CONTRACT RECEIPT OF RS.5,7,53,797/-, AGAINST THIS RECEIPT THE ASSESSEE HAS SHOWN ONLY RS.3,86,99,260/-. THE TAX ON THIS GROSS RECEIPT OF RS.5,67,53,797/- HAD BEEN DULY DEDUCTED BY THE M .P.GOVERNMENT AND THE ASSESSEE-FIRM HAS ALSO CLAIMED THE AMOUNT OF TD S DEDUCTED BY THE GOVERNMENT TOWARDS THE LIABILITY FOR THE YEAR UNDER CONSIDERATION. THE LD.SR.DR SUBMITTED THAT THE EXPLANATION OF THE ASSE SSEE WAS THAT IT ENTERED INTO JOINT VENTURES WIT THE SEVEN OTHER PER SONS IN RESPECT OF THE WORK CARRIED OUT AT NIMACH (MP). THEREFORE, THE PA YMENTS MADE TO THESE PARTIES WERE DIRECTLY PAID OUT OF THE CONTRAC T RECEIPT. HE SUBMITTED THAT IT IS NOT IN DISPUTE THAT THE CONTRACT WAS AWA RDED BY THE GOVERNMENT TO THE ASSESSEE-FIRM AND NOT IN THE FORM OF JOINT-V ENTURES. HE SUBMITTED THAT EVEN IF IT IS ASSUMED THAT THIS WORK WAS FURTH ER SUB-CONTRACTED, THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX ON SUCH PAYMENT S. THEREFORE, THE ORDER OF THE AO DESERVES TO BE UPHELD. 4. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUP PORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THE ENTIRE RECEIPT CANNOT BE TAXED AND ONLY THE INCOME ELEMENT HAS TO BE TAXED. HE FURTHE R SUBMITTED THAT THE ASSESSEE FURNISHED ALL THE DETAILS WITH REGARD TO T HE JOIN-VENTURES AGREEMENT WITH THE SEVEN OTHER PARTIES. HE ALSO S UBMITTED THAT THESE ITA NO.2778/AHD /2009 THE ASST.CIT VS. M/S.SHIV CONSTRUCTION CO. ASST.YEAR 2005-06 - 4 - PARTIES HAVE REFLECTED FOR THESE RECEIPTS IN THEIR RESPECTIVE RETURNS AND PAID TAX ON SUCH RECEIPTS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT BOTH THE AUTHORITIES BELOW HAVE TREATE D THE RECEIPTS PAID TO THE OTHER SEVEN PERSONS AS THE PAYMENTS MADE UNDER THE SUB-CONTRACT. IF THE PAYMENT HAS BEEN MADE UNDER THE SUB-CONTRACT, T HE ASSESSEE WAS REQUIRED TO DEDUCT THE TAX. THE CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE IS THAT EVEN IF IT IS ASSUMED THAT THE PAY MENTS HAVE BEN MADE UNDER SUB-CONTRACT, THEN ALSO THE AO HAS TO GIVE A CLEAR FINDING AS TO HOW AND UNDER WHAT PROVISIONS OF LAW THE ASSESSEE IS RE QUIRED TO DEDUCT THE TAX. IT IS ALSO CONTENDED THAT IN VIEW OF THE AME NDMENT IN SECTION 201 OF THE ACT AND ALSO IN THE LIGHT OF THE JUDGEMENT OF H ONBLE APEX COURT RENDERED IN THE CASE OF HINDUSTAN COCA COLA BEVERAG E PVT.LTD. VS. CIT REPORTEDE AT (2007) 293 ITR 226(SC), IF THE RECIPIE NT HAS DISCLOSED THE CONTRACT RECEIPTS IN HIS RETURN OF INCOME AND TAX H AS BEEN PAID ON SUCH RECEIPTS UNDER SUCH CIRCUMSTANCES, NO DISALLOWANCE IS CALLED FOR. AFTER CONSIDERING THE TOTALITY OF THE FACTS, WE ARE OF TH E CONSIDERED VIEW THAT THIS ISSUE BE RESTORED TO THE FILE OF THE AO TO VER IFY WHETHER THE RECIPIENTS OF THE PAYMENTS HAVE DECLARED THE RECEIPTS IN THEI R RETURNS OF INCOME AND PAID TAX THEREON. IN CASE, THEY HAVE DECLARED AND TAX HAS BEEN PAID, THE ISSUE MAY BE DECIDED IN THE LIGHT OF THE JUDGEMENT OF THE HONBLE APEX COURT RENDERED IN THE CASE OF HINDUSTAN COCA COLA B EVERAGE PVT.LTD. (SUPRA) AND AMENDMENT IN SECTION 201 OF THE ACT. A CCORDINGLY, THE ISSUE IS HEREBY RESTORED TO THE FILE OF AO FOR DECISION A FRESH IN THE LIGHT OF THE ITA NO.2778/AHD /2009 THE ASST.CIT VS. M/S.SHIV CONSTRUCTION CO. ASST.YEAR 2005-06 - 5 - OBSERVATION MADE HEREINABOVE. NEEDLESS TO SAY THAT THE ASSESSEE MAY BE GIVEN SUFFICIENT OPPORTUNITY TO FURNISH REQUISITE D ETAILS. THUS, THIS GROUND OF REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURP OSES. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HER EINABOVE AT CAPTION PAGE SD/- SD/- ( .. ) (' #$) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 28/ 08 /2014 71.., .../ T.C. NAIR, SR. PS 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$ 4 / ,$8 98'$/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. !! $ ': / CONCERNED CIT 4. ':() / THE CIT(A)-V, BARODA 5. 8 #; ,$ , , / DR, ITAT, AHMEDABAD 6. ;<& =0 / GUARD FILE. 4' 4' 4' 4' / BY ORDER, -8$ ,$ //TRUE COPY// > >> >/ // / !) !) !) !) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DICTATION ..27.8.14 (DICTATION-PAD 9- PAG ES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..27.8.14 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BAC K TO THE SR.P.S./P.S. 28.8.14 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 28.8.14 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER