The ACIT, Circle- 5, Ahmedabad V. N. J. Devani Builders Pvt. Ltd., Ahmedabad

ITA 2827/AHD/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9523 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 03-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Reopening of assessment; Onus to prove
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHR I R. P. TOLANI , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER N. J. DEVANI BUILDERS PVT. LTD, B/H ISHWAR BHUWAN, NAVRANGPURA, AHMEDABAD - 380009 PAN: AAACN4952D (APPELLANT) THE ACIT, CIRCLE - 5, AHMEDABAD (APPELLANT) VS VS THE ACIT, CIRCLE - 5, AHMEDABAD (RESPONDENT) N. J. DEVANI BUILDERS PVT. LTD, B/H ISHWAR BHUWAN, NAVRANGPURA, AHMEDABAD - 380009 PAN: AAACN4952D (RESPONDENT) REVENUE BY : S H RI JAMES KURIAN , SR. D . R. ASSESSEE BY: S H RI S. N. SOPARKAR , A.R. DATE OF HEARING : 01 - 12 - 2 016 DATE OF PRONOUNCEMENT : 11 - 01 - 2 017 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THE S E CROSS APPEAL S BY ASSESSEE AND REVENUE FOR A.Y. 2010 - 11 , AR ISE FROM ORDER OF THE CIT(A) - XI, AHMEDABAD DATED 11 - 09 - 2013 I T A NO S . 2354 & 2827 / A HD/2 0 13 A SSESSMENT YEAR 2010 - 11 I.T.A NO S. 2354 & 2827 /AHD/20 13 A.Y. 2010 - 11 PAGE NO N. J. DEVANI BUILDERS PVT. LTD VS. ACIT 2 IN APPEAL NO. CIT(A) - XI/274/ACIT. CIR - 5/12 - 13 , IN PROCEEDINGS UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1 LD. CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE MADE BY AO OF REMUNERATION PAID TO THE DIRECTORS THAT IS FIXED ACC ORDING TO THE RESOLUTION PASSED BY THE SHAREHOLDERS O F THE COMPANY OF RS. 13,20,000 / - INVOKING PROVISIONS OF SEC. 40(A)(2) OF THE ACT. BOTH THE LOWER AUTHORITIES ERRED IN DISALLOWING PAYMENT WITHOUT ESTABLISHING THE SAME TO BE EXCESSIVE AND UNREASONABLE IGN ORING SUBMISSIONS, FACTS ON RECORD AS WELL CASE LAWS RELIED UPON BY THE APPELLANT. LD. CIT (A) OUGHT TO HAVE DELETED SUCH DISALLOWANCE. IT BE SO HELD NOW. 2 LEVY OF INTEREST U/S 234A, 234B & 234C OF THE ACT IS NOT JUSTIFIED. 3 INITIATION O F PENALTY PROCEEDINGS U/S 271(1 )(C) OF THE ACT IS NOT JUSTIFIED. 3. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - I) THE ID. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,18,96,143/ - ON ACCOUNT OF RETENTION MONEY ADDED BA CK TO THE INCOME OF THE ASSESSEE. II) THE ID. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN RELYING ON THE DECISION OF HON. GUJ. HIGH COURT IN ASSESSEE'S OWN CASE FOR THE A.Y.1995 - 96 AS THE I SSUE INVOLVED WAS OF ' ADVANCE MONEY' AND NOT OF 'RETENTION MONEY'. 4 . IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 1 , 49 , 40 , 906/ - WAS FILED ON 25 TH SEPTEMBER, 2010. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION WORK. DURING I.T.A NO S. 2354 & 2827 /AHD/20 13 A.Y. 2010 - 11 PAGE NO N. J. DEVANI BUILDERS PVT. LTD VS. ACIT 3 THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER H AS OBSERVED THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. HE NOTICED THAT THE CONTRACT RECEIPT WAS ACCOUNTED NET OF SECURITY DEPOSIT/ RETENTION MONEY ON THE BASIS OF WORK COMPLETED, CERTIFIED AND PAID. THE ASSESSING OFFICER ASKED THE AS SESSEE WHY THE RETENTION MONEY WITHHELD WITH THE CONTRACTEE SHOULD NOT BE ADDED TO THE RECEIPT OF THE ASSSESSEE AND TREATED AS INCOME OF ASSESSMENT YEAR 2009 - 10. IN THIS CONNECTION, THE ASSESSEE EXPLAINED TO THE ASSESSING OFFICER THAT RETENTION MONEY WA S THE CERTAIN PERCENTAGE OF ESTIMATED VALUE OF WORK EXECUTED . THIS RETENTION MONEY USED TO BE WITHHELD TILL THE COMPLETION OF WORK AND RENDERED FREE OF DEFECTS DURING A DEFECT LIABILITY PERIOD WHICH WAS MOSTLY ONE YEAR AFTER THE COMPLETION OF CONTRACT. HE FURTHER STATED THAT THE AMOUNT OF RETENTION MONEY ACCRUED ONLY WHEN IT WAS PAID UPON SATISFACTION OF THE OWNER . T HEREFORE, RETENTION MONEY WAS SHOWN AS RECEIPT ONLY WHEN IT WAS RECEIVED. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE AS SESSEE STATING THAT THE CONTRACT REVENUE WAS NOT MATCHED WITH THE CONTRACT COST AND STATED THAT THE ASSESSEE CANNOT POSTPONE THE ENTIRE RETENTION MONEY ON RECEIPT BASIS BUT HAS TO OFFER THE SAME FOR TAXATION ON ACCRUAL BASIS. THE ASSESSING OFFICER STATED THAT ASSESSEE SHOULD HAVE SHOWN RETENTION MONEY ON ACCRUAL BASIS AND NOT ON RECEIPT BASIS. HE FURTHER STATED THAT THE ENTIRE AMOUNT OF RETENTION MONEY HAS ALREADY BEEN SUBJECT TO TAX DEDUCTION AT SOURCE AND THEREFORE THE SAID RETENTION MONEY HAS A LREADY ACCRUED TO THE ASSESSEE. THE ASSESSING OFFICER HAD TREATED THE RETENTION MONEY OF RS. 1 , 18 , 9 6 , 1 4 3/ - AS INCOME ACCRUED TO THE ASSESEEE AND ADDED TO I.T.A NO S. 2354 & 2827 /AHD/20 13 A.Y. 2010 - 11 PAGE NO N. J. DEVANI BUILDERS PVT. LTD VS. ACIT 4 THE TOTAL INCOME OF THE ASSESSEE. THE SECOND ISSUE WAS THAT T HE ASSESSEE COMPANY HAD PAID REMUNERAT ION OF RS. 7,20,000/ - AN D RS. 6 LACS TO TWO DIRECTORS, SMT. LILABEN N. DEVANI AND PRITI A. DEVANI. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN WHAT KIND OF SERVICES AND CONTRIBUTION MADE BY THESE TWO DIRECTORS IN THE BUSINESS ACTIVITIES OF THE ASS ESSEE . HE ALSO ASKED THE ALLOWABILITY OF THE SAID REMUNERATION IN THE LIGHT OF THE PROVISION OF SECTION 40A ( 2 ) (A) . T HE ASSESSEE EXPLAINED THAT THESE DIRECTORS WERE APPOINTED BY THE SHAREHOLDERS IN THE ANNUAL GENERAL MEETING AND THEIR REMUNERATION WAS ALSO F IXED ACCORDING TO THE RESOLUTION OF THE GENERAL MEETING OF THE SHAREHOLDERS. IT WAS FURTHER STATED THAT THESE DIRECTORS WERE HAND L ING THE MANAGERIAL NATURE OF WORK CONSIST ING OF ADMINISTRATIVE FUNCTION, ATTENDING TELEPHONE CALLS , RESPONDING TO VISITORS A ND LOOKING AFTER OTHER MATTER S ARISING AT THE HEAD OFFICE. THE ASSESSING OFFICER HA D NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE ON THE GROUND THAT ASSESSEE DID NOT PROVIDED ANY EVIDENCES TO JUSTIFY THE PAYMENT MADE TO THESE DIRECTORS. THEREFORE, THE ASS ESSING OFFICER HAS DISALLOWE D THE S U M OF RS. 13 ,20,000/ - (7,20,000+6,00000) U/S. 40A ( 2 ) (A) OF THE ACT. APPEAL OF THE REVENUE ITA NO. 2827/AHD/2013 ADDITION OF RS. 1,18,96,143/ - MADE ON ACCOUNT OF RETENTION MONEY 5. THE FACTS OF THIS ISSUE HAS BEEN REPORTED AS ABOVE IN PARA 4 OF THIS ORDER. AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, THE I.T.A NO S. 2354 & 2827 /AHD/20 13 A.Y. 2010 - 11 PAGE NO N. J. DEVANI BUILDERS PVT. LTD VS. ACIT 5 ASSESSEE FILED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A). THE LD. COMMISSIONER OF INCOME TAX(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE BY DELETING THE A DDITION OF RS. 1 , 18 , 9 6 , 143/ - MADE ON ACCOUNT OF RETENTION MONEY BY THE ASSESSING OFFICER. THE DECISION OF THE LD. COMMISSIONER OF INCOME TAX(A) IS REPRODUCED AS UNDER: - 2.2 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. IT IS SEEN THAT THE IDENTICAL ISSUE HAS BEEN DECIDED BY MY PREDECESSOR LD. CIT(A) IN THE CASE OF THE APPELLANT FOR A.Y.2009 - 10 IN FAVOUR OF APPELLANT. THE HON'BLE GUJARAT HIGH COURT IN SPECIAL CIVIL APPLICATION NO. 11111 OF 2011 IN THE CASE OF APPELLANT HAS MADE FOLLOWING OBSERVATIONS : - 11. HAVING HEARD LEARNED COUNSEL FOR THE PARTIES AND HAVING PERUSED THE DOCUMENTS ON RECORD, WE ARE NOT INCLINED TO GO INTO THE FIRST TWO CONTENTIONS RAISED BY THE COUNSEL FOR THE PETITIONER NAMELY WHETHER ON FACTS OF CASE, THE ASSESSING OFFICER CAN BE STATED TO HAVE FORMED ANY OPINION ON THE TAXABILITY OF THE RETENTION MONEY AND WHETHER MERELY BECAUSE THE ASSESSES HAS CHALLENGED THE ASSESSING OFFICER'S ORDER BEFORE THE COMMISSIONER ON SOME OTHER GROUNDS, REOPENING OF ASSESSMENT WOULD NOT BE PERMISSIBLE ON PRINCIPLE OF MERGER; SINCE IN THE FACTS OF THE PRESENT CASE, THESE ISSUES NEED NOT BE DELIBERATED UPON. THIS IS SO BECAUSE IN OUR OPINION THE ENTIRE ISSUE ON MERITS HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE RIGHT UPTO THE HIGH COURT LEVEL. 12. WE HAVE BRIEFLY NOTED THE CENTRAL CONTROVERSY ON THE BASIS OF WHICH THE ASSESSING OFFICER SEEKS TO REOPEN THE ASSESSMENT. THE ASSESSEE, WHILE EXECUTING THE WORKS CONTRACTS, RAISES ITS BILLS, RECEIVES PERIODICAL PAYMENTS FROM THE CLIENTS, WHICH PAYMENT ARE MADE AF TER RETAINING THE PART OF THE BILLS RAISED TOWARDS RETENTION MONEY. THIS IS PURSUANT TO THE AGREEMENT BETWEEN THE PARTIES THAT THE RETENTION MONEY WOULD BE RELEASED UPON EXPIRY OF A CERTAIN PERIOD AFTER COMPLETION OF THE WORK. AS PER THE ASSESSEE, THOUGH T HE BILLS ARE RAISED, RIGHT TO RECEIVE SUCH RETENTION MONEY IS NOT ACCRUED AND THE ASSESSEE, THEREFORE, DOES NOT REFLECT THE ENTIRE AMOUNT OF THE BILLS RAISED IN ITS ACCOUNTS, THOUGH THE ASSESSEE FOLLOWS THE I.T.A NO S. 2354 & 2827 /AHD/20 13 A.Y. 2010 - 11 PAGE NO N. J. DEVANI BUILDERS PVT. LTD VS. ACIT 6 MERCANTILE SYSTEM OF ACCOUNTING. THE ASSESSING OF FICER, HOWEVER, HOLDS THE PRIMA FACIE BELIEF THAT THE RETENTION MONEY AL SO SHOULD HAVE FORMED PART OF THE ASSESSEE'S RECEIPTS FOR THE YEAR UNDER CONSIDERATION.' FOLLOWING THE DECISION OF HON'BLE IT AT AND HON'BLE GUJARAT HIGH COURT IN THE CASE OF APPELLANT MY PREDECESSOR LD. CIT(A) HAD DELETED THE ADDITION ON ACCOUNT OF RETENTION MONEY FOR A.Y.2009 - 10. RESPECTFULLY FOLLOWING THE FINDINGS OF MY PREDECESSOR LD. CLT(A) THE ADDITION OF RS. 1,18,96,143/ - RELENTION ORDERED TO BE DELETED. GROUND NOS.1.1 TO 1.3 AR E ALLOWED. 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, LD. COUNSEL RELIED ON THE ORDER OF LD. COMMISSIONER OF INCOME TAX(A) AND ALSO PLACED RELIANCE ON THE DECIS ION OF THE CO - ORDINATE BENCH FOR ASSESSMENT YEAR 2009 - 10 ITA NO. 2497/AHD/2012 IN THE CASE OF THE ASSESSEE . 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL RECORD. WE FIND THAT THE CO - ORDINATE BENCH OF ITAT IN THE CASE OF ASSESSEE FOR THE ASSESSMENT YE AR 2009 - 10 DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE BY STATING AS UNDER: - 15.3. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ISSUE I S COVERED IN FAVOUR OF ASSESSEE IN THE LIGHT OF JUDGEMENT OF HON'BLE JURISDICTIONAL HIGH COURT RENDERED IN ASSESSEE'S OWN CASE FOR AY 2006 - 07 IN SPECIAL CIVIL APPLICATION NO. 11111 OF 2011 DATED 28/11/2011. THUS, THIS GROUND REVENUE'S APPEAL IS DISMISSED. WE CONSIDERED THAT THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE COORDINATE BENCH OF THE TRIBUNAL AND BY THE JURISDICTIONAL HIGH COURT AS STATED SUPRA IN THE CASE OF THE ASSESSEE I.T.A NO S. 2354 & 2827 /AHD/20 13 A.Y. 2010 - 11 PAGE NO N. J. DEVANI BUILDERS PVT. LTD VS. ACIT 7 ITSEL THEREFORE WE DO NOT FIND ANY REASON TO INTERFERE IN T HE FINDINGS OF THE LD.CIT(A). APPEAL OF THE ASSESSEE ITA NOS. 2354 DISALLOWANCE OF RS.13,20,000/ U/S. 40A ( 2 ) (A) OF THE ACT . 8. THE FACTS OF THIS ISSUE HAS BEEN REPORTED AS ABOVE IN PARA 4 OF THIS ORDER. AGGRIEVED AGAINST THE ORDER OF THE ASSESSING OFFICER, ASSESSEE FILED APPEAL BEFORE THE LD. COMMISSIONER OF INCOME TAX(A). THE LD. COMMISSIONER OF INCOME TAX(A) HAS SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. THE DECISION OF THE LD. COMMISSIONER OF INCOM E TAX(A) IS REPRODUCED AS UNDER: - 3.2 I HA VE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. IT IS SEEN THAT DIRECTORS REMUNERATION IN CASE OF SMT. LILABEN N. DEVANI AND PRITI A. DEVANI HAS BEEN DECIDED AGAINST THE APPELLANT IN APPEAL NO.CIT(A) - XI/351/DCIT.CIR - 5/10 - 11 DATED 17.4.2012 FOR THE A.Y.2008 - 09. THE RELEVANT PART OF THIS ORDER IS REPRODUCED FOR THE SAKE OF READY REFERENCE: - '4.2 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. I HAVE ALSO PERUSED THE CASE LAWS RELIED UPON BY THE APPELLANT. IT IS SEEN THAT DIRECTORS REMUNERATION HAS BEEN DIS ALLOWED AS PER THE PROVISIONS OF SEC. 40A(2) OF THE I.T. ACT. IN VIEW OF THIS, AT THE OUTSET, I WOULD LIKE TO DISCUSS THE' PROVISIONS OF SEC,40A(2) OF THE L. T. ACT AND ITS APPLICABILITY IN THE CASE OF THE APPELLANT. THE PROVISIONS OF SEC.40A STARTS WITH N ON OBSTANTE CLAUSE AND HAVE OVERRIDING EFFECT OVER THE PROVISIONS OF ANY OTHER SECTION OF INCOME - TAX ACT, 1961. IT WAS HELD BY THE HON'BLE SUPREME COURT IN SHRI SAJJAN MILLS LTD. VS CIT (1985) 156 ITR 585(SC). FURTHER HON'BLE GUJARAT HIGH COURT IN CIT VS B HARAT VIJAY MILLS LTD. 1988 REPORTED AT 128 ITR 633 (GUJ.) HAS HELD THAT PROVISIONS OF SEC.40A HAVE BEEN DECLARED TO BE OF OVERRIDING NATURE. THE NON OBSTANTE CLAUSE AT THE BEGINNING OF SEC.40A(1) CLEARLY INDICATE THAT IF ANY OTHER PROVISIONS EXIST I.T.A NO S. 2354 & 2827 /AHD/20 13 A.Y. 2010 - 11 PAGE NO N. J. DEVANI BUILDERS PVT. LTD VS. ACIT 8 SOMEWHE RE ON THE STATUTE BOOK, THEY HAVE TO GIVE WAY TO CLEAR THE EXPRESS PROVISIONS OF SEC.40A. 4.3 IN VIEW OF THE OVERRIDING PROVISIONS OF SEC.40A(2)(A), THE PAYMENT OF REMUNERATION MAY THOUGH BE AUTHORIZED BY THE DEED OF PARTNERSHIP, MAY ALSO BE IN ACCORDANCE WITH THE TERMS OF DEED, AND MAY FURTHER BE WITHIN THE CEILING LIMIT AS FIXED BY CL.V OF SECTION 40(B), IN RESPECT OF AGGREGATE AMOUNT OF REMUNERATION PAYABLE TO THE PARTNERS, IF THE AMOUNT OF REMUNERATION PAID TO A PARTICULAR PARTNER(OR PARTNERS) IS EXCESS IVE OR UNREASONABLE OR, LOOKING TO THE LEGITIMATE NEEDS TO THE BUSINESS OF THE ASSESSEE FIRM OR THE BENEFIT DERIVED BY THE FIRM, THE SAME IS UNFAIR, THE A.O. MAY ALLOW A REMUNERATION ONLY TO THE EXTENT IT IS REASONABLE AND NOT EXCESSIVE IN HIS OPINION. 4.4 THE ABOVE DISCUSSION CLEARLY REVEALS THAT THE EXCESSIVE 0 DIRECTORS REMUNERATION CAN ALWAYS BE DISALLOWED AS PER THE PROVISIONS OF SEC.40A(2) OF THE I.T.ACT. THIS APPEAL IS TO BE DECIDED KEEPING IN VIEW THE ABOVE MENTIONED LEGAL AND FACTUAL MA TRIX. 4.5 PERUSAL OF VARIOUS FACTS AVAILABLE ON RECORD REVEALS THAT THE APPELLANT HAS NOT FURNISHED ANY EVIDENCE TO PROVE THE SERVICES RENDERED BY THE LADY DIRECTORS FOR THE APPELLANT COMPANY. IN FACT IN HIS WRITTEN SUBMISSIONS DAT E D 28/11/2011 THE LD. A.R . HAD MADE A PASSING REFERENCE THAT IF IT IS NEED THE PHOTO COPIES OF VOUCHERS CAN BE PRODUCED FOR PERUSAL. HOWEVER, THE APPELLANT HAS NOT FURNISHED SUCH VOUCHERS. ON THE OTHER HAND, THE ASSESSING OFFICER HAD MADE DETAILED INVESTIGATION AND PROVED BEYOND A NY DOUBT THAT THESE LADY DIRECTORS HAD NOT RENDERED ANY SERVICES TO THE APPELLANT COMPANY. THE A.O. HAD MENTIONED THE RESULT OF THESE INVESTIGATIONS. THE LD. A.R. HAD NOT FURNISHED ANY EVIDENCE TO CONTROVERT THE FINDINGS OF THE LD. A.O. THIS WAY THE FINDIN GS OF THE LD. A.O. REMAINS UNCONTROVERTED. SINCE THE CLAIMS TOWARDS DIRECTORS REMUNERATION WAS MADE BY THE APPELLANT, ACCORDINGLY, IT WAS HIS ONUS TO PROVE THE GENUINENESS OF THESE EXPENSES BY COGENT EVIDENCES. SINCE THE APPELLANT HAS NOT FURNISHED DOCUMEN TARY EVIDENCES TO PROVE THE GENUINENESS OF DIRECTORS REMUNERATION TO LADY DIRECTORS, ACCORDINGLY I AM INCLINED TO AGREE WITH THE CONTENTIONS OF LD. A.O. IT IS FURTHER SEEN THAT MY LD. PREDECESSOR HAD DECIDED A SIMILAR ISSUE IN APPEAL NO.CIT(A)XI/945/09 - 10 DATED 24/1/2011, FOR THE A.Y.2007 - 08, WHEREIN DIRECTORS REMUNERATION TO THE EXTENT OF I.T.A NO S. 2354 & 2827 /AHD/20 13 A.Y. 2010 - 11 PAGE NO N. J. DEVANI BUILDERS PVT. LTD VS. ACIT 9 RS.8,28,000/ - WAS ALLOWED. PERUSAL OF APPELLATE ORDER IN APPEAL NO.CIT(A) - XI/945/09 - 10 REVEALS THAT FACTS OF THE YEAR UNDER CONSIDERATION WAS SUBSTANTIALLY DIFFERENT THAN THE FACTS AS IT WAS IN THE , A.Y.2007 - 08. IN THE CURRENT YEAR, THE A.,O. HAD MADE INVESTIGATIONS AND PROVED IT BEYOND DOUBT THAT THE LADY DIRECTORS HAD NOT RENDERED ANY SERVICES. THE APPEAL DECIDED BY MY PREDECESSOR WAS ON DIFFERENT FACTS AND ACCORDINGLY W ITH DUE RESPECT, THE DECISION OF MY PREDECESSOR WILL NOT HOLD GOOD FOR THIS YEAR. 4.5 AS DISCUSSED ABOVE, THE PROVISIONS OF SECTION 40A(2) ARE HAVING OVERRIDING EFFECT. AS PER THE PROVISIONS OF THIS SECTION, REMUNERATION PAID AGAINST SERVICES RENDERED BY THE DIRECTORS IS ALLOWABLE. IF THE DIRECTORS HAD NOT RENDERED ANY SERVICE, THEN NO REMUNERATION CAN BE ALLOWED. IN THE INSTANT CASE, THE LADY DIRECTORS HAD NOT RENDERED ANY SERVICE AND ACCORDINGLY ALLOWABLE REMUNERATION WORKS OUT TO NIL. IN VIEW OF ABO VE, DISALLOWANCE MADE BY A.O. OF RS. 15,48,000/ - U/S.40(A)(2) IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED.' 3.3 THE FACTS ARE SIMILAR IN THIS YEAR ALSO. THE APPELLANT DURING THE ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS FAILED TO FURNISH DOCUMENTA RY EVIDENCES TO SUBSTANTIATE THE FACT OF SERVICES RENDERED BY THE LADY DIRECTORS. ACCORDINGLY, RESPECTFULLY FOLLOWING THE ORDER OF THE EARLIER YEAR, I AM INCLINED TO AGREE WITH THE CONTENTIONS OF LD. A.O. THE DISALLOWANCE OF RS. 13,20,000/ - IS CONFIRMED. T HIS GROUND OF APPEAL IS DISMISSED. 9. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS STATED T HAT THIS ISSUE IS COVERED IN FAVOR OF THE ASSESSEE IN THE LIGHT OF THE DECISION OF THE CO - ORDINATE BENCH OF ITAT IN T H E CASE OF THE AS SESSEE IN THE ASSESSMENT YEAR 2008 - 09 AND 2009 - 10 ITA NO. 1387 AND 2126/AHD/2012. ON THE OTHER HAND THE LD. D.R. RELIED ON THE ORDER OF THE COMMISSIONER OF INCOME TAX(A). 10. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. WE FIND THA T THE SAME ISSUE HAS BEEN DEALT BY THE CO - I.T.A NO S. 2354 & 2827 /AHD/20 13 A.Y. 2010 - 11 PAGE NO N. J. DEVANI BUILDERS PVT. LTD VS. ACIT 10 ORDINATE BENCH OF ITAT IN THE CASE OF THE ASSESSEE FOR ASSESSMENT Y EAR 2007 - 08 TO 2009 - 10 VIDE ITA NO. 923/AHD/2011 FOR ASSESSMENT YEAR 2007 - 08 AND ITA NO S . 1387 AND 2126/AHD/2012 FOR ASSESSMENT YEAR 2008 - 09 AND 20 09 - 10 , WHEREIN , THE APPEAL OF THE REVENUE ON THE SAME ISSUE WAS DISMISSED. WE HAVE NOTICED THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE ISSUE IN THIS YEAR , THERE FORE , TAKING A CONSISTENT VIEW, THIS GROUND OF APPEAL OF ASSESSEE S APPEAL IS ACCEPTED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 11 - 01 - 201 7 SD/ - SD/ - ( R. P. TOLANI ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 11 /01/2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,