DCIT, New Delhi V. Yunada Aluminium Engineering (India) Ltd., New Delhi

ITA 2832/DEL/2013

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8493 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 30-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAINA SOIN KAPIL
• Section: 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER AND SH. R. K. PANDA, ACCOUNTANT MEMBER ITA NO.2832/DEL/2013 ASSESSMENT YEAR: 2009-10 DCIT CIRCLE 18 (1) NEW DELHI VS. YUANDA ALUMINIUM ENGINEERING (INDIA) PVT. LTD. C-306, FIRST FLOOR, DEFENCE COLONY, NEW DELHI-110024 PAN NO. AAACY3502E (APPELLANT) (RESPONDENT) APPELLANT BY SMT. NAINA SOIN KAPIL, SR. DR. RESPONDENT BY SH. P. C. YADAV, ADVOCATE DATE OF HEARING: 01/08/2019 DATE OF PRONOUNCEMENT: 10/10/2019 ORDER PER R.K PANDA, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 28.02.2013 OF CIT(A)-XXI, NEW DELHI REL ATING TO A.Y. 2009-10. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READS AS UNDER :- 1. LD. CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION MADE BY THE AO TO THE TOTAL IN COME OF THE ASSESSEE AMOUNTING TO RS.5,95,49,188/- BY TREATING THE AMOUNT AS WIP. PAGE | 2 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS A COMPANY ENGAGED IN THE BUSINESS OF ALUMINIUM ENGINE ERING WORKS. IT FILED ITS RETURN OF INCOME ON 22.09.2009 DECLARING LOSS OF RS.84,90,242/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT ASSESSEE HAS DEBITED AN AMOUNT OF RS.50,57,38,085/- AS EXPENDITURE ON ACCOUNT OF CONT RACT PURCHASES DURING THE YEAR. DETAILS IN THIS REGARD WERE FILED VIDE LETTER DATED 08.11.2011 AND ITS ANNEXURE AS PER WHI CH THE FOLLOWING ARE THE DETAILS IN RESPECT OF CONTRACT PU RCHASES. SL. NO. BILL DATE BILL. NO. AMOUNT 1 28/02/2009 002 11,10,09,604/ - 2 06/03/2009 003 7,48,43,323/ - 3 16/03/2009 004 17,18,28,951/ - 4 25/03//2009 006 7,68,47,094/ - 5 31/03/2009 002 3,06,09,244/ - 6 25/03/2009 001 4,05,99,869/ - TOTAL 50,57,38,085/ - THE AO OBSERVED THAT AT SI. NO. 5 & 6 THE AMOUNTS O F RS.3,06,09,244/- AND RS.4,05,99,869/- ARE CLEARLY M ENTIONED IN THE INVOICES TO HAVE BEEN INCURRED FOR PAYMENT O F LABOUR CHARGES FOR INSTALLATIONS AND MANAGEMENT FEE TO M/S ALUPRO BUILDING SYSTEMS PVT LTD UNDER SUB CONTRACT AGREEME NT. AFTER DEDUCTING THE SUMS OF RS.3,06,09,244/- AND RS.4,05, 99,869/- FROM THE TOTAL AMOUNT OF RS. 50,57,38,085/- THE BAL ANCE AMOUNT WORKS OUT TO RS.43,45,28,972/- WHICH IS THE ACTUAL PAGE | 3 VALUE OF WORKS CONTRACTS PURCHASE. HOWEVER, THE ASS ESSEE HAS SHOWN AN AMOUNT OF RS.37,49,79,784/- AS WORKS CONTR ACT SALES. ACCORDING TO THE AO THE ASSESSEE WAS NOT AB LE TO JUSTIFY WHY THE WORKS CONTRACT SALES HAVE BEEN SHOWN AT THE PRICE WHICH IS LESS BY RS.5,95,49,188/- (434528972 - 3749 79784) FROM THE AMOUNT OF WORKS CONTRACT PURCHASE. THE ASS ESSEE HAS NOT REFLECTED ANY WORK IN PROGRESS IN THE TRADING A CCOUNT. IN VIEW OF THE ABOVE THE DIFFERENCE OF RS.5,95,49,188/ - WAS TREATED BY THE AO AS WORK IN PROGRESS AND MADE ADDITION OF THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEFORE CIT(A) THE ASSESSEE SUBMITTED THAT AS PER THE COMPUTATION OF THE AO, THE TOTAL WORKS CONTRACT PUR CHASES ARE AMOUNTING TO RS.43,45,28,972/- WHEREAS THIS AMOUNT OF CONTRACT WORK PURCHASES INCLUDES LABOUR CHARGES OF RS.17,98, 41,355/-. IT WAS SUBMITTED THAT BILLING MADE TO M/S. LARSEN & TO URBO LTD. MADE ON 31.03.2009 FOR RS.37,49,79,784/- INCLUDES L ABOUR CHARGES PAID TO M/S. ALUPRO BUILDING SYSTEMS PVT. L TD. FOR RS.3,06,09,244 & RS.4,05,99,869/-. SO IT IS INCORRE CT THAT RS.3,06,09,244 & RS.4,05,99,869/- FORMED PART OF WI P BECAUSE ALL THE LABOUR CHARGES PAID TO M/S. ALUPRO BUILDING SYSTEMS PVT. LTD. WERE BILLED TO M/S. LARSEN & TOUBRO LTD. ON DA TED 31.03.2009. IT WAS SUBMITTED THAT WORKS CONTRACT S ALES ARE EXCEEDING WORKS CONTRACT PURCHASES. THE ASSESSING O FFICER DISALLOWED THE WORKS CONTRACT PURCHASES JUST ON THE BASIS OF LABOUR CHARGES AND HE DID NOT TAKE INTO THE ACTUAL FACTS AND DETAILS OF THE MATTER. IT WAS SUBMITTED THAT LABOUR CHARGES & THE PAGE | 4 AMOUNT OF PURCHASES & SALES, BOTH, HAVE BEEN INVOIC ED SEPARATELY TO M/S. LARSEN & TOURBO LIMITED. ASSESSI NG OFFICER WHILE COMPUTING THE INCOME OF THE ASSESSEE JUST CON SIDERED THAT THE AMOUNT OF SALES WERE LESS THAN THE PURCHASES. HE DID NOT TAKE INTO THE ACCOUNT THAT THE AMOUNT OF PURCHASES INCLUDED A PART OF LABOUR CHARGES. FURTHER ASSESSING OFFICER D IDNT TAKE IN TO ACCOUNT THE INVOICE OF RS.1,44,20,4983.40 IN RESPEC T OF LABOUR CHAGES BOOKED AS INCOME AND BILLED TO M/S. LARSEN & TOURBO LTD. 5. BASED ON THE ARGUMENTS ADVANCED BY THE ASSESSEE AND SUBMISSIONS MADE THE LD. CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. THE REMAND REPORT OF THE AO WAS CONFRONTED TO THE ASSESSEE. AFTER CONSIDERING THE CONTENTS OF THE RE MAND REPORT AND THE SUBMISSION OF THE ASSESSEE TO SUCH REMAND R EPORT THE LD. CIT(A) DELETED THE DISALLOWANCE BY OBSERVING AS UND ER :- 3. GROUND NO.L TO 6 ARE TAKEN TOGETHER AS THESE ARE INTERLINKED. IN THI S REGARD, LD.AR OF THE APPELLANT HAS RELIED ON TRADING ACCOUN T WHICH IS AVAILABLE AT PAG E NO.45 OF THE PAPER BOOK, WHEREIN, THERE ARE TWO FIGURES V IZ, CREDIT SIDE LABOUR CHARGES (L&T) RS. 144204983.40/- AND IN THE DEBIT SIDE THERE IS WORK CONTRACT PURCHASE (ALUPRO) RS.505738084.88/ -. IN THIS REGARD, IT HAS BEEN CONTENDED BY THE LD.AR OF THE APPELLANT TH AT AO HAS NOT TAKEN INTO ACCOUNT LABOUR CHARGES OF L&T AND HAS REDUCED WORK CONTRACT PURCHASE BY SUM OF RS.7,11,99,113/-. IT HAS BEEN FU RTHER DEMONSTRATED BY THE LD.AR OF THE APPELLANT THAT THESE DETAILS ARE A VAILABLE WITH THE AO AT THE TIME OF ASSESSMENT PROCEEDINGS AS IS EVIDENT FR OM PAGE NO.56 OF THE PAPER BOOK, WHEREIN, TAX INVOICE AMOUNTING TO RS.14 4204983.40/- IN THE NAME OF L&T LTD. IS AVAILABLE. FURTHERMORE, IT HAS BEEN CONTENDED THAT AT PAGE NO.51, THERE IS LABOUR CHARGES FOR INSTALLATIO N AMOUNTING TO PAGE | 5 RS.30609244.00/- IN THE NAME OF ALUPRO BUILDING SYS TEMS (P)LTD. AND AT PAGE NO.52, THERE IS CONTRACT SALES AMOUNTING TO RS .40599869/-. LD.AR OF THE APPELLANT HAS FURTHER DEMONSTRATED THAT AT PAGE NO.47, THERE IS CONTRACT PURCHASES LEDGER ACCOUNT AS PER WHICH TOTA L AMOUNT IS TO THE TUNE OF RS.505738084.88/-. HOWEVER, AO HAS NOT CONS IDERED LAST TWO ENTRIES BELONGING TO ALUPRO BUILDING SYSTEMS PVT. L TD. WHICH HAS CAUSED DIFFERENCE AND ULTIMATELY LEAD TO ADDITION. TOTAL C ONTRACT PURCHASE LEDGER ACCOUNT AVAILABLE AT PAGE NO.47 IS REPRODUCED HEREU NDER:- DATE PARTICULARS VCH TYPE VCH NO. DEBIT CREDIT 28.2.2009 TO ALUPRO BUILDING SYSTEMS PVT. LTD. JOURNAL 31 11,10,09,604,42 6.3.2009 TO ALUPRO BUILDING SYSTEMS PVT. LTD. JOURNAL 33 7,48,43,323,43 16.3.2009 TO ALUPRO BUILDING SYSTEMS PVT. LTD. JOURNAL 44 17,18,28,951.00 25.3.2009 TO ALUPRO BUILDING SYSTEMS PVT. LTD. JOURNAL 60 7,68,47,093 31.3.2009 TO ALUPRO BUILDING SYSTEMS PVT. LTD. JOURNAL 64 3,06,09,244.00 TO ALUPRO BUILDING SYSTEMS PVT. LTD. JOURNAL 66 4,05,99,869 50,57,38,084.88 50,57,38,084.88 50,57,38,084.88 50,57,38,084.88 3.1 IN T31.3.2009HIS REGARD, IT IS FOUND THAT AO HAS NO T CONS IDE RED LAST T WO EN TRIES. THE ACTION OF AO FOR NOT CONSIDERING TWO ENTRIES IS FOU ND TO BE ERRONEOUS AND WITHOUT BASIS BECAUSE LD.AR OF THE APPELLANT HAS BEEN ABLE TO SHO W THAT NOT CONSIDERING TWO ENTRIES OF THE WORK CONTRACT HAS GOT NOT BASIS. FURTHERMORE, AO HA S NOT DISPUTED THE TRADING ACCOUNT OF THE APPELLANT AVAILABLE AT PAGE NO.45. THUS, IT IS FOUND THAT AO'S ACTION IS IN A VERY ARBITRARY MANNER. IF YOU ARE ACCEPTING CERTAIN BILLS OF THE S AME PARTY, VIZ, OUT OF SIX, FOUR BILLS HAVE BEEN ACCEPTED, THERE IS NO JUSTIFICATION FOR NOT AL LOWING THE REMAINING TWO BILLS. I HAVE GONE THROUGH THE FINDINGS OF THE AO IN THE ASSESSMENT OR DER AND REMAND REPORT ,WRITTEN PAGE | 6 SUBMISSION AND REJOINDER OF THE LD.AR IN THIS REGAR D ,AND AFTER CONSIDERING ALL THE MATERIALS, I COME TO THE CONCLUSION THAT BY SUBMISSION DATED 2 2.10.2012, VIDE PARA 6&7 LD.AR OF THE APPELLANT HAS EXPLAINED THE WHOLE THINGS BY SUBMITT ING AS UNDER:- PARTICULARS AMOUNT (1NR) AMOUNT OF PURCHASES DISALLOWED FROM M/S.ALUPRO BUILDING SYSTEMS PVT.LTD. BILL NO.011 DATED 25/03/2009 40,599,869.00 BILLNO.002 DATED 31/03/2009 30,609.244.00 TOTAL PURCHASES DISALLOWED 71,209,113.00 WORKS CONTRACT PURCHASES DEBITED TO PROFIT& LOSSA/C. 505,738,085.00 LESS: AMOUNT OF PURCHASES DISALLOWED 71,209,113.00 TOTAL WORKS CONTRACT PURCHASES ALLOWED(A) 434,528 ,972.00 TOTAL WORKS CONTRACT SALES (B) 374,979,784.00 TOTAL AMOUNT DISALLOWED/ADDED BACK TO THE INCOME OF THE ASSESSEE(A-B) 59,549,188.00 THE AMOUNT OF RS.59549188.00 WAS TREATED AS WORK IN PROGRESS BY THE ASSESSING OFFICER. 7. INCOME OF THE COMPANY S COMPLETED BY ASSESSING O FFICER WAS AS UNDER: PARTICULARS AMOUNT (INR) INCOME AS PER RETURN FILED (8,490,242.00) ADD: DISALLOWANCE OF AMOUNT TREATED AS WORK IN PROG RESS 59,549.188.00 ADD: DISALLOWANCE OF AMOUNT PAID TO M/S.KOCHAR &CO. 400,000.00 TOTAL INCOME 51,458,946.00 ROUNDED OFF 51,458,950.00 3.2 IN VIEW OF THE ABOVE DISCUSSION, IN MY CONSIDERED O PINION GROUND NO.L TO 6 DESERVES TO BE ALLOWED. 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE REV ENUE IS IN APPEAL BEFORE THE TRIBUNAL. PAGE | 7 7. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE A O WHEREAS THE LD. COUNSEL FOR THE ASSESSEE HEAVILY RELIED ON THE ORDER OF THE CIT(A). 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE A O IN THE INSTANT CASE HAS MADE ADDITION OF RS.5,95,49,188/- ON THE G ROUND THAT THE ASSESSEE HAS NOT REFLECTED ANY WORK IN PROGRESS IN THE TRADING ACCOUNT AND THE ASSESSEE WAS UNABLE TO GIVE PROPER EXPLANATION, REGARDING WHY THE WORK CONTRACT SALES HAVE BEEN SHO WN AT THE PRICE WHICH IS LESS BY RS.5,95,49,188/- FROM THE AM OUNT OF WORKS CONTRACT PURCHASES. WE FIND THE LD. CIT(A) DELETED THE ADDITION, THE REASONS OF WHICH HAVE ALREADY BEEN REPRODUCED I N THE PRECEDING PARAGRAPH. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). THE FACTUAL FINDING GIVEN LD. CIT(A) T HAT THE AO HAS NOT CONSIDERED THE LAST TWO ENTRIES BELONGING TO M/ S. ALUPRO BUILDINGS SYSTEMS PRIVATE LIMITED WHICH HAS CAUSED DIFFERENCE AND ULTIMATELY LED TO THE ADDITION COULD NOT BE CON TROVERTED BY THE LD. DR. FURTHER THE OBSERVATION OF THE CIT(A) THAT AO HAS ALSO NOT DISPUTED THE TRADING ACCOUNT OF THE ASSESS EE COULD NOT BE CONTROVERT BY THE LD. DR. SINCE THE LD. CIT(A) AFTE R CONSIDERING THE SUBMISSION OF THE ASSESSEE, REMAND REPORT OF TH E AO AND REJOINDER OF THE ASSESSEE TO SUCH REMAND REPORT HAS DELETED THE ADDITION AFTER VERIFYING THE RELEVANT MATERIAL AND SINCE THE LD. DR COULD NOT CONTROVERT THE FACTUAL FINDINGS GIVEN BY THE CIT(A), THEREFORE, IN ABSENCE OF ANY CONTRARY MATERIAL BROU GHT TO OUR PAGE | 8 NOTICE AGAINST THE FACTUAL FINDINGS GIVEN BY CIT(A) WHILE DELETING THE ADDITION WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE CIT(A). ACCORDINGLY WE UPHOLD THE SAME AND THE GRO UND RAISED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.10.2019. SD/- SD/- (BHAVNESH SAINI) (R.K PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER *NEHA* DATE:- 10.10.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 10.10.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 10.10.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS 10.10.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 10.10.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 10.10.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 10.10.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 10.1 0.2019 DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER