The DCIT, 5(1), Indore V. M/s. Kumat Construction, Indore

ITA 284/IND/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4875 (ITAT-INDORE)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 13-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: SHRIRAM GILDA
• Section: 143(3); 133(6); 145

Judgement Text

PAGE 1 OF 10 A IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : AAACK7070K I.T.A.NO. 2 84 /IND/201 3 A.Y. : 2008-09 DY. CIT , 5(1), INDORE. VS. M/S. KUMAT CONSTRUCTION, 6-7-8, SHANTI NIKETAN, INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI R. A. VERMA, SR. DR RESPONDENT BY : SH . SHRI RAM GILDA, ADVOCATE DATE OF HEARING : 13 . 1 1 .201 3 DATE OF PRONOUNCEMENT : 18 . 1 1 .201 3 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER PASSED BY THE CIT(A), DATED 1.02.2013 FOR THE ASSES SMENT YEAR 2008-09 IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961. KUMAT CONSTRUCTION, INDORE. I.T.A.NO. 284/IND/2013 A.Y. 2008-09 2 PAGE 2 OF 10 2. IN THIS APPEAL, THE REVENUE IS AGGRIEVED FOR DELETI ON OF ADDITION OF RS. 12,50,047/- MADE BY THE ASSESSING O FFICER ON ACCOUNT OF CONTRACT RECEIPTS FROM IPCA LABORATORIES . 3. THE RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. WHILE MAKING THE ADDITION OF RS. 12,50,047/- THE AO HAS OBSERVED IN PARA NO. 2 OF THE ASSESSMENT ORDER AS FOLLOWS :- 'THE ASSESSEE HAS SHOWN INCOME FROM CONTRACTS RECEIPTS FROM IPCA LABORATORIES. AS PER COPIES OF TDS CERTIFICATE SUBMITTED WITH RETURN OF INCOME THE ASSESSEE HAS RECEIVED TOTAL PAYMENT OF RS. 2,47,18,877/- DURING THE ACCOUNTING YEAS WHEREAS THE ASSESSEE HAS ACCOUNTED FOR ONLY RS. 1,20,63,616/- BUT HAS CLAIMED CREDIT OF TDS OF RS. 3,84,623/- WHICH HAS MADE FROM RS. 2,47,18,877/-. THE ASSESSEE ASKED TO EXPLAIN THE ABOVE DISCREPANCY VIDE LETTER DTD. 26-11-10. VIDE AN UNDATED REPLY THE ASSESSEE HAS EXPLAINED THE KUMAT CONSTRUCTION, INDORE. I.T.A.NO. 284/IND/2013 A.Y. 2008-09 3 PAGE 3 OF 10 POSITION STATING THAT THE IPCA LABORATORY HAS MADE TDS OF R.16985/- AS SURCHARGES IN TDS BEING TOTAL WORK WAS EXCEEDED TO RS. 1,00,00,000/-. AS SUCH THE PARTY HAS DEDUCTED SURCHARGES OF ALREADY PAID AMOUNT OF RS. 82,44,780/- ON WHICH TDS HAD BEEN DEDUCTED WITHOUT SURCHARGES. IT IS ALSO STATED THAT CONTACT PAYMENT OF RS. 43,72,668/- A TDS OF RS. 99,084/- HAS BEEN WRONGLY MADE BY THE SAID PAYING COMPANY FOR WHICH WORK WAS DONE BY ASSESSEE IN NEXT FINANCIAL YEAR AND THIS PAYMENT WAS CONSIDERED BY THE ASSESSEE IN F.Y. 08-09 BUT TDS MADE WAS CLAIMED IN F.Y. 2007-08. FROM THE AUDIT REPORT FILED BY THE ASSESSEE IT IS SEEN THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND INCOME IS RECOGNIZED ON ACCRUAL BASIS. DETAILS OF WORK AND PAYMENTS MADE HAVE BEEN FURNISHED BY IPCA LAB. A KUMAT CONSTRUCTION, INDORE. I.T.A.NO. 284/IND/2013 A.Y. 2008-09 4 PAGE 4 OF 10 PERUSAL OF SUCH DETAILS SHOWN THAT THE A FIGURE OF RS. 99,084/- HAS ALSO BEEN INCLUDED IN WORK DETAILS. IN FACT THIS AMOUNT OF RS. 99,084/- HAS BEEN DEDUCTED AT SOURCE AND HAS BEEN EARMARKED FOR TDS PROVISION. IT IS CLAIMED THAT IPCA LTD HAD DEDUCTED TAX BY MAKING PROVISION FOR WHICH NEITHER WORK HAD BEEN DONE NOR THE BILL RAISED. THE ASSESSEE WAS ASKED TO PROVIDE EVIDENCE IN THIS REGARD WHICH SHOW THAT M/S. IPCA LTD. HAS WRONGLY CREDITED ITS ACCOUNT AND ISSUED TDS CERTIFICATE WITHOUT ANY WORK DONE BY THE ASSESSEE . THE ASSESSEE COULD NOT PROVIDE SUCH EVIDENCE. AS SUCH THE CLAIM OF THE ASSESSEE IS REJECTED. THUS EXCESS PAYMENT OF RS. 44,10,475/- ( 1,64,74,091 - 1,20,63,616) HAS NOT BEEN PROPERLY EXPLAINED BY THE ASSESSEE BILL WISE. SUCH BILLS HAVING BEEN RAISED EITHER IN EARLIER YEARS OR IN SUBSEQUENT YEAR IN VIEW OF THE KUMAT CONSTRUCTION, INDORE. I.T.A.NO. 284/IND/2013 A.Y. 2008-09 5 PAGE 5 OF 10 MERCANTILE SYSTEM OF ACCOUNTING OF THE ASSESSEE AND ASSESSEE SHOWING INCOME ON THE BASIS OF BILLS RAISED IRRESPECTIVE OF ACTUAL RECEIPTS. THE ACCOUNTS OF THE ASSESSEE ARE NOT THEREFORE, CORRECT AND COMPLETE AND AS SUCH PROVISION OF SECTION 145(3) ARE CLEARLY ATTRACTED. IN VIEW OF THIS, THE BOOK RESULT ARE REJECTED AND INCOME IS COMPUTED IN THE MANNER PROVIDED IN SECTION 144. SINCE THE ASSESSEE HAS FAILED TO RECONCILE THE RECEIPTS AS PER TDS CERTIFICATE AND THOSE RECORDED IN BOOKS, TOTAL RECEIPTS ARE TAKEN AS PER TDS CERTIFICATE AT RS. 1,64,74,410/- AND A NET PROFIT @ 10% IS CHARGED AND TOTAL INCOME IS DETERMINED AT RS.16,47,410/-. 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION AFTER HAVING THE FOLLOWING OBSERVATIONS :- 8. I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE AO IN THE ASSESSMENT ORDER, THE WRITTEN KUMAT CONSTRUCTION, INDORE. I.T.A.NO. 284/IND/2013 A.Y. 2008-09 6 PAGE 6 OF 10 SUBMISSION OF THE APPELLANT COMPANY AS WELL AS THE DETAILS FURNISHED BY M/S. IPCA LABORATORIES LTD. THE AO HAS MADE THE ADDITION OF RS, 12,50,047/- MAINLY ON THE GROUND THAT APPELLANT COMPANY FAILED TO PRODUCE EVIDENCE REGARDING THE EXCESS TDS DEDUCTED BY THE M/S. IPCA LABORATORIES LTD. , AND ESTIMATED THE NET PROFIT @10% ON THE CONTRACT RECEIPT OF RS. 1,64,74,091/- AGAINST THE ACTUAL CONTRACT RECEIPT OF RS. 1,20,63,616/- SHOWN IN THE BOOKS OF ACCOUNTS. 9. THE LD. COUNSEL OF THE APPELLANT COMPANY PRODUCED THE CERTIFICATE ISSUED BY M/S. IPCA LABORATORIES LTD, DETAILS OF CONTRACT RECEIPTS FOR A.Y. 2008-09 AND A.Y. 2009-10, COPIES OF ACCOUNT OF THE APPELLANT COMPANY IN THE BOOKS OF M/ S. IPCA LABORATORIES LTD. AS WELL AS THE PROFIT & LOSS AND WORK ORDER FOR F.Y.2008-09 TO EXPLAIN THE DIFFERENCE OF ACTUAL CONTRACT KUMAT CONSTRUCTION, INDORE. I.T.A.NO. 284/IND/2013 A.Y. 2008-09 7 PAGE 7 OF 10 RECEIPTS AS PER BOOKS OF ACCOUNTS AND AS PER TDS CERTIFICATE ISSUED BY M/S. IPCA LABORATORIES LTD. 10. M/S. IPCA LABORATORIES LTD. THROUGH THEIR SUBMISSION DATED 24.08.2012 ALSO SUBMITTED IN THIS OFFICE THE DETAILS OF CONTRACT PAYMENT AND TDS MADE, IN COMPLIANCE OF NOTICE ISSUED FROM THIS OFFICE U/S 133(6) OF THE I.T. ACT. I HAVE VERIFIED THE VARIOUS DETAILS SUBMITTED BY THE APPELLANT COMPANY AND M/S. IPCA LABORATORIES LTD. WITH REFERENCE TO THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER. I FIND THAT PAYMENT MADE BY M/ S. IPCA LABORATORIES LTD. IN F.Y. 2007-08 TO THE APPELLANT IS OF RS. 1,20,49,366/- WHICH HAVE BEEN DULY SHOWN BY APPELLANT COMPANY AT RS. 1,20,63,616/- IN F.Y. 2007-08 AND FOR SMALL DIFFERENCE A RECONCILIATION STATEMENT IS FILED. WHEN THE CONTRACT RECEIPTS HAVE BEEN DULY KUMAT CONSTRUCTION, INDORE. I.T.A.NO. 284/IND/2013 A.Y. 2008-09 8 PAGE 8 OF 10 ACCOUNTED FOR IN F.Y. 2007-08, THERE IS NO SCOPE FOR INVOKING PROVISION OF SECTION 145 OF THE LT. ACT. HOWEVER AS APPELLANT HAS ALSO ADMITTED THAT M/S IPCA LABORATORIES LTD DEDUCTED TDS OF RS. 99084/- ON PROVISIONAL CONTRACT WORK ON ESTIMATE BASIS PERTAINING TO F.Y. 2008-09. HENCE CREDIT OF SUCH TDS COULD NOT BE GIVEN TO APPELLANT IN F.Y. 2007-08. 11. AFTER CAREFUL CONSIDERATION OF THE COMPLETE FACTS AND CIRCUMSTANCE OF THE CASE, THE AO'S ACTION ESTIMATING THE INCOME FROM M/S IPCA LABORATORIES LTD. AND MAKING THE ADDITION OF RS. 12,50,047/- IS WITHOUT ANY BASIS AND THEREFORE ADDITION OF RS. 12,50,047/- IS HEREBY DELETED. HOWEVER, SINCE TDS OF RS. 99084/-DOES NOT PERTAIN TO WORK CONTRACT PERTAINS TO WORK CONTRACT OF F.Y. 08-09. HENCE CREDIT FOR THE SAME CAN NOT BE GIVEN IN THE YEAR UNDER KUMAT CONSTRUCTION, INDORE. I.T.A.NO. 284/IND/2013 A.Y. 2008-09 9 PAGE 9 OF 10 CONSIDERATION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FOUND FROM RECORD THAT CONTRACT PAYMENT OF RS. 12,50,047/ - WAS PERTAINING TO THE NEXT FINANCIAL YEAR AND PAYMENT W AS ALSO MADE BY IPCA LABORATORIES IN THE NEXT FINANCIAL YEA R. A CERTIFICATE TO THIS EFFECT DATED 3 RD DECEMBER, 2010, WAS ALSO FILED BY IPCA LABORATORIES LIMITED. AFTER CONSIDERI NG THE STATEMENT OF ACCOUNT OF ASSESSEE AS WELL AS IPCA LA BORATORIES AND ALSO THE CERTIFICATE ISSUED BY IPCA LABORATORIE S, THE LD. CIT(A) DELETED THE ADDITION OF RS. 12,50,047/- OBSE RVING THAT CREDIT FOR DEDUCTION OF TAX AMOUNTING TO RS. 99,084 /- SHOULD BE ALLOWED IN THE SUBSEQUENT YEAR, WHEN ASSESSEE OF FERS CORRESPONDING CONTRACT RECEIPT IN HIS PROFIT AND LO SS ACCOUNT. THE DETAILED FINDING GIVEN BY THE LD.CIT(A), AT PAR A 8 TO 10 AS REPRODUCED ABOVE HAVE NOT BEEN CONTROVERTED. ACCORD INGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FO R DELETING THE ADDITION MADE ON ACCOUNT OF TDS CERTIFICATE. HOWEVE R, WHILE FRAMING ASSESSMENT FOR SUBSEQUENT ASSESSMENT YEAR I .E. 2009- 10, THE ASSESSING OFFICER SHOULD KEEP WATCH THAT CO NTRACT KUMAT CONSTRUCTION, INDORE. I.T.A.NO. 284/IND/2013 A.Y. 2008-09 10 PAGE 10 OF 10 RECEIPT OF RS. 12,50,047/- BEING PAID BY IPCA LABO RATORIES TO ASSESSEE IS INCORPORATED IN THE RECEIPTS OF SUBSEQU ENT ASSESSMENT YEAR. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED SUBJECT TO THE OBSERVATIONS MADE HEREINABOVE. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 18 TH NOVEMBER, 2013. CPU* 131811