Dy.CIT, Circle-16(1), Hyderabad V. M/s NECX (P) Limited, Hyderabad

ITA 290/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69824 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-09-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 05-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T DIWAKAR PRASAD
• Assessee Lawyers: V RAGHAVENDRA RAO
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 290/HYD/2013 ASSESSMENT YEAR 2006-07 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-16(1) HYDERABAD VS. M/S. NECX (P) LTD. HYDERABAD PAN: AACCN0219M APPELLANT RESPONDENT APPELLANT BY: SRI T. DIWAKAR PRASAD RESPONDENT BY: SRI V. RAGHAVENDRA RAO DATE OF HEARING: 17.09.2013 DATE OF PRONOUNCEMENT: 17.09.2013 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE OR DER OF THE CIT(A)-V, HYDERABAD DATED 30.11.2012 FOR ASSE SSMENT YEAR 2006-07. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT(A) ERRED BOTH ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE WITHOUT GOING INTO THE MERITS OF THE ORDER OF THE ASSESSING OFFICER. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ADDITION TOWARDS DIFFERENCE IN GROSS RECEIPTS AS PER TDS CERTIFICATES TREATING THE SAME AS INCOME NOT OFFERED TO TAX WAS ON ACCOUNT OF FAILURE TO FURNISH REQUISITE INFORMATION BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. ITA NO. 290/HYD/2013 M/S. NECX (P) LIMITED ================= 2 3. THE CIT(A) ERRED IN ACCEPTING THE ASSESSEE'S CLAIM THAT INCOME RECEIVED AFTER TDS CAN BE OFFERED TO TAX NEXT YEAR/SUBSEQUENT YEAR, EVEN WHEN THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. 3. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE-COMPANY, IN THE BUSINESS OF FRANCHISE AND AMC SERVICES, FILED ITS RETURN OF INCOME FOR A.Y. 2006-07 ON 25.11.2006 ADMITTING INCOM E OF RS. 8,80,150. SUBSEQUENTLY, THE ASSESSMENT WAS REOPENED U/S. 147 AND AN AMOUNT OF RS. 80,60,154, BEING THE DIFFERENCE OF RS. 1,81,50,412 (GROSS RECEIPTS AS PER THE TDS CERTIFICATE S) AND RS. 1,00,90,258 (RECEIPTS AS PER PROFIT AND LOSS A/C. ) WAS ADDED TO THE TOTAL INCOME RETURNED. AGGRIEVED, THE ASS ESSEE WENT IN APPEAL BEFORE THE CIT(A). 4. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE HAD ALREADY OFFERED TO TAX THE ENTIRE ADVANCE AMOUNT OF RS . 55,28,106 IN THE F.Y. 2006-07 RELEVANT TO A.Y. 2007-08 ON ACCRUAL BASIS, TOWARDS AMC RECEIVED FROM THE CUSTOMER S IN THE F.Y. 2005-06. THE ASSESSEE HAS ALSO PRODUCED THE AG REEMENT COPY DATED 1-7-2004 WITH THE WIPRO TOWARDS AMC, WHICH IS EFFECTIVE FOR TWO YEARS I.E., FROM JULY 2004 TO JUNE, 2006. THE ASSESSEE RECEIVED AMC OF RS. 53,32,821 FOR THE F.Y. 2005-06 AND RS. 55,28,106 FOR THE F.Y. 2006-07, WHICH ARE RE FLECTED IN STATEMENT AND ACCOUNT COPIES SUBMITTED BY THE ASSESSEE. HENCE, THE CIT(A) DIRECTED THE AO DELETE THE ADDITION OF RS. 55,28,106. 5. THE CIT(A), WITH REGARD TO RS. 25,32,048 BEING THE REIMBURSEMENT OF EXPENSES, OBSERVED THAT THE ASSESSEE CONTENDED THAT IT HAD ALREADY ACCOUNTED THE SAME IN ITS B OOKS OF ACCOUNT FOR THE YEAR AND THE STATEMENT HAD BEEN SUBMI TTED ITA NO. 290/HYD/2013 M/S. NECX (P) LIMITED ================= 3 TO THE ASSESSING OFFICER. IT HAD ALSO CONTENDED THAT TH E ADDITION OF RS. 25,32,048 WOULD AMOUNT TO TAXING THE SAM E AMOUNT TWICE IN THE SAME YEAR. THE CIT(A) OBSERVED TH AT THE AO WAS NOT JUSTIFIED IN ADDING THE SAME AMOUNT TWICE WH EN THE REIMBURSEMENT EXPENSES HAVE ALREADY BEEN ACCOUNTED FO R IN THE ASSESSEE'S BOOKS OF ACCOUNT FOR THE YEAR. THE REIMBURSEMENT EXPENSES OF RS. 25,32,048 ARE CLEARLY REFLECTED IN THE STATEMENT. ACCORDINGLY, HE DIRECTED THE AO TO DE LETE THE AMOUNT OF RS. 25,32,048 ON ACCOUNT OF REIMBURSEMENT OF EXPENSES. AGAINST THIS, THE REVENUE IS IN APPEAL BEF ORE US. 6. THE LEARNED AR PLACED BEFORE US COPIES OF BALANCE S HEET AND RECONCILIATION STATEMENT REGARDING THIS IMPUGNED RE CEIPT AND SUBMITTED THAT THE IMPUGNED RECEIPT WAS RELATING TO T WO ASSESSMENT YEARS AND IT WAS DULY ACCOUNTED IN ITS BOOKS OF ACCOUNT. REGARDING SPREADING OVER OF THESE RECEIPTS I N TWO ASSESSMENT YEARS, IT WAS STATED IN ITS NOTES OF ACCOUNTS, FORMING PART OF THE BALANCE SHEET AS ON 31 ST MARCH, 2006 AND PROFIT AND LOSS A/C. ACCORDING TO THE AR, IF THE ASS ESSING OFFICER FAILED TO EXAMINE THE INFORMATION FURNISHED B Y THE ASSESSEE, NO FAULT COULD BE FOUND WITH THE ASSESSEE. 7. ON THE OTHER HAND, THE LEARNED DR SUBMITTED THAT THE ASSESSEE WAS NOT COOPERATIVE BEFORE THE ASSESSING OFFI CER. FURTHER HE SUBMITTED THAT THERE IS NO BASIS TO SPREAD OVE R THE RECEIPT OF THE SUBSEQUENT YEAR SINCE THE SAME HAS BEE N ACCRUED AND RECEIVED IN THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2006-07. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. CONSIDERING THE CONTENTIONS OF BOTH THE PAR TIES AND ITA NO. 290/HYD/2013 M/S. NECX (P) LIMITED ================= 4 IN VIEW OF NON-COOPERATION OF THE ASSESSEE BEFORE THE AO, AS OBSERVED BY THE AO IN HIS ORDER, WE ARE INCLINED TO R EMIT THE ENTIRE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR RE- CONSIDERATION WITH A DIRECTION TO THE ASSESSEE TO SUPPOR T ITS CASE WITH ALL RELEVANT MATERIALS. THE ASSESSING OFFIC ER SHALL RE- EXAMINE THE ISSUE AFRESH AND PASS NECESSARY ORDER AF TER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH SEPTEMBER, 2013. SD/- (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 17 TH SEPTEMBER, 2013 COPY FORWARDED TO: 1. THE DCIT, CIRCLE-16(1), ROOM NO. 612, 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD. 2. M/S. NECX (P) LTD., 12-13-460, FLAT NO. 4, ARUNODA YA APARTMENTS, STREET NO. 1, TARNAKA, HYDERABAD. 3. THE CIT(A)-V, HYDERABAD. 4. THE CIT-IV, HYDERABAD. 5. THE DR 'B' BENCH, ITAT, HYDERABAD. TPRAO