DCIT, Jaipur V. SAND DUNE CONSTRUCTION P LTD., Jaipur

ITA 304/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99275 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 22-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: S L PODDAR DHK
• Keywords: Rejection of books of accounts; Corroborative evidences
• Section: 143(3); 145; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA-@ ITA NO. 304/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 THE DCIT CIRCLE- 2 JAIPUR CUKE VS. M/S. SAND DUNE CONSTRUCTION (P) LTD. , A-8, SHYAM NAGAR JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAFCS 2569 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO. 26/JP/2013 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 304/JP/2013) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 M/S. SAND DUNE CONSTRUCTION (P) LTD. , A-8, SHYAM NAGAR JAIPUR CUKE VS. THE DCIT CIRCLE- 2 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAFCS 2569 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY: SHRI RAJ MEHRA , JCIT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI S.L.PODDAR, ADVOCATE LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/07/2015 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 11/08/2015 VKNS'K@ ORDER PER T.R. MEENA, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST T HE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 24-01-2013 FOR THE ASSESSMEN T YEAR 2009-10. THE ASSESSEE HAS FILED THE CROSS OBJECTION. ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 2 2.1 THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER :- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN:- 1. REJECTING THE ACTION OF AO INVOKING PROVISIONS OF SECTION 145(3) OF THE I.T. ACT AND DELETING THE TRADING ADDITION OF RS. 14,33,722/- WHEREAS THE SITEWISE CO ST OF CONSTRUCTION AND VALUE OF STOCK WAS NOT SUBJECT TO VERIFICATION IN THE ABSENCE OF DETAILS OF SITEWISE CONSTRUCTION EXPENSE AND WORK IN PROGRESS. 2. DIRECTING TO ALLOW CREDIT OF TDS DEDUCTED ON THE RENTAL RECEIPTS WHICH DOES NOT BELONG TO THE AS SESSEE COMPANY. 2.2 THE ASSESSEE HAS RAISED SOLITARY GROUND IN ITS CROSS OBJECTION. 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F THE LD AO IN DISALLOWING OF RS. 2,33,735/- U/S 40(A)(IA) O F THE I.T. ACT, 1961. 3.1 THE GROUND NO.1 OF THE REVENUE PERTAINS TO DE LETION OF TRADING ADDITION OF RS. 14,33,722/-. BRIEF FACTS OF THE CAS E ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL/ COMMERCIAL PROJECTS AT ITS OWN AND ON A COLLABORATI ON BASIS. THE ASSESSEE COMPANY HAS FILED A RETURN DECLARING INCOME OF RS. 1,451,54,980/- ON 28- 09- 2009. THE CASE OF THE ASSESSEE COMPANY WAS SCRU TINIZED U/S 143(3) OF THE ACT. THE ASSESSEE COMPANY HAD SHOWN TRADING RES ULTS AS UNDER:- ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 3 A.Y. SALES GROSS PROFIT GROSS PROFIT RATE NET PROFIT NET PROFIT RATE 2009-10 219441873 33676978 15.35% 8053978 3.67% 2008-09 102346109 14826281 14.37% 2784703 2.72% 2007-08 83772100 4486120 5.35% 2973994 3.35% THE AO ASKED THE ASSESSEE COMPANY TO PRODUCE THE BO OKS OF ACCOUNT ALONGWITH THE SUPPORTING BILLS AND VOUCHERS. THE AS SESSEE COMPANY PRODUCED THE SUPPORTING BILLS AND VOUCHERS BEFORE T HE AO WHO HAS OBSERVED AS UNDER:- (I) ON EXAMINATION OF THE VOUCHERS IN RESPECT OF CONSTRUCTION EXPENSES CLAIMED AT RS. 1,46,99,999/-, THE AO OBSERVED THAT CERTAIN PAYMENTS HAVE BEEN MADE WITHO UT SUPPORTING ORIGINAL BILLS AND VOUCHERS. THEREFORE, THE AO COUL D NOT VERIFY SUCH EXPENDITURE IN THE ABSENCE OF ORIGINAL VOUCHER S. (II) THE AO OBSERVED THAT THE ASSESSEE COMPANY IS ENGAGED IN THE CONSTRUCTION OF RESIDENTIAL AND COMM ERCIAL COMPLEXES AT DIFFERENT LOCATIONS IN THE CITY OF JAI PUR BUT HE COULD NOT ASCERTAIN THE POSITION AND VALUE OF STOCK SITE WISE/ LOCATIONWISE FOR WANT OF SEPARATE STOCK REGISTERS. (III) THE AO OBSERVED THAT THE ASSESSEE COMPANY HAS SHOWN WORK IN PROGRESS AT RS. 8,87,97,104/- BUT IT COULD NOT EXPLAIN THE BASIS FOR THIS VALUATION OF THIS WORK IN PROGRESS BEFORE THE AO. IT IS OBSERVED THAT THE ASSESSEE COMPANY HA S TAKEN THE VALUATION OF THE UNSOLD GOODS ON ESTIMATE BASIS WHE RE PROJECT IS UNDER CONSTRUCTION. THE AO DID NOT ACCEPT THE VALUA TION OF WORK IN PROGRESS AS DECLARED BY THE ASSESSEE COMPANY BE CAUSE THE ASSESSEE COMPANY DID NOT FULFILL STATUTORY REQUIREM ENT OF SECTION 145 WHEREIN IT HAS BEEN NOTIFIED THAT AS2 SHALL BE APPLIED WHILE VALUING INVENTORIES INCLUDING WORK IN PROGRESS. (IV) THE AO OBSERVED THAT ASSESSEE COMPANY HAD INCU RRED CERTAIN EXPENSE UNDER DIFFERENT HEADS LIKE LABOUR P AYMENTS ETC. ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 4 WHICH WERE PAID IN CASH AND WERE SUPPORTED BY SELF MADE VOUCHERS. SINCE THE PAYMENTS HAVE BEEN MADE THROUGH SELF MADE VOUCHERS, THEREFORE, THE EXPENDITURE INCURRED BY TH E ASSESSEE COMPANY COULD NOT BE VERIFIED BY THE AO. (V) THE AO OBSERVED THAT THE ASSESSEE COMPANY HAS M ADE PAYMENTS THROUGH SELF MADE VOUCHERS WITHOUT INDICAT ING EITHER THE PURPOSE OR NATURE OF THE EXPENDITURE. IN THE CASE O F SHRI RAVI MATHUR, NO MENTION OF PURPOSE OR WORK HAS BEEN MADE ON THE VOUCHERS. THE AO OBSERVED THAT THE PAYMENTS ON ACCO UNT OF CONTRACTS HAVE BEEN SHOWN IN THE NAME OF THE OTHER FAMILY MEMBERS OF THE DIRECTORS OF THE COMPANY AND THEY AR E NOT CORROBORATED WITH THE MENTION OF NATURE OF EXPENSES AS WELL AS BUSINESS PURPOSE WITHIN THE MEANING OF SECTION 37(1 ) OF THE ACT. IN VIEW OF THE ABOVE DISCREPANCIES, THE AO ISSUED T HE SHOW CAUSE NOTICE TO THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 9-12-2 011 AS TO WHY THE BOOKS OF ACCOUNT SHOULD NOT BE REJECTED BY INVOKING THE PROVISIONS OF SECTION 145(3) OF THE ACT. 3.2 IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESS EE FILED THE WRITTEN SUBMISSION ON 14-12-2011 INDICATING THEREIN FOLLOWI NG REASONS. (I) THE BOOKS OF ACCOUNT OF THE ACCOUNTS ARE MAINTA INED DURING THE COURSE OF BUSINESS. THE ACCOUNT OF THE C OMPANY STANDS AUDITED UNDER THE COMPANIES ACT AS WELL AS U /S 44AB OF I.T. ACT (II) THE ASSESSEE COMPANY SUBMITTED THAT ALL THE DE TAILS FOR PURCHASE OF RAW MATERIALS LIKE BAJRI, RODI AND WATER ETC. ARE MAINTAINED AND IN THE BUSINESS OF CONSTRUCTION ACTIVITY IT IS NOT POSSIBLE TO OBTAIN 100% VOUCHERS FROM REGIS TERED DEALERS. THE TOTAL PURCHASES MADE DURING THE YEAR A RE AT RS. 4,40,81,824/- AND THEY ARE FULLY SUPPORTED BY VOUCH ERS. ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 5 (III) THE ASSESSEE COMPANY SUBMITTED THAT THE COMPA NY HAS TO CARRY OUT CONSTRUCTION ACTIVITIES AND IT IS NOT POSSIBLE TO MAINTAIN STOCK REGISTER OF RAW MATERIALS LIKE CEMEN T, BAJRI, RODI, STEEL AND OTHER ITEMS USED IN FINISHING IT. H OWEVER, THE COMPANY HAS MAINTAINED COMPLETE DETAILS OF PURCHASE S. THE CLOSING STOCK AND OPENING STOCK IS TAKEN AFTER PHYS ICAL VERIFICATION. THE ASSESSEE COMPANY SUBMITTED THAT M ERE NON- MAINTENANCE OF STOCK REGISTER IS NOT A DEFECT OF SU CH NATURE OF CONSTRUCTION BUSINESS AND IT DOES NOT ATTRACT AP PLICATION OF PROVISIONS OF SECTION 145 OF THE ACT. (IV) THE ASSESSEE COMPANY SUBMITTED THE DETAILS OF THE TURNOVER, GROSS PROFIT AND NET PROFIT DURING THE Y EAR AS WELL AS COMPARISON OF EARLIER TWO YEARS. THE ASSESSEE SU BMITTED THAT THE GROSS PROFIT RATE AND NET PROFIT RATE IS B ETTER THAN EARLIER YEARS AND THE TURNOVER IS ALSO INCREASED BY MORE THAN 100% DURING THE YEAR. THEREFORE, THERE IS NO REASON FOR INVOKING THE PROVISIONS OF SECTION 145 OF THE ACT. THE ASSESSEE HAS MAINTAINED COMPLETE BOOKS OF ACCOUNT A ND THEY ARE AUDITED U/S 44AB OF THE ACT AND ALSO THERE IS N O DEFECT IN THEM. THUS THERE IS NO CASE FOR APPLICATION OF PROV ISION OF SECTION 145 OF THE ACT. HOWEVER, THE AO DID NOT ACCEPT THE ABOVE CONTENTION S OF THE ASSESSEE AND INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT. THE AO CONSIDERING ALL THE MATERIALS FACTS AVAILABLE ON RE CORD, APPLIED THE GROSS PROFIT RATE OF 16% ON THE GROSS TURNOVER OF RS. 21 ,94,41,873 WHICH COMES TO RS. 3,51,10,700/- AND IT RESULTED INTO TRA DING ADDITION OF RS. 14,33,722/- AFTER REDUCING THE DECLARED GROSS PROFI T OF THE ASSESSEE COMPANY. 3.3 THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO DELETED THE ADDITION BY OBSERVING AS UNDER:- ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 6 4.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND THE SUBMISSIONS OF THE A.R. THE APPELLANT WAS ENGAGED I N THE WORK OF CIVIL CONSTRUCTION AND THE AO HAS PRIMARILY REJECTE D THE BOOKS OF ACCOUNTS OF THE ASSESSEE ON THE GROUNDS THAT THE AS SESSEE HAD NOT MAINTAINED STOCK REGISTER OR SITEWISE STOCK REGISTE R AND DETAILS OF THE VOUCHERS OF CERTAIN EXPENDITURES WERE NOT MENTI ONED. THE BASIS OF VALUATION OF CLOSING STOCK WAS NOT CLARIFIED. I FIND THAT THE OBSERVATIONS MADE BY THE AO WAS THEORETICAL CONSIDE RING THAT NO MATERIAL DISCREPANCY WAS BROUGHT ON RECORD. IT IS A JUDICIALLY ESTABLISHED PRINCIPLE THAT NON-MAINTENANCE OF STOCK REGISTER IS NOT A SUFFICIENT GROUND TO REJECT THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE FOUR FACTORS REQUIRED FOR REJECTION OF THE BOOK S OF ACCOUNTS ARE DEFECTS IN THE SALE BILLS, PURCHASES BILL AND VALUA TION OF THE CLOSING STOCK OR OPENING STOCK. IT IS NOT THE CASE OF THE A O THAT THE CONTRACT RECEIPTS WERE UNDERSTATED OR THAT THE EXPENSES WERE INFLATED OR BOGUS. IT WAS HELD BY THE HON'BLE HIGH COURT IN TH E CASE OF CIT VS. JAS JACK ELEGANCE EXPORTS, 324 ITR 95 THAT THERE WA S NO PROVISION IN THE I.T. ACT OR RULES REQUIRING AN ASSESSEE TO M AINTAIN A STOCK REGISTER AS PART OF ITS ACCOUNTS. PARTICULARLY IN C ASES WHERE IT WAS NOT FEASIBLE TO MAINTAIN THE STOCK REGISTER GIVEN T HE NATURE OF BUSINESS. IN THE PRESENT CASE, THE AO HAS NOT BROUG HT ON RECORD ANY MATERIAL DISCREPANCY IN THE BOOKS OF ACCOUNTS B Y WAY OF SUPPRESSION OF SALES, INFLATION OF EXPENDITURE OR I NCORRECT VALUATION OF THE CLOSING STOCK. IT IS ALSO OBSERVED THAT THE APPELLANT HAD MAINTAINED DETAILS OF CLOSING STOCK AS ON 31-03-200 9 ON THE BASIS OF THE VALUATION DONE BY A TECHNICAL CONSULTANT WHO WAS ALSO REGISTERED VALUER BY THE INCOME TAX DEPARTMENT. THI S VALUATION WAS RELIED ON BY THE CHARTERED ACCOUNTANT WHILE AUD ITING THE ACCOUNTS AND DETERMINING THE VALUE OF THE CLOSING S TOCK U/S 44AB. GIVEN THESE FACTS, IT IS HELD THAT THE BOOKS OF ACC OUNTS CANNOT BE REJECTED LIGHT HEARTEDLY WITHOUT POINTING OUT ANY S PECIFIC DEFECTS. RELIANCE IS PLACED ON THE FOLLOWING CASES. (A) HON'BLE JODHPUR TRIBUNAL IN THE CASE OF HARIDA S PARIKH VS. ITO, 113 TTJ 274. (B) HON'BLE TRIBUNAL, HYDERABAD BENCH A IN THE CAS E OF VISHAL INFRASTRUCTURE LTD. VS. ACIT, 104ITD 537. ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 7 IN THE AFOREMENTIONED CASE, THE HON'BLE BENCH HELD THAT NON-MAINTENANCE OF RECORD DOES NOT GIVE A LICENSE T O THE AO TO REJECT THE BOOKS OF ACCOUNT. THERE WAS NO JUSTIFICA TION IN INVOKING THE PROVISIONS OF SECTION 145(3) OF THE I.T. ACT IF THERE WAS NO CHALLENGE TO THE TRANSACTIONS REPRESENTED IN THE BO OKS OF ACCOUNTS THEN IT WAS NOT OPEN TO THE DEPARTMENT TO CONTEND T HAT WHAT WAS SHOWN BY THE ENTRIES WAS NOT THE REAL STATE OF AFFA IRS. ABSENCE OF VOUCHERS OR THE SUPPORTING EVIDENCE IN R ESPECT OF A PARTICULAR ITEM OF EXPENDITURE COULD NOT BY ITSEL F EMPOWER AN ASSESSING OFFICER TO INVOKE PROVISIONS OF SECTION 1 45(3) FOR REJECTING THE BOOKS OF ACCOUNT. THE HON'BLE AMRTIS AR TRIBUNAL HELD IN THE CASE OF ASHOK KUMAR & CO. VS. ITO (2 S OT 518) THAT REJECTION OF BOOKS COULD NOT BE RESORTED TO SIMPLY ON THE BASIS OF SOME VOUCHERS AND FAILURE TO PRODUCE THE SAME BY TH E ASSESSEE. IN OTHER WORDS, ANY SITUATION SHOULD ONLY WARRANT A SP ECIFIC ADDITION BY THE ASSESSING OFFICER IF HE CAME TO A CONCLUSION THAT SUCH EXPENDITURE HAD NOT BEEN INCURRED OR WAS NOT VERIFI ABLE. INSTEAD OF ADOPTING THIS ACCEPTED APPROACH, IF AN ASSESSING OF FICER RESORTED TO A CONVENIENT APPROACH OF REJECTING THE BOOKS OF ACCOUNT IN TOTALITY THEN SUCH ACTION WOULD BE ILLEGAL AND AGAI NST THE TENETS OF LAW. THUS TO REJECT THE ENTIRE BOOKS OF ACCOUNT ON THE B ASIS OF GENERAL COMMENTS CANNOT BE COUNTENANCED. NON-MAINTE NANCE OF STOCK RECORDS OR QUANTITATIVE DETAILS COULD NOT BY ITSELF FORM A REASON FOR THE REJECTION OF BOOKS OF ACCOUNTS BUT C OULD ONLY LEAD TO A REASON TO SUSPECT THAT THE ACCOUNTS MAY NOT BE CO RRECT OR COMPLETE, LEADING TO FURTHER ENQUIRY. THE AO HAD FA ILED TO CONDUCT ANY FURTHER ENQUIRY SO AS TO ENABLE HER TO REJECT T HE BOOKS OF ACCOUNTS. THEREFORE, THE REJECTION OF THE BOOKS OF ACCOUNTS OF APPELLANT DOES NOT APPEAR TO BE JUSTIFIABLE AND THE GP ADDITION MADE IS ALSO NOT SUSTAINABLE IN VIEW OF THE FACT TH AT THE APPELLANT HA SHOWN A GROSS PROFIT RATE AND NET PROFIT RATE ON INCREASED TURNOVER. THEREFORE, THE G.P. ADDITION OF RS. 14,3, 722/- IS DELETED. 3.4 THE LD. DR SUPPORTED THE ORDER OF THE AO. ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 8 3.5 THE LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A) AND RELIED ON FOLLOWING CASE LAWS THROUGH HIS WRITTEN S UBMISSION. (I) PANDIT BROS VS. CIT (1954), 26 ITR 159 (PUNJAB) (II) S. VEERIAH REDDIAR VS. CIT (196), 38 ITR 152 (KER.) (III) M. DURAI RAJ VS. CIT (1972), 83 ITR 484 (KER.) (IV) CIT VS. GOTAN LIME KHANIJ UDYOG, 256 ITR 243 (RAJ.) (V) VISHAL INFRASTRUCTURE LTD. VS. CIT (2007) 11 SO T 386/104 ITD 537 (HYD.) (VI) NARSING DAS RAM KISAN VS. ACIT, 272 ITR 467 (VII) HARIDAS PARIKH VS. ITO (2008) 113 TTJ 274 (JO DH.) (IX) ITO VS. BOTHRA INTERNATIONAL (2008)117 TTJ 6 72(JD.) 3.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT EMERGES FROM THE RECORD THA T THE AO FAILED TO CONDUCT ANY FURTHER ENQUIRY AS TO REJECTION OF BOOK S OF ACCOUNT OF THE ASSESSEE. THE REJECTION OF BOOKS OF ACCOUNT BY THE AO DOES NOT APPEAR TO BE JUSTIFIABLE AND THE G.P. ADDITION MADE IS ALSO N OT SUSTAINABLE IN VIEW OF THE FACT THAT THE ASSESSEE HAS SHOWN BETTER GROSS P ROFIT AND NET PROFIT RATE ON INCREASED TURNOVER. THUS WE FIND NO REASON TO IN TERFERE IN THE ORDER OF THE LD. CIT(A) WHICH IS SUSTAINED. THEREFORE, THE G ROUND NO. 1 OF THE REVENUE IS DISMISSED. ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 9 4.1 THE GROUND NO. 2 OF THE REVENUE RELATES TO ALL OWING CREDIT OF TDS DEDUCTED ON THE RENAL RECEIPTS WHICH DOES NOT B ELONG TO THE ASSESSEE COMPANY. 4.2 THE FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT THE ASSESSEE COMPANY HAD TRANSFERRED RENT AMOUNT OF RS. 28,51,96 2/- TO M/S. A.G. & COMPANY DUE TO SALE OF PROPERTY TO IT AND THE RENT WAS RECEIVED BY THE ASSESSEE COMPANY TILL DEC. 2008. THE AO OBSERVED TH AT THE RENT RECEIVED ON THAT PROPERTY FROM 01-01-2009 WAS TO BE THE INCO ME OF M/S. A.G. & COMPANY. THE AO FURTHER OBSERVED THAT ASSESSEE COM PANY HAD TRANSFERRED THE RENT SO RECEIVED ON BEHALF OF M/S. A.G. & COMPANY TO IT AFTER CLAIMING TDS DEDUCTED ON THESE RECEIPTS. SINC E THE AMOUNT SO TRANSFERRED TO M/S. A.G. & COMPANY WAS NOT ASSESSEE 'S INCOME, THE TDS MADE ON THE SAME COULD NOT BE CLAIMED BY THE ASSESS EE. THEREFORE, THE TDS OF RS. 6,89,845/- CLAIMED BY THE ASSESSEE COMPA NY WAS DISALLOWED BY THE AO. 4.3 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO ALLOWED THE CLAIM OF TDS AMOUNTING TO RS . 6,89,845/- BY OBSERVING AS UNDER:- 5.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND THAT THE SUBMISSIONS OF THE A.R. ALONGWITH THE ORDER OF THE HON'BLE ITAT MUMBAI BENCH IN THE CASE OF ARVIND MURJANI BRA NDS (P) LTD. VS. ITO. I CONCUR WITH THE SUBMISSIONS OF THE A.R. THE FACTS ARE THAT ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 10 THE PROPERTY HAD BEEN TRANSFERRED TO A.G. & COMPANY AND THE RENT RECEIVED DURING THE TRANSIT PERIOD WAS TRANSFERRED TO M/S. A.G. & CO. AND THE LATTER PAID TAXES ON THE SAME. GIVEN TH E ABOVE FACTS, IT IS HELD THAT THE FINDINGS OF THE HON'BLE ITAT BENC H IN THE CASE OF ARVIND VS. ITO (SUPRA) IS TOTALLY LOGICAL TO THE FA CTS OF THE CASE OF THE APPELLANT. MOREOVER, EVEN LOGICALLY ONCE THE AC TUAL RECIPIENT OF THE INCOME I.E. A.G. & CO. HAS PAID TAXES ON THE RE NTAL INCOME, IT CANNOT BE TAXED TWICE BY DISALLOWING THE TDS IN THE HANDS OF THE APPELLANT. THEREFORE, THE CLAIM OF TDS OF RS. 6,89, 845/- IS TO BE ALLOWED TO THE APPELLANT. 4.3 THE LD. DR SUPPORTED THE ORDER OF THE AO. 4.4 THE LD. AR OF THE SUPPORTED THE ORDER OF THE LD . CIT(A) AND PRAYED THROUGH HIS WRITTEN SUBMISSION THAT WE RECEIVED REN TAL INCOME ON BEHALF OF M/S. A.G. & COMPANY DURING TRANSITIONAL FACE AND PASSED TO M/S. A.G. & COMPANY AND M/S. A.G. & COMPANY HAS SHOWN THE SAM E INCOME AND PAID TAXES THEREON. THEREFORE, THE CREDIT OF TDS DE DUCTED BY THE PAYEE SHOULD BE ALLOWED AND THE ACTION OF THE AO DESERVES TO BE QUASHED. 4.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND FROM THE RECORDS THAT THE PROPERTY HAD BEEN TRANSFERRED TO M/S. A.G. & COMPANY AND THE RENT REC EIVED DURING THE TRANSIT PERIOD WAS TRANSFERRED TO M/S. A.G. & COMP ANY AND THE TAXES WERE PAID. THE DECISION OF ITAT MUMBAI BENCH AS RE LIED ON BY THE LD. AR OF THE ASSESSEE IN HIS WRITTEN SUBMISSION IN THE CASE ARVIND MURJANI BRANDS (P) LTD. VS. ITO (ITA NO. 6708/MUM/2010) IS FULLY APPLICABLE IN ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 11 THE CASE OF THE ASSESSEE. ONCE THE ACTUAL RECIPIENT OF THE INCOME I.E. M/S. A.G. & COMPANY HAS PAID TAXES ON THE RENTAL INCOME THEN IT CANNOT BE TAXED TWICE BY DISALLOWING THE TDS IN THE HANDS OF THE ASSESSEE COMPANY. THUS WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) WHICH IS SUSTAINED. THEREFORE, THE GROUND NO . 2 OF THE REVENUE IS DISMISSED. 5.1 NOW WE TAKE UP THE C.O. OF THE ASSESSEE WHEREIN THE SOLITARY ISSUE OF THE ASSESSEE IS AS UNDER:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F THE LD AO IN DISALLOWING OF RS. 2,33,735/- U/S 40(A)(IA) O F THE I.T. ACT, 1961. 5.2 BRIEFLY, IN THIS CASE THE AO OBSERVED THAT THE ADVERTISEMENT EXPENSES OF RS. 14,86,679/- WAS DEBITED BY THE ASSE SSEE IN PROFIT AND LOSS ACCOUNT AND TDS WAS DEDUCTED BY THE ASSESSEE @ 1. 03% EVEN ON THE PAYMENTS MADE TO PARTIES OTHER THAN INDIVIDUAL AND HUF. THE AO OBSERVED THAT APPLICABLE RATE OF TDS ON PAYMENT TO PARTIES NOT BEING INDIVIDUAL AND HUF ON ACCOUNT OF ADVERTISEMENT EXPE NSES FOR THE ASSESSMENT YEAR 2009-10 WAS 1.33%. ACCORDING TO THE AO, IT WAS A SHORT DEDUCTION OF TDS BY THE ASSESSEE ON THESE PAYMENTS. THE TOTAL SHORT DEDUCTION OF TDS WAS AT RS. 3,109-/- AND THE TOTAL AMOUNT ON WHICH TDS ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 12 WAS NOT DEDUCTED (PROPORTIONATELY) IS RS. 2,33,735/ - WHICH WAS DISALLOWED U/S 40(A)(IA) OF THE ACT BY THE AO AND T HE SAME WAS ADDED BACK TO THE INCOME OF THE ASSESSEE. 5.3 THE ASSESSEE CHALLENGED THIS ISSUE BEFORE THE L D. CIT(A) WHO DISALLOWED THIS GROUND OF THE ASSESSEE BY OBSERVING AS UNDER:- 6.2 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND SUBMISSION OF THE A.R. I DO NOT CONCUR WITH THE SUBMISSIONS OF THE A.R. THE A.R. OF THE APPELLANT HAS NOT REBUTTED THE FINDING OF FACT BY THE AO THAT TDS WAS NOT DEDUCTED AT PRESCR IBED RATES AND ON PAYMENTS WHICH WERE SUBJECT TO SUCH DEDUCTION. H IS ONLY CONTENTION WAS THAT SINCE THE PAYMENTS HAD BEEN MAD E THE CASE OF THE ASSESSEE WAS COVERED BY THE FINDING OF SPECIAL BENCH IN THE CASE OF MEILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (2012) 70 DTR 81 (SPECIAL BENCH DECISION VISHAKHAPATNAM). IT IS PERTINENT TO NOTE THAT THE HON'BLE ANDHRA PRADESH HIGH COURT HAS GRANTED INTERIM SUSPENSION OF THIS ITAT ORDER VIDE ITS ORDE R NO. ITTA NO. 384 OF 2012. THEREFORE, THE DECISION OF THE AO TO D ISALLOW THE AMOUNT OF RS. 2,33,735/- AND 3,109/- U/S 40(A)(IA) IS CONFIRMED. 5.4 THE ASSESSEE IS NOW BEFORE US. THE LD. AR OF TH E ASSESSEE SUBMITTED THAT THE ASSESSEE MADE PAYMENT ON ACCOUNT OF ADVERTISEMENT EXPENSE INCURRING DURING THE YEAR WHICH WERE PAID D URING THE YEAR ITSELF. THEREFORE, IT IS NOT PAYABLE AT THE END OF THE YEAR . THE LD. AR OF THE ASSESSEE AGAIN REITERATED THE ARGUMENTS MADE BEFORE THE LD. CIT(A) AND ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 13 RELIED ON FINDING OF SPECIAL BENCH IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (2012) 70 DTR 81 (VISHAKHA PATNAM) AND ARGUED THAT THERE IS NO AMOUNT PAYABLE ON ACCOUNT O F ADVERTISEMENT. THEREFORE, SECTION 40(A)(IA) IS NOT APPLICABLE. HE FURTHER RELIED ON FOLLOWING DECISIONS. (I) ITO VS. MGB TRANSPORT (201), 23 ITR 391 (KOL, TRIBUNAL) (II) ITO VS. VINOD DATTA, 22 ITR 243 (MUM) (III) GADTRIUM ENGINEERING SOLUTIONS (P) LTD. VS. ITO 150 TTJ 124 (DEL.) THE LD. AR OF THE ASSESSEE PRAYED FOR DELETION OF T HE ADDITION AS SUSTAINED BY THE LD. CIT(A). 5.5 THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A ). 5.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS OBSERVED THAT JUDGEMENT IN THE CASE OF M/S. MERILYN SHIPPING & TRANSPORT VS. ACIT (SUPRA) HAS BEEN UPHELD BY HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS . VECTOR SHIPPING SERVICES (P) LTD. 357 ITR 642. REVENUES SLP AGAIN ST THE SAME HAS ALSO BEEN DISMISSED BY THE HON'BLE SUPREME COURT. THUS, THE ISSUE STANDS SETTLED IN FAVOUR OF THE ASSESSEE. CONSEQUENTLY, TH IS GROUND OF THE ASSESSEE IS ALLOWED. ITA NO. 304/JP/2013 DCIT CIRCLE- 2, JAIPUR VS. M/S. SAND DUNE CONSTRUCT ION (P) LTD. . 14 6.0 IN THE RESULT, THE APPEAL OF THE REVENUE OF IS DISMISSED AND THE C.O. OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11/08/201 5. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 11 /08/ 2015 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT CIRCLE- 2, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT-M/S. SAND DUNE CONSTRUCTION (P) LTD ., JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.304/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR