ACIT, Bulandshahr V. M/s. Allied Constructions, Bulandshahr

ITA 3764/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4174 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 25-04-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 05-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS SURJAN MOHANTY
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A NOS. 3763, 3764/DEL/10 ASSTT. YEARS : 1997-98, 1998-99 ACIT, BULANDSHAHR. VS. M/S. ALLIED CONSTRUCTIONS, GULMOHAR ENCLAVE , BULANDSHAHR. (APPELLANT) (RESPONDENT) APPELLANT BY: MRS. SURJAN MOHANTY , SR. DR RESPONDENT BY: NONE ORDER PER RAJPAL YADAV : JM THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANC E OF REVENUE AGAINST THE COMMON ORDER OF LD. CIT(A) DATED 26 TH MAY, 2010 PASSED FOR ASSTT. YEARS 1997-98 AND 1998-99. THESE APPEALS WER E LISTED ON 3 RD JANUARY, 2011, BUT INSPITE OF SERVICE OF NOTICE, NO ONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE. A FRESH NOTICE WAS ISSUE D THROUGH THE OFFICE OF LD. DR. LD. DR HAS PLACED ON RECORD COPY OF THE LETTER WRITTEN BY ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE BULANDSHA HR WHO HAS INTIMATED THAT NOTICE OF HEARING FOR 25 TH APRIL, 2011 HAS BEEN SERVED UPON THE ASSESS. HE ANNEXED THE COPY OF THE NOTICE. SHRI K.K. SHARMA ITA NOS. 3763, 3764/DEL/10 ASSTT. YEARS 1997-98, 1998-99 2 HAD RECEIVED THE NOTICE ON BEHALF OF ALLIED CONSTRU CTION. INSPITE OF SERVICE OF NOTICE, NO ONE HAS COME PRESENT ON BEHAL F OF THE ASSESSEE. WITH THE ASSISTANCE OF LD. DR, WE HAVE GONE THROUGH THE RECORD AND PROCEED TO DECIDE THE APPEALS EX PARTE QUA THE ASSE SSEE. 2. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE A RE VERBATIM SAME IN BOTH THE ASSTT. YEARS EXCEPT VARIATION IN THE Q UANTUM. THEY ARE ARGUMENTATIVE AND DESCRIPTIVE IN NATURE. IN BRIEF, THE SOLITARY GRIEVANCE OF THE REVENUE IN BOTH ASSTT. YEARS IS THAT LD. CIT (A) HAS ERRED IN COMPUTING THE NET LOSS FROM CONTRACT RECEIPTS AT ` 5,14,152/- IN ASSTT. YEAR 1997-98 AND PROFIT AT ` 27,73,713/- (WITHOUT DEPRECIATION IN ASSTT. YEAR 1998-99). ACCORDING TO THE REVENUE, LD. CIT(A) FURTHER ERRED IN ALLOWING DEPRECIATION TO THE ASSESSEE. 3. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A CIVIL CONTRACTOR. IT HAS FILED ITS RETURN OF INCOME FOR BOTH THE ASSTT. YEARS. ASSESSMENTS WERE COMPLETED U/S 143(3) ON 21 ST FEBRUARY, 2000 IN ASSTT. YEAR 1997-98 AND 29 TH MARCH, 2001 IN ASSTT. YEAR 1998-99. THE AO HAS ASS ESSED THE INCOME AT ` 50,15,100/- AGAINST THE RETURN INCOME OF ` 1,41,930/- IN ASSTT. YEAR 1997-98 AND AT ` 95,92,971/- AGAINST THE RETURN INCOME OF ` 46,71,997/- IN ASSTT. YEAR 1998-99. THERE IS NO DI SPUTE THAT BOOKS OF ACCOUNTS OF THE ASSESSEE WERE NOT RELIABLE. ITS BOO K RESULT WAS REJECTED IN BOTH THE ASSTT. YEARS. THE AO HAS COMPUTED THE INCOME OF ASSESSEE ITA NOS. 3763, 3764/DEL/10 ASSTT. YEARS 1997-98, 1998-99 3 BY APPLYING NET PROFIT RATE AT 8%. DISSATISFIED WIT H THE ASSTT. ORDER ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD . CIT(A) AND ULTIMATELY THE DISPUTE TRAVELLED TO THE TRIBUNAL. T HE TRIBUNAL HAS SET ASIDE THE ISSUE TO THE AO BY DESERVING THAT HE WAS NOT JUSTIFIED IN APPLYING 8% RATE BECAUSE NO MATERIAL WAS REFERRED B Y THE AO FOR ADOPTING 8% N.P. THE AO IS SUPPOSED TO CONSIDER THE PART HISTORY GIVING LOSS/PROFIT IN THE CASE OF ASSESSEE AND THEN HE OUG HT TO HAVE COMPUTED THE INCOME OF THE ASSESSEE FOR THESE ASSTT. YEARS. THE RELEVANT OBSERVATION OF THE TRIBUNAL HAS BEEN REPRODUCED BY THE LD. CIT(A) IN PARAGRAPH 9.3 ON PAGE 6 OF THE IMPUGNED ORDER. PAR T OF SUCH OBSERVATION READ AS UNDER :- LOOKING TO THE RATIO OF THESE CASES, IF PAST RESULT S SHOWED LOSS OR NOMINAL NET PROFIT RATE, THEN, THE AO WILL NOT BE J USTIFIED IN APPLYING 8 PER CENT RATE. THE CLAIM OF THE ASSESSEE FOR ALLOWING DEPRE CIATION SEPARATELY WILL ALSO BE EXAMINED BY THE AO IN THE LIGHT OF VARIOUS JUDIC IAL PRONOUNCEMENTS REFERRED TO BY THE LEARNED COUNSEL FOR THE ASSESSEE . HOWEVER, IT IS CLARIFIED THAT IF IN THE PAST ESTIMATION OF INCOME HAD BEEN D ONE BEFORE ALLOWING DEPRECIATION THEN THE AO WILL BE JUSTIFIED IN ALLOW ING DEPRECIATION IN THESE YEARS ALSO AND NOT OTHERWISE, BECAUSE ONLY LIKE THI NGS CAN BE COMPARED. 4. THE AO WHILE GIVING EFFECT TO THE TRIBUNALS ORD ER, AGAIN ADOPTED THE RATE AT 8%. HE ASSIGNED THE REASON THAT ORDER O F THE TRIBUNAL HAS BEEN CHALLENGED BY THE DEPARTMENT IN APPEAL BEFORE THE HONBLE HIGH COURT. THEREFORE, HE AGAIN ADOPTED THE SAME RATE OF PROFIT. 5. ON APPEAL, LD. CIT(A) TOOK INTO CONSIDERATION TH E COMPLETE DETAILS SUBMITTED BY THE ASSESSEE FOR ASSTT. YEAR 1993-94 TO 1996-97. HE HAS ITA NOS. 3763, 3764/DEL/10 ASSTT. YEARS 1997-98, 1998-99 4 ANNEXED SUCH DETAILS IN A TABULAR FORM ON PAGE 9 OF THE IMPUGNED ORDER. AFTER A DETAILED ANALYSES, HE WORKED OUT THAT NET P ROFIT / (LOSS) FOR ASSTT. YEAR 1993-94 TO 1996-97 AT 1.88%. THE LD. CIT(A) H AS APPLIED THIS RATE IN ASSTT. YEAR 1997-98 AND THEREAFTER ALLOWED THE D EPRECIATION TO THE ASSESSEE. THE DETAILS WHICH HE TOOK INTO CONSIDERAT ION WERE WITHOUT GRANT OF DEPRECIATION. CALCULATION OF LD. FIRST APP ELLATE AUTHORITY FOR THE PURPOSE OF BOTH THE ASTT. YEARS AVAILABLE AT PAGE 1 1 OF THE IMPUGNED ORDER READ AS UNDER :- THUS, AVERAGE NET LOSS PERCENTAGE BEFORE DEPRECIATI ON AND WITHOUT CONSIDERING OTHER RECEIPTS FOR THE FOUR PRECEDING ASSESSMENT YEARS, I.E. FROM AY 1993-94 TO AY 1996-97 COMES TO 1.88%. ACCORDING LY THE NET LOSS FROM CONTRACTOR BUSINESS FOR THE A.Y. 1997-98 OF THE APP ELLANT WITHOUT DEPRECIATION IS WORKED OUT AT RS. 5,14,152/- ON THE DECLARED GRO SS CONTRACT RECEIPTS OF RS. 2,73,48,503/- FOR THAT YEAR. THE AO IS DIRECTED TO FURTHER ALLOW DEPRECIATION AS PER LAW UNDER RULE 5 FOR THE YEAR AND ADD THE OTHE R RECEIPTS OF RS. 48,05,609/- TO WORK OUT THE ASSESSABLE INCOME OF TH E APPELLANT FOR THE YEAR. II. A.Y. 1998-99 THE NET PROFIT/LOSS FROM THE CONTRACT BUSINESS DEC LARED BY THE APPELLANT FOR THE A.Y. 1998-99 IS GIVEN AS UNDER. PARTICULARS GROSS CONTRACT RECEIPTS 6,55,29,260 GROSS PROFIT 1,31,38,429 EXPS. OTHER THAN DEPRECIATION 1,03,65,116 NET PROFIT BEFORE DEPRECIATION 27,73,313 NET PROFIT/(LOSS) RATE % (+) 4,23% SINCE THE ASSESSED NET PROFIT/LOSS OF THE APPELLANT FOR THE 5 PRECEDING YEARS (I.E. FROM AY 1993-94 TO 1997-98) FROM THE CONTRACT BUSIN ESS WITHOUT CONSIDERING DEPRECIATION AND OTHER RECEIPTS IS NET LOSS, WHEREA S THE COMPARABLE FIGURE HAS BEEN DECLARED IN POSITIVE AS ABOVE BY THE APPELLANT ITSE LF, NO INTERFERENCE IN THE SAME IS ITA NOS. 3763, 3764/DEL/10 ASSTT. YEARS 1997-98, 1998-99 5 CALLED FOR. ACCORDINGLY, THE AO IS DIRECTED TO RED UCE DEPRECIATION AS PER LAW UNDER RULE 5 FOR THE YEAR FROM THE ABOVE NET PROFIT OF RS . 27,73,313/- AND ADD THE OTHER RECEIPTS OF RS. 44,69,263/- THERETO TO WORK OUT TH E ASSESSABLE INCOME OF THE APPELLANT FOR THE YEAR. 6. ON DUE CONSIDERATION OF THE WELL REASONED ORDER OF THE LD. CIT(A), WE DO NOT SEE ANY JUSTIFICATION TO INTERFER E IN IT. LD. FIRST APPELLATE AUTHORITY HAS COMPLIED WITH THE DIRECTION OF ITAT PASSED IN THE FIRST ROUND OF LITIGATION. HE TOOK INTO CONSIDERATI ON THE COMPLETE PAST HISTORY OF THE ASSESSES WHICH HAVE BEEN COMPILED I N TABULAR FORM AND PLACED AT PAGE 9 OF THE IMPUGNED ORDER. AFTER TAKIN G INTO CONSIDERATION THESE DETAILS COUPLED WITH THE FINDING OF LD. CIT( A), WE ARE OF THE VIEW THAT THESE APPEALS ARE DEVOID OF ANY MERITS. ACCORD INGLY THEY ARE REJECTED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 5 TH APRIL, 2011. SD/- SD/- [G.E.VEERABHADRAPPA] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER DATED: 25.4.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BEN CHES