Isnar Constructions, Visakhapatnam V. THE DCIT, Visakhapatnam

ITA 386/VIZ/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6665 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 10 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2000-2001
• Appeal Filed On: 09-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Keywords: Depreciation; Rectification of order
• Section: 143(3); 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 3 86 /VIZ/ 201 5 ( /ASSESSMENT YEAR: 20 00 - 01 ) M/S ISNAR CONSTRUCTIONS D.NO.50 - 113 - 3, MIG - 5 NE SEETHAMMADHARA VISAKHAPATNAM [ PAN : A A AF15667D ] DY. COMMISSIONER OF INCOME TAX CIRCLE - 3(1) VISAKHAPATNAM ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N.HARI , AR / RESPONDENT BY : S HRI M.K.SETHI , DR / DATE OF HEARING : 0 7 .0 9 .2017 / DATE OF PRONOUNCEMENT : 13 . 0 9 .2017 / O R D E R PER D.S. SUNDER SINGH , ACCOUNTANT MEMBER : 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 1, VISAKHAPATNAM VIDE ITA NO.686/2014 - 15/DCIT,C - 3(1), VSP/2015 - 16 DATED 28.8.2015 FOR THE ASSESSMENT YEAR 2000 - 01. 2 ITA NO. 386 /VIZ/201 5 M/S ISNAR CONSTRUCTIONS 2. ALL THE GROUNDS OF APPEAL ARE AGAINST THE ORDER OF CIT(A) FOR CONFIRMING THE RECTIFICATION ORDER PASSED U/S 154 OF I.T.ACT BY THE ASSESSING OFFICER. IN THIS CASE, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) BY AN ORDER DATED 29.11.2 002 ESTIMATING THE INCOME @8% OF THE GRO SS BILLS AND ALLOWED THE DEDUCTION FOR R EMUNERATION AND INTEREST PAID TO THE PARTNERS. ACCORDINGLY THE PROFIT WAS ESTIMATED BY THE ASSESSING OFFICER CLEAR OF DEPRECIATION AT RS.93,54,014/ - AND ALLOWED THE REMUNERATION AND INTEREST PAID TO THE PARTNERS. THE ASSESSEE WENT ON APPEAL BEFORE THE L D. CIT (A) AND THE LD. CIT (A) DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE INCOME @12.5% AND ALLOW THE DEPRECIATION, REMUNERATION AND INTEREST PAID TO THE PARTNERS . THE MATTER TRAVELLED TO THE TRIBUNAL AND THE ITAT, VISAKHAPATNAM BENCH PASSED AN ORDER ESTIMATING THE INCOME AT 11% AND DIRECTED THE AO TO ALL OW THE DEPRECIATION, INTEREST AND THE REMUNERATION TO THE PARTNERS. ACCORDINGLY, THE ASSESSING OFFICER PASSED CONSEQUENTIAL ORDER GIVING EFFE CT TO THE TRIBUNAL ORDER. AS PER THE TRIBUNAL ORDER, THE PROFIT WAS ESTIMATED AT RS.1,21,38,812/ - AND FROM THE SAID AMOUNT DEDUCTION WA S ALLOWED WITH RESPECT TO THE REMUNERATION AND INTEREST PAID TO THE PARTNERS AND THE DEPRECIATION 3 ITA NO. 386 /VIZ/201 5 M/S ISNAR CONSTRUCTIONS AMOUNTING TO RS.1,05,9 8,095/ - . THE AO PASSED THE CONSEQUENTIAL ORDER GIVING EFFECT TO THE ITATS ORDER AND REVISED THE TOTAL INCOME TO RS.15,40,717/ - BY AN ORDER DATED 04.12.2009. SUBSEQUENTLY THE AO HAS ISSUED THE NOTICE U/S 154 FOR RECTIF YING THE CONSEQUENTIAL ORDER DATED 04 . 12 . 2009 TO BRING RECEIPTS IN RESPECT OF INTEREST ON BG DEPOSITS, I .T. REFUND AND INTERNAL TRANSFERS TO TAX, FOR WHICH THE ASSESSE OBJECTED FOR PROPOSED RECTIFICATION. IGNORING THE OBJECTIONS RAISED BY THE ASSESS E E, T HE ASSESSING OFFICER PASSED AN ORDER U/S 154 D ATED 28.03.2014 MAKING THE FOLL O W ING ADDITIONS : (A) INTEREST ON BG DEPOSITS RS.7,21,780/ - (B) INTEREST ON IT REFUND RS.1,41,492/ - (C) INTERNAL TRANSFER I.E. H.O TO RS.8,18,057/ - PARVATHIPURAM ROAD WORK (NO INTEREST RECEIVED FROM OUTSIDE PA RTY) (D) OTHER INTEREST RS.2,15,056/ - THE AO MADE THE ADDITION OF RS.18,96,3 85/ - AS ABOVE AND REVISED THE TOTAL INCOME TO RS.34,37,102/ - . THE RECTIFICATION ORDER WAS PASSED STATING THAT THE MISTAKE WAS CREPT WHILE GIVING EFFECT TO THE ORDER OF THE HONBLE ITAT, VISAKHAPATNAM IN ITA NO.488/V/2004. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT ON APPEAL BEFORE 4 ITA NO. 386 /VIZ/201 5 M/S ISNAR CONSTRUCTIONS LD.CIT (A) . IN APPEAL T HE LD. CIT (A) ALLOWED PARTIAL RELIEF . AGGRIEVED BY THE ORDER OF THE LD.CIT (A) , THE ASSESSEE IS IN A PPEAL BEFORE US. 3. APPEARING FOR THE ASSESSEE, THE LD.AR ARGUED THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT ESTIMATING THE INCOME @ 8% ON GROSS RECEIPTS, INCLUSIVE OF INCOME FROM OTHER SOURCES I.E. INTEREST ON BANK DEPOSITS OF RS.7,21 ,180/ - , INTEREST ON IT REFUND OF RS.1,41,492/ - , INTERNAL TRANSFER I.E. H. O TO PARVATHIPURAM ROAD WORK OF RS. 8,18,057/ - AND OTHER INTEREST OF RS.2,15,056/ - . THE ASSESSING OFFICER HAS NOT ASSESSED THE ABOVE RECEIPTS AS A SEPARATE SOURCE OF INCOME . THE ORDER OF THE ASSESSING OFFICER WAS CHALLENGED BEFORE THE CIT (A) AND THE LD. CIT (A) ALSO DIRECTED THE ASSESSING OFFICER TO MAKE ESTIMATION OF INCOME @12.5% INCLUSIVE OF THE ABOVE RECEIPTS. MATTER TRAVELLED TO THE HONBLE ITAT AND THE TRIBUNAL PASSED T HE ORDER DIRECTING THE ASSESSING OFFICER TO ESTIMATE THE INCOME @11% AND ALLOWED DEPRECIATION, INTEREST A N D THE REMUNERATION PAID TO THE PARTNERS. FROM THE ORDERS OF THE ASSESSING OFFICER, LD. CIT (A) AND THE HONBLE ITAT, IT IS CLEAR THAT THE INCOME COMPUT ED WAS INCLUDING THE ABOVE RECEIPTS AND THE INCOME FROM OTHER SOURCES WAS NEVER BROUGHT TO TAX SEPARATELY. THE ASSESSING 5 ITA NO. 386 /VIZ/201 5 M/S ISNAR CONSTRUCTIONS OFFICER SOUGHT TO RECTIFY THE ORDER OF THE HONBLE ITAT, VISAKHAP A TNAM STATING THAT WHILE GIVING EFFECT TO THE ORDER OF THE ITAT, THE ASSESSING OFFICER COMMITTED A MISTAKE IN RESPECT OF INTEREST INCOME WHICH WAS NEVER AN ISSUE BEFORE THE TRIBUNAL. FROM PLAIN READING OF THE ORDER OF THE ITAT, IT HAS NOT DIRECTED THE ASSESSING OFFICER TO CONSIDER THE INTEREST INCOME SEPARATELY. THEREFORE, THERE IS NO MISTAKE APPARENT FROM RECORD WHICH NEEDS RECTIFICATION AND THE ASSESSING OFFICER HAS COMMITTED THE BLATANT ERROR BY BRINGING THE INCOME FROM OTHER SOURCES SEPARATELY. LD. AR FURTHER ARGUED THAT THE LD. CIT(A) ALSO COMMITTED AN ERROR BY CONFIRMI NG THE ORDER OF THE ASSESSING OFFICER PARTLY. THEREFORE, LD.AR ARGUED THAT THE ORDERS OF THE LOWER AUTHORITIES NEEDS TO BE SET ASIDE AND THE APPEAL OF THE ASSESSEE TO BE ALLOWED. 4. ON THE OTHER HAND, LD.DR RELIED ON THE ORDERS OF THE LD. CIT (A) . 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED ON RECORD. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT BY ESTIMATING THE INCOME @8% ON G ROSS RECEIPTS BEFORE INTEREST AND REMUNERATION TO PARTNERS. THE ASSESSING OFFICER HAS NOT ASSESSED THE 6 ITA NO. 386 /VIZ/201 5 M/S ISNAR CONSTRUCTIONS INCOME FROM OTHER SOURCES SEPARATELY. IT WAS INCLUDED IN THE ESTIMATION OF INCOME MADE BY THE ASSESSING OFFICER. THE MATTER TRAVELLED TO THE ITAT AND THE TRIBUNAL DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE INCOME @11% BEFORE DEPRECIATION, INTEREST A ND REMUNERA T I ON PAID TO THE PARTNERS. HONBLE ITAT HAS NO T DIRECTED THE ASSESSING OFFICE R TO ASSESS THE INCOME FROM OTHER SOURCES SEPARATELY. FOR READY REFERENCE, WE REPRODUCE THE RELEVANT PARA OF THE ORDER OF THE HONBLE ITAT AS UNDER : WE ARE OF THE O PINION THAT THE INCOME OF THE ASSESSEE BEFORE ALLOWING DEPRECIATION AND INTEREST AND REMUNERATION PAID TO THE PARTNERS ESTIMATED AT 11% OF THE NET CONTRACT RECEIPTS WOULD MEET THE ENDS OF JUSTICE AND WE ORDER ACCORDINGLY. 5.1. FROM THE PLAIN READING OF T HE ORDER OF THE HONBLE ITAT, IT IS EVIDENT THAT THE ITAT HAS NOT DIRECTED THE AO TO ASSESS THE INCOME FROM OTHER SOURCES SEPARATELY. THE ASSESSING OFFICER HAS ALREADY INCLUDED THE INCOME FROM OTHER SOURCES IN THE ESTIMATION MADE BY HIM . IT WAS NEVER BRO UGHT TO TAX SEPARATELY. THE ASSESSING OFFICER SOUGHT TO RECTIFY THE CONSEQUENTIAL ORDER GIVING EFFECT TO THE ITATS ORDER TO BRING THE INCOME FROM OTHER SOURCES SEPARATELY WHICH WAS NOT THE DIRECTION OF THE ITAT. WITHOUT A SPECIFIC DIRECTION S IN THE ORDER , THE ASSESSING OFFICER CANNOT MAKE SUCH RECTIFICATION . THEREFORE, THERE IS NO MISTAKE WHICH 7 ITA NO. 386 /VIZ/201 5 M/S ISNAR CONSTRUCTIONS REQUIRED TO BE RECTIFIED IN THE CONSEQUENTIAL ORDER PASSED BY THE ASSESSING OFFICER. FURTHER, AS DISCUSSED ABOVE, THE ASSESSING OFFICER HAS INCLUDED THE INCOME FROM OTHER SOURCES IN THE ESTIMATION MADE IN THE ASSESSMENT , WHICH WAS CONFIRMED BY THE APPELLATE AUTHORITIES , HENCE TAXING THE INCOME FROM OTHER SOURCES SEPARATELY IS A DEBATABLE ISSUE WHICH CANNOT BE ADJUDICATED UPON U/S 154 OF I.T.ACT. THER EFORE WE SET ASIDE THE ORDER OF THE LOWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 13 TH SEP 20 17 . SD/ - SD/ - ( . ) . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER / VISAKHAPATNAM /DATED : 13 . 0 9 .2017 L. RAMA, SPS 8 ITA NO. 386 /VIZ/201 5 M/S ISNAR CONSTRUCTIONS /COPY OF THE ORDER FORWARDED TO: - 1. / THE APPELLANT M/S ISNAR CONSTRUCTIONS, D.NO.50 - 113 - 3, MIG - 5, NE SEETHAMMADHARA, VISAKHAPATNAM 2 . / THE RESPONDENT DY.COMMISSIONER OF INCOME TAX, CIRCLE - 3(1) VISAKHAPATNAM 3 . THE COMMISSIONER OF INCOME TAX - 1, VISAKHAPATNAM 4. THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, VISAKHAPATNAM 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM