Appeal Details
Counselvise Citation
38724514 RSA 2012
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
28-02-2014
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Next Hearing Date
18-09-2013
Assessment Year
2008-2009
Appeal Filed On
27-02-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHE B, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.387/PN/2012 (ASSESSMENT YEAR : 2008-09) M/S AKRUTI PROJECTS, 301, SUPREME IKON, AUNDH, PUNE 411 007. PAN : AALFA2587P . APPELLANT VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-4, PUNE. . RESPONDENT ASSESSEE BY : MR. NIKHIL PATHAK & MR. SUHAS BORA DEPARTMENT BY : MR. A. K. MODI DATE OF HEARING : 10-01-2014 DATE OF PRONOUNCEMENT : 28-02-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED A GAINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE D ATED 30.12.2011 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 27.12.2010 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2008-09. 2. IN THIS APPEAL, THE SOLITARY DISPUTE IS WITH REG ARD TO AN ADDITION OF RS.25,02,710/- MADE BY THE ASSESSING OFFICER WHILE DETERMINING THE TOTAL INCOME. 3. BEFORE PROCEEDING TO ADJUDICATE THE DISPUTE, IT WOULD BE APPROPRIATE TO REFER TO THE FOLLOWING BRIEF BACKGROUND. THE APPEL LANT BEFORE US IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS O F CIVIL CONTRACTING AND FOR THE ASSESSMENT YEAR 2008-09, IT FILED A RETURN OF I NCOME DECLARING TOTAL INCOME ITA NO.387/PN/2012 A.Y. 2008-09 OF RS.1,51,07,960/-. THE SAID RETURN WAS SUBJECT T O SCRUTINY ASSESSMENT IN THE COURSE OF WHICH THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD DEBITED A SUM OF RS.25,02,710/- IN THE PROFIT & LOSS ACCOUNT WHICH WAS A MERE PROVISION. THE SAID PROVISION WAS DEBITED UNDER TH E HEAD DEFECT LIABILITY. THE ASSESSING OFFICER SHOW-CAUSED THE ASSESSEE THAT THE AFORESAID CLAIM BEING A MERE PROVISION, WHY THE SAME SHOULD NOT BE DISALLOWED. THE ASSESSEE EXPLAINED THAT IT WAS IN THE CONTRACTING B USINESS AND IN TERMS OF THE CONTRACTS AWARDED, IT WAS LIABLE TO PROVIDE PERFORM ANCE GUARANTEE FOR THE WORKS EXECUTED FOR PERIODS RANGING FROM 12 TO 24 MO NTHS FROM THE HANDING- OVER OF THE PROJECT. IT ALSO EXPLAINED THAT ANY DE FECT ARISING IN THE SAID PERIOD WAS LIABLE TO BE MADE GOOD BY THE ASSESSEE AS PER T HE CONTRACTS OR THE TENDERS AWARDED. ASSESSEE EXPLAINED THAT 1% OF THE CONTRACT VALUE WAS ESTIMATED AS A PROBABLE LIABILITY ON THIS SCORE AND ACCORDINGLY, THE SAID PROVISION WAS SOUGHT TO BE JUSTIFIED AS A LIABILITY WHICH HAD ACCRUED WITH CERTAINTY. THE ASSESSING OFFICER DISALLOWED THE CL AIM BY OBSERVING THAT IT WAS A MERE CONTINGENT LIABILITY AND ACCORDINGLY ADDED B ACK THE SUM OF RS.25,02,710/- TO THE RETURNED INCOME. THE CIT(A) HAS ALSO SUSTAINED THE SAID ADDITION, AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. NO ARGUMENTS HAVE BEEN ADVANCED ON THIS SCORE AND ACCO RDINGLY THE STAND OF THE REVENUE IS UPHELD. 4. HOWEVER, THE ADDITION OF RS.25,02,710/- IS SOUGH T TO BE ASSAILED ON A DIFFERENT FACET, WHICH IS DISCUSSED HEREINAFTER. B EFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS RAISED THE FOLLOWING ADDITIONA L GROUND OF APPEAL WHICH WERE HITHERTO NOT RAISED IN THE ORIGINAL MEMO OF AP PEAL :- 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE A.O. S ACTION OF TAXING AN AMOUNT OF RS.25,02,710/- WITHOUT APPRECIA TING THAT THE SAID AMOUNT DID NOT CONSTITUTE INCOME IN THIS YEAR. 2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THA T THE AMOUNT OF RS.25,02,710/- WITHHELD / DEDUCTED BY THE APPELLANT COMPANY'S CUSTOMERS ACCRUED AS INCOME OF THE APPELLANT COMPANY ONLY ON EXPIRY OF DEFECT LIABILITY PERIOD PRESCRIBED IN THE CONTRACTS AND HENCE, THE A MOUNT OF RS. 25,02,710/- TOWARDS RETENTION MONEY SHOULD NOT HAVE BEEN TAXED. ITA NO.387/PN/2012 A.Y. 2008-09 THE ASSESSEE SUBMITS THAT THE ADDITIONAL GROUND RAI SED IS A PURELY LEGAL ISSUE AND AS ALL THE FACTS ARE ON RECORD, THE ASSESSEE REQUESTS FOR ADMISSION OF THE ABOVE GROUND. 5. THE LEARNED COUNSEL EXPLAINED THAT THE AFORESAID ADDITIONAL GROUND SEEKS TO SHOW THAT THE AMOUNT OF RS.25,02,710/- IS IN-FACT NOT INCLUDIBLE AS AN INCOME BECAUSE THE SAME HAS BEEN RETAINED BY THE CU STOMERS AND FOLLOWING THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN T HE CASE OF CIT VS. ASSOCIATED CABLES (P) LTD., (2006) 286 ITR 596 (BOM ) SUCH INCOME DOES NOT ACCRUE TO THE ASSESSEE IN THE YEAR IN WHICH SUCH AM OUNT IS RETAINED BY THE CUSTOMERS. THE LEARNED COUNSEL EXPLAINED THAT THOU GH THE SAID PLEA WAS NOT RAISED BEFORE THE LOWER AUTHORITIES HITHERTO BUT IT BEING A PURE POINT OF LAW, WHICH IS SETTLED BY THE JUDGEMENT OF THE HONBLE JU RISDICTION HIGH COURT; AND, ALL THE NECESSARY FACTS REQUIRED TO ADJUDICATE THE CONTROVERSY ARE ON RECORD, THEREFORE, IT IS SUBMITTED THAT THE SAID ADDITIONAL GROUND IS LIABLE TO BE ADMITTED IN VIEW OF THE PARITY OF REASONING LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT , 229 ITR 383 (SC). 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE CONTENDED THAT ISSUE NOW BEING RAIS ED BY THE ASSESSEE HAS A COMPLETELY DIFFERENT CONNOTATION THAN THE CLAIM WHI CH WAS BEFORE THE ASSESSING OFFICER ON THE BASIS OF RETURN OF INCOME FILED BY THE ASSESSEE. IT WAS THEREFORE CONTENDED THAT THE SAID ADDITIONAL GR OUND BE NOT ADMITTED FOR ADJUDICATION AT THIS STAGE. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ON THIS ASPECT. IT IS A TRITE LAW THAT THE POWER OF THE TRIBUNAL U/S 254 OF THE ACT IS NOT MERELY TO DECIDE THE ISSUES WHICH ARISE FROM THE ORDER OF THE CIT(A) BUT IT IS COMPETENT TO ALLOW OR NOT TO ALLOW A NEW GROUND TO BE RAISED, WHICH WAS HITHERTO NOT RAISED BEFORE THE LOWER AUTHORITIES. AS PER THE HO NBLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. (SUPRA) WHI LE THE TRIBUNAL HAS JURISDICTION TO ENTERTAIN A FRESH GROUND OF APPEAL WHICH WAS HITHERTO NOT RAISED ITA NO.387/PN/2012 A.Y. 2008-09 BEFORE THE LOWER AUTHORITIES BUT THE SAME SHOULD BE A POINT OF LAW WHICH ARISES FROM THE FACTS AS FOUND BY THE INCOME-TAX AUTHORITI ES AND THE SAME SHOULD HAVE A BEARING ON THE TAX LIABILITY OF THE ASSESSEE . IN THIS CONTEXT, WE FIND THAT THE PRESENT ADDITIONAL GROUND SOUGHT TO BE RAISED B Y THE ASSESSEE INVOLVES A POINT OF LAW. WE ARE ALSO CONSCIOUS THAT THE FACTS NECESSARY TO ADJUDICATE THE AFORESAID POINT OF LAW ARE AVAILABLE ON RECORD. WE SAY SO FOR THE REASON THAT IN THE WRITTEN SUBMISSIONS FILED BEFORE THE ASSESSI NG OFFICER, ASSESSEE HAD EXPLAINED THE COMPLETE FACT-POSITION, INCLUDING THE FACT THAT AS PER THE TERMS OF THE CONTRACTS EXECUTED, A CUSTOMER WERE ENTITLED TO RETAIN A PORTION OF PROCEEDS FOR A LIMITED PERIOD AFTER COMPLETION OF T HE CONTRACT ON ACCOUNT OF SATISFACTORY PERFORMANCE. SUCH WRITTEN SUBMISSIONS HAVE BEEN REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER ITSEL F. MOREOVER, IN PARA 5.1 OF THE ASSESSMENT ORDER THE ASSESSING OFFICER HAS NOTI CED THAT PARTIES RETAIN CERTAIN AMOUNT AS EITHER SECURITY DEPOSIT OR RETENT ION MONEY FROM THE AMOUNT PAYABLE TO THE ASSESSEE . THEREFORE, THOUGH THE ASSESSEE HAD NOT RAISED TH E ISSUE OF EXCLUDING SUCH RETENTION MONEY FROM INCOME YET THE NATURE OF THE CONTRACTS OF THE ASSESSEE CLEARLY REFLECTED A POSIT ION THAT THE CUSTOMERS WERE ENTITLED TO RETAIN CERTAIN SUMS AS RETENTION MONEY; AND, SUCH FACTUAL MATRIX HAS BEEN NOTED BY THE ASSESSING OFFICER. IN SUM AN D SUBSTANCE, WHAT WE ARE ONLY TRYING TO POINT OUT IS THAT THE ADDITIONAL GRO UND NOW RAISED BY THE ASSESSEE HAS A BEARING ON ITS TAX LIABILITY AND IT INVOLVES A POINT OF LAW FOR WHICH THE NECESSARY FACTS FOUND BY THE AUTHORITIES ARE ON RECORD. THEREFORE, WE ARE INCLINED TO ADMIT THE AFORESAID ADDITIONAL G ROUND OF APPEAL FOR ADJUDICATION. 8. WITH RESPECT TO THE MERITS OF THE CLAIM, LEARNED COUNSEL HAS REFERRED TO THE PAPER BOOK WHEREIN CERTAIN AGREEMENTS/ TENDER D OCUMENTS WITH CUSTOMERS HAVE BEEN PLACED ON RECORD TO SHOW THAT T HE CUSTOMERS HAD RETAINED CERTAIN SUMS AS RETENTION MONEY, AFTER COM PLETION OF THE PROJECT, FOR A SPECIFIED PERIOD IN ORDER TO ENSURE SATISFACTORY PE RFORMANCE. IN SUCH LIKE ITA NO.387/PN/2012 A.Y. 2008-09 SITUATION, AS PER THE HONBLE HIGH COURT IN THE CAS E OF ASSOCIATED CABLES (P) LTD. (SUPRA) THE RETENTION MONEY WITHHELD BY THE CO NTRACTEES PENDING SATISFACTORY COMPLETION OF THE PROJECT WOULD NOT AM OUNT TO AN INCOME IN THE YEAR IN WHICH SUCH AMOUNT IS RETAINED BY THE CUSTOM ERS. IN-PRINCIPLE, IN OUR VIEW, THE CLAIM OF THE ASSESSEE IS IN ACCORDANCE WI TH THE PARITY OF REASONING LAID DOWN BY THE HONBLE HIGH COURT IN THE CASE OF ASSOCIATED CABLES (P) LTD. (SUPRA). SO HOWEVER, SINCE THE AFORESAID IS A NEW CLAIM RAISED BEFORE US WHICH HAS NOT BEEN PUT TO VERIFICATION BY THE LOWER AUTHORITIES, WE THEREFORE DEEM IT FIT AND PROPER TO RESTORE THE MATTER BACK T O THE FILE OF THE ASSESSING OFFICER WHO SHALL VERIFY THE CLAIM OF THE ASSESSEE AND THEREAFTER ALLOW THE SAME IN ACCORDANCE WITH LAW. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEIN G HEARD IN THE MATTER AND ONLY THEREAFTER THE ASSESSING OFFICER SHALL PASS AN ORDER AFRESH AS PER LAW. 9. BEFORE PARTING, WE MAY OBSERVE THAT THE ADDITION AL GROUND IS BEING ADMITTED ONLY WITH RESPECT TO A CLAIM OF RS.25,02,7 10/- AND NO MORE. IN OTHER WORDS, EVEN IF THE AMOUNT EXCLUDIBLE FROM INCOME ON ACCOUNT OF IT BEING IN THE NATURE OF RETENTION MONEY FOLLOWING THE PARITY OF R EASONING THE HONBLE HIGH COURT IN THE CASE OF ASSOCIATED CABLES (P) LTD. (SU PRA) IS IN EXCESS OF RS.25,02,710/-, THE CLAIM OF THE ASSESSEE SHALL BE LIMITED TO RS.25,02,710/- AND IF IT IS BELOW THE SAID AMOUNT, THEN ONLY THE A PPROPRIATE RELIEF SHALL BE ALLOWABLE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TR EATED AS PARTLY ALLOWED, AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (G . S. PANNU) JUDICIAL MEMBER ACCOUNT ANT MEMBER PUNE, DATED : 28 TH FEBRUARY, 2014 SUJEET ITA NO.387/PN/2012 A.Y. 2008-09 COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, PUNE; 4) THE CIT-II, PUNE; 5) THE DR, B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE
