The ITO, Ward-8(1), Ahmedabad V. Synpase System Pvt.Ltd., Ahmedabad

ITA 3874/AHD/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 6486 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 31-03-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 27-11-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: J P SHAH
• Keywords: Capital asset; Bad and doubtful debts; Commercial expediency; Revenue expenditure; TDS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : C BENCH : AHMEDABAD (BEFORE HONBLE SHRI G.D. AGRAWAL, VICE-PRESIDENT(A Z) & HONBLE SHRI T.K. SHARMA, J.M.) I.T.A. NO. 3874/AHD./2008 ASSESSMENT YEAR : 2006-2007 INCOME TAX OFFICER, WARD-8(2), AHMEDABAD VS.- SYN PASE SYSTEM PVT. LTD., AHMEDABAD (PAN : AAFCS 7077 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C.K. MISHRA, SR. D.R. RESPONDENT BY : SHRI J.P. SHAH O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 10.09.2008 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XIV, AHMEDABAD FOR THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED THE FACTS ARE THE ASSESSEE IS A C OMPANY ENGAGED IN THE BUSINESS OF CREATING ANIMATION, AD FILMS & MULTIMEDIA. FOR THE ASSESSMEN T YEAR UNDER APPEAL, IT FILED THE RETURN OF INCOME DECLARING INCOME OF RS. NIL. THE ASSESSING O FFICER FRAMED THE ASSESSMENT UNDER SECTION 143(3) ON 15.07.2008 WHEREIN HE MADE THE FOLLOWING ADDITIONS :- 1. DISALLOWANCE OUT OF WIP RS.20,61,246/- 2. DISALLOWANCE OF BAD DEBTS RS. 83,176/- 3. DISALLOWANCE OF COMMISSION EXPENSES RS. 1,40,000/- 4. APPORTION OF EXPENSES OF ON GOING PROJECTS RS. 5,00,000/- 3. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) DELETED ALL THE AFORESAID FOUR ADDITIONS. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL BEFOR E US ON THE FOLLOWING GROUNDS :- 1. THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV, AH MEDABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE CLAIM OF THE ASSESSEE STATING THAT THE EXPENSES WAS INCURRED FOR PRODUCTION OF AN IMATION FILM AND IS RELATED TO BUSINESS ACTIVITY, HENCE IT IS A REVENUE EXPENSES. 2 ITA NO. 3874/AHD/200 8 2. THE LD. COMMISSIONER OF INCOME TAX(A)-XIV, AH MEDABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE BAD DEBTS CLAIM OF THE ASSESSEE OF RS.83,176/- STATING THAT THE DEBT IS OF REVENUE IN NATURE . THE A,O. WAS OF THE OPINION THAT THE ASSESSEE HAD F AILED TO PROVE THAT THE DEBT HAD BECOME ACTUALLY BAD IN THIS YEAR, 3. THE LD. COMMISSIONER OF INCOME TAX(A)-XIV, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE COMMISSIO N EXPENSES CLAIM OF THE ASSESSEE OF RS. 1,40,000/- STATING THAT COMMISS ION HAS BEEN ALLOWED IN EARLIER ALSO, HOWEVER, THE A,O. WAS OF T HE OPINION THAT THE ASSESSEE HAS TO PROVE THE COMMISSION PAYMENT: HAS D ERIVED CERTAIN BENEFIT. 4. THE ID. COMMISSIONER OF INCOME TAX (A)-XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL OF THE ASSESSEE STATING THAT THE VALUATION HAS BEEN MADE ON THE BASIS OF CE RTIFICATE GIVEN BY THE OFFICER. THE A.O. STATED THAT NO SUCH CERTIFICA TE WAS FILED DURING THE ASSESSMENT PROCEEDINGS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. COMMISSIONER OF INCOME TAX (A)-XIV, AHMEDABAD OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 6. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE ID. COMMISSIONER OF INCOME-TAX(A)-XIV, AHMEDABAD MAY BE SET-ASIDE AND T HAT OF THE ASSESSING OFFICER BE RESTORED. 4. WITH REGARD TO THE GROUND NO. 1 OF THIS APPEAL, AT THE TIME OF HEARING BEFORE US, SHRI C.K. MISHRA, SR. D.R. APPEARING ON BEHALF OF REVENU E POINTED OUT THAT THE ASSESSEE HAS SHOWN CLOSING WIP OF RS.6,40,500/-, THUS THE ASSESSEE DID NOT SHOW WIP OF RS.20,61,246/- OUT OF THE OPENING WIP. BEFORE THE ASSESSING OFFICER, THE ASSE SSEE SUBMITTED THAT A PROJECT WAS TAKEN UP IN EARLIER YEARS AS 2D ANIMATION PROJECT, BUT NO REVEN UE WAS GENERATED TILL DATE AND AS THERE WAS NO CHANCE OF RECOVERY, THE ENTIRE AMOUNT WAS WRITTEN O FF. THE LD. D.R. POINTED OUT THAT BEFORE THE A.O., THE ASSESSEE HAS NOT GIVEN THE NAME AND ADDRE SS OF THE CLIENT FOR WHOM THE AMOUNT WAS ACTUALLY SPENT, SO GENUINENESS OF THE EXPENSES WAS NOT PROVED. APART FROM THIS, AS PER MERCANTILE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE, THE EXPENDITURE IN QUESTION WAS NOT ALLOWABLE BECAUSE DURING THE YEAR THE SAID FILM WAS NOT SOLD AND THE ASSESSEE HAS NOT TAKEN ANY ACTION AGAINST THE CLIENT ON WHOSE ORDER THE SAID FILM WAS ACCEPTED. AS AGAINST THIS, THE LD. D.R. POINTED OUT THAT THERE WAS NO ORDER FOR THE SAID FILM. IT W AS MADE WITH THE HOPE THAT IT WILL BE SOLD SUBSEQUENTLY. THE EXPENDITURE WAS INCURRED AS A MEA SURE OF COMMERCIAL EXPEDIENCY, IT WAS WRITTEN OFF AS THERE WAS NO MARKET VALUE FOR THE SA ID PROJECT. 3 ITA NO. 3874/AHD/200 8 5. ON THE OTHER HAND, SHRI J.P. SHAH APPEARING ON B EHALF OF ASSESSEE RELIED ON THE ORDER OF AUTHORITIES BELOW. HE CONTENDED THAT THE ASSESSEE H AS DONE BUSINESS OF MANUFACTURING OF 2D, 3D ANIMATION FILMS, AD FILMS AND MULTIMEDIA AND ALSO D ONE JOB WORK OF ANIMATION FILMS, AD FILMS AND MULTIMEDIA. THE EXPENDITURE WAS INCURRED IN RES PECT OF A 2D ANIMATION FILM PRODUCED IN HOUSE WITH AN INTENTION TO GENERATE REVENUE, BUT AF TER COMPLETION, THE ASSESSEE FOUND THAT THERE WAS NO MARKET FOR THE SAME, SO THE ASSESSEE WROTE I T OFF. IT WAS NOT A PROJECT FOR ANY CUSTOMER, SO THERE IS NO QUESTION OF ANY RECOVERY FROM ANY PARTY AND THE ASSESSEE COULD NOT HAVE TAKEN ACTION AGAINST ANY PERSON AS THE AMOUNT WAS NOT DUE FROM A NYBODY. THE EXPENDITURE INCURRED BY THE ASSESSEE HAS NEXUS WITH THE BUSINESS ACTIVITY CARRI ED OUT BY THE ASSESSEE. THE ASSESSEE HAD TO WRITE OFF THE SAID VALUE SHOWN AS WORK IN PROCESS A S THERE WAS NO MARKET VALUE FOR THE SAID PROJECT OR THE FILM. HE CONTENDED THAT THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 6. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE REASONING GIVEN BY THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) FOR DELETING THE ADDITION OF RS.20,61,246/- IS CONTAINED IN PARA 2.2, WHICH READS AS UNDER :- 2.2. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS AS ADVANCED BY THE A.R. OF THE APPELLAN T. IT IS NOTICED THAT THE APPELLANT COMPANY HAS DONE BUSINESS OF MANUFACT URING OF 2D, 3D ANIMATION FILMS, AD FILMS AND MULTIMEDIA AND ALSO D ONE JOB WORK OF ANIMATION FILMS, AD FILMS AND MULTIMEDIA. THE ABOVE EXPENDITURE WAS INCURRED IN RESPECT OF A 2D ANIMATION FILM PRODUCED IN HOUSE WITH AN INTENTION TO GENERATE REVENUE, BUT AFTER COMPLETION , THE APPELLANT FOUND THAT THERE WAS NO MARKET FOR THE SAME, SO THE APPEL LANT WROTE IT OFF. IT WAS NOT A PROJECT FOR ANY CUSTOMER, SO THERE IS NO QUESTION OF ANY RECOVERY FROM ANY PARTY AND THE APPELLANT COULD NOT HAVE TAKEN ACTION AGAINST ANY PERSON AS THE AMOUNT WAS NOT DUE FROM A NYBODY. THE EXPENDITURE INCURRED BY THE APPELLANT HAS NEXUS WIT H THE BUSINESS ACTIVITY CARRIED OUT BY THE APPELLANT. THE APPELLAN T HAD TO WRITE OFF THE SAID VALUE SHOWN AS WORK IN PROCESS AS THERE WAS NO MARKET VALUE FOR THE SAID PROJECT OR THE FILM. IT DID NOT RESULT IN ANY ADVANTAGE OF ENDURING NATURE TO AS TO TREAT IT AS CAPITAL EXPEND ITURE NOR ANY CAPITAL ASSET HAS COME INTO EXISTENCE. THE COURTS HAVE HELD THAT A REVENUE EXPENDITURE CAN NOT BE DISALLOWED MERELY BECAUSE IT HAS BEEN PROVED TO BE ABORTIVE. AS THE EXPENDITURE HAS BEEN INCURRED A S A MEASURE OF COMMERCIAL EXPEDIENCY, THE EXPENDITURE IS HELD DEDU CTIBLE. ACCORDINGLY, THE DISALLOWANCE OF RS.20,61,246/- IS DELETED. 4 ITA NO. 3874/AHD/200 8 7. IT IS PERTINENT TO NOTE THAT ASSESSING OFFICER H AS MADE THE DISALLOWANCE MAINLY ON THE GROUND THAT THE ASSESSEE HAS NOT FURNISHED THE NAME AND ADDRESS OF THE CLIENT FOR WHOM THE AMOUNT WAS ACTUALLY SPENT. ACCORDING TO ASSESSEE, T HE AID FILM WAS MADE IN EARLIER YEARS. THERE WAS NO CLIENT. IT WAS MADE ON THE EXPECTATION THAT SOME CLIENT MAY LIKE IT AND IT WILL BE SOLD. IN EARLIER YEARS, IT WAS SHOWN AS WORK-IN-PROCESS. THE WORK-IN-PROCESS WAS NEVER DISPUTED BY THE ASSESSING OFFICER. IN THE PREVIOUS YEAR UNDER APPEA L, IT WAS REALIZED THAT IT HAS NO MARKET, THEREFORE, THE AMOUNT IN QUESTION WAS WRITTEN OFF. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT IT IS A BUSINESS LOSS AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HAS RIGHTLY DELETED THE SAID DISALLOWANCE. 7.1. AFTER PERUSING THE MATERIAL AVAILABLE ON RECOR D, WE FIND THAT IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE H AS NOT SOLD THE PROJECT, WHICH WAS SHOWN IN EARLIER YEAR AS WORK-IN-PROCESS. THERE IS NO EVIDEN CE ON RECORD THAT ANY REVENUE WAS GENERATED FROM THE SAID PROJECT AND THERE WAS ANY CHANCE OF R ECOVERY. IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL, THE ASSESSEE-COMPANY HAS WRITTEN OFF THE SAID AMOUNT BY DEBITING THE PROFIT & LOSS A/C. AS THE ANIMATION FILM, WHICH WAS MADE IN THE YEAR 2001, BECOMES OUT OF DATE AND PASSION. SINCE IT HAS NO MARKET VALUE, IN OUR OPINION, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORREC T IN DELETING THE ADDITION. THE GROUND NO. 1 IS ACCORDINGLY REJECTED. 8. WITH REGARD TO THE GROUND NO. 2 OF THIS APPEAL, WE HAVE HEARD BOTH THE SIDES. THE BAD DEBTS IN QUESTION AMOUNTING TO RS.83,176/- WERE WRI TTEN OFF IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL BECAUSE AFTER LONG COR RESPONDENCE, THE PARTY DID NOT PAY. THIS ISSUE IS NOW STAND COVERED BY THE JUDGMENT OF THE H ON'BLE SUPREME COURT IN THE CASE OF TRF REPORTED IN 230 CTR 15 (SC). BY RESPECTFULLY FOLLOW ING THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF TRF (SUPRA), WE DECLINE TO INT ERFERE WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND REJECT THIS GROUND OF APPEAL OF REVENUE. 9. THE FACTS RELATING TO CONTROVERSY INVOLVED IN GR OUND NO. 3 OF THIS APPEAL ARE THAT THE ASSESSING OFFICER DISALLOWED COMMISSION EXPENSES OF RS.1,40,000/- ON THE GROUND THAT THERE IS 5 ITA NO. 3874/AHD/200 8 NO AGREEMENT WITH THE COMMISSION AGENT AND THE ASSE SSEE FAILED TO FILE ANY DOCUMENTARY EVIDENCE TO SHOW THAT THE AGENT HAS ACTUALLY CARRIE D OUT WORK FOR THE ASSESSEE. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), TH E ASSESSEE HAS MADE THE FOLLOWING SUBMISSIONS :- THAT THE LEARNED ASSESSING OFFICER HAS MADE AN ADD ITION OF RS.1,40,000/- ON COMMISSION EXPENSES PAID BY THE AP PELLANT DURING THE YEAR GIVING THE REASON THAT THERE IS NO PAPER WORK TO PROVE ANY WORK CARRIED OUT BY THE AGENT AND THERE IS NO QUALIFICAT IONS OR EXPERIENCE OF AGENT IN THE ASSESSEES BUSINESS. THAT DURING THE YEAR THE APPELLANT HAS PAID COMMISS ION OF RS.1,40,000/- TO ITS THREE AGENTS WHO ARE WELL EDUCATED AND HAVE THE EXPERIENCE FOR PROVIDING THE CLIENTS IN THE BUSINESS OF THE APPELL ANT COMPANY. THAT ALL THE AGENTS ARE WORKING FOR THE APPELLANT COMPANY SI NCE LAST TWO THREE YEARS AND ARE WELL QUALIFIED AND MASTERS IN THEIR F IELDS. THAT THE APPELLANT COMPANY IS IN THE BUSINESS OF AD FILMS, ANIMATIONS AND MULTIMEDIA AND THIS TYPE OF BUSINESS CANNOT RUN WITHOUT THE AID OF THE COMMISSION AGENTS, AS THE COMMISSION AGENTS BRI NG THE JOB WORK FOR THE APPELLANT COMPANY. ALL THE THREE AGENTS ARE WOR KING FOR THE COMPANY SINCE LAST TWO THREE YEARS AND CONTINUOUSLY BRING BUSINESS FOR THE COMPANY. THAT THE COMMISSION PAID TO THE AGENTS WERE IN ACCO RDANCE WITH THE MARKET TREND AND NOTHING IN EXCESS OF THE PREVAILIN G MARKET RATE OF COMMISSION WAS PAID TO THE AGENT. THAT THE SAID EXPENSES OF COMMISSION HAS BEEN MADE FOR COMMERCIAL CONSIDERATION AND WERE EXPENDED FOR BUSINESS PURPOS ES ONLY. THE PAYMENTS HAVE NEVER BEEN DISPUTED AND SAME HAVE BEE N INCURRED IN THE COURSE OF THE BUSINESS. AT THE SAME TIME, NOWHERE S UCH EXPENSES HAVE BEEN PROVED TO BE EXCESSIVE OR UNREASONABLE. THERE WAS NO REASON FOR DISALLOWING THE SAME MERELY ON THE BASIS OF PRESUMP TIONS AND GUESSING. IN OTHER WORDS, THE EXPENSES ON COMMISSION WERE BON AFIDELY AND EXCLUSIVELY INCURRED FOR THE BUSINESS PURPOSES. THE SE EXPENSES WERE INCURRED FOR COMMERCIAL EXPEDIENCY AND ARE ALLOWABL E IN TERMS OF SECTION 37(3) OF THE INCOME TAX ACT. THAT THE AGENT RECEIVING THE COMMISSION HAD CONFIRM ED THE RECEIPT THEREOF. ALSO, THE AGENT ARE ASSESSED TO TAX REGULA RLY. IN THE PREVIOUS YEARS ALSO, COMMISSION HAS BEEN PAID AND ALLOWED. T HAT ALL THE DETAILS REGARDING COMMISSION AGENTS, LIKE NAME, ADDRESS, PA N NO. AMOUNT OF COMMISSION PAID AND THE NAME OF THE PROJECTS ON WHI CH COMMISSION HAVE BEEN PAID, ARE FILLED BEFORE THE ASSESSING OFF ICER DURING THE COURSE 6 ITA NO. 3874/AHD/200 8 OF HEARING. THAT WE ARE FILING HEREWITH THE COPY OF ACCOUNTS WITH DETAILS OF TDS MADE ON PAYMENT OF COMMISSION FOR YOUR KIND CONSIDERATION AND VERIFICATION. THEREFORE, THE DISALLOWANCE OF COMMISSION PAID IS N OT JUSTIFIED AND MAY BE DELETED. 10. AFTER CONSIDERING THE AFORESAID SUBMISSIONS, IN THE IMPUGNED ORDER, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADD ITION OBSERVING THAT THE ASSESSEE HAS DEDUCTED TDS FROM THE COMMISSION PAYMENT. IT HAS BE EN PAID TO THREE AGENTS WHO HAVE BROUGHT BUSINESS AND ADDED CLIENTS FOR THE ASSESSEE. AGGRIE VED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL BEFOR E US. 11. THE LD. D.R. POINTED OUT THAT SINCE THERE IS NO EVIDENCE FOR RENDERING SERVICES, THE DISALLOWANCE WAS RIGHTLY MADE. 12. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSES SEE CONTENDED THAT COMPLETE NAME AND ADDRESS OF THE PERSON, TO WHOM COMMISSION WAS PAID, THEIR PAN, AMOUNT OF COMMISSION PAID AND THE PROJECTS CARRIED OUT WITH THE ASSISTANCE OF THE SAID COMMISSION AGENT WERE FURNISHED. THE ASSESSING OFFICER WAS AT LIBERTY TO MAKE CROSS VERI FICATION IN ORDER TO ASCERTAIN THE TRUE NATURE OF SERVICES RENDERED TO THOSE PERSONS. ADMITTEDLY, THI S WAS NOT DONE, THEREFORE, THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 13. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AU THORITIES BELOW. IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS FURNISHED THE COMPLETE DETAILS OF COMMISSION PAID, TAX DEDUCTED AT SOURCE. THE SAID DETAILS ARE AS UNDER :- 1. MALCHAND LUNIA 5-A, GOPAL KUNJ SOC., NR. VALLABHVADI, MAHINAGAR, AHD. AAGPL6485L 60,000 3137/- PRASAD KOCH PRASAD GWK 2. SANJAY MATHUR 11, PRANAV APRT., GURUKUL ROAD, AHD. ACAPM2243D 45,000/- 2295/- GSFC, GNFC, GUJ. AGRO, GACL, GMDC (CALANDAR) 3. SHRICHAND PINCHA 103, KESHAV APRT., NR. BEST ABAPP8082G 35,000/- 1830/- LOWE LINTAS 7 ITA NO. 3874/AHD/200 8 HIGH SCHOOL, MANINAGAR, AHD. 14. FROM THE AFORESAID DETAILS, IT CAN BE SEEN THAT COMPLETE ADDRESS OF THE PERSONS, TO WHOM THE COMMISSION IS PAID, THE PROJECT ON WHICH THE WO RK WAS GIVEN. THUS THE ASSESSEE HAS DISCHARGED ITS ONUS. THE ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DISPROVE THE SAME. WE, THEREFORE, INCLINE TO UPHOLD THE ORDE R OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). RESULTANTLY, THIS GROUND OF APPEAL IS REJECTED. 15. IN RESPECT OF GROUND NO. 4 OF THIS APPEAL, WE H AVE HEARD BOTH THE SIDES. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED THAT THE PROJ ECTS OF THE ASSESSEE ARE CARRIED OUT IN 3 TO 4 YEARS DEPENDING ON THE PROJECTS, SO THE EXPENSES AR E REQUIRED TO BE CONSIDERED FOR INCOMPLETE PROJECTS ON THE BASIS OF MAN HOURS UTILIZED AND IN THE ABSENCE OF SPECIFIC DETAILS, EXACT COMPUTATION OF WORK IN WIP CAN NOT BE MADE. SO HE A DDED RS.5,00,000/- AS ATTRIBUTABLE TO WORK IN PROCESS OF SUCH INCOMPLETE PROJECTS. 16. ON APPEAL, IN THE IMPUGNED ORDER THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) DELETED THE SAME FOR THE DETAILED REASONS GIVEN IN PARA 5.2, WHICH READS AS UNDER :- 5.2. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS AS ADVANCED BY THE A.R. OF THE APPELLAN T. I FIND THAT THE APPELLANT HAS CORRECTLY VALUED THE WORK IN PROCESS FOR INCOMPLETE PROJECTS. I FIND FROM THE DETAILS AS SUBMITTED HERE IN ABOVE IN PARA 5.1 THAT IN RESPECT OF THE VARIOUS PROJECTS THE WORK HAS BEE N COMPLETED RANGING FROM 30% TO 65% OF THE PROJECTS. IN RESPECT OF THE FIVE PROJECTS I.E. SL. NO. 1,2,6,7 & 8 AS PER THE SUBMISSIONS OF THE A.R. PROD UCED HEREINABOVE THE APPELLANT HAS COMPLETED THE PROJECTS IN MAY AND JUN E, 2006 AND ON THE BASIS OF BILLS RAISED FOR THESE PROJECTS TOTALING T O RS.8,28,895/- AND APPELLANT HAS VALUED THE WORK IN PROCESS AS ON 31 ST MARCH, 2006 AT RS.3,75,500/- AS PER THE CERTIFICATE OF THE OFFICER IN CHARGE OF THE PROJECTS. FOR THE BALANCE PROJECTS THE APPELLANT HAS VALUED T HE WORK IN PROCESS ON THE BASIS OF ADVANCES RECEIVED FROM THE PARTIES AND AS AGAINST ADVANCE OF RS.2,30,525/- FROM THE THREE PARTIES, THE APPELLANT HAS VALUED THE WORK IN PROCESS AT RS.2,65,000/-. IN VIEW OF THE ABOVE FACT S, I HOLD THAT THERE IS NO JUSTIFICATION FOR ADDITION OF RS.5,00,000/-, HENCE, I DELETE THE ADDITION OF RS.5,00,000/-. AGGRIEVED WITH THIS ORDER OF LEARNED COMMISSIONER O F INCOME TAX(APPEALS) ON THIS GROUND, THE REVENUE IS IN APPEAL BEFORE US. 8 ITA NO. 3874/AHD/200 8 17. THE LD. D.R. RELYING ON THE REASONING GIVEN BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER CONTENDED THAT THE A.O. RIGHTLY ESTIMATED THE WORK IN PROCESS OF SOME PROJECTS OF THE ASSESSEE AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN MAKING THE ADDITION OF RS.5,00,000/- AND IT SHOULD BE DELETED. 18. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSES SEE DURING THE COURSE OF HEARING REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS). HE POINTED OUT THAT THE ASSESSEE CORRECTLY VALUED THE WORK IN PROCESS FOR INCOMPLETE PROJECTS. THE PERCENTAGE OF WORK COMPLETED, BILL RAISED, ETC. WER E DULY FURNISHED BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER ESTIMATED THE WORK IN PROCES S AT RS.5,00,000/- ON DOUBTS AND SUSPICION. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN THE IMPUGNED ORDER, AFTER VERIFYING THE COMPLETE DETAILS DELETED THE ADDITION, THEREFORE, T HE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 19. WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AU THORITIES BELOW ON THIS ISSUE. BEFORE THE ASSESSING OFFICER AS WELL AS LEARNED COMMISSIONER O F INCOME TAX(APPEALS), THE ASSESSEE HAS FURNISHED THE COMPLETE DETAILS INDICATING HOW IT HA S WORKED OUT THE WORK IN PROCESS OF RS.6,40,500/- IN RESPECT OF FIVE PROJECTS. IN THIS VIEW, IN OUR OPINION, THERE WAS NO JUSTIFICATION FOR MAKING FURTHER ADDITION OF RS.5,00,000/-. WE, T HEREFORE, INCLINE TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS). RESULT ANTLY, THIS GROUND OF APPEAL IS REJECTED. 20. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 23.04.2010 . SD/- SD/- (G.D. AGRAWAL) (T.K. SHARMA ) VICE-PRESIDENT (AZ) JUDICIAL MEMBER DATED : 23/ 04 /2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED, (4) CIT CONCERNED, (5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD LAHA/SR.P.S.