ACIT, Noida V. Col. Tejinder Singh (Retd.), Noida

ITA 4038/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53106 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 05-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B R R KUMAR
• Assessee Lawyers: P K RASTOGIC A
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H DELHI BEFORE SHRI I.P. BANSAL AND SHRI K.G. BANSAL ITA NO. 4038(DEL)/2011 ASSESSMENT YEAR: 2006-07 ASSISTANT COMMISSIONER OF INCOME SHRI TEJINDER SINGH (RETD.) TAX, CIRCLE NOIDA. VS . B-70, SECTOR-40, NOIDA. PAN: AGJPS2217A CROSS OBJECTION NO. 333(DEL)/2011 (ARISING OUT OF ITA NO. 4038(DEL)/2011) ASSESSMENT YEAR: 2006-07 SHRI TEJINDER SINGH (RETD.), ASSISTANT COMMISSIONER OF B-70, SECTOR-40, NOIDA. VS. INCOME-TAX, CIRCLE NOIDA. (APPELLANT) (RESPONDENT) DEPARTMENT BY : DR. B.R.R. KUMAR, S R.DR ASSESSEE BY : SHRI P.K. RASTOGI,C.A. DATE OF HEA RING : 03.11.2011 DATE OF PRO NOUNCEMENT : 11.11.2011 ORDER PER K.G. BANSAL : AM IN THE AFORESAID APPEAL OF THE REVENUE, TWO SUBS TANTIVE GROUNDS HAVE BEEN TAKEN UP IN RESPECT OF ALLOWANCE OF SPEC IAL PRODUCTION INCENTIVE (SPI FOR SHORT). IT IS MENTIONED THAT THE ASSE SSEE WAS SUPPLYING LABOUR TO D.S. CONSTRUCTION LTD. AT PRE-DECIDED RATES, THE REFORE, THE PAYMENT TO SPI TO THE LABOURERS IS NOT JUSTIFIED. IT IS F URTHER MENTIONED THAT THE ITA NO. 4038 & C.O.333(DEL)/2011 2 DETAILS IN RESPECT OF THE SPI CONTAINED THE PAYMEN T OF EPF, WHICH HAS BEEN SEPARATELY CLAIMED BY THE ASSESSEE. IT IS ALSO MENTIONED THAT NO DOCUMENTARY EVIDENCE HAS BEEN PRODUCED IN SUPPORT O F THE CLAIM. IT IS ALSO MENTIONED THAT THE LD. CIT(APPEALS) ERRED IN ADMI TTING ADDITIONAL EVIDENCE WHICH WAS NOT FURNISHED TO THE AO FOR EXAMINATIO N. ON THE OTHER HAND, THE ASSESSEE HAS TAKEN FOUR GROUNDS IN THE CROS S OBJECTION, WHICH ARE IN THE NATURE OF PROVIDING SUPPORT TO THE IMPUGNED O RDER. 2. THE FACTS OF THE CASE ARE THAT THE RETURN W AS FILED ON 31.10.2006 DECLARING TOTAL INCOME OF RS. 6,44,950/-. THE ASS ESSMENT PROCEEDINGS WERE INITIATED AFTER SERVING NOTICE U/S 143(2) ON THE ASSESSEE. IT WAS INTER-ALIA FOUND THAT THE ASSESSEE DEBITED SALAR Y AND WAGES UNDER FOUR DISTINCT HEADS AS UNDER:- SL. NO. DESCRIPTION AMOUNT (RS.) (I) BASIC WAGES 69,87,599/- (II) HOUSE RENT ALLOWANCE 30,71,111/- (III) CONVEYANCE ALLOWANCE 28,75,014/- (IV) SPI 21,23,203/- 2.1 IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUESTED TO JUSTIFY THE DEDUCTION OF THE SPI. I T WAS SUBMITTED THAT THE INCENTIVE WAS PAID TO THE EMPLOYEES OF M/S HI MALAYA AGENCIES, A ITA NO. 4038 & C.O.333(DEL)/2011 3 PROPRIETARY CONCERN OF THE ASSESSEE, FOR COMPLETI NG THE WORK EFFICIENTLY AND ON TIME. CONSOLIDATED BILL HAS BEEN RAISED ON D.S. CONSTRUCTION LTD., WHICH INCLUDES BASIC WAGES, HOUSE RENT ALLOWANC E, CONVEYANCE ALLOWANCE AND SPI. THE LEDGER ACCOUNT OF THE SPI WAS A LSO FILED. THE AO CONSIDERED THE FACTS AND SUBMISSIONS MADE BY T HE ASSESSEE. IT IS MENTIONED THAT THE CONTENTION OF THE ASSESSEE IS THAT THE LABOUR WAS SPECIALIZED LABOUR, ENGAGED IN THE CONSTRUCTION OF FLYOVER. THE CONSTRUCTION WAS A TIME BOUND PROGRAMME, WHICH HAD TO BE COMPLE TED IN TIME. M/S D.S. CONSTRUCTION LTD. PAID EXTRA AMOUNT TO THE WO RKERS WHO WERE FOUND EFFICIENT. THE WORKERS ARE IN TURN SUPPLIED BY THE ASSESSEE AT THE SITE OF CONSTRUCTION. IT IS FURTHER MENTIONED THAT THE LA BOUR IS SUPPLIED AT A PRE- DECIDED CHARGES. THEREFORE, THE PAYMENT OF THE S PI IS NOT JUSTIFIED. THE ACCOUNT SUPPLIED BY THE ASSESSEE SHOWS ENTRIES REGARDING EPF ALSO, WHICH CANNOT BE TAKEN TO BE THE SPI AS CLAIME D BY THE ASSESSEE. THEREFORE, IT HAS BEEN HELD THAT THE SPI IS AN ATTEMPT TO REDUCE THE INCIDENCE OF TAXATION. 2.2 BEFORE THE LD. CIT(APPEALS), IT WAS SUBMITTED THAT THE DETAILS OF THE SPI WERE FURNISHED, HOWEVER, THE AO COULD NOT PROP ERLY UNDERSTAND THE ITA NO. 4038 & C.O.333(DEL)/2011 4 IMPORT OF JOURNAL ENTRIES. THIS WAS EXPLAINED B Y WAY OF ENTRIES IN VOUCHER NO. 605 DATED 10.01.2006, WHICH IS ACC OUNTED FOR AS UNDER:- VOUCHER NO. 605 DATED 10.01.2006 DR. CR. WAGES SALARY ACCOUNT DSC 4,96,3 11.00 HRA DSC 1,86,792.00 EDUCATION INCENTIVE 1,21,739.00 EPF PAYABLE 75,373.00 CASH PAID 8,85,875.00 - - - - - - - - - - - - - - - - - - - - TOTAL: RS. 9,61,248.00 9,61,248.00 - - - - - - - - - - - - - - - - - - - - - 2.3 IT WAS EXPLAINED THAT WHEN THE AFORESAID E NTRY IS ENTERED IN THE COMPUTER THROUGH TALLY ACCOUNTING SOFTWARE, AL L DEBIT ENTRIES WILL GET THE NARRATION OF THE FIRST CREDIT ENTRY, I.E., EPF AC COUNT IN THIS CASE, AND ALL CREDIT ENTRIES WILL GET THE NARRATION OF FIRST D EBIT ENTRY, I.E., WAGE/SALARY ACCOUNT-DSC. HOWEVER, ALL THE PAYMENTS ARE IN RE SPECT OF SALARY AND WAGES OF THE EMPLOYEES GIVEN TO D.S. CONSTRUCTI ON LTD. ACCORDINGLY, IT WAS AGITATED THAT THE AO WRONGLY CAME TO THE CONCL USION THAT THE SPI WAS EITHER NOT PAID OR WAS A DEVISE TO REDUCE THE INCIDENCE OF TAXATION. THE LD. CIT(APPEALS) CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM. HE VERIFIED THE DETAILS OF W AGES FROM THE WAGE REGISTER AND THE VOUCHERS OF PAYMENT. NO DISCRE PANCY WAS FOUND. ITA NO. 4038 & C.O.333(DEL)/2011 5 THEREFORE, IT WAS HELD THAT SINCE SPI HAS BEEN PAID, THERE IS NO QUESTION OF DISALLOWANCE OF THE AMOUNT OF RS. 21,23,203/-. 3. BEFORE US, THE LD. DR REFERRED TO THE FINDINGS OF THE AO AND THE LD. CIT(APPEALS). HOWEVER, HE COULD NOT DISPLACE T HE FINDING THAT THE SPI HAD IN FACT BEEN PAID BY THE ASSESSEE TO THE LA BOURERS. 3.1 IN REPLY, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS BEEN SUPPLYING LABOUR TO D.S. CONSTR UCTION LTD. AT COST PLUS BASIS. THE MARGIN CHARGED FOR THIS YEAR ON COST WAS ABOUT 9%. THUS, THE ASSESSEE RECOVERED WAGES AND SALARIES PAID TO T HE LABOURERS FROM D.S. CONSTRUCTION LTD. AND FURTHER RECOVERED ABOUT 9 % OF THE WAGES ETC. THE WAGES WERE PAID BY D.S. CONSTRUCTION LTD. UNDER DIFFERENT HEADS AS ABOVE AND, THEREFORE, THE ACCOUNTING WAS MADE IN THE BOOKS OF THE ASSESSEE ACCORDINGLY. NONETHELESS, THE FACT REMA INS THAT THE ASSESSEE MERELY EARNED 9% ON THE TOTAL WAGES PAID BY THE ASSESSEE TO THE WORKERS WHO WERE LOOKING AFTER THE WORK OF D.S. CONSTRU CTION LTD. SINCE THE CONSTRUCTION OF FLYOVER WAS TO BE COMPLETED IN A TIME BOUND PROGRAMME, INCENTIVES WERE ALSO PAID TO THE LABOU RERS AND SUCH INCENTIVES FORMED PART OF THE WAGES. THE WAGE REGISTERED HAS BEEN VERIFIED BY THE ITA NO. 4038 & C.O.333(DEL)/2011 6 LD. CIT(APPEALS) WITH THE VOUCHERS AND NO DISCR EPANCY HAS BEEN FOUND. THEREFORE, HE WAS RIGHT IN DELETING THE DISALLOW ANCE MADE BY THE AO. 3.2 IN THE COURSE OF HEARING, THE LD. DR WAS RE QUESTED TO STATE THE DETAILS OF ADDITIONAL EVIDENCE FILED BY THE ASSE SSEE BEFORE THE LD. CIT(APPEALS). HE COULD NOT PIN-POINT TO ANY SUCH ADDITIONAL EVIDENCE. THE GROUND TAKEN BY THE REVENUE ALSO DOES NOT S PECIFY THE ADDITIONAL EVIDENCE. IT APPEARS TO US THAT LD. CIT(APPEALS ) CALLED FOR WAGE REGISTER AND VERIFIED THE SAME WITH THE VOUCHERS. THIS D OES NOT AMOUNT TO ADMISSION OF ADDITIONAL EVIDENCE. THE DETAILS H AD ALREADY BEEN FILED BEFORE THE AO AND THERE IS NO ALLEGATION IN THE A SSESSMENT ORDER THAT BOOKS WERE NOT PRODUCED. 4. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. IN THE LIGHT OF THE DISCUSSION MADE I N THE IMMEDIATELY PRECEDING SUB-PARAGRAPHS, IT IS CLEAR THAT NO A DDITIONAL EVIDENCE HAS BEEN ENTERTAINED BY THE LD. CIT(APPEALS). THEREFORE, THE GROUND IN THIS BEHALF IS DISMISSED. ITA NO. 4038 & C.O.333(DEL)/2011 7 4.1 COMING TO THE DISALLOWANCE, THE LD. CIT(APPE ALS) HAS PERSONALLY VERIFIED THE LABOUR REGISTER WITH THE VOUCHERS. THE DISPUTE SOUGHT TO BE RAISED BY THE AO HAS ALSO BEEN EXPLAINED WITH RE FERENCE TO THE FEATURES OF TALLY SOFTWARE. IN ANY CASE, THE DETAILS OF PAY MENTS HAD BEEN FURNISHED AND ALL THE DETAILS HAD BEEN MADE TO EMPLOYEES UNDER ONE HEAD OR THE OTHER. THEREFORE, EVEN IF ENTRIES IN REGARD TO EPF HAS BEEN MISCLASSIFIED, THOUGH IT IS NOT PROVED, THE EXPENDITURE OF RS . 21,23,203/- IS DEDUCTIBLE IN COMPUTING THE INCOME. REALLY SPEAKING, RECE IPT AND PAYMENT OF WAGES IS NOT REALLY THE INCOME OR EXPENDITURE O F THE ASSESSEE. IT IS THE EXPENDITURE OF D.S. CONSTRUCTION LTD. THE ASSES SEE HAS GOT ADD-ON OF ABOUT 9% OF THE WAGES ETC. PAID, WHICH REALLY CONSTITUTES ITS INCOME. IN THESE CIRCUMSTANCES, THE LD. CIT(APPEALS) RIGHTL Y ALLOWED THE SPI. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS INFRUC TUOUS. SD/- SD/- (I.P. BANSAL) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA ITA NO. 4038 & C.O.333(DEL)/2011 8 COPY OF THE ORDER FORWARDED TO:- 1. SHRI TEJINDER SINGH (RETD.), NOIDA. 2. ACIT, CIRCLE NOIDA. 3. CIT 4. CIT(A) 5. THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.