ACIT, Jaipur V. OM METAL INFRA PROJECTS PVT. LTD., Jaipur

ITA 422/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99492 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 29-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B V MAHESHWRI C A DHK
• Keywords: Retrospective amendment

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 422/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 . ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. CUKE VS. M/S. OM METAL INFRA PROJECTS PVT. LTD., OM TOWER, CHURCH ROAD, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACO 8245 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 915/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 . DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. CUKE VS. M/S. OM METAL INFRA PROJECTS PVT. LTD., OM TOWER, CHURCH ROAD, M.I. ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACO 8245 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S MEENA (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI B.V. MAHESHWRI, (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04.11.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 20/11/2015. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THESE TWO APPEALS HAVE BEEN FILED BY THE REVENUE AG AINST THE ORDER OF LD. CIT (A)-I, JAIPUR DATED 31.03.2014 AND 18.10 .2012 FOR THE 2 ITA NO. 422/JP/2014 & 915/JP/2012 ACIT VS. OM METAL INFRA PROJECTS PVT. LTD. ASSESSMENT YEARS 2008-09 AND 2009-10 RESPECTIVELY W HEREIN IT HAS TAKEN FOLLOWING GROUNDS OF APPEAL :- ITA NO. 422/JP/2014 : A.Y. 2008-09 : 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING TH E ADDITION OF RS. 1,30,13,039/- MADE BY AO ON A/C OF DISALLOWA NCES OF EXPENSES. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING TH E ADDITION MADE BY WAY OF DISALLOWING DEDUCTION U/S 80IA(4) OF THE ACT. ITA NO. 915/JP/2012 : A.Y. 2009-10 : WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) WAS JUSTIFIED IN DELETING TH E ADDITION MADE BY THE AO BY DISALLOWING DEDUCTION U/S 80IA(4) ON THE BUSINESS OF THE ASSESSEE RELATED TO GOSHI KHURD PRO JECT, BEING NATURE OF CONTRACT AWARDED BY THE VIDC (AN UNDERTAK ING OF MAHARASHTRA GOVT.) DESPITE AMENDMENT IN SECTION 80I A. 2. FIRSTLY, THE REVENUE HAS CONTESTED THE DELETION OF ADDITION MADE BY THE AO BY WAY OF DISALLOWING THE DEDUCTION UNDER SE CTION 80IA(4) OF THE IT ACT, IN BOTH THE ASSESSMENT YEARS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PUBLIC LIMITED COMPANY AND CLAIMED DEDUCTION OF RS. 9,03,62,294/- FOR A.Y. 2008-09 AND RS. 6,47,58,437/- IN A.Y. 2009-10 UNDER SECTION 80I A(4) IN RESPECT OF GOSHI 3 ITA NO. 422/JP/2014 & 915/JP/2012 ACIT VS. OM METAL INFRA PROJECTS PVT. LTD. KHURD PROJECT WHICH IS A IRRIGATION PROJECT PROMOTE D BY GOVERNMENT OF MAHARASHTRA. THE PROJECT ENVISAGES CONSTRUCTION OF EARTHEN DAM TO PROVIDE IRRIGATION AND ALSO PROVIDE DRINKING WATER TO CERTAIN AREAS IN MAHARASHTRA. THE AO OBSERVED THAT BY FINANCE ACT, 2007 AN EXPLANATION WAS ADDED WITH RETROSPECTIVE EFFECT MAKING IT CLEAR THAT THE PROVISIONS OF SECTION 80IA(4) WILL NOT APPLY TO A PERSON WHO EXEC UTES A WORKS CONTRACT ENTERED INTO BY THE UNDERTAKING OR THE ENTERPRISE, AS THE CASE MAY BE. FURTHER, BY FINANCE ACT, 2009 AN EXPLANATION WAS AD DED WITH RETROSPECTIVE EFFECT FROM 1.4.2000 AND, THEREFORE, THE SAME WAS C LEAR THAT NOTHING CONTAINED IN SECTION 80IA(4) SHALL APPLY WHICH IS I N THE NATURE OF A WORKS CONTRACT AWARDED BY ANY PERSON (INCLUDING THE CENTR AL OR STATE GOVT.) AND EXECUTED BY THE UNDERTAKING OR ENTERPRISES. AS THE ASSESSEE WAS AWARDED A WORKS CONTRACT BY THE STATE GOVT. OF MAHARASHTRA WHICH IS PART OF TOTAL WORKS OF CONSTRUCTION, DEVELOPMENT AND OPERATION, T HE CLAIM OF ASSESSEE WAS NOT FOUND TENABLE AND ACCORDINGLY WAS REJECTED. 4. AT THE OUTSET, THE APPELLANT SUBMITTED THAT THE HONBLE ITAT IN APPELLANTS OWN CASE FOR A.Y. 2007-08 HAS ALLOWED T HE CLAIM UNDER SECTION 80IA(4) VIDE ORDER IN ITA NO. 911/JP/2010 DATED 5.8 .2011 AND STATED THAT THERE IS NO CHANGE IN THE FACTS OF THE CASE DURING THE YEAR UNDER 4 ITA NO. 422/JP/2014 & 915/JP/2012 ACIT VS. OM METAL INFRA PROJECTS PVT. LTD. CONSIDERATION, AND THE EARLIER ORDER OF HONBLE ITA T MAY BE FOLLOWED. THE RELEVANT PARA 19.1 OF THE SAID ORDER ALLOWING THE A PPEAL OF THE ASSESSEE IS REPRODUCED HEREIN BELOW :- 19.1. IN VIEW OF ALL THESE FACTS AND CIRCUMSTANCE S AND IN VIEW OF THE VARIOUS JUDICIAL PRONOUNCEMENTS DISCUSS ED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT ASSESSEE IS A DE VELOPER AND ELIGIBLE FOR DEDUCTION UNDER SECTION 80IA(4) EVEN A FTER EXPLANATION ADDED IN SECTION 80IA(4) BY FINANCE ACT , 2007 AND AMENDED BY FINANCE ACT, 2009 WITH RETROSPECTIVE EFF ECT FROM 1.4.2000. ACCORDINGLY WE ALLOW THIS GROUND OF THE A SSESSEE AND DIRECT THE DEPARTMENT TO ALLOW THE DEDUCTION CLAIME D UNDER SECTION 80IA(4) TO THE ASSESSEE. 5. THE LD. D/R RELIED ON THE ORDER OF THE AO AND SU BMITTED THAT THE DEPARTMENT HAS FILED APPEAL AGAINST THE EARLIER ORD ER OF ITAT BEFORE THE HONBLE RAJASTHAN HIGH COURT AND THE SAME IS CURREN TLY PENDING BEFORE THE HIGH COURT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY, THERE IS NO CHANG E IN THE FACTS OF THE CASE DURING THE YEAR UNDER CONSIDERATION. IN THE EARLIER YEARS, COORDINATE BENCH HAD PASSED A DETAILED ORDER WHEREIN LEGISLATIVE AME NDMENTS BROUGHT IN 5 ITA NO. 422/JP/2014 & 915/JP/2012 ACIT VS. OM METAL INFRA PROJECTS PVT. LTD. SECTION 80IA(4) READ WITH EXPLANATION HAVE BEEN DUL Y CONSIDERED. FOLLOWING THE DECISION OF THE COORDINATE BENCH IN A SSESSEES OWN CASE FOR A.Y. 2007-08, THIS GROUND OF APPEAL TAKEN BY THE RE VENUE IN BOTH THE ASSESSMENT YEARS IS DISMISSED. 7. COMING TO THE FIRST GROUND OF APPEAL FOR A.Y.200 8-09, THE REVENUE HAS CONTESTED THE DELETION OF ADDITION OF RS.1,30,1 3,039/-BY THE LD.CIT (A). 8. BRIEF FACTS RELEVANT FOR THE PURPOSE ARE AS FOLL OWS :- 8.1. DURING THE YEAR UNDER CONSIDERATION THE ASSESS EE HAS RECEIVED AN AMOUNT OF RS. 43.50 CR. TOWARDS COMPENSATION FOR RE LINQUISHING ITS RIGHT IN A JOINT VENTURE IN FAVOUR OF M/S. B. RAHEJA BUILDER S PVT. LTD. THE SAID CONSIDERATION HAS BEEN BROUGHT TO TAX AS BUSINESS R ECEIPTS IN THE HANDS OF THE ASSESSEE BY THE AO AND WHICH HAS BEEN CONFIRMED BY LD. CIT (A) AND ALSO ACCEPTED BY THE ASSESSEE AS WELL. AS PART OF T HIS TRANSACTION, THE ASSESSEE SUBMITTED THAT IT HAS INCURRED EXPENSES OF RS. 2,75,33,426/- AND IF THE RECEIPTS ARE BROUGHT TO TAX, THEN THE EXPENS ES INCURRED IN EARNING THE SAID RECEIPTS SHOULD ALSO BE ALLOWED TO THE ASS ESSEE. FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS NOTED THAT THE ASSES SEE HAS INCURRED EXPENSES ON ACCOUNT OF SERVICE CHARGES, CONSULTANCY CHARGES, BROKERAGE ETC. TO VARIOUS PARTIES, NAMELY, ASTHA CONSULTANCY SERVICES, JHAVAR & 6 ITA NO. 422/JP/2014 & 915/JP/2012 ACIT VS. OM METAL INFRA PROJECTS PVT. LTD. ASSOCIATES, ALMT LEGAL AND HITESH JAIN. THE AO AFT ER EXAMINATION OF THE DETAILS SUBMITTED BY THE ASSESSEE HAS DISALLOWED RS . 6,00,000/- OF ASTHA COMMUNICATIONS AND RS. 82,348/- OF SHRI VIKAS KOTHA RI IN ABSENCE OF BILLS/VOUCHERS. FURTHER THE AO HAS DISALLOWED 50% O F THE REMAINING EXPENSES STATING THAT NO COPY OF AGREEMENT WAS GIVE N TO JUSTIFY THE BALANCE EXPENSES AND IN VIEW OF THAT 50% OF THE PAY MENT MADE TO THESE PARTIES WERE CONSIDERED REASONABLE AND BALANCE 50% WAS DISALLOWED. 8.2. THE LD. CIT (A) IN HIS ORDER HAS MENTIONED THA T THE AO HAS DISALLOWED THESE EXPENSES ON THE SOLE GROUND THAT N ECESSARY AGREEMENTS WERE NOT PRODUCED AND ONLY RELEVANT BILLS WERE FURN ISHED AND THE SAME DOES NOT APPEAR TO BE A VALID REASON FOR DISALLOWIN G 50% OF THE EXPENSES ON AN ADHOC BASIS PARTICULARLY WHEN THEY ARE RELATE D TO BUSINESS ACTIVITIES OF THE APPELLANT. THE RELEVANT OBSERVATIONS OF LD. CIT (A) ARE REPRODUCED AS UNDER :- 6.3. AS REGARDS THE CLAIM OF THE APPELLANT REGARD ING EXPENSES RELATING TO THE RECEIPT OF RS. 43,52,50,000/-, IT I S SEEN THAT THESE EXPENSES AMOUNTING TO RS. 2,75,33,426/- HAVE BEEN INCURRED BY THE APPELLANT IN PURSUANCE TO THE RELIN QUISHMENT OF BUSINESS INTEREST BY THE APPELLANT. DISALLOWANCE OF RS. 6,00,000/- AND RS. 42,348/- HAVE BEEN MADE BY THE A O ON THE 7 ITA NO. 422/JP/2014 & 915/JP/2012 ACIT VS. OM METAL INFRA PROJECTS PVT. LTD. GROUND THAT THE SUPPORTING DETAILS IN RESPECT OF TH ESE EXPENSES HAVE NOT BEEN PRODUCED. NO DETAILS IN THIS REGARD H AVE BEEN FURNISHED EVEN AT THE APPELLATE STAGE. HENCE, THE D ISALLOWANCE OF THESE EXPENSES IS CONFIRMED. SO FAR AS THE REMAINING EXPENSES ARE CONCERNED, IT IS SEEN THAT THESE HAVE BEEN DISALLOWED ON THE GROUND THAT NECES SARY AGREEMENTS WERE NOT PRODUCED AND ONLY RELEVANT BILL S WERE FURNISHED. THIS, HOWEVER, DOES NOT APPEAR TO BE A V ALID REASON FOR DISALLOWING 50% OF THE EXPENSES ON ADHOC BASIS, PARTICULARLY WHEN THESE ARE RELATED TO THE BUSINESS ACTIVITY OF THE APPELLANT. THERE IS NOTHING TO SHOW THAT THESE EXPENSES WERE INFLATED, BOGUS OR NOT RELATED TO THE BUSINESS . IN SUCH A SITUATION, THERE IS NO BASIS TO DISALLOW 50% OF THE EXPENSES ON AN ADHOC BASIS. THE DISALLOWANCE MADE BY THE AO, TH EREFORE, APPEARS TO BE UNJUSTIFIED AND IS, ACCORDINGLY, DELE TED. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. FIRSTLY, IT IS NOT UNDER DISPUTE THAT SINCE THE CONSIDERATION FOR RELINQUISHMENT OF RIGHTS IN JOINT VENTURE HAS BEEN BROUGHT TO TAX, ALL EXPENSES INCURRED IN CONNECTION WITH THE SAME ARE L IABLE TO BE ALLOWED. SECONDLY, IT IS ALSO NOT UNDER DISPUTE THAT ASSESSE E HAS SUBMITTED BILLS OF JHAVAR & ASSOCIATES AND ASTHA CONSULTANCY SERVICES BEFORE THE AO WHICH HAVE BEEN DISALLOWED TO THE EXTENT OF 50% BY A.O. THERE IS NO SPECIFIC 8 ITA NO. 422/JP/2014 & 915/JP/2012 ACIT VS. OM METAL INFRA PROJECTS PVT. LTD. FINDING OF THE AO IN RESPECT OF THOSE BILLS EXCEPT FOR BILLS AMOUNTING TO RS. 6,00,000/- OF ASTHA CONSULTANCY WHICH HAS BEEN RI GHTLY DISALLOWED. AS PER THE AO, NO COPY OF AGREEMENT WAS GIVEN AND NO D ETAILS EXCEPT BILLS HAVE BEEN PROVIDED TO JUSTIFY THE EXPENSES AND THE ASSESSEE HAS OFFERED NO REPLY IN RESPECT OF BROKERAGE PAYMENT. HOWEVER, NO BASIS HAS BEEN GIVEN BY AO FOR DISALLOWING 50% OF THE EXPENSES. AS PER LD. CIT (A), THERE IS NOTHING TO SHOW THAT THESE EXPENSES WERE INFLATE D, BOGUS OR NOT RELATED TO THE BUSINESS. IN SUCH A SITUATION, THERE IS NO B ASIS TO DISALLOW 50% OF THE EXPENSES ON AN ADHOC BASIS. WE, AGREE WITH THE REASONING OF LD. CIT (A) THAT THERE IS NO BASIS FOR DISALLOWANCE OF EXPE NSES ON AN ADHOC BASIS. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT (A) AND THE SAME IS UPHELD. THE GROUND OF THE REVENUE IS DISMIS SED. 10. IN THE RESULT, APPEALS OF THE REVENUE IN ITA NO . 915/JP/2012 AND ITA NO. 422/JP/2014 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20/11/2015. SD/- SD/- VKJ-IH-RKSYKUH FOE FLAG ;KNO (R.P.TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 20/11/ 2015 DAS/ 9 ITA NO. 422/JP/2014 & 915/JP/2012 ACIT VS. OM METAL INFRA PROJECTS PVT. LTD. VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT, CIRCLE-2, JAIPUR. 2. THE RESPONDENT- M/S. OM METAL INFRA PROJECTS P. LTD., JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO.915/JP/2012 & 422/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 10 ITA NO. 422/JP/2014 & 915/JP/2012 ACIT VS. OM METAL INFRA PROJECTS PVT. LTD. SL. NO. DATE INITIAL 1 DATE OF DICTATION 2 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER OTHER MEMBER 3 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P.S./P.S 4 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 5 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P.S./P.S. 6 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 8 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER 9 DATE OF DISPATCH OF THE ORDER