RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTION CORPORATION LTD., Jaipur V. JCIT, Jaipur

ITA 426/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5132 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 29-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Revenue expenditure
• Section: 143(3); 115JB

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 558/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-6, JAIPUR. CUKE VS. M/S. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTION CORPN. LTD., SETHU BHAWAN, JHALANA DOONGRI, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCR 9650 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 426/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12. M/S. RAJASTHAN STATE ROAD DEVELOPMENT & CONSTRUCTION CORPN. LTD., SETHU BHAWAN, JHALANA DOONGRI, JAIPUR. CUKE VS. THE DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE-6, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABCR 9650 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S. MEENA (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (C.A) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 27.07.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 08/09/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THESE TWO CROSS APPEALS BY THE REVENUE AND THE ASSE SSEE ARE DIRECTED AGAINST THE ORDER OF LD. CIT (A)-2, JAIPUR DATED 19 .03.2015 PERTAINING TO ASSESSMENT YEAR 2011-12. BOTH THESE APPEALS ARISE OUT OF THE SAME ORDER, THEREFORE, THEY ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR T HE SAKE OF CONVENIENCE. FIRST, WE 2 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . TAKE THE REVENUES APPEAL IN ITA NO. 558/JP/2015. T HE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN HOLDING CONTRIBUTI ON OF RS. 10,00,000/- TO STATE RENEWABLE FUND AS ALLOWABLE EX PENDITURE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN DELETING THE ADDIT ION MADE BY THE AO BY DISALLOWING RS 1,94,34,645/- OUT OF PRIOR PER IOD EXPENSES. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW THE LD. CIT (A) HAS ERRED IN RESTRICTING THE DI SALLOWANCE OF DEDUCTION U/S 80IA TO RS. 6,98,93,301/- AGAINST RS. 8,20,34,909/- MADE BY THE AO. 4. THE APPELLANT CRAVES ITS RIGHTS TO ADD, AMEND OR AL TER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMEN T WAS FRAMED UNDER SECTION 143(3) OF THE IT ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE ORDER DATED 24.12.2013. WHILE FRAMING THE ASSESSMENT, THE AO MA DE DISALLOWANCE IN RESPECT OF A SUM OF RS. 10,00,000/- CLAIMED AS CONTRIBUTION TO STATE RENEWAL FUND ACCOUNT, DISALLOWANCE OF RS. 14,16,45,738/- CONTRIBUTION TO UNAPPROVED GRATUITY & PENSION FUND, DISALLOWANCE OF RS. 2,49,62,662/- BEING PRIOR PERIOD EXPENSES AND ALSO DISALLOWED THE CLAIM OF DEDUCTION U/S 80IA OF RS. 8 ,20,34,909/-. THEREFORE, THE AO COMPUTED THE TOTAL INCOME AT RS. 23,86,28,557/- AND ACCORDINGLY COMPUTED THE PROFIT UNDER SECTION 115JB OF THE ACT AT RS. 5,69,7 0,704/-. THE ASSESSEE AGGRIEVED BY THIS ORDER, PREFERRED AN APPEAL BEFORE LD. CIT ( A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE DELETED THE DISALLOWANC E OF RS. 10,00,000/- CLAIMED AS 3 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . CONTRIBUTION TO STATE RENEWAL FUND, CONTRIBUTION TO LIC GROUP GRATUITY FUND OF RS. 14,16,45,738/-, RESTRICTED THE DISALLOWANCE ON ACCO UNT OF PRIOR PERIOD EXPENSES TO RS. 55,28,017/- AND IN RESPECT OF CLAIM OF DEDUCTIO N U/S 80IA RESTRICTED THE DISALLOWANCE TO THE EXTENT OF RS. 6,98,93,301/-. 3. NOW, BOTH THE REVENUE AND THE ASSESSEE ARE IN AP PEAL BEFORE US. 4. THE FIRST GROUND OF REVENUES APPEAL IS AGAINST DELETION OF ADDITION OF RS. 10,00,000/- CONTRIBUTION TOWARDS STATE RENEWAL FUND . 4.1. THE LD. D/R SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 4.2. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF I TAT JAIPUR FOR EARLIER YEARS. 4.3. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. IN THE EARLIER YEAR ALSO SIMILAR ISSUE AROS E BEFORE THE TRIBUNAL AND THE TRIBUNAL WAS PLEASED TO DELETE THE DISALLOWANCE IN ITA NO. 26/JP/2014 PERTAINING TO ASSESSMENT YEAR 2007-08. THE COORDINATE BENCH IN P ARA 2.3 OF ITS ORDER HAS HELD AS UNDER :- 2.3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED THE MATERIALS AVAILABLE ON RECORD. AS REGARDS GROUND NO. 1 OF THE REVENUE, WE FIND THAT ITAT JAIPUR BENCH HAS DECIDED THIS ISSUE IN AS SESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06 IN FAVOUR OF THE AS SESSEE VIDE ITS ORDER DATED 16.07.2010 IN ITA NO. 919/JP/2009 BY FO LLOWING OBSERVATIONS :- 4. THE SECOND ISSUE ON WHICH THE REVENUE IS AGGRI EVED IS AGAINST THE DELETION OF ADDITION OF RS. 10 LAKHS ON ACCOUNT OF PAYMENT AS CONTRIBUTION TO STATE RENEWAL FUND. THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL I N AY 2006-07 VIDE ORDER DATED 26.2.2010 IN ITA N. 754/JP/2009. I T WILL BE USEFUL TO REPRODUCE PARAGRAPH 5 FROM THAT DECISION :- 4 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PART IES. WE FIND THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVE RED BY THE DECISION OF ITAT IN CASE OF RAJASTHAN STATE SEED CO RPORATION LTD. VS. ACIT IN ITA NO. 233/JP/2009 DATED 25.5.200 9 WHICH IS BASED UPON HONBLE RAJASTHAN HIGH COURT JUDGMENTS I N THE CASES OF CIT VS. SHRI RAJASTHAN SYNTEX LTD. 221 CTR 410 (RAJ.) AND CIT VS. RAJASTHAN SPINNING AND WEAVING MILLS LT D. 274 ITR 465 (RAJ.). THE FACTS OF HONBLE RAJASTHAN HIGH COU RT JUDGMENT IN CASE OF JODHPUR COOPERATIVE MARKETING SOCIETY WH ICH IS RELIED BY THE AO IS DISTINGUISHABLE AS IN THAT CASE THE AM OUNT WAS PROVIDED FOR THE BENEFIT OF THE EMPLOYEES. SINCE, I N THE PRESENT CASE ALSO THE AMOUNT WAS SET APART NOT FOR SHAREHOL DER BUT IT WAS PROVIDED FOR THE BENEFITS OF THE EMPLOYEES, BY FOLLOWING OUR EARLIER DECISIONS, WE UPHOLD THE ORDER OF CIT (A) O N THIS ISSUE. THIS GROUND OF THE DEPARTMENT IS DISMISSED. 5. HENCE, THE ISSUE RAISED BY THE REVENUE HAS ALREADY BEEN DECIDED BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE AY 2006-07, THEREFORE THE ISSUE IN THE ASSESSMENT YEAR UNDER CO NSIDERATION IS ALSO DECIDED AGAINST THE REVENUE. THE ABOVE FINDING OF THE COORDINATE BENCH IS NOT CO NTROVERTED BY THE REVENUE, HENCE TAKING A CONSISTENT VIEW, WE DO NOT SEE ANY R EASON TO INTERFERE IN THE ORDER OF LD. CIT (A). THIS GROUND OF THE REVENUE IS DISMISSE D. 5. GROUND NO. 2 IS AGAINST DELETION OF ADDITION MAD E BY THE AO OF RS. 1,94,34,645/- OUT OF PRIOR PERIOD EXPENSES. 6. THE LD. D/R SUPPORTED THE ORDER OF THE AO. 6.1. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS ARE MADE IN THE WRITTEN BRIEF AND SUBMITTED THAT TH E ISSUE OF PRIOR PERIOD EXPENSES IS COVERED IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2007-08 IN ITA NO. 26/JP/2014 AND ALSO IN ITA NO. 7 59/JP/2013. THE FACTS ARE IDENTICAL. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT PRIOR PERIOD EXPENSES IN RESPECT OF HEAD OFFICE AND JODHPUR UNIT IS A CASE O F REVERSAL OF INCOME ALREADY 5 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . OFFERED FOR TAX IN EARLIER YEARS. HENCE, THESE AMOU NTS CANNOT BE HELD AS PRIOR PERIOD EXPENSES RATHER IT IS A CASE OF REVERSAL OF EXCESS INCOME TAXED IN EARLIER ASSESSMENT YEAR. HENCE THE LD. CIT (A) HAS RIGHTLY ALLOWED PRI OR PERIOD EXPENSES IN RESPECT OF HEAD OFFICE. THE LD. COUNSEL, HOWEVER, SUBMITTED THAT PRIOR PERIOD EXPENSES OF RS. 55,28,017/- BOOKED IN RESPECT OF JODHPUR UNIT IS NO T ALLOWED BY THE LD. CIT (A) BY STATING THAT THE EXPLANATION FURNISHED BY THE ASSES SEE DOES NOT MATCH WITH THE SUPPORTING ORDER SHEET ENTRIES. IN HOLDING SO, HE H AS NOT ELABORATED AS TO HOW THE EXPLANATION FURNISHED BY THE ASSESSEE DOES NOT MATC H WITH THE ORDER SHEET ENTRIES. LD. COUNSEL SUBMITTED THAT THE COPY OF ORDER SHEET ENTRIES AND THE CORRESPONDENCE ARE AT PAGES 63-66 OF THE PAPER BOOK. FROM THE ORD ER SHEET ENTRY AT PAGES 64 AND 66 OF THE PAPER BOOK, IT IS CLEAR THAT SALE OF SHUT TERING MATERIAL IN THE YEAR 2005-06 WAS CREDITED TO THE ACCOUNT OF THE CORPORATION INST EAD OF ACCORDING CREDIT TO THE RESPECTIVE WORK AS A RESULT OF WHICH SIMILAR AMOUNT WAS SHOWN OUTSTANDING AGAINST THE PHED. ACCORDINGLY, THE PRIOR PERIOD EXPENDITURE IS DEBITED BY CREDITING TO THE ACCOUNT OF PHED. THE LD. COUNSEL SUBMITTED THAT IT IS A CASE OF REVERSAL OF INCOME WRONGLY BOOKED IN EARLIER YEARS ON WHICH TAX IS PAI D. LD. COUNSEL SUBMITTED THAT AS FAR AS REMAINING EXPENSES ARE CONCERNED, THE ASSESS EE IS A STATE GOVERNMENT UNDERTAKING WHERE THERE IS PRESCRIBED RULE FOR MAKI NG PAYMENT OF EXPENDITURE. EVEN WHEN BILLS ARE SUBMITTED THEY ARE FIRST CHECKED WHE THER THE CLAIM IS AS PER RULES/TERMS OR NOT AND THEREAFTER APPROVED BY THE A PPROPRIATE AUTHORITY. WITHOUT THEIR APPROVAL, NO EXPENDITURE IS PAID. FOR THESE REASONS, THE EXPENDITURE PERTAINING TO A PARTICULAR YEAR MAY GET APPROVED IN SUBSEQUENT YEARS AND ACCORDINGLY ENTERED IN THE BOOKS OF ACCOUNTS IN THAT YEAR. THERE IS NO DOUBT REGARDING THE GENUINENESS 6 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . OF THE EXPENDITURE. AS PER THE REGULAR SYSTEM OF A CCOUNTING ALL EXPENSES ARE ACCOUNTED AFTER GETTING APPROVAL FROM CONCERNED AUT HORITIES. LD. COUNSEL SUBMITTED THAT THIS TRIBUNAL IN THE CASE OF OTHER STATE GOVER NMENT UNDERTAKING I.E. RIICO, RSEB, RSMDC, RBCC IS CONSISTENTLY TAKING A VIEW TO ALLOW SUCH EXPENDITURE IN THE YEAR WHEN THE EXPENSES ARE FINALLY SANCTIONED AND A PPROVED. IN THE PRESENT CASE SINCE THE EXPENDITURE ARE APPROVED DURING THE YEAR, THE SAME IS ALLOWABLE AS CURRENT YEAR EXPENDITURE. FURTHER THE RATE OF TAX BEING TH E SAME, IT DOES NOT MATTER WHETHER IT IS ALLOWED AS DEDUCTION IN THE YEAR IN W HICH THE EXPENDITURE IS BOOKED OR IN EARLIER YEAR. LD. COUNSEL PLACED RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF EXCEL INDUSTRIES LTD., 358 ITR 290 (SC) IN SUPPORT OF THE CONTENTION THAT WHEN THE RATE OF TAX REMAINED THE S AME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN SUBSEQUENT ASSESSMENT, THE DISPU TE RAISED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT BEST MAY HAVE A MINOR TAX E FFECT. RELIANCE IS ALSO PLACED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. JAGATJIT INDUSTRIES LTD., 339 ITR 382 (DEL.HC) IN SUPPORT OF THE CONTEN TION THAT IF A PARTICULAR ACCOUNTING SYSTEM HAS BEEN FOLLOWED AND ACCEPTED AN D THERE IS NO ACCEPTABLE REASON TO DIFFER WITH THE SAME, THE DOCTRINE OF CON SISTENCY WOULD COME INTO PLAY. IT IS CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE TH AT THE ASSESSEE HAS BEEN FOLLOWING THIS ACCOUNTING SYSTEM FOR A NUMBER OF YE ARS. THE LD. COUNSEL FURTHER PLACED RELIANCE ON THE JUDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF SAURASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. VS. CI T, 213 ITR 523 (GUJ.HC) IN SUPPORT OF THE CONTENTION THAT IF ANY LIABILITY, TH OUGH RELATING TO THE EARLIER YEAR, DEPENDS UPON MAKING A DEMAND AND ITS ACCEPTANCE BY THE ASSESSEE AND SUCH 7 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . LIABILITY HAS BEEN ACTUALLY CLAIMED AND PAID IN THE LATER PREVIOUS YEARS, IT CANNOT BE DISALLOWED AS DEDUCTION MERELY ON THE BASIS THAT TH E ACCOUNTS ARE MAINTAINED ON MERCANTILE BASIS AND THAT IT RELATED TO A TRANSACTI ON OF THE PREVIOUS YEAR. 6.2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE LD. CIT (A) IN PARA 4.3 OF HIS ORDER HA S DECIDED THE ISSUE AS UNDER :- 4.3. I HAVE PERUSED THE FACTS OF THE CASE, THE ASS ESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE APPELLANT HAS GIVEN A BREAK-UP OF THE EXPENDITURE DEBITED UNDER THE HEAD PRIOR PER IOD EXPENSES. AS PER THIS BREAK-UP, AN AMOUNT OF RS. 1,77,09,136/- W ITH RESPECT TO THE HEAD OFFICE AND AN AMOUNT OF RS. 55,28,017/- WITH R ESPECT TO THE JODHPUR UNIT ARE REVERSAL OF ENTRIES OF INCOME, WRO NGLY MADE IN THE PRECEDING YEARS. WITH RESPECT TO THE HEAD OFFICE, A N AMOUNT OF RS. 96,08,000/- PERTAINS TO REVERSAL OF DOUBLE INCOME B OOKED IN F.Y. 2002- 03 WITH RESPECT TO MAINTENANCE CHARGES. FURTHER, AN AMOUNT OF RS. 2,94,25,000/- WITH RESPECT TO THE HEAD OFFICE PERTA INS TO WRONG ENTRY OF INTEREST INCOME IN F.Y. 2002-03 & 2003-04 WITH R ESPECT TO TOLL PROJECTS ON CAPITAL DEPLOYED BY THE APPELLANT. THE ABOVE CONTENTIONS OF THE APPELLANT WITH RESPECT TO REVERSAL OF INCOME WRONGLY DECLARED IN EARLIER YEARS, IS ACCEPTABLE. EXPENDITURE OF RS. 76 ,629/- WITH RESPECT TO GURGAON AND EXPENDITURE OF RS. 15,000/- WITH RESPEC T TO THE MECHANICAL UNIT ARE IN THE NATURE OF PRIOR PERIOD E XPENSES WHICH COVERED IN FAVOUR OF THE APPELLANT BY THE ORDERS OF CIT (A)-II, JAIPUR FOR A.Y. 2009-10 & 2010-11. FOLLOWING THE ABOVE ORD ERS, THIS PRIOR PERIOD EXPENDITURE IS ALLOWABLE. WITH RESPECT TO T HE EXPENDITURE OF RS. 16,33,880/- PERTAINING TO THE BIKANER UNIT, THIS EX PENDITURE HAS BEEN INCURRED ON SHIFTING OF PLANT IN AN EARLIER YEAR, W HICH WAS ORIGINALLY RECOVERABLE FROM PWD BUT SINCE THE WORK GOT WITHDRA WN AND THE AMOUNT COULD NOT BE RECOVERED FROM PWD, THIS AMOUNT HAS BEEN DEBITED IN THIS YEAR. THIS CONTENTION OF THE APPEL LANT IS ACCEPTABLE. IN VIEW OF THE ABOVE DISCUSSION, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER, ON ACCOUNT OF THE ABOVE PRIOR PERIOD EXPEN SES TO THE TUNE OF RS. 1,94,34,645/- IS DIRECTED TO BE DELETED. WITH RESPECT TO THE AMOUNT OF RS. 55,28,017/- PERTA INING TO THE JODHPUR UNIT, WITH RESPECT TO SHUTTERING MATERIAL, THE EXPLANATION FURNISHED BY THE APPELLANT DOES NOT MATCH THE SUPPO RTING ORDER SHEET ENTRIES SUBMITTED. THEREFORE, THE NATURE OF EXPENDI TURE IS NOT ASCERTAINABLE AND THEREFORE THIS EXPENDITURE CANNOT BE ALLOWED. THIS DISALLOWANCE MADE BY THE ASSESSING OFFICER IS UPHEL D. THIS GROUND IS PARTLY ALLOWED. 8 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . THE LD. CIT (A) HAS GIVEN A FINDING OF FACT THAT WI TH RESPECT TO THE HEAD OFFICE AN AMOUNT OF RS. 96,08,000/- PERTAINS TO REVERSAL OF D OUBLE INCOME BOOKED IN F.Y. 2002-03 WITH RESPECT TO MAINTENANCE CHARGES. THE L D.CIT (A) HAS GIVEN FURTHER FINDING OF FACT THAT AN AMOUNT OF RS. 2,94,25,000/- WITH RESPECT TO THE HEAD OFFICE PERTAINS TO WRONG ENTRY OF INTEREST INCOME IN FY 20 02-03 & 2003-04 WITH RESPECT TO TOLL PROJECTS ON CAPITAL DEPLOYED BY THE APPELLANT. THIS FINDING OF FACT IS NOT CONTROVERTED BY THE LD. D/R BY PLACING ANY MATERIAL ON RECORD. WE ARE IN AGREEMENT WITH THE OBSERVATIONS OF THE LD. CIT (A) THAT REVER SAL OF INCOME WRONGLY DECLARED IN EARLIER YEARS, IS ALLOWABLE. HENCE THIS GROUND OF THE REVENUE IS DISMISSED. 7. GROUND NO. 3 OF THE REVENUES APPEAL IS AGAINST RESTRICTING THE DISALLOWANCE OF DEDUCTION U/S 80IA TO RS. 6,98,93,301/- AGAINST RS. 8,20,34,909/-. 8. THE LD. D/R SUPPORTED THE ORDER OF THE AO AND SU BMITTED THAT LD. CIT (A) WAS NOT JUSTIFIED IN REDUCING THE DEDUCTION. 8.1. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE HAS REITERATED THE SUBMISSIONS AS ARE MADE IN THE WRITTEN BRIEF. THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE IS HAVING UNIT-WISE AS WELL AS PROJECT-WISE ACCOUNTING SYSTEM. AT THE YEAR END, ACCOUNTS OF THE UNITS ARE CONSOLIDATED AT HEAD OFFI CE AND BALANCE SHEET AND PROFIT & LOSS ACCOUNT IS PREPARED. THE LD. COUNSEL SUBMITTED THAT IN RESPECT OF BOT PROJECTS, COMPANY HAS AWARDED THE WORK OF TOLL COLLECTION TO THE CONTRACTOR WHO PAYS THE TOLL COLLECTION CHARGES AS PER THE TERMS OF THE AWARD. ALL EXPENSES ON SALARY/ADMINISTRATION ETC. IS BORNE BY THE CONTRACT OR. THEREFORE, THE CORPORATION DOES NOT INCUR ANY EXPENDITURE ON SALARY OR ON ADMI NISTRATION OF THE BOT PROJECT. WHATEVER EXPENDITURE IS INCURRED IN THE BOT COLLECT ION WORK, THAT IS DEBITED IN 9 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . WORKING OUT THE ELIGIBLE PROFIT OF THE BOT UNDERTAK ING. THE SAME IS CERTIFIED BY THE CHARTERED ACCOUNTANT. THUS, ONCE ALL THE DIRECT AND INDIRECT EXPENSES INCURRED HAVE BEEN ACCOUNTED FOR IN CALCULATING THE ELIGIBLE PROF IT AND DULY CERTIFIED BY THE CHARTERED ACCOUNTANT, THERE CANNOT BE FURTHER ALLOC ATION OF PROPORTIONATE EXPENSES IN RESPECT OF EMPLOYEES COST AND ADMINISTRATIVE EXP ENSES INCURRED AT HEAD OFFICE AND AT VARIOUS UNIT OFFICES. NO SUCH DISALLOWANCE W AS MADE IN THE PAST. HENCE THE DISALLOWANCE OF DEDUCTION U/S 80IA MADE BY THE AO I S INCORRECT, UNJUSTIFIED AND NOT AS PER LAW. THE LD. COUNSEL SUBMITTED THAT THE AO HAS CONSIDERED THE TOTAL TURNOVER OF THE ASSESSEE AT RS. 64,78,66,570 AND THE LD. CIT (A) AT RS. 69,89,85,491/- WHEREAS THE CORRECT TURNOVER OF THE ASSESSEE IS RS. 4,38,13,34,652/-. THE LD. COUNSEL SUBMITTED THAT CENTAGE CHARGES TURNOVER AS PER THE AO IS RS. 26,24,99,957/- AND AS PER THE ASSESSEE AT RS. 3,94, 48,49,118/-. LD. COUNSEL SUBMITTED THAT THESE CHARGES ARE IN RESPECT OF COST PLUS FIXED MARGIN CONTRACT. IN THESE CONTRACTS ASSESSEE CHARGES FIXED MARGIN ON TH E EXPENDITURE ON CONTRACT INCURRED BY IT. THE TURNOVER IN RESPECT OF THESE C ONTRACTS IS RS. 394.48 CRORES AS MENTIONED AT PAGE 21 OF THE FINANCIAL STATEMENT PAG E 23 OF PAPER BOOK. THE WORKING OF THIS TURNOVER IS ENCLOSED AT PAGES 37 & 38 OF THE PAPER BOOK. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, SUBMITTED THAT THE CORRECT TURNOVER IS RS.436,77,72,468/- AND NOT RS. 64,78,66,570/- AS T AKEN BY THE AO AND RS. 69,89,85,491/- AS TAKEN BY THE LD. CIT (A). HE SUB MITTED THAT LD. CIT (A) IS INCORRECT IN CONSIDERING THE ASSESSEES TURNOVER AT RS. 69,89 ,85,491/- AS AGAINST THE CORRECT TURNOVER OF RS. 436,77,72,468/-. THE LD. COUNSEL S UBMITTED THAT THE AO HAS CONSIDERED THE EXPENDITURE OF RS. 32,68,44,701/- DE BITED IN SCHEDULE-I TOWARDS 10 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . PAYMENT TO AND PROVISION FOR EMPLOYEE FOR ALLOCATIO N PURPOSES. THE LD. COUNSEL SUBMITTED THAT THE ALLOCATION CAN AT THE MOST BE MA DE IN RESPECT OF HEAD OFFICE EXPENSES AND FIVE UNITS WHERE TOLL COLLECTION WORK IS ALSO LOOKED AFTER. HE SUBMITTED THAT THE LD. CIT (A) HELD THAT ENTIRE EXPENDITURE O F RS. 32.68 CRORES CANNOT BE APPORTIONED TO THE PROJECTS ELIGIBLE FOR DEDUCTION U/S 80IA(4) AND THUS APPORTIONED ONLY 16.98 CRORES TO THESE ELIGIBLE PROJECTS. HE S UBMITTED THAT IN DOING SO, HE IGNORED THE FACT THAT WHEN THE ENTIRE WORK OF COLLE CTION OF TOLL HAS BEEN OUTSOURCED TO THE CONTRACTOR, APPORTIONING SUCH EXPENDITURE IN THE RATIO OF THE TURNOVER IS NOT CORRECT. THE LD. COUNSEL SUBMITTED THAT THERE IS H ARDLY ANY STAFF WHO IS REQUIRED TO SUPERVISE THE BOT COLLECTION WORK AS THE ENTIRE ACT IVITY IS OUTSOURCED AND WHATEVER EXPENDITURE IS INCURRED IN SUCH WORK, THE SAME IS A LREADY DEBITED AS TOLL COLLECTION EXPENSES IN WORKING OUT THE ELIGIBLE PROFIT OF THES E UNDERTAKINGS. HENCE, NO PART OF THESE EXPENSES ARE ALLOCABLE FOR WORKING OUT THE PR OFIT OF THE ELIGIBLE UNDERTAKING U/S 80IA. HE SUBMITTED THAT THE AO CONSIDERED THE ADMINISTRATIVE EXPENSES OF RS. 6,05,47,431/- FOR ALLOCATION TO THE PROJECT ELIGIBL E FOR DEDUCTION UNDER SECTION 80IA(4). OUT OF THIS AMOUNT, A SUM OF RS. 1,80,00, 500/- REPRESENTS STAMP DUTY PAID ON INCREASE ON SHARE CAPITAL WHICH HAS BEEN DISALL OWED IN THE COMPUTATION OF TOTAL INCOME. THEREFORE, THE LD. CIT (A) RIGHTLY EXCLUDED THIS AMOUNT IN WORKING OUT THE ADMINISTRATIVE EXPENDITURE FOR THE PURPOSE OF ALLOC ATION. THE BALANCE EXPENDITURE OF RS. 4,25,46,931/- COMPRISES OF ADVERTISEMENT, INSUR ANCE, POSTAGE AND TELEGRAM, REPAIR AND MAINTENANCE, CONSULTANCY ETC. WHICH DO N OT PERTAIN TO THE TOLL COLLECTION AS EVIDENT FROM THE STATEMENT AT PAGES 35-36 OF THE PAPER BOOK. THE LD. CIT (A), HOWEVER, WITHOUT ANY BASIS HELD THAT LOOKING TO THE NATURE OF ADMINISTRATIVE 11 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . EXPENSES, THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. HE HAS NOT GIVEN ANY REASONING WHY THE CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE WHEN FROM THE NATURE OF THE EXPENDITURE IT IS CLEAR THAT NO PART OF THESE EXPENDITURE ARE RELATED TO THE BOT PROJECTS AND THE BOT COLLECTION WORK HAS BE EN OUTSOURCED. HE SUBMITTED THAT ASSESSEE HAS ALREADY CONSIDERED RS. 87,10,074/ - TOWARDS THE TOLL EXPENSES AS TABULATED IN THE FACTS. HENCE, NO PART OF ADMINISTR ATIVE EXPENSES SHOULD BE CONSIDERED FOR ALLOCATION AND, THEREFORE THE LD. CI T (A) HAS ERRED IN ALLOCATING SUCH EXPENDITURE TOWARDS THE BOT PROJECTS. HE SUBMITTED THAT IN VIEW OF THESE FACTS, THE GROUND RAISED BY THE REVENUE DESERVES TO BE REJECTE D. 8.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE AO OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE COMPANY HAS CLAIM ED ESTABLISHMENT EXPENSES UNDER THE HEAD PAYMENT TO AND PROVISION FOR EMPLOY EES AS PER SCHEDULE I AT RS.32,68,44,701/- AND ADMINISTRATIVE EXPENSES AT RS. 6,05,47,431/- AS PER SCHEDULE J ANNEXED TO THE PROFIT & LOSS ACCOUNT. TOTAL OF THESE EXPENSES COMES TO RS. 38,73,92,132/-. THE AO FURTHER OBSERVED THA T NONE OF THE EXPENSES WERE CHARGED TOWARDS INCOME DISCLOSED FROM VARIOUS TOLL ROAD PROJECTS ELIGIBLE FOR CLAIMING DEDUCTION U/S 80IA OF THE ACT. HE OBSERVED THAT ASS ESSEE HAS CLAIMED TOTAL 8 TOLL ROAD/BRIDGE PROJECTS ELIGIBLE FOR DEDUCTION U/S 80 IA OF THE ACT WITHIN THE MEANING OF SECTION 80IA(4)(I) OF THE ACT FOR DEVELOPING, OPERA TING AND MAINTAINING OF INFRASTRUCTURE FACILITY I.E. ROAD/BRIDGE. THESE 8 PROJECTS ARE : (I) BIKANER BYPASS, (II) HANUMANGARH-SURATGARH ROAD, (III) HANUMANGARH-SHRIG ANGANAGAR ROAD, (IV)MASSI BRIDGE, (V) CHALA NEEM KA THANA-KOTPUTLI ROAD, (VI) CHOMU-AJITGARH-SHAHPURA 12 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . ROAD, (VII) CHALA NEEM KA THANA-KOTPUTLI ROAD (IMPR OVEMENT), (VIII) MANGALWAR NIMBAHERA ROAD. OUT OF THESE, TWO PROJECTS BIKANER BYPASS & CHOMU-AJITGARH- SHAHPURA ROAD HAVE INCURRED LOSSES. ON BALANCE 6 P ROJECTS ASSESSEE HAS CLAIMED DEDUCTION U/S 80IA OF THE ACT TO THE TUNE OF RS. 8, 20,34,909/-. AS THE ESTABLISHMENT AND ADMINISTRATIVE EXPENSES WERE UTILIZED FOR THE E NTIRE BUSINESS ACTIVITIES OF THE COMPANY WHICH INCLUDES ROAD & BRIDGE PROJECTS; AS S UCH THE ASSESSEE WAS ASKED TO SHOW CAUSE AND EXPLAIN AS TO WHY THE ESTABLISHMENT AND ADMINISTRATIVE EXPENSES OF RS. 38,73,92,132/- SHOULD NOT BE ALLOCATED PROPORTI ONATELY TO ROAD/BRIDGE PROJECTS IN PROPORTION TO THEIR INCOME OF RS. 23,00,24,830/- WITH TOTAL INCOME OF RS. 64,78,66,500/-. THE ASSESSEE, IN RESPONSE TO THIS QUERY, MADE A DETAILED SUBMISSION. HOWEVER, THE SUBMISSIONS OF THE ASSESS EE WERE NOT FOUND ACCEPTABLE BY THE AO. THE A.O, THEREFORE, BY RELYING ON THE P ROVISIONS OF SECTION 80IA(5) ALLOCATED THE DIRECT EXPENSES TOWARDS ELIGIBLE UNIT S AS WELL. THE AO FURTHER OBSERVED THAT IT IS CLEAR THAT MANY EXPENSES OF COM MON NATURE I.E. HEAD OFFICE AND OTHER DAY-TO-DAY MANAGEMENT AND SUPERVISION EXPENSE S HAVE NOT BEEN APPORTIONED AMONGST THE UNIT CLAIMING DEDUCTION U/S 80IA OF THE ACT. THE ASSESSEE HAS CONSIDERED ONLY DIRECT OPERATION AND MAINTENANCE EX PENSES FOR WORKING OUT THE PROFITS OF ROAD AND BRIDGE PROJECTS FOR CLAIMING DE DUCTION U/S 80IA, AS IF THESE PROJECTS WERE AUTOMATICALLY SET UP AND RUNNING WITH OUT ANY STRATEGIC PLANNING, MANAGEMENT, DIRECTIONS, SUPERVISION, MARKETING SUPP ORT, REGULAR CONTRACT AWARDING, WORKS TENDERING, CONTROL ETC. BY THE HEAD OFFICE/BR ANCH OFFICES. THE ADMINISTRATIVE, HEAD OFFICE AND OTHER EXPENSES HAVE A DIRECT NEXUS WITH THE RUNNING OF ROAD/BRIDGE PROJECTS OF THE ASSESSEE SITUATED AT VARIOUS PLACES AND, THEREFORE, THE SAME ARE 13 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . DEDUCTIBLE ON PROPORTIONATE BASIS IN COMPUTING THE PROFITS AND GAINS FROM THE ELIGIBLE BUSINESS FOR THE PURPOSE OF SUB-SECTION (1 ) OF SEC. 80IA OF THE ACT. THEREFORE, THE AO OBSERVED THAT A SUM OF RS. 13,75, 43,459/- IS REQUIRED TO BE APPORTIONED TO 80IA UNITS, ACCORDINGLY THIS WILL BE DEDUCTED FOR THE PURPOSE OF WORKING OUT DEDUCTION UNDER SECTION 80IA OF THE ACT . THUS THE AO REDUCED THE ALLOWABLE DEDUCTION ACCORDINGLY. HOWEVER, THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, RESTRICTED THE DISALLO WANCE TO RS. 6,98,93,301/- AGAINST RS. 8,20,34,909/-. THE LD. CIT (A) BY DOING SO HAS OBSERVED AS UNDER :- 5.5. THE APPELLANT HAS STATED THAT WHILE APPORTIO NING THE EXPENDITURE, THE ASSESSING OFFICER HAS WRONGLY TAKE N THE TOTAL TURNOVER AS RS. 64,78,66,570/- WHEREAS THE CORRECT TURNOVER IS RS. 4,38,13,34,652/-, REFLECTED IN THE INNER COLUMN OF SCHEDULE-G OF THE FINAL ACCOUNTS RELATING TO OPERATING RECEIPTS. IF T HE INNER COLUMN OF SCHEDULE-G PERTAINING TO OPERATING RECEIPTS IS TOTA LED, THE GROSS TURNOVER AMOUNTS TO RS. 69,89,85,491/- AS AGAINST R S. 4,38,13,34,652/- CLAIMED BY THE APPELLANT. 5.6. THE APPELLANT HAS STATED THAT THE WORK OF BOT PROJECTS IS HANDLED BY ONLY FIVE DIVISIONS OF THE APPELLANT AND THE REMAINING 26 DIVISIONS DO NOT UNDERTAKE ANY WORK RELATING TO BOT PROJECTS. THEREFORE, PAYMENT TO AND PROVISION FOR EMPLOYEES O F THESE FIVE DIVISIONS AND THE HEAD OFFICE SHOULD ONLY BE TAKEN. THIS CONTENTION OF THE APPELLANT IS CORRECT AND THIS EXPENDITURE RELAT ABLE TO BOT PROJECTS IS TAKEN AS RS. 16,98,40,588/-. 5.7. THE APPELLANT HAS STATED THAT ADMINISTRATIVE E XPENSES INCURRED AT THE HEAD OFFICE OF RS. 6,05,47,731/- DO NOT RELA TE TO BOT PROJECTS. LOOKING TO THE NATURE OF ADMINISTRATIVE EXPENSES, T HIS CONTENTION OF THE APPELLANT IS WITHOUT ANY BASIS AND CANNOT BE AC CEPTED. THE ADMINISTRATIVE EXPENSES WHICH NEED TO BE APPORTIONE D TO THE BOT PROJECTS IS RS. 6,05,47,731/- - RS. 1,80,00,500/-= RS. 4,25,46,931/- (EXPENDITURE OF RS. 1,80,00,500/- HAS BEEN DISALLOW ED BY THE APPELLANT IN THE COMPUTATION OF INCOME). THEREFORE, THE TOTA L EXPENDITURE WHICH NEEDS TO BE APPORTIONED TO THE BOT PROJECTS IS RS. 21,23,87,519/- (RS. 16,98,40,588 + RS. 4,25,46,931/-). 14 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . 5.8. IN THIS WAY, DISALLOWANCE UNDER SECTION 80IA(4 ) WILL BE COMPUTED AS UNDER :- RS. 21,23,87,519 X RS. 23,00,24,830 / RS. 69,89,8 5,491 = RS. 6,98,93,301/-. THE DISALLOWANCE U/S 80IA(4) OF RS. 8,20,34,909/- M ADE BY THE ASSESSING OFFICER IS RESTRICTED TO THE ABOVE AMOUNT OF RS. 6,98,93,301/-. GROUND 4.1 IS PARTLY ALLOWED. THE ASSESSEE HAS DEMONSTRATED THAT THE AUTHORITIES BELOW HAVE TAKEN INCORRECT FIGURE OF TURNOVER. ANOTHER CONTENTION OF THE ASSES SEE IS THAT THE AMOUNT RELATED TO HEAD OFFICE IS ALREADY APPORTIONED AND, THEREFORE, THERE WAS NO NEED FOR APPORTIONMENT OF THE SAME. WE FIND MERIT IN THE CO NTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. THEREFORE, THE GROUND RAISED IN THE A PPEAL OF THE REVENUE IS DISMISSED. 9. NOW WE TAKE UP THE ASSESSEES APPEAL IN ITA NO. 426/JP/2015. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THE LD.CIT (A) HAS ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE CLAIM OF PRIOR PERIOD EXPENSES OF RS. 55,28,017/- PERTAINING TO JODHPUR UNIT WHICH IS EXPLAINED TO BE REVERSAL OF INCOME BOOKED IN EAR LIER YEARS BY INCORRECTLY HOLDING THAT THE EXPLANATION FURNISHED BY THE ASSES SEE DOES NOT MATCH THE SUPPORTING ORDER SHEETS ENTRIES AND THE NATURE OF E XPENDITURE IS NOT ASCERTAINABLE. 2. THE LD.CIT (A) HAS ERRED ON FACTS AND IN LAW IN CON FIRMING THE FINDINGS OF THE AO THAT PAYMENT TO AND PROVISION FOR EMPLOYEES AND ADMINISTRATIVE EXPENSES NEEDS TO BE ALLOCATED ON PROPORTIONATE BA SIS FOR DETERMINING THE INCOME FROM BOT PROJECTS FOR ALLOWING THE CLAIM OF DEDUCTION U/S 80IA. 2.1. THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN DI SALLOWING THE CLAIM OF DEDUCTION IN RESPECT OF BOT PROJECTS U/S 80IA(4) BY RS. 6,98,93,301/- BY 15 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . A) CONSIDERING THE EXPENDITURE FOR APPORTIONMENT TO TH E BOT PROJECTS AT RS.21,23,87,591/- (16984588+42546931); B) BY TAKING THE GROSS TURNOVER AT RS. 69,89,85,491/- AS AGAINST RS. 4,38,13,34,652/- CLAIMED BY THE ASSESSEE. 10. THE FIRST GROUND OF THE APPEAL RELATES TO CONFI RMATION OF PRIOR PERIOD EXPENSES OF RS. 55,28,017/-. 11. THE CONTENTION OF THE LD. COUNSEL FOR THE ASSES SEE IS THAT THE ISSUE OF PRIOR PERIOD EXPENSES IS COVERED BY THE DECISION OF COORD INATE BENCH IN ITA NO. 26/JP/2014 FOR THE ASSESSMENT YEAR 2007-08 IN ASSES SEES OWN CASE AND IN ITA NO.759/JP/2013 FOR THE A.Y. 2008-09. HE SUBMITTED T HAT FROM THE TABULATED EXPENSES IT CAN BE NOTED THAT PRIOR PERIOD EXPENDIT URE BOOKED IN RESPECT OF HEAD OFFICE AND JODHPUR UNIT IS A CASE OF REVERSAL OF IN COME ALREADY OFFERED FOR TAX IN EARLIER YEARS. HENCE, THESE AMOUNTS CANNOT BE HELD AS PRIOR PERIOD EXPENSES RATHER IT IS A CASE OF REVERSAL OF EXCESS INCOME TAXED IN EARLIER YEAR. HE SUBMITTED THAT LD. CIT (A) IN RESPECT OF JODHPUR UNIT DID NOT ALLOW TH E PRIOR PERIOD EXPENSES BY STATING THAT EXPLANATION FURNISHED BY THE ASSESSEE DOES NOT MATCH WITH THE SUPPORTING ORDER SHEET ENTRIES. IN HOLDING SO, HE HAS NOT ELABORATED AS TO HOW THE EXPLANATION FURNISHED BY THE ASSESSEE DOES NOT MATCH WITH THE O RDER SHEET ENTRIES. HE SUBMITTED THAT SALE OF SHUTTERING MATERIAL IN THE Y EAR 2005-06 WAS CREDITED TO THE ACCOUNT OF CORPORATION INSTEAD OF ACCORDING CREDIT TO THE RESPECTIVE WORK AS A RESULT OF WHICH SIMILAR AMOUNT WAS SHOWN OUTSTANDING AGAIN ST THE PHED. ACCORDINGLY, THE PRIOR PERIOD EXPENSES IS DEBITED BY CREDITING TO TH E ACCOUNT OF PHED. THUS, IT IS A CASE OF REVERSAL OF INCOME WRONGLY BOOKED IN EARLIE R YEARS ON WHICH TAX IS PAID. 16 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . THEREFORE, LD. CIT (A) IS NOT JUSTIFIED IN CONFIRMI NG THE DISALLOWANCE OF RS. 55,28,017/-. 11.1. ON THE CONTRARY, THE LD. D/R SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. 11.2. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W. THE FACTUM OF THE CONTENTION THAT THE AMOUNT IS NOT A PRIOR PERIOD EXPENDITURE R EQUIRES VERIFICATION AT THE END OF THE AO WHETHER THIS INCOME WAS WRONGLY BOOKED IN EA RLIER YEARS IS TO BE VERIFIED BY MAKING FURTHER ENQUIRY. THEREFORE, WE SET ASIDE TH E ORDER OF LD. CIT (A) AND RESTORE THE MATTER TO THE FILE OF THE AO FOR VERIFYING THE CONTENTION OF THE ASSESSEE THAT THE AMOUNT REPRESENTS REVERSAL OF INCOME. IN CASE THE A O FINDS THAT IT IS A REVERSAL OF INCOME WRONGLY BOOKED IN EARLIER YEARS, IN THAT EVE NT HE WOULD DELETE THE DISALLOWANCE. THIS GROUND OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. 12. GROUND NO. 2 AND 2.1 RELATE TO DISALLOWANCE OF DEDUCTION UNDER SECTION 80IA OF THE ACT. 13. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN BRIEF. 13.1. ON THE CONTRARY, THE LD. D/R SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. 13.2. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS MADE THE SUBMISSIONS BY WAY WRITTEN SUBMISSIONS AS UNDER :- 1. IT IS SUBMITTED THAT ASSESSEE IS HAVING UNIT WI SE AS WELL AS PROJECT WISE ACCOUNTING SYSTEM. AT THE YEAR END, ACCOUNTS O F THE UNITS ARE CONSOLIDATED AT HEAD OFFICE AND BALANCE SHEET AND P ROFIT & LOSS ACCOUNT IS PREPARED. IN RESPECT OF BOT PROJECTS, CO MPANY HAS AWARDED THE WORK OF TOLL COLLECTION TO THE CONTRACTOR WHO P AYS THE TOLL COLLECTION 17 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . CHARGES AS PER THE TERMS OF THE AWARD. ALL EXPENSES ON SALARY/ADMINISTRATION ETC. IS BORNE BY THE CONTRACT OR. THEREFORE THE CORPORATION DOES NOT INCUR ANY EXPENDITURE ON SALAR Y OR ON ADMINISTRATION OF THE BOT PROJECT. WHATEVER EXPENDI TURE IS INCURRED IN THE BOT COLLECTION WORK THAT IS DEBITED IN WORKING OUT THE ELIGIBLE PROFIT OF THE BOT UNDERTAKING AS TABULATED ABOVE. THE SAME IS CERTIFIED BY THE CHARTERED ACCOUNTANT. THUS, ONCE ALL THE DIRECT AND INDIRECT EXPENSES INCURRED HAVE BEEN ACCOUNTED FOR IN CALCUL ATING THE ELIGIBLE PROFIT AND DULY CERTIFIED BY THE CHARTERED ACCOUNTA NT, THERE CANT BE FURTHER ALLOCATION OF PROPORTIONATE EXPENSES IN RES PECT OF EMPLOYEES COST AND ADMINISTRATIVE EXPENSES INCURRED AT HEAD O FFICE AND AT VARIOUS UNIT OFFICES. NO SUCH DISALLOWANCE WAS MADE IN THE PAST. HENCE THE DISALLOWANCE OF DEDUCTION U/S 80IA MADE BY AO AND R ESTRICTED BY CIT(A) IS INCORRECT, UNJUSTIFIED AND NOT AS PER LAW . 2. WITHOUT PREJUDICE TO ABOVE, THE TOTAL TURNOVER A ND THE MANNER OF ALLOCATION OF ADMINISTRATIVE EXPENSES AND PAYMENT T O EMPLOYEE AGAINST THE ELIGIBLE UNDERTAKING AS DONE BY THE LOWER AUTHO RITIES IS INCORRECT FOR THE FOLLOWING REASONS:- (I) THE AO HAS CONSIDERED THE TOTAL TURNOVER OF THE ASS ESSEE AT RS.64,78,66,570/- AND THE LD. CIT(A) AT RS.69,89,85 ,491/- WHEREAS THE CORRECT TURNOVER OF THE ASSESSEE IS RS.4,38,13, 34,652/- COMPUTED AS UNDER:- PARTICULAR OF TURNOVER TURNOVER AS PER AO COR RECT TURNOVER REMARKS CENTAGE CHARGES 26,24,99,957/ - 3,94,48,49,118/ - THESE CHARGES ARE IN RESPECT OF COST PLUS FIXED MARGIN CONTRACT. IN THESE CONTRACTS ASSESSEE CHARGES FIXED MARGIN ON THE EXPENDITURE ON CONTRACT INCURRED BY IT. IN SCHEDULE G (PB 20), ONLY THE CENTAGE CHARGES IS SHOWN. THE TURNOVER IN RESPECT OF THESE CONTRACT IS RS.394.48 CRORES AS MENTIONED AT PAGE 21 OF THE FINANCIAL STATEMENT 18 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . (PB 23) . THE WORKING OF THIS TURNOVER IS AT PB 37- 38. TENDER WORK 3,66,51,707/ - 3,66,51,707/ - STORAGE CHARGES 22,53,096/ - 22,53,096/ - MACHINE HIRE CHARGES 78,77,424/ - 4,54,34,161/ - THIS FIGURE IS GIVEN IN THE INNER COLUMN OF THE SCHEDULE G ITSELF BOT TOLL COLLECTION 23,00,24,830/ - 23,00,24,830/ - PROFIT ON SALE OF FIXED ASSETS 20,44,087/ - 20,44,087/ - INTEREST ON FDR 7,97,73,966/ - 7,97,73,966/ - MISC. RECEIPT 43,49,393/ - 43,49,393/ - INTEREST ON BOT PROJECTS 2,23,92,110/ - 2,23,92,110/ - TOTAL 64,78,66,570/ - 436,77,72,468/ - THUS, THE CORRECT TURNOVER IS RS. 436,77,72,468/- A ND NOT RS.64,78,66,570/- AS TAKEN BY AO AND RS.69,89,85,491/- AS TAKEN BY CI T(A). THE LD. CIT(A) TOOK THE TURNOVER AT RS.69,89,85,491/- BY MENTIONIN G THAT ONLY INNER COLUMN OF SCHEDULE G PERTAINING TO THE OPERATING RECEIPT I S TO BE TOTALED. HOW THIS AMOUNT IS ARRIVED AT IS NOT CLEAR BUT ACCORDING TO HIS FINDING, THE TURNOVER WOULD BE RS.64,78,66,570/- + RS.78,57,445/- + RS.3, 75,56,737/- I.E. RS.69,32,80,752/-. THIS TURNOVER TAKEN BY THE CIT(A ) IS INCORRECT AS HE DID NOT CONSIDERED THAT IN RESPECT OF CENTAGE WORK, THE REC EIPT SHOWN IN SCHEDULE G IS ONLY A CERTAIN PERCENTAGE OF THE TOTAL EXPENDITURE WHICH IS THE INCOME OF THE ASSESSEE AND THEREFORE IN WORKING OUT THE TURNOVER IN RESPECT OF CENTAGE CHARGES, THE EXPENDITURE INCURRED WHICH IS SEPARATE LY RECOVERED FROM THE CONTRACTEE IS TO BE CONSIDERED AND NOT THE CENTAGE CHARGES ONLY. THE TURNOVER IN RESPECT OF CENTAGE CHARGES IS RS.394,48,49,118/- AS EXPLAINED IN THE TABLE ABOVE. THEREFORE, THE LD. CIT(A) HAS INCORRECTLY CO NSIDERED THE GROSS TURNOVER OF THE ASSESSEE AT RS.69,89,85,491/- AS AGAINST THE CORRECT TURNOVER OF RS.436,77,72,468/- AS STATED ABOVE. IN AY 13-14, AO HIMSELF HAS CONSIDERED THE TURNOVER IN THIS MANNER AS PER THE ASSESSMENT O RDER ENCLOSED HEREWITH. (II) THE AO HAS CONSIDERED EXPENDITURE OF RS.32,68 ,44,701/- DEBITED IN SCHEDULE I (PB 20) TOWARDS PAYMENT TO AND PROVISION FOR EMPLOYEE FOR ALLOCATION PURPOSE. THIS EXPENDITURE IS FOR HEAD OF FICE AS WELL AS 31 UNITS OF THE ASSESSEE CORPORATION. OUT OF THE 31 UNITS, 26 UNITS ARE RELATED TO THE CONSTRUCTION WORK ONLY WHICH HAS NO RELATION WITH T HE TOLL COLLECTION. ONLY IN 19 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . FIVE UNIT CONSTRUCTION AS WELL AS TOLL COLLECTION W ORK IS CARRIED OUT. THE UNIT WISE DETAIL OF THE EXPENDITURE ON SALARY AND ALLOWA NCE IS AT PB 34 . HENCE SALARY/PENSION/GRATUITY/CONTRIBUTION TO STATE RENEW AL FUND AND STAFF WELFARE EXPENSES PAID/INCURRED TO/ON THE EMPLOYEES OF 26 UN ITS CANT BE CONSIDERED FOR ALLOCATION TO 80IA UNITS. THE ALLOCATION CAN AT THE MOST BE MADE IN RESPECT OF HEAD OFFICE EXPENSES AND FIVE UNITS WHERE TOLL C OLLECTION WORK IS ALSO LOOKED AFTER. ON THIS BASIS, THE EXPENDITURE UNDER THE HEA D PAYMENT TO AND PROVISION FOR EMPLOYEES IN RESPECT OF HEAD OFFICE AND THESE 5 UNITS WOULD BE AS UNDER:- PARTICULARS TOTAL AMOUNT AMOUNT RELATED TO HEAD OFFICE AND FIVE UNITS SALARY WAGES AND BONUS 17,73,86,515/ - 9,21,76,591/ - CONTRIBUTION TO PENSION AND GRATUITY FUND 14,16,45,738/ - 7,36,04,361/ - CONTRIBUTION TO STATE RENEWAL FUND 10,00,000/ - 5,19,636/ - STAFF WELFARE EXPENSES 68,12,448/ - 35,40,000/ - 32,68,44,701/ - 16,98,40,588/ - THE LD. CIT(A) HAS THEREFORE HELD THAT THE ENTIRE E XPENDITURE OF RS.32.68 CRORES CANNOT BE APPORTIONED TO THE PROJECTS ELIGIB LE FOR DEDUCTION U/S 80IA(4) AND THUS APPORTIONED ONLY 16.98 CRORES TO THESE ELI GIBLE PROJECTS. HOWEVER, IN DOING SO, HE IGNORED THE FACT THAT WHEN THE ENTIRE WORK OF COLLECTION OF TOLL HAS BEEN OUTSOURCED TO THE CONTRACTOR, APPORTIONING SUCH EXPENDITURE IN THE RATIO OF THE TURNOVER IS NOT CORRECT. THERE IS HARD LY ANY STAFF WHO IS REQUIRED TO SUPERVISE THE BOT COLLECTION WORK AS THE ENTIRE ACT IVITY IS OUTSOURCED AND WHATEVER EXPENDITURE IS INCURRED IN SUCH WORK, THE SAME IS ALREADY DEBITED AS TOLL COLLECTION EXPENSES IN WORKING OUT THE ELIGIBL E PROFIT OF THESE UNDERTAKINGS. HENCE, NO PART OF THESE EXPENSES ARE ALLOCABLE FOR WORKING OUT THE PROFIT OF THE ELIGIBLE UNDERTAKING U/S 80IA. (III) THE AO CONSIDERED ADMINISTRATIVE EXPENSES OF RS.6,05,47,431/- FOR ALLOCATION TO THE PROJECT ELIGIBLE FOR DEDUCTION U/ S 80IA(4). OUT OF THIS AMOUNT, A SUM OF RS.1,80,00,500/- REPRESENTS STAMP DUTY PAI D ON INCREASE ON SHARE CAPITAL WHICH HAS BEEN DISALLOWED IN THE COMPUTATIO N OF TOTAL INCOME (PB 15 AND 21) . THEREFORE, CIT(A) RIGHTLY EXCLUDED THIS AMOUNT IN WORKING OUT THE ADMINISTRATIVE EXPENDITURE FOR THE PURPOSE OF ALLOC ATION. THE BALANCE EXPENDITURE OF RS.4,25,46,931/- (60547431-18000500) COMPRISES OF ADVERTISEMENT, INSURANCE, POSTAGE AND TELEGRAM, REP AIR AND MAINTENANCE, CONSULTANCY ETC WHICH DO NOT PERTAIN TO THE TOLL CO LLECTION AS EVIDENT FROM THE STATEMENT AT P B 35-36. THE LD. CIT(A), HOWEVER, WITHOUT ANY BASIS HELD THA T LOOKING TO THE NATURE OF ADMINISTRATIVE EXPENSES, T HE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. HE HAS NOT GIVEN ANY R EASONING WHY THE 20 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE WHEN F ROM THE NATURE OF THE EXPENDITURE IT IS CLEAR THAT NO PART OF THESE EXPEN DITURE ARE RELATED TO THE BOT PROJECTS AND THE BOT COLLECTION WORK HAS BEEN OUTSO URCED. FURTHER, IT INCLUDES RS. 2 LACS BEING DEFERRED REVENUE EXPENDITURE WRITT EN OFF WHICH IS ALSO ADDED IN COMPUTING THE TOTAL INCOME (PB 15 AND 21) . THE ASSESSEE HAS ALREADY CONSIDERED RS.87,10,074/- TOWARDS THE TOLL EXPENSES AS TABULATED IN PARA 1 OF FACTS ABOVE. HENCE, NO PART OF ADMINISTRATIVE EXPEN SES SHOULD BE CONSIDERED FOR ALLOCATION AND THEREFORE THE LD. CIT(A) HAS ERR ED IN ALLOCATING SUCH EXPENDITURE TOWARDS THE BOT PROJECTS. FROM THE AFORESAID SUBMISSIONS IT IS EVIDENT THAT T HE CONTENTION OF THE ASSESSEE AGAINST DISALLOWANCE OF DEDUCTION ARE THREE FOLD. F IRSTLY, THE TURNOVER AS TAKEN BY THE AO AND THE LD. CIT (A) IS INCORRECT. SECONDLY, THE ASSESSEE HIMSELF HAS CONSIDERED THE EXPENDITURE AGAINST THE INCOME ELIGIBLE FOR DED UCTION UNDER SECTION 80IA. THIRDLY, THE ALLOCATION OF HEAD OFFICE EXPENDITURE AS DONE BY THE LOWER AUTHORITIES IS NOT CORRECT. THEREFORE, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN DISALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 80IA. WE FIND MER IT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. HOWEVER, THE FIGURES ARE REQUIRED TO BE VERIFIED FROM THE ACCOUNTS OF THE ASSESSEE. THEREFORE, THE ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE ON THIS ISSUE. THE ISSUE OF CLAIM OF DEDUCTI ON UNDER SECTION 80IA IS RESTORED BACK TO THE FILE OF THE AO TO VERIFY THE CONTENTION OF THE ASSESSEE AS MADE IN THE WRITTEN BRIEF. IN CASE THE AO FINDS THAT THE FIGURE S AS GIVEN IN THE WRITTEN BRIEF MATCHES WITH THE BOOKS OF ACCOUNT OF THE ASSESSEE, HE WOULD ACCORDINGLY RE- COMPUTE THE DEDUCTION ALLOWABLE TO THE ASSESSEE. N EEDLESS TO SAY THAT THE AO WOULD GIVE SUFFICIENT OPPORTUNITY TO THE ASSESSEE F OR FURNISHING THE EVIDENCES IN SUPPORT OF ITS CLAIM. THESE GROUNDS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 21 ITA NO. 558(2)/JP/2015 RAJASTHAN STATE ROAD DEV. & CONSTRUCTION CORPN. LTD . 14. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER IS PRONOUNCED IN THE OPEN COURT ON 08/09/ 2016. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 08/09/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE DCIT, CIRCLE-6, JAIPUR. 2. THE RESPONDENT RAJASTHAN STATE ROAD DEVELOPMEN T & CONSTRUCTION CORPN., JAIPUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO.558 & 426/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR