The ACIT, 3(1), Bhopal V. M/s Sandhya Prakash Bhawan, Bhopal

ITA 46/IND/2013

• Counselvise Citation: 4622714 RSA 2013
• Duration Of Justice: 2 year(s) 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 31-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHANE
• Assessee Lawyers: GIRISH AGRAWAL; N D PATWA
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, J.M. AND SHRI B.C.MEENA, A.M. I.T.A.NO.46/IND/2013 A.Y. : 2009-10 ACIT, 3(1), M/S.SANDHYA PRAKASH BHAWAN, BHOPAL VS MALVIYA NAGAR, BHOPAL APPELLANT RESPONDENT P.A.N. NO A AGCS3539R APPELLANT BY SHRI RAJEEV VARSHANE, CIT DR RESPONDENT BY SHRI GIRISH AGRAWAL AND SHRI N. D.PATWA, ADVOCATES DATE OF HEARING : 0 1 .0 9 .2015 DATE OF PRONOUNCEMENT : 10 .09.2015 -: 2: - 2 O R D E R PER GARASIA, J.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, BHOPAL, DATED 15.11.2012 FOR THE ASSE SSMENT YEAR 2009-10. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENU E :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN :- 1. DELETING THE ADDITION OF RS. 11,03,459/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF BINDING CHARGES. 2. DELETING THE ADDITION OF RS. 5,51,567/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF DIFFERENCE IN RENTAL INCOME. 3. DELETING THE ADDITION OF RS. 3,18,36,970/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF -: 3: - 3 DIFFERENTIAL/ADDITIONAL INCOME AS PER TDS CERTIFICATE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PRINTING OF B OOKS AND PERIODICALS, NEWSPAPERS AND CIVIL CONSTRUCTION WORK . DURING THE YEAR, THE ASSESSEE HAS DECLARED TOTAL RECEIPTS OF RS. 20,99,08,079/- ON WHICH NET PROFIT OF RS. 66,93,148 /- @ 39.51% HAS BEEN EARNED AND SHOWN. THE ASSESSEES DE CLARED RESULTS ALONGWITH ITS AUDITED BOOKS OF ACCOUNT HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER. 4. THE FIRST GROUND RELATES TO THE ADDITION OF RS. 11,03,459/- MADE FOR DISALLOWANCE OF BINDING CHARGE S. 5. ON VERIFICATION OF PROFIT AND LOSS ACCOUNT, THE AO FOUND THAT THE ASSESSEE HAS CLAIMED BINDING CHARGES AMOUNTING TO RS. 11,03,459/- FOR ASSESSMENT YEAR 20 09-10 WHEREAS IT WAS RS. 20,18,346/- FOR ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS SHOWN BINDING CHARGES RECEIPTS OF RS. 2,25,47,796/- IN THE ASSESSMENT YEAR 2008-09 AGAINS T EXPENSE OF RS. 20,18,346/-, WHEREAS IN THE YEAR UND ER CONSIDERATION, THE ASSESSEE COMPANY HAS NOT SHOWN A NY -: 4: - 4 RECEIPT AS BINDING CHARGES. IT WAS CLEAR THAT DURIN G THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS NOT DO NE ANY BINDING WORK. WITHOUT DOING ANY BINDING WORK, THE P URPOSE OR JUSTIFICATION FOR BINDING CHARGES EXPENSES IS NOT F URNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS. THE AO, THEREFORE, ADDED THE AMOUNT OF RS. 11,03,45 9/- IN THE TOTAL INCOME OF THE ASSESSEE. 6. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DELETED THIS ADDITION BY OBSERVING AS UNDER :- 3.3 ON PERUSAL OF RECORDS AND SUBMISSIONS, THE APPELLANT COMPANY IS FOUND TO HAVE DONE BINDING WORK FOR TEXT BOOK CORPORATION, M.P. MADHYAM, CHHATISGARH TEXT BOOK CORPORATION AND HINDI GRANTH ACADEMY IN ITS VARIOUS DIVISIONS WHICH IS DULY SHOWN IN THE JOB WORK RECEIPT OF RS. 5,04,98,316/- AS COMPARED TO NIL SHOWN LAST YEAR. AO HAS ACCEPTED APPELLANTS AUDITED BOOKS OF ACCOUNT WITHOUT MENTIONING ANY DEFECT THEREIN NOR HAS BROUGHT ANY ADVERSE MATERIAL ON RECORD TO SHOW THAT CLAIMED BINDING -: 5: - 5 EXPENSES HAVE NOT BEEN INCURRED OR PAID OUTSIDE ITS BOOKS OF ACCOUNT. DISALLOWANCE HAS BEEN MADE MORE ON PRESUMPTIONS AND SURMISES. AO IS NOT FOUND JUSTIFIED IN MAKING DISALLOWANCE OF LEGITIMATE BUSINESS EXPENSES INCURRED AS PER APPELLANTS BOOKS OF ACCOUNT BINDING CHARGES. ADDITION OF RS. 11,03,459/- IS, HEREBY, DELETED. 7. LD. CIT D.R. RELIED UPON THE ORDER OF AO. 8. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS RECEIVED BINDING CHARGES IN THIS ASSES SMENT YEAR ALSO WHICH HAVE BEEN RECORDED UNDER THE HEAD JOB W ORK RECEIPTS. THERE IS CHANGE IN NAME OF HEADING ( NOT THE NATURE OF RECEIPTS). LAST YEAR THE JOB WORK RECEIPTS WAS S HOWN AT RS. 3,45,72,494/- AND THIS YEAR IT WAS SHOWN AT RS. 9,1 5,11,847/- . THE LD. COUNSEL FURTHER STATED THAT THE BINDING EXPENSES ARE INDEPENDENT OF BINDINGS RECEIPTS AS BINDING PROCESS IS NOT ONLY DONE FOR OUTSIDE PARTIES BUT IT IS ALSO CARRIE D OUT FOR PUBLICATION OF OWN JOURNALS, PERIODICALS, BOOKS ETC . DURING -: 6: - 6 EXAMINATION ALSO, THE AO DID NOT FIND ANY SPECIFIC ENTRIES OF NON-VERIFIABLE NATURE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE BINDING RECEIPT WAS NOT SHOWN SEPA RATELY DURING THE YEAR AS THE SAME WAS ALREADY INCLUDED UN DER THE HEAD JOB WORK WHERE THE RECEIPT WAS RS. 5,04,98,3 16/-. BINDING WORK IS BASICALLY STITCHING, PASTING AND BI NDING OF PAPERS. THIS PROCESS IS ALSO BEING DONE WHILE PACKA GING WHERE BOARDS ARE PASTED AND STITCHED. THIS PROCESS IS ALS O BEING DONE IN CASE OF PRINTING OF BOOKS AND PERIODICALS A LSO. DESPITE EXTENSIVE EXAMINATION, THE AO DID NOT FIND ANY EN TRIES TO BE OF UN-VERIFIABLE NATURE. WE, THEREFORE, UPHOLD THE ACTION OF THE LD. CIT(A). GROUND NO. 1 FAILS. 10. GROUND NO. 2 RELATES TO THE ADDITION OF RS. 5,51,56 7/- ON ACCOUNT OF DISALLOWANCE OF DIFFERENCE IN RENTAL INCOME. 11. THE AO ON VERIFICATION OF TDS CERTIFICATES FOUND TH AT THE TOTAL RENTAL INCOME AT RS. 62,45,567/- AS AGAIN ST RS. 56,94,000/- WAS SHOWN BY THE ASSESSEE AND, THUS, TH E DIFFERENCE OF RS. 5,51,567/- WAS ADDED TO THE TOTAL INCOME. -: 7: - 7 12. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DELETED THIS ADDITION STATING THAT THE TOTAL RENT R ECEIVED WAS RS. 56,94,000/- ( RS. 36,24,000 + RS. 20,70,000/-) ON WHICH SERVICE TAX OF RS. 5,75,567/- HAS ALSO BEEN PAID. T HE ASSESSEE WAS FOUND TO HAVE DECLARED RENTAL INCOME IN ITS BOO KS OF ACCOUNT AS RECEIVED BY IT AND THE ADDITION OF RS. 5 ,51,567/- WAS NOT FOUND SUSTAINABLE AND WAS DELETED BY THE CI T(A). 13. THE LD. CIT D.R. RELIED ON THE ORDER OF THE AO. 14. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE AOS FINDING IS WRONG BECAUSE WHILE ARRIVING TO THI S CONCLUSION, HE CONSIDERED ONLY ONE RATE OF TDS I.E. 15 % ONLY AND THAT TOO WITHOUT TAKING INTO ACCOUNT SERVICE TA X CONTENT. HE FURTHER CONTENDED THAT RENTAL INCOME CONSISTS OF TWO TYPES OF INCOME, ONE IS RELATED TO HIRING OF BUILDING AND ANOTHER RELATED TO HIRING OF MACHINERY AND TDS WAS DEDUCTED ON RENTAL INCOME INCLUDING SERVICE TAX. 15. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE TOTAL RENT RECEIVED WAS RS. 56,94, 000/- ON WHICH SERVICE TAX WAS CALCULATED AT RS. 5,75,567/-, WHICH HAS -: 8: - 8 ALSO BEEN PAID. THE ASSESSEE HAS ALSO DECLARED THE RENTAL INCOME IN ITS BOOKS OF ACCOUNT AS RECEIVED BY IT. W E FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS. 5,51,567/- BY OBSERVING AS UNDER :- 4.2 APPELLANTS SUBMISSIONS HAVE BEEN CONSIDERED CAREFULLY AND ARE FOUND ACCEPTABLE. THE FOLLOWING CHART SHOWS THE DETAILS OF RENTAL INCOME DECLARED BY THE APPELLANT ALONGWITH TDS MADE THEREON :- DATE RENT OF BUILDING SERVICE TAX TOTAL TDS @ 16.99% ON BUILDING RENT OF MACHINERY SERVICE TAX TOTAL TDS @ 11.33% ON MACHINERY 30.4.08 0.00 0.00 0.00 0.00 460000 0.00 460000 5211 8 31.05.08 0.00 0.00 0.00 0.00 460000 0.00 460000 521 18 30.06.08 360000 44496 404496 68746 115000 14214 129 214 14642 31.07.08 360000 44496 404496 68746 115000 14214 129 214 14642 31.08.08 360000 44496 404496 68746 115000 14214 129 214 14642 30.09.08 360000 44496 404496 68746 115000 14214 129 214 14642 31.10.08 360000 44496 404496 68746 115000 14214 129 214 14642 30.11.08 360000 44496 404496 68746 115000 14214 129 214 14642 31.12.08 360000 44496 404496 68746 115000 14214 129 214 14642 31.01.09 360000 44496 404496 68746 115000 14214 129 214 14642 28.02.09 360000 43171 403171 68520 115000 13791 128 791 14594 31.03.09 360000 37080 397080 67485 115000 11845 126 845 14373 31.03.09 12000 0.00 12000 0.00 0.00 0.00 0.00 0.00 31.03.09 12000 0.00 12000 0.00 0.00 0.00 0.00 0.00 TOTAL 3624000 436219 4060219 685973 2070000 139348 2209348 250339 THUS, THE TOTAL RENT RECEIVED IS RS. 56,94,000/- ( RS. 36,24,000/- + 20,70,000/-) ON WHICH SERVICE TAX OF RS 5,75,567/- HAS ALSO BEEN PAID. THE APPELLANT IS FOUND TO HAVE DECLARED RENTAL INCOME IN ITS BOOKS O F -: 9: - 9 ACCOUNT AS RECEIVED BY IT. ADDITION OF RS. 5,51,567 /- IS NOT FOUND SUSTAINABLE AND HEREBY DELETED. GROUND NO. 2 IS DISMISSED . 16. GROUND NO. 3, WHICH RELATES TO ADDITION OF RS. 3,18,36,970/- MADE FOR DIFFERENCE IN TOTAL INCOME. 17. ON VERIFICATION OF TDS CERTIFICATE, THE TOTAL INCOM E OF THE ASSESSEE WAS CALCULATED AT RS. 13,89,92,745/-. THE INTEREST INCOME SHOWN BY THE ASSESSEE WAS FOUND ACC ORDING TO TDS CERTIFICATE AND RENTAL INCOME WAS ALREADY CONSI DERED. THERE WAS NO OTHER INCOME ON WHICH TDS WAS TO BE DE DUCTED LIKE MISC. INCOME, WRITTEN OFF, POWER CHARGES RECEI VED, LABOUR CHARGES RECEIVED ETC. ACCORDINGLY, FROM THE TDS CER TIFICATE THE INCOME OTHER THAN ABOVE INCOME WAS CALCULATED AT RS . 13,89,92,745/-. BUT THE ASSESSEE HAD SHOWN SUCH INC OME COMPRISING OF SALES AT RS. 4,15,29,871/-, JOB WORK AT RS. 5,04,98,316/- AND ADVERTISING RECEIPT AT RS. 1,51,2 7,589/- AGGREGATING TO RS. 10,71,55,775/- ONLY. THE INCOME OF RS. 3,18,36,970/- WAS NOT SHOWN BY THE ASSESSEE. HENCE, THE SAME WAS CONSIDERED AS INCOME OF THE ASSESSEE AND A DDED BACK TO ITS INCOME. -: 10: - 10 18. THE MATTER CARRIED TO LD. CIT(A). THE LD. CIT(A) DE LETED THE ADDITION BY OBSERVING AS UNDER :- 5.2 ON PERUSAL, APPELLANTS SUBMISSIONS ARE FOUND ACCEPTABLE. AS PER SCHEDULE-10, THE APPELLANT HAS DECLARED MISC. INCOME OF RS. 9,15,11,847/- DURING T HE YEAR, DETAILS OF WHICH HAVE BEEN GIVEN TO THE AO DU RING THE CURSE OF ASSESSMENT PROCEEDINGS. THE SAME ARE A S UNDER :- INDIRECT INCOMES 1-APR-2008 TO 31-MAR-2009 S.NO. PARTICULARS AMOUNT 1 DISCOUNT RECEIVED 142296.00 2 EARTH DEVELOPMENT WORK 91205877.20 3 INTEREST ON FDR 23756 4 MISC. INCOME 8446 5 TENDER FORM REVD. 67500 6 DIESEL CHARGES RECEIPTS 25811.08 7. INTEREST RECEIVED ON S. D. 9162 8 WATER CHARGES RECEIVED 29000 GRAND TOTAL 91511848.28 FURTHER DETAILS OF EARTH DEVELOPMENT WORK CARRIED OUT FOR VIBHA TRADING PRIVATE LIMITED ON WHICH SERVICE TAX AND TDS HAVE ALSO BEEN DEDUCTED -: 11: - 11 ALONGWITH TAX PAID CERTIFICATES HAVE BEEN PRODUCED BEFORE THE AO AS UNDER :- S.NO. PARTICULARS AMOUNT RS. SERVICE TAX RS. TOTAL RS. TDS RS. 1. VIBHA TRADING PVT.LTD. 80769628 8116410 88886038 1104130 2. VIBHA TRADING PVT.LTD. 10436249 1048721.80 11484971 213481 3. VIBHA TRADING PVT.LTD. 0.00 0.00 0.00 906400 TOTAL 91205877.20 2165131.80 100371009 2224011 A.O. HAS MADE THE SAID DISALLOWANCE ON MISCONCEIVED PRESUMPTION. AFTER PERUSAL OF RECORDS, NO VARIATION IS FOUND IN DECLARED INCOME VIS--VIS TDES CERTIFICATES AND AS MENTIONED BY THE ASSESSING OFFICER. ACCORDINGLY, ADDITION OF RS. 3,18,36,970/- IS NOT FOUND SUSTAINABLE AND HEREBY DELETED. 19. LD. CIT DR RELIED ON THE ORDER OF THE AO. 20. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT TH E AO HAS NOT CONSIDERED OTHER HEADS OF INCOME I.E. MI SC. INCOME, POWER CHARGES RECEIVED, LABOUR CHARGES ETC. THE LD. -: 12: - 12 AO PRESUMED THAT NO TDS SHOULD HAVE BEEN DEDUCTED O N OTHER INCOME LIKE MISC. INCOME, POWER CHARGES RECEI VED, LABOUR CHARGES RECEIVED ETC. IT WAS FURTHER CONTEND ED THAT ONLY MISC.INCOME INCLUDED ONE WORK OF LAND LEVELING OF M /S. VIBHA TRADING COMPANY, WHERE THE ASSESSEE HAS PAID RS. 9,81,46,998/- (INCLUDING SERVICE TAX) AND TDS OF RS . 22,24,011/- HAD BEEN DEDUCTED DURING THE YEAR. THE LD. COUNSEL CONTENDED THAT THE ADDITION OF INCOME OF R S. 3,18,36,970/- MAY PLEASE BE DELETED. 21. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE AOS PRESUMPTION THAT TDS SHOULD N OT HAVE BEEN DEDUCTED ON THE INCOMES SUCH AS MISC. INCOME, POWER CHARGES RECEIVED AND LABOUR CHARGES. WE FIND THAT I T IS BASED ON PURELY SURMISES AND CONJECTURES. WE CONCUR WITH THE FINDING OF THE LD. CIT(A) HOLDING THAT THE AO HAS M ADE THE SAID -: 13: - 13 DISALLOWANCE ON MIS-CONCEIVED PRESUMPTION. OUR INT ERFERENCE IS NOT REQUIRED. GROUND NO. 3 IS DISMISSED. 22. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 10 TH SEPTEMBER, 2015. SD/- (B. C. MEENA) ACCOUNTANT MEMBER SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 10 TH SEPTEMBER, 2015. CPU* 1.9