CRESCENT CONSTRUCTION CO., NAVI MUMBAI V. ADDL CIT 22(3), MUMBAI

ITA 4993/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92692 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 12-11-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: PRAKASH K JOTWANI
• Keywords: Depreciation; Revenue expenditure

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO.5292/MUM/2012 ASSESSMENT YEAR: 2008 - 09 ACIT - 22(3 ), 3 RD FLOOR, TOWER NO.6, VASHI RAILWAY STATION COMPLEX, VASHI, NAVI MUMBAI. / VS. M/S CRESCENT CONSTRUCTION COMPANY, 527, ARNEJA CORNER, SECTOR - 17, VASHI, NAVI MUMBAI - 400 703 ( / REVENUE) ( /ASSESSEE) P.A. NO.AACFC3931A ITA NO.4993/MUM/2012 ASSESSMENT YEAR: 2008 - 09 CRESCENT CONSTRUCTION COMPANY, 228, ANNAPURNA, SECTOR - 18, VASHI, NAVI MUMBAI - 400 705 / VS. COMMISSIONER OF INCOME TAX (APPEALS) - 33, ITO OFF. TOWER NO.6, VASHI RAILWAY STATION BUILDING, VASHI, NAVI MUMBAI. ( / REVENUE) ( /ASSESSEE) P.A. NO.AACFC3931A 2 ITA NOS.5292 & 4993/MUM/2012 M/S CRESCENT CONSTRUCTION COMPANY / REVENUE BY SHRI PREMANAND J. - DR / ASSESSEE BY SHRI PRAKASH K. JOTWANI / DATE OF HEARING : 26 /05/2015 / DATE OF ORDER : 0 1 / 06 /2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE AS WELL AS THE ASSESSEE ARE IN CROSS APPEAL FOR ASSESSMENT YEAR 2008 - 09 CHALLENGING THE IMPUGNED ORDER DATED 20.06.2012 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. 2. FIRST WE SHALL TAKE UP APPEA L OF THE REVENUE (ITA NO.5292/MUM/2012) WHEREIN THE EFFECTIVE GROUND RAISED PERTAINS TO ALLOWING DEPRECIATION OF SCHOOL BUILDING, LABOUR HUTS, STORE BUILDING ETC. THE CRUX OF ARGUMENTS ADVANCED BY SHRI PREMANAND J. LD. DR IS IDENTICAL TO THE GROUND RAISED BY SUBMITTING THAT THESE ASSETS WERE NOT OWNED BY THE ASSESSEE AND FURTHER THE AGREEMENT WITH THE RAJASTHAN HOUSING BOARD DOES NOT MENTION SUCH CONSTRUCTION. ON THE OTHER HAND SHRI PRAKASH K. JOTWANI, LD. COUNSEL FOR THE ASSESSEE DEFENDED THE CONCLUSION AR RIVED AT IN THE IMPUGNED ORDER . 2. 1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, 3 ITA NOS.5292 & 4993/MUM/2012 M/S CRESCENT CONSTRUCTION COMPANY CONCLUSION DRAWN IN THE IMPUGNED ORDE R, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSELS, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE NOTE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION MAINLY WITH THE GOVERNMENT/SEMI - GOVERNMENT ORGANIZATIONS. THE ASSESSEE ON 30.09.2008 DECLARED INCOME OF RS.79,44,800/ - . THE ASSESSING OFFICER DETERMINED THE INCOME AT RS. 1,11,52,260/ - . A SUM OF RS. 16,07,503/ - WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT 100% DEPRECIATION ON THE SCH OOL BUILDING, LABOUR HUTS AND STORE BUILDING ETC. IS NOT AVAILABLE TO THE ASSESSEE. THE ASSESSEE CONSTRUCTED/COMPLETED A BIG PROJECT OF RAJASTHAN HOUSING BOARD. AS PER THE AGREEMENT THE ASSESSEE WAS TO CONSTRUCT CERTAIN ASSETS/BUILDINGS LIKE SCHOOL, LABOUR HUTS AT THE SITE TO STAY FOR LABOUR AND STORE BUILDING TO KEEP THE MATERIAL AT SITE, SITE OFFICE BUILDING ETC. THE SAME WERE HANDED OVER TO THE RAJASTHAN GOVERNMENT. THE ASSESSEE WRITTEN OF THE ASSETS BY CLAIMING 100% OF DEPRECIATION . THERE IS NO DISPUTE THAT THE ASSESSEE INCURRED EXPENSES ON SUCH CONSTRUCTION LIKE SITE OFFICE BUILDING, LABOUR HUTS AND STORE BUILDING WHICH WERE LATERON HANDED OVER TO THE RAJASTHAN HOUSING BOARD. THESE WERE PART AND PARTIAL OF THE PROJECT, THUS, THE CONSTRUCTION EXPENSES HA S TO BE ALLOWED AS REVENUE EXPENDITURE. THE ASSESSEE PREFERRED TO DO IN TWO INSTALLMENT BY CLAIMING 50% DEPRECIATION IN TWO DIFFERENT ASSESSMENT YEAR WHEN THE PROJECT WAS IN EXISTENCE. IN VIEW OF THESE FACTS, WE AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE IN GRANTING RELIEF WITH RESPECT TO CLAIM OF 4 ITA NOS.5292 & 4993/MUM/2012 M/S CRESCENT CONSTRUCTION COMPANY DEPRECIATION, THUS, THE APPEAL OF THE REVENUE IS HAVING NO MERIT, CONSEQUENTLY, THE APPEAL IS DISMISSED. 3. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE (ITA NO. 4993 /MUM/2 012) , WHEREIN CONFIRMING THE ADDITION OF RS.11,62,358, MADE ON ACCRUED INTEREST ON FIXED DEPOSIT, ALLEGEDLY NOT ACCOUNTED IN THE BOOKS OF ACCOUNT HAS BEEN CHALLENGED. THE LEARNED COUNSEL FOR THE ASSESSEE ADVANCED HIS ARGUMENTS WHICH ARE IDENTICAL TO THE GR OUND RAISED. ON THE OTHER HAND, THE LEARNED D.R. DEFENDED THE CONFIRMATION OF ADDITION BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSELS, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE FIND THAT THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON THE BUSINESS OF CIVIL CONSTRUCTION BROADLY WITH THE GOVERNMENT AND SEMI GOVERNMENT ORGANISATIONS. THE ASSESSING OFFICER DISALLOWED A SUM OF RS.11,62,358, ON THE GROUND THAT THE ACCRUED INTEREST ON F.DS WAS NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS BY THE ASSESSEE. WE FIND THAT THE BANK DIRECTLY CREDITED THE INTEREST ON F.DS AND DUE TO NON - COMMUNICATION TO THE ASSESSEE AT THE RELEVANT TIME, COULD NOT BE SHOWN, HOWEVER, THE F.DS MATURED IN THE ASSESSMENT YEAR 2010 - 11 AND THE BAN K ALONG WITH INTEREST CREDITED THE INCOME FOR WHICH THE ASSESSEE DECLARED THE SAME IN 5 ITA NOS.5292 & 4993/MUM/2012 M/S CRESCENT CONSTRUCTION COMPANY HIS PROFIT & LOSS ACCOUNT ON MATURITY AND OFFERED THE INCOME ON SUCH INTEREST IN THE ASSESSMENT YEAR 2010 - 11. THERE IS NO LOSS TO THE REVENUE SINCE THE INTEREST WAS OFFER ED AS INCOME. THUS, THIS APPEAL OF THE ASSESSEE IS ALLOWED AND THE ADDITION SO MADE IS DELETED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AND THAT OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESE NTATIVES FROM BOTH SIDES AT THE CO NCLUSION OF THE HEARING ON 26 TH MAY 2015. SD/ - SD/ - ( N.K. BILLAIYA ) (JOGINDER SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; DATED : 01 /06 /2015 S.K , P.S/. . . / PRADEEP CHOWDHURY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A) - , MUMBAI 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI