ACIT CIR. - 18(2), MUMBAI V. M/s. BACKBONE UNITY (JOINT VENTURE), MUMBAI

ITA 5712/MUM/2006

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2635 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 02-11-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Section: 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI D.K. AGARWAL, JM & SHRI R.K. PANDA, AM I.T.A. NO. 5712/MUM/06 (ASSESSMENT YEAR 2003-04) ACIT, CIRCLE 18(2) ROOM NO. 115, 1 ST FLOOR, PIRAMAL CHAMBERS, PARE, MUMBAI-400 012 VS. M/S. BACKBONE UNITY (JOINT VENTURE), 1252, PUSHPANJALI, OLD PRABHADEVI ROAD, PRABHADEVI, MUMBAI-400 021 PAN: AADFB9812C APPELLANT RESPONDENT APPELLANT BY: SHRI S.S. RANA RESPONDENT BY: SHRI VIJAY MEHTA O R D E R DATE OF HEARING: 22.09.2009 DATE OF ORDER: 02.12.2009 PER R.K. PANDA, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 30 TH AUGUST, 2006 OF THE CIT(A)-XVIII, MUMBAI RELATING TO ASSESSMENT YEAR 2003-04. 2. GROUNDS OF APPEAL NOS. 1 AND 2 BY THE REVENUE READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN: I. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FA CTS OF THE CASE. 2. THE CIT(A) HAS ERRED IN DELETING ADDITION OF RS.11,14,82,840/- MADE BY THE AO ON ACCOUNT OF SUPP RESSION OF GROSS PROFIT BY ASSESSEE ON A/C OF EXCESS BILLIN G FOR VARIOUS QUANTITIES OF WORK WHICH WERE SHOWN AS OPENING WORK -IN- PROGRESS BUT COULD NOT HAVE BEEN EXECUTED AS IS EST ABLISHED FROM THE SCHEDULE OF TOTAL QUANTITIES OF WORK DONE BY THE ASSESSEE FOR ITS CLIENT AND BY SUB-CONTRACTORS FOR THE ASSESSEE WITHOUT APPRECIATING THAT I.T.A. NO. 5712/MUM/06 M/S. BACKBONE UNITY (JOINT VENTURE) ========================= 2 (I) THE ADDITION HAD BEEN MADE BY THE AO AFTER DOIN G THOROUGH ANALYSIS OF QUANTITIES OF WORK DONE IN RES PECT OF EACH ITEM OF WORK BY THE SUBCONTRACTORS AND QUANTIT IES OF WORK DONE BY ASSESSEE FOR MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM) AND FINDING OUT THAT QUANTITIES OF VA RIOUS ITEMS OF WORK EXECUTED DURING THE YEAR BY SUBCONTRA CTORS WITH THE QUANTITIES BILLED BY ASSESSEE ON ITS CLIEN T AND THEREFORE, THERE WAS NO QUESTION OF ANY OPENING WOR K-IN- PROGRESS. (II) THE ADDITION HAD BEEN MADE BY THE AO ON THE B ASIS OF THE CRUCIAL INFORMATION IN THE FORM OF RUNNING BILL S OF ASSESSEE AND SUBCONTRACTORS PROVIDED ONLY ON 30.03.2006 WHIL E THE ASSESSEE WAS GETTING BARRED BY LIMITATION ON 31.3.2 006. AND (III) THE ASSESSEE DID NOT OFFER ANY RECEIPTS OR IN COME IN A.Y. 2003-03 AND ENTIRE EXCESS BILLS RAISED BY SUBC ONTRACTORS IN A.Y. 2002-03 WERE SHOWN AS CLOSING WORK-IN-PROGR ESS AS ON 31.03.2002 AND HENCE THE FINDING OF THE CIT(A) THAT THIS WILL AFFECT THE INCOME FOR A.Y. 2002-03 ONLY AND NOT FOR THE A.Y. 2003-04 WAS ERRONEOUS. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A JOINT VENTURE (JV) BETWEEN 2 PARTNERS VIZ., M/S. BACKBONE PROJECT S LTD. (BPL) AND M/S. UNITY INFRAPROJECTS LTD (UIL) EACH HAVING PROFIT SH ARING RATIO OF 50%. THESE PARTNERS HAVE FORMED THE JOINT VENTURE FOR TH E WORK OF STRENGTHENING OF TANSA DAM, TALUKA SHAHAPUR, DISTRI CT THANE. THE JV FORMED BY A MOU DATED 7.3.2000 TO DO THE ABOVE WORK FOR MUNICIPAL CORPORATION OF GREATER MUMBAI (MCGM). THE WORK HAS BEEN STATED TO BE STARTED IN DECEMBER 2001 AND AN OPENING WORK-IN-PRO GRESS OF RS.10,79,06,410/- HAS BEEN SHOWN AT THE BEGINNING O F THE IMPUGNED ASSESSMENT YEAR. CONTRACT RECEIPTS HAVE STARTED T O COME TO THE JV IN THIS FINANCIAL YEAR ONLY. THE ASSESSEE HAS SHOWN TO HAV E RECEIVED RS.28,96,58,745/- AS CONTRACT RECEIPTS. THE JV HA S SHOWN CLOSING WORK- IN-PROGRESS OF RS.43,59,896. 4. THE ASSESSING OFFICER CALLED FOR VARIOUS DETAILS FR OM THE ASSESSEE. THE ASSESSEE FILED FINAL RUNNING BILLS OF SUBCONTRA CTOR ALONG WITH THE WORKING OF QUANTITY, RATE AND VALUE OF VARIOUS ITEM S OF WORK BILLED BY THE I.T.A. NO. 5712/MUM/06 M/S. BACKBONE UNITY (JOINT VENTURE) ========================= 3 SUBCONTRACTOR AND BILLED BY THE ASSESSEE ON MCGM. THE ASSESSING OFFICER OBSERVED FROM THE ABOVE BILLS THAT THE QUANTITIES O F WORK EXECUTED BY THE SUBCONTRACTOR DURING THE YEAR MATCH WITH THE QUANTI TIES OF WORK EXECUTED BY THE ASSESSEE FOR MCGM. THEREFORE, THE ASSESSING OFFICER WAS OF THE OPINION THAT THERE IS NO QUESTION OF OPENING WORK-I N-PROGRESS. NOT BEING SATISFIED WITH THE VARIOUS EXPLANATIONS GIVEN BY TH E ASSESSEE THE ASSESSING OFFICER MADE AN ADDITION OF RS.11,14,82,8 40 TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF SUPPRESSION OF GROSS PROFIT DUE TO THE FOLLOWING REASONS AS PER PARA 14 OF ASSESSMENT ORDE R AND WHICH READS AS UNDER: A. THE ANALYSIS OF FINAL RUNNING BILLS OF THE SUB CONTRACTORS AND ASSESSEE SHOW THAT ASSESSEE HAS BILLED EXCESS QUANT ITIES OF WORK AS OPENING WIP WHICH HAVE NOT BEEN EXECUTED BY THE SUBCONTRACTORS FOR THE ASSESSEE TO SUPPRESS ITS INC OME. THIS IS PROVED AS THE QUANTITIES EXECUTED BY THE SUBCONTRACTORS FOR THE ASSESSEE DURING THE YEAR MAT CH WITH THE QUANTITIES EXECUTED BY THE ASSESSEE FOR MCGM DU RING THE YEAR. B. THE ASSESSEES SUBCONTRACTORS ARE ITS PARTNERS O R ASSOCIATED CONCERNS WHICH HAVE GIVEN THE BILLS AS PER THE CONV ENIENCE OF THE ASSESSEE TO SUPPRESS THE PROFITS. C. THE ASSESSEES POSSIBLE ARGUMENTS THAT THE QUANT ITIES DONE BY SUBCONTRACTORS ARE MORE THAN THE QUANTITIES IT C AN BILL TO MCGM CANNOT STAND AS EXACTLY THE SAME ITEM NO. AND DESCRIPTION HAS BEEN USED BY SUBCONTRACTORS AS IN T HE BILL FORMAT PRESCRIBED BY MCGM. NO AGREEMENT WHATSOEVER HAS BEEN GIVEN BY THE ASSESSEE IN RESPECT OF THE WORK E XECUTED BY ITS PARTNERS AS SUBCONTRACTORS. IT WAS SEEN THA T THE MCGM HAD GIVEN SPECIFIC ITEM NO. FOR EACH ITEM OF W ORK AND HAS ACCURATELY DESCRIBED THE SAME LEAVING NOTHING T O IMAGINATION OR MISINTERPRETATION. SINCE THE SAME I TEM NOS. I.T.A. NO. 5712/MUM/06 M/S. BACKBONE UNITY (JOINT VENTURE) ========================= 4 HAVE BEEN USED BY THE SUBCONTRACTORS, IT IS OBVIOUS THAT THEY HAVE ALSO BEEN INTERPRETED BY THE SUBCONTRACTO RS IN THE SAME WAY. D. THE ASSESSEES POSSIBLE ARGUMENT THAT THE EXCESS QUANTITIES ARE REQUIRED TO BE DONE ALSO STANDS DISPROVED AFTER COMPARISON OF QUANTITIES BILLED BY SUBCONTRACTORS W ITH THE QUANTITIES BILLED BY THE ASSESSEE IN RESPECT OF VAR IOUS WORKS DONE WHICH MATCH TO THE LAST DIGIT. E. BOOKS OF THE ASSESSEE ONLY SHOW THE ACCOUNTING E NTRIES AFTER TAKING INTO ACCOUNT THE BILLS RAISED BY THE A SSESSEE. IN ISOLATION, THE BOOKS APPEAR TO BE CORRECT AS WHATEV ER BILLS HAVE BEEN RAISED, PAYMENTS HAVE EITHER BEEN MADE TO THOSE PARTIES OR THE AMOUNT IS OUTSTANDING. HOWEVER WHEN SEEN IN THE LIGHT OF QUANTITATIVE ANALYSIS DONE IN THE O RDER AND VARIOUS ANNEXURES, IT BECOMES CLEAR THAT EXCESS OPE NING WIP HAS BEEN SHOWN BY THE ASSESSEE TO SUPPRESS PROF ITS. IT IS ALSO IMPORTANT TO POINT OUT THAT NO QUANTITATIVE DETAILS HAVE BEEN FURNISHED BY THE ASSESSEE ALONG WITH ITS RETURN OF INCOME. F. THE QUANTITATIVE DETAILS AND THE DETAILED RUNNIN G BILLS RAISED BY THE ASSESSEE AND SUBCONTRACTORS WERE FURN ISHED ONLY AFTER SEVERAL HEARINGS AND ONLY WHEN THE SAME WERE REPEATEDLY ASKED. G. THE EXPLANATION GIVEN BY THE ASSESSEE ARE VERY G ENERAL IN NATURE THOUGH HE WAS ASKED SPECIFIC QUESTIONS VIDE QUESTIONNAIRE DATED 24.3.2006. THE REPLIES ARE ALS O NOT SUPPORTED BY ANY EVIDENCE. 5. HOWEVER, BEFORE MAKING THE ADDITION THE ASSESSING O FFICER OBSERVED THAT FINAL OPPORTUNITY COULD NOT BE AFFORD ED TO THE ASSESSEE I.T.A. NO. 5712/MUM/06 M/S. BACKBONE UNITY (JOINT VENTURE) ========================= 5 SINCE TILL THE LAST MOMENT THE ASSESSEE DID NOT SUB MIT THE DETAILS AS ASKED FOR AND WERE FURNISHED ONLY ON 30 TH MARCH, 2006 JUT BEFORE THE CASE IS GETTING BARRED BY LIMITATION ON 31.3.2006. THERE FORE, IT DID NOT REMAIN POSSIBLE TO GIVE ANOTHER OPPORTUNITY TO THE ASSESSE E. HE ACCORDINGLY MADE THE ADDITION OF RS.11,14,82,840 TO THE TOTAL I NCOME OF THE ASSESSEE ON ACCOUNT OF SUPPRESSION OF GROSS PROFIT. 6. IN APPEAL, THE LEARNED CIT(A) DELETED THE ADDITION. WHILE DOING SO HE OBSERVED THAT THE OPENING WORK IN PROGRESS FOR T HIS ASSESSMENT YEAR IS NOTHING BUT THE CLOSING WORKING IN PROGRESS OF THE PRECEDING ASSESSMENT YEAR. IN CASE THE ASSESSING OFFICER DOUBTED THE OP ENING WORK IN PROGRESS, THE PROPER COURSE OF ACTION BEFORE HIM WAS TO RESOR T TO THE PROVISIONS OF SECTION 147/148 OF THE ACT FOR THE A.Y. 2002-03. HE OBSERVED THAT THE ASSESSMENT PROCEEDINGS FOR THE IMPUGNED ASSESSMENT YEAR DO NOT CONSTITUTE A PROPER FORUM TO MAKE INVESTIGATIONS OR TO GIVE FINDING IN RESPECT OF THE MATTER PERTAINING TO A.Y. 2002-03. THEREFORE, AS FAR AS THIS ASSESSMENT YEAR IS CONCERNED, THE ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT OF THE DIFFERENCE OBSERVED PERTAINING TO WORK-IN-PROGRESS CANNOT BE SUSTAINED. THESE ADDITIONS WERE ACCORDIN GLY DELETED. 7. AS REGARDS THE ARGUMENTS OF THE ASSESSEE IN RESPECT OF THE CORRECTNESS OF THE WORK-IN-PROGRESS HE REFRAINED HI MSELF FROM PASSING AN OBSERVATION UPON THE SAME SO AS NOT TO JEOPARDISE, IF ANY, THAT CAN BE TAKEN UP BY THE ASSESSING OFFICER IN RESPECT OF A.Y . 2002-03. 8. ON THE BASIS OF THE ARGUMENTS ADVANCED BY THE ASSES SEE THAT THE ASSESSING OFFICER HAS OMITTED TWO ENTRIES ON THE CR EDIT SIDE OF PROFIT AND LOSS A/C. I.E., OTHER INCOME OF RS.33,960 AND THE C LOSING OF WORK-IN- PROGRESS AMOUNTING TO RS.43,59,896 AND CONSIDERING THE WORKING GIVEN BY THE ASSESSEE HE OBSERVED THAT THE PROFIT CALCULA TED BY THE ASSESSING OFFICER AT RS.87,27,301 ALMOST TALLIES WITH THE NET PROFIT DECLARED BY THE ASSESSEE AT RS.87,25,298. HE FURTHER OBSERVED THAT OPPORTUNITY TO REBUT THE PROPOSITION GOING AGAINST THE ASSESSEE WAS NOT PROVIDED TO THE I.T.A. NO. 5712/MUM/06 M/S. BACKBONE UNITY (JOINT VENTURE) ========================= 6 ASSESSEE. SINCE THE WORK-IN-PROGRESS RELATES TO TH E EARLIER YEAR ON THE BASIS OF WHICH THE ADDITION HAS BEEN MADE AND SINCE THE REVISED SUPPRESSION OF PROFIT WORKED OUT DO NOT EXHIBIT ANY SUBSTANTIAL DIFFERENCE AND SINCE THE PARTNERS/ASSOCIATES ARE BEING TAXED A T THE SAME RATE AND ALSO THAT THE AMOUNTS IN THE HANDS OF THE PARTNERS/ ASSOCIATES HAVE BEEN ASSESSED IN THE EARLIER YEAR, HE DELETED THE ENTIRE ADDITION OF RS.11,14,82,840/- PERTAINING TO THE ALLEGED SUPPRE SSION OF GROSS PROFIT BY THE ASSESSEE. AGGRIEVED WITH SUCH ORDER OF THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 9. THE LEARNED DR REFERRING TO THE ORDER OF THE ASSESS ING OFFICER SUBMITTED THAT THE ASSESSING OFFICER HAS BROUGHT OU T CLEAR REASONS FOR MAKING THE ADDITION. HOWEVER, THE CIT(A) WHILE DEL ETING THE ADDITION GAVE VERY CRYPTIC REASONS FOR DELETING THE ADDITION . HE SUBMITTED THAT THERE IS NO CORRELATION BETWEEN THE WORK DONE BY TH E SUBCONTRACTOR AND BILLS RAISED BY THE MAIN CONTRACTOR. THE REAL AFFA IRS OF THE ASSESSEE COMPANY HAVE NOT BEEN EXPLAINED PROPERLY BY THE ASS ESSEE. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BE REVERSED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 10. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, REFERRING PAGE 52 OF THE PAPER BOOK SUBMITTED THAT THE DETAIL S OF M/S. UIL INCLUDES CONSTRUCTION CHARGES OF AN AMOUNT OF RS.10,20,26,11 5 RELATING TO M/S. BACKBONE UNIT JOINT VENTURE. REFERRING TO PAGE 15 OF THE PAPER BOOK HE REFERRED TO CLAUSE (7) OF FORM NO. 3CB AND DREW THE ATTENTION OF THE BENCH THAT BPL AND UIL ARE HOLDING 50% SHARE EACH. REFERRING TO PAGER 17 OF THE PAPER BOOK HE SUBMITTED THAT THE AMOUNT O F RS.10,20,26,115 HAS BEEN PAID TO UIL WHICH HAS BEEN MENTIONED AS P AYMENTS MADE TO PERSONS SPECIFIED U/S. 40A(2)(B) OF THE ACT IN THE BOOKS OF ASSESSEE COMPANY FOR THE A.Y. 2002-03. REFERRING TO PAGE 18 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE AMOUNT OF LA BOUR CHARGES AT RS.10,29,64,115. REFERRING TO PAGE 19 OF THE PAPER BOOK HE SUBMITTED THAT THE WORK-IN-PROGRESS WAS SHOWN AT RS.10,79,06, 412 AS ON 31 ST MARCH, I.T.A. NO. 5712/MUM/06 M/S. BACKBONE UNITY (JOINT VENTURE) ========================= 7 2002. REFERRING TO PAGE 20 OF THE PAPER BOOK, HE D REW THE ATTENTION OF THE BENCH TO THE BREAKUP OF THE WORK-IN-PROGRESS AT RS.10,79,06,412 AS ON 31.3.2002. REFERRING TO PAGE 52 OF THE PAPER BO OK, HE DREW THE ATTENTION OF THE BENCH TO THE WORK DONE BY THE JOIN T VENTURE ON ACCOUNT OF THE PROJECT TANSA DAM WHERE THE NAME OF THE ASSESSE E COMPANY SHOWS THE WORK DONE AT RS.10,20,26,115. REFERRING TO PAG E 53 OF THE PAPER BOOK, HE DREW THE ATTENTION OF THE BENCH TO THE PRO FIT AND LOSS A/C. OF UIL WHERE THE ITEM OF INCOME SHOWS THE CONSTRUCTION CHA RGES AT RS.77,14,96,495. REFERRING TO PAGE 54 OF THE PAPER BOOK, HE SUBMITTED THAT M/S. UIL HAS DECLARED A TAXABLE INCOME OF RS.3 ,64,82,230. REFERRING TO PAGES 55 TO 60 OF THE PAPER BOOK HE DREW THE ATT ENTION OF THE BENCH TO THE BILL RAISED BY UIL AGAINST THE ASSESSEE COMPANY AT RS.10,20,26,115. HE SUBMITTED THAT THE ABOVE FIGURE OF RS.10,20,26,1 15 IS THE CLOSING WORK- IN-PROGRESS OF THE PRECEDING ASSESSMENT YEAR. FURT HER FOR PREPARATORY WORK MCGM IS NOT GOING TO PAY TO THE ASSESSEE COMPA NY. HE ACCORDINGLY SUBMITTED THAT SINCE THE BILL RAISED BY UIL DURING THE A.Y. 2002-03 HAS BEEN INCLUDED IN THEIR INCOME WHICH HAS BEEN ACCEPT ED BY THE DEPARTMENT AND SINCE THE BILL RAISED DURING A.Y. 20 02-03 BY UIL ALONG WITH OTHER EXPENSES WERE SHOWN AS THE CLOSING WORK- IN-PROGRESS DURING A.Y. 2002-03 AND WHICH HAS BEEN ACCEPTED BY THE DEP ARTMENT, THEREFORE, THE ASSESSING OFFICER CANNOT DISTURB THE SAME WHEN IT WAS SHOWN AS OPENING WORK-IN-PROGRESS FOR THE A.Y. 2003-04. HE ACCORDINGLY RELIED ON THE ORDER OF THE CIT(A) AND SUBMITTED THAT THERE BE ING NO INFIRMITY IN THE SAME THE GROUNDS RAISED BY THE REVENUE HAVE TO BE D ISMISSED. REFERRING TO THE ORDER OF THE ASSESSING OFFICER HE DREW THE A TTENTION OF THE BENCH TO PARA NO. 13 OF THE ASSESSMENT ORDER AND SUBMITTED T HAT EVEN THOUGH ALL THE DETAILS WERE GIVEN TO THE ASSESSING OFFICER ON 30 TH MARCH, 2006, HE IGNORED ALL THOSE THINGS WHEN HE PASSED THE ORDER O N 31 ST MARCH, 2006 ON THE GROUND THAT THE ASSESSMENT WAS GETTING TIME BAR RED AND IT IS NOT POSSIBLE ON HIS PART TO GIVE ANY FURTHER OPPORTUNIT Y TO THE ASSESSEE. HE ACCORDINGLY SUBMITTED THAT THE GROUNDS RAISED BY TH E REVENUE HAVE TO BE DISMISSED. I.T.A. NO. 5712/MUM/06 M/S. BACKBONE UNITY (JOINT VENTURE) ========================= 8 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE BY BO TH SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE COMPANY IS A JOINT VENTURE CONSISTING OF TWO PARTNERS VIZ., BPL AND UIL HAVING 50% SHARE EACH. WE FIND FROM THE AUDITED BALANCE SHEET OF UIL FOR THE YEAR ENDED 31 ST MARCH, 2002 THAT THE INCOME INCLUDES CONSTRUCTION CHARGES OF RS.77,14,96,495 WHICH INCLU DES THE WORK DONE ON ACCOUNT OF BACKBONE UNIT JOINT VENTURE AT RS.10,20. 26,115. WE FIND UIL HAS FILED A RETURN OF INCOME DECLARING A TOTAL INCO ME OF RS.3,64,52,230 WHICH INCLUDES PROFIT ON ACCOUNT OF BILLS RAISED AG AINST THE ASSESSEE JOINT VENTURE AT RS.10,20,26,115. WE FIND THE ASSESSEE J OINT VENTURE FOR THE PREVIOUS YEAR ENDED 31 ST MARCH, 2002 HAS DISCLOSED WORK-IN-PROGRESS AT RS.10,29,06,412 WHICH IS THE OPENING WORK-IN-PROGRE SS OF THE IMPUGNED ASSESSMENT YEAR. SINCE THE ACCOUNTS FOR 2001-02 I. E., FOR THE A.Y. 2002-03 HAVE BEEN ACCEPTED BY THE REVENUE AUTHORITIES, THER EFORE, IN OUR OPINION, THE CLOSING WORK-IN-PROGRESS AS ON 31 ST MARCH, 2002 WHICH BECOMES OPENING WORK-IN-PROGRESS AS ON 1 ST APRIL 2003 CANNOT BE DISTURBED AND THE SAME HAS TO BE ACCEPTED. FURTHER WE ALSO FIND MERIT IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE AS SESSING OFFICER HAS NOT CONSIDERED THE SUBMISSION FILED BEFORE HIM ON 30 TH MARCH, 2006 WHEN HE COMPLETED THE ASSESSMENT ON 31 ST MARCH, 2006 ON THE GROUND THAT THE ASSESSMENT WAS GETTING TIME BARRED. WE ALSO FIND T HAT THE ASSESSING OFFICER HAS OMITTED TWO ENTRIES ON THE CREDIT SIDE OF THE PROFIT AND LOSS A/C. I.E., THE OTHER INCOME OF RS.33,960 AND CLOSIN G WORK-IN-PROGRESS AMOUNTING TO RS.43,59,896 AND THE ASSESSEE SUBMITTE D THE CORRECT WORKING OF PROFIT BEFORE THE CIT(A) WHICH IS INCORP ORATED IN HIS ORDER ON PAGES 4 AND 5 AND WHERE THE CIT(A) HAS GIVEN A FIND ING THAT THE PROFIT AS PER THE ASSESSING OFFICERS WORKING AT RS.87,27,301 ALMOST TALLIES WITH THE PROFIT DECLARED BY THE ASSESSEE AT RS.87,25,298. T HE LEARNED DR COULD NOT CONTROVERT THE ABOVE WORKING GIVEN IN THE ORDER OF THE CIT(A). WE FIND MERIT IN THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE PARTNERS AS WELL AS JOINT VENTURE ARE TAXED AT THE SAME RATE AND IT WOULD I.T.A. NO. 5712/MUM/06 M/S. BACKBONE UNITY (JOINT VENTURE) ========================= 9 NOT SERVE ANY USEFUL PURPOSE FOR TRANSFERRING THE P ROFIT TO THE PARTNERS FROM THE JOINT VENTURE. SINCE M/S. UIL HAS BEEN AS SESSED TO TAX AND HAS PAID TAX ON THEIR INCOME ON ACCOUNT OF BILLS RAISED BY THEM ON THE JOINT VENTURE IN THE PRECEDING ASSESSMENT YEAR, THEREFORE , BRINGING THE SAME TO TAX IN THE CURRENT ASSESSMENT YEAR, IN OUR OPINION, IS ALSO NOT JUSTIFIED. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAILED DISCUSSION BY THE CIT(A) IN DELETING THE ADDITION AND IN ABSENCE OF A NY DISTINGUISHABLE FEATURES BROUGHT ON RECORD BY THE REVENUE TO CONTRO VERT THE FINDINGS GIVEN BY THE CIT(A), WE DO NOT FIND ANY MERIT IN TH E GROUNDS RAISED BY THE REVENUE AND THEY ARE ACCORDINGLY DISMISSED. 12. GROUNDS OF APPEAL NOS. 3 AND 4 BY THE REVENUE READ AS UNDER: 3. THE CIT(A) ERRED IN ALLOWING THE CLAIM OF DEDUCT ION U/S. 80IA EVEN WHEN THE ASSESSEE WAS MERELY ACTING AS A CONTRACTOR FOR STRENGTHENING OF DAM (AND NOT AS A D EVELOPER) IN TERMS OF AGREEMENT BETWEEN THE ASSESSEE AND ITS CLIENT AND WAS BEING PAID FOR THE WORKS EXECUTED BY IT ON THE BASIS OF QUANTITIES EXECUTED BY IT AND RATES AGREED FOR THOS E WORKS. 4. THE CIT(A) ERRED IN ALLOWING THE CLAIM OF DEDUCT ION U/S. 80IA WHEN THE ASSESSEE HAD NOT SATISFIED THE C ONDITIONS U/S. 80IA(4) OF THE IT ACT, THE ASSESSEE BEING ONLY A CONTRACTOR. 13. THE LEARNED COUNSEL FOR THE ASSESSEE FAIRLY CONCEDE D THAT THE ABOVE GROUNDS ARE AGAINST THE ASSESSEE. ACCORDINGL Y THE ABOVE GROUNDS RAISED BY THE REVENUE ARE ALLOWED. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS P ARTLY ALLOWED. ORDER PRONOUNCED ON 2 ND DECEMBER, 2009. SD/- (D.K. AGARWAL) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED 2 ND DECEMBER, 2009 I.T.A. NO. 5712/MUM/06 M/S. BACKBONE UNITY (JOINT VENTURE) ========================= 10 COPY TO: (1) THE APPELLANT, (2) THE RESPONDENT, (3) THE CIT (A)-XVIII, MUMBAI, (4) THE CIT, MC-XVIII, MUMBAI, (5) THE DR, B BENCH, ITAT, MUMBAI. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI TPRAO