Bikramjit Ahluwalia, New Delhi V. JCIT, New Delhi

ITA 5842/DEL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3154 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 31-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: VISHAL SEHGAL
• Keywords: Capital receipt

Judgement Text

ITA NO. 5842/DEL/2013 ASSESSMENT YEAR 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI S.V. MEHROTRA, VICE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 5842/DEL/2013 ASSESSMENT YEAR: 2009-10 BIKRAMJIT AHLUWALIA, C/O A.L. SEHGAL & CO., CA, 1102, PRAKASH DEEP, 7, TOLSTOY MARG, NEW DELHI-110001 (PAN: AAEPA8644E) VS JCIT, RANGE-38, NEW DELHI. APPELLANT BY SHRI VISHAL SEHGAL, CA RESPONDENT BY SHRI S.K. JAIN DR ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF LD. CIT(A)-XXVIII, NEW DELHI DATED 1.8.201 3 AND PERTAINS TO ASSESSMENT YEAR 2009-10. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS HAVING BUSINESS OF CIVIL CONSTRUCTION AND HAS SHOWN INCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCES APART F ROM BUSINESS. DATE OF HEARING 09.02.2017 DATE OF PRONOUNCEMENT 11.05.2017 ITA NO. 5842/DEL/2013 ASSESSMENT YEAR 2009-10 2 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE WAS ASKED TO RECONCILE THE GROSS RECEIPTS SHOWN AS PER THE PROFIT AND LOSS ACCOUNT WITH THAT OF THE GROSS RECEIPTS SHOWN AS PER TDS CERTIFICATE ON WHICH TDS CREDIT WAS CLAIMED BY THE ASSESSEE. ON PERUSAL OF THE DETAILS FILED BY THE ASSESSEE, THE A SSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED TDS CREDIT ON MOBILISATION ADVANCES RECEIVED DURING FY 2008-09 RELEVANT TO ASS ESSMENT YEAR 2009-10 BUT SUCH ADVANCES WERE NOT CREDITED TO THE PROFIT AND LOSS ACCOUNT BY WAY OF INCOME. THE ASSESSING O FFICER OBSERVED THAT THE UNADJUSTED MOBILIZATION ADVANCES DURING THE YEAR STOOD AT RS. 3,99,06,816/- ON WHICH TDS OF RS. 8,77,950/- WAS CLAIMED BY THE ASSESSEE DURING THE YEAR. THE A SSESSING OFFICER HELD THAT THE TDS CLAIMED OF RS. 8,77,950/- WAS NOT TO BE GRANTED IN THE ASSESSMENT YEAR 2009-10 AS PER PROVI SIONS OF SUB RULE (3)(I) AND (II) OF RULE 37BA READ WITH SECTION 199 OF THE I.T. ACT, 1961. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. CIT(A) WHO DISMISSED THE ASSESSEES APPEAL AND NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT AND HAS RAISED THE FOL LOWING GROUNDS OF APPEAL:- ITA NO. 5842/DEL/2013 ASSESSMENT YEAR 2009-10 3 1. THAT THE HON'BLE COMMISSIONER OF INCOME TAX (APPEAL) IS NOT JUSTIFIED IN SUSTAINING ARBITRARILY THE DISALLOWANCE OF TDS CLAIM FOR RS. 8,77,950/- MADE ON OUTSTANDING MOBILIZATION ADVANCE OF RS. 8,99,06,816/- AS ON 31 ST MARCH 2009 FOR ALLEGED IS EXECUTION OF WORK CONTRACTS IS SUBSEQUENT YEARS. THE DEDUCTION ON MOBILIZATION HAS ALL ALONG BEEN CLAIMED AND ALLOWED IN THE YEAR OF DEDUCTION ON THE BASIS OF THE CONSISTEN T METHOD OF ACCOUNTING REGULARLY FOLLOWED BY THE APPELLANT. 2. THAT THE MOBILIZATION ADVANCE IS PRIMARILY RECEIVED AGAINST FURNISHING OF BANK GUARANTEES IN FAVOUR OF THE PAYEE CUSTOMER FOR EXECUTION OF CIVIL CONSTRUCTION WORK. THE MOBILIZATION ADVANCE IS BEIN G ADJUSTED PROPORTIONALITY FROM TIME TO TIME AS PER AGREEMENT ON SUBMITTING OF BILLS TO CLIENTS FOR WOR K EXECUTED. THE PAYEE HAS A RIGHT OVER BANK GUARANTEE S TO ENCASH IT ON ANY ISSUE SUCH AS CANCELLATION OF W ORK ORDER, STOPPING OF WORK AND EVEN AFTER PARTIAL EXEC UTION OF WORK WITHOUT COMPENSATING FOR TDS DEDUCTED. 3. THAT THE PROVISION OF SEC 199 OF INCOME TAX ACT IS AN ENABLING PROVISION FOR TDS CREDIT AND IS NOT A COMPUTATION PROVISION SECTION 199 PERMITS ASSESSEE TO CLAIM TDS IN THE YEAR OF DEDUCTION WHERE THE CONSIS TENT METHOD OF ACCOUNTING HAS BEEN FOLLOWED AND ACCEPTED BY ASSESSING OFFICER IN EARLIER YEARS. DURING THE Y EAR THE AMOUNT OF WORK EXECUTED RS. 94,73,40,679/- FAR EXCEEDS THE AMOUNT OF MOBILIZATION ADVANCE RECEIVED RS. 8,90,18,261/- RECEIVED DURING THE YEAR ON WHICH TDS IS DEDUCTED OF RS. 20,17,104/-. SO MUCH SO THE TDS IS FURTHER THE DEDUCTED BY THE CLIENTS ON SUBMISSION OF BILLS FOR WORK DONE DURING THE YEAR. THE DISALLOWANCE IS ARBITRARY. 4. THAT THE ASSESSMENT AS FRAMED IS AGAINST LAW AND FACTS OF THE CASE. IT IS PRAYED THAT THE ALLOWA NCE OF TDS CREDIT OF RS. 8,77,950/- MAY BE GRANTED. ITA NO. 5842/DEL/2013 ASSESSMENT YEAR 2009-10 4 5. THAT THE APPELLANT CRAVES LEAVES TO ADD, TO ALT ER OR AMEND THE AFORESAID GROUNDS OF APPEAL AT THE TIM E OF HEARING OF APPEAL. 4. AT THE OUTSET, LD. AR SUBMITTED THAT THE ASSES SEES CASE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF T HE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF ACIT CIRCLE 2(1) VS PEDDU SRINIVASA RAO IN ITA NO. 324/VIZAG/2009 VIDE ORDER DATED 3.3.2011. 5. LD. DR PLACED RELIANCE ON THE ORDER OF THE ASSES SING OFFICER AS WELL AS THE LD. CIT(A) BUT COULD NOT DISPUTE THE FACT THAT THE ASSESSEES CASE WAS COVERED BY THE AFORESAID ORDER OF THE VISAKHAPATNAM BENCH OF ITAT. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O GONE THROUGH THE RELEVANT RECORDS. WE AGREE WITH THE CO NTENTIONS OF THE LD. AR THAT THE ASSESSEES CASE IS COVERED IN F AVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT, VISAKHAPATNAM IN THE CASE OF ACIT VS PEDDU SRINIVASA RAO (SUPRA). ITAT VISAKHAP ATNAM BENCH HAS DISCUSSED THE ISSUES AT LENGTH IN PARAGRA PHS 3, 4, 6, 8 AND 10 OF THE IMPUGNED ORDER. THE RELEVANT PORTION S OF THESE PARAGRAPHS ARE BEING REPRODUCED FOR A READY REFEREN CE:- ITA NO. 5842/DEL/2013 ASSESSMENT YEAR 2009-10 5 3. .THIS MOBILIZATION ADVANCE IS IN THE NATURE O F LOAN, ON WHICH INTEREST @8% IS CHARGEABLE AS PER TH E TERMS OF SUB-CONTRACT AGREEMENT. THE MOBILIZATION ADVANCE IS A CAPITAL RECEIPT BEING IN THE NATURE OF A LOAN AND THEREFORE, THERE WAS NO LEGAL OBLIGATION TO DED UCT TAX AT SOURCE. HOWEVER, M/S GAMMON INDIA LIMITED DEDUCTED TAX AT SOURCE IN RESPECT OF SUCH MOBILIZAT ION ADVANCE ALSO.. 4. ..MOBILIZATION ADVANCE WAS GRANTED TO THE ASSESSEE IN ORDER TO ENABLE IT TO DEPLOY MACHINERY AND MAN POWER IN SUFFICIENT QUANTITY AT THE WORK SITE, AWARDED TO THE ASSESSEE. IT WAS FURTHER CONTENDED T HAT SINCE THE MOBILIZATION ADVANCE IS NOT IN THE NATURE OF INCOME, NO TDS CAN BE DEDUCTED BUT IT WAS HOWEVER, DEDUCTED BY M/S. GAMMON INDIA LIMITED. THEREFORE, T HE CREDIT OF THE SAME IS TO BE ALLOWED TO THE ASSESSEE . THE CONTENTIONS OF THE ASSESSES WERE EXAMINED BY THE CI T(A) AND FOLLOWING THE ORDER OF THE TRIBUNAL, MUMBAI BEN CH IN THE CASE OF TOYO ENGINEERING INDIA LIMITED, 5 SO T 616 DIRECTED THE A.O. TO ALLOW THE CREDIT OF TDS IN THE YEAR UNDER CONSIDERATION. 6. UNDISPUTEDLY, THE TAX WAS DEDUCTED AT THE SOUR CE ON PAYMENT OF THE MOBILIZATION AMOUNT THOUGH THIS MOBILIZATION AMOUNT IS MERELY AN ADVANCE GIVEN TO T HE ASSESSEE AND NOT CHARGEABLE TO TAX. BUT ONCE THE TA X IS DEDUCTED ON ANY PAYMENT MADE TO THE ASSESSEE, THOUG H IT IS NOT CHARGEABLE TO TAX, A CREDIT OF THE SAME S HOULD BE GIVEN TO THE ASSESSEES. MOBILIZATION AMOUNT WOUL D NOT BE ADJUSTED AGAINST ONE CONTRACT RECEIPT. IT WO ULD BE ADJUSTED IN PART IN SUBSEQUENT YEARS WHENEVER THE S UB- CONTRACT BILLS WERE RAISED. THEREFORE, IT WOULD BE VERY DIFFICULT TO CLAIM A PROPER SET OFF OF THE TDS DEDU CTED IN SUBSEQUENT YEARS IN WHICH NO SEPARATE CERTIFICATE W OULD BE ISSUED. THE CERTIFICATE WAS ISSUED IN THE YEAR I N WHICH THIS MOBILIZATION AMOUNT WAS PAID TO THE ASSESSEES. THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT ALL THESE ASPECTS WERE EXAMINED BY T HE TRIBUNAL IN THE CASE OF SUPREME RENEWABLE ENERGY LIMITED VS. ITO 32 DTR 140. ITA NO. 5842/DEL/2013 ASSESSMENT YEAR 2009-10 6 8. .AS PER AMENDED PROVISIONS OF SECTION 199, IN SUB- SECTION 1, IT HAS BEEN STATED THAT ANY DEDUCTIONS M ADE IN ACCORDANCE WITH THE FOREGOING PROVISIONS OF THIS CHAPTER AND PAID TO THE CENTRAL GOVERNMENT SHALL BE TREATED AS A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOSE INCOME THE DEDUCTION WAS MADE. THEREFORE, AS PER THE AMENDED PROVISIONS, ONCE THE TDS WAS DEDUCTED, A CREDIT OF THE SAME TO BE GIVEN TO THE ASSESSEES, IRRESPECTIVE OF THE YEAR TO WHICH IT RELATES 10. FROM A CAREFUL PERUSAL OF THE LEGAL PROPOSITION S LAID DOWN THROUGH THE AFORESAID ORDERS BY THE TRIBUNAL A ND THE RELEVANT PROVISIONS OF THE ACT, WE ARE OF THE V IEW THAT ONCE THE TDS WAS DEDUCTED AND PAID TO THE CENTRAL GOVERNMENT, A CREDIT OF THE SAME SHOULD BE GIVEN TO THE ASSESSEES IN ORDER TO AVOID ALL SORTS OF COMPLICATI ONS IN THE YEAR OF DEDUCTION OF THE TDS. THEREFORE, WE FIN D NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAS RIGHTL Y DIRECTED THE A.O. TO ALLOW THE CREDIT OF THE TDS IN THE IMPUGNED ASSESSMENT YEAR. ACCORDINGLY, THE ORDER OF THE CIT(A) IS CONFIRMED. 7. IN VIEW OF THE AFORESAID ORDER OF THE ITAT, VISA KHAPATNAM BENCH, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO GRANT CREDIT OF TDS OF RS. 8,7 7,950/- . 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY, 2017. SD/- SD/- (S.V. MEHROTRA) (SUDHANSHU SRIVASTAVA) VICE PRESIDENT JUDICIAL MEMBER DT. 11TH MAY 2017 GS ITA NO. 5842/DEL/2013 ASSESSMENT YEAR 2009-10 7 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR