THE DCIT, Vijayawada V. The KCP Ltd., Chennai

ITA 593/VIZ/2014

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9862 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SETHI
• Section: 143(3)

Judgement Text

ITA NO.593/VIZAG/2014 THE K.C.P. LIMITED, CHENNAI 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.593/VIZAG/2014 ( / ASSESSMENT YEAR: 2010-11) DCIT, CIRCLE - 1(1), VIJAYAWADA VS. THE K.C.P. LIMITED, CHENNAI [PAN: AAACT8046 J ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI M.K. SETHI, DR / RESPONDENT BY : SHRI C. SUBRAHMANYAM, AR / DATE OF HEARING : 26.09.2016 / DATE OF PRONOUNCEMENT : 27.09.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), VIJAYAWADA DATED 18.8.2014 FOR THE ASSESSME NT YEAR 2010-11. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A LIMITE D COMPANY, FILED ITS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS.86 ,95,11,808/-. ITA NO.593/VIZAG/2014 THE K.C.P. LIMITED, CHENNAI 2 THE ASSESSEES CASE IS TAKEN UP FOR SCRUTINY AND AS SESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT, 1961 (H EREINAFTER CALLED AS 'THE ACT') BY DISALLOWING THE PROVISION OF LIQUIDA TED DAMAGES TO THE EXTENT OF RS.1,23,88,127/-. IN THE ASSESSMENT ORDE R, THE A.O. HAS NOTED THAT A SUM OF RS.1,23,88,127/- RELATES TO CONTRACTS WHICH WERE NOT COMPLETED DURING THE FINANCIAL YEAR 2009-10. THE A SSESSING OFFICER DISALLOWED THIS AMOUNT BY HOLDING THAT THE LIABILIT Y TO PAY LIQUIDATED DAMAGES ARISES ONLY ON COMPLETION OF CONTRACT AND H ENCE, THE SAME CANNOT BE REGARDED AS CRYSTALLIZED LIABILITY IN THE INTERREGNUM PERIODS BEFORE THE CONTRACTS ARE ACTUALLY COMPLETED OR FULF ILLED. 3. ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN A PPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), IT WAS SUBMITTED THAT THE ISS UE INVOLVED IN THIS APPEAL IS COVERED BY THE DECISION OF THE TRIBUNAL I N THE ASSESSEES OWN CASE. THE LD. CIT(A) BY FOLLOWING THE ASSESSEES O WN CASE FOR THE ASSESSMENT YEARS 2001-02 TO 2006-07 IN ITA NOS.135/ V/2005, 503/V/2006, 340, 572 & 638/V/2008 & 182/V/2005 VIDE ORDER DATED 28.7.2010. THE LD. CIT(A) BY CONSIDERING THE SUBMI SSIONS MADE BY THE ASSESSEE DIRECTED THE A.O. TO DELETE THE ADDITION B Y FOLLOWING THE ITA NO.593/VIZAG/2014 THE K.C.P. LIMITED, CHENNAI 3 ASSESSEES OWN CASE (SUPRA). THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: 4. DURING THE APPEAL PROCEEDINGS, SRI B. KAUSALENDR A RAO, ADVOCATE AND AUTHORISED REPRESENTATIVE OF THE APPELLANT ATTE NDED THE HEARING AND SUBMITTED THAT AS ALREADY HELD BY THE HON'BLE SPECI AL BENCH OF ITAT, HYDERABAD, IN THE APPELLANT'S OWN CASE, CONTRACTUAL LIABILITY AROSE DURING THE YEAR WHEN THE DUE DATE FOR SUPPLY OF MACHINERY HAD EXPIRED AND ACCORDINGLY, THE SAME SHOULD BE CORRECTLY ALLOWED I N THIS YEAR. ALSO, THE JURISDICTIONAL ITAT BENCH, IN THE APPELLANT'S OWN C ASE FOR ASST. YEARS 2001-02 TO 2006-07 HAS ALLOWED THIS IDENTICAL ISSUE IN ITA. NO. 135/V/2005, 503/V/2006, 340, 572 & 638/V/2008, 182/ V/2005 VIDE ORDER DATED 28/07/2010. HE FURTHER SUBMITTED THAT THERE I S NOTHING CONTINGENT IN NATURE IN THIS EXPENDITURE AND THE ASSESSING AUT HORITY IS BOUND TO FOLLOW THE ORDERS OF THE HON'BLE SPECIAL BENCH OF T HE ITAT AND THE VISAKHAPATNAM BENCH OF ITAT. THE APPELLANT'S AR HAS FILED COPIES OF TRIBUNAL ORDERS AND CIT(A) ORDERS PASSED FOR EARLIE R YEARS IN ITS OWN CASE. 5. ON CAREFUL CONSIDERATION, I FIND THAT THE ISSUE I NVOLVED IN THE PRESENT APPEAL IS SIMILAR TO THE ISSUE INVOLVED IN THE APPEALS FOR EARLIER YEARS IN THE APPELLANT'S CASE, WHICH WAS DECIDED BY MY PREDECESSORS IN FAVOUR OF THE APPELLANT, AFTER FOLLOWING THE DECISI ON OF THE HON'BLE ITAT, HYDERABAD 'B' (SPECIAL BENCH) FOR ASSESSMENT YEAR 1 982-83 VIDE ORDER REPORTED IN 34 ITL 50 (SB) AND THE HON'BLE ITAT, VI SAKHAPATNAM BENCH FOR THE ASSESSMENT YEARS 2001-02 TO 2006-07 VIDE OR DER IN ITA. NO. 135/V/2005, 503/V/2006, 340, 572 & 638/V/2008, 182/ V/2005 DATED 28/07/2010 ON SIMILAR ISSUE IN THE CASE OF THE SAME APPELLANT. IN A RECENT JUDGEMENT ALSO, THE HON'BLE ITAT, VISAKHAPATNAM BEN CH HAS ALLOWED AN IDENTICAL ISSUE FOR THE ASST. YEAR 2007-08 VIDE ORD ER IN ITA.NO. 514/VIZAG/2010 DATED 02/06/2011, IN WHICH THE HON'B LE ITAT HELD AS UNDER: 'WE HAVE CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES AND WE FIND THAT THE IMPUGNED ISSUE HAS BEEN ADJUDI CATED BY THE TRIBUNAL FOLLOWING THE ORDER OF THE SPECIAL BEN CH OF THE INCOME TAX APPELLATE TRIBUNAL AND ALLOWED THE CLAIM OF LIQUIDATED DAMAGES. THIS ORDER OF THE TRIBUNAL WAS FOLLOWED BY THE CIT(A) WHILE ADJUDICATING THE IMPUGNED ISSUE. W E, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE CI T(A) AS HE WAS BOUND BY THE ORDERS OF THE TRIBUNAL. WE ACCORDINGLY , CONFIRM THE ORDER OF THE CIT(A) IN THIS REGARD.' SINCE THE ISSUE BEFORE THE UNDERSIGNED BEING A COVE RED ISSUE IN FAVOUR OF THE APPELLANT, THE AO IS DIRECTED TO DELETE THE ADD ITION MADE BY HIM IN THIS REGARD. ITA NO.593/VIZAG/2014 THE K.C.P. LIMITED, CHENNAI 4 5. WE FIND THAT THE LD. CIT(A) BY FOLLOWING THE ASSE SSEES OWN CASE DIRECTED THE A.O. TO DELETE THE ADDITION. WE FIND T HAT THE LD. CIT(A) BY CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE CASE AND ALSO BY FOLLOWING THE ASSESSEES OWN CASE DIRECTED THE A.O. TO DELETE THE ADDITION. WE FIND NO INFIRMITY IN THE ORDER PASSED BY THE CIT(A). THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED . 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27 TH SEPT16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 27.09.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE DCIT, CIRCLE-1(1), VIJAYAWAD A 2. / THE RESPONDENT THE K.C.P. LIMITED, RAMAKRISHNA BUILDINGS, NO.2, DR. P.V. CHERIAN CRESCENT EGMORE, CHENNAI-600 008. 3. ) / THE CIT, VIJAYAWADA 4. ) ( ) / THE CIT(A), VIJAYAWADA 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM