National Projects Construction Corporation Ltd., New Delhi V. DCIT, New Delhi

ITA 6068/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0238 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 08-03-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 30-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PIYUSH SONKAR SENIOR
• Assessee Lawyers: MANOJ KUMAR SHARMA
• Keywords: Business income; Opportunity of being heard; Non-deduction of tax; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.6068/DEL./2010 (ASSESSMENT YEAR : 2007-08) M/S. NATIONAL PROJECTS CONSTRUCTION CORPORATION LTD ., VS. DCIT, 30-31, RAJA HOUSE, NEHRU PLACE, CIRCLE 13 (1), NEW DELHI 110 019. NEW DELHI. (PAN : AAACR6117Q) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MANOJ KUMAR SHARMA, ADVOCATE REVENUE BY : SHRI PIYUSH SONKAR, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE CIT (APPEALS)-XVI DATED 30.9.2010. THE GROUNDS OF APPE AL READ AS UNDER :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, LEARNED COMMISSIONER (APPEALS) UPHOLD THE ORDER OF THE ASSESSING OFFICER TREATING THE APPELLANT AS ASSESSE E IN DEFAULT DISALLOWED THE INTEREST PAID TO M/S. ONGC AND HUDA AMOUNTING TO RS.69,64,623/- U/S 40(A)(IA) WHICH IS GROSSLY UNJUSTIFIED, ERRONEOUS AND UNSUSTAINABLE AND NECESS ARY DIRECTIONS MAY BE GIVEN AS DEEMED FIT BY LD. TRIBUN AL. 2. THAT THE AMOUNT OF RS.14,17,500/- PAID TO M/S. H UDA WAS IN FACT FOR THE INTEREST CHARGED ON ACCOUNT OF DELAYED PAYMENT FOR PAYING THE COST OF THE LAND WHICH IS A CAPITAL EXPENDITURE IN NATURE AND DOES NOT ATTRACT SECTION 194A. THE AUDITORS IN THEIR REPORT BY MISTAKE HAS OBSERVED TH AT THE SAME WAS ON ACCOUNT OF INTEREST PAID AND FOR WHICH TDS W AS TO BE ITA NO.6068/DEL./2010 2 DEDUCTED WHEREAS NO EXPENDITURE OF INTEREST HAS BEE N BOOKED IN THE ACCOUNTS ON THIS ACCOUNT AS REVENUE EXPENDITURE . 3. THE APPELLANT RESERVES THE RIGHT TO ADD/OR AMEND OR DELETE ANY ONE OF ABOVE GROUNDS AT OR BEFORE HEARING OF TH E APPEAL. 2. THE ASSESSEE COMPANY IS A GOVERNMENT ENTERPRISE ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. THE E.RETURN OF IN COME FILED DECLARING BUSINESS INCOME AT RS.29,49,882/- AND INCOME FROM OTHER SOUR CES BY WAY OF INTEREST OF RS.4,59,89,141/- AND ADJUSTING THE SAME AGAINST THE BROUGHT FORWARD LOSSES OF EARLIER YEARS AND THE INCOME DECLARED WAS NIL. THE ASSESSEE COMPANY HAS PAID INTEREST OF RS.69,64,623/- TO ONGC AND HUDA AN D NO TDS WAS DEDUCTED. THE INTEREST PAID TO ONGC WAS RS.55,47,1 23/- AND NO TDS WAS DEDUCTED U/S 194(A) AND THE PLEA TAKEN BY THE ASSES SEE IS THAT IT WAS NOT DEDUCTED BECAUSE ONGC WAS A GOVERNMENT COMPANY. IT WAS ALSO SUBMITTED THAT ONGC ASSURED THAT THEY WILL SUBMIT EXEMPTION C ERTIFICATE U/S 197 OF THE INCOME-TAX ACT. 3. IN THE GROUND NO.1, THE AMOUNT HAS BEEN TAKEN AT CONSOLIDATED AT RS.69,64,623/- WHICH HAS BEEN DISALLOWED ON ACCOUNT OF DEDUCTION OF TDS. IN THE GROUND NO.2, THE ISSUE RELATED TO THE PAYMEN T MADE TO HUDA OF RS.14,17,500/- HAS BEEN TAKEN WHERE NO TDS WAS DEDU CTED. 4. BOTH THE PARTIES WERE HEARD. 5. AFTER HEARING BOTH THE SIDES, WE ARE OF THE VIEW THAT THE ASSESSEE TOO HAS FAILED TO SUBMIT THE CERTIFICATE U/S 197 SHOWIN G FOR NON-DEDUCTION OF TAXES. CERTIFICATE SHOWING THAT THAT NO TDS WAS DE DUCTIBLE ON THE INTEREST PAYMENT MADE WAS NECESSARY. IT WAS NOT PRODUCED BE FORE AUTHORITIES BELOW. ASSESSEE MADE A SIMPLE STATEMENT IN THIS REGARD WIT HOUT ANY DOCUMENTARY PROOF. THEREFORE, WE FIND NO MERITS IN THE APPEAL OF THE ASSESSEE. HOWEVER, ASSESSEE HAS CLAIMED THAT THE INTEREST PAYMENT OF R S.14,17,500/- MADE TO HUDA WAS ON ACCOUNT OF DELAYED PAYMENT FOR PURCHASE OF LAND. IT IS ITA NO.6068/DEL./2010 3 CLAIMED AS CAPITAL EXPENDITURE. IT IS ALSO CLAIMED THAT THE INTEREST HAS NOT BEEN DEBITED IN THE BOOKS OF ACCOUNT AS REVENUE EXPENDIT URE. IN VIEW OF THIS CLAIM, WE FIND THAT THIS FACT WAS NEVER RAISED/DISC LOSED BEFORE THE AUTHORITIES BELOW, THEREFORE, THESE FACTS REQUIRE VERIFICATION. IN VIEW OF THAT AND IN THE INTEREST OF JUSTICE AND EQUITY, WE RESTORE THE ISSU E IN RESPECT OF THE INTEREST TO THE HUDA OF RS.14,17,500/- TO THE FILE OF THE ASSES SING OFFICER TO DECIDE THE SAME AFRESH AFTER PROVIDING AN OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF MARCH, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 11 TH DAY OF MARCH, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.DRP-II, DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.