PATEL L & T CONSORTIUM, MUMBAI V. CIT 12, MUMBAI

ITA 634/MUM/2012

• Counselvise Citation: 63419914 RSA 2012
• Duration Of Justice: 2 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 29-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 31-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER KAUR
• Section: 143(3); 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.634/MUM/2012 ( / ASSESSMENT YEAR :2007-08) PATEL L & T CONSORTIUM, L AND T HOUSE, N M MARG, BALLARD ESTATE, MUMBAI-400001. / VS. COMMISSIONER OF INCOME TAX - 12, MUMBAI. ( / APPELLANT) .. ( ! / RESPONDENT) ./ #$ ./ PAN/GIRNO.:AAAAP5965E % / APPELLANT BY : SHRI FIROZE B ANDHYARUJINA ! & % / RESPONDENT BY SHRI PARMINDER KAUR ' ( & ) * / DATE OF HEARING :29.12.2014 +, & ) * /DATE OF PRONOUNCEMENT : 16 .01.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE VALIDITY OF REVISION ORDER DATED 05-12-2011 PASSED BY LD CIT-12, MUMBAI U/S 263 OF THE ACT FOR THE ASSESSMENT YEAR 2007-08. 2. THE FACTS RELATING TO THE CASE ARE THAT THE ASSE SSMENT FOR THE ABOVE SAID YEAR WAS COMPLETED ON 16.12.2009 U/S 143(3) OF THE ACT ACCEPTING THE RETURNED INCOME OF RS.1.00 LAKHS. THE LD CIT, ON EXAMINATION OF THE RECORD, TOOK THE VIEW THAT THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE, SINCE THE ASSESSING OFFICER DID NOT CONSIDER THE FINANCIAL STATEMENTS PROPERLY AND THEY SHOW THAT THE ASSESSEE HAD EARNED A NET PROFIT OF RS.46,57,144/- DURING THE YEAR UNDER 634/M/2012 2 CONSIDERATION ON EXECUTION OF CONTRACT. ACCORDINGL Y HE SET ASIDE THE ASSESSMENT ORDER WITH THE DIRECTIONS TO THE AO TO E XAMINE THE ISSUE IN DETAIL. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF LD CIT. 3. THE ASSESSEE IS AN UNINCORPORATED JOINT VENT URE BETWEEN M/S PATEL ENGINEERING LTD AND M/S LARSEN & TOUBRO LTD FORMED FOR THE EXECUTION OF A CONTRACT AWARDED BY NATIONAL HYDRO ELECTRIC POWER CORPORATION (NHPC) FOR CONSTRUCTION OF PARVATI HYDRO ELECTRIC PROJECT III, LOT 1, SAINJ IN DISTRICT KULLU (HIMACHAL PRADESH). THE CONTRACT AMOUNT WAS RS.439.08 CRORES AND THE PROJECT IS REQUIRED TO BE COMPLETED WITHIN 56 M ONTHS FROM THE DATE OF CONTRACT. ACCORDING TO LD CIT, DURING THE YEAR UNDE R CONSIDERATION, THE ASSESSEE INCURRED PROJECT COST OF RS.47.59 CRORES A ND RAISED A BILL OF RS.48.06 CRORES AND THE DIFFERENCE BETWEEN THE TWO, I.E., RS.46.57 LAKHS WAS THE PROFIT EARNED BY THE ASSESSEE DURING THE YE AR UNDER CONSIDERATION. HOWEVER, IT WAS SEEN BY HIM THAT THE ASSESSEE HAD D ECLARED AN INCOME OF RS.1.00 LAKH ONLY AND THE SAME WAS ALSO ACCEPTED BY THE AO. ACCORDINGLY, THE LD CIT CAME TO THE CONCLUSION THAT THE ASSESSME NT ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 4. THE LD A.R INVITED OUR ATTENTION TO THE BALA NCE SHEET FURNISHED IN THE PAPER BOOK AT PAGE 16 AND SUBMITTED THAT THE AMOUNT OF RS.46,57,144/- ACTUALLY REPRESENTS THE AMOUNT PAYABLE TO A CUSTOME R, I.E., THE CUSTOMERS WHO HAD RAISED BILLS AGAINST THE ASSESSEE. THE SAI D LIABILITY IS SHOWN AS UNDER IN THE BALANCE SHEET:- LIABILITIES:- DUE TO CUSTOMER 48,05,99,359 LESS:- WORK IN PROGRESS AT COST 47,59,42,215 ------------------- 46,57,144 ========== THE LD A.R SUBMITTED THAT THE LD CIT HAS WRONGLY PR ESUMED THAT THE ABOVE SAID LIABILITY PAYABLE TO THE SUB-CONTRACTORS (CUSTOMER) REPRESENTS 634/M/2012 3 PROFIT OF THE ASSESSEE. HE THEN INVITED OUR ATTENT ION TO THE PROFIT AND LOSS ACCOUNT FURNISHED AT PAGE 17 OF THE PAPER AND SUBMI TTED THAT THE ASSESSEE HAD INCURRED CONTRACT EXPENSES TO THE TUNE OF RS.46.08 CRORES DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE HAD ALSO INCURRED OTHER ADMINISTRATIVE EXPENSE TO THE TUNE OF RS.1.51 CRORE S. THE AGGREGATE AMOUNT OF BOTH THE EXPENSES HAVE BEEN TAKEN AS CLOS ING WORK IN PROGRESS AND HENCE NO PROFIT WAS ARRIVED AT IN THE PROFIT AN D LOSS ACCOUNT. 5. THE LD A.R SUBMITTED THAT THE CONTRACT EXPEN SES OF RS.46.08 CRORES REPRESENTS ONLY ABOUT 10% OF THE TOTAL CONTRACT AMO UNT. ACCORDINGLY HE SUBMITTED THAT THE CONTRACT HAS NOT REACHED A REASO NABLE LEVEL WARRANTING ESTIMATION OF INCOME. DESPITE THIS FACT THAT THE A SSESSEE HAS DECLARED INCOME OF RS.1.00 LAKH AND THE SAME HAS BEEN ACCEPT ED BY THE AO. ACCORDINGLY, THE LD A.R SUBMITTED THAT THE LD CIT H AS ENTERTAINED AN ERRONEOUS VIEW ABOUT THE FACTS PREVAILING IN THE IN STANT CASE AND HENCE THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 6. ON THE CONTRARY, THE LD D.R PLACED RELIANCE ON THE ORDER PASSED BY LD CIT AND SUBMITTED THAT THE FINANCIAL STATEMENTS SHOW THAT THE ASSESSEE HAS EARNED AN INCOME OF RS.46.57 LAKHS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. WE NOTICE THAT THE LD CIT HAS CONSIDERED THE BALANCE S HEET OF THE ASSESSEE AND HAS COME TO THE CONCLUSION THAT THE ASSESSEE HA S RAISED A BILL OF RS.48.05 CRORES AND HAS INCURRED THE WORK IN PROGRE SS EXPENDITURE OF RS.47.59 CRORES. WHERE AS, THE ASSESSEE HAS DEMONS TRATED BEFORE US THAT THE AMOUNT OF RS.48.05 CRORES IS THE BILL AMOUNTS R AISED BY ITS CUSTOMERS AGAINST THE ASSESSEE. THE ASSESSEE HAS DEDUCTED TH E VALUE OF WORK-IN- PROGRESS FROM THE ABOVE SAID AMOUNT, INSTEAD OF SHO WING THE SAME IN THE ASSETS SIDE OF THE BALANCE SHEET. IF THE ASSESSEE HAD SHOWN THE WORK IN PROGRESS AMOUNT IN THE ASSET SIDE OF THE BALANCE SH EET, THEN THE MATTER 634/M/2012 4 WOULD HAVE BEEN MORE CLEAR. THUS, WE NOTICE THAT TH ERE IS A CONCEPTUAL MISUNDERSTANDING ON THE PART OF LD CIT ABOUT THE FA CTS PREVAILING IN THIS CASE. WHEN THE LD CIT PROCEEDS ON ERRONEOUS LINE O N MISUNDERSTOOD FACTS AND ACCORDINGLY PASSES THE REVISION ORDER, IN OUR VIEW, THE SAME CANNOT BE SUSTAINED. 8. IN VIEW OF THE ABOVE, WE SET ASIDE THE IMPUGNE D REVISION ORDER PASSED BY LD CIT. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16TH JAN,2015. +, ' - ./ 0 116TH JAN 2015 , & 6( 7 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER . ' ( MUMBAI: 16TH JAN, 2015. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' ;) ( ) / THE CIT(A)- CONCERNED 4. ' ;) / CIT CONCERNED 5. 6. <= 6 )> , * > , . ' ( / DR, ITAT, MUMBAI CONCERNED 6 ? @ ( / GUARD FILE. A ' / BY ORDER, TRUE COPY B # (ASSTT. REGISTRAR) * > , . ' ( /ITAT, MUMBAI