ITO, New Delhi V. M/s. Velcon Projects (P) Ltd., New Delhi

ITA 6568/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3305 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 10-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P A RNAV KUMAR LD
• Assessee Lawyers: S K CHATURVEDI
• Section: 143(3)

Judgement Text

ITA NO.6568/DEL/2015 VELCON PROJECTS (P) LTD. ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, NEW DELHI . , & & & & , )* )* )* )* ) ) ) ) BEFORE SHRI D. MANMOHAN, VP AND SHRI MANOJ KUMAR AGGARWAL, AM ) )) ) ./I.T.A. NO.6568/DEL/2015 ( + + + + ,+ ,+ ,+ ,+ / ASSESSMENT YEAR: 2011-12) ITO, WARD - 26(2), NEW DELHI. / VS. VELCON PROJECTS (P) LTD., 12/4, 1 ST FLOOR, EAST PATEL NAGAR, NEW DELHI. *. *. *. *. ) )) ) ./ ) )) ) ./PAN/GIR NO. AADCV-4445-L ( .0 .0 .0 .0 /APPELLANT ) : ( 12.0 12.0 12.0 12.0 / RESPONDENT ) RE VENUE BY : SHRI P A RNAV KUMAR , LD. SR. DR A SSESSEE BY : SHRI S. K. CHATURVEDI, CA ) ) ) ) 3 33 3 4 4 4 4 / DATE OF HEARING : 13/11/2017 , , , , 3 33 3 4 4 4 4 / DATE OF PRONOUNCEMENT : 15/11/2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY REVENUE FOR ASSESSMENT Y EAR [AY] 2011-12 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-9 [CIT(A)], NEW DELHI, APPEAL NO.111/14-15 DATED 28/09/2015 BY RAISING THE FOLLOWING EFFECTIVE GROUNDS OF APPEA L :- ITA NO.6568/DEL/2015 VELCON PROJECTS (P) LTD. ASSESSMENT YEAR-2011-12 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER PASSED BY THE LD. CIT(A) IS ERRONEOUS AND THE LEARNED CIT(A): I) HAS ERRED IN DELETING THE ADDITIONS OF RS.36,30, 000/- MADE BY AO ON ACCOUNT OF DISCREPANCY IN THE FIGURES OF GROSS RECE IPTS AS PER FORM 26AS AND P&L A/C. II) HAS ERRED IN DELETING THE ADDITIONS OF RS.36,37 2/- MADE BY AO ACCOUNT OF 15% OUT OF TOTAL EXPENSES TOTALING TO RS.2,42,48 2/-. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER, WARD 17(2), NEW DELHI U/S 143(3) ON 20/03/ 2014. 2.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION WAS ASSESSED FOR IMPUGNED AY AT RS.50,23,630/- AS AGAIN ST RETURNED INCOME OF RS.13,57,260/- FILED BY THE ASSESSEE ON 30/09/20 11. THE ASSESSEE SUFFERED ADDITIONS OF RS.36.30 LACS ON ACCOUNT OF A MOUNT RECEIVED FROM AN ENTITY NAMELY ERA INFRA ENGINEERING LTD. AND ANOTHER ADHOC ADDITION OF RS.36,372/- AGAINST CERTAIN EXPENSES CLAIMED BY THE ASSESSEE. BOTH THESE ADDITIONS ARE THE SUBJECT MATTER OF THIS APPE AL. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTICED T HAT THE ASSESSEE REFLECTED GROSS RECEIPT OF RS.2,05,01,790/- AS AGAI NST RS.2,35,18,470/- REFLECTED IN FORM 26AS. FURTHER, THE ASSESSEE CLAIMED FULL CREDIT OF TAX DEDUCTED AT SOURCE [TDS] AS REFLECTED IN FORM 26AS IN THE IMPUGNED AY. UPON BEING CONFRONTED, THE ASSESSEE POINTED OUT THAT THE DIFFERENTIAL AMOUNT OF RS.36.30 LACS REPRESENTED BILL RAISED AGA INST THE SAID ENTITY IN THE NEXT AY WHEREAS THAT ENTITY MADE PROVISION OF T HESE EXPENSES IN HIS BOOKS IN AY 2011-12 AND DEDUCTED TDS THEREUPON. IT WAS FURTHER CONTENDED THAT THE UNCOMPLETED WORK WAS SHOWN AS CL OSING STOCK AS ON 31.03.2011 AND THE RECEIPTS WERE RECOGNIZED AS INCO ME UPON ITA NO.6568/DEL/2015 VELCON PROJECTS (P) LTD. ASSESSMENT YEAR-2011-12 3 COMPLETION IN THE NEXT AY. HOWEVER, NOT CONVINCED, LD. AO APPLYING THE PROVISIONS OF SECTION 199 READ WITH RULE 37BA CONCLUDED THAT SINCE FULL TDS CREDIT WAS CLAIMED IN THE CURRENT YEAR, THE REC EIPTS WAS ALSO ASSESSABLE IN THE IMPUGNED AY. THE LD. AO MADE ANOT HER ADHOC ADDITION OF 15% AGAINST AGGREGATE EXPENSES OF RS.2, 42,482/- CLAIMED BY THE ASSESSEE ON THE PREMISES THAT THE SAME WERE NOT PROPERLY VOUCHED FOR AND PERSONAL ELEMENTS IN THE SAME COULD NOT BE RULED OUT. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH SUCCESS BEFORE LD.CIT(A) VIDE IMPUGNED ORDER DATED 28/09/2015 WHER E LD. CIT(A) CONCURRED WITH ASSESSEES SUBMISSION AND DECIDED TH E ISSUE IN THE FOLLOWING MANNER:- 3.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND ORDER OF THE A.O. AND DETAILS FILED BY THE APPELLANT. IT IS SEEN DURING T HE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ASKED THE CLARIFICATION REGAR DING DISCREPANCY OF AMOUNTING TO RS.36,30,000/-. THE A.O. OBSERVED THAT GROSS RECEIP T AS PER 26AS WAS RS.2,35,18,470/- WHEREAS, THE ASSESSEE HAD DECLARED OF RS.2,05,01,790/-. THE APPELLANT HAS SUBMITTED ITS EXPLANATION BEFORE THE A.O. THAT REGARDING DIFFERENCE IN RECEIPT AS PER FORM 26AS AND RECEIPTS AS PER PROFIT & LOSS ACCOUNT. THE CONTRACTEE, M/S ERA INFRA ENGINEERING LIMITED H AS DEDUCTED TDS ON PROVISION FOR WORK DONE BY THE ASSESSEE COMPANY FOR WHICH BIL LS HAS NOT BEEN RAISED BY THE COMPANY AS ON 31.03.2011 OF AMOUNTING TO RS.36,30,0 00/- DUE TO NON COMPLETION OF WORK. THE ASSESSEE COMPANY HAS SHOWN THE VALUE OF U NCOMPLETED WORK AS CLOSING STOCK. SINCE THE WORK WAS NOT COMPLETED AND REVENUE HAS BEEN RECOGNIZED IN SUBSEQUENT FINANCIAL YEAR ON THE BASIS OF BILLS RAI SED. AFTER CONSIDERING THE SUBMISSIONS OF THE APPELLANT, THE A.O. CONCLUDED THAT SECTION 199 OF THE INCOME TAX ACT READ WITH RULE 37BA OF TH E IT ACT PROVIDES THAT CREDIT OF TDS SHALL BE ALLOWED IN THE YEAR TO WHICH THE INCOM E ON WHICH TAX HAS BEEN DEDUCTED IS ASSESSABLE. THE A.O. CONCLUDED THAT THE ASSESSEE ITSELF HAS CLAIMED CREDIT OF TDS WHICH ESTABLISHED THAT THE INCOME OF RS.36,30,000/- IS ASSESSABLE IN THE YEAR UNDER CONSIDERATION. AS AGAINST, THE APPEL LANT HAS SUBMITTED THAT DISPUTE IS REGARDING THE BILLS OF AMOUNTING TO RS.36,30,000/- WHICH WAS RAISED BY THE APPELLANT ON 6.4.2011 AND DULY ACKNOWLEDGED BY M/S ERA INFRA ENGINEERING LTD. ON 7.4.2011 WHICH WAS ACCOUNTED FOR F.Y. 2011-12. THE APPELLANT FURTHER SUBMITTED THAT THE A.O. HAS TAKEN THE ARGUMENT THAT ON THIS BILL, TDS WAS CLAIMED BY THE APPELLANT. THE APPELLANT HAS SUBMITTED THAT THE PROVISION OF SECTION 199 READ WITH RULE 37BA ARE RELATING TO ALLOWABILITY OF CRED IT OF TDS. IF THE A.O. IS SATISFIED THAT TDS IS NOT PERTAINED TO THIS YEAR, THEN THE A. O. SHOULD GIVE THE CREDIT OF TDS IN ITA NO.6568/DEL/2015 VELCON PROJECTS (P) LTD. ASSESSMENT YEAR-2011-12 4 SUBSEQUENT YEAR AND NOT THE INCOME SHOULD BE ADDED IN THIS YEAR ON THE BASIS OF TDS. THE APPELLANT HAS ALSO SUBMITTED THE COPY OF T HE BILLS RAISED. THE BILL WAS RAISED ON 6.4.2011 WHICH WAS ALSO ACKNOWLEDGED BY T HE OTHER PARTY. THE APPELLANT HAS ALSO SUBMITTED THE COPY OF LEDGER FOR A.Y. 2011 -12 AND COPY OF RETURN OF INCOME. FROM THE ABOVE DETAILS, IT IS VERY CLEAR THAT ABOVE RECEIPT HAS BEEN INCLUDED IN THE SUBSEQUENT RETURN OF INCOME. THE RECEIPT SHOWN IN T HE P&L ACCOUNT ARE DULY TALLIED WITH THE LEDGER. THE APPELLANT HAS TAKEN SA ME ARGUMENT BEFORE THE A.O. SINCE, THE RECEIPT IS SHOWN, IN SUBSEQUENT YEAR I.E . IN 2012-13, THE SAME IS NOT REQUIRED TO BE TAXED AGAIN IN THIS YEAR. ON THE IDE NTICAL ISSUE, THE APPELLANT HAS RELIED THE DECISION OF HON'BLE ITAT IN THE CASE OF LLOYD INSULATION LTD. IN ITA NO. 2400/DEL/11 IN ANY CASE BEFORE THE ASSESSEE TO BE A SSESSED WHERE THE HON'BLE ITAT HELD THAT 'SECTION 199 IS NOT ONLY TO ANSWER THE QUESTION AS TO THE YEAR IN WHICH THE CREDIT FOR TDS SHALL BE GIVEN. IT LINKS UP THE CRED IT WITH ASSESSMENT YEAR IN WHICH SUCH INCOME IS ASSESSABLE. IN OTHER WORDS, TH E ASSESSING OFFICER IS BOUND TO GIVE CREDIT IN THE YEAR IN WHICH THE INCOM E IS OFFERED TO TAX. THIS SECTION 199 DOES NOT EMPOWER HE ASSESSING OFFICER T O DETERMINE THE YEAR OF ASSESSABILITY OF THE INCOME ITSELF BUT IT ONLY MAND ATES THE YEAR IN WHICH THE CREDIT IS TO BE GIVEN ON THE BASIS OF THE CERTIFICA TE FURNISHED.' FROM THE ABOVE FACTS, IT IS CLEAR THAT THE BILL WAS RAISED OF AMOUNTING TO RS.36,30,000/- ON 6.4.2011 WHICH PERTAINS TO F.Y. 2 011-12 I.E. A.Y. 2012-13 AND SAME HAS BEEN OFFERED FOR YEAR I.E. IN A.Y. 2012-13 . SINCE THE ABOVE RECEIPT HAS ALREADY BEEN SHOWN IN SUBSEQUENT YEAR I.E IN A.Y. 2 012-13, SO SAME IS NOT REQUIRED TO BE TAXED AGAIN. THEREFORE, THE ADDITION OF AMOUN T TO RS.36,30,000/- IS HEREBY DELETED. 4. IN GROUND NO. 3, THE APPELLANT HAS OBJECTED REGA RDING ADHOC ESTIMATE ADDITION MADE BY THE AO OUT OF VARIOUS EXPENSES. TH E APPELLANT HAS DEBITED THE VARIOUS EXPENSES IN THE HEAD OF MISCELLANEOUS EXPEN SES, CONVEYANCE AND TRAVELLING EXPENSES, TELEPHONE EXPENSES, OF HIS TOT AL COMES TO RS.2,42,482/-. THE A.O. MADE AN ADHOC ADDITION OF RS.36,302/- AT THE R ATE OF 15%, BY STATING THAT ASSESSEE COULD NOT PROVE THE NEXUS THAT THE EXPENSE S WERE WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSE. FURTHER, IT IS ALSO MENTI ONED THAT PERSONAL ELEMENTS OF THE DIRECTOR AND THE EMPLOYEES OF THE COMPANY ALSO CANN OT BE ALLOWED. AS AGAINST, THE APPELLANT HAS SUBMITTED THAT A.O. HAS MADE ADDITION WITHOUT DISCUSSION. IT IS ALSO SUBMITTED THAT THE APPELLANT BEING A CORPORATE ENTI TY, THERE CAN BE NO ELEMENT OF PERSONAL USE. THE APPELLANT HAS ALSO RELIED THE DEC ISION OF ITAT IN THE CASE OF ASHOKA BETELNUT CO (INDIA) PVT LTD. VS. ITO REPORTE D IN 10 ITD 788. 4.1 CONSIDERING THE ABOVE SUBMISSIONS, I FIND THAT THE A.O. AS MADE ADHOC ADDITION. THE A.O. HAS NOT POINTED OUT ANY SPECIFIC MISTAKES AND FURTHER, HE HAS NOT GIVEN ANY INSTANCES WHICH PROVES THE EXPENSES AS PE RSONAL IN NATURE.THE A.O. HAS MADE THE ADDITION WITHOUT ASSIGNING ANY REASON, WHI CH IS NOT SUSTAINABLE IN LAW. THEREFORE, IN VIEW OF THE ABOVE FACTS, THE ADDITION MADE BY THE A.O.IS HEREBY DELETED. HENCE, THE GROUND OF APPEAL IS ALLOWED. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. ITA NO.6568/DEL/2015 VELCON PROJECTS (P) LTD. ASSESSMENT YEAR-2011-12 5 4. THE LD. DEPARTMENTAL REPRESENTATIVE [DR] CONTES TED THE RELIEF GRANTED BY LD. CIT(A) ON THE GROUND THAT SINCE ASSE SSEE CLAIMED FULL CREDIT OF TDS, THE CONCERNED RECEIPTS WERE ALSO LIA BLE TO BE ASSESSED IN THE SAME PERIOD. PER CONTRA, LD. AR SUBMITTED THAT THE STAND OF LD. CIT(A) WAS FAIR & REASONABLE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. UPON PERUSAL OF RECORDS AND ORDERS OF LO WER AUTHORITIES, THE UNDISPUTED FACT IS THAT THE ASSESSEE HAS RECOGNIZED REVENUE OF RS.36.30 LACS IN IMMEDIATELY SUCCEEDING AY I.E. 2012-13. THE BILL AGAINST THE SAME HAS BEEN RAISED ON 06/04/2011 AND THE ASSESSEE HAS SHOWN CERTAIN CLOSING STOCK AS ON 31/03/2011. THE REVENUE HAS NOWHERE DISPUTED THAT THE WORK WAS NOT COMPLETED IN THE IMP UGNED AY. HENCE, ON FACTUAL MATRIX, WE FIND THAT LD. CIT(A) HAS CLIN CHED THE ISSUE IN PROPER PERSPECTIVE SINCE THE ASSESSEE WAS BOUND TO RECOGNI ZE ONLY THOSE INCOMES / RECEIPTS WHICH HAD ACCRUED TO HIM IN THE IMPUGNED AY. THE LD. AO MADE THE ADDITION SOLELY ON THE PREMISES THA T SINCE FULL TDS CREDIT HAS BEEN CLAIMED, THE CONCERNED RECEIPTS WER E ALSO LIABLE TO BE ASSESSED IN THE SAME PERIOD, WHICH WAS NOT CORRECT APPROACH SINCE UNDER MERCANTILE SYSTEM OF ACCOUNTING, THE ASSESSEE WAS REQUIRED TO RECOGNIZE ONLY THOSE INCOMES WHICH ACTUALLY CRYSTAL LIZED AND ACCRUED TO HIM IN THE IMPUGNED AY. WE FIND THAT THE ASSESSEE H AD OFFERED THE IMPUGNED INCOME IN THE NEXT AY AND HENCE, IN TERMS OF STATUTORY PROVISIONS, THE CREDIT OF TDS WAS ALSO TO BE GRANTE D TO THE ASSESSEE IN THAT YEAR ONLY. HOWEVER, WE SEE NO FRUITFUL REASON TO DISTURB THE ALREADY CONCLUDED ASSESSMENT SINCE THE EXERCISE WOULD BE RE VENUE NEUTRAL. ITA NO.6568/DEL/2015 VELCON PROJECTS (P) LTD. ASSESSMENT YEAR-2011-12 6 REGARDING ADHOC DISALLOWANCE, THE SAME COULD NOT BE MADE BY LD. AO MERELY ON THE BASIS OF DOUBTS OR GENERAL PERCEPTION . HENCE, FINDING THE ORDER OF LD. CIT(A) QUITE FAIR AND REASONED ONE, WE SEE NO REASON TO DISTURB THE SAME. 6. RESULTANTLY, THE REVENUES APPEAL STANDS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH NOVEMBER, 2017. SD/- SD/- (D. MANMOHAN) (MANOJ KUMAR AGGA RWAL) / VICE PRESIDENT )* )* )* )* / ACCOUNTANT MEMBER /NEW DELHI; DATED : 15.11.2017 SR.PS:- SUJEET 3 33 3 147 147 147 147 &7,4 &7,4 &7,4 &7,4 / COPY OF THE ORDER FORWARDED TO : 1. .0 / THE APPELLANT 2. 12.0 / THE RESPONDENT 3. 8 ( ) / THE CIT(A) 4. 8 / CIT CONCERNED 5. 79: 14 , , / DR, ITAT, NEW DELHI 6. :+ / GUARD FILE //TRUE COPY// ) ) ) ) / BY ORDER, ) ) ) ) (ASSTT. REGISTRAR) , / ITAT, NEW DELHI