Income Tax Officer Ward-4, BHILAI(CG) V. M/s Aakash Builders, BHILAI(CG)

ITA 70/BIL/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85361 (ITAT-RAIPUR)
• Duration Of Justice: 3 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 03-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K JAIN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI REJENDRA, ACCOUNTANT MEMEBR ITA NO.70/BLPR/2011 A.Y. 2006-07 INCOME TAX OFFICER-4, VS. M/S AKASH BUILDERS, BHILAI. 20-A/10, NEHRU NAGAR (WEST) BHILAI. (PAN: AALFS 9582 G) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI D.K. JAIN, RESPONDENT BY : NONE DATE OF HEARING : 17.12.2014 DATE OF PRONOUNCEMENT : 17.12.2014 ORDER PER H.L. KARWA, PRESIDENT THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF LD. CIT(A), BILASPUR DATED 30.12.2010 RELATING TO A.Y. 2006-07. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN ITS APPEAL READS AS UNDER:- WHETHER IN LAW AND ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE DISALLOWAN CE OF RS.18,68,810/- MADE BY HE AO OUT OF THE PROVISION MADE BY ASSESSEE FOR ROAD WORK MAINTENANCE. 2 ITA NO. 70/BLPR/2011 A.Y. 2006-07 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A REGISTERED FIRM AND IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTIO N AND ROAD WORKS. AS IN THE PRECEDING A.Y., THIS YEAR ALSO THE ASSESSEE HAS SEC URED ROAD WORK CONTRACT FROM STATE GOVERNMENT (PWD). THESE CONTRACTORS ARE GOVE RNED BY ADDITIONAL SPECIAL CONDITIONS (ASC) WHICH MANDATES THE CONTRACTOR TO C ARRY OUT ALL NECESSARY REPAIR AND MAINTENANCE OF THE CONSTRUCTED ROADS FOR A PERI OD OF THREE YEARS. TO ENFORCE COMPLIANCE, THE CONTRACTOR IS REQUIRED TO FURNISH P ERFORMANCE SECURITY IN THE SHAPE OF BANK GUARANTEE @ 15% OF THE CONTRACT AMOUNT FOR THE SPECIFIED PERIOD. IN VIEW OF THE AFORESAID CONDITIONS AND FOLLOWING THE ACCOU NTING STANDARDS, THE ASSESSEE FIRM MADE A PROVISION OF RS.21,10,083/- BEING 15% O F THE CONTRACT RECEIPTS SUBJECT TO ASC, FOR FUTURE MAINTENANCE AND REPAIR OF ROADS. THE NET PROVISION MADE BY THE ASSESSEE COMES TO RS.18,68,810/-. THE A.O. REJECTE D THE CLAIM OF ASSESSEE STATING THAT THE PROVISION IS IN THE NATURE OF CONTINGENT L IABILITY AND, THEREFORE, NOT ALLOWABLE AS DEDUCTION. 4. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION O BSERVING AS UNDER :- 4.1 IN THE COURSE OF APPEAL PROCEEDINGS, THE APPEL LANT CONTENDED THAT THE IMPUGNED ISSUE WAS RESOLVED BY THE JURISDI CTIONAL TRIBUNAL IN APPELLANTS FAVOUR IN THE CASE OF ASSOCIATE CONCERN M/S KULKARNI & SAHU ASSOCIATES FOR ASSESSMENT YEARS 2003-04 AND 20 04-05 IN ITA NO.212/NAG//2006 & 2020/NAG/2006 VIDE ORDER DATED 0 6.10.2006. THE APPELLANT ALSO RELIED ON THE DECISION OF HONBL E SUPREME COURT IN THE CASE OF BARAT EARTH MOVERS VS. CIT 245 ITR 428 (SC). 4.2 I HAVE GONE THROUGH THE OBSERVATIONS OF THE AO AND SUBMISSIONS OF THE APPELLANT. THE NATURE OF PROVISION CREATED AGAINST PERFORMANCE OF THE ROADS FOR FUTURE THREE YEARS OR SUCH OTHER PERIODS GIVEN IN THE 3 ITA NO. 70/BLPR/2011 A.Y. 2006-07 CONTRACT AGREEMENT WAS HELD TO BE AN ACCRUED LIABIL ITY BY THE JURISDICTIONAL BENCH OF THE HONBLE ITAT IN SEVERAL CASES. LOOKING TO THE CONSISTENT VIEW TAKEN BY THE HONBLE TRIBUNAL, THE DISALLOWANCE MADE BY THE AO CANNOT BE SUSTAINED. ACCORDINGLY, T HE ADDITION IS DELETED AND THE APPEAL IS ALLOWED ON THESE GROUNDS. 5. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND HAVE ALSO PERUSED THE MATERIAL ON RECORD. IT IS OBSERVED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF TRIBUNAL IN THE CASE OF ASSESSEES SISTER CONCERN M/S KULKARNI & SAHU ASSOC IATES FOR ASSESSMENT YEARS 2003-04 AND 2004-05 IN ITA NO.212/NAG//2006 & 220/N AG/2006, ORDER DATED 06.10.2006. SHRI D.K. JAIN, LD. DEPARTMENTAL REPRE SENTATIVE, COULD NOT CONTROVERT THE FINDINGS GIVEN BY THE LD. CIT(A) ON THIS ISSUE. CONSIDERING THE RELEVANT FACTS AND MATERIALS AVAILABLE ON RECORD, WE DECLINE TO IN TERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE AND ACCORDINGLY WE UPHOLD THE SAME. RESULTANTLY, THE APPEAL DESERVES TO BE DISMISSED. 6. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.12.2014. SD/- SD/- (RAJENDRA) (H.L. KARWA) ACCOUNTANT MEMBER PRESIDENT RAIPUR, DATED: 17.12.2014 PBN/* 4 ITA NO. 70/BLPR/2011 A.Y. 2006-07 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. D.R. ITAT, RAIPUR BENCH, RAIPUR 6. GUARD FILE //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, RAIPUR