ACIT, CHENNAI V. Fichtner Consulting Engineers Pvt Ltd., CHENNAI

ITA 70/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9414 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 21-04-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 13-01-2016
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: A S SRIRAMAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! , ' #$ BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ./ ITA NOS. 70 & 71/MDS/2016 / ASSESSMENT YEARS : 2011-12 & 2012-13 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CORPORATE CIRCLE 2(1), CHENNAI-34. ( /APPELLANT) VS M/S. FICHTNER CONSULTING ENGINEERS PVT. LTD., 9 TH FLOOR, MENON ETERNITY, 165, ST. MARYS ROAD, ALWARPET, CHENNAI-600 018. PAN AAACF5620Q ( /RESPONDENT) / APPELLANT BY : SHRI P.B. SEKARAN, CIT / RESPONDENT BY : SHRI A.S. SRIRAMAN, ADVOCATE / DATE OF HEARING : 21.04.2016 ! / DATE OF PRONOUNCEMENT: 27.04.2016 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINS T DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME-TAX( APPEALS) DATED 12.11.2015 FOR THE ASST. YEARS 2011-12 AND 20 12-13. - - ITA 70 & 71/16 2 2. THE FIRST COMMON GROUND RAISED BY THE REVENUE IN THESE APPEALS IS WITH REGARD TO DELETION OF ADDITION TOWA RDS BILLING IN EXCESS OF REVENUE AT ` 5,60,00,000/- AND ` 20,09,07,000/- FOR THE ASSESSMENT YEARS 2011-12 AND 2012-13 RESPECTIVE LY. 3. AFTER HEARING BOTH THE PARTIES, WE FIND THAT SIM ILAR ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN C ASE FOR THE ASSESSMENT YEAR 2007-08 IN ITA NO.481/MDS/2011. TH E TRIBUNAL AFTER CONSIDERING THE FACTS OF THE CASE VI DE ORDER DATED 18.5.2012 DELETED THE ADDITION BY OBSERVING AS FOLL OWS : 7. CLAIM OF THE ASSESSEE THAT THERE WERE BILLINGS IN EXCESS OF REVENUE HAS TO BE SEEN IN THE LIGHT OF IT S VOLUNTARY RECOGNITION OF INCOME WHICH WERE IN EXCES S OF BILLINGS. ASSESSEE WOULD HAVE BEEN FREE TO EXCLUDE BOTH THE AMOUNTS. IT WAS NOT NECESSARY FOR THE ASSESSEE TO SHOW AS REVENUE THE AMOUNTS OTHER THAN WHAT WAS BILLED BY IT FOR THE SIMPLE REASON UNLESS AND UNTIL IT WAS BILLED, NOBODY WOULD HAVE PAID THE MON EY OR IN OTHER WORDS, THERE WAS NO LEGAL OBLIGATION FO R THE OTHER PARTIES TO PAY. WITHOUT ANY COMPULSION, ASSES SEE HAD SUO MOTU UNHESITATINGLY SHOWN THE REVENUE EARNE D BY IT IN EXCESS OF BILLING AS A PART OF ITS INCOME. IT IS ALSO NOTEWORTHY THAT REVENUE SO RECOGNIZED IN EXCESS OF BILLING CAME TO ` 453.07 LAKHS, WHEREAS, BILLING IN EXCESS OF REVENUE CONSIDERED FOR REVERSAL CAME TO ` 360.38 LAKHS ONLY. IF IT HAD EXCLUDED BOTH THE AMOU NTS, IT WOULD HAVE ONLY GAINED. BUT, IT HAD OPTED NOT TO DO SO. HENCE, IN OUR OPINION, ASSESSEES CLAIM FOR REV ERSAL COULD NOT BE BRUSHED ASIDE, LIGHTLY. IN ITS PAPER-B OOK - - ITA 70 & 71/16 3 PAGES 11(1) AND 11(2) CLEAR REASON WHY IT HAD RAISE D BILLS WITHOUT PRO RATA SERVICES BEING RENDERED HAS BEEN GIVEN. A.O., NO DOUBT, HAD MADE AN ANALYSIS OF TWO AGREEMENTS FOR COMING TO A CONCLUSION THAT INVOICES WERE RAISED ONLY WHEN MILESTONES WERE REACHED AND NOT OTHERWISE. BUT, A LOOK AT THE BREAK-UP OF BILL ING IN EXCESS OF REVENUE GIVEN AT ABOVE MENTIONED PAPER- BOOK PAGES 11(1) AND 11(2) WOULD CLEARLY SHOW THAT NONE OF THESE CLIENTS WERE EITHER M/S TATA PROJECTS LIMITED OR M/S CHEMPLAST SANMAR LIMITED. IN OUR OPINION, CONCLUSIONS REACHED BASED ON STUDY OF TWO AGREEMENTS, WHICH WERE NOT APPEARING IN THE LIST MENTIONED ABOVE, COULD NOT HAVE BEEN APPLIED ON A S ET OF CLIENTS OF THE ASSESSEE WHO WERE NO WAY CONCERNE D TO SUCH CONTRACTS. ASSESSEES CONTENTION THAT IT HA D RAISED BILLS ON ITS CLIENTS WHICH WERE NOT COMMENSU RATE WITH THE SERVICES RENDERED APPEARS TO BE JUSTIFIED. NO DOUBT, HAVING RAISED THE BILLS, THE ONUS WAS ON THE ASSESSEE TO SHOW THAT THE BILLS WERE RAISED WITHOUT CORRESPONDING WORK BEING RENDERED AND THIS IT HAD DEMONSTRATED SATISFACTORILY VIDE THE DETAILED BILL- WISE EXPLANATION GIVEN IN PAPER-BOOK PAGES 11(1) AND 11( 2). UNLESS AND UNTIL THE REASON GIVEN BY THE ASSESSEE F OR NOT RECOGNIZING REVENUE IN EACH OF SUCH BILLS WAS F OUND TO BE INCORRECT, A DISALLOWANCE COULD NOT HAVE BEEN MADE. THERE IS NO SUCH FINDING ANYWHERE IN THE ORDE RS OF THE AUTHORITIES BELOW. AS ALREADY MENTIONED BY U S, THE CONCLUSION REACHED BY THE A.O. BASED ON TWO AGREEMENTS OUGHT NOT HAVE BEEN APPLIED ON THE BILLI NGS MADE ON OTHER PARTIES WHEN THE EXCESS OF REVENUE, A S PER THE ASSESSEE, HAD COME FROM OTHER PARTIES. ASSESSEE HAVING EXPLAINED THAT EACH OF THE BILLINGS WERE IN EXCESS OF THE COMMENSURATE SERVICE, IT WAS WELL ELIGIBLE FOR A REVERSAL OF SUCH AMOUNT. WE ARE , THEREFORE, OF THE OPINION THAT THE ADDITION WAS NOT CALLED FOR. WE, THEREFORE, SET ASIDE THE ORDERS OF AUTHORI TIES BELOW AND ALLOW THE CLAIM OF THE ASSESSEE. - - ITA 70 & 71/16 4 IN OUR OPINION, THE CIT(APPEALS) HAS RIGHTLY DELETE D THE ADDITION BY FOLLOWING THE ABOVE ORDER OF THE TRIBUNAL. BEIN G SO, WE DO NOT FIND ANY INFIRMITY IN THE FINDING OF THE CIT(APPEAL S) ON THIS ISSUE. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 4. THE NEXT GROUND RAISED BY THE REVENUE IN ITA NO.70/MDS/2016 IS THAT THE CIT(APPEALS) ERRED IN HO LDING THAT TRAVELLING EXPENSES, TELECOMMUNICATION CHARGES INCU RRED IN FOREIGN EXCHANGE ARE TO BE REDUCED FROM TOTAL TURNO VER ALSO FOR THE PURPOSE OF COMPUTATION OF DEDUCTION U/S.10A OF THE ACT. 5. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OP INION THAT SIMILAR ISSUE WAS CONSIDERED BY THE SPECIAL BENCH O F THIS TRIBUNAL IN THE CASE OF ITO V. SAK SOFT LTD. [2009] 30 SOT 55, WHEREIN IT WAS HELD THAT TELECOMMUNICATION AND FORE IGN TRAVEL EXPENSES TO BE REDUCED FROM BOTH EXPORT TURNOVER AN D TOTAL TURNOVER SO AS TO GIVE DEDUCTION U/S.10A OF THE ACT . IN VIEW OF THE AFORESAID DECISION OF THE SPECIAL BENCH, WE ARE OF THE OPINION THAT THE CIT(APPEALS) HAS TAKEN A CORRECT V IEW IN DECIDING THE ISSUE BY FOLLOWING THE DECISION OF THI S TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2009- 10 AND - - ITA 70 & 71/16 5 2010-11 IN ITA NOS. 2281 & 2282/MDS/13 AND 367 & 368/MDS/2014 DATED 17.3.2014. ACCORDINGLY, THIS GR OUND OF APPEAL OF THE REVENUE IS DISMISSED. 6. IN THE RESULT, THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 27 TH OF APRIL, 2016 AT CHENNAI. SD/- SD/- ( ' . . ' . #$ ) ( % & ' ( ) ) N.R.S.GANESAN * )+,-./0-1223-04* 5 67 /JUDICIAL MEMBER 6789::2;.<-.<=>?@>0 %5 /CHENNAI, A6 /DATED, THE 27 TH APRIL, 2016. MPO* 6$ BCDC /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. E)* /CIT(A) 4. E /CIT 5. 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