Madhucon Projects Ltd., Hyd, Hyderabad V. DCIT, Central Circle-3, Hyd, Hyderabad

ITA 746/HYD/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2484 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 13-10-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 02-06-2015
• Court: TRIBUNAL
• Department Lawyers: P CHANDRA SEKHAR
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Business expenditure
• Section: 40A(3); 143(3); 153A; 115JB; 54; 263; 154; 2; 11

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 745/HYD/2015 ASSESSMENT YEAR: 2008-09 M/S MADHUCON PROJECTS LIMITED, HYDERABAD. PAN AAVBM4757A VS. DCIT, CIRCLE - 3 , HYDERABAD. (APPELLANT) (RESPONDENT) ITA NO. 746/HYD/2015 ASSESSMENT YEAR: 2008-09 M/S MADHUCON PROJECTS LIMITED, HYDERABAD. PAN AAVBM4757A VS. DCIT, CIRCLE - 3, HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P. MURALI MOHAN RAO REVENUE BY : SHRI P. CHANDRA SEKHAR DATE OF HEARING: 12 - 04 - 2017 DATE OF PRONOUNCEMENT: 19 - 05 - 2017 O R D E R PER B. RAMAKOTAIAH, A.M: THESE TWO ARE APPEALS BY ASSESSEE AGAINST THE COMMON ORDER PASSED BY PR.CIT(CENTRAL) HYDERABAD, D ATED 27.03.2015, SETTING ASIDE THE ORDERS OF A.O U/S 143 (3) R.W.S 153A DATED 31-03-2013 AND THE ORDERS U/S 154 OF THE IT ACT DATED 07-04-2013. 2. LD. PR. CIT(CENTRAL) EXERCISED POWERS U/S 263 O F THE IT ACT AND SET ASIDE THE ASSESSMENT ORDER AS WELL A S 2 ITA NOS. 745&746/HYD/2015 M/S MADHUCON PROJECTS LTD, HYD. SUBSEQUENT MODIFICATION ORDER BY THE COMMON ORDER U /S 263 OF THE IT ACT. THE REASON FOR SETTING ASIDE THE ORDER U/S 143(3) R.W.S 153A OF THE IT ACT WAS THAT AN AMOUNT OF RS. 53,94,694/- INADMISSIBLE UNDER THE PROVISION OF SEC. 40A OF THE IT ACT WAS NOT BROUGHT TO TAX, EVEN THOUGH THE SAME WAS REPORT ED IN THE 3CD REPORT BY THE AUDITOR. THE REASON FOR INVOKING JURISDICTION UNDER SEC. 263 OF THE IT ACT ON THE ORDER U/S 154 O F THE IT ACT WAS THAT, A.O WITHOUT EXAMINING THE DIRECTIONS OF T HE ITAT HAS ALLOWED DEDUCTION U/S 80IA(4) OF THE IT ACT, AND FU RTHER DID NOT COMPUTE THE INCOME U/S 115JB OF THE IT ACT. AFTER CONSIDERING THE EXPLANATION OF ASSESSEE AND OBJECTIONS RAISED, LD. PR. CIT SET ASIDE BOTH THE ORDERS, HENCE THE PRESENT APPEAL S. 3. AT THE OUTSET, LD. COUNSEL FAIRLY ADMITTED THAT THE A.O IN THE CONSEQUENTIAL ORDERS AFTER DUE EXAMINATI ON OF ASSESSEES SUBMISSIONS HAS ALLOWED 80IA(4) OF THE I T ACT. FURTHER, IT WAS ALSO SUBMITTED THAT THE ISSUE OF NO T DISALLOWING OF AN AMOUNT RS. 53,94,694/- UNDER 40A(3) OF THE IT ACT WAS ALSO ACCEPTED BY A.O, AS THE SAME WAS ADDED TO THE TOTAL INCOME WHILE PASSING THE ASSESSMENT ORDER. U/S 143( 3) R.W.S 153A OF THE IT ACT ORIGINALLY. 4. HOWEVER, LD. COUNSEL SUBMITTED THAT LD. CIT INVOKED THE JURISDICTION WRONGLY, WHEN THERE IS NEI THER ANY ERROR NOR ANY PREJUDICE TO THE INTERESTS OF REVENUE , ACCORDINGLY THE ORDERS PASSED BY CIT U/S 263 OF THE IT ACT ARE NOT CORRECT. 5. LD. CIT DR WHILE SUPPORTING THE ORDERS OF THE P R. CIT HOWEVER, SUBMITTED THAT THE ISSUE OF 115JB OF THE I T ACT WAS NOT EXAMINED BY A.O AND THERE ARE CERTAIN MISTAKES IN THE 3 ITA NOS. 745&746/HYD/2015 M/S MADHUCON PROJECTS LTD, HYD. ORDER BEING ERRONEOUS ONE, AND THEREFORE THE ORDER OF CIT SHOULD BE UPHELD. 6. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND TH E ORDERS PLACED ON RECORD. AS FAR AS INVOKING THE PO WERS U/S 263 ON THE ORDER U/S 143(3) OF THE IT ACT R.W.S 153A OF THE IT ACT DATED 31-03-2013 IS CONCERNED, THE ONLY ISSUE CONSI DERED BY THE LD. PR.CIT WAS THAT THE AMOUNT U/S 40A(3) OF TH E IT ACT WAS NOT DISALLOWED BY A.O IN THE ORDER. WE ARE NOT SUR E ON WHAT BASIS LD. PR.CIT CAME TO THAT CONCLUSION. AS SEEN FROM THE CONSEQUENTIAL ORDER PASSED BY DY. CIT VIDE THE ORDE R DATED 21- 03-2016, IT WAS CLEARLY STATED BY DY. CIT THAT THE SAID AMOUNT WAS ALREADY ADDED TO THE TOTAL INCOME WHILE PASSING THE ASSESSMENT ORDER U/S 143(3) R.W.S 153A OF THE IT AC T EARLIER AND ALSO SUBSEQUENTLY IN THE CONSEQUENTIAL ORDER, A CCORDINGLY THERE IS NO NEED TO MAKE SEPARATE ADDITION ON THIS. EVEN OTHERWISE THERE IS NO PREJUDICE CAUSED TO REVENUE A S THE SAID AMOUNT COULD HAVE BEEN ELIGIBLE FOR DEDUCTION U/S 8 0IA(4) OF THE IT ACT AS THE DISALLOWANCE PERTAINS TO BUSINESS EXPENDITURE. THUS ON THE BOTH THE GROUNDS I.E. THERE IS NO ERROR IN THE ORDER OF A.O AND THERE IS NO PREJUDICE CAUSED TO REVENUE, THE EXERCISE OF JURISDICTION U/S 263 OF THE IT ACT ON T HE ORDER DATED 143(3) R.W.S 153A OF THE IT ACT IS NOT VALID. NOW AS THERE IS NO PREJUDICE CAUSED TO ASSESSEE IN THE CONSEQUENTIAL O RDER, IT DOES NOT MATTER WHETHER 263 OF THE IT ACT IS CANCELLED O R NOT. THE ISSUE HAS BECOME ACADEMIC NOW. 7. NOW COMING TO THE PROCEEDINGS ON THE ORDER U/S 154 OF THE IT ACT, IT IS TRUE THAT PROVISION OF SEC. 11 5JB OF THE IT ACT WERE NOT EXAMINED BY A.O, WHILE ALLOWING THE DE DUCTION U/S 80IA(4) OF THE IT ACT IN THE ORDER UNDER 154 OF THE IT ACT DATED 4 ITA NOS. 745&746/HYD/2015 M/S MADHUCON PROJECTS LTD, HYD. 04-04-2013. IN THE CONSEQUENTIAL ORDER PASSED AFTER THE PROCEEDINGS U/S 263 OF THE IT ACT, A.O HAS EXAMINED THIS ISSUE AND NOTED THAT THE TOTAL INCOME COMPUTED UNDER THE NORMAL PROVISIONS WOULD RESULT IN A TAX LIABILITY OF RS. 6 ,98,89,354/-, WHEREAS COMPUTATION UNDER 115JB OF THE IT ACT WOULD RESULT IN TAX LIABILITY OF RS. 7,87,77,760/-. THUS THE COMPU TATION 115JB OF THE IT ACT SHOULD HAVE BEEN ADOPTED BY A.O, WHIL E GIVING RELIEF TO ASSESSEE U/S 80IA(4) OF THE IT ACT IN THE NORMAL COMPUTATION. THUS, THERE IS NOT ONLY AN ERROR COMM ITTED BY A.O, BUT, IT ALSO CAUSED PREJUDICE TO THE INTERESTS OF REVENUE. THUS ON BOTH THE PRINCIPLES, THE EXERCISE OF POWER BY THE CIT U/S 263 OF THE IT ACT IS TO BE UPHELD, THEREFORE, T HE DIRECTION OF CIT TO SET ASIDE THE ORDER UNDER 154(A) OF THE IT A CT, IS UPHELD. 8. BOTH THE PARTIES HAVE RELIED ON VARIOUS CASE LA W IN SUPPORT OF THEIR CONTENTIONS, HOWEVER, AS THE FACTS INDICATE HERE THERE IS NO ERROR IN THE ORDER U/S 143(3) R.W.S 153 A OF THE IT ACT DATED 27-03-2013 AND THE SUBSEQUENT ORDER U/S 1 54 OF THE IT ACT IS FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENUE, FOR NOT INVOKING THE PROVISIONS OF SEC. 115JB OF THE IT ACT. THERE IS NO NEED TO ANALYSE AND DISCUSS TH E VARIOUS PRINCIPLES LAID DOWN IN VARIOUS CASE LAW RELIED UPO N. 9. IN THE RESULT, THE GROUNDS RAISED IN ITA 745/HYD/2015 ON EXERCISE OF JURISDICTION UNDER 263 OF THE IT ACT ON THE ORDER UNDER 143(3) R.W.S 153A OF THE IT ACT ARE ALLOWED AND THE APPEAL IS TREATED AS ALLOWED. THE GROUNDS IN ITA NO. 746/HYD/2015 ON THE ORDER U/S 263 OF THE IT ACT DATED 07-04-2013 IS REJECTED, ACCORDINGLY THAT APPEAL IS DISMISSED. 5 ITA NOS. 745&746/HYD/2015 M/S MADHUCON PROJECTS LTD, HYD. 10. IN THE RESULT, APPEAL IN ITA NO. 745/HYD/2015 IS ALLOWED AND THE APPEAL IN ITA NO. 746/HYD/2015 IS D ISMISSED. PRONOUNCED IN THE OPEN COURT ON 19 TH MAY, 2017. SD/- SD/- (D. MANMOHAN) (B. RAMA KOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED: 19 TH MAY, 2017. KRK 1 M/S MADHUCON PROJECTS LTD. HYD C/O P. MURALI & CO C AS, 6-3- 655/2/3, IST FLOOR, SOMAJIGUDA, HYDERABAD 82. 2 DCIT, CENTRAL CIRCLE-3, HYDERABAD. 3 PR.CIT (CENTRAL), HYDERABAD. 4 ADDL.CIT, CENTRAL RANGE-2, HYDERABAD. 5 THE DR, ITAT HYDERABAD 6 GUARD FILE