DCIT, V. K.K.Builders Pvt Ltd,

ITA 90/PAT/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1027 (ITAT-PATNA)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 23-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BIPIN KUMAR
• Assessee Lawyers: RISHI RAJ SINHA SR S C

Judgement Text

, PATNA IN THE INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH, PATNA . . , , BEFORE SHRI A.D. JAIN (JM) AND SHRI SANJAY ARORA (AM) ./ I.T.A. NO. 90 / PAT/201 1 ( / ASSESSMENT YEAR: 2007 0 8 ) D Y. CIT CIRCLE 2, MUZAFFARPUR / VS. K. K. BUILDERS PVT. LTD. WARD NO.13, GOPALGANJ ./ ./ PAN/GIR NO. ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI BIPIN KUMAR, ADV. / RESPONDENT BY : SHRI RISHI RAJ SINHA, SR.S.C. / DATE OF HEARING : 23 .0 4 . 2015 / DATE OF PRONOUNCEMENT : 28 .05.2015 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) I , PATNA (CIT(A) FOR SHORT) DATED 28.03.2011 , PARTLY ALLOWING THE A SSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT , 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2007 08 VIDE ORDER DATED 30.12.2009. 2. THE APPEAL RAISES FIVE GROUNDS, AS UNDER, WHI CH WE SHALL TAKE UP IN SERIATIM: 2 ITA NO. 90/PAT/2011 (A.Y. 2007 - 08) D Y. CIT VS. K. K. BUILDERS PVT. LTD. 1. THAT THE LD. CIT(APPEALS) HAS ERRED IN ALLOWING RELIEF TO THE TUNE OF RS.13,53,164/ TO THE ASSESSEE ON THE ISSUE OF ADDITION MADE BY THE A.O. U/S40(A)(IA) OF THE ACT EVEN AFTER OBSERVING THAT THE ISSUE IS DEBATABLE AND THAT SHE TOO HAS NOT REACHED TO ANY CONCLUSION WHETHER PROPER TDS HAS BEEN MADE. 2. THAT THE LD. CIT(A PPEAL) HAS ERRED IN REDUCING THE DISALLOWANCE OUT OF FUEL EXPENSES TO 1% OF THE CLAIM I.E. RS.5,34,335/ FROM RS.10,00,000/ . THUS THERE IS A RELIEF OF RS.4,65,665/ WITHOUT ANY REASON OR BASIS. 3. THAT THE LD. CIT(APPEALS) HAS ALSO ERRED IN ALLOWING RE LIEF BY REDUCING THE DISALLOWANCE OUT OF OFFICE EXPENSES TO 10% OF THE CLAIM I.E RS.71,230/ FROM RS.1,42,460/ WITHOUT ANY BASIS OR REASONING. 4. THAT THE LD. CIT(APPEALS) HAS ALSO ERRED IN REDUCING THE DISALLOWANCE OUT OF MISCELLANEOUS EXPENSES TO 10% OF THE EXPENSES AND GRANTING A RELIEF OF RS.55,436/ WITHOUT ANY BASIS OR REASONING. 5. THAT THE LD. CIT(APPEAL) WAS NOT JUSTIFIED IN PROVIDING RELIEF TO THE ASSESSEE COMPANY ON THE ISSUE OF ALLOW ABILITY OF REMUNERATION OF RS.16,00,000/ TO THE DIRECT ORS AFTER FINDING OUT ONLY THE QUALIFICATIONS AND WITHOUT FINDING OUT WHETHER ANY SERVICES WERE RENDERED BY THEM TO THE COMPANY OR NOT. MOREOVER, SHE HAS ACCEPTED THE COMPARISON WITH ANOTHER COMPANY VIZ., LARSEN AND TOUBRO , WHICH IS A MUCH LARGER COMPANY W ITH VERY HIGH TURNOVER THAN THE ASSESSEE COMPANY. 3. THE FACTS IN RELATION TO FIRST GROUND ARE THAT THE ASSESSING OFFICER (A.O.) OBSERVED THE ASSESSEE, A COMPANY IN THE BUSINESS OF CIVIL CONSTRUCTION ON CONTRACT BASIS, TO HAVE INCURRED EXPENDITURE BY WA Y OF MACHINERY HIRE CHAR G ES IN THE SUM OF RS.95,79,541/ . T AX THEREON HAD BEEN DEDUCTED AT THE RATE APPLICABLE TO A WORKS CONTRACT, U/S.194C OF THE ACT, I.E., AT THE BASE RATE OF 2% + CESS ( OR AT 2.244%). THE MACHINERY HIRE, HOWEVER, CAME WITHIN THE PURVIE W OF SECTION 194I OF THE ACT , PRESCRIBING DEDUCTION OF TAX AT SOURCE ON RENT, QUA WHICH AN EXTENDED DEFINITION HAD BEEN PROVIDED THERE UNDER. TWO, THE ENTIRE TAX , I.E., FROM APRIL , 2006 TO M ARCH, 2007, I.E., AT RS.2,15,010/ , HAD BEEN PAID ONLY ON 31.07.20 07. THERE WAS, THUS, A V IOL ATION OF THE PROVISIONS OF CHAPTER XVII B OF THE ACT , AND THE DEDUCTEE PAYEE BEING A RESIDENT , THE PROVISIONS OF SECTION 40(A)(IA) WOULD STAND ATTRACTED. THE ENTIRE AMOUNT OF HIRE CHARGES WAS, ACCORDINGLY, DISALLOWED THERE UNDER . 3 ITA NO. 90/PAT/2011 (A.Y. 2007 - 08) D Y. CIT VS. K. K. BUILDERS PVT. LTD. IN APPEAL, THE LD. CIT(A) FOUND THAT THE EXTENDED DEFINITION OF RENT BY WAY OF SUBSTITUTION O F THE E XP LANTION TO SECTION 194I, INCLUDING HIRE OF PLANT AND MACHINERY, WAS W.E.F. 13.07.2006, SO THAT IT WOULD APPLY FOR A PART OF THE YEAR. WITH REFERENCE TO THE AGREEMENT WITH THE COMPANYS PAYEE, HE OBSERVED THAT THE HIRE CHARGE, WHICH W AS ON HOURLY BASIS, WAS INCLUSIVE OF FUEL CHARGES, OPERATIVE WAGES, EQUIPMENT MAINTENANCE CHARGES AND OBLIGATION , I NCIDENTAL TO THE OPERATION OF THE EQUIPMENT, SO THAT THE HI RE AMOUNT WAS WITH REFERENCE TO THE ACTUAL RUNNING OF THE EQUIPMENT. SO, HOWEVER, HE REFRAIN ED FROM GIVING ANY FINDING IN THE MATTER , NOTING THOUGH THAT THE ASSESSEES ARGUMENT ON THAT BASIS, STATING IT TO BE AN AR RAN G E MENT IN THE NATURE OF A WORK S CONTRAC T , WAS NOT D E V OI D O F MERITS. THE ASSESSEE HAD PAID THE ENTIRE TAX DEDUCTIBLE FOR THE YEAR ON 31.07.2007, I.E., BEFORE THE DUE DATE OF FILING OF THE RETURN U/S. 139(1) OF THE ACT. IN AS MUCH AS THE ENTIRE TAX WAS DEDUCTED ONLY DURING THE MONTH OF MARCH, 200 7, THE DUE DATE FOR ITS DEPOSIT U/S.40(A)(IA), PRIOR TO ITS AMENDMENT BY FINANCE ACT, 2010 (W.E.F 01.04.2010) , THE DUE DATE AS SPECIFIED U/S. 200 R/W R ULE 30 OF THE INCOME TAX RULES, 1962. TH IS IS AS THE SCHEME OF TAX DEDUCTION AT SOURCE ENVISAGES DEDUCTIO N OF TAX ON THE D ATE OF PAYMENT OR CREDIT TO THE ACCOUNT OF THE RECIPIENT, WHICHEVER IS EARLIER, AND NOT AT THE END OF THE YEAR. TAX AT SOURCE HAVING BEEN DEPOSITED B EYOND THE DUE DATE, DEDUCTION IN ITS RESPECT WOULD THUS BE EXIGIBLE ONLY FOR THE YEAR IN W HICH THE TAX WAS PAID, I.E., PREVIOUS YEAR 2007 08, RELEVANT TO A.Y. 2008 09. TH E EXPENDITURE FOR THE MONTH OF M ARCH , 2007 (I.E., RS.13,53,164/ ) , HOWEVER, COULD BE ALLOWED FOR THE CURRENT YEAR, I.E., A.Y. 2007 08. HE DIRECT ED ACCORDINGLY, SO THAT THE REVE NUE IS IN APPEAL FOR THE RELIEF ALLOWED, I.E., THE EXPENDITURE FOR THE MONTH OF MARCH , 2007 (RS.13.53 LACS). 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. IN OUR VIEW, THE LD. CIT(A) WAS NOT JUSTIFIED IN TAKING THE VIEW AS ADOPTED BY H IM. THE TAX DEDUCTIBLE UNDER THE PROVISIONS OF CHAPTER XVII B FOR THE EXPENDITURE INCURRED DURING THE MONTH OF MARCH , 2007 IS 30.04.2007, WHILE THE PAYMENT HAS IN FACT BEEN MADE ONLY ON 31.07.2007. AS SUCH, THE SAME DEB I L ITY THAT LE D TO THE CONFIRMATION OF THE DISALLOWANCE FOR THE PAYMENTS/CREDITS DURING THE FIRST 11 MONTHS OF THE YEAR, WOULD OBTAIN FOR THE LAST MONTH 4 ITA NO. 90/PAT/2011 (A.Y. 2007 - 08) D Y. CIT VS. K. K. BUILDERS PVT. LTD. (MARCH, 2007) AS WELL. WE ALSO FIND THAT HE HAS NOT TAKEN THE ASSESSEES ARGUMENT MADE WITH REFERENCE TO THE PROVISIONS OF THE AGREEMENT TO I TS LOGICAL END. THE SAID ARGUMENT WAS ALSO RAISED BY THE ASSESSEE BEFORE THE A.O. AND, THEREFORE, MERITED A CLEAR FINDING, I.E., AS TO WHETHER, IN TERMS THEREOF, THE AGREEMENT AMOUNTED TO A WORKS CONTRACT, AS CLARIFIED BY THE BOARD CIRCULAR NO. 558 DATED 2 8.03.1990, RELIED UPON BY THE ASSESSEE, OR NOT SO. THIS COULD POSSIBLY BE FOR THE REASON THAT HE FOUND THE ASSESSEE TO HAVE NEITHER DEDUCTED TAX AT SOURCE, NOR DEPOSITED THE SAME, IN TIME. THUS, E VEN CONSIDERING THAT THE TAX WAS DEDUCTIBLE U/S. 194C, SO TH AT THERE WAS NO ISSUE WITH REGARD TO THE QUANTUM OF TAX DEDUCTED , TAX WAS NOT DEDUCTED OR PAID IN TIME, SO THAT THE PROVISION OF S . 40(A)(IA) WOULD IN ANY CASE STAND ATTRACTED. WE FIND THIS APPROACH AS VALID IN AS MUCH AS THE CONFUSION ON THE QUANTUM OF DED UCTION IS, AS APPARENT, BONA FIDE , EVEN THOUGH NO FINAL FINDINGS HAVE BEEN ISSUED. UNDER THE CIRCUMSTANCES, THEREFORE, A MERE DIFFERENCE IN THE PROVISION UNDER WHICH THE TAX IS DEDUCTED, RESULTING IN A DIFFERENCE IN THE QUANTUM OF DEDUCTION , SHOULD NOT LEA D TO A DISALLOWANCE OF THE CORRESPONDING EXPENDITURE. SO, HOWEVER, WE FIND NO GOOD REASON FOR UPHOLDING THE DISALLOWANCE . WE STATE FOR INDEPENDENT REASONS FOR THE SAME, AS FOLLOWS . FIRSTLY, IT IS APPARENT THAT THE DEDUCTION U/S.194C HAS BEEN MADE BONA FID E . C OMING , NEXT , TO THE BASIS OF HIS RELIEF, IMPUGNED BY THE REVENUE, I.E., THE DEPOSIT OF THE TAX DEDUCTED FOR THE MONTH OF MARCH, 2007 AS IN TIME , SO THAT DEDUCTION IN ITS RESPECT WOULD BE EXIGIBLE FOR THE CURRENT YEAR , IS , AGAIN, PATENTLY INCORRECT. AS OBSERVED EARLIER, THE DUE DATE FOR THE LAST MONTH OF THE YEAR IS THE END OF THE FOLLOWING MONTH, I.E., 30.04.2007 (SEE R ULE 30(2)(A)). SO, HOWEVER, THE HIGHER COURTS OF LAW, AS THE DELHI HIGH COURT IN THE CASE OF C IT VS. NARESH KUMAR [2014] 362 ITR 256 (DE L), HAVE HELD THE SUBSTITUTION TO SECTION 40(A)(IA) BY FINANCE ACT, 2010 W.E.F. 01.04.2010 AS RETROSPECTIVE, SO THAT IT WOULD APPLY FOR THE CURRENT YEAR AS WELL. ACCORDINGLY, THE TAX DEDUCTIBLE (AND DEDUCTED FOR THE LAST MONTH OF THE PREVIOUS YEAR) , W H ERE DEPOSITED ON OR BEFORE THE DUE DATE OF FILING THE RETURN U/S. 139(1) , WOULD PRECLUDE THE APPLICATION OF SECTION 40(A)(IA) , AND WHICH IS SO IN THE PRESENT CASE IN AS MUCH AS THE DUE DATE FOR FILING THE RETURN IS ONLY AFTER 31.07.2007 ; THE ACCOUNTS OF THE AS SESSEE COMPANY BEING SUBJECT TO AUDIT U/S.44AB 5 ITA NO. 90/PAT/2011 (A.Y. 2007 - 08) D Y. CIT VS. K. K. BUILDERS PVT. LTD. OF THE ACT. WE, THEREFORE, ALBEIT FOR DIFFERENT REASONS, UPH O LD THE CONFIRMATION OF THE DEDUCTION ALLOWED BY THE LD. CIT(A) QUA THE MACHINERY HIRE CHARGES FOR THE MONTH OF M ARCH, 2007. WE DECIDE ACCORDINGLY, D ISMISSING THE REVENUES GROUND NO. 1. 5. GROUND NOS. 2, 3 AND 4 ARE IN RESPECT OF PART DISALLOWANCES TO THE EXTEN T RESTRICTED BY THE LD. CIT(A) IN RESPECT OF THE ASSESSEES CLAIM FOR FUEL EXPENSES; OFFICE EXPENSES ; AND MISCELLANEOUS EXPENSES . THE DISCUSSI ON IN ITS RESPECT APPEARS AT PARA 5 TO 5.2 OF THE IMPUGNED ORDER; THE LAST BEARING HIS FINDINGS, AS UNDER: 5.2 I HAVE CONSIDERED THE APPELLANT S SUBMISSIONS. IT IS OBSERVED THAT THE AO HAS DISALLOWED RS. 15 LAKH OUT OF THE TOTAL CLAIM OF RS. 9,38,75,089 ON WAGES, WHICH AMOUNTS TO 1 .59% OF THE CLAIM. THE DISALLOWANCE WAS MADE ON THE GROUND THAT NO MUSTER ROLL OR WAGES REGISTER WAS PRODUCED. THE AO ALSO FOUND THE CLAIM EXCESSIVE AND UNVERIFIABLE. AS REGARDS FUEL EXPENSES, RS.10 LAKH OUT OF THE CLAIM OF RS. 5,3 4,33,491 WAS DISALLOWED MAINLY FOR THE REASON THAT THE EXPENSES HAD GONE UP, WHEREAS GROSS RECEIPTS HAD REDUCED AS COMPARED TO THE PRECEDING YEAR. IT MAY BE STATED, HOWEVER, THAT MERELY BECAUSE EXPENDITURE HAS INCREASED AS COMPARED TO THE PRECEDING YEAR IS NOT ADEQUATE GROUND FOR DISALLOWANCE, PARTICULARLY WHEN BOOKS OF ACCOUNT ARE MAINTAINED. WHILE MENTIONING THAT THE EXPENDITURE WAS NOT FULLY SUPPORTED WITH BILLS, THE AO HAS NOT SPECIFIED THE QUANTUM OF THE CLAIM WHICH WAS NOT SUPPORTED BY BILLS. ON THE O THER HAND, IT IS OBSERVED THAT THE NET PROFIT RATE DECLARED BY THE APPELLANT IS LESS THAN 2% OF THE JOB WORKS DURING THE YEAR, WHICH APPEARS TO BE RATHER LOW AS COMPARED TO THE INDUSTRY NORM. AFTER CONSIDERING THE VARIOUS FACETS OF THE ISSUE, THE DISALLOWA NCE OUT OF LABOUR EXPENSES IS CONFIRMED . T HE DISALLOWANCE OUT OF FUEL EXPENSE IS REDUCED TO 1 % OF THE CLAIM, I.E., RS.5,34,335. THE DISALLOWANCE OUT OF OFFICE EXPENSES AND MISCELLANEOUS EXPENSES IS REDUCED TO 10% OF THE RESPECTIVE CLAIMS. 6. WE HAVE HE ARD THE PARTIES, AND PERUSED THE MATEIRAL ON RECORD. AS APPARENT FROM THE FOREGOING, FINDING THE ASSESSEES CASE INFIRM, BOTH THE AUTHORITIES BELOW HAVE APPLIED DIFFERENT RATIOS , I.E., TO WHICH THEY CONSIDERED THE ASSESSEES CLAIM /S AS NOT REASONABLE. WE F URTHER OBSERVE THAT THE FURTHER RESTRICTION BY THE LD. CIT(A) HAS BEEN PRIMARILY ON ACCOUNT OF THE FACT THAT THE A.O. HA D NOT SPECIFIED THE EXTENT TO WHICH THE ASSESSEES CLAIM WAS NOT VERIFIABLE, BEING NOT SUPPORTED BY BILLS, IN VIEW OF WHICH HE VENTURED HIS OWN ESTIMATE . THOUGH , STRICTLY SPEAKING, THE MATTER OUGHT TO HAVE BEEN DETERMINED BY 6 ITA NO. 90/PAT/2011 (A.Y. 2007 - 08) D Y. CIT VS. K. K. BUILDERS PVT. LTD. CALLING FOR A REMAND REPORT SO AS TO REMOVE THE INFIRMITY AS OBTAINED IN THE ASSESSMENT ORDER, W E ARE NOT INCLINED TO DIRECT SO IN THE INSTANT CASE. THE ISSUE IS SUBSI STING ONE AND HAS VARIOUS FACETS TO IT , THE PRIMARY BEING THE MECHANICAL APPROACH ADOPTED BY THE ASSESSING AUTHORITY. UNDER THE CIRCUMSTANCES, THEREFORE, WE ARE INCLINED TO ACCEPT THE DISALLOWANCE AS CONFIRMED BY THE LD. C IT(A) , WHICH WE OBSERVE TO BE ALSO IN LINE WITH THE ESTIMATE AS SUSTAINED BY THE FIRST APPELLATE AUTHORITY FOR THE IMMEDIATELY PRECEDING YEAR, I.E., A.Y. 2006 07. WE HOLD SO AND , IN RESULT , THE REVENUE FAILS . WE MAY THOUGH CLARIFY THAT THE SAME SHALL NOT BE CONSTRUED AS LAYING ANY PRECEDEN T . WE DECIDE ACCORDINGLY. 7. THE LAST AND THE FIFTH GROUND OF THE REVENUES APPEAL CONCERNS THE DISALLOWANCE IN RESPECT OF THE ASSESSEES CLAIM FOR D IRECTORS REMUNERATION (AT RS.74.41 LACS) , EFFECTED BY INVOKING THE PROVISION OF SECTION 40A(2)(A) OF THE ACT , IN THE SUM OF RS.16 LACS. THE BASIS OF THE DISALLOWANCE WAS A SIMILAR DISALLOWANCE MADE FOR THE IMMEDIATELY PRECEDING YEAR, WHILE THE ASSESSEE RELIED HEAVILY ON THE FACT THAT THE EXPENDITURE FOR THE YEAR R EPRESENTED AN INCREASE OF ONLY 5% OVER THE CO RRESPONDING EXPENDITURE FOR THE IMMEDIATELY PRECEDING YEAR (AT RS. 69.19 LACS). THE FINDINGS BY THE LD. CIT(A) , IN ALLOWING RELIEF TO THE ASSESSEE , ARE AT PARA 6.3 OF THE ORDER, WHICH READS AS UNDER: 6 .3 I HAVE CONSIDERED TH E ISSUE. THE AO HAD DISALLOWED RS. 16 LAKH U/S 40A(2)(A ) , MENTIONING THAT MOST OF THE DIRECTORS HAD NO PROFESSIONAL QUALIFICATION. IT WAS OBSERVED, HOWEVER, THAT ALL THE DIRECTORS WERE GRADUATES, TWO OF THEM HAD MBA DEGREES AND THERE WERE THREE POST GRADUATES OF OTHER DISCIPLINES. THE J OB PROFILE OF EACH DIRECTOR AND THEIR SPECIFIC AREA OF RESPONSIBILITY IN THE COMPANY'S FUNCTIONING WAS INDICATED. THE AR ALSO CITED THE REMUNERATION BEING PAID BY LARSEN AND TOUBRO, WHO WERE CLAIMED TO BE THE NEAREST RIVAL OF THE APPELLANT COMPANY, FOR COM PARABLE SERVICES AS PROVIDED BY THE DIRECTORS TO THE COMPANY, AND IT WAS CLAIMED THAT THE REMUNERATION BEING PAID BY THE APPELLANT COMPANY WAS VERY CONSERVATIVE IN COMPARISON. IT WAS OBSERVED THAT THE REMUNE RATION CLAIMED RANGED BETWEEN RS. 4.29 LAKH PER AN NUM TO RS.11 .64 LAKH PER ANNUM IN THE CASE OF THE MANAGING DIRECTOR, SH. K.K. SINGH. THE REMUNERATION DOES NOT APPEAR TO BE EXCESSIVE, TAKING INTO ACCOUNT THE REMUNERATION PAC K AGES PREVALENT IN THE PRIVATE SECTOR. IT WAS ALSO ASSERTED THAT THE DIRECTOR'S REMUNERATION HAD BEEN INCREASED BY 5% ALONG WITH 7 ITA NO. 90/PAT/2011 (A.Y. 2007 - 08) D Y. CIT VS. K. K. BUILDERS PVT. LTD. SIMILAR INCREASE IN THE SALARIES OF ALL ADMINISTRATIVE AND SUPERVISORY STAFF. COPIES OF RETURNS OF THE DIRECTORS WERE ALSO FILED IN SUPPORT OF THE CLAIM THAT THEY WERE ALREADY PAYING TAX ON THE SALARY. AFTER CONSIDERING THE FACTS ON RECORD, PARTICUL ARLY THE INCREASE AT 5% EFFECTED IN TILE SALARIES OF ALL EMPLOYEES, A COMMENSURATE INCREASE IN TH E SALARIES OF THE DIRECTORS DOES NOT APPEAR TO JUSTIFY AN ADVERSE VIEW. THIS GROUND OF APPEAL IS ACCEPTED. 8. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. THE ASSESSEE PLEADS ITS CASE ON THE BASIS OF THE INCREASE FOR THE YEAR AS REPRESENTING A NOMINAL INCREMENT OF 5% OVER THE IMMEDIATELY PRECEDING YEAR , INCREASE TO WHICH EXTENT STANDS ALSO ALLOWED TO ITS REGULAR STAFF IN THE NORMAL COURSE OF B USINESS. THE SAME, THOUGH REASONABLE, AND FOUND FAVOUR WITH THE FIRS T APPELLATE AU T HO RITY , WOULD BE OF LITTLE ASSISTANCE IN AS MUCH AS THE REVENUES CASE IS BASED ON THE FACT THAT IT DID CONSIDERS THE DIRECTOR S REMUNERATION FOR THE PRECEDING YEAR ITSELF AS NOT REASONABLE AND EXCESSIVE , I.E., WITH REFERENCE TO THE FAIR VALUE OF THE SERVICES FOR WHICH THE SAME ST AND ALLOWED . WE FURTHER FIND THE LD. CIT(A) TO HAVE BEEN ALSO MOVED BY THE FACT OF THE ASSESSEE FURNIS HING THE JOB PROFI LE OF EACH DIRECTOR , AS WELL AS CONT E N D ING , ON THAT BASIS, OF THE SAME BEING BELOW THE MARKET RATES, AND TOWARD WHICH IT FURNISH E S THE R EMUNERATION PACKAGES BEING ALLOWED FOR SIMILAR SERVICES BY ITS NEAREST RIVAL, I.E., LARSEN & TOURBO. T HE MOOT QUESTION, HOWEVER, WOULD BE IF THE SAID INFORMATION WAS S UBMITTED TO THE A.O., THE ASSESSING AUTHORITY, AND WHICH FIND TO BE NOT THE CASE. UNLESS THE RELEVANT INFORMATION IS PLACED BEFORE THE A.O., WHICH THE ASSESSEE IS OBLIGED TO IN SUBSTANTIATION OF ITS CASE, HOW COULD HE POSSIBLY UNDERTAKE ANY MEANINGFUL ENQUIRY OR VERIFICATION , DE HORS WHICH THE INFORMATION IS OF LITTLE VALUE . THE LD. C IT(A) HAS IGNORED THIS VITAL ASPECT, ONLY TAKING THE ASSESSEES STATEMENT AT FACE VALUE. EVEN AS CONTENDED BY T HE REVENUE PER ITS GD. 5, LARSEN & TOURBO IS A MUCH LARGER COMPANY. IT WOULD OSTENSIBLY HAVE ITS OWN PARAMETERS FOR SERVICES RENDERED, INCLUDING THEIR ASSESSMENT, AS WELL AS REMUNERATION THEREAGAINST . RATHER, E VEN IF THE A.O. HA S COMMITTED A LAPSE IN ENQUI RY, HE , AS AN APPELLATE AUTHORITY , I S DUTY BOUND TO SEEK ITS RECTIFICATION/CORRECTION (REFER : KAPURCHAND SHRIMAL VS. CIT [1981] 131 ITR 451 (SC)). THE A.O., ON HIS PART , IS TO ACT REASONABLY. THE ONUS, I.E., ONCE THE ASSESSEE HAS FURNISHED THE REQUISITE DE TAILS, U/S.40A(2)(A) , IS EVEN OTHERWISE ON THE 8 ITA NO. 90/PAT/2011 (A.Y. 2007 - 08) D Y. CIT VS. K. K. BUILDERS PVT. LTD. REVENUE . THE A.O. IN THE REMAND REPORT FOR THE IMMEDIATELY PRECEDING YEAR (A.Y. 2006 07), AS CALLED FOR BY THE FIRST APPELLATE AUTHORITY IN DECIDING THE APPEAL IN THE SECOND ROUND (IN APPEAL NO. 10/A I, 2013 D ATED 28.09.2012/COPY ON RECORD), HAS HIMSELF, VIDE HIS REMAND REPORT DATED 17/19.09.2012 (THE RELEVANT PART OF WHICH IS REPRESENTED AT PGS. 4 TO 6 OF THE SAID ORDER), CONFIRMED THE REMUNERATION TO 5 OF THE 9 DIRECTORS AS REASONABLE, HAVE BEEN TAKEN INTO AC COUNT. HOW COULD, THEN, I.E., IN VIEW OF THE AOS FINDINGS PER THE SAID REMAND REPORT, THE REVENUE CONTEND OF THE SAME BEING NOT REASONABLE FOR THE CURRENT YEAR, OF COURSE ASSUMING THAT THE NAMED 5 DIRECTORS CONTINUE TO BE ON THE COMPANYS ROLLS, AND THEIR SALARY HAS BEEN INCREASED ONLY TO THE STATED EXTENT OF 5%. AGAIN, THE FINDINGS BY THE TRIBUNAL IN THE ASSESSEES CASE FOR A.Y. 2006 07 WOULD ALSO BE RELEVANT, WHICH THE SAME HAVE NOT BEEN SHOWN TO BE CONSIDERED OR MET. THE S UPERVENING CONSIDERATION , WE EM PHASIZE, IS OF REASONABILITY AND OBJECTIVITY , WITH THE ASSESSEE OBLIGED TO FURNISH A LL THE RELEVANT DETAILS. THE MATTER ACCORDINGLY IS RESTORED BACK TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW, ISSUING DEFINITE FINDINGS OF FACT. W E DECIDE ACCORDINGLY. 9. IN THE RESULT, THE REVENUES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED BY LISTING THE RESULT ON THE NOTICE BOARD OF THE BENCH UNDER RULE 34 (4 ) OF THE APPELLATE TRIBUNAL RULES, 1963. SD/ SD/ ( A. D. JAIN ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 28 . 0 5 .201 5 . . ./ ROSHANI , SR. PS 9 ITA NO. 90/PAT/2011 (A.Y. 2007 - 08) D Y. CIT VS. K. K. BUILDERS PVT. LTD. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./A SSTT. REGISTRAR) , ITAT, PATNA