DCIT, Chandigarh V. M/s SAB Industires Ltd, Chandigarh

ITA 933/CHANDI/2000

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68440 (ITAT-CHANDIGARH)
• Duration Of Justice: 12 year(s) 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 08-08-2013
• Assessment Year: 1997-1998
• Appeal Filed On: 29-12-2000
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Assessee Lawyers: MRS GURPREET KAUR
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.1073 /CHD/1993 (ASSESSMENT YEAR : 1990-91) THE A.C.I.T., VS. M/S S.A.BUILDERS LTD., CENTRAL CIRCLE, SCO 49-50, SECTOR 26, CHANDIGARH. CHANDIGARH. PAN: ITA NO.933 /CHD/2000 (ASSESSMENT YEAR : 1997-98) THE D.C.I.T., VS. M/S SAB INDUSTRIES LTD., CENTRAL CIRCLE, SCO 49-50, SECTOR 26, CHANDIGARH. CHANDIGARH. ITA NO.253 /CHD/2001 (ASSESSMENT YEAR : 1998-99) THE D.C.I.T., VS. M/S SAB INDUSTRIES LTD., CENTRAL CIRCLE, SCO 49-50, SECTOR 26, CHANDIGARH. CHANDIGARH. PAN: AND ITA NO.254 /CHD/2001 (ASSESSMENT YEAR : 1995-96) THE D.C.I.T., VS. M/S S.A.BUILDERS & FINANCIERS LTD., CENTRAL CIRCLE, SCO 49-50, SECTOR 26, CHANDIGARH. CHANDIGARH. PAN: (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : MRS.GURPREET KAUR DATE OF HEARING : 08.08.2013 DATE OF PRONOUNCEMENT : 23.08.2013 2 O R D E R PER SUSHMA CHOWLA, J.M. : THIS BUNCH OF FOUR APPEALS HAS BEEN RESTORED BACK B Y THE HON'BLE PUNJAB & HARYANA HIGH COURT TO THE FILE OF THE TRIB UNAL WITH SEPARATE ORDERS DATED 15.01.2009 RELATING TO ASSESSMENT YEAR S 1990-91, 1997-98, 1998-99 AND 1995-96. THE APPEALS IN THE CASE OF T HE ASSESSEE RELATING TO ASSESSMENT YEARS 1990-91, 1997-98, 1998-99 AND 1 995-96 WERE DECIDED BY THE TRIBUNAL VIDE SEPARATE ORDERS AGAINS T WHICH THE REVENUE WENT IN APPEAL BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT. THE QUESTION OF LAW RAISED IN THE CAPTIONED APPEALS WAS AS UNDER: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE HON'BLE ITAT WAS RIGHT IN LAW IN HOLDING THAT THE AMOUNT OF RS.58,68,700/-(A.Y.1990-91)/RS.22,26 ,584/- (A.Y.1997-98)/RS.22,57,570/-(A.Y.1998-99)/RS.11,02, 959/-(A.Y.1995-96) RETAINED BY THE AUTHORITIES, COULD NOT BE TREATED A S ASSESSEES INCOME FOR THE YEAR INSPITE OF FACT THAT INCOME WAS BEING ASSESSED ON ACCRUAL BASIS? 2. THE HON'BLE HIGH COURT IN INCOME TAX APPEAL NO.2 0 OF 2003 VIDE ORDER DATED 15.1.2009 RELATING TO ASSESSMENT YEAR 1 990-91, IN INCOME TAX APPEAL NO.331 OF 2005 RELATING TO ASSESSMENT YE AR 1997-98 VIDE ORDER DATED 15..1.2009, IN INCOME TAX APPEAL NO.401 OF 2005 RELATING TO ASSESSMENT YEAR 1998-99 VIDE ORDER DATED 15.1.2009 AND IN INCOME TAX APPEAL NO.402 OF 2005 RELATING TO ASSESSMENT YEAR 1 995-96 VIDE ORDER DATED 15.1.2009 REMITTED THE ISSUE BACK TO THE FILE OF THE TRIBUNAL TO REDECIDE THE SAME. CONSEQUENT TO THE ORDER OF THE TRIBUNAL THE PRESENT SET OF APPEALS WERE SLATED FOR HEARING BEFORE US TO DECIDE THE ISSUE IN RELATION TO THE TAXABILITY OF THE RETENTION MONEY I N THE HANDS OF THE ASSESSEE FROM YEAR TO YEAR. 3 3. THE GROUND NO.1 RAISED BY THE REVENUE IN ASSESSM ENT YEAR 1990-91 READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.58,68,700/- ON ACCOUNT OF RETENTION MONEY. THE DEPARTMENT IS IN SECOND APPEAL AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) IN APPEAL NOS.40-P/8/88-89, 272/88-89, 271- P/72/88-89 & 270/P-71/88-89 FOR THE ASSTT. YEARS 1985-86, 1986-87, 1987-88 & 1988-89 RELIED UPON. 4. SIMILAR GROUND OF APPEAL HAS BEEN RAISED BY THE ASSESSEE IN OTHER ASSESSMENT YEARS AND THE SAME READS AS UNDER: ASSESSMENT YEAR 1997-98 : (II) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FA CTS OF THE CASE IN DELETING THE DISALLOWANCE OF DEDUCTION ON ACCOUNT OF RETENTION MONEY WITHHELD BY THE PRINCIPALS TO THE TUNE OF RS.22,26, 584/-. WHILE DELETING THE ADDITION MADE BY THE LD. CIT(A) HAS DISREGARDED THE FACT THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND IN THAT EVENT, WHATEVER AMOUNT IS RETAINED BY THE AUTHORITIES FROM THE CONTRACT PAYMENTS MADE; TO THE ASSESSEE WHETHER IN THE NATURE OF SECURITY OR IN ANY OTHER FORM IS AN INCOME ACCRUED TO THE ASSESSEE. THE INCOME ACCRUES TO THE ASSESSEE AT THE MOMENT BILLS ARE SUBMITTED BY THE ASSESSEE FOR PAYMENT BECAUSE THE BILLS ARE PREPARED ON THE BASIS OF WORK DONE BY IT. ASSESSMENT YEAR 1998-99 : (I) THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FAC TS OF THE CASE IN DELETING THE DISALLOWANCE OF DEDUCTION ON ACCOUNT OF RETENTION MONEY WITHHELD BY THE PRINCIPALS TO THE TUNE OF RS.22,57,570/-. ASSESSMENT YEAR 1995-96 : 1. THE LD. CIT(A) HAS ERRED BOTH IN JAW AND ON FACT S OF THE CASE IN DELETING (HE DISALLOWANCE OF DEDUCTION ON ACCOUNT OF RETENTION MONEY AMOUNTING TO RS.11,02,259/- WITH-HELD BY THE PRINCIPALS. WHILE DELETING THE ADDITION, THE LD. CTT(A) HAS 4 TOTALLY DISREGARDED THE FACT THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND IN THAT EVENT, WHATEVER AMOUNT IS RETAINED BY THE AUTHORITIES FROM THE CONTRACT PAYMENTS MADE TO THE ASSESSES, WHETHER IN. THE NATURE OF SECURITY OR IN ANY OTHER FORM IS AN INCOME ACCRUED TO THE ASSESSES. TH E INCOME ACCRUES TO THE ASSESSES THE VERY MOMENT, BILLS .IRE SUBMITTED BY THE ASSESSES FOR PAYMENT BECAUSE THE BILLS ARC PREPARED ON THE BASIS OF WORK DONE BY IT. 5. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT SIMILAR ISSUE IN RESPECT OF TAXABILITY OF RETENTION MONEY WITHHELD B Y THE AUTHORITIES WHETHER TO BE ASSESSED AS INCOME OF THE ASSESSEE AR OSE BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEES O WN CASE RELATING TO ASSESSMENT YEAR 1992-93 AND THE ISSUE HAS BEEN DECI DED IN FAVOUR OF THE ASSESSEE AND THE APPEAL OF THE REVENUE HAS BEEN DIS MISSED BY JUDGMENT DATED 6.5.2013. 6. THE LEARNED D.R. FOR THE REVENUE FAIRLY PLACED R ELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ONLY ISSUE SET ASIDE TO THE FILE OF THE TRIBUNAL BY THE HON'BLE HIGH COURT VIDE SEPARATE ORDER DATED 15.1.2009 WAS IN RELATION TO THE TAXABILITY OF RETENTION MONEY AS INCOME OF THE ASSESSEE. SIMILAR ISSUE AROSE BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT IN ASSESSEE S OWN CASE RELATING TO ASSESSMENT YEAR 1992-93 AND IN ITA NO.6 1 OF 2004 VIDE JUDGMENT DATED 6.5.2013 WE FIND THAT THE QUESTION O F LAW ARISING BEFORE THE HON'BLE HIGH COURT WAS AS UNDER: 'WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE AMOUNT OF RS.14,45,700/- RETAINED BY THE AUTHORITIE S, COULD NOT BE TREATED AS ASSESSEES INCOME FOR THE Y EAR IN SPITE OF FACT THAT INCOME WAS BEING ASSESSED ON ACCRUAL BASIS? 5 8. THE HON'BLE HIGH COURT NOTED THE FACTS OF THE CA SE AS UNDER FOR THE RELEVANT ACCOUNTING YEAR, THE ASSESSEE FIL ED ITS RETURN OF INCOME DECLARING NET LOSS OF RS.1,17,39,640-. THE ASSESSING OFFICER MADE ADDITIO NS DURING THE COURSE OF ASSESSMENT WHICH INCLUDES DISALLOWANCE ON ACCOUNT OF RETENTION MONEY RETAINED BY THE AUTHORITY ON WHOSE BEHALF WORK WAS CARRIED OUT, AWAITING SUCCESSFUL COMPLETION OF THE WORK. THE DISALLOWANCE ORDERED BY THE ASSESSING OFFICER WAS S ET ASIDE BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE SAID ORDER WAS AFFIRMED BY THE TRIBUNAL. 9. THE HON'BLE HIGH COURT THUS HELD AS UNDER: LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON COMMISSIONER OF INCOME TAX VS. CHANCHANI BROTHERS (CONTRACTORS) PVT. LTD. 161 ITR 418 PATNA, COMMISSIONER OF INCOME TAX VS. SIMPLEX CONCRETE PIL ES (INDIA)PVT. LTD., 179 TTR 8 (CALCUTTA), COMMISSIONER OF INCOME TAX VS. EAST COAST CONSTRUCTIONS AND IND. LTD. (2006) 283 ITR 297 (MAD), COMMISSIONER OF INCOME TAX VS. ASSOCIATED CABLES P. LTD. (2006) 286 ITR 596 (BOM) COMMISSIONER OF INCOME TAX VS. P & C CONSTRUCTIONS (P) LTD. (2009) 318 ITR 113 (MAD) , WHEREIN, IT HAS BEEN HELD THAT THE RIGHT TO RECEIVE RETENTION MONEY ACCRUES ONLY AFTER THE OBLIGATIONS UNDER THE CONTRACT ARE FULFILLED. THEREFORE, IT WIL L NOT AMOUNT TO INCOME OF THE ASSESSEE IN THE YEAR IN WHI CH AMOUNT IS RETAINED. IN VIEW OF THE CONSISTENT VIEW OF THE DIFFERENT HIG H COURTS WITH WHICH WE RESPECTFULLY AGREE, WE DO NOT FIND ANY SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION. 10. THE ISSUE ARISING IN THE PRESENT SET OF APPEALS BEFORE US IS IDENTICAL TO THE ISSUE ARISING BEFORE THE HON'BLE P UNJAB & HARYANA HIGH COURT IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 1992-93. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE H ON'BLE HIGH COURT WE HOLD THAT THE RIGHT TO RECEIVE RETENTION MONEY ACCR UES ONLY AFTER THE OBLIGATIONS ARE FULFILLED. THEREFORE, THE SAID RET ENTION MONEY DOES NOT AMOUNT TO INCOME OF THE YEAR IN WHICH SUCH AMOUNT I S RETAINED EVEN WHERE THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM O F ACCOUNTING. IN VIEW THEREOF, THE GROUND NO.1 RELATING TO ASSESSMEN T YEAR 1990-91, 6 GROUND NO.(II) RELATING TO ASSESSMENT YEAR 1997-98, GROUND NO.(I) RELATING TO ASSESSMENT YEAR 1998-99 AND GROUND NO. 1 RELATING TO ASSESSMENT YEAR 1995-96 RAISED BY THE REVENUE ARE T HUS DISMISSED. 11. IN THE RESULT, GROUND NO.1 RELATING TO ASSESSME NT YEAR 1990-91, GROUND NO.(II) RELATING TO ASSESSMENT YEAR 1997-98, GROUND NO.(I) RELATING TO ASSESSMENT YEAR 1998-99 AND GROUND NO. 1 RELATING TO ASSESSMENT YEAR 1995-96 RAISED BY THE REVENUE ARE T HUS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF AUGUST, 2013. SD/- SD/- (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23 RD AUGUST, 2013 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH