Rahee Infratech Ltd., Kolkata V. DCIT, CC-XXI, Kolkata, Kolkata

ITSSA 6/KOL/2015

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3857 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 08-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIG MALLIKARJUNA
• Assessee Lawyers: SHRIMANISH TIWARI
• Keywords: Depreciation; Bad and doubtful debts; Accommodation entries; Onus to prove
• Section: 194C; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATAA BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER& SRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER] I.T(SS).A. NO.05/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T(SS).A. NO. 06/KOL/2015 ASSESSMENT YEAR: 2011-12 I.T(SS).A. NO. 07/KOL/2015 ASSESSMENT YEAR: 2012-13 RAHEEINFRATECH LTD..........APPELLANT 4, HO-CHI MINH SARANI FLAT-1C KOLKATA 700 071 [PAN: AABCR 2809 Q] D.C.I.T. CENTRAL CIRCLE-XXI........RESPONDENT AAYKARBHAWANPOORVA 110, SHANTIPALLY KOLKATA- 700 107 APPEARANCES BY: SHRIMANISH TIWARI, AR,APPEARED ON BEHALF OF THE ASSESSEE. SHRIG. MALLIKARJUNA, CIT, D/R,APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING :MAY 23 RD , 2018 DATE OF PRONOUNCING THE ORDER :JULY 4 TH , 2018 ORDER PER J. SUDHAKARREDDY :- ALL THESE APPEALS ARE FILED BY THE ASSESSEE AND ARE DIRECTED AGAINST THE SEPARATED ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)21, KOLKATA, (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT.26/11/2014, RELATING TO ASSESSMENT YEARS 2010-11, 2011-12 & 2012-13. AS THE ISSUES ARISING IN ALL THESE APPEALS ARE COMMON, FOR THE SAKE OF CONVENIENCE, THEY ARE HEARD TOGETHER AND DISPOSED OFF BY WAY OF THIS COMMON ORDER. 2. THE ASSESSEE IS A COMPANY AND IS IN THE BUSINESS OF MANUFACTURING AND TRADING OF RAILWAY TRACKS, FINANCING AND CONSTRUCTION OF RAILWAY BRIDGE. FOR THE ASSESSMENT YEAR 2010-11, THE ISSUES BEFORE US ARE ESTIMATION OF INCOME FROM BOGUS SUB-CONTRACT RECEIPTS AND EXPENSES, ALLOWABILITY OF BAD DEBTS U/S 36(1)(VII) OF 2 I.T(SS).A. NO. 05/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T(SS).A. NO. 06/KOL/2015 ASSESSMENT YEAR: 2011-12 I.T(SS).A. NO. 07/KOL/2015 ASSESSMENT YEAR: 2012-13 RAHEEINFRATECH LTD THE ACT AND LASTLY WHETHER THE INCOME FROM LEASE OF FACTORY SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR UNDER THE HEAD INCOME FROM OTHER SOURCES. THE THIRD ISSUE REFERRED ABOVE, IS COMMON FOR ALL THE THREE ASSESSMENT YEARS. FOR THE ASSESSMENT YEAR 2011-12, ONE MORE ISSUE ARISES, WHICH IS REGARDING THE ALLOWABILITY OF COMMISSION EXPENSES. 3. FIRST WE TAKEN UP THE ISSUE OF SUB-CONTRACT EXPENSES. THE FINDINGS OF THE ASSESSING OFFICER IS THAT THE, ASSESSEE WAS AWARDED A CONTRACT FOR LAND FILLING BY M/S. J.KUMARINFRAPROJECTS LTD., ANDHERI, MUMBAI (JKIL) AND M/S. PACL INDIA LTD. (PACL), BARAKHAMBHA ROAD, NEW DELHI AND M/S. RAJESH PROJECTS (INDIA) PVT. LTD. (RPPL) AT PITAMPURA , NEW DELHI. THE WORKS SO OBTAINED WAS ASSIGNED ON SUB- CONTRACT TO M/S SAFECO PROJECTS PVT. LTD. AT 7, LYONS RANGE, KOLKATA- 700 001, ON A BACK TO BACK BASIS. THE ASSESSEE HAD ENCLOSED COPY OF THE AGREEMENTS ENTERED WITH THESE PARTIES, COPIES OF INVOICES RAISED BY THE SUB-CONTRACTOR M/S. SAFECO PROJECTS, COPY OF CERTIFICATE ISSUE U/S 197(1) OF THE ACT, IN THE CASE OF M/S. SAFECO PROJECTS, BY THE ITO, TDS, WARD59(3), KOLKATA, COPIES OF LEDGER ACCOUNT OF M/S. SAFECO PROJECTS PVT. LTD. IN THE BOOKS OF THE ASSESSEE COMPANY AND THE COPY OF THE ASSESSEES COMPANYS LEDGER ACCOUNT IN THE BOOKS OF M/S. SAFECO PROJECTS PVT. LTD. AS EVIDENCE. THE ASSESSING OFFICER OBSERVED THAT NONE OF THE BILLS RAISED BY THE ASSESSEE AND THE BILLS RAISED BY THE SUB-CONTRACTOR, GIVE DESCRIPTION OF THE PLACE WHERE THE WORK HAS BEEN EXECUTED. HE ALSO OBSERVED THAT ONE OF THE RECIPIENTS, DOWN THE LINE OF THE PAYMENT, CONFIRMED ON OATH, ON MORE THAN ONE OCCASION, THAT HIS CONCERN HAS NOT PERFORMED OR EXECUTED ANY KIND OF WORK OF EARTH FILLING FOR THE AMOUNT RECEIVED FROM M/S RAHEE INDUSTRIES LTD. HE ALSO OBSERVED THAT, WHEN SEARCH WAS CONDUCTED IN THE CASE OF M/S. AMR CONSTRUCTIONS LTD., IT HAS COME TO LIGHT THAT M/S. SAFECO PROJECTS PVT. LTD. PROVIDED ACCOMMODATION ENTRIES FOR BOOKING BOGUS EXPENDITURE. A SURVEY WAS CONDUCTED ON M/S. RAHEE GROUP AND DURING THE SURVEY ON 23/09/2011 AND LATER ON 26/09/2011, THE STATEMENT OF THE DIRECTORS AND RESPONSIBLE PERSONS OF M/S. SAFECO PROJECTS, WERE RECORDED AND THEY HAD ADMITTED THAT M/S. SAFECO, IS JUST A JAMAKHARCHI COMPANY AND HAD NEVER EXCLUDED ANY WORK EXCEPT PROVIDING ACCOMMODATION ENTRIES ON COMMISSION OF 1% ON GROSS RECEIPT, WHICH INCLUDES THE TDS AMOUNT. THE ASSESSING OFFICER EXAMINED THE DIRECTOR, MR. ADITYACHIRIMAR AND PRESENT DIRECTOR MR. BABLU SHAW OF M/S. SAFECO PROJECTS AND STATEMENTS WERE RECORDED ON 3 I.T(SS).A. NO. 05/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T(SS).A. NO. 06/KOL/2015 ASSESSMENT YEAR: 2011-12 I.T(SS).A. NO. 07/KOL/2015 ASSESSMENT YEAR: 2012-13 RAHEEINFRATECH LTD 26/11/2013, 04/12/2013 & 12/02/2014, ON OATH. BOTH OF THEM HAD REITERATED THEIR STATEMENTS GIVEN DURING THE SURVEY ON 23/09/2011 AND 26/09/2011. THE ASSESSING OFFICER ISSUED NOTICE U/S 131 OF THE ACT TO THE DIRECTORS OF THE ASSESSEE COMPANY TO APPEAR BEFORE HIM AND CROSS-EXAMINE MR. ADITYACHIRIMAR, THE CASE WAS FIXED TWICE BUT THE ASSESSEE CHOSE NOT TO CROSS-EXAMINE THESE PERSONS NOR APPEAR BEFORE THE ASSESSING OFFICER. HENCE, IT WAS CONCLUDED BY THE ASSESSING OFFICER THAT NO WORK WAS DONE BY THE ASSESSEE OR BY THE SUB CONTRACTOR, WHATSOEVER, FOR WHICH EXPENSES HAVE BEEN CLAIMED. THE ASSESSING OFFICER HAS IN HIS ORDER CONCLUDED AS FOLLOWS:- IN COURSE OF ASSESSMENT PROCEEDINGS IT WAS SUBMITTED THAT THE ASSESSEE COMPANY RECEIVED THIS ASSSIGMENT FOR EARTH FILING FROM M/S. J. KUMAR INFRAPROJECTS LTD. M/S PACL INDIA LTD. AND KUMAR INFRAPROJECTSPVT. LTD. WHICH IT DELEGATED TO M/S. SAFECO PROJECTS PVT. LTD. IN COURSE OF ASSESSMENT PROCEEDINGS RESPECTIVE LEGERS IN THE BOOKS OF M/S RAHEE INDUSTRIES I.E. THE ASSESSEE UPON THE CONCERN FROM WHOM THIS CONTRACT WORK WAS RECEIVED. SIMILARLY THE BILLS RAISED BY THE SAFECO UPON THE ASSESSEE FOR THE SAME CONTRACT JOB WAS ALSO REFLECTED IN THE SAID STATEMENT. THIS STATEMENT IS BEING MADE PART OF THIS ORDER AS PER ANNEXURE-A. FROM THE SAID STATEMENT IT CAN BE SEEN THAT BEFORE THE BILLS RAISED BY M/S SAFECO PROJECT PVT LTD. UPON THE ASSESSEE THE ASSESSEE HAS RAISED BILLS UPON THE PARTIES FROM WHOM IT HAS RECEIVED THE WORK CONTRACT FOR EARTH FILLING WHICH MEANS THAT BEFORE THE WORK BEING EXECUTED BY THE SUB-CONTRACTORS THE ASSESSEE HAS RAISED BILLS UPON THE PRINCIPAL. MOREOVER FROM THE STATEMENT IT IS CLEAR THAT ON ACCOUNT OF CONTRACT JOB IT HAS RECEIVED RS.19,65,76,691/- AND PAID RS.19,18,44,148/-. THEREFORE, THE DIFFERENCE AMOUNT OF RS.47,32,543/- IS THE MARGIN OF PROFIT WHICH IS APPARENT FROM THIS STATEMENT. THIS AMOUNT OF PROFIT THEREFORE HAS ARISED TO THE ASSESSEE COMPANY WHICH IS APPARENT FROM THE ACCOUNT. THERE MAY BE SOME HIDDEN PROFIT OR SOME PROFIT WHICH BY WAY OF CLAIMING CASH EXPENDITURE BY THE SUB-CONTRACTORS MAY HAVE PASSED ON TO THE ASSESSEE COMPANY. BUT FROM THE ABOVE DISCUSSION IT IS VERY CLEAR THAT IN REALITY NO SUCH WORK OF EARTH FILLING WAS AT ALL DONE. THESE ARE ALL BOOK ENTRIES, SO IT CANNOT BE DENIED THAT THE PRINCIPALS FROM WHOM THE ASSESSEE COMPANY I.E. M/S. RAHEE INDUSTRIES HAVE PROCURED THIS EARTH FILLING JOB ARE THE REAL BENEFICIARIES OF THIS TRANSACTION AS THEY HAVE BY TAKING ACCOMMODATION ENTRIES FROM M/S RAHEE HAD BOOKED BOGUS EXPENSES ON ACCOUNT OF CONTRACT JOB GIVEN TO M/S RAHEE FOR EARTH FILLING. M/S RAHEE INDUSTRIES AT PRESENT M/S. RAJEEINFRATECH IS BASICALLY A MANUFACTURER OF RAILWAYS EQUIPMENT. IN THE YEAR OF SEARCH THEY HAVE DIVERSIFIED TO MAJOR AREA OF WORKS CONTRACT IN THE FORM OF CIVIL CONSTRUCTION AND THESE CONTRACTS ARE SOLELY FROM INDIAN RAILWAYS, SO THE CONTRACT IT RECEIVED IN THE F.Y. 2009-10 I.E. A.Y. 2010-11 OF EARTH FILLING FROM THIS NON GOVERNMENT AGENCIES ARE OF DOUBTFUL NATURE. IF THE AGREEMENT AND BILLS RAISED ARE EXAMINED NOWHERE THE PLACE OF WORK OR THE SITE ADDRESS OR LOCATION IS MENTIONED. SO INFORMATION REGARDING ACCOMMODATION ENTRIES TAKEN BY THE PRINCIPLES TO THE ASSESSEE COMPANY ARE BEING PASSED ON TO THEIR RESPECTIVE JURISDICTION AS THEY HAVE BOOKED BOGUS EXPENDITURE AND REDUCED THEIR PROFIT CONSIDERABLY. IN THE HANDS OF THE ASSESSEE AS WE HAVE DISCUSSED ABOVE, THE MARGIN APPARENT FROM THE STATEMENT SHOWS 2.4% BUT SINCE THESE ARE BOOK ENTRIES, PROFIT FROM COMMISSION FOR PROVIDING ACCOMMODATION TO THE PRINCIPLE IS ESTIMATED AT 5% OF THE TURN OVER I.E. 5% OF RS.19,65,76,691/- I.E. RS.98,28,834/- IS BEING AS ADDED AS INCOME FROM ACCOMMODATION ENTRIES PROVIDES FOR BOGUS SUB-CONTRACT JOB. 4 I.T(SS).A. NO. 05/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T(SS).A. NO. 06/KOL/2015 ASSESSMENT YEAR: 2011-12 I.T(SS).A. NO. 07/KOL/2015 ASSESSMENT YEAR: 2012-13 RAHEEINFRATECH LTD 4. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL. THE LD. FIRST APPELLATE AUTHORITY, UPHELD THE FACTUAL FINDINGS OF THE ASSESSING OFFICER THAT THE ASSESSEE IS A PASS THROUGH ENTITY I.E. IN OTHER WORDS A JAMAKHARCHI COMPANY. HE ALSO UPHELD THE ESTIMATION OF INCOME @ 5% ON THE BOOK ENTRIES PROVIDED. AS THE ASSESSEE ALREADY DISCLOSED A PROFIT OF RS. 47,32,543/-, HE REDUCED THE ADDITION TO RS.50,96,291/-. 4.1. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 5. ON FACTS THE ASSESSEE SUBMITS THAT THE WORK HAS ACTUALLY TAKEN PLACE AND IT IS WRONG ON THE PART OF THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A) TO HOLD OTHERWISE. HE PRODUCED ALL THE EVIDENCES THAT WERE FILED BEFORE THE REVENUE AUTHORITIES IN SUPPORT OF ITS CONTENTIONS. ALTERNATIVELY, HE SUBMITS THAT THE ESTIMATION IS WRONG AND AS THERE IS NO PROOF THAT MONEY HAS FLOWN INTO THE COMPANY, THE AMOUNTS DISCLOSED UNDER THE BOOKS SHOULD BE ACCEPTED. 5.1. THE LD. D/R, RELIES ON THE FINDINGS OF THE ASSESSING OFFICER. 6. WE HAVE HEARD RIVAL CONTENTIONS. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, PAPERS ON RECORD, ORDERS OF THE AUTHORITIES BELOW AS WELL AS CASE-LAW CITED, WE HOLD AS FOLLOWS:- IN OUR VIEW, THE FACTUAL FINDS OF THE ASSESSING OFFICER AS WELL AS THE LD. CIT(A), COULD NOT BE CONTROVERTED BY THE LD. COUNSEL FOR THE ASSESSEE. THERE IS NO EXPLANATION AS TO WHY THE ASSESSEE CHOSE NOT TO CROSS-EXAMINE MR. ADITYA CHIRIMAR DESPITE THE ASSESSING OFFICER PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESSEE. NUMBER OF CONTENTIONS HAVE BEEN RAISED REGARDING THE EVIDENTIARY VALUE OF THE STATEMENTS RECORDED. WE REJECTED THESE CONTENTIONS IN VIEW OF THE FACTUAL FINDINGS GIVEN BY THE ASSESSING OFFICER AS CONFIRMED BY THE LD. CIT(A) AS THE ASSESSEE HAS FAILED TO CONTROVERT THE SAME. 6.1. NOW WE COME TO THE ISSUE OF ESTIMATION. DURING THE COURSE OF EXAMINATION ON OATH OF THE DIRECTORS OF M/S. SAFECO PROJECTS, IT WAS RECORDED THAT COMMISSION PAID IN SUCH TRANSACTIONS WAS 1% OF GROSS RECEIPTS INCLUSIVE OF TDS. THIS GIVES THE PERCENTAGE OF COMMISSION THAT THE ASSESSEE CHARGES. WHEN THE ASSESSING OFFICER RELIES ON THESE STATEMENTS TO REJECT THE CONTENTIONS OF THE ASSESSEE, THEN THE ENTIRE STATEMENTS HAVE TO BE CONSIDERED AS EVIDENCE. THUS, THE ESTIMATION OF COMMISSION AT 5% OF THE TURNOVER, IN OUR VIEW IS EXCESSIVE AND HAS NOT BASIS. IT IS AN ARBITRARY FIGURE. THE ASSESSEE HAD SHOWN 5 I.T(SS).A. NO. 05/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T(SS).A. NO. 06/KOL/2015 ASSESSMENT YEAR: 2011-12 I.T(SS).A. NO. 07/KOL/2015 ASSESSMENT YEAR: 2012-13 RAHEEINFRATECH LTD INCOME OF 2.4%, IN THIS CASE INCLUSIVE OF TDS. IN OUR OPINION THIS IS REASONABLE. HENCE NO FURTHER ADDITION ON THIS ACCOUNT NEEDS TO BE MADE. THUS, THE ADDITION OF RS.50,96,291/-, AS SUSTAINED BY THE LD. CIT(A) IS HEREBY DELETED. 7. GROUND NO. 2, IS ON THE ISSUE OF WRITE OFF OF BAD DEBTS U/S 36(1)(VII). THE ASSESSEE HAS WRITTEN OFF DEBTS RECEIVABLE FROM M/S. VIVEK STEELS, PAWAN JHUNJHUNWALA, IN THIS BANK ACCOUNT. IT HAD ALSO WRITTEN OFF ADVANCE TDS DEPOSIT U/S 194C AND U/S 194J OF THE ACT. THE ENTIRE AMOUNT WAS CLAIMED AS A DEDUCTION. APPARENTLY, THE WRITE OFF OF ADVANCE TDS DEPOSIT CANNOT BE ALLOWED U/S 36(1)(VII) OF THE ACT. AS REGARDS WRITE OFF OF LOANS FROM VIVEK STEELS AND PAWAN JHUNJHUNWALA, IN VIEW OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD VS COMMISSIONER OF INCOME TAX (2010) 323 ITR 397 , THE DEDUCTION SHOULD BE ALLOWED. ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS ALLOWED IN PART. 8. THE THIRD ISSUE IS INCOME FROM LEASE OF FACTORY PREMISES IS TO BE ASSESSED UNDER THE HEAD INCOME FROM PROPERTY OR UNDER THE HEAD INCOME FROM OTHER SOURCES. 8.1. THE ASSESSING OFFICER OBSERVES THAT THE ASSESSEE HAS LET OUT FACTORY BUILDING WITHOUT ANY PLANT AND MACHINERY. HENCE HE CONCLUDED THAT THE PLANT WAS NOT GIVEN ON RENT AS AN ONGOING CONCERN. HE CAME TO A CONCLUSION THAT THE RENT DERIVED FROM BY THE ASSESSEE BY MERELY LETTING OUT FACTORY BUILDING SHOULD BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY. ON APPEAL, THE LD. FIRST APPELLATE AUTHORITY, WITHOUT MUCH DISCUSSION, AT PARA 8 OF HIS ORDER, UPHELD THE ACTION OF THE ASSESSEE. 8.1.2. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 8.2. THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE DECISION OF THE HONBLE APEX COURT IN THE CASE OF NEW SAVAN SUGAR AND GUR REFINING CO. LTD. V. CIT [1969] 74 ITR 7 , FOR THE PROPOSITION THAT THE INCOME IN QUESTION SHOULD BE ASSESSED UNDER THE HEAD OTHER SOURCES WHEN THE INTENTION OF THE ASSESSEE IS TO PART WITH THE MACHINERY AND PREMISE ONLY WITH THE PURPOSE OF EARNING RENTAL INCOME. HE SUBMITTED THAT THE FACTORY BUILDING IS CLASSIFIED UNDER THE HEAD PLANT AND MACHINERY FOR THE PURPOSE OF CLAIM OF DEPRECIATION AND HENCE, WHEN IT IS LET OUT, IT SHOULD BE CONSIDERED AS LETTING OUT OF PLANT AND MACHINERY AND DEPRECIATION BE ALLOWED THEREON. ALTERNATIVELY, HE SUBMITTED THAT UNDER THE BLOCK OF 6 I.T(SS).A. NO. 05/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T(SS).A. NO. 06/KOL/2015 ASSESSMENT YEAR: 2011-12 I.T(SS).A. NO. 07/KOL/2015 ASSESSMENT YEAR: 2012-13 RAHEEINFRATECH LTD ASSETS CONCEPT, DEPRECIATION ON THE WDV OF THE BLOCK HAS TO BE GRANTED TO THE ASSESSEE. HE RELIED ON CERTAIN CASE-LAW ON THIS ISSUE. 8.3. THE LD. D/R, RELIED ON THE ORDER OF THE ASSESSING OFFICER. 8.4. ON CAREFUL CONSIDERATION, WE FIND THAT THE ASSET IN QUESTION I.E. THE FACTORY BUILDING, IS A PART OF THE PLANT AND BUILDING OF THE ASSESSEE. THIS IS LET OUT FOR COMMERCIAL USE. WHEN THE ASSESSEE EARNS INCOME FROM UTILIZATION OF THIS FACTORY BUILDING, THE INCOME FROM THE SAME IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. THIS ENTITLES THE ASSESSEE TO CLAIM DEPRECIATION ON THE FACTORY BUILDING. EVEN OTHERWISE, THE BLOCK OF ASSETS CONCEPT WAS BROUGHT INTO THE STATUTE BY THE FINANCE ACT, 1998. AFTER THE INTRODUCTION OF THIS BLOCK OF ASSETS CONCEPT, DEPRECIATION ON WRITTEN DOWN VALUE HAS TO BE ALLOWED IRRESPECTIVE OF THE FACT WHETHER INDIVIDUAL ITEMS OF MACHINERY HAS BEEN INTRODUCED OR NOT. WE UPHOLD THIS CONTENTION OF THE ASSESSEE. HENCE THIS GROUND OF THE ASSESSEE IS ALLOWED. HENCE THE APPEAL FOR THE ASSESSMENT YEAR 2010-11 IS ALLOWED. 9. ASSESSMENT YEAR 2011-12 THE FIRST ISSUE IS ALLOWABILITY OF CLAIM OF BAD DEBTS. IN THIS YEAR, THE ASSESSEE CLAIMS THAT THERE WAS EXCESS BILLING AND AN AMOUNT OF RS. 39,23,335/-, WAS DUE FROM GPT INFRAPROJECTS LTD. AS THIS WAS NOT IRRECOVERABLE, THE SAME WAS WRITTEN OFF. THE UNDISPUTED FACT IS THAT WHEN THESE BILLS WERE RAISED IT WAS TAKEN AS THE INCOME OF THE ASSESSEE, UNDER THESE CIRCUMSTANCES, CONSISTENT WITH THE VIEW TAKEN BY US FOR THE ASSESSMENT YEAR 2010- 11, AND FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT, IN THE CASE OF T.R.F. LTD VS COMMISSIONER OF INCOME TAX (SUPRA) , WE ALLOW THIS CLAIM OF THE ASSESSEE. ACCORDINGLY, THIS GROUND OF THE ASSESSEE IS ALLOWED. 10. GROUND NO. 2 IS ON THE DISALLOWANCE OF COMMISSION PAYMENT OF RS.1,10,15,341/-. COMMISSION OF RS.1,29,77,458/-, WAS CLAIMED TO HAVE BEEN PAID TO M/S STEEL CRACKERS PVT. LTD. AND THE COMMISSION OF RS.90,53,224/-, CLAIMED TO HAVE BEEN PAID TO M/S HOOGHLY ALLOYS & STEEL CO. PVT. LTD. DURING THE YEAR BY THE ASSESSEE. THE REPRESENTATIVES OF M/S. HOOGHLY ALLOYS & STEEL CO. PVT. LTD. APPEARED BEFORE THE ASSESSING OFFICER AND SUBMITTED COPIES OF THE BILLS RAISED BY THEM ON THE ASSESSEE FOR COMMISSION ON SERVICES AND CONFIRMED THE TRANSACTION. A COPY OF THE AGREEMENT WAS ALSO SUBMITTED BASED ON WHICH THE COMMISSION HAD BEEN PAID WAS ALSO SUBMITTED. THE ASSESSING OFFICER DISALLOWED 50% 7 I.T(SS).A. NO. 05/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T(SS).A. NO. 06/KOL/2015 ASSESSMENT YEAR: 2011-12 I.T(SS).A. NO. 07/KOL/2015 ASSESSMENT YEAR: 2012-13 RAHEEINFRATECH LTD OF THE CLAIM MADE BY THE ASSESSEE ON ESTIMATE BASIS ON THE GROUND THAT THE GENUINENESS OF THIS PAYMENT IS DOUBTFUL. 10.1. ON APPEAL, THE LD. FIRST APPELLATE AUTHORITY CONFIRMED THE SAME. 11. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PARTIES TO WHOM THE PAYMENT HAS BEEN GIVEN ARE IDENTIFIED. THE PURPOSE FOR WHICH THE AMOUNT WAS PAID IS MENTIONED IN THE AGREEMENTS, COPIES OF BILLS, RAISED BY THE CONCERNS AND THAT THE ASSESSING OFFICER HAS INDEPENDENTLY VERIFIED THE FACTS DIRECTLY WITH THESE PARTIES AND THEY HAVE CONFIRMED THE TRANSACTIONS. HE SUBMITTED THAT DISALLOWING 50% OF THE CLAIM BY DOUBTING THE GENUINENESS IS ARBITRARY, AND WITHOUT ANY BASIS. 11.1. THE LD. D/R, RELIED ON THE ORDER OF THE ASSESSING OFFICER. IN OUR VIEW, THE ASSESSING OFFICER HAS WITHOUT ANY BASIS ESTIMATED THE EXPENDITURE INCURRED BY THE ASSESSEE AT 50% AND DISALLOWED 50%. IF THE PAYMENT IS NOT GENUINE THEN THE ENTIRE EXPENDITURE CLAIMED HAS TO BE DISALLOWED. IN THIS CASE, THE ASSESSEE HAS PRODUCED EVIDENCE AND DISCHARGED THE BURDEN OF PROOF THAT LAY ON IT AND WHEREAS THE REVENUE HAS NOT CONTROVERTED THIS EVIDENCE. UNDER THESE CIRCUMSTANCES, SUCH ESTIMATED DISALLOWANCE CANNOT BE SUSTAINED AS THE SAME IS ARBITRARY. HENCE THIS GROUND OF THE ASSESSEE IS ALLOWED. 12. THE THIRD ISSUE IS WHETHER THE INCOME FROM LETTING OUT OF FACTORY HAS TO BE ASSESSEE AS INCOME FROM HOUSE PROPERTY OR UNDER THE HEAD INCOME FROM OTHER SOURCES. CONSISTENT WITH THE VIEW TAKEN BY US FOR THE ASSESSMENT YEAR 2010-11, WE DIRECT THE ASSESSING OFFICER ALLOW DEPRECIATION AS CLAIMED BY THE ASSESSEE ON THE BLOCK OF ASSET. 13. IN THE RESULT, I.T(SS)A. NO. 06/KOL/2015, ASSESSMENT YEAR 2011-12, IS ALLOWED. 14. FOR THE ASSESSMENT YEAR 2012-13, THE SOLE ISSUE IS WHETHER THE INCOME FROM LETTING OUT OF FACTORY IS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY OR UNDER THE HEAD INCOME FROM OTHER SOURCES. CONSISTENT WITH THE VIEW TAKEN BY US FOR THE ASSESSMENT YEAR 2010-11, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE DEPRECIATION CLAIMED BY THE ASSESSEE ON THE BLOCK OF ASSET. 8 I.T(SS).A. NO. 05/KOL/2015 ASSESSMENT YEAR: 2010-11 I.T(SS).A. NO. 06/KOL/2015 ASSESSMENT YEAR: 2011-12 I.T(SS).A. NO. 07/KOL/2015 ASSESSMENT YEAR: 2012-13 RAHEEINFRATECH LTD 15. IN THE RESULT, ALL THESE APPEALS OF THE ASSESSEE ARE ALLOWED. KOLKATA, THE 4 TH DAY OF JULY, 2018. SD/- SD/- [S.S. VISWANETHRA RAVI] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04.07.2018 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. RAHEEINFRATECH LTD 4, HO-CHI MINH SARANI FLAT-1C KOLKATA 700 071 2. D.C.I.T. CENTRAL CIRCLE-XXI AAYKARBHAWANPOORVA 110, SHANTIPALLY KOLKATA- 700 107 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES