AI Insights
The case involves Rithwik Swathi Joint Venture, which appealed against the order of the CIT(A) that upheld the disallowance of a bank guarantee commission of Rs. 74,18,621 by the Assessing Officer. The commission was incurred for bank guarantees issued by Progressive Constructions Ltd on behalf of the assessee for business purposes. The Tribunal had previously set aside a similar issue for the assessment year 2007-08, directing the Assessing Officer to verify the facts. Upon re-examination, the Assessing Officer again disallowed the commission, which was upheld by the CIT(A). The Tribunal, referencing its earlier decision and the principles established in the case of ACIT vs. Akkamba Textiles Ltd, found the commission to be a business expenditure and allowed the appeal.
Appeal Details
Counselvise Citation
[2025] 140 COUNSELVISE.COM (IT) 708650 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
18-07-2025
Appeal Filed By
Assessee
Order Result
Allowed
Assessment Year
2008-2009
Judgement Text
"आयकर अपीलीय न्यायाधिकरण में, हैदराबाद ‘ए’ बेंच, हैदराबाद IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ A ‘ Bench, Hyderabad श्री मंजूनाथ जी, माननीय लेखा सदस्य एवं श्री रवीश सूद, माननीय न्याययक सदस्य SHRI G. MANJUNATHA, HON’BLE ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER आयकरअपीलसं./I.T.A.No.462/Hyd/2025 (निर्धारण वर्ा/ Assessment Year:2008-09) Rithwik Swathi Joint Venture, Hyderabad. PAN : AAAAR2384K Vs. The Deputy Commissioner of Income Tax, Circle – 6(1), Hyderabad. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri P. Murali Mohan Rao, C.A. राजस्व का प्रतततितित्व/ Department Represented by : Shri Gurpreet Singh, Sr.DR सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 26.06.2025 घोर्णध की तधरीख/ Date of Pronouncement : 18.07.2025 O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee (AOP) is directed against the order passed by the Addl/JCIT(A), Faridabad, dated 2 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture 23.01.2025, which in turn arises from the order passed by the Assessing Officer (for short “A.O.”) u/s 143(3) r.w.s. 254 of the Income Tax Act, 1961 (for short “the Act”) dated 18.03.2014. The assessee (AOP) has assailed the impugned order on the following grounds of appeal before us: “1. The order of the CIT(A) passed u/s 250 of the Act dated 23-01-2025 is erroneous both on facts and in law to the extent the order is prejudice to the interests of the appellant. 2. The Ld. CIT(A) erred in disallowing Bank guarantee commission expenses of Rs. 74,18,621/- incurred by the assessee. 3. The Ld. CIT(A) ought to have appreciated the fact that the bank guarantee have been issued by the principle contractor i.e. Progressive Construction Ltd on behalf of the assessee. 4. The Ld. CIT(A) ought to have appreciated that similar issue has been covered in the assessee's own case in ITA No. 293/H/2016 for AY 2007- 08 which is allowed. 5. The Ld. CIT(A) ought to have appreciated that the principal contractor has provided Bank guarantee for the purpose of business of the appellant and that therefore, the expenditure incurred in connection with the same is required to be allowed as business expenditure in the hands of the appellant. 6. The Ld. CIT(A) ought to have appreciated that the AO has not followed the directions given by the Hon'ble ITAT vide their order in ITA No. 451/H/2012 dated 04-12-2012 with regard to the allowance of bank guarantee commission paid by the appellant.” 2. Succinctly stated, the assessee company, which is engaged in the business of civil construction, had filed its return of income for A.Y. 2008-09 declaring an income of Rs.4,94,19,224/-. 3 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture 3. Original assessment was framed by the A.O. vide his order passed u/s 143(3) of the Act, dated 13.12.2010, determining the income of the assessee (AOP) at Rs.5,93,47,795/- after making the following additions : S.No. Particulars Amount in Rs. 1 Disallowance of expenditure debited towards Bank guarantee Commission 74,18,621 2 Estimate of interest at 6% on deposits of Rs.70,75,000/- 4,24,500/- 4. Aggrieved, the assessee (AOP) carried the matter in appeal before the Commissioner of Income Tax (Appeals) – IV, Hyderabad, who vide his order passed in the first round of litigation in ITA No.501/AC 3(1)/CIT(A)-IV/09-10 dated 30.12.2011, though deleted the addition of Rs.4,24,500/-, but upheld the addition of Rs.74,18,621/-. 5. The assessee (AOP), being aggrieved with the order of the CIT(A) carried the matter in appeal before the Tribunal, wherein it had sustained the addition of Rs. 74,18,621/- i.e., the disallowance made by the A.O. of the assessee’s claim for deduction of bank guarantee commission. 4 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture 6. The Tribunal, vide its order passed in ITA No. 451/Hyd/2012 dated 04.12.2012, after referring to its observations recorded in the assessee's own case for A.Y. 2007-08 in ITA No.797/Hyd/2011, dated 23.02.2012, set aside the matter to the file of the A.O. for fresh consideration by observing as under : \"3. At the outset, the learned AR as well as learned Departmental Representative submitted that the issue is covered by the order of the Tribunal passed in the case of the same assessee for the preceding assessment year 2007-08 in ITA No.797/Hyd/2011 dated 22-3-2012. A copy of the said order was also produced before us. On going through the order of the Tribunal passed in the assessee's own case (supra) we find that the identical dispute also came up before the Tribunal in the assessment year 2007-08 in the case of the same assessee. The Tribunal remitted the matter back to the Assessing Officer for verification by observing in the following manner:- \"9. We have heard both the parties and perused the material on record. The claim of the assessee is that the bank guarantee has been given on behalf of the assessee by its principal M/s. PCL in favour of M/s. THDC. On titis M/s, PCL incurred bank guarantee commission at Rs. 58,61,341 and the same was reimbursed by the assessee to M/s. PCL as the bank guarantee is given on behalf of the assessee in favour of M/s. THDC. According to the assessee this is a business expenditure. In our opinion, if the bank guarantee has been given to M/s. THDC by M/s. PCL onbehalf of the assessee then the bank guarantee commission has to be treated as business expenditure in view of the judgement of jurisdictional High Court in the case of ACIT vs. Akkamba Textiles Ltd. (117 ITR 294) wherein it was held as under \"The question whether a particular expenditure is revenue expenditure incurred for the purpose of the business must be viewed in the larger context of business necessity or expediency. If the outgoing expenditure is so related to the carrying on or the conduct of business, that it may be regarded as an integral part of the profit-earning process and not for acquisition of an asset or a right of a permanent character, the possession of which is a condition to the carrying on of business, the expenditure may be regarded as revenue expenditure. The transaction of acquisition of assets can be said to be closely related to the commencement and carrying on of business by an assessee. Hence, any 5 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture expenditure incurred by the assessee, which is a running concern, for ensuring use of money for a certain period or enabling the assessee to make deferred payment of cost of assets acquired, constitutes revenue expenditure and, therefore, the same is admissible as deduction from revenue income. Therefore, the commission paid by the assessee to the guarantor for enabling it (the assessee) to make deferred payment of the purchase consideration, constitutes revenue expenditure and not capital expenditure and, therefore, is admissible as deduction from the income.\" 10. Furnishing of bank guarantee on behalf of the assessee by M/s. PCL has to be verified and decided accordingly. Accordingly, the issue is set aside to the file of the Assessing Officer for fresh consideration.” 7. Consequent to the order of the Tribunal, the A.O. vide his order passed u/s 143(3) r.w.s. 254 of the Act, dated 18.03.2014, once again disallowed the bank guarantee commission of Rs.74,18,621/- (supra) and added back the same to the income of the assessee. 8. Aggrieved, the assessee assailed the impugned order passed u/s 143(3) r.w.s. 254 of the Act before the learned CIT(A). As the assessee, despite sufficient opportunity, failed to participate in the appellate proceedings, therefore, the CIT(A) in the second round of litigation before him was constrained to dispose of the appeal on the basis of the documents available on record. The CIT(A), after deliberating at length on the issue in hand i.e., the assessee's claim for deduction of bank guarantee commission of Rs.74,18,621/- (supra), observed that it was the claim of the assessee that the 6 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture principal contractor, i.e., M/s. Progressive Constructions Ltd (for short “PCL”) had issued the bank guarantee in favour of M/s. Tehri Hydro Development Corporation Ltd (for short “THDC”) on behalf of the assessee and the bank guarantee charges were being charged to the latter's account. However, the CIT(A) did not find favour with the aforesaid claim of the assessee. It was observed by him that the assessee had entered into the contract subsequent to the contract between THDC and PCL. Accordingly, the CIT(A) found no infirmity in the view taken by the A.O., and upheld the assessee’s claim for the deduction of bank guarantee charges of Rs.74,18,621/-. 9. Aggrieved, the assessee has carried the matter by way of second round of litigation before us. 10. We have heard the Ld. Authorized Representatives of both parties, perused the orders of the lower authorities and the material available on record as well as the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 11. Shri P. Murali Mohan Rao, C.A. the learned Authorized Representative (for short “Ld.AR”) for the assessee, at the threshold 7 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture of hearing of the appeal, vehemently submitted that the issue involved in the present appeal i.e. the allowability of the assessee’s claim for bank guarantee charges is squarely covered by the order passed by the Tribunal in the assessee’s own case for A.Y. 2007-08 in ITA No.293/Hyd/2016 dated 09.08.2018. The Ld. AR to buttress his claim had taken us through the order passed by the Tribunal in the case of the assessee in ITA No.293/Hyd/2016 dated 09.08.2018 (Page Nos. 16 to 26 of APB.). 12. Per Contra, Shri Gurpreet Singh, the learned Senior Departmental Representative (for short, “Ld. DR”), submitted that as the assessee had failed to substantiate that the bank guarantee charges pertaining to the bank guarantee provided by M/s. PCL was allowable as a deduction in its hands, therefore, the same had rightly been disallowed by the A.O. 13. Before proceeding any further, it will be apposite to briefly cull out the facts leading to the present litigation before us. We find on a perusal of the record that the A.O. had framed the original assessment vide his order passed u/s 143(3) of the Act, dated 13.12.2010, wherein he had inter alia, disallowed the assessee’s 8 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture claim for deduction of bank guarantee expenses of Rs.74,18,621/- . On appeal, the CIT(A), finding no infirmity in the view taken by the A.O. had upheld his order. On further appeal, the Tribunal vide its order passed in ITA No.451/Hyd/2012, dated 04.12.2012, had set aside the matter to the file of A.O. for fresh consideration. 14. The A.O. giving effect to the order of the Tribunal, framed the assessment vide his order passed u/s 143(3) r.w.s. 254 of the Act, dated 18.03.2014, wherein he had once again disallowed the assessee’s claim for deduction of bank guarantee commission charges of Rs.74,18,621/-. On appeal, the CIT(A) in the second round of litigation vide his impugned order dated 23.01.2025, upheld the view taken by the A.O. in the course of the set aside proceedings and had sustained the disallowance of bank guarantee commission of Rs.74,18,621/-. 15. Ostensibly, the Tribunal while disposing of the appeal of the assessee for the subject year i.e., A.Y. 2008-09 had in the course of the first round of litigation taken cognizance of the fact that a similar issue had come up before the Tribunal in assessee’s own case for the immediately preceding year i.e. A.Y. 2007-08 in ITA No.797/Hyd/2011, dated 22.03.2012. It was observed that the 9 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture Tribunal while disposing of the aforementioned appeal for A.Y. 2007-08 vide its order passed in ITA No.797/Hyd/2011 dated 22.03.2012 had set aside the matter to the file of A.O. for fresh consideration. Accordingly, the Tribunal following its view taken in the assessee’s appeal for the preceding year i.e. A.Y. 2007-08 in ITA No.797/Hyd/2011, dated 22.03.2012 had on the same terms remitted the matter to the file of the A.O. to verify the assessee’s claim that the bank guarantee was given on its behalf by M/s. PCL and re-adjudicate the issue. 16. As observed by us hereinabove, the A.O. had thereafter, vide his order passed u/s 143(3) r.w.s. 254 of the Act, dated 18.03.2014 while giving effect to the direction of the Tribunal re-adjudicated the issue wherein, he had once again disallowed the assessee’s claim for deduction of bank guarantee commission of Rs.74,18,621/-. Also, the view taken by the A.O. had thereafter been approved by the CIT(A), vide his order dated 23.01.2025 against the impugned disallowance of the bank guarantee commission of Rs.74,18,621/- by the A.O. vide his order passed u/s 143(3) r.w.s. 254 of the Act, dated 18.03.2014. 10 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture 17. As the assessee in the present appeal before us has assailed, the order passed by the CIT(A) dated 23.01.2025 which in turn arises from the order passed by the A.O. u/s 143(3) r.w.s. 254 of the Act, dated 18.03.2014, therefore, we shall hereinafter adjudicate the sustainability of the view taken by the A.O. wherein he had upheld the disallowance of the assessee’s claim of bank guarantee commission of Rs.74,18,621/-. 18. We find on a perusal of the record that after the order passed by the Tribunal in ITA No.797/Hyd/2011 dated 22.03.2012 for A.Y. 2007-08, wherein the matter was set aside to the file of A.O. for fresh adjudication, the A.O. had once again upheld the disallowance of the bank guarantee commission, which view of his was thereafter approved by the CIT(A). However, we find that in the second round of litigation before the Tribunal for A.Y. 2007-08 in ITA No.293/Hyd/2016 dated 09.08.2018, the Tribunal after deliberating at length on the issue in hand, had observed, that the bank guarantee commission claimed by the assessee as a deduction was allowable in its hand as a business expenditure. For the sake of clarity, the observations of the Tribunal, are culled out as under: 11 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture “5. As regards Grounds 2 to 5, brief facts have already been enumerated in the Paras above. On 23rd November, 2017, this Bench called for a remand report from the AO by observing as under: This case was heard at length and one of the issue in this appeal is the Bank Guarantee Commission of Rs.58,61,347. This is the second round of litigation. In the earlier round, the ITAT vide order dated 22.3.2012, had remitted the issue to the file of the AO for verification and adjudication. In compliance with the directions of the Tribunal, the AO issued notice and required the assessee to furnish certain information. The assessee filed a letter dated 10th April, 2007 of M/s.Progressive Constructions Ltd (M/s. PCL in short) mentioning that an amount of Rs.59,33,240 is debited to the account of the assessee towards bank guarantees issued by it in favour of M/s. THDC for obtaining mobilization advance, machinery advance and performance guarantee. Observing that except for filing of this letter, the assessee has not demonstrated by way of any corroboratory evidence regarding furnishing of bank guarantee by M/ s. Progressive Constructions in favour of M/s. THDC on behalf of the assessee, the AO disallowed the same and brought to tax and the CIT (A) has confirmed this addition. On perusal of the order of the Tribunal dated 22.3.2012, we find that the Tribunal has considered the fact that M/ s. PCL, being the Principal Contractor, has issued the bank guarantee in favour of THDC on behalf of the assessee and after considering the jurisdictional High Court decision in the case of ACIT vs. Akkamba Textiles Ltd (117 ITR 294), Tribunal has held that the bank guarantee commission has to be treated as business expenditure if the bank guarantee has been given to M/s THDC by PCL on behalf of the assessee. The Tribunal has therefore, directed the AO to verify if the bank guarantee has been furnished by M/s PCL on behalf of the assessee. The AO however, has embarked on a fresh inquiry as to the allowability of the expenditure which is not the direction of the Tribunal. Therefore, we issue this interim direction to the AO to furnish a remand report with a copy to the other side on or before 29.01.2018 after verifying the documents furnished by the assessee with regard to the bank guarantee furnished by PCL to THDC and if necessary calling for confirmation from M/s PCL with regard to the assessee's claim that PCL has given bank guarantee on behalf of the assessee and has paid the sub contract receipt to the assessee only after reducing the bank guarantee commission paid by it to the Punjab National Bank. The assessee shall cooperate with the AO by furnishing the relevant material and the AO shall give the assessee a fair opportunity of being heard during the remand proceedings. It is accordingly ordered. Copy of this order is to be furnished to both the parties. 12 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture Sd/- Sd/- (AM) (JM) 23rd November, 2017\" 6. In compliance thereof, the AO replied to the CIT (DR), as under: \"OFFICE OF THE DEPUTY COMMISSIONER OF INCOME TAX, CIRC-LE-3(1), ROOM NO. 714, 7TH FLOOR, SIGNATURE 1l'OWERS, KONDAPUR HYDERABAD 500084, Ph: 040-23485434 F.No. DCIT /C-3(1)/ AAAAR3284K/ITAT /2017-18 Dt.13,3,2018 To The Sr. Authorized Representative-I, Income Tax Appellate Tribunal, A-Bench, Hyderabad. Madam, Sub: Appellate proceedings in the case of M/s. Rithwik Swathi JV- AAAAR3284K - AY 200'7-08 :ITA No.293/Hyd/2016 -reg. Ref: i. Letter in F.No. ITA 293/H/2016 dated 22.01.2018. ii. This office letter in F.No. DC-3(1)/Seconp Appeal/2017-1.8 dated 25.01.2018. Kindly refer to the above. As per the directions of Hon'ble ITAT A-Bench, Hyderabad vide order dated 23.11.2017 in the case of M/s. Rithwik Swathi JV in ITA No. 293/Hyd/2016 for AY 2007-08, information was called for from assessee M/ s. Rithwik Swathi JV as well as from principal contractor M/s. Progress.ve Constructions Ltd vide letter dated 14.02.2018 in respect of the assessee's claim of bank guarantee commission. The above letter were duly served on both parties through notice server on 14.02.2018 and 15.02.2014 as well as through mail torplhyd@rithwikprojects.com. navya.kallam@progressive constructions.com & contact@progressiveconstructions.com on 14.02.2018 and the date of compliance was fixed for 23.02.2018. However, no compliance has been made by any of the parties till date. 2. In view of the above, as there was no compliance from assessee as well as from prime contractor, it is requested that the Hon'ble ITAT may kindly be requested that the issue of claim of bank guarantee commission by 13 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture assessee may kindly be decided on merits and information available on- record. Assessment records in two volumes are enclosed herewith for kind reference. Yours faithfully, (N.SRIKANTH) Dy. Commissioner of Income Tax, Circle-3(1), Hyderabad\" 7. Therefore, we proceed to dispose of the appeal on the basis of the material on record. We find that this Tribunal in ITA No.797/Hyd/2011 dated 22.03.2012 had considered this issue and had directed as under: \"9. We have heard both the parties and perused the material on record. The claim of the assessee is that the bank guarantee has been given on behalf of the assessee by its principal M/s. PCL in favour of M/s. THDC. On this M/s. PCL incurred bank guarantee commission at Rs. 58,61,341 and the same was reimbursed by the assessee to M/s. PCL as the bank guarantee is given on behalf of the assessee in favour of M/s. THDC. According to the assessee this is a business expenditure. In our opinion, if the bank guarantee has been given to M/s. THDC by M/s. PCL on behalf of the assessee then the bank guarantee commission has to be treated as business expenditure in view of the judgement of jurisdictional High Court in the case of ACIT vs. Akkamba Textiles Ltd. (117 ITR 294) wherein it was held as under: \"The question whether a particular expenditure is revenue expenditure incurred for the purpose of the business must be viewed in the larger context of business necessity or expediency. If the outgoing expenditure is so related to the carrying on or the conduct of business, that it may be regarded as an integral part of the profit-earning process and not for acquisition of an asset or a right of a permanent character, the possession of which is a condition to the carrying on of business, the expenditure may be regarded as revenue expenditure. The transaction of acquisition of assets can be said to be closely related to the commencement and carrying on of business by an assessee. Hence, any expenditure incurred by the assessee, which is a running concern, for ensuring use of money for a certain period or enabling the assessee to make deferred payment of cost of assets acquired, constitutes revenue expenditure and, therefore, the same is admissible as deduction from revenue income. Therefore, the commission paid by the assessee to the guarantor for enabling it (the assessee) to make deferred payment of the purchase consideration, constitutes revenue expenditure and not capital expenditure and, therefore, is admissible as deduction from the income.\" 8. Thus, as observed by us earlier in our docket order dated 23.11.2017, the direction of the Tribunal was to verify whether PCL has given the Bank Guarantee and not to re-examine the entire issue afresh. As regards 14 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture the evidence as to whether PCL has given Bank Guarantee and as to whether the assessee was required to pay the guarantee commission, the assessee has filed the copies of the construction agreement between THDC & PCL dated 14.11.2002 and the agreement between PCL & M/s Rithwik Projects Ltd and M/s. Swathi Constructions dated 21.12.2002. On perusal thereof, it is noticed that M/s. PCL Intrtech Lenhydro Consortium JV was awarded the contract and constituent members agreed to demarcate and share, for operational convenience, their responsibilities in respect of execution of the work. It is also noticed that RSJV has taken on sub-contract the work of PCL. As per the said agreement, the margin money and bank guarantee commission is payable by the JV as under: \"4. Margin Money and Bank Guarantee Commission: RSJV has agreed to pay margin money/deposit to Progressive and the details of which are given hereunder: a) An interest bearing deposit to 30% of Performance Bank Guarantee towards margin money for furnishing the performance bank guarantee to the Employer as per the Original Agreement. The said deposit shall be come refundable within 7 days of the performance guarantee being returned by the employer to progressive. b) An interest bearing deposit equivalent to 30% of the Advance Bank guarantee towards margin money for furnishing the mobilization advance guarantee to the Employer as per the original agreement. The said deposit shall become refundable, in proportion to the return of mobilization advance bank guarantee furnished to the Employer, within 7 days of the mobilization advance bank guarantee being as and when returned by the employer. The Mobilization advance given shall be shared equally i.e 50% each by PCL and RSJV. The interest on Mobilization advance levied by Department shall be borne proportionately (i.e. 50% each) by both the parties. The margin monies and bank commissions for the Bank Guarantees shall be borne proportionately (i.e. 50% each) by both the parties. Commissions incurred obtaining the mobilization advance bank guarantee including the commission towards extension of mobilization advance bank guarantee.............. c) All other Bank Guarantees necessary during the execution of work will be provided by either by RPL or Swathi Individually on behalf of PCL Inteertech Lenhydro Consortium JM to the employer\" 10. Thus, it can be seen that RSJV was required to furnish the Bank Guarantee on behalf of PCL Intertech Lenhydro Consortium JV to the employer. The learned Counsel for the assessee has also filed the copy of the Bank Guarantee No.4437ILG003706 issued by Punjab National Bank to THDC dated 23.06.2006 for an amount of Rs.45,00,000/-. Thus, it 15 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture appears to have been given for the first time in 2006, i.e. after the execution of contract agreement with RSJV, and therefore, as per the terms of the agreement, RSJV is required to provide the Bank guarantee. The Bank guarantee given by PNB does not specify as to on whose behalf the Guarantee has been given. From the letter dated 2-1-2015 issued by PNB, the Bank guarantee No.4437ILG000206 dated 3.2.2006 also in for a sum of Rs.45.00 lakhs which was extended upto 31.12.2015 and in this letter, there is a reference to M/s. PCL-Intertech Lenhydro Consortium Joint Venture. Since the bank guarantee was given in 2006, the assessee has claimed the commission from A.Y 2007-08 onwards. The letter of M/s PCL dated 10.04.2007 refers to the debit of Bank Guarantee charges being recovered from RA bill amounts. Therefore, there appears to be many missing links in this case. No doubt, the onus is on the assessee to prove its claim and the Tribunal had set aside the issue to give the assessee, an opportunity to substantiate its claim. The assessee has produced the letter of M/s. PCL and the bank guarantee of PNB only to prove its claim, but these are not conclusive evidence. The learned Counsel for the assessee had submitted that M/s. PCL was not able to provide the necessary details to the assessee inspite of request made by it. In these circumstances, we are constrained to decide the issue on the basis of the entries in the books of the assessee and the preponderance of probabilities. It is common knowledge that in civil contracts, bank guarantee has to be given and from the A/c of the assessee, it is seen that it has not provided any funds for the bank guarantee but has claimed only the Bank Guarantee commission. Since PCL-Intertech Consortium was the main contractor, the bank guarantee would have to be provided in its name. Since the assessee has not reflected the Bank Guarantee in its books, it has to be presumed that Bank Guarantee has been given by M/s. PCL and that the assessee is liable to pay the guarantee commission for availing the said service. In these circumstances, the Bank Guarantee commission is allowable as business expenditure. Thus, grounds 2 to 5 are allowed.” (emphasis supplied by us) Considering the aforesaid facts, we find that the issue involved in the present appeal, which is perpetuating from the preceding year, is squarely covered by the order passed by the Tribunal in the assessee’s own case in ITA No.293/Hyd/2016 dated 09.08.2018 for A.Y. 2007-08. Also, it will be apposite to observe that the Ld. DR 16 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture had failed to place on record any material which would establish that the aforesaid view taken by the Tribunal regarding allowing the claim of the assessee for deduction of bank guarantee charges while disposing of its appeal for the preceding year i.e., A.Y. 2007-08 is either distinguishable on facts or had thereafter been dislodged and does not hold the ground anymore. 19. We, thus, are of the considered view that as the issue in hand, i.e., the allowability of the assessee’s claim for deduction of bank guarantee charges that was also involved in its case for the preceding year i.e AY 2007-08, had been decided by the Tribunal in ITA No. 293/Hyd/2016, dated 09.08.2018 in favour of the assessee, therefore, respectfully follow the same. Accordingly, we herein set-aside the CIT(A) order and vacate the disallowance by the A.O. of the assessee’s claim for deduction of bank guarantee commission of Rs. 74,18,621/-. 17 ITA No.462/Hyd/2025 Rithwik Swathi Joint Venture 20. Resultantly, the appeal filed by the assessee is allowed in terms of our aforesaid observations. Order pronounced in the Open Court on 18th July, 2025. Sd/- Sd/- (मंजूनाथ जी) (MANJUNATHA G.) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (श्री रवीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- Hyderabad, dated 18.07.2025. TYNM/sps आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The Assessee : Rithwik Swathi Joint Venture, Jubilee Hills, Hyderabad, C/o. P. Murali & Co., Chartered Accountants, 6-3- 655/2/3, Somajiguda, Hyderabad. 2. रधजस्व/ The Revenue : The Deputy Commissioner of Income Tax, Circle – 6(1), Hyderabad. 3. The Principal Commissioner of Income Tax, Hyderabad. 4. नवभधगीयप्रनतनिनर्, आयकर अपीलीय अनर्करण, हैदरधबधद / DR, ITAT, Hyderabad 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER Sr. Private Secretary ITAT, Hyderabad "
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