Mitra Real Estate Pvt. Ltd., Kolkata v. DCIT, CIR-23, HOOGHLY, Hooghly

CO 17/KOL/2016 | 2011-2012
Pronouncement Date: 08-11-2017 | Result: Allowed

Appeal Details

RSA Number 1723523 RSA 2016
Assessee PAN AABCM9191N
Bench Kolkata
Appeal Number CO 17/KOL/2016
Duration Of Justice 1 year(s) 7 month(s) 8 day(s)
Appellant Mitra Real Estate Pvt. Ltd., Kolkata
Respondent DCIT, CIR-23, HOOGHLY, Hooghly
Appeal Type Cross Objection
Pronouncement Date 08-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted A
Tribunal Order Date 08-11-2017
Assessment Year 2011-2012
Appeal Filed On 30-03-2016
Judgment Text
A IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI ABY.T VARKEY JUDICIAL MEMBER AND SHRI WASEEM AHMED ACCOUNTANT MEMBER ITA NO. 207 / KOL / 2016 ASSESSMENT YEAR :2011-12 DCIT CIRCLE-23 AAYAKAR BHAWAN G.T. ROAD KHADINA MORE CHINSURAH HOOGHLY- 712101 V/S . M/S MITRA REAL ESTATE PVT. LTD 4/1 JANATA ROAD NEW SANTOSHPUR KOLKATA-700 075 [ PAN NO.AABCM 9191 N ] /APPELLANT .. / RESPONDENT C.O. NO.17/KOL/2016 (A/O ITA NO.207/KOL/2016) ASSESSMENT YEAR: 2011-12 M/S MITRA REAL ESTATE PVT. LTD 4/1 JANATA ROAD NEW SANTOSHPUR KOLKATA-700 075 V/S . DCIT CIRCLE-23 AAYAKAR BHAWAN G.T. ROAD KHADINA MORE CHINSURAH HOOGHLY-712101 CO-OBJECTOR .. / RESPONDENT /BY ASSESSEE SHRI K.M. ROY FCA /BY RESPONDENT SHRI SALLONG YADEN ADDL CIT-DR /DATE OF HEARING 12-10-2017 /DATE OF PRONOUNCEMENT 08-11-2017 / O R D E R PER WASEEM AHMED ACCOUNTANT MEMBER:- THIS APPEAL AS WELL AS CROSS OBJECTION (CO) BY THE REVENUE AND ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIO NER OF INCOME TAX (APPEALS)-6 KOLKATA DATED 12.11.2015. ASSESSMENT W AS FRAMED BY ACIT CIRCLE-1 HOOGHLY U/S 144 OF THE INCOME TAX ACT 19 61 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30.03.2014 FOR A SSESSMENT YEAR 2011-12. ITA NO.207/KOL/2016 & CO 17/KOL/2016 A.Y 2011-1 2 DCIT CIR-23 HGL. VS. M/S MITRA REAL ESTATE PVT . LTD. PAGE 2 SHRI SALLONG YADEN LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE AND SHRI K.M. ROY LD. AUTHORIZED REPRESENT ATIVE APPEARED ON BEHALF OF ASSESSEE. 2. AT THE OUTSET IT IS NOTICED THAT THE REVENUES APPEAL FOR ASSESSMENT YEAR 2011-12 IS BARRED BY LIMITATION BY 23 DAYS. RE VENUE HAS FILED CONDONATION PETITION SUPPORTED BY AFFIDAVIT EXPLAIN ING THE REASONS FOR THE DELAY IN FILING THE APPEAL. ON QUERY FROM THE BENCH LD. COUNSEL FOR THE ASSESSEE HAS NOT OPPOSED THE CONDONATION RATHER HE CONCEDED THAT DELAY CAN BE CONDONED. IN VIEW OF THE ABOVE REASONS GIVEN IN THE CONDONATION PETITION AND CONCESSION GIVEN BY LD. COUNSEL FOR THE ASSESSE E WE CONDONE THE DELAY AND ADMIT THE APPEAL OF REVENUE. 3. AT THE OUTSET WE FIND THAT TAX EFFECT IN THIS A PPEAL FILED BY THE REVENUE IS BELOW THE LIMIT OF 10 LAKH WHICH WAS FIXED BY THE CBDT VIDE CIRCULAR NO. 21 OF 2015 DATED 10.12.2015 FOR NOT FILING APPEALS BEFORE THE TRIBUNAL. HOWEVER THERE ARE CERTAIN EXCEPTIONS CURVED OUT IN THE SAID CIRCULAR WHERE MONETARY LIMIT OF RS. 10 LACS IS NOT APPLICABLE BUT LD. DR COULD NOT POINT OUT THAT PRESENT APPEAL FALLS UNDER ANY OF THE EXCEPTIO NS MENTIONED IN THE SAID CIRCULAR. IN THESE CIRCUMSTANCES THIS APPEAL FILED BY THE REVENUE STAND DISMISSED IN LIMINE ON ACCOUNT OF LOW TAX EFFECT. 3. IN THE RESULT REVENUES APPEAL STANDS DISMISSED IN LIMINE . NOW COMING TO ASSESSEES CO NO.17/KOL/2016 . 4. SOLE ISSUE RAISED BY ASSESSEE IN ITS CO IS THAT LD. CIT(A) ERRED IN ESTIMATING THE PROFIT ON THE AMOUNT AT 93 13 296/- WHICH IS INCLUSIVE OF MATERIAL SUPPLIED BY THE GOVT. 5. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A PRIV ATE LIMITED COMPANY AND ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF 6 47 908/-. SUBSEQUENTLY THE CASE WAS SELECTED FOR SCRUTINY UND ER CASS MODULE. ACCORDINGLY NOTICES WERE SERVED U/S 143(2) UPON TH E ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSING OFFICER REQUISITIONED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNT BUT ASSESS EE FAILED TO DO SO. ITA NO.207/KOL/2016 & CO 17/KOL/2016 A.Y 2011-1 2 DCIT CIR-23 HGL. VS. M/S MITRA REAL ESTATE PVT . LTD. PAGE 3 THEREFORE THE AO REJECTED THE BOOKS OF ACCOUNT AND ESTIMATED THE PROFIT @ 8% ON ITS GROSS TURNOVER OF 93 13 296/- UNDER THE PROVISION OF SECTION 44AD OF THE ACT. 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE GROSS CONTRACT VALUE SHOWN AT 93 13 296/- IS INCLUSIVE OF MATERIAL SUPPLIED BY TH E GOVERNMENT FOR 40 29 115/- AND THEREFORE THE SAME CANNOT BE CONSID ERED WHILE DETERMINING THE PROFIT @ 8% ON THE GROSS CONTRACT VALUE. 6.1 THE ASSESSEE FURTHER SUBMITTED THAT THE NET PRO FIT AT THE MOST CAN BE DETERMINED ON THE CONTRACT VALUE FOR 52 84 181/- (93 13 296 40 29 115) BEING CONTRACTUAL TRANSFER PRICE. HOWEVER LD. CIT( A) DISREGARDED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ORDER OF AO BY OBSERVING AS UNDER:- 7. I HAVE CONSIDERED THE FACTS OF THE CASE THE DIS CUSSION IN THE ASSESSMENT ORDER THE APPELLANTS SUBMISSIONS AND THE REMAND R EPORT. I HAVE ALSO EXAMINED THE ASSESSMENT RECORD. THE SECOND GROUND O F APPEAL IS AGAINST ESTIMATION OF PROFIT ON CONTRACTUAL RECEIPTS @ 8% A S RS.7 45 063/-. IN THE SUBMISSIONS THE ONLY CONTENTION OF THE APPELLANT I S THAT THE NET CONTRACTUAL RECEIPTS AFTER REDUCING THE MATERIALS WORTH RS.40 2 9 115/- SUPPLIED BY THE CLIENT (DEPARTMENT) FOR USE IN THEIR PROJECT AMOUN TED TO RS.52 84 81/- AND THE PROFIT SHOULD HAVE BEEN DETERMINED @ 8% ON THE NET TURNOVER ONLY. IN THE ASSESSMENT ORDER THE AO HAD ESTIMATED THE PROFIT F OR WANT OF DETAILS / EVIDENCE. IN THE APPELLATE PROCEEDINGS NEITHER ANY DETAILS / EVIDENCE IN RELATION TO EXPENSES HAS BEEN PRODUCED NOR HAVE ANY ARGUMENTS BEEN MADE AGAINST THE FAIRNESS OF THE ESTIMATION OF PROFIT @ 8%. AS REGARDS THE ONLY CONTENTION THAT THE NET TURNOVER FOR THE PURPOSE OF ESTIMATION OF PROFIT SHOULD HAVE BEEN TAKEN AS RS.52 84 181/- I DO NOT AGREE W ITH THE APPELLANT AS THE RECEIPTS OF THE APPELLANT STOOD AT RS.93 13 296/- O NLY. IT WAS ONLY A MATTER OF DETAIL THAT MATERIALS CONSUMED FOR EARNING SUCH REC EIPTS WERE PARTLY SUPPLIED BY THE CLIENT INSTEAD OF GETTING SUPPLIED BY A THIR D PARTY. HENCE THE ASSESSING OFFICER'S APPROACH IN ESTIMATING PROFIT @ 8% ON GRO SS CONTRACTUAL RECEIPTS OF RS.93 13 296/- CANNOT BE FAULTED AND COMPUTATION OF PROFIT OF RS.7 45 063/- IS CONFIRMED . AGGRIEVED BY THE ABOVE FINDING OF LD. CIT(A) THE AS SESSEE IS IN CO BEFORE THE TRIBUNAL. 7. LD. AR BEFORE US SUBMITTED THAT THE MATERIAL HAS BEEN SUPPLIED BY THE GOVERNMENT DEPARTMENT / CONTRACTOR FOR 40 29 115/-. THEREFORE THE SAME CANNOT BE INCLUDED WHILE DETERMINING THE PROFIT UND ER PROVISION OF SECTION ITA NO.207/KOL/2016 & CO 17/KOL/2016 A.Y 2011-1 2 DCIT CIR-23 HGL. VS. M/S MITRA REAL ESTATE PVT . LTD. PAGE 4 44AD OF THE ACT. LD. AR IN SUPPORT OF ASSESSEES CL AIM PRODUCED THE COPY OF PAYMENT CERTIFICATE ISSUED BY THE CONTRACTEE WHICH IS PLACED ON RECORD. LD. AR IN SUPPORT OF ASSESSEES CLAIM HAS ALSO RELIED ON T HE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF BRIJ BHUSAN LAL PARDJMANKER VS. CIT REPORTED IN 115 ITR 524 (SC) WHEREIN IT WAS HELD AS UNDER:- IN SUBSTANCE AND IN REALITY SUCH STORES/MATERIAL A LWAYS REMAINED THE PROPERTY OF THE DEPARTMENT AND THE CONTRACTOR HAD M ERELY THE CUSTODY OF IT AND HE FIXED OR INCORPORATED THE SAME INTO THE WORKS. I T SEEMED CLEAR THAT IN SUCH CIRCUMSTANCES AND HAVING REGARD TO THE TERMS AND CO NDITIONS ON WHICH SUCH SUPPLY OF STORES/MATERIALS WAS MADE THERE WAS NOT E VEN A THEORETICAL POSSIBILITY OF ANY ELEMENT OF PROFIT BEING INVOLVED IN THE TURNOVER REPRESENTED BY THE COST OF SUCH STORES/MATERIAL. IT WAS CONCEIV ABLE THAT WHEN THE CONTRACTOR HIMSELF PURCHASED MATERIALS IN THE OPEN MARKET AND SUPPLIES THE SAME TO THE DEPARTMENT BY USING FIXING OR INCORPOR ATING THE SAME IN THE WORKS AS IN THE CASE OF MATERIALS OTHER THAN THOSE SPECIFIED IN SCHEDULE 'B' SOME PROFIT ELEMENT WOULD BE EMBEDDED IN THE TURNOV ER REPRESENTED BY THE COST OF SUCH MATERIAL BUT WHEN STORES/MATERIAL WAS SUPPLIED BY THE GOVERNMENT DEPARTMENT AT FIXED RATES FOR BEING USED FIXED OR INCORPORATED IN THE WORK ON TERMS INDICATED ABOVE THERE WOULD BE N O ELEMENT OF PROFIT INVOLVED IN THE TURNOVER REPRESENTED BY THE COST OF SUCH MATERIAL. IT IS TRUE THAT ORDINARILY WHEN A WORKS CONTRACT IS PUT THRO UGH OR COMPLETED BY A CONTRACTOR THE INCOME OR PROFITS DERIVED BY THE CON TRACTOR FROM SUCH CONTRACT IS DETERMINED ON THE VALUE OF THE CONTRACT AS A WHOLE AND CANNOT BE DETERMINED BY CONSIDERING SEVERAL ITEMS THAT GO TO FORM SUCH V ALUE OF THE CONTRACT BUT IN OUR VIEW WHERE CERTAIN STORES/MATERIAL IS SUPPLIED AT FIXED RATES BY THE DEPARTMENT TO THE CONTRACTOR SOLELY FOR BEING USED OR FIXED OR INCORPORATED IN THE WORKS UNDERTAKEN ON TERMS AND CONDITIONS MENTIO NED ABOVE THE REAL TOTAL VALUE OF THE ENTIRE CONTRACT WOULD BE THE VALUE MIN US THE COST OF SUCH STORES/MATERIAL SO SUPPLIED. THEREFORE SINCE NO EL EMENT OF PROFIT WAS INVOLVED IN THE TURNOVER REPRESENTED BY THE COST OF STORES/M ATERIAL SUPPLIED BY THE M.E.S. TO THE ASSESSEE-FIRM THE INCOME OR PROFITS DERIVED BY THE ASSESSEE FIRM FROM SUCH CONTRACTS WOULD HAVE TO BE DETERMINE D ON THE BASIS OF THE VALUE OF THE CONTRACTS REPRESENTED BY THE CASH PAYM ENTS RECEIVED BY THE ASSESSEE-FIRMS FROM THE M.E.S. DEPARTMENT EXCLUSIVE OF THE COST OF THE MATERIAL/STORES RECEIVED FOR BEING USED FIXED OR I NCORPORATED IN THE WORKS UNDERTAKEN BY THEM. ON THE OTHER HAND LD. DR HEAVILY RELIED ON THE ORD ER OF AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE THE ASSESSMENT WAS FRAMED U/S. 144 OF THE ACT AFTER REJECTING THE BOOKS OF AC COUNT ON THE GROUND THAT ASSESSEE FAILED TO PRODUCE THE SAME. THE AO DETERMI NED THE PROFIT @ 8% OF 93 13 296/- ONLY AND THE GRIEVANCE OF ASSESSEE IS T HAT THE AO HAS TAKEN ITA NO.207/KOL/2016 & CO 17/KOL/2016 A.Y 2011-1 2 DCIT CIR-23 HGL. VS. M/S MITRA REAL ESTATE PVT . LTD. PAGE 5 WRONG AMOUNT OF GROSS CONTRACTUAL VALUE AS DECLARED BY ASSESSEE. IN FACT THE AMOUNT OF GROSS CONTRACTUAL VALUE WAS INCLUSIVE OF MATERIAL SUPPLIED BY THE CONTRACTEE I.E. GOVERNMENT FOR 40 29 115/-. THEREFORE THE SAME CANNOT BE INCLUDED IN THE TURNOVER OF ASSESSEE. ON PERUSAL OF THE FACTS OF THE CASE WE FIND THAT THERE IS NO AMBIGUITY THAT THE MATERIAL W AS SUPPLIED BY CONTRACTEE / GOVERNMENT FOR 40 29 115/- AS EVIDENT FROM THE PAYMENT ADVISED ISS UED BY THE CONTRACTEE WHICH IS PLACED AS ANNEXURE-A OF THIS ORDER. ONCE WE HOLD THAT THE MATERIALS WERE SUPPLIED BY GOVERNMENT / CO NTRACTEE THEN IN OUR CONSIDERED VIEW SAME CANNOT BE INCLUDED IN GROSS C ONTRACTUAL VALUE FOR THE PURPOSE OF DETERMINING THE PROFIT U/S. 44AD OF THE ACT. IN HOLDING SO WE ALSO FIND SUPPORT AND GUIDANCE FROM THE PRINCIPLE LAID D OWN BY THE HON'BLE SUPREME COURT IN THE CASE OF BRIJ BHUSAL LAL (SUPRA). THUS WE DIRECT THE ASSESSING OFFICER TO DETERMINE THE PROFIT @ 8% ON T HE GROSS CONTRACTUAL VALUE LESS MATERIAL SUPPLIED BY THE CONTRACTEE / GOVERNME NT. HENCE THIS GROUND OF ASSESSEES CO IS ALLOWED. 9. IN THE RESULT ASSESSEES CO IS ALLOWED. 10. IN COMBINE RESULT APPEAL OF REVENUE STANDS DISMISS ED AS LIMINE AND THAT OF ASSESSEES CO IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 08/ 11/2017 SD/- SD/- (ABY. T. VARKEY) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA *DKP SR.P.S &- 08 / 11 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S MITRA REAL ESTATE PVT.LTD. 4/1 JANATA R OAD NEW SANTOSHPUR KOLKATA-75 2. /REVENUE-DCIT CIRCLE-23 AAYAKAR BHAWAN G.T. ROAD KHADINA MORE CHINSURAH HOOGHLY-712 101 3. 1 2 / CONCERNED CIT KOLKATA 4. 2- / CIT (A) KOLKATA 5. 5 881 1 / DR ITAT KOLKATA 6. ; / GUARD FILE. BY ORDER/ /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO 1