M/s Buildmet Limited, Bangalore v. ITO, Bangalore

CO 55/BANG/2010 | 2005-2006
Pronouncement Date: 28-02-2012 | Result: Dismissed

Appeal Details

RSA Number 5521123 RSA 2010
Assessee PAN AAACB7376F
Bench Bangalore
Appeal Number CO 55/BANG/2010
Duration Of Justice 1 year(s) 4 month(s) 9 day(s)
Appellant M/s Buildmet Limited, Bangalore
Respondent ITO, Bangalore
Appeal Type Cross Objection
Pronouncement Date 28-02-2012
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 28-02-2012
Date Of Final Hearing 28-02-2012
Next Hearing Date 28-02-2012
Assessment Year 2005-2006
Appeal Filed On 19-10-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI JASON P. BOAZ ACCOUNTANT MEMBER I.T.A. NO.952/BANG/2010 (ASSESSMENT YEAR : 2005-06) INCOME TAX OFFICER WARD 11 (1) BANGALORE. . APPELLANT. VS. M/S. BUILDMET LIMITED NO.25 CRESCENT ROAD MANGALORE. .. RESPONDENT. PAN AAACB 7376F C.O. NO.55/BANG/2010 (IN ITA NO.952/BANG/2010) (BY ASSESSEE) APPELLANT BY : SHRI B. SARAVANAN. JCIT DR. RESPONDENT/C.O. BY : SMT. SHEETAL ADVOCATE. DATE OF HEARING : 28.02.2012. DATE OF PRONOUNCEMENT : 28.02.2012. O R D E R PER SHRI JASON P. BOAZ A.M . : THIS APPEAL BY THE DEPARTMENT AND THE CROSS OBJEC TION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER UNDER SECTION 250 OF THE INCOME TAX ACT 1961 (HEREIN AFTER REFERRED AS 'THE ACT') PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS)II BANGALORE ON 9.6.2010 FOR THE ASSESSMENT YEAR 2005-06. 2 ITA NO.952/BANG/10 & C.O. NO.55/BANG/2010 ITA NO.952/BANG/2010 2. THE FACTS OF THE CASE IN BRIEF ARE AS UNDER : 2.1 THE ASSESSEE A COMPANY IN THE BUSINE SS OF CONSTRUCTION OF SILOS AND CIVIL CONTRACTS FILED ITS RETURN OF INCOME FOR ASSESSMEN T YEAR 2005-06 ON 4.10.2005 DECLARING NIL INCOME AFTER SET OFF OF BROUGHT FORWARD LOSSES AMOUNTING TO RS.32 53 028. THE ASSESSING OFFICER AFTER SCRUTINIZING THE CASE COMP LETED THE ASSESSMENT BY AN ORDER UNDER SECTION 143(3) OF THE ACT ON 12.12.2007 IN WH ICH TWO ADDITIONS/DISALLOWANCES WERE MADE WHICH WERE AGREED TO BY THE ASSESSEES AUTHORI SED REPRESENTATIVE ACCOUNTS MANAGER OF THE COMPANY. THE ADDITIONS/DISALLOWANCE S ARE AS UNDER : I) EXPENDITURE TOWARDS INVESTMENTS WRITTEN OFF. R S.5 00 000 II) LABOUR CHARGES ON WHICH TDS NOT DEDUCTED DISALLOWED UNDER SECTION 40(A)(IA). RS.24 75 000 3. AGGRIEVED BY THIS ORDER OF ASSESSMENT UNDER SECTION 143(3) DT.12.12.2007 THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A)-I BANGAL ORE. THE CIT(A) IN HIS ORDER DATED 9.6.2010 UPHELD THE ASSESSING OFFICERS FINDING ON THE DISALLOWANCE OF RS.5 LAKHS MADE BY HIM ON INVESTMENTS WRITTEN OFF. HE HOWEVER DELETE D THE DISALLOWANCE UNDER SECTION 40(A)(IA) ALLOWING THE ASSESSEES CLAIM ON THIS PO INT. 4.1 REVENUE BEING AGGRIEVED BY THE ORDER OF THE CIT(A) IS NOW IN APPEAL BEFORE US. 4.2 THE GROUNDS OF APPEAL RAISED BY THE REVENU E ARE AS UNDER : 1. THE ORDER OF THE LEARNED CIT(A) IN SO FAR IT IS PREJUDICIAL TO THE INTEREST OF REVENUE IS OPPOSED TO LAW FACTS AND CIRCUMSTANC ES OF THE CASE. 3 ITA NO.952/BANG/10 & C.O. NO.55/BANG/2010 2. THE CIT(A) HAS ERRED DELETING THE ADDITION OF R S.24.75 LAKHS ON ACCOUNT OF PAYMENT TO LABOURERS UNDER SECTION 40(A)(IA) OF THE I.T. ACT HOLDING THAT IT WAS A MERE PROVISION AND THAT SECTION 194C ENVISAGES TH E TAX TO BE DEDUCTED AT SOURCE AT THE TIME OF PAYMENT OR CREDIT WITHOUT AP PRECIATING THE PROVISIONS OF SECTION 194C(2) IN THE RIGHT PERSPECTIVE. 3. THE CIT(A) HAS ERRED IN NOT APPRECIATING THAT AS PER THE EXPLANATION II TO SECTION 194C OF THE INCOME TAX ACT 1961 THE PROVI SIONS OF SECTION 194C OF THE I.T. ACT 1961 ARE APPLICABLE TO ANY SUM REFERR ED TO IN SUB-SECTION (1) IS CREDITED TO ANY ACCOUNT CALLED SUSPENSE ACCOUNT O R BY ANY OTHER NAME IN THE BOOKS OF ACCOUNTS OF THE PERSON LIABLE TO PAY SUCH SUM AND SUCH CREDITING SHALL BE DEEMED TO BE CREDIT OF SUCH INCOME TO THE ACCOUN T OF THE PAYEE AND THE PROVISIONS OF SECTION 194C WILL APPLY ACCORDINGLY. 4. FOR THESE AND SUCH OTHER GROUNDS THAT MA Y BE URGED AT THE TIME OF HEARING IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) BE REVERSED IN SO FAR AS IT RELATES TO THE ABOVE MENTIONED ISSUE AND THAT OF THE ASSESSING OFFICER RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER TO AMEND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEA RING OF THE APPEAL. 5. GROUND NOS.1 AND 5 ARE GENERAL IN NATURE & T HEREFORE NO ADJUDICATION IS CALLED FOR THEREON. 6.1 GROUND NOS.2 TO 4 ARE IN RESPECT OF THE DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT MADE BY THE ASSESSING OFFICER. 6.2 THE LEARNED DEPARTMENTAL REPRESENTATIVE ARGUED VEHEMENTLY AGAINST THE RELIEF GRANTED BY THE CIT(A) TO THE ASSESSEE ON THE DISALL OWANCE UNDER SECTION 40(A)(IA) AMOUNTING TO RS.24 75 000. THE LEARNED DEPARTMENTA L REPRESENTATIVE SUPPORTING THE ORDER OF THE ASSESSING OFFICER SUBMITTED THAT THE RELEVANT RECORDS OF ASSESSMENT ESTABLISHED THAT THE A.R. OF THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFICER ON 12.12.2007. HE FURTHER STATED THAT THE ASSESSING O FFICER ON VERIFICATION OF THE BOOKS OF ACCOUNTS PRODUCED BY THE ASSESSEE NOTICED THAT TDS HAD NOT BEEN DEDUCTED ON LABOUR 4 ITA NO.952/BANG/10 & C.O. NO.55/BANG/2010 CHARGES PAID PROPOSED TO DISALLOW THE SAME AND CON FRONTED THE AR OF THE ASSESSEE ON THIS LAPSE. THE AR OF THE ASSESSEE THEN AGREED TO THE AS SESSING OFFICERS PROPOSAL FOR DISALLOWANCE UNDER SECTION 40(A)(IA) OF THE ACT AND AFFIXED HIS SIGNATURE THERETO IN THE ORDER SHEET NOTING ON 12.12.2007. THE LEARNED A.R. FILED COPIES OF THE RELEVANT ORDER SHEET NOTING DT.12.12.2007 WHICH FORM PART OF THE ASSESSMENT RECORDS TO FORTIFY HIS SUBMISSION. IT WAS FURTHER SUBMITTED BY THE LEARN ED DEPARTMENTAL REPRESENTATIVE THAT THE CIT(A) IN HIS ORDER HAS ALLOWED THE CLAIM OF T HE ASSESSEE ON THIS POINT WITHOUT GOING INTO THE FACTS OF THE CASE OR GIVING ANY REASONS O R SPEAKING ORDER. HE THEREFORE PLEADED TO SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE TH E DISALLOWANCES MADE BY THE ASSESSING OFFICER IN THE ORDER OF ASSESSMENT. 7. THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY SU PPORTED THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE UNDER SECTION 40(A)(IA) O F THE ACT MADE BY THE ASSESSING OFFICER. 8. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY THE A.R. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON BEING CONFRONTED BY THE ASSESSING OFFICER AGREED TO THE PROPOSED DISALLOWANCE UNDER SECTION 40(A)(IA) AMOUNTING TO RS.24 75 000 ON ACCOUNT OF T HE ASSESSEES FAILURE TO DEDUCT TDS FROM LABOUR CHARGES PAID. IT APPEARS THAT THIS ADMI SSION BY THE ASSESSEE FOR THE DISALLOWANCE UNDER SECTION 40(A)(IA) AT THE INITIA L STAGE ITSELF PRECLUDED THE ASSESSING OFFICER FROM VERIFYING THE FACTS ON THIS ISSUE. TH E CIT(A) S ORDER DEALS WITH THIS ISSUE IN PARA 7 TO 7.2 ON PAGES 4 AND 5 THEREOF. WE FIND TH AT THE CIT(A) S ORDER IS CRYPTIC DOES 5 ITA NO.952/BANG/10 & C.O. NO.55/BANG/2010 NOT BRING OUT THE FACTS OF THE CASE AND GIVES NO RE ASONING WHATSOEVER FOR HIS FINDING. WE ARE THEREFORE OF THE VIEW THAT IN THE INTEREST OF JUSTICE TO BOTH PARTIES THE ISSUE OF DISALLOWANCE UNDER SECTION 40(A)(IA) AMOUNTING TO R S.24 75 000 BE REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE FACTS ON THIS ISSUE AFRESH AND COME TO A FINDING THEREON AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER. C.O. NO.55/BANG/2010 9. THE ASSESSEE HAD PREFERRED THESE CROSS OBJECTION S AGAINST THE ORDER OF THE CIT(A) ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) OUGHT TO HAVE ALLOWED RS.5 LAKHS BEI NG THE LOSS ON ACCOUNT OF IRRECOVERABLE INVESTMENT WHICH WAS MA DE DURING THE COURSE OF BUSINESS OF THE RESPONDENT. 2. THE LEARNED COMMISSIONER (A) OUGHT TO HAVE HE LD THAT THE INTEREST UNDER SECTION 234D OF THE ACT WAS NOT LEVI ABLE WHEN THE INCOME IS ULTIMATELY DETERMINED UNDER SECTION 1 15JB OF THE ACT. 3. FOR THESE AND OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING OF THE APPEAL THE RESPONDENT PRAYS THAT THE APPEAL MAY BE ALLOWED. 10. DURING THE COURSE OF HEARING THE LEARNED COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE CROSS OBJECTIONS PREFERRED IN THIS APPEAL ARE NOT BEING PRESSED. CONSEQUENTLY THE GROUNDS RAISED BY THE ASSESSEE IN THE C.O. ARE DIS MISSED. 6 ITA NO.952/BANG/10 & C.O. NO.55/BANG/2010 11. IN THE RESULT THE APPEAL OF THE REVENUE IS ALL OWED FOR STATISTICAL PURPOSE AND C.O. BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.02.2012. SD/- SD/- (P. MADHAVI DEVI) ( JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED: 28.02.2012. *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR - A BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDE R ASSTT. REGISTRAR ITAT BANGALORE