DCIT, Pune v. M/s. National Heavy Engineering Co-op Ltd.,, Pune

ITA 140/PUN/2009 | 2005-2006
Pronouncement Date: 27-08-2010 | Result: Dismissed

Appeal Details

RSA Number 14024514 RSA 2009
Assessee PAN AAACN6315I
Bench Pune
Appeal Number ITA 140/PUN/2009
Duration Of Justice 1 year(s) 6 month(s) 30 day(s)
Appellant DCIT, Pune
Respondent M/s. National Heavy Engineering Co-op Ltd.,, Pune
Appeal Type Income Tax Appeal
Pronouncement Date 27-08-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 27-08-2010
Assessment Year 2005-2006
Appeal Filed On 28-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI I.C. SUDHIR (JM) AND SHRI D. KARUNAKARA RAO (AM) ITA NO. 1409/PN/2009 (ASSTT. YEAR : 2005-06) DY. COMMISSIONER OF INCOME-TAX CIR-2 MALEGAON APPELLANT V. M/S. NATIONAL HEAVY ENGINEERING CO- OP.LTD. 17 MAHATMA GANDHI ROAD PUNE 411 001 PAN: AAACN6315I RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK ASSESSEE BY : SHRI. SANTOSH KUMAR ORDER PER D. KARUNAKARA RAO AM THIS APPEAL BY THE REVENUE IS FILED AGAINST THE ORDE R OF THE CIT(A)- II PUNE DATED 14.10.2008 FOR THE A.Y. 2005-06. GROUNDS RAISE D READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.48 15 210/- MADE BY THE AO ON ACCOUNT OF RETENTION MONEY RECEIVABLE BY THE ASSESSEE ON TURNKEY PROJECTS COMPLETED BY THE ASSESSEE IGNORING THE FACT THAT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNT ING AND THE ASSESSEE HAD A RIGHT TO RECEIVE THE MONEY RETAINED BY THE CONTRACTORS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING AND FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF STATE BANK OF TRAVANCORE (138 ITR 102) IN WHICH IT HAS BEEN HELD THAT IT IS THE I NCOME WHICH HAS REALLY ACCRUED OR ARISEN TO THE ASSESSEE THAT IS TA XABLE. IN THE ASSESSEES CASE THE RETENTION MONEY HAD REALLY ACCR UED TO THE ASSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) HAS ERRED IN NOT FOLLOWING THE DECISION OF PUNE ITAT BENCH IN THE CASE SPIREX MARSHAL LTD ITA NO. 1465/PN/1996 D ATED 11.9.2003 WHEREIN THE ISSUE WAS DECIDED IN FAVOUR OF REVENUE . 2. AT THE VERY OUTSET THE LD. COUNSEL FOR THE ASSESS EE FILED A COPY OF THE ORDER OF THE TRIBUNAL IN HIS OWN CASE VIDE ITA NO. 1228/PN /04 1229/PN/04 1016/PN/04 ITA NO 140/PN/2009 M/S. NACIONAL HEAVY ENGG. LTD. A.Y.2005-06 2 AND 1457/PN/04 (REPORTED IN 105 ITD 485) FOR A.YS. 19 96-97 TO 1998-99 & 2001-02 AND STATED THAT THE ISSUE INVOLVED IS THE TAXABILIT Y OF THE AMOUNT OF RETENTION MONEY OF RS.48 15 210/- FOR THE YEAR UNDER CONSIDERATION. LD COUNSEL MENTIONED THAT THE SAID IDENTICAL ISSUE WAS DECIDED IN FAVOUR OF THE AS SESSEE BY THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT THAT THE SAME IS NOT TAXABL E IN THE YEAR UNDER CONSIDERATION RATHER IT IS TAXABLE IN THE YEAR IT IS RE CEIVED BY THE ASSESSEE. A.O HAS NOT ONLY MENTIONED PARA NO. 3 OF THE SAID ORDER OF TH E TRIBUNAL FURTHER HE RELIED ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF 286 ITR 596 IN THE CASE OF ASSOCIATED CABLES PVT. LTD. WE HAVE PE RUSED THE RELEVANT PART OF THE ORDER OF THE TRIBUNAL (SUPRA) AS WELL AS THE JUDGMENT O F THE HONBLE HIGH COURT. FOR THE SAKE OF COMPLETENESS THE SAME ARE REPRODUCED AS U NDER : A. FROM TRIBUNAL ORDER (SUPRA): 3. THESE GROUNDS RELATE TO RETENTION MONEY RECEIVAB LE BY THE ASSESSEE ON TURNKEY PROJECTS. IT WAS ADMITTED BY BOTH THE PA RTIES THAT THIS ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F ITAT PUNE IN THE ASSESSEES OWN CASE IN I.T.A. NO. 1249/PN/94 FOR A. Y. 1991-92 DATED 17.02.2006. IN PARAGRAPH 7.3 OF ITS ORDER THE TRIB UNAL OBSERVED AS UNDER: 7.3IN VIEW OF THE SUBSEQUENT DECISIONS ON THIS ISSUE THE ASSESSEE FOLLOWED THE CORRECT METHOD OF ACCOUNTING BY CHANGING ITS PRACTICE. THEREFORE WE HAVE NO HESITATION IN HOLD ING THAT THE AMOUNT OF RETENTION MONEY DID NOT ACCRUE TO THE ASSESSEE A S INCOME IN THIS YEAR. IT HAS BEEN OTHERWISE DEMONSTRATED BY THE A SSESSEE THAT IT HAS BEEN ACCOUNTED FOR IN BOOKS AS INCOME IN THE APPROP RIATE YEARS. THUS RELYING ON THE DECISION OF HONBLE TRIBUNAL WHICH REPRESENTS THE CORRECT STATE OF LAW ACCORDING TO US WE HOLD THAT THE LEARNED CIT(A) RIGHTLY DELETED THE ADDITION MADE BY THE AO ON THIS ISSUE. 4. WE RESPECTFULLY FOLLOW THE PRECEDENT AND DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. THE GROUNDS NO. 1 2 AND 3 ARE ACCORDINGLY REJECTED. B. FROM BOMBAY HIGH JUDGMENT (SUPRA) THE PAYMENT OF RETENTION MONEY IN THE CASE OF CONTR ACT IS CONTINGENT ON SATISFACTORY COMPLETION OF CONTRACT WORK. THE R IGHT TO RECEIVE THE RETENTION MONEY ACCRUES ONLY AFTER THE OBLIGATIONS UNDER THE CONTRACT ARE FULFILLED AND THEREFORE IT WOULD NOT AMOUNT T O INCOME OF THE ASSESSEE IN THE YEAR IN WHICH THE AMOUNT IS RETAINE D. 3. CONSIDERING THE FACTS OF THE CASE THAT THE SAID AMOUNT IS THE RETENTION MONEY AND THE SAME IS NOT RECEIVED IN THE YEAR UNDER CONSIDERATION THE ABOVE RATIO DECIDENDI IN THE CASE OF BOMBAY HIGH COURT (SUPRA) HAS AN DIREC T APPLICATION. ACCORDINGLY GROUNDS RAISED BY THE REVENUE ARE DISMISSED . ITA NO 140/PN/2009 M/S. NACIONAL HEAVY ENGG. LTD. A.Y.2005-06 3 4. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27TH DAY OF AUGU ST 2010. SD/- SD/- (I.C. SUDHIR) JUDICIAL MEMBER (D. KARUNAKARA RAO ) ACCOUNTANT MEMBER PUNE DATED THE 27TH AUGUST 2010 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-II PUNE 4. THE CIT(A) - II NASHIK 5. THE D.R. B BENCH PUNE 5. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE