ACIT, BARMER v. M/s. Bhawan V Path Nirman (Bohra) & Company, JODHPUR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR BEFORE SHRI S.V. MEHROTRA ACCOUNTANT MEMBER AND SHRI V.D. RAO JUDICIAL MEMBER ITA NO: 193 / JU / 2010 ASSTT. YEAR: 2007 2008 ACIT CIRCLE-BMR VS M/S BHAWAN V PATH NIRMA N SANGJI BHAWAN (BOHRA) & COMPANY BARMER. BARMER. (PAN: AAAFB 6438 P) C.O.NO.05 / JU / 2010 (A/O ITA NO.193 / JU / 2010) ASSTT. YEAR: 2007 2008 M/S BHAWAN V PATH NIRMAN VS ACIT CIRCLE-BMR (BOHRA) & CO. BARMER. SANGJI BHAWAN BARMER. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AMIT NIGAM D.R. RESPONDENT BY : S HRI U.C. JAIN A.R. ORDER PER V.D. RAO: JM THESE APPEALS HAS BEEN FILED BY THE REVENUE AS W ELL AS THE ASSESSEE RAISING OUT OF COMMON ORDER PASSED BY THE 2 LD. CIT (A) JODHPUR DATED 18 TH JANUARY 2010 RELATING TO ASSESSMENT YEAR 2007 2008. WE THEREFORE PROPOS E TO DECIDE BOTH THE APPEALS BY PASSING COMMON ORDER. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL BEFORE THE TRIBUNAL. GROUNDS OF APPEL: 1. DELETING THE ADDITION MADE ON ACCOUNT OF AWARD RECEIVED OF RS. 3 99 975/- & RS. 2 65 974/- IGNORIN G THE FACT THAT THE RECEIPT ARE OF REVENUE NATURE. 2. DELETING THE ADDITION OF RS. 15 18 055/- MADE U/S 4 0 (A) (IA) OF THE I.T.ACT IGNORING THE FACT THAT THE ASSESSEE HAS DEDUCTED THE TAX BEFORE 28.02.2007 BUT FAILED TO DEPOSIT THE SAME IN GOVT. ACCOUNT TILL 31.3.2007. 3. DIRECTING THE ASSESSING OFFICER TO COMPUTE INCOME @ AS AGAINST THE RATE APPLIED BY THE AIO @ 10.5%. RESULTING IN DELETION OF ADDITION OF RS. 4 21 674/- WITHOUT CONSIDERING THE FACTS AND MATERIAL DISCUSSE D IN ASSESSMENT ORDER. 2. THE FIRST GROUND OF APPEAL RAISED RELATING TO AD DITION ON ACCOUNT OF AWARD RECEIVED OF RS. 3 99 975/- & RS. 2 65 974/-. FACTS ARE IN BRIEF THAT THE ASSESSEE IS A CONTRACTO R AND FILED THE 3 RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 22 2 4 430/-. SUBSEQUENTLY THE ASSESSING OFFICER U/S 143 (3) PAS SED THE ASSESSMENT ORDER BY ASSESSING THE INCOME OF THE ASS ESSEE RS. 48 51 730/- BY MAKING VARIOUS ADDITIONS. DURI NG THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICE R HAS OBSERVED THAT THE ASSESSEE HA RECEIVED AN AMOUNT OF RS.6 65 949/- FROM THE EXTN. PWD CITY DN. KOTA. THE ASSESSEE HAS NOT SHOW N AS A REVENUE RECEIPT AND HE HAS SIMPLY APPLIED @ 9.46%. THE ASSESSING OFFICER HAS ASKED THE ASSESSEE WHY NOT T HIS RECEIPT IS TREATED AS A REVENUE RECEIPT. 3. IN RESPONSE TO THE QUERY RAISED BY THE ASSESSING OFFICER THE ASSESSEE HAS SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE AMOUNT RECEIVED BY THE ASSESSEE OF RS. 3 99 95/- DU E TO INCREASE OF RATES AND THE INTEREST RECEIVED FOR THE DELAY OF PA YMENTS THEREFORE THESE RECEIPTS ARE BUSINESS RECEIPTS AND ADOPTED TH E PROFIT @ 9.46%. 4 4. HOWEVER THE ASSESSING OFFICER HAS NOT ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND THE WHOLE AMOUNT OF RS. 6 65 949/- TREATING AS A REVENUE RECEIPT ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 5. ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE LD. CIT (A). THE LD. CIT (A) HAS OBSERVED THAT THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS. 3 99 975/- AS A CONSIDERATION FOR THE INCREASE IN THE COST OF CONTRACT THIS IS NOTHING BUT A CONSIDERATI ON FOR EXECUTION OF CONTRACT AND THIS AMOUNT CANNOT BE CONSIDERED AS A N INCOME. THIS IS A CONTRACT RECEIPT ON WHICH PROFIT HAS TO BE DET ERMINED; THE WHOLE CANNOT BE TREATED AS A PROFIT AND HOLD THAT T HE AMOUNT IS CONTRACT RECEIPT OF THE ASSESSEE ON WHICH PROFIT HA S RIGHTLY BEEN ACCOUNTED BY THE ASSESSEE. ACCORDINGLY THE ADDITI ON MADE BY THE ASSESSING OFFICER WAS DELETED. 6. WE HAVE HEARD BOTH THE SIDES. THE ASSESSEE HAS RECEIVED AN ADDITIONAL AMOUNT OF RS. 3 99 975/- AND THERE IS A SPECIFIC FINDING GIVEN BY THE LD. CIT (A) THAT THE ADDITIONAL PAYMEN T RECEIVED BY 5 THE ASSESSEE AS A CONSIDERATION FOR INCREASE OF COS T OF CONTRACT AND THIS IS NOTHING BUT CONSIDERATION FOR THE EXECUTION OF THE CONTRACT. WE FIND NO INFIRMITY FROM THE ORDER OF THE LD. CIT (A). WE THEREFORE UPHOLD THE LD. CIT (A) ON THIS ACCOUNT. 7. IN SO FAR AS INTEREST AMOUNT OF RS. 2 65 974/- T HE LD. CIT (A) BY FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME CO URT IN THE CASE OF CIT VS GOVINDA CHOUDARY & SONS (203 ITR 881 S C) ALLOWED THE CLAIM OF THE ASSESSEE AND DELETED THE A DDITION MADE BY THE ASSESSING OFFICER. THE HONBLE SUPREME COURT H AS HELD THAT IN OUR VIEW THE INTEREST PAYABLE TO HIM CERTAINLY P ARTAKES OF THE SAME CHARACTER AS THE RECEIPTS FOR THE PAYMENT HAS BEEN DELAYED AS A RESULT OF CERTAIN DISPUTES BETWEEN THE PARTIES. IT CANNOT BE SEPARATED FROM THE OTHER AMOUNTS GRANTED TO THE ASSESSEE UNDER THE AWARDS AND TREATED AS INCOME FR OM OTHER SOURCES. IN THE PRESENT CASE ALSO THE INTEREST RECEIVED BY THE ASSESSEE AFTER THE AWARD PASSED BY THE DISTRICT AND SESSION JUDGE KOTA IN RELATION TO THE CONTRACT. WE THEREFORE T HE LD. CIT (A) BY 6 FOLLOWING THE JUDGMENT OF THE GOVINDA CHOWDARY & SO NS (SUPRA) CORRECTLY DECIDED THE ISSUE. WE ACCORDINGLY DISMIS SED THIS GROUND OF APPEAL RAISED BY THE REVENUE. 8. THE NEXT GROUND OF APPEAL RELATING TO ADDITION I N RESPECT OF RS. 15 18 055/- MADE U/S 40 (A) (IA) OF THE ACT. D URING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSING OFFICE R HAS OBSERVED THAT THE ASSESSEE HAS PAID PAYMENTS TO THE CONTRACT ORS AND TDS WAS DEDUCTED IN RESPECT OF PAYMENT OF RS. 1 26 000/ - RS.6 30 000/- RS. 3 66 908/-. THE ASSESSEE HAS NO T DEDUCTED TDS ON PAYMENTS OF RS.15 18 055/- IN RESPECT OF PAYMEN T MADE TO M/S SUWALIKA & CO. BEFORE MARCH 2007. ACCORDINGLY THE ASSESSING OFFICER HAS DISALLOWED ENTIRE PAYMENT MADE TO M/S S UWALIKA & CO. AMOUNTING TO RS. 15 18 055/- BY INVOKING PROVIS IONS U/S 40 (A) (IA) READ WITH 194 C OF THE ACT. ON APPEAL THE LD. CIT (A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSING OFFICER FAILED TO TAKE NOTE OF T HE CERTAIN FACTS AND THE ASSESSING OFFICER IS NOT JUSTIFIED MAKING S UCH AN ADDITION. 7 ON BEING AGGRIEVED REVENUE CARRIED THE MATTER IN AP PEAL BEFORE THE TRIBUNAL. 9. THE LEARNED D.R. HAS SUBMITTED THAT THE ASSESSEE HAS NOT DEDUCTED THE TDS FROM THE PAYMENTS MADE TO M/S SUWA LIKA & CO. IN RESPECT OF RS. 15 18 055/- AND THE ASSESSING OFF ICER RIGHTLY INVOKED SEC. 40 (A) (IA) OF THE ACT. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PRO PERTY MADE TO M/S SUWALIKA & CO. TO THE EXTENT OF RS.15 18 055/- TDS WAS DEDUCTED AND PAID BEFORE DUE DATE OF THE FILING OF THE RETURN. 10. WE HAVE HEARD BOTH THE SIDES PERUSE THE RECORD S AND GONE TO THE ORDERS OF THE AUTHORITIES BELOW. 11. THE ONLY DISPUTE IN THIS GROUND OF APPEAL IS WH ETHER THE ASSESSEE HAS MADE TDS IN RESPECT OF RS.15 18 055/- AND PAID BEFORE THE DUE DATE OF FILING OF THE RETURN OR NOT. WE FIND THAT THE ORDER PASSED BY THE LD. CIT (A) IS NOT CLEAR IN THI S ASPECT AND AS PER THE ASSESSING OFFICER THE TDS WAS NOT DEDUCTED. WE THEREFORE REMIT THE ISSUE MATTER BACK TO THE ASSES SING OFFICER FOR A 8 LIMITED PURPOSE TO VERIFY THE RECORDS OF THE ASSESS EE WHETHER THE ASSESSEE DEDUCTED THE TDS AND PAID BEFORE THE DUE D ATE OF THE FILING OF THE RETURN AND IF SO ALLOW THE CLAIM OF T HE ASSESSEE AS PER LAW. THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 12. THE LEARNED COUNSEL FOR THE ASSESSEE HAS NOT PR ESSED THE CROSS OBJECTION THEREFORE DISMISSED AS NOT PRESSED. 13. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS A LLOWED FOR STATISTICAL PURPOSE THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 14. O RDER WAS PASSED IN THE OPEN COURT DATED ON 11 TH FEBRUARY 2011. SD/- SD/- (S.V. MEHROTRA) (V.D. RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH FEBRUARY 2011 KAMAL KUMAR COPY FORWARDED TO:- THE APPELLANT /RESPONDENT /ITO/CIT/LD. D.R /GUARD F ILE.