DCIT, New Delhi v. M/s. The Indure Pvt. Ltd., New Delhi

ITA 2004/DEL/2010 | 2007-2008
Pronouncement Date: 27-01-2011 | Result: Dismissed

Appeal Details

RSA Number 200420114 RSA 2010
Assessee PAN AAACT0121C
Bench Delhi
Appeal Number ITA 2004/DEL/2010
Duration Of Justice 8 month(s) 24 day(s)
Appellant DCIT, New Delhi
Respondent M/s. The Indure Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 27-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 27-01-2011
Date Of Final Hearing 27-01-2011
Next Hearing Date 27-01-2011
Assessment Year 2007-2008
Appeal Filed On 03-05-2010
Judgment Text
ITA NO. 2004/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 2004/DEL/2010 A.Y. : 2007-08 DY. COMMISSIONER OF INCOME TAX CIRCLE 16(1) NEW DELHI VS. M/S THE INDURE PVT. LTD. INDURE HOUSE GREATER KAILASH-II NEW DELHI (PAN/GIR NO. : AAACT0121C) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : NONE DEPARTMENT BY : SH. KISHOR B. SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 17.2.2 010 PERTAINING TO ASSESSMENT YEAR 2007-08. 2. THE FIRST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE DISALLOWANCE OF ` 1 00 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF EXCESS REIMBURS EMENT OF SALARY EXPENSES TO ASSOCIATE CONCERNS. 3. ON THIS ISSUE THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY HAD REFLECTED REIMBURSEMENT OF SALARY OF ` 42 69948/- FOR THE CO-SHARED WORK WITH THE SISTER CONCERN OF THE ASSES SEE COMPANY. ON ENQUIRY IT WAS SUBMITTED THAT ASSESSEE COMPANY IS AV AILING FACILITIES OF STAFF OF DESEIN P LTD. AND OPG COMPUTER AIDED DESIGN P LTD AT VARIOUS SITES INCLUDING AT HEAD OFFICE. FOR THIS THE COMPANY ITA NO. 2004/DEL/2010 2 REIMBURSES THE SALARY OF SUCH STAFF DEPUTED BY THE A BOVE ASSOCIATES. HOWEVER ASSESSING OFFICER NOTED THAT ASSESSEE COU LD NOT PROVIDE THE CONCRETE AND EXACT DETAILS OF WORK DONE BY THE ASSO CIATED CONCERNS AND THE BASIS OF APPORTIONMENT OF REIMBURSEMENT TO T HEM. THEREFORE A DISALLOWANCE OF ` 1 00 000/- IS BEING MADE ON ACCO UNT OF EXCESS SALARY REIMBURSED. 4. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) IT WAS SUBMITTED THAT ASSESSEE IS AVAILING FACILITIES OF S TAFF OF THESE TWO CONCERNS AT VARIOUS SITES INCLUDING AT HEAD OFFICE. THIS ARRANGEMENT HAS BEEN IN EXISTENCE FOR THE LAST NUMBER OF YEARS. THE SERVICES OF THE STAFF OF ASSOCIATE COMPANIES ARE OBTAINED BASED ON T HE REQUIREMENT OF THE COMPANY FROM TIME TO TIME FOR ITS BUSINESS OPERAT IONS. IN CASE THE SERVICES OF THE PERSON IS ENGAGED FOR THE WHOLE PERIOD THE ENTIRE COST IS PAID AND WHEREVER THE STAFF IS PARTLY ENGAG ED PART PERCENTAGE IS PAID. IT WAS FURTHER SUBMITTED THAT THE DISALLOW ANCES HAVE BEEN MADE PURELY ON ESTIMATED BASIS WITHOUT ANY NEGATIVE I NFERENCE AS TO THE FACT QUANTUM OF SERVICES RENDERED. THE REIMBUR SEMENT OF EXPENSES WAS A MATTER OF AGREEMENT BETWEEN THE PARTIE S AND NO ADVERSE INFERENCE HAS BEEN DRAWN BY THE ASSESSING O FFICER. CONSIDERING THE ABOVE LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT CONSIDERING THE NATURE OF EXPENDITURE AND FACT S BROUGHT OUT ON RECORD BY THE ASSESSEE AND AS THERE IS MUTUAL BENE FIT AMONG THE GROUP COMPANIES HE WAS INCLINED TO AGREE WITH THE C ONTENTION OF THE A.R. ACCORDINGLY HE ALLOWED THE ISSUE IN FAVOUR O F THE ASSESSEE. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEV ER WE FEEL THAT THIS MATTER MAY BE ADJUDICATED UPON HEARING THE LD. ITA NO. 2004/DEL/2010 3 DEPARTMENTAL REPRESENTATIVE AND PERUSING THE RECORDS. WE NOTE THAT THIS ARRANGEMENT BY THE ASSESSEE AND THE TWO SISTE R CONCERNS WERE IN EXISTENCE FROM A PREVIOUS NUMBER OF YEARS. NO DI SALLOWANCE WAS MADE EARLIER. THE REIMBURSEMENT HAS BEEN MADE AS PER THE ARRANGEMENT MADE BETWEEN THE ASSESSEE AND THE SAID A SSOCIATE CONCERNS. NO ADVERSE INFERENCE IN THIS REGARD HAS BEEN BROUGHT ON RECORD. THE DISALLOWANCE HAS BEEN MADE BY THE AS SESSING OFFICER PURELY ON GUESS WORK AND SURMISES. IT IS A SETTLE D LAW THAT NO DISALLOWANCE CAN BE MADE ON SURMISES AND GUESS WORK. ACCORDINGLY WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND ACCORDINGLY WE UPHOLD THE SAME. 7. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN SETTING ASIDE THE ISSUE REGARD ING DISALLOWANCE OF ` 2 46 335/-. 8. ON THIS ISSUE THE ASSESSING OFFICER NOTED THAT AS PER THE DETAILS PROVIDED FOR EPF AND ESI CONTRIBUTION. THE PAYMENT T O THE TUNE OF ` 93 354/- ON ACCOUNT EPF AND ` 1 52 981/- ON ACCOUN T OF ESI CONTRIBUTION RECEIVED BY THE ASSESSEE WERE MADE AFTE R THE DUE DATE AND AS SUCH HAVE NOT BEEN MADE AS PER PROVISIONS OF SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE IT ACT 1961. ACCORDINGLY ASSESSING OFFICER MADE TOTAL DISALLOWANCE OF ` 2 46 335/-. 9. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT IT IS NOT CLEAR FROM THE ASSE SSMENT ORDER OR FROM THE SUBMISSIONS OF THE ASSESSEE WHETHER THE PAYMENT WAS MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME EA RNED. IF PAYMENT WAS MADE BEFORE THE DUE DATE FOR FILING RETURN OF IN COME THERE IS NO CASE OF ANY DISALLOWANCE IN LIGHT OF THE DECISION R ENDERED BY THE ITA NO. 2004/DEL/2010 4 JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. P.M. ELECTRONICS LTD. 220 CTR 635. HE SET ASIDE THE ISSUE TO THE FILES O F THE ASSESSING OFFICER WITH THE ABOVE DIRECTION. 10. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 11. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. WE FIND THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) IS CORRECT IN H OLDING THAT IF THE PAYMENTS WERE MADE BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME THE SAME IS HAS TO BE ALLOWED. THIS PROPOSITION DRAWS SUPPORT FORM HONBLE HIGH COURT DECISION CITED ABOVE AS WELL AS DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. VINAY CEMENT LTD. 213 CTR 268 . IN LIGHT OF THE ABOVE DISCUSSION AND PRECEDENT WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) AND ACCORDINGLY WE UPHOLD THE SAME. 12. THE LAST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ALLOWING CREDIT OF TDS AMOUNTING TO ` 12 04 977/- WHEN THE INCOME CORRESPONDING TO THE TDS WAS NOT OFF ERED FOR TAX AS PER THE PROVISIONS OF SECTION 199 OF INCOME TAX ACT 1961. 13. ON THIS ISSUE ASSESSING OFFICER NOTED THAT ASS ESSEE HAD CLAIMED TDS AMOUNTING TO ` 12 04 977/- PERTAINING TO RUNNING JOB AT TPL PARICHHA (UP). ASSESSEE WAS ASKED TO FILE TDS RECONCIL IATION AND TAXES PAID. CONSIDERING THE ASSESSEES REPLY THE ASSES SING OFFICER OBSERVED THAT TDS AMOUNTING TO ` 12 04 977/- BASED ON CERTIFICATES HAD BEEN CLAIMED IN THE YEAR UNDER ASSESSMENT. HO WEVER THIS TDS OF ` 12 04 977/- ONLY EXPENSES DEBITED TO P&L ACCOUNT H AVE BEEN SHOWN AS RELATED TO JOBS IN PROGRESS AND THE INCOME IN RESP ECT THEREOF WAS RECOGNIZED UPON COMPLETION OF THE SAID PROJECTS. ACC ORDINGLY AS PER ITA NO. 2004/DEL/2010 5 SECTION 199 OF THE INCOME TAX ACT 1961 ASSESSING OFFICER HELD THAT TAX CREDIT OF ` 12 04 977/- SHALL BE GIVEN IN THE Y EAR IN WHICH INCOME FROM THESE PROJECTS ARE RECOGNIZED. 14. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APP EALS) IT WAS SUBMITTED THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR EARLI ER YEARS. CONSIDERING THE SAME LD. COMMISSIONER OF INCOME TAX (APPEALS) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. 15. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS. W E FIND THAT THIS TRIBUNAL IN ASSESSEES OWN CASE HAS CONSIDERED THE ISSUE IN ITA NO. 363/DEL/2008 1219/DEL/2008 AND 1220/DEL/2008 FOR A.Y .RS. 2003-04 TO 2005-06 VIDE ORDER DATED 24.4.2009. WE FIND THAT TRIBUNAL IN THE SAID ORDER HAS ELABORATELY CONSIDERED THE ISSUE AND CON CLUDED AS UNDER:- 13. IN VIEW OF THE ABOVE WE CAN SAFELY CONCLUDE THAT ALTHOUGH THE CONTRACT VALUE RELATABLE TO THE COMPLETED CONTRA CTS ARE CREDITED AS SALES IN THE YEAR OF COMPLETION THE INCOME IN RESPECT THEREOF DURING THE YEAR IS ALSO DULY TAKEN INTO ACCOUNT IN THE PROFIT AND LOSS ACCOUNT THROUGH THE WORK IN PROGRESS. THUS IT WOULD NOT BE CORRECT TO SAY THA T INCOME IN RESPECT OF CONTRACT IN PROGRESS IS NOT ACCOUNTE D FOR IN THE PROFIT AND LOSS ACCOUNT SO AS TO DECLINE ASSESSEE THE CREDIT FOR DEDUCTION OF TAX IN RESPECT OF SUCH AMOUNT WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN ALLOWING CRE DIT FOR TAX DEDUCTED AT SOURCE IN RESPECT OF THE SAID RECEI PTS. ITA NO. 2004/DEL/2010 6 15.1 RESPECTFULLY FOLLOWING THE ABOVE SAID PRECEDEN T WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 16. IN THE RESULT THE APPEAL FILED BY THE REVENU E STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/01/2011 UP ON CONCLUSION OF HEARING. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [R [R[R [RAJPAL YADAV AJPAL YADAV AJPAL YADAV AJPAL YADAV] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 27/01/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES