M/s. Macro Nirman Pvt. Ltd., New Delhi v. ITO, New Delhi

ITA 2105/DEL/2013 | 2008-2009
Pronouncement Date: 27-04-2015 | Result: Allowed

Appeal Details

RSA Number 210520114 RSA 2013
Assessee PAN AADCM5066G
Bench Delhi
Appeal Number ITA 2105/DEL/2013
Duration Of Justice 2 year(s) 15 day(s)
Appellant M/s. Macro Nirman Pvt. Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 27-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 27-04-2015
Date Of Final Hearing 04-02-2015
Next Hearing Date 04-02-2015
Assessment Year 2008-2009
Appeal Filed On 11-04-2013
Judgment Text
INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C : NEW DELHI BEFORE SHRI J. S. REDDY ACCOUNTANT MEMBER AND SHRI A. T. VARKEY JUDICIAL MEMBER ( ITA NO. 2105 /DEL/ 2013 ) (ASSESSMENT YEAR: 2008 - 09 ) MACRO NIRMAN PVT. LTD SURYA FARM KASRA NO.427 BEHIND SECTOR - 3 PKT - D VASANT KUNJ NEW DELHI PAN:AADCM5066G VS. ITO WARD - 6(1) C.R.BUILDING NEW DELHI (APPELLANT) (RESPONDENT) DATE OF HEARING 17.04.2015 DATE OF PRONOUNCEMENT 27 . 04 .2015 O R D E R PER A. T. VARKEY JUDICIAL MEMBER THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGA INST THE ORDER OF THE LD CIT(A) IX NEW DELHI DATED 27.02.2013 FOR THE ASSESSMENT YEAR 2008 - 09. 2. THE GROUNDS OF APPEAL PREFERRED BY THE ASSESSEE ARE AS FOLLOWS: - 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEAL) IN SHORT 'CIT(A)' TO THE EXTENT CHALLENGED IN THIS APPEAL IS P ERVERSE AND AGAINST THE SETTLED PRINCIPLES OF LAW AND THEREFORE LIABLE TO BE SET ASIDE AND RETURNED INCOME TO BE ACCEPTED SAVE ADMITTED DISALLOWANCES. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN UPHOLDING ADDITIO N OF RS.1 09 92 260/ - ON ACCOUNT OF ALLEGED DIFFERENCE IN CONTRACT RECEIPTS ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS BY THE APPELLANT VIZ - A - VIZ CONTRACT RECEIPTS ACCOUNTED FOR BY M/S. UNIPRODUCTS INDIA LTD. IN THE TDS CERTIFICATES ISSUED ON THE GROUND THAT STATUTORY AUDITOR AS WELL AS TAX AUDITOR DID NOT MENTION THAT THE APPELLANT HAS BEEN FOLLOWING PERCENTAGE COMPLETION METHOD STIPULATED IN THE ACCOUNTING STANDARD (AS) - 7 AND BY GIVING COMPLETE GO BY TO THE ADMITTED FACT THAT BILL OF RS.1 08 92 867/ - HAS B EEN ACCOUNTED FOR AND ASSESSED IN NEXT ASSESSMENT YEAR. APPELLANT BY : SH. ASHWANI TANEJA ADV RESPONDENT BY : SH. K.K. JAISWAL SR. DR PAGE 2 OF 12 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT (A) IN PERVERSITY OF FACTS UPHELD ADDITION OF RS.16 61 161/ - UNDER SECTION 69 OF ACT ON ACCOUNT OF PURCHASES MADE FROM M/S. AMIT S TEEL. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT (A) ERRED IN UPHOLDING DISALLOWANCE OF SERVICE TAX OF RS.15 64 994/ - UNDER SECTION 43 B OF ACT. 5. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW LD. CIT (A) ERRED IN UPHOLDING DISALLOWANCE UNDER SECTION 40 (A) (IA) OF ACT TO THE EXTENT OF RS.69 320/ - . 3. GROUND NO.1 IS GENERAL IN NATURE SO IS NOT ADJUDICATED. 4. GROUND NO.2 RELATES TO THE ADDITION OF RS.1 09 92 260 / - ON ACCOUNT OF DIFFERENCE IN CONTRACT RECEIPTS S HOWN BY THE APPELLANT AND ACCOUNTED FOR BY THE CUSTOMER M/S UNIPRODUCTS INDIA LTD. 5 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPAN Y IS IN THE BUSINESS OF CIVIL CONSTRUCTION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THE RECEIPTS OF THE ASSESSEE AS PER THE P&L ACCOUNT DID NOT MATCH THE RECEIPTS AS PER THE TOTAL REFLECTED IN THE TDS CERTIFICATES FURNISHED FROM ITS CLIENT M/S UNIPRODUCTS INDIA LTD . ON BEING SUMMONED M/S. UNIPRODUCTS APPEARED BEFORE THE AO AND FIL ED COPY OF ACCOUNT OF THE ASSESSEE IN ITS BOOKS ALONG WITH COPY OF BILLS ISSUED BY THE ASSESSEE COMPANY DURING THE YEAR. FROM THE PERUSAL OF THE ACCOUNT OF THE ASSESSEE COMPANY IN THE BOOKS OF M/S UNIPRODUCTS IT WAS OBSERVED BY THE AO THAT EXPENSES OF RS.3 7 3 39 842/ - HAVE BEEN BOOKED BY THE SAID CONCERN ON THE BASIS OF BILLS RAISED BY THE ASSESSEE COMPANY WHEREAS THE ASSESSEE HAS BOOKED RECEIPTS OF ONLY RS.2 63 47 582/ - FROM M/S UNIPRODUCTS INDIA LTD. IN THE INSTANT ASSESSMENT YEAR. THOUGH ASKED BY T HE AO T O RECONCILE THE SAID DIFFERENCE HOWEVER ACCORDING THE AO T HE ASSESSEE DID NOT FILE THE RECONCILIATION. ACCORDING TO THE AO THE AR SIMPLY STATED THAT THE DIFFERENCE IN RECEIPTS HAS BEEN BOOKED IN THE NEXT YEAR WITHOUT GIVING ANY REASONS. THE AO DID NOT AC CEPT THE SAID CONTENTION OF THE ASSESSEE AND HELD THAT THE ASSESSEES CONTENTION THAT PART OF THE BILLS HAVE BEEN ACCOUNTED FOR IN THE NEXT YEAR CANNOT BE ACCEPTED WHEN THE EXPENSES RELATED TO THE WORK DONE IN RESPECT OF THOSE BILLS HAVE BEEN BOOKED BY THE ASSESSEE IN THE PRESENT YEAR. THEREFORE THE DIFFERENCE OF RS.1 09 92 260/ - NET OF SERVICE TAX WA S ADDED TO THE INCOME OF THE ASSESSEE. PAGE 3 OF 12 6 . ON APPEAL BEFORE THE LD CIT(A) THE LD CIT(A) HAD CONFIRMED THE ORDER OF THE AO. AGGRIEVED BY THE ORDER OF THE LD C IT(A) THE ASSESSEE IS BEFORE US. 7 . THE LD AR OF THE ASSESSEE SHRI ASHWANI TENEJA CONTENDED THAT THE ADDITION WAS MADE ON THE GROUND THAT ASSESSEE HAS RAISED THE BILL AGGREGATING TO RS.3 73 39 842/ - TO THE CUSTOMER NAMELY M/S UNI PRODUCTS INDIA LTD. ON WHICH THE SAID CUSTOMER HAS DEDUCTED TDS ALSO BUT ASSESSEE HAS ACCOUNTED FOR RECEIPTS IN ITS BOOKS OF ACCOUNTS ONLY TO THE TUNE OF RS.2 63 47 582 / - AND THUS THE RECEIPT WAS SHOWN LESS FOR A SUM OF RS. 1 09 92 260/ - . ACCORDING TO SHR I ASHWANI TENEJA CASE OF THE ASSESSEE IS THAT ASSESSEE BEING A CONSTRUCTION COMPANY HAS TO FOLLOW THE ACCOUNTING STANDARD ( AS ) - 7 ACCORDING TO WHICH A COMPANY ENGAGED IN CONSTRUCTION BUSINESS HAS TO FOLLOW REVENUE RECOGNITION METHOD BASED ON PERCENTAGE CO MPLETION. THEREFORE THE REVENUE WAS RECOGNIZED LESS IN THIS YEAR BUT IT HAS BEEN RECOGNIZED IN THE NEXT ASSESSMENT YEAR I.E. A. Y. 2009 - 10 . IT WAS POINTED OUT TO US BY THE LD AR THAT THIS EXERCISE OF RECOGNIZING THE SAID AMOUNT NEXT YEAR WAS DONE MUCH BEFORE THIS QUESTION WAS RAISED IN TH E YEAR UNDER APPEAL AND SO IT WAS NOT AN AFTERTHOUGHT . ASSESSMENT ORDER OF THE ASSESSEE REVE A LS THAT THE SAID INCOME WAS ALRE ADY OFFERED TO TAX IN A.Y. 2009 - 10 AND THIS HAS B EEN SO OFFERED IN THE RETURN FILED IN OCT OBER 2009 WHEREAS IMPUGNED ASSESSMENT HAS BEEN MADE ON 31.12.2010 T HIS ACCORDING TO THE LD AR IS STATED TO SHOW THE BONA - FIDE CONDUCT OF THE ASSESSEE . ACCORDING TO SHRI ASHWANI TANEJA THE HON'BLE DELHI HIGH COURT IN THE FOLLOWING CASES HAVE HELD THAT IF TAX RATES IN BOTH THE YEARS ARE SAME IT SHOULD NOT BE OF MUCH CONCERN AS TO WHETHER INCOME GETS TAXED IN ONE YEAR OR IN THE OTHER YEAR. CIT VS. VISHNU INDUSTRIAL GASES (P) LTD. IN ITR NO. 229/1988 DATED 06.05.2008 CIT VS. DINESH KUMAR GOEL (331 ITR 10 (DEL) CIT VS. EXCEL INDUSTRIES LTD. (2013) 38 TAXMANN. COM 100 (SC)/ 358 ITR 295 (SC) 8 . ON THE OTHER HAND THE LD DR RELIED ON THE ORDER OF THE LD CIT(A) AND AO. 9 . WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE RECORDS AND CASE LAWS CITED BY BOTH THE PARTIES . WE FIND THAT THE IMPUGNED ADDITION WAS MADE BY THE AO WHICH WAS CONFIRMED BY THE LD CIT(A) HAS BEEN BROUGHT TO TAX IN THE PAGE 4 OF 12 IMMEDIATE SUCCEEDING YEAR I.E. ASSESSMENT YEAR 2009 - 10 AND HONBLE SUPREME COURT IN EXCEL INDUSTRIES 358 ITR 295 (SC) HELD I N PARA 32 AS UNDER: - 32. THIRDLY THE REAL QUESTION CONCERNING US IS THE YEAR IN WHICH THE ASSESSEE IS REQUIRED TO PAY TAX. THERE IS NO DISPUTE THAT IN THE SUBSEQUENT ACCOUNTING YEAR THE ASSESSEE DID MAKE IMPORTS AND DID DERIVE BENEFITS UNDER THE ADVANCE LICENCE AND THE DUTY ENTITLEMENT PASS BOOK AND PAID TAX THEREON. THEREFORE IT IS NOT AS IF THE REVENUE HAS BEEN DEPRIVED OF ANY TAX. WE ARE TOLD THAT THE RATE OF TAX REMAINED THE SAME IN THE PRESENT ASSESSMENT YEAR AS WELL AS IN THE SUBSEQUENT ASSESSMENT YEAR. THEREFORE THE DISPUTE RAISED BY THE REVENUE IS ENTIRELY ACADEMIC OR AT BEST MAY HAVE A MINOR TAX EFFECT. THERE WAS THEREFORE NO NEED FOR THE REVENUE TO CONTINUE WITH THIS LITIGATION WHEN IT WAS QUITE CLEAR THAT NOT ONLY WAS IT FRUITLESS (ON MERIT S) BUT ALSO THAT IT MAY NOT HAVE ADDED ANYTHING MUCH TO THE PUBLIC COFFERS. 10. WE FIND THAT THE ASSESSEE COMPANY IS IN THE BUSINESS OF THE BUILDING CONTRACT WORK AND HAS FOLLOWED AS - 7 ACCOUNTING STANDARD WHILE FINALIZING ACCOUNT AS PER MERCANTILE SYSTEM . THE LD CIT(A) AND AO ERRED IN NOT TAKING NOTICE THE WORKING SUBMITTED BY THE ASSESSEE WHICH IS ENCLOSED IN PAGE 95 96 AND 221 OF THE PAPER BOOK WHEREIN THE ASSESSEE HAS SHOWN THE WORKING DEMONSTRATING THAT REVENUE EARNED FROM M/S UNIPRODUCT LTD HAS BEEN SHOWN IN THE ACCOUNTS ON THE PERCENTAGE COMPLETION METHOD. SO VIEWED FROM THIS ANG L E ALSO THE ACTION OF THE AUTHORITIES BELOW IS LEGALLY AND FACTUALLY UNTENABLE . SO WE FIND NO JUSTIFICATION TO MAKE THE ADDITION AND SO WE ALLOW THE SAID GROUND OF THE ASSESSEE AND DIRECT THE AO TO DELETE THE IMPUGNED ADDITION MADE ON THIS ACCOUNT. 11. GROUND NO.3 RELATES TO THE DISALLOWANCE OF RS.16 61 161/ - ON ACCOUNT OF THE PURCHASE MADE FROM M/S. AMIT STEEL ON THE GROUND THAT THE SAID PARTY WAS NOT TRACEABLE. 12 . AO INORDER T O VERIFY THE PURCHASE MADE BY THE ASSESSEE DURING THE YEAR SENT NOTICE U/S 133(6) TO SEVERAL PARTIES INCLUDING M/S DHARAM STEEL CALLING FOR COPIES OF ACCOUNT OF ASSESSEE IN THEIR BOOKS OF ACCOUNT. THE COPY OF ACCOUNTS RECEIVED FROM M/S DHARAM STEEL SHOWED DISCREPANCIES. THE PURCHASE AS SHOWN BY THE ASSESSEE FROM THE CONCERN ARE RS.38 59 019/ - WHEREAS AS PER THE PARTY IT HAS MADE SALES OF RS.21 91 993/ - ONLY. FURTHER AO NOTED THAT THERE WA S A DIFFER ENCE IN THE CREDIT BALANCE ALSO. THESE FACTS WERE CONFRONTED TO THE COUNSEL OF THE ASSESSEE VIDE ORDER SHEET ENTRY DATED 21.12.2010 AND HE WAS PAGE 5 OF 12 ASKED TO EXPLAIN AS TO WHY ADVERSE INFERENCE BE NOT DRAWN FROM THESE FACTS. A S THE APPELLANT FAILED TO PRODUCE IT S BOOKS OF ACCOUNTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NOTICES ISSUED BY THE AO TO VERIFY SUCH PURCHASES REMAINED UNCOMPLIED AND AS ALSO THERE WAS DIFFERENCE IN AMOUNT OF M / S DHARA M STEEL TRADERS THE ACCOUNT AS PER LEDGER OF M/S.DHARAM STEEL TRADERS COULD NOT BE RECONCILED BY THE ASSESSEE COMPANY AND THEREFORE DIFFERENCE OF RS.16 67 026/ - WAS ADDED TO THE INCOME OF THE ASSESSEE COMPANY AS UNEXPLAINED EXPENDITURE. 13 . AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) 14 . DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT FILED CONFIRMATION OF ACCOUNT OF THESE PARTIES. THE MATTER WAS REMANDED TO THE AO FOR COMMENTS. THEREIN IT WAS STATED BY THE AO IN HIS REMAND REPORT 'TO VERIFY THE GENUINENESS OF THE DOCUMENTS AND TRANSACTIONS AN INSPECTOR OF INCOME - TAX WAS DEPUTED TO MAKE LOCAL ENQUIRES AND TO CONFIRM THE TRANSACTIONS. HE HAS REPORTED AS UNDER: INSPECTOR REPORT I HEMMINLUN HAOKIP INSPECTOR OF INCOME - TAX NEW DELHI AS PER DIRECTION OF THE ITO WARD - 6(1) NEW DELHI IN THE CASE OF M/S MACRO NIRMAN (P) LTD. VISITED THE FOLLOWING PARTIES AT THE ADDRESSES. S.NO. NAME OF THE PARTV ADDRESS 1 M/S MULTICOLOR STEEL (INDIA) P LTD WHITE HOSUE 1118 - 20 RANI JHANSI ROAD NEW DELHI - 55 2 MLS SWASTIK MARBLES TRADERS KHASRA NO. 567 VILLAGE SA TBARI OPP. MALLU FARM CHATTARPUR MANDIR ROAD NEW DELHI - 30 3 SH. IS/AMUDDIN 71 HAZIPABAD CHANDAN HOLLA VILLAGE DELHI - 74 4 M/S DHARAM STEEL SEC. - 4A SHONA ROAD DHARUHERA DISTT. REWARI (H.R.) 5 M/S THAWAR STEEL TRADERS CIRCULAR ROAD REWARI - 123401 6 M/S NANDANI ROOFING SYSTEMS (P) LTD 0 - 31 MEERUT ROAD INDUSTRIAL AREA GHAZIABAD (U.P.) AMIT STEEL BHIWADI AND MI5 DHARAM STEEL DHERUHERE ARE OWNED BY THE SAME PARTY M/S AMD STEEL IS NOT PRESENTLY EXISTING NOW . ALL THE ABOVE SIX PARTIES EXIST AT THE ADDRESSES ABOVE. THEY HAVE CONFIRMED HAVING SOLD MATERIAL TO M/S MACRO NIRMAN PVT. LTD. COPIES OF PAGE 6 OF 12 LEDGER AND VISITING CARD OF THESE PARTIES ARE ENCLOSED HEREWITH THIS REPORT AND COPY OF PAN OF SH. 8AHADUR SINGH OF M/S THAWAR STEEL TRADERS AND COPY OF VOTER CARD ISSUED BY ELECTION COMMISSION IN RESPECT OF SH. ISL AMUDDIN IS ALSO ENCLOSED. 1 5 . THE LD. CIT(A) AFTER TAKING NOTE OF THE REMAND REPORT AS AFORESTATED HELD AS UNDER: - ON THE NEXT ISSUE IN THE REMAND REPORT IT WAS STATED AS REGARDS DIFFERENCE IN THE AMOUNT STATEMENT OF DHARAM STEEL THE STAND TAKEN BY THE ASSESSEE COMPANY IS THAT THE VENDOR HAD SUPPLIED MATERIAL UNDER TWO DIFFERENT ENTITIES DHARAM STEEL AND AMIT STEEL. THE DIFFERENCE WAS BECAUSE OF TRANSACTIONS WITH AMIT STEEL WERE INCLUDED BY THE ASSESSEE COMPANY IN THE LEDGER ACCOUNT OF DHARAM STEEL. HOWEVER NO DOCUMENTARY EVIDENCE COULD BE FILED BY THE ASSESSEE COMPANY TO SUBSTANTIATE ITS CLAIM. AS PER RE PORT OF THE INSPECTOR NO SUCH FIRM IS IN EXISTENCE NOW. NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE TWO FIRMS WERE INDEED OWNED BY THE SAME PERSON. IN THE APPELLATE PROCEEDINGS SUBMISSIONS WERE MADE THAT A BILL OF M/S AMIT OF RS. 16 61 161/ - WAS WRONGLY ACCOUNTED IN THE BOOKS OF M/S DHARAM STEEL. THAT IT WAS A CLERICAL ERROR. AS M/S AMIT IS NOW NOT IN EXISTENCE THE CLAIMS OF THE APPELLANT CANNOT BE VERIFIED. AS THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM WITH DOCUMENTARY EVIDENC ED THE SAME IS DISMISSED. THE ADDITION OFRS. 16 61 161 / - IS UPHELD . 16 . AGGRIEVED BY THE SAID ORDER OF THE LD. CIT(A) THE ASSESSEE IS BEFORE US. 17 . THE LD. AR SUBMITTED THAT THE CASE OF THE ASSESSEE IS THAT THE PURCHASE WAS MADE FROM M/S AMIT STEEL BUT WAS WRONGLY SHOWN IN THE ACCOUNT OF M/S DHARAM STEEL BECAUSE BOTH THE CONCERNS WERE OWNED BY THE SAME PERSON. BUT FACT OF THE MATTER IS THAT PURCHASE WAS M ADE FROM M/S AMIT STEEL. LD. AR TOOK OUR ATTENTION TOWARDS PAPER BOOK PAGE 25 - 26 WHICH ARE THE SUBMISSIONS BEFORE THE LD. CIT(A) SUBMITTING THAT BILL OF AMIT STEEL WAS WRONGLY ENTERED IN THE ACCOUNT OF M/S DHARAM STEEL AND THE ERROR WAS SO APPAR ENT WHICH WAS SOUGHT TO BE NOTED BY THE LD. CIT(A). ACCORDING TO THE LD. AR THE ASSESSEE WRONGLY ACCOUN TED FOR BILL NO. 2 DATED 3.12.2007 OF M/S AMIT STEELS OF RS. 16 61 161/ - IN THE ACCOUNT OF M/S DHARAM STEEL. IN MAY NOT BE OUT OF PLACE TO MENTION THAT ON 3.12.2007 M/S DHARAM STEEL WAS ISSUING INVOICE NO. 1367 WHICH WAS RECEIVED BY THE ASSESSEE WHEREAS INVOICE / CHALLAN NO OF AMIT STEEL IS 2 WHICH CLEARLY SUGGEST THAT THE INVOICE HAS WRONGLY BEEN ACCOUNTED OF [COPY OF INVOICE/CHALLAN I SSUED BY AMIT STEELS AND TOOK OUR ATTENTION TO THE PAGE 108 PAGE 7 OF 12 OF PB WHEREIN WE NOTE THAT IT IS A DELIVERY CHAL LAN IN TH E NAME OF AMIT STEEL ON 3.12.07 TO THE ASSESSEE FOR AN AMOUNT OF RS. 16 61 161/ - . LD. COUNSEL OF THE ASSESSEE ALSO SUBMITTED THAT M/S DHARAMA STEELS DID NOT ACCOUNT FOR BILL NO. 1378 DATED 24.12.2007 OF RS. 2 505/ - ISSUED BY THEM TO ASSESSEE IN THEIR BOOK S OF ACCOUNTS HOWEVER SAME HAS DULY BEEN RECORDED BY THE APPELLANT. LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE APPELLANT WHILE ACCOUNTING BILLS OF M/S DHARAM STEELS MADE CLERICAL ERRORS RESULTING THE DIFFERENCE OF RS. 3 360/ - DETAILS OF WHIC H IS AS UNDER: - S.NO. DATE BILL NO. INVOICE AMOUNT AMOUNT RECORDED AS PURCHASE DIFFERENCE IN RECORDING. 1 6.9.2007 1243 2 09 228 2 09 288 60 2 21.9.2007 1273 1 40 100 1 40 400 300 3 5.11.2007 1336 64 749 67 749 3 000 TOTAL 4 14 077 4 17 437 3 360 18 . LD. AR FURTHER STATED THAT SINCE THE DIFFERENCE IN ACCOUNT IS ONLY CLERICAL IN POSTING THE AMOUNT THEREFORE ADDITION MADE OF RS. 16 67 026 / - ON ACCOUNT OF DIFFERENCE IN ACCOUNT OF LEDGER OF M/S DHARAM STEELS IS LIABLE TO BE DELETED . LD. AR ALSO TOOK OUR ATTENTION TO THE PB PAGE 89 - 90 WHICH IS THE COPY OF THE DELIVERY CHALLAN OF M/S AMIT STEELS SHOWING THE PURCHASES FROM M/S AMIT STEELS. AND THEN PB PAGE 206 - 207 WHICH IS THE SUBMISSION IN RESPONSE TO REMAND REPORT SUBMITTING THAT THE ERROR HAS BEEN ACCEPTED BY THE AO IN THE REMAND REPORT. AND ALSO DRAW OUR ATTENTI ON TOWARDS THE COPY OF THE INSPECTOR REPORT (SUPRA) WHEREIN IN PARA 4 AO HIMSELF HAS REPRODUCED IN HIS REMAND REPORT THAT M/S AMIT STEEL AND M/S DHARAM STEEL ARE OWNED BY THE SAME PARTY. SO ACCORDING TO THE LD AR THE CLERICAL MISTAKE AS POINTED OUT ABOVE SHOULD NOT BE THE BASIS FOR THE IMPUGNED ADDITION AND PRAYED THAT IT MA Y BE DELETED. 19 . THE LD. DR RELIED ON THE AO AND THE LD. CIT(A) AND DOES NOT WANT TO INTERFERE IN THE ORDER. 20 . WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THROUGH THE RECORDS AND SUBMISSIONS MADE BY BOTH THE PARTIES. WE FIND THAT ASSESSEE HAS PURCH ASED STEEL FROM M/S AMIT STEEL BUT IT WAS WRONGLY SHOWN IN THE ACCOUNT OF M/S DHARAM STEEL BECAUSE BOTH THE CONCERNS BELONGED TO THE SAME PERSON. AND PAGE 8 OF 12 THE MISTAKE WAS CLERICAL IN NATURE. THE ASSESSEE HAS POINTED OUT THE MISTAKE WHICH HAS ARISEN AND ON PER USAL OF THE REMAND REPORT OF THE AO IN WHICH THE INSPECTORS REPORT WHEREIN THE INSPECTOR HAS CLEARLY MENTIONED THAT THE M/S AMIT STEEL AND DHARAM STEEL BELONGS TO ONE AND THE SAME PERSON AND THE MISTAKE MADE BY THE ASSESSEE ACCOUNTANT NEED NOT COME IN THE IR WAY TO SADDLE THE M WITH THE LIABILITY. THE EXPLANATION OF THE ASSESSEE HAS BEEN CORROB OR ATED BY EVIDENCE ON RECORD THEREFORE THERE IS NO JUSTIFICATION FOR IMPUGNED DISALLOWANCE. WE FIND FORCE IN THE CONTENTION OF THE ASSESSEES COUNSEL REGARDING THIS FACTUAL ASPECT AND THE LD. DR COULD NOT POINT OUT ANYTHING CONTRARY TO THE SAID FACT SO WE ARE INCLINED TO ALLOW THIS GROUND AND DIRECT THE AO TO DELETE THE ADDITION IN DISPUTE MADE ON THIS ACCOUNT. 21 . GROUND NO. 4 RELATES TO THE DISALLOWANCE OF THE SERVICE TAX PAYABLE AMOUNTING TO RS. 15 64 994/ - UNDER SECTION 43B OF THE ACT. 22 . THE AO HAS STATED IN HIS ASSESSMENT ORDER THAT FROM THE PERUSAL OF THE BALANCE SHEET AS ON 31.3.2008 THE ASSESSEE HAS SHOWN RS. 15 64 994/ - AS SERVICE TAX PAYABLE A ND RS. 3 04 284/ - AS SALES TAX PAYABLE. WHEN IT WAS ASKED BY THE AO TO EXPLAIN THE ASSESSEE REPLIED THAT THE SERVICE TAX WAS PAID ON 16.6.2009 AND 22.6.2009 AND HAS ALSO SUBMITTED THAT WE HEREBY SURRENDER THE AMOUNT OF SERVICE TAX OF RS. 11 76 203/ - FO R ADDITION DUE TO DEPOSIT OF THE SAME LATE. ACCORDING TO THE AO SINCE THE ASSESSEE HAS NOT INFORMED AS TO WHEN THE REMAINING AMOUNT WAS PAID / DEPOSITED HE DISALLOWED THE SAME. 23 . AGGRIEVED BY THE SAID ORDER THE ASSESSEE PREFERRED THE APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE SAID DISALLOWANCE MADE BY THE AO ON THE GROUND THAT SERVICE TAX DEDUCTION IS ALLOWABLE IN THE P&L ACCOUNT ONLY WHEN THE AMOUNT IS ACTUALLY PAID AS PER SECTION 43B OF THE ACT AND SINCE THE CLAIM OF THE ASSESSEE IS THAT IT HAS NOT CLAIMED ANY DEDUCTION ON ACCOUNT OF SERVICE TAX IS NOT BORNE OUT OF THE AUDIT REPORT OF THE ASSESSEE HE DID NOT ACCEPT THE SAID CONTENTION. 24 . AGGRIEVED BY THE SAID IMPUGNED ORDER THE ASSESSEE IS BEFORE US. 25 . LD. COUNSEL OF THE ASSESSEE S UBMITTED BEFORE US THAT IT IS PERTINENT TO NOTE THAT THE ASSESSEE DID NOT CLAIM ANY DEDUCTION ON ACCOUNT OF SERVICE TAX PAID PAGE 9 OF 12 NOR DID IT DEBIT THE AMOUNT AS AN EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT. SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT IN THE PROFIT AND LOSS ACCOUNT AS AN EXPENDITURE NOR DID THE ASSESSEE CLAIMED ANY DEDUCTION IN RESPECT OF THE AMOUNT WHICH IS SINE QUA NON FOR MAKING DISALLOWANCE U/S. 43B OF THE ACT THEREFORE THE DISALLOWANCE MADE BY THE AO IS AGAINST THE PROVISIONS OF LAW AN D IS LIABLE TO BE DELETED. LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT SECTION 29 OF THE ACT STIPULATES PROVISIONS FOR COMPUTING INCOME FROM PROFITS AND GAINS OF BUSINESS OR PROFESSION WHICH INTER ALIA READS: - THE INCOME REFERRED TO IN SECTION 28 SHALL BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 30 TO 43D. 26 . WHEREAS SECTION 43B STIPULATES THE PROVISION FOR DEDUCTION OF EXPENSE SPECIFIED UNDER THE SECTION ONLY ON ACTUAL PAYMENT THEREFORE CLAIMING OF DEDUCTION OF PARTICULAR EXPENSE IS PREREQUISITE CONDITION FOR INVOKING PROVISION OF SECTION 43B OF THE ACT. SINCE THE ASSESSEE HAS NOT CLAIMED ANY DEDUCTION ON ACCOUNT OF SERVICE T AX THEREFORE THE DISALLOWANCE U/S. 43B IS ERRONEOUS AND IS LIABLE TO BE DELETED. THE ASSESSEE IN SUPPORT OF CONTENTION RAISED IN RELYING UPON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE MATTER OF CIT VS. NOBLE & HEWITT (I) P. LTD. (2008) 305 ITR 324 (DELHI). 27 . ON THE CONTRARY THE LD. DR RELIED ON THE AO AND THE LD. CIT(A) AN D DOES NOT WANT TO INTERFERE IN THE ORDER. 28 . WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THROUGH THE RECORDS AND SUBMISSIONS MADE BY BOTH THE PARTIES. WE FIND FROM THE RECORDS THAT THE SERVICE TAX PAYABLE HAS NOT BEEN CLAIMED AS DEDUCTION IN THE P&L A CCOUNT. WE FURTHER FIND THAT ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING. SIMILAR CASE WAS DECIDED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE CIT VS. NOBLE & HEWITT (I) P. LTD. (2008) 305 ITR 3 24 (DELHI) (SUPRA) HAS HELD IN OUR OPINION SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE P&L ACCOUNT AS AN EXPENDITURE NOR DID THE ASSESSEE CLAIMED ANY DEDUCTION IN RESPECT OF THE AMOUNT AND CONSIDERING THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING THE QUESTION OF DISALLOWANCE OF DEDUCTION NOT CLAIMED COULD NOT ARISE. THE AFORESAID CASE IS SIMILAR TO THAT CASE IN HAND AND THEREFORE RATIO LAID PAGE 10 OF 12 DOWN IN THAT CASE IS SQUARELY APPLICABLE TO THE CASE IN HAND THEREFORE WE ALLOW THE CLAIM OF THE ASSESSEE. 29 . GROUND N O. 5 IT RELATES TO THE DISALLOWANCE OF RS. 69 320/ - UNDER SECTION 40(A)(IA) OF THE ACT. 30 . THE AO NOTICED THAT ASSESSEE HAS BOOKED SHUTTERING EXPENSES OF RS.18 0 3 690/ - . ON A QUERY BY THE AO HE FILED THE PARTY WISE DETAILS OF THE SHUTTERING EXPENSES. AFTER PERUSAL OF THE DETAILS FILED BY THE ASSESSEE THE AO NOTICED THAT NO TDS HAS BEEN DEDUCTED WHILE MAKING PAYMENTS SHUTTERING / HIRE CHARGES. SO THE ENTIRE AMOUNT WAS DISALLOWED BY THE AO U/S. 40(A)(IA) OF THE ACT. 31 . AGGRIEVED BY THE SAID O RDER THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND BEFORE HIM LD. AR CONTENDED THAT THE ASSESSEE PAID SHUTTERING/HIRE CHARGES OF RS.18 03 690/ OUT OF WHICH RS.69 320/ - WERE PAID TO THREE DIFFERENT PARTIES FOR WHOM NO TAX WAS LIABLE TO BE DEDUCT ED. THE LD. CIT(A) DID NOT AGREE TO THE SAID CONTENTION OF THE ASSESSEE BECAUSE IT H AS NOT CLARIFIED AND ELABORATED AS TO WHY RS.69 320/ - WAS NOT LIABLE FOR TAX DEDUCTION. THEREFORE HE CONFIRMED THE ACTION OF THE AO ON THIS ACCOUNT. 32 . AGGRIEVED BY THE SAID IMPUGNED ORDER THE ASSESSEE IS BEFORE US. 33 . LD. COUNSEL OF THE ASSESSEE SUBMITTED BEFORE US THAT IN RESPECT OF THE THREE PARTIES TO WHOM THE PAYMENT IS TO TUNE OF RS.69 320/ - PROVISION OF SECTION 194I IS NOT ATTRACTED AND THEREFORE DISALLOWANC E COULD NOT BE MADE UNDER SECTION 40(A)(IA) OF THE ACT. ACCORDING TO THE LD. AR DETAILS OF THE SHUTTERING / HIRE CHARGES WOULD SHOW THAT A SUM OF RS. 42 320/ - WAS PAID TO MR. ARJUN SINGH; RS. 12 000/ - TO MR. KRISHNA AND RS. 15 000/ - TO M/S NTS SCAFFOLDING AGGREGATING TO RS. 69 320/ - WERE PAID TO 3 PARTIES WHICH ACCORDING THE LD. AR IS LESS THAN THAT THE THRESHOLD LIMIT OF RS. 1 20 000/ - GIVEN IN SECTION 194I. SO THEREFORE THE LD. AR WANTED US TO DIRECT THE DI SALLOWANCE TO BE REDUCED BY RS. 69 320/ - . 34 . O N THE OTHER HAND THE LD. DR RELIED ON THE AO AND THE LD. CIT(A) AND DOES NOT WANT TO INTERFERE IN THE ORDER. PAGE 11 OF 12 35 . WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE THROUGH THE RECORDS AND SUBMISSIONS MADE BY BOTH THE PARTIES. WE FIND FROM THE PERUSAL OF PAGE NO. 91 OF THE PB THAT AMOUNT GIVEN TO ARJUN SINGH WAS 42 300 KRISHAN RS.12 000/ - AND NTS SCAFFOLDING RS. 15 00 0/ - WHICH TOTAL AMOUNTING TO RS.69 320/ - WHICH IS ADMITTEDLY LESS THAN THE THRESHOLD LIMIT OF RS. 1 20 000/ - G IVEN IN SECTION 194I OF THE ACT. HENCE WE FIND FORCE IN THE CONTENTI ON OF THE LD. AR IN THIS REGARD S O WE DIRECT THE DEDUCTION OF RS. 69 320/ - OUT OF RS.18 03 690/ - FROM THE DISALLOWANCE MADE UNDER SECTION 49(A)(IA) OF THE ACT. 36 . IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 . 04 . 2015 . - SD/ - - SD/ - ( J. S. REDDY ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 / 04 / 2015 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT NEW DELHI PAGE 12 OF 12 DATE 1. DRAFT DICTATED ON 25.04.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 25.04.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 27.04.2015 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 27.04.2015 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.