M/s Biora Infrastructure Pvt. Ltd., Indore v. The ITO, Indore

PAGE 1 OF 7 -I.T.A.NO. 295./IND/2009 BIORA INFRASTRUCTURE PRIVATE LIMITED INDORE. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : AABCB7682 I.T.A.NO. 295/IND/2009 A.Y. : 2004-05 M/S. BIORA INFRASTRUCTURE PT.LTD. INCOME-TAX OFFICER 16 RACE COURSE ROAD VS 5(2) INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI C.P.RAWKA C.A. RESPONDENT BY : SMT.APARNA KARAN SR. DR DATE OF HEARING : 11.05.2010 O R D E R PER V.K. GUPTA A.M. THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF ORD ER OF THE LD. CIT(A)-II INDORE DATED 18.03.2009 FOR THE ASSESS MENT YEAR 2004-05. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. GROUND NO.1 READS AS UNDER :- THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OF FICER ON ACCOUNT OF INTEREST TO M/S. SHREE CONSTRUCTION C O. (UNIT PAGE 2 OF 7 -I.T.A.NO. 295./IND/2009 BIORA INFRASTRUCTURE PRIVATE LIMITED INDORE. OF BIORA CONSTRUCTION PVT.LTD. OF RS. 4853/- WITHOU T CONSIDERING FULL FACTS AND FACTUAL POSITION. THE DISALLOWANCE MADE AND CONFIRMED BY LD. CIT(A) THEREFORE IS TOTALLY WRONG AND ILLEGAL ON THE FACTS OF THE CASE. 4. THE FACTS IN BRIEF ARE THAT THE IMPUGNED DISALLOW ANCE WAS MADE BY THE ASSESSING OFFICER FOR THE REASONS THAT THE FUNDS BORROWED FROM M/S. SHREE CONSTRUCTION COMPANY HAD NOT BEEN U TILIZED FOR BUSINESS PURPOSES. THE LD. CIT(A) ALSO CONFIRMED TH E SAME. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE US. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THA T THE COPY OF THE BALANCE SHEET WHICH HAD BEEN PRODUCED BEFORE TH E REVENUE AUTHORITIES AND WHEREIN ONLY BUSINESS PURPOSE INVES TMENTS WERE REFLECTED AND THE REVENUE AUTHORITIES HAD ALSO NOT BROUGHT ANY SPECIFIC MATERIAL ON RECORD TO SHOW THAT FUNDS SO BORROWED H AD BEEN UTILIZED FOR NON-BUSINESS PURPOSES. HENCE SUCH DISALLOWANCE WAS NOT WARRANTED. THE LD. SR. DR ON THE OTHER HAND PREFERRED TO RELY O N THE ORDER OF THE LD. CIT(A). 6. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 7. IT IS NOTED THAT BOTH THE REVENUE AUTHORITIES HAVE DISALLOWED THE IMPUGNED SUM AS INCURRED FOR NON-BUSINESS PURPO SES. HOWEVER IT IS PAGE 3 OF 7 -I.T.A.NO. 295./IND/2009 BIORA INFRASTRUCTURE PRIVATE LIMITED INDORE. APPARENT FROM THE FINANCIAL STATEMENT SUBMITTED BEF ORE THE REVENUE AUTHORITIES THAT THE ASSESSEE HAS NOT INVESTED BEFO RE SUCH FUNDS IN ANY NON-BUSINESS ACTIVITIES. EVEN THE REVENUE AUTHORITI ES HAVE SIMPLY DISALLOWED THE SAME WITHOUT BRINGING ANY MATERIAL O N RECORD TO SHOW THAT SUCH FUNDS WERE ACTUALLY UTILIZED FOR NON-BUSINESS PURPOSES. THUS THE IMPUGNED DISALLOWANCE IS NOT JUSTIFIED. ACCORDINGLY THE SAME IS DELETED. 8. GROUND NO.2 READS :- THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R ON ACCOUNT OF DIFFERENCE INCLOSING STOCK VALUATION OF RS. 27 000/- WITHOUT CONSIDERING FULL FACTS AND WITHOUT ANY BASIS. THE ADDITION MADE AND CONFIRMED BY THE LD. C IT(A) THEREFORE IS TOTALLY WRONG AND ILLEGAL ON THE FACT S OF THE CASE. 9. THE ASSESSEE DISCLOSED CLOSING STOCK AT RS. 1 77 00 0/-. THE AO REQUIRED THE ASSESSEE TO SUBMIT THE DETAILS OF ITEM -WISE INVENTORY AND VALUATION METHODOLOGY WHICH WAS NOT SUBMITTED AS T HE ASSESSEE WAS NOT MAINTAINING QUANTITATIVE RECORDS. ACCORDINGLY THE AO ADDED A SUM OF RS. 27 000/- TO THE VALUATION OF CLOSING STOCK ON A D HOC BASIS. 10. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO ALSO CONFIRMED THE ACTION OF THE AO . SINCE THE ASSESSEE PAGE 4 OF 7 -I.T.A.NO. 295./IND/2009 BIORA INFRASTRUCTURE PRIVATE LIMITED INDORE. FAILED TO JUSTIFY THE VALUATION OF CLOSING STOCK DE CLARED BY THE ASSESSEE. STILL AGGRIEVED THE ASSESSEE IS BEFORE US. 11. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED T HE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES. HO WEVER NO DETAILS WERE SUBMITTED AS REGARD TO METHOD OF VALUATION ADO PTED BY THE ASSESSEE AND NATURE OF ITEMS HELD BY THE ASSESSEE AS CLOSING STOCK. IN THE ABSENCE OF SUCH DETAILS IN OUR OPINION NO INTERFERENCE IS REQUIRED IN THE ORDER OF THE LD. CIT(A). THUS THIS GROUND OF THE ASSESSEE I S DISMISSED. 12. GROUND NO. 3 READS AS UNDER :- THAT THE LD. CIT(A) ERRED IN LAW AND FACTS OF THE CASE AND CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OF FICER ON ACCOUNT OF METAL EXPENSES OF RS. 1 10 180/- WITH OUT CONSIDERING FULL FACTS AND FACTUAL POSITION. THE DI SALLOWANCE MADE AND CONFIRMED BY LD. CIT(A) THEREFORE IS TOTAL LY WRONG AND ILLEGAL ON THE FACTS OF THE CASE. 13. THE AO REQUIRED THE ASSESSEE TO ESTABLISH ITS CLA IM FOR DEDUCTION OF METAL EXPENSES OF RS.14 24 800/-. THE AO TEST CHECKED THE DOCUMENTS MAINTAINED BY THE ASSESSEE IN RESPECT OF SUCH EXPENSES WHICH REVEALED THAT VOUCHERS FOR 9 TRANSACTIONS AGGREGATE D TO RS.1 10 180/- WERE NOT AVAILABLE. HENCE THE AO DISALLOWED THE SA ME. PAGE 5 OF 7 -I.T.A.NO. 295./IND/2009 BIORA INFRASTRUCTURE PRIVATE LIMITED INDORE. 14. AGGRIEVED BY THIS THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO ALSO CONFIRMED THE ACTION OF AO AS NO SUPPORTING DOCUMENTS WERE PRODUCED. THE LD. CIT(A) ALSO REJECT ED THE CLAIM OF THE ASSESSEE THAT PAYMENT OF RS. 15 000/- HAD ALREADY B EEN INCLUDED IN THE PURCHASE OF RS. 40 355/- FOR WANT OF VERIFICATION. 15. AGGRIEVED BY THIS THE ASSESSEE IS IN APPEAL BEFORE US. 16. THE LEARNED COUNSEL NARRATED THE FACTS REITERATED THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES BE SIDES MAKING AN ALTERNATE CLAIM THAT SUM OF RS. 15 000/- PAID TO M/ S. JAGDEESH STONE CRUSHERS OUT OF GITTI PURCHASED FROM HIM TO THE TUN E OF RS. 40 355/- WAS NOT AN EXPENDITURE AND PRODUCED COPY OF ACCOUNT OF GITTI PURCHASES AS WELL AS OF THE SUPPLIER TO JUSTIFY ITS CLAIM. THE L EARNED COUNSEL ALSO SUBMITTED THAT THE CLAIM OF RS. 40 355/- WAS ALSO N OT TO BE DISALLOWED AS IT WAS THE CASE OF PURCHASE OF METAL FROM REGULAR S UPPLIER AND THUS THIS FACT COULD HAVE BEEN CONFIRMED BY THE SAID SUPPLIER ALSO. 17. THE LD. SR.DR ON THE OTHER HAND PREFERRED TO REL Y ON THE ORDER OF THE LD. CIT(A). 18. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 19. IT IS NOTED THAT THE ASSESSEE IS A CONTRACTOR ENGAG ED IN CIVIL WORKS. THE AO HAS MADE IMPUGNED DISALLOWANCE FOR WA NT OF PAGE 6 OF 7 -I.T.A.NO. 295./IND/2009 BIORA INFRASTRUCTURE PRIVATE LIMITED INDORE. VERIFICATION. HOWEVER THE PAYMENT OF RS. 15 000/- IS AGAINST THE EXPENDITURE OF RS. 40 355/- AND HAS BEEN DEBITED IN THE ACCOUNT OF THE SUPPLIER WHEREAS THE TOTAL EXPENDITURE HAS BEEN DE BITED IN THE METAL EXPENSES ACCOUNT. HENCE TO THIS EXTENT THE ASSESS EES CLAIM IS CORRECT. ACCORDINGLY WE DELETE THE DISALLOWANCE OF RS. 15 0 00/-. AS REGARD TO THE OTHER CLAIMS OF THE ASSESSEE WE FIND THAT NO EVIDE NCES HAVE BEEN BROUGHT ON RECORD INCLUDING CONFIRMATION OF M/S. JAGDEESH S TONE CRUSHERS OR COPY OF ACCOUNT OF THE ASSESSEE IN HIS BOOKS. HENCE IN THESE CIRCUMSTANCES WE CONFIRM THE FINDINGS OF THE LD. C IT(A) IN THIS REGARD. THUS THIS GROUND OF THE ASSESSEE STANDS PARTLY ALL OWED. 20. GROUND NO. 4 READS AS UNDER :- THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS OF T HE CASE AND CONFIRMED THE DISALLOWANCE MADE BY AO ON ACCOUN T OF LABOUR & WAGES OF RS.19 812/- WITHOUT CONSIDERING F ULL FACTS AND FACTUAL POSITION. THE DISALLOWANCE MADE AND CONFIRMED BY LD. CIT(A) THEREFORE IS TOTALLY WRONG AND ILLEGAL ON THE FACTS OF THE CASE. 21. THE IMPUGNED EXPENSES HAVE BEEN DISALLOWED FOR WANT OF DETAILS AS REGARD TO NATURE OF WORK DONE ATTENDANC E POSITION PLACE AND SITE OF WORK AND IN THE COURSE OF HEARING BEFORE US ALSO THE ASSESSEE HAS PAGE 7 OF 7 -I.T.A.NO. 295./IND/2009 BIORA INFRASTRUCTURE PRIVATE LIMITED INDORE. NOT BEEN ABLE TO SUBMIT THESE DETAILS. HENCE IN OU R OPINION THE AD HOC DISALLOWANCE @ 5% OF TOTAL LABOUR CHARGES OF RS. 3 91 230/- CANNOT BE HELD AS UNREASONABLE. ACCORDINGLY WE CONFIRM THE IMPUGNED DISALLOWANCE. THUS THIS GROUND OF THE ASSESSEE IS ALSO DISMISSED. 22. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE STA NDS PARTLY ALLOWED. 23. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 24 TH MAY 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24 TH MAY 2010. CPU* 11135