DCIT CIR - 8(1), MUMBAI v. M/s. ADVANCE CONSTRUCTION CO. PVT. LTD, MUMBAI

ITA 3761/MUM/2008 | 2005-2006
Pronouncement Date: 18-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 376119914 RSA 2008
Bench Mumbai
Appeal Number ITA 3761/MUM/2008
Duration Of Justice 1 year(s) 7 month(s) 19 day(s)
Appellant DCIT CIR - 8(1), MUMBAI
Respondent M/s. ADVANCE CONSTRUCTION CO. PVT. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-01-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted H
Tribunal Order Date 18-01-2010
Date Of Final Hearing 08-01-2010
Next Hearing Date 08-01-2010
Assessment Year 2005-2006
Appeal Filed On 29-05-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI BEFORE SHRI R.S.SYAL AM AND SMT.ASHA VIJAYARAGHAVAN JM ITA NO.6225/MUM/2007 : ASST.YEAR 2004-2005 M/S.ADVANCE CONSTRUCTION CO.PVT.LTD. 303 PUSHPAK 10 TH ROAD JVPD SCHEME MUMBAI 400 049. PA NO.AABCA0710B VS. THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 8(1) MUMBAI. (APPELLANT) (RESPONDENT) ITA NO.6686/MUM/2007 : ASST.YEAR 2004-2005 THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 8(1) MUMBAI. VS. M/S.ADVANCE CONSTRUCTION CO.PVT.LTD. 303 PUSHPAK 10 TH ROAD JVPD SCHEME MUMBAI 400 049. (APPELLANT) (RESPONDENT) ITA NO.3761/MUM/2008 : ASST.YEAR 2005-2006 THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 8(1) MUMBAI. VS. M/S.ADVANCE CONSTRUCTION CO.PVT.LTD. 303 PUSHPAK 10 TH ROAD JVPD SCHEME MUMBAI 400 049. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI S.K.PAHWA (CIT-DR) ASSESSEE BY : SHRI MILIN MEHTA O R D E R PER R.S.SYAL AM : OUT OF THESE THREE APPEALS TWO ARE CROSS APPEALS ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE FOR THE ASSESSMENT YEAR 20 04-2005. THE THIRD APPEAL BY THE REVENUE IS IN RELATION TO THE ASSESSMENT YEAR 2 005-2006. SINCE SOME COMMON ISSUES ARE RAISED IN THESE APPEALS WE ARE THEREFO RE PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIE NCE. ASSESSMENT YEAR 2004-2005 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE WAS ENGAGED IN THE CONSTRUCTION WORK. IT CLAIMED DEDUCTION OF RS.6 42 52 260 U/S.80-IB(10) OF THE ACT BY CLAIMING ITSELF TO BE THE DEVELOPER OF THE HOUSI NG PROJECT. THE ASSESSING OFFICER ITA NOS.6225 & 6686/M/07 & 3761/M/08 M/S.ADVANCE CONSTRUCTION CO. PVT. LTD. 2 OBSERVED THAT THE ASSESSEE WAS NOT A DEVELOPER OF T HE PROJECT BUT THE DEVELOPER OF WAS MUMBAI METROPOLITAN REGIONAL DEVELOPMENT AUTHOR ITY (MMRDA) AND THE SUB-DEVELOPER OF THE PROJECT WAS M/S.VIDEOCON ATITH I SHELTER PRIVATE LIMITED WHO HAD GIVEN THE WORK TO THE ASSESSEE ON CONTRACT BASI S. THE ASSESSING OFFICER AFTER CONSIDERING THE ASSESSEES REASONS IN SUPPORT OF TH E DEDUCTION CAME TO THE CONCLUSION THAT IT WAS NOT ELIGIBLE FOR DEDUCTION U /S.80-IB(10) AS IT WAS NOT A DEVELOPER. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE ASSESSEE ALSO RAISED AN ALTERNATIVE CLAIM THAT IT MAY BE GRANTED DEDUCTION U/S. 80IA(4). THIS CLAIM ALSO CAME TO BE NEGATIVED BY THE ASSESSING OFFICER ON TH E GROUND THAT THE ASSESSEE WAS NOT A DEVELOPER OF THE INFRASTRUCTURE PROJECT BUT M ERELY A CONTRACTOR. RESULTANTLY THE CLAIM OF DEDUCTION U/S.80-IB AMOUNTING TO RS.6.42 C RORES WAS REJECTED. THE ASSESSEE AGITATED THE MATTER BEFORE THE LEARNED CIT (A) CLAIMING THAT THE DEDUCTION BE ALLOWED U/S.80-IA(4) AND IN THE ALTERNATIVE U/S .80-IB(10). THE LEARNED CIT(A) VIDE PAGE 5 OF THE IMPUGNED ORDER DECLINED TO ENTER TAIN THE ASSESSEES CLAIM U/S.80- IA(4) WITH THE FOLLOWING REMARKS:- THE ISSUE HAS BEEN CAREFULLY EXAMINED. THE GROUND REGARDING THE CLAIM OF DEDUCTION U/S.80-IA(4) CANNOT BE ACCEPTED. SECTION 80-IA(4) HAS UNDERGONE AMENDMENT WHICH CLEARLY BRINGS OUT FR OM ITS AMBIT THE CASE OF THE APPELLANT. THIS PLEA OF THE APPELLANT THEREFORE FAILS. 3. THEN HE WENT ON TO CONSIDER THE ASSESSEES CLAIM U/S.80-IB(10) AND CAME TO THE CONCLUSION THAT THE ASSESSEE WAS ELIGIBLE FOR D EDUCTION U/S.80-IB(10). THE REVENUE IS IN APPEAL AGAINST THE ALLOWING OF DEDUCT ION U/S.80-IB(10) AND THE ASSESSEE IN CROSS APPEAL HAS ASSAILED THE DENIA L OF DEDUCTION U/S.80-IA(4). 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THERE IS ONLY ONE DISPU TED AMOUNT OF DEDUCTION TO THE TUNE OF RS.6.42 CRORES U/S.80-IB(10) AND IN THE ALT ERNATIVE U/S 80-IA(4). THERE WAS ONLY ONE PROJECT IN RESPECT OF WHICH THE ASSESSEE M ADE THE ALTERNATIVE CLAIMS UNDER THESE TWO SECTIONS. IT WAS FAIRLY CONCEDED BY THE L EARNED A.R. THAT THE ASSESSEE WAS ITA NOS.6225 & 6686/M/07 & 3761/M/08 M/S.ADVANCE CONSTRUCTION CO. PVT. LTD. 3 ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION ON BE HALF OF THE DEVELOPER AND WAS NOT DEVELOPER IN HIS OWN CAPACITY. RECENTLY THE THR EE MEMBER BENCH OF THE TRIBUNAL IN M/S . B.T.PATIL & SONS BELGAUM CONSTRUCTION PRIVATE LIMIT ED VS. ACIT HAS DEALT WITH SIMILAR ISSUE IN THE CONTEXT OF SECT ION 80-IA(4) BY HOLDING VIDE ITS ORDER DATED 26 TH OCTOBER 2009 THAT DEDUCTION U/S.80-IA(4) IS NOT A VAILABLE TO CONTRACTOR BUT ONLY TO THE DEVELOPER. SINCE THE FAC TS OF THE INSTANT CASE ARE MUTANTIS MUTANDIS SIMILAR TO THOSE CONSIDERED BY THE LARGER BENCH OF THE TRIBUNAL AT MUMBAI WE ARE OF THE CONSIDERED OPINION THAT THE C LAIM OF THE ASSESSEE FOR DEDUCTION U/S.80-IA(4) CANNOT BE ACCEPTED AS THE A SSESSEE IS ADMITTEDLY NOT A DEVELOPER BUT CONTRACTOR. 5. THE LEARNED CIT(A) HAS GRANTED DEDUCTION TO THE ASSESSEE U/S.80-IB(10) WHICH IN TURN IS PERMISSIBLE TO AN UNDERTAKING D EVELOPING AND BUILDING HOUSING PROJECTS APPROVED BEFORE THE SPECIFIED DATE BY A LO CAL AUTHORITY. THE ESSENTIAL CONDITION OF DEVELOPING AND BUILDING HOUSING PROJEC T IS MATERIALLY SIMILAR TO THAT OF SECTION 80-IA(4). THE LEARNED A.R. CANDIDLY ACCEPT ED THAT IN THE ABSENCE OF THE ASSESSEE BEING A DEVELOPER OF HOUSING PROJECT IN IT S OWN CAPACITY IS NOT ENTITLED TO DEDUCTION U/S.80-IB(10) IN THE LIGHT OF THE DECISIO N OF THE LARGER BENCH OF THE TRIBUNAL IN M/S.B.T.PATIL & SONS BELGAUM CONSTRUCT ION PRIVATE LIMITED (SUPRA). IN OUR CONSIDERED OPINION THE ASSESSEE IN ORDER TO BE ELIGIBLE FOR DEDUCTION U/S.80- IB(10) SHOULD BE DEVELOPER OF THE HOUSING PROJECT A ND NOT MERE A CIVIL CONTRACTOR DOING THE WORK ON BEHALF OF SOME OTHER DEVELOPER. R ESPECTFULLY FOLLOWING THE LARGER BENCH DECISION OF THE MUMBAI TRIBUNAL WE HO LD THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN GRANTING DEDUCTION U/S.80-IB(1 0). HIS VIEW ON THIS ISSUE IS THEREFORE OVERTURNED. THE SUM AND SUBSTANCE OF OUR CONCLUSION IS THAT THE ASSESSEE IS NOT ELIGIBLE TO DEDUCTION OF RS.6.42 LAKHS EITHE R U/S.80-IA(4) OR U/S.80-IB(10). THE GROUND RAISED BY THE ASSESSEE IS DISMISSED AND THAT OF THE REVENUE IS ALLOWED. ITA NOS.6225 & 6686/M/07 & 3761/M/08 M/S.ADVANCE CONSTRUCTION CO. PVT. LTD. 4 6. THE ONLY OTHER GROUND WHICH SURVIVES FOR OUR CON SIDERATION IS AGAINST THE CONFIRMATION OF ADDITION OF RS.5 00 000 OUT OF LABO UR EXPENSES. THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE CLAIMED A SUM OF RS.3. 51 CRORES ON ACCOUNT OF LABOUR CHARGES. DURING THE COURSE OF SURVEY ACTION U/S.133 A CONDUCTED ON THE ASSESSEE IT WAS GATHERED THAT THE EXPENSES ON ACCOUNT OF LABOUR CHARGES WERE NOT PROPERLY VERIFIABLE. THE RELEVANT EXTRACT OF THE STATEMENT O F SHRI B.S.HAMPANAGOUDAR FROM THE SIDE OF THE ASSESSEE HAS BEEN REPRODUCED IN P ARA 7.1 OF THE ASSESSMENT ORDER IN WHICH IT WAS ADMITTED THAT SOME OF THE BILLS FOR LABOUR CHARGES WERE NOT PROPERLY VERIFIABLE. DURING THE COURSE OF ASSESSMENT PROCEED INGS THE ASSESSEE SUBMITTED THAT ALL THE PERSONS TO WHOM THE LABOUR CHARGES PAID WER E GENUINE. SINCE THE LABOURERS WERE ILLITERATE THEY DID NOT ALWAYS FURNISH BILLS. CONSIDERING THE TOTALITY OF THE FACTS THE ASSESSING OFFICER CAME TO THE CONCLUSION THAT M ANY PAYMENTS WERE NOT SUPPORTED BY PROPER THIRD PARTY DOCUMENTARY EVIDENC E. HE THEREFORE MADE DISALLOWANCE OF RS.5 LAKHS OUT OF THE LABOUR PAYMEN TS WHICH ADDITION CAME TO BE UPHELD IN THE FIRST APPEAL. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS OBSERVED THAT OUT OF THE TOTAL LABOUR PAYMENTS OF RS.3.51 CRORES THE ASSESSING OFFICER HAS MADE A MEAGER ADDITION OF RS. 5 LAKHS ON ACCOUNT OF THE FACT THAT SOME OF THE LABOUR CHARGES WERE NOT PROPERLY V ERIFIABLE. THIS VIEW POINT OF THE ASSESSING OFFICER THAT THE EXPENSES WERE NOT FULLY VERIFIABLE HAS REMAINED UNCONTROVERTED BEFORE US. UNDER SUCH CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT NO INFIRMITY CAN BE FOUND IN SUSTAININ G THIS ADDITION. THIS GROUND IS NOT ALLOWED. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DIS MISSED AND THAT OF THE REVENUE IS ALLOWED. ITA NOS.6225 & 6686/M/07 & 3761/M/08 M/S.ADVANCE CONSTRUCTION CO. PVT. LTD. 5 ASSESSMENT YEAR 2005-2006 9. THE FIRST GROUND RAISED BY THE REVENUE IN ITS AP PEAL IS AGAINST THE ALLOWING OF DEDUCTION U/S.80-IA. BOTH THE SIDES ARE IN AGREE MENT THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF ASSESSMENT YEAR 2004-205. FOLLOWING THE VIEW TAKEN HEREINABOVE WE HOLD THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE CLAIM OF D EDUCTION U/S.80-IA. WE THEREFORE ALLOW THIS GROUND OF APPEAL. 10. THE ONLY OTHER GROUND IS AGAINST THE DELETION O F ADDITION OF RS.1 23 117 ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF AND ESIC WH ICH WAS PAID AFTER THE DUE DATE BUT WITHIN THE GRACE PERIOD. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED D.R. HAS FAIRLY CONCEDED THAT T HE AMOUNT WAS DEPOSITED BY THE ASSESSEE WITHIN THE PRESCRIBED GRACE PERIOD OF 5 DA YS. IN OUR CONSIDERED OPINION THE LEARNED CIT(A) WAS JUSTIFIED IN ORDERING FOR TH E DELETION OF THIS DISALLOWANCE IN THE LIGHT OF THE JUDGEMENT RENDERED BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. SHRI GANAPATHY MILLS COMPANY LIMITED [(2000 ) 243 ITR 879 (MAD.)] . 12. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 18 TH DAY OF JANUARY 2010. SD/- SD/- (ASHA VIJAYARAGHAVAN) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI : 18 TH JANUARY 2010. DEVDAS* ITA NOS.6225 & 6686/M/07 & 3761/M/08 M/S.ADVANCE CONSTRUCTION CO. PVT. LTD. 6 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - VIII MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI. ITA NOS.6225 & 6686/M/07 & 3761/M/08 M/S.ADVANCE CONSTRUCTION CO. PVT. LTD. 7 DATE INITIAL 1. DRAFT DICTATED ON 08.01.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 13.01.2010 SR.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 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER.