ITO, Sonepat v. M/s. Jai Shiv Shakti Enterprises, Sonepat

ITA 4304/DEL/2009 | 2006-2007
Pronouncement Date: 11-01-2010 | Result: Dismissed

Appeal Details

RSA Number 430420114 RSA 2009
Bench Delhi
Appeal Number ITA 4304/DEL/2009
Duration Of Justice 2 month(s)
Appellant ITO, Sonepat
Respondent M/s. Jai Shiv Shakti Enterprises, Sonepat
Appeal Type Income Tax Appeal
Pronouncement Date 11-01-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 11-01-2010
Date Of Final Hearing 11-01-2010
Next Hearing Date 11-01-2010
Assessment Year 2006-2007
Appeal Filed On 10-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D : NEW DELHI BEFORE SHRI D.R.SINGH JM AND SHRI R.C.SHARMA AM ITA NO.4304/DEL/2009 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER WARD-3 SONEPAT. VS. M/S JAI SHIV SHAKTI ENTERPRISES 106 SECTOR-14 SONEPAT. PAN NO.AAEFJ9923F. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B.K.GUPTA SR.DR. RESPONDENT BY : SHRI GAUTAM JAIN CA. ORDER PER R.C.SHARMA AM : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) DATED 10.9.2009 FOR AY 2006-07 IN THE MATTER OF ORDER PA SSED U/S 143(3) OF THE IT ACT. 2. THE ONLY GRIEVANCE OF THE REVENUE RELATES TO DEL ETION OF DISALLOWANCE OF RS.16 LAKHS ON ACCOUNT OF INFRINGEMENT OF LAW. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PER USED. FACTS IN BRIEF ARE THAT ASSESSEE FIRM HAS TAKEN A CONTRACT FROM HARYAN A STATE ROADS & BRIDGES DEVELOPMENT CORPORATION LTD. (IN SHORT HSRB) FOR CO NSTRUCTING A TOLL PLAZA AT SOHNA ROAD FOR LEVY OF TOLL. THE TOLL PLAZA WAS TO BE CONSTRUCTED AS PER THE SITE PLAN AND DRAWINGS SUPPLIED BY HSRB. THE ASSESSEE H AS DEPOSITED RS.20 LAKHS AS A SECURITY DEPOSIT WITH HSRB. HOWEVER DUE TO OBJE CTION BY THE FOREST DEPARTMENT AND OTHER HURDLES THE TOLL PLAZA COULD NOT BE CONSTRUCTED AND AS PER THE TERMS OF THE AGREEMENT ESTIMATED COST OF CONST RUCTION OF TOLL PLAZA AMOUNTING TO RS.16 LAKHS WAS DEDUCTED OUT OF THE SECURITY DEP OSITED. THE AO FOUND THAT AMOUNT WAS DEDUCTED FOR NOT FULFILLING THE TERMS OF THE AGREEMENT WHICH AMOUNTS TO VIOLATION OF LAW ACCORDINGLY SAME WAS DISALLOWE D BY INVOKING PROVISIONS OF ITA-4304/D/2009 2 EXPLANATION TO SECTION 37. BY THE IMPUGNED ORDER THE CIT(A) DELETED THE SAME BY OBSERVING THAT DEDUCTION OUT OF THE SECURITY PAY MENT WAS ON ACCOUNT OF NON- PERFORMANCE OF CONTRACTUAL OBLIGATION ON THE PART O F THE ASSESSEE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) INSOFAR AS A S PER THE CONDITION NO.20 OF THE AGREEMENT WHICH WAS REPRODUCED BY THE CIT(A) AT PAG E 3 OF THE APPELLATE ORDER THE AMOUNT OF RS.16 LAKHS WAS DEDUCTED BY HSRB FOR CONSTRUCTING THE TOLL PLAZA WHICH OTHERWISE WAS THE DUTY OF THE ASSESSEE. THUS THERE WAS NO INFRINGEMENT OF ANY LAW OF THE LAND AND THE AMOUNT WAS PAID AS PER THE AGREEMENT BETWEEN THE TWO PARTIES. HON'BLE SUPREME COURT IN THE CASE OF AHME DABAD COTTON MFG.CO.LTD. 205 ITR 163 HAS HELD THAT WHERE THE PAYMENT HAS BEE N MADE BY THE ASSESSEE IN EXERCISE OF THE OPTION CONFERRED UPON HIM UNDER THE VERY LAW OF THE SCHEME CONCERNED THE AO HAS TO REGARD SUCH PAYMENT AS BUS INESS EXPENSES OF THE ASSESSEE WHICH IS TO BE ALLOWED U/S 37 OF THE IT AC T. RESPECTFULLY APPLYING THE PROPOSITION OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT WE DO NOT FIND ANY MERIT IN THE OBSERVATION OF THE AO TO THE EFFECT TH AT PAYMENT WAS ON ACCOUNT OF INFRINGEMENT OF LAW ON THE CONTRARY THE PAYMENT WA S FOR NON-PERFORMANCE OF CONTRACTUAL OBLIGATION WHICH CANNOT BE DISALLOWED U NDER EXPLANATION TO SECTION 37(1) OF THE IT ACT. WE THEREFORE AGREE WITH THE L EARNED AR THAT IN TERMS OF FINDINGS RECORDED BY THE CIT(A) THE EXPENDITURE SO INCURRED IS TO BE ALLOWED U/S 37 OF THE IT ACT. 4. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY 2010. SD/- SD/- (D.R.SINGH) (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 11.01.2010. VK. ITA-4304/D/2009 3 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT DEPUTY REGISTRAR