The ACIT, Circle-4,, Baroda v. M/s. Mascon Multiservices Pvt.Ltd.,, Baroda

ITA 733/AHD/2009 | 2005-2006
Pronouncement Date: 15-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 73320514 RSA 2009
Assessee PAN AABCM2827R
Bench Ahmedabad
Appeal Number ITA 733/AHD/2009
Duration Of Justice 2 year(s) 4 month(s) 11 day(s)
Appellant The ACIT, Circle-4,, Baroda
Respondent M/s. Mascon Multiservices Pvt.Ltd.,, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 15-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 08-05-2009
Date Of Final Hearing 07-07-2011
Next Hearing Date 07-07-2011
Assessment Year 2005-2006
Appeal Filed On 05-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI MUKUL SHRAWAT JUDICIAL MEMBER AND SHRI A. K. GARODIA ACCOUNTANT MEMBER I.T.A. NO. 733/ AHD/2009 (ASSESSMENT YEAR 2005-06) ACIT CIRCLE 4 BARODA VS. M/S. MASCON MULTISERVICES PVT. LTD. 7 TH FLOOR GALAV CHAMBERS SAYAJIGANJ BARODA PAN/GIR NO. : AABCM2827R (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI B L YADAV SR. DR RESPONDENT BY: SMT. URVASHI SHODHAN AR O R D E R PER SHRI A. K. GARODIA AM:- THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AGAIN ST THE ORDER OF LD. CIT(A) III BARODA DATED 18.12.2008 FOR THE ASSESSM ENT YEAR 2005-06. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ISSUING THE DIRECTION TO THE A. O. TO ALLOW EXPENDITURE UNDER THE HEAD PRIOR PERIOD EXPENSES FO R THE ASSESSMENT YEAR 2004-05 OF RS.16 24 750/- OVERLOOKING THE FACT THAT THE APPEAL PERTAINS TO THE ASSESSMENT YEAR 2005-06 AND THE CIT (A) HA TRAVELED BEYOND HIS JURISDICTION. 2. THE BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE A.O. IN PARA 3.4 OF THE ASSESSMENT ORDER THAT FROM THE DETAILS FURNISHE D IT WAS SEEN THAT FOR EPIC JOB THE TOTAL EXPENDITURE DEBITED DURING THE PRESENT YEAR WAS RS.29 01 336/- AND THE INCOME DECLARED DURING THE P RESENT YEAR IS ONLY I.T.A.NO. /AHD/200 2 RS.12 99 840/- AND HENCE THE RESULT IN THE PRESENT YEAR IS A LOSS OF RS.16 01 498/-. THE A.O. ASKED THE ASSESSEE TO EXP LAIN THIS POSITION AND IN REPLY IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT ASSESSEE CARRIED OUT THE WORK RELATING TO PREPARATION OF PHOTO IDENT ITY CARDS FOR ELECTION WORK. IT WAS ALSO SUBMITTED THAT THE WORK WAS DONE BY 100 % SUB CONTRACTING ARRANGEMENTS. IT WAS FURTHER SUBMITTED THAT THE WI P WITH REGARD TO THE SAID PROJECT AT THE YEAR END OF PRECEDING YEAR I.E. ON 3 1.03.2004 WAS VALUED ACCOUNTED AND CREDITED TO P & L ACCOUNT AT RS.16.57 LACS IN FINANCIAL YEAR 2003-04 BUT THE CORRESPONDING COST OF THIS PROJECT OF THE SAME AMOUNT OF RS.16.57 LACS WAS LEFT OUT AND NOT CLAIMED AS DEDUC TION IN THAT YEAR. THE A.O. HELD THAT THE EXPENDITURE IS REQUIRED TO BE CL AIMED AS DEDUCTION IN THE YEAR TO WHICH IT RELATES. THE A.O. ALSO HELD THAT SINCE OUT OF THE TOTAL RECEIPT OF RS.29 57 737/- I.E. 44% OF THE TOTAL INCOME IS DECLARED IN THE PRESENT YEAR THE ASSESSEE IS ELIGIBLE FOR DEDUCTION TO THE EXTENT OF 44% OF THE TOTAL SUCH EXPENDITURE IN THE PRESENT YEAR. ON THIS BASI S HE ALLOWED DEDUCTION OF RS.12 76 588/- 44% OF THE TOTAL EXPENDITURE OF (RS. 29 01 338/-) AND THE BALANCE EXPENDITURE OF RS.16 24 750/- WAS DISALLOWE D. 3. BEING AGGRIEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD. CIT(A). IT AS HELD BY LD. CIT(A) THAT DISALLOWANCE MADE BY THE A.O. IN THE PRESENT YEAR IS JUSTIFIED. THERE WAS AN ALTERNATIV E CLAIM OF THE ASSESSEE BEFORE LD. CIT(A) THAT SINCE THE EXPENSES WERE ACTU ALLY INCURRED THE SAME SHOULD BE ALLOWED IN THE PRECEDING YEAR IF NOT IN T HE PRESENT YEAR. LD. CIT(A) DIRECTED THE A.O. TO VERIFY THE EXPENSES AND ALLOW THE SAME IN ASSESSMENT YEAR 2004-05 IF THE SAME IS INCURRED FOR THE PURPOSE OF BUSINESS. NOW THE REVENUE IS IN APPEAL BEFORE US AGAINST THI S DIRECTION OF LD. CIT(A). 4. IT IS SUBMITTED BY THE LD. D.R. THAT THE APPEAL BEFORE CIT(A) WAS RELATING TO ASSESSMENT YEAR 2005-06 AND HENCE IT W AS NOT WITHIN THE POWERS I.T.A.NO. /AHD/200 3 OF LD. CIT(A) TO GIVE ANY DIRECTION TO THE A.O. IN RELATION TO ASSESSMENT YEAR 2004-05. IT WAS SUBMITTED THAT HENCE SUCH DI RECTION OF LD. CIT(A) SHOULD BE EXPUNGED. 5. AS AGAINST THIS LD. A.R. SUPPORTED THE ORDER OF LD. CIT(A). SHE HAS SUBMITTED THAT AS PER EXPLANATION TO SECTION 251 C IT(A) MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEAL AGAINST WAS PASSED AND HENCE IT WAS WELL WITHIN TH E POWERS OF LD. CIT(A) TO GIVE SUCH DIRECTION TO THE A.O. IT IS ALSO SUBMIT TED THAT THE POWERS OF LD. CIT(A) ARE CO-TERMINUS WITH THE POWERS OF THE A.O. AND HENCE FOR THIS REASON ALSO THE DIRECTION GIVEN BY LD. CIT(A) WAS WELL WITHIN HIS POWERS. 6. IT WAS POINTED OUT BY THE BENCH THAT EVEN IF IT IS ACCEPTED THAT LD. CIT(A) HAD THE POWERS TO GIVE DIRECTION TO THE A.O. THEN ALSO IT HAS TO BE EXAMINED AS TO WHETHER THE DIRECTIONS GIVEN BY THE LD. CIT(A) ARE CORRECT OR NOT. IT WAS POINTED OUT BY THE BENCH THAT IT WAS S UBMITTED BY THE ASSESSEE BEFORE THE A.O. THAT W.I.P. CLOSING STOCK WITH REGA RD TO THIS PROJECT REGARDING EPIC JOB IN THE PRECEDING ACCOUNTING YEAR I.E. YEAR ENDED 3.103.2004 WAS VALUED ACCOUNTED AND CREDITED TO P & L ACCOUNT AT RS.16.57 LACS FOR THE FINANCIAL YEAR 2003-04 BUT EXPENSES WERE NOT ACCOUN TED FOR IN THAT YEAR. THE BENCH POINTED OUT THAT THIS APPEARS TO BE STRAN GE AND THE ASSESSEE SHOULD FURNISH EVIDENCE IN THIS REGARD. IN REPLY LD. A.R . FURNISHED BEFORE US A COPY OF THE BALANCE SHEET AND P & L ACCOUNT OF THE ASSESSEE COMPANY FOR THE PRESENT YEAR AS WELL AS FOR THE YEAR ENDED 31.03.20 04 BUT NOTHING IS COMING OUT FROM THE SAME BECAUSE IN THE P & L ACCOUNT FOR THE YEAR ENDED 31.03.2004 ASSESSEE HAS ACCOUNTED FOR CONTRACT INC OME OF RS.288.61 LACS AND THE CLOSING STOCK OF W.I.P. HAS BEEN CONSIDERED IN THAT YEAR TO THE EXTENT OF RS.142.66 LACS AND NO DETAIL IS MADE AVAILABLE I TSELF WITH REGARD TO CONTRACT INCOME OR OF THE CLOSING STOCK OF W.I.P. C REDITED IN THE P & L I.T.A.NO. /AHD/200 4 ACCOUNT FOR THE YEAR ENDED 31.03.2004 OR FOR THE EX PANSES DEBITED IN THAT YEAR. 7. SIMILARLY IN THE PRESENT YEAR P & L ACCOUNT TH E ASSESSEE HAS DEBITED OPENING STOCK OF W.I.P. TO THE EXTENT OF RS.142.66 LACS AND IN THE PRESENT YEAR THE ASSESSEE HAS DECLARED CONTACT INCOME OF R S.432.70 LACS AND CLOSING STOCK OF W.I.P. IS OF RS.16.92 LACS. DETAILS OF EX PENSES FOR THE PRESENT YEAR IS ALSO NOT AVAILABLE. IN THE ABSENCE OF BREAKUP OF C ONTRACT INCOME FOR THE PRESENT YEAR AS WELL AS FOR THE PRECEDING YEAR IT IS NOT COMING OUT FROM THE RECORDS AS TO WHETHER THE ASSESSEE HAS DECLARED INC OME IN THE PRECEDING Y EAR WITH REGARD TO EPIC JOB PROJECT AND WHETHER VAL UE OF THIS WAS INCLUDED IN THE CLOSING STOCK OF W.I.P. OF THAT YEAR. THIS IS ALSO NOT COMING OUT FROM THE DOCUMENTS AVAILABLE BEFORE US AS TO WHETHER ANY DEDUCTION ON ACCOUNT OF EXPENSES OF THIS PROJECT WERE CLAIMED IN THE PRECED ING YEAR OR NOT. IT WAS THE SUBMISSION OF THE LD. A.R. THAT SUCH DETAILS AR E NOT READILY AVAILABLE AND HENCE THE MATTER MAY BE RESTORED BACK TO THE FILE O F THE A.O. FOR A FRESH DECISION AFTER EXAMINING THESE ASPECTS. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUSE D THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF AUTHORIT IES BELOW. THE FIRST OBJECTION OF THE REVENUE IS THAT WHETHER IT WAS WIT HIN THE POWERS OF LD. CIT(A) TO GIVE DIRECTIONS TO THE A.O. FOR CONSIDERI NG AND ALLOWING THE EXPENSES IN THE PRECEDING YEAR. WITH REGARD TO THI S FIRST WE EXAMINE THE PROVISIONS OF SECTION 251 OF THE INCOME TAX ACT 19 61 WHICH ARE REPRODUCED BELOW: POWERS OF THE COMMISSIONER (APPEALS). 251. (1) IN DISPOSING OF AN APPEAL THE COMMISSIONE R (APPEALS) HAVE THE FOLLOWING POWERS I.T.A.NO. /AHD/200 5 (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT HE MAY CONFIRM REDUCE ENHANCE OR ANNUL THE ASSESSMENT. (AA) IN AN APPEAL AGAINST THE ORDER OF ASSESSMENT I N RESPECT OF WHICH THE PROCEEDING BEFORE THE SETTLEMENT COMMISSI ON ABATES UNDER SECTION 245HA HE MAY AFTER TAKING IN TO CONSIDERATION ALL THE MATERIAL AND OTHER INFORMATIO N PRODUCED BY THE ASSESSEE BEFORE OR THE RESULTS OF THE INQUI RY HELD OR EVIDENCE RECORDED BY THE SETTLEMENT COMMISSION IN THE COURSE OF THE PROCEEDING BEFORE IT AND SUCH OTHER M ATERIAL AS MAY BE BROUGHT ON HIS RECORD CONFIRM REDUCE ENHA NCE OR ANNUL THE ASSESSMENT;] (B) IN AN APPEAL AGAINST AN ORDER IMPOSING A PENALT Y HE MAY CONFIRM OR CANCEL SUCH ORDER OR VARY IT SO AS EITHE R TO ENHANCE OR TO REDUCE THE PENALTY; (C) IN ANY OTHER CASE HE MAY PASS SUCH ORDERS IN T HE APPEAL AS HE THINKS FIT. (2)THE COMMISSIONER (APPEALS) SHALL NOT ENHANCE AN ASSESSMENT OR A 1 PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNITY OF SHOWING CAUSE AGAINST SUC H ENHANCEMENT OR REDUCTION. EXPLANATION .IN DISPOSING OF AN APPEAL THE COMMISSIONER (APPEALS) MAY CONSIDER AND DECIDE ANY MATTER ARISI NG OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED NOTWITHSTANDING THAT SUCH MATTER WAS NOT RAISED BEF ORE THE COMMISSIONER (APPEALS) BY THE APPELLANT. 9. FROM THE ABOVE PROVISIONS OF SECTION 251 WE FIN D THAT AS PER THE EXPLANATION TO SECTION 251 CIT(A) MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER A PPEALED AGAINST WAS PASSED. IN OUR CONSIDERED OPINION THE ISSUE REGAR DING ALLOWABILITY OF EXPENSES IN QUESTION IS ARISING OUT OF THE PROCEEDI NGS IN WHICH THE ORDER WAS PASSED BY THE LD. CIT(A) AND HENCE IT WAS WITHIN T HE POWERS OF LD. CIT(A) TO CONSIDER AND DECIDE THIS ASPECT OF MATTER ALSO I F HE CONSIDERED IT PROPER. 10. NOW WE HAVE TO CONSIDER AND DECIDE AS TO WHETH ER DIRECTION GIVEN BY THE LD. CIT(A) ARE CORRECT OR NOT. WE FIND THAT TH E STAND OF THE ASSESSEE BEFORE THE A.O. WAS THAT W.I.P. OF EPIC JOB CONTRAC T WAS VALUED ACCOUNTED I.T.A.NO. /AHD/200 6 FOR AND CREDITED TO P & L ACCOUNT AT RS.16.57 LACS IN FINANCIAL YEAR 2003-04 BUT CORRESPONDING EXPENSES OF THE SAME AMOUNT WERE LEFT TO BE ACCOUNTED FOR IN THAT YEAR AND THE SAME ARE BEING CLAIMED IN THE PRESENT YEAR. THIS IS SOMETHING STRANGE THAT SOME EXPENDITURE ARE NOT DEB ITED TO THE P & L ACCOUNT BUT ARE INCLUDED IN THE VALUE OF CLOSING ST OCK OF W.I.P. HENCE WE FEEL THAT THIS ASPECT SHOULD ALSO BE EXAMINED BY TH E A.O. AS TO WHETHER THE EXPENSES FOR THIS EPIC PROJECT WERE CLAIMED IN ASSE SSMENT YEAR 2004-05 OR NOT. IF IT IS FOUND THAT NO SUCH EXPENSE WERE CLAI MED AND THE EXPENSES NOW CLAIMED WERE INCURRED IN THAT YEAR & CORRESPONDING INCOME WAS ACCOUNTED FOR IN THAT YEAR THEN ONLY THE A.O. SHOULD ALLOW DEDUCTION TO THE EXTENT THE SAME IS FOUND TO BE ALLOWABLE AS PER LAW. 11. WE THEREFORE MODIFY THE DIRECTION OF LD. CIT( A). WE DIRECT THE A.O. TO FIRST EXAMINE THE VERACITY OF THIS CONTENTI ON OF THE ASSESSEE THAT INCOME ON ACCOUNT OF EPIC PROJECT WAS ACCOUNTED FOR IN ASSESSMENT YEAR 2004-05 BUT EXPENSES FOR THE SAME WERE NOT ACCOUNTE D FOR IN THAT YEAR. THEREAFTER IF IT IS FOUND THATS THIS CONTENTION I S CORRECT THEN HE SHOULD EXAMINE THE ALLOWABILITY OF THESE EXPENSES IN THAT YEAR AND ALLOW THE SAME TO THE EXTENT FOUND ALLOWABLE AND PASS NECESSARY ORDER S AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. 12. IN THE RESULT APPEAL OF THE REVENUE STANDS PAR TLY ALLOWED FOR STATISTICAL PURPOSES IN TERMS INDICATED ABOVE. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY 2011. SD./- SD./- (MUKUL SHRAWAT) (A. K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED : 15 TH JULY 2011 SP I.T.A.NO. /AHD/200 7 COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR AHMEDABAD 6. THE GUARD FILE 1. DATE OF DICTATION 12/7 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 13/7 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 14/7 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 15/7 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 15/7 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15/7/11 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..