HINDUSTAN CONSTRUCTION CO. LTD., MUMBAI v. DCIT - 14(2)(1) (ERSTWHILE DCIT - 10(1)), MUMBAI

MA 251/MUM/2016 | 2008-2009
Pronouncement Date: 17-10-2016

Appeal Details

RSA Number 25119924 RSA 2016
Assessee PAN AAACH0968B
Bench Mumbai
Appeal Number MA 251/MUM/2016
Duration Of Justice 2 month(s) 19 day(s)
Appellant HINDUSTAN CONSTRUCTION CO. LTD., MUMBAI
Respondent DCIT - 14(2)(1) (ERSTWHILE DCIT - 10(1)), MUMBAI
Appeal Type Miscellaneous Application
Pronouncement Date 17-10-2016
Appeal Filed By Assessee
Bench Allotted H
Tribunal Order Date 17-10-2016
Assessment Year 2008-2009
Appeal Filed On 28-07-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) M.A. NO. 251/MUM/2016 ARISING OUT OF I.T.A. NO. 7362 /MUM/20 11 (ASSESSMENT YEAR 20 08 - 09 ) M.A. NO. 252/MUM/2016 ARISING OUT OF I.T.A. NO. 788/MU M/2013 (ASSESSMENT YEAR 2009 - 10) M.A. NO. 253/MUM/2016 ARISING OUT OF I.T.A. NO. 2999/MUM/2013 (ASSESSMENT YEAR 2010 - 11) M/S. HINDUSTAN CONSTRUCTION CO. LTD. HINCON HOUSE LBS MARG VIKHROLI EAST MUMBAI - 400 083. VS. DCIT - 14(2)(1) ERSTWHILE 10(1) AAYAKA R BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAACH0968B ASSESSEE BY SHRI H.P. MAHAJANI DEPARTMENT BY S HRI SHIDDARAMAPPA KAPPATTANAVAR DATE OF HEARING 14.10 . 201 6 DATE OF PRONOUNCEMENT 14 . 10 . 201 6 O R D E R PER BENCH: - THE ASSESSEE HAS FILED THESE MISCELLANEOUS APPLICATIONS AGAINST THE COMMON ORDER PASSED BY THE TRIBUNAL AGAINST THE CROSS APPEALS FILED FOR AY 2008 - 09 TO 2010 - 11. IT HAS BEEN POINTED OUT THAT THE TRIBUNAL HAS OMITTED TO DISPOSE OF GROUND NO.3 URG ED BY THE ASSESSEE IN ALL THE THREE APPEALS. 2. WE HEARD THE PARTIES AND PERUSED THE COMMON ORDER DATED 06 - 04 - 2016 PASSED BY THE TRIBUNAL AND NOTICE THAT THE TRIBUNAL HAS OMITTED TO DISPOSE OF HI NDUSTAN CONSTRUCTION CO. LTD. 2 THE GROUND NO.3 (WHICH IS COMMON IN ALL THE THREE YEARS) U RGED IN ALL THE THREE APPEALS FILED BY THE ASSESSEE. THE SAID GROUND IS RELATED TO THE ALLOWABILITY OF LOSS ARISING FROM THE PROJECT EXECUTED BY THE ASSESSEE AND THE SAME IS ALSO LINKED WITH OTHER GROUNDS. 3. ACCORDINGLY THE GROUND NO.3 URGED IN ALL THE APPEALS FILED BY THE ASSESSEE IS DISPOSED OF AS UNDER BY INSERTING FOLLOWING PARAGRAPH IN THE COMMON ORDER REFERRED ABOVE: - 30. THE NEXT ISSUE URGED IN THE ALL THE THREE APPEALS FILED BY THE REVENUE RELATES TO THE ADDITION RELATING TO THE LOSS CLAI MED BY THE ASSESSEE FROM THE BWSL PROJECT. THE ASSESSEE HAD ESTIMATED THE LOSS FROM THE PROJECT AND ACCORDINGLY CLAIMED LOSS TO THE TUNE OF RS.231.21 CRORES UP TO THE YEAR ENDING 31.3.2007 ON PROPORTIONATE BASIS. THE ASSESSEE COMPUTED THE LOSS UP TO 31.3 .2008 ON THE BASIS OF ACTUAL COST INCURRED AND THE CONTRACT VALUE WHICH WORKED OUT TO RS.252.07 CRORES. ACCORDINGLY THE ASSESSEE CLAIMED LOSS OF RS.20.85 CRORES (RS.252.07 LESS RS.231.21 CRORES) BEING THE INCREMENTAL VALUE OF LOSS. THE AO NOTICED THAT THE ASSESSEE HAD ESTIMATED THE TOTAL LOSS FROM THE BWSL PROJECT AT RS.185.60 CRORES WHERE AS THE ACTUAL LOSS WAS SHOWN AT RS.252.07 CRORES. THE AO ALSO OBSERVED THAT IN RESPECT OF ANOTHER PROJECT NAMED CBP PROJECT THE ACTUAL LOSS AND THE ESTIMATED LOS S WAS SAME. ACCORDINGLY THE AO TOOK THE VIEW THAT THE ASSESSEE HAS ADOPTED ITS OWN METHOD FOR MEASURING LOSS IN RESPECT OF BWSL PROJECT. ACCORDINGLY THE AO RESTRICTED THE LOSS TO RS.185.60 CRORES BEING THE EXPECTED LOSS. ACCORDINGLY THE AO DISALLOWED A SUM OF RS.66.46 LAKHS BEING THE DIFFERENCE BETWEEN RS.252.07 CRORES AND RS.185.60 CRORES TREATING THE SAME AS EXCESS LOSS BOOKED BY THE ASSESSEE. THE LD CIT(A) ALSO CONFIRMED THE SAME. 31. WE HEARD THE PARTIES ON THIS ISSUE AND PERUSED THE RECORD . WE NOTICE THAT THE ASSESSEE HAS BEEN ESTIMATING LOSS FROM THE PROJECT AND ACCORDINGLY BOOKING THE LOSS ON PROPORTIONATE BASIS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS REVISED THE ESTIMATED LOSS AT RS.185.58 CRORES. HOWEVER FROM THE ACCOU NTS IT WAS NOTICED THAT THE LOSS INCURRED BY THE ASSESSEE TILL 31.3.2008 WORKED OUT TO RS.252.07 CRORES ON ACTUAL BASIS AS AGAINST THE ESTIMATED LOSS OF RS.185.58 CRORES. IN OUR CONSIDERED VIEW WHEN THE ACTUAL LOSS EXCEEDS THE ESTIMATED LOSS THEN IT WO ULD BE PRUDENT TO BOOK THE ENTIRE AMOUNT OF ACTUAL LOSS. ON THIS PRINCIPLE WE ARE OF THE VIEW THAT THE ASSESSEE WAS JUSTIFIED IN BOOKING THE HI NDUSTAN CONSTRUCTION CO. LTD. 3 INCREMENTAL LOSS OF RS.20.85 CRORES. WE NOTICE THAT THE AO HAS DISALLOWED THE DIFFERENCE BETWEEN THE ACTUAL LOSS AND EXPECTED LOSS. WHEN THE BOOKS OF ACCOUNTS SHOW ACTUAL LOSS THE QUESTION OF DISALLOWANCE SHALL ARISE ONLY WHEN IT IS SHOWN THAT THE ACTUAL LOSS SHOWN BY THE ASSESSEE WAS NOT CORRECT. IN THE ABSENCE OF SUCH A FINDING WE ARE OF THE VIEW THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN DISTURBING THE ACTUAL LOSS OF RS.252.07 CRORES. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE IN ALL THE THREE YEARS UNDER CONSIDERATION AND DIRECT THE AO TO ALLOW THE LOSS BY TAKING THE ACTUAL LOSS OF RS.252.07 CRORES. 4. IN VIEW OF INSERTION OF ABOVE SAID TWO PARAGRAPHS THE PARAGRAPH NO.30 IN THE EXISTING ORDER SHALL BE RENUMBERED AS NO.32. 5. IN THE RESULT THE MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEE ARE ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 14 . 10 .2016 SD/ - SD/ - (PAWAN SINGH ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 14 / 10 / 20 1 6 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR ITAT MUMBAI 6. GUARD FILE. BY ORDER //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT MUMBAI