Gowthami Infratech Private Limited,, ... vs Assessee

Gowthami Infratech Private Dy. Commissioner of Limited, Somajiguda, Vs Income Tax, HYDERABAD. Circle-2(2), [PAN: AACCK 6892 K] HYDERABAD

(Appellant) (Respondent)

For Assessee : Shri G. Sivarama Krishna Prasad & Shri S. Venugopal

For Revenue : Smt. G.Aparna Rao

Date of Hearing : 06-01-2015 Date of Pronouncement : 16-01-2015

ORDER

PER B. RAMAKOTAIAH, A.M. :

This is an appeal by assessee on confirming the entire

mobilization advance as turnover of the assessee by the

Commissioner of Income Tax(Appeals) in his order dated 15-01-2014.

There is one more issue of disallowance of amount paid to ROC.

These issues are considered in this order after hearing the Ld.AR,

Ld.DR and also seeking clarifications on issues.

:- 2 -: I.T.A. No. 605 /Hyd/14 Gowthami Infratech P. Ltd.,

2. Briefly stated, assessee is a civil contractor and has entered into certain contracts with M/s.Maytas Infra Ltd., presently known as M/s.IL&FS Engineering and Construction Company Ltd., to perform certain civil and electrical supply/erection works. During the year, assessee received Rs.2,416.94 Lakhs as mobilization advance against civil works, out of which assessee executed works to an extent of Rs.1055.32 Lakhs and raised an invoice and showed the same as turnover. Apart from the other turnovers in other contracts, assessee also had an electrical contract executed to an extent of Rs.79.35 Lakhs on which it raised invoices. Thus, assessee received during the year an amount of Rs.2,416.94 Lakhs and the net amount payable to M/s.Maytas Infra Ltd., both civil and electrical work was at determined Rs.1227.25 Lakhs as on 31-03-2009. The details are as under:

Opening Balance as on 01-04-2008 (receivable 235.48 from Maytas Infra on Electrical works) Add: Works Executed - Civil 1055.32 Add: Works executed - Electrical 79.35 Sub total 1370.15 Less: Amount received from Maytas Infra including (-)2585.45 Mobilization Advances (2416.91+168.51) Less: TDS on Rs.1055.32 lakhs (-)11.95 Net Amount payable to Maytas Infra 1227.25

The Assessing Officer verified the TDS certificates received from M/s.Maytas Infra Ltd., which had showed the total receipts on which TDS was made at Rs.31.01 Crores. Assessing Officer issued a show cause notice to the assessee that the TDS certificates issued by M/s.Maytas Infra Ltd., resulted in a turnover of Rs.31.01 Crores and as assessee has shown turnover of Rs.10.27 Crores (ignoring :- 3 -: I.T.A. No. 605 /Hyd/14 Gowthami Infratech P. Ltd.,

electrical turnover), he asked why the difference of Rs.20.73 Crores should not be treated as income of the assessee. Assessee explained that it has received only Rs.2416.94 Lakhs but the said company deducted tax both on the mobilization advance of the above amount and also on the bills raised to an extent of Rs.1055.32 Lakhs which resulted in the additional turnover. It also submitted re-conciliation of its accounts turnover viz-a-viz TDS certificates and amounts payable. Assessing Officer in the original assessment gave credit of only advance receiveable to an extent of Rs.337.92 Lakhs and made an addition of Rs.2,073 Lakh to the income returned.

3. Assessee company submitted before the Ld.CIT(A) that amount received from M/s.Maytas Infra Ltd., was only Rs.2,416.94 Lakhs and Assessing Officer not only ignored the turnover of electrical works but also amount payable under civil works. Assessee submitted that the total amount payable to M/s.Maytas Infra Ltd., was Rs.1227.25 Lakhs. The Ld.CIT(A), however, did not consider the re-conciliation and observed that assessee has not furnished all the TDS certificates therefore, there is suppression of turnover and directed the Assessing Officer to verify the TDS certificates and entries in the bank account to arrive at the exact figure of the amount received. The Ld.CIT(A) did not take into consideration the confirmations received from M/s.Maytas Infra Ltd.. Assessee is aggrieved on the orders of the CIT(A).

4. In the mean time, Assessing Officer passed consequential orders vide order dt.13-03-2014 wherein he accepted that the total mobilization advance received for civil contracts was at Rs.2,416.94 Lakhs. Therefore to the extent that assessee has suppressed the turnover based on the TDS certificates does not arise. In fact there is evidence that the said company deducted the TDS twice both at :- 4 -: I.T.A. No. 605 /Hyd/14 Gowthami Infratech P. Ltd.,

the time of paying mobilization advance and also at the time of raising the bill thereby resulting in confusion in the mind of the Assessing Officer which lead to the addition. In the consequential order Assessing Officer determined the gross-receipts at Rs.2,416.94 Lakhs only. But, Assessing Officer confused further and ignored the amount outstanding against M/s.Maytas Infra Ltd., of Rs.1227.24 Lakhs. In fact Assessing Officer at the time of assessment took only Rs.337.92 Lakhs as outstanding and excluded that. However, in the consequential order this amount was also ignored and the entire Rs.2,416.94 Lakhs was treated as works executed by the assessee-company, when assessee admits that it has completed the turnover of Rs.1055.32 in civil works and Rs.79.35 in electrical works. The consequential order not only ignored the outstanding amount given already credit in the assessment order but also ignored the turnover towards the electrical services. Thereby, the net relief given consequent to the order of the CIT(A) was only Rs.683.06 Lakhs and Assessing Officer treated the amount of Rs.1,389.44 Lakhs as suppressed turnover and brought to tax.

5. After reconciliation of the gross amounts payable, gross turnovers and TDS certificates, we are of the opinion that both Assessing Officer at the time of assessment and CIT(A) at the time of appellate order and the present Assessing Officer in the consequential order did not consider the facts appropriately. As seen from the consequential order, the Assessing Officer admits that gross mobilization advance received was Rs.2,416.94. This amount cannot be considered as work executed by the assessee-company as assessee has already shown in the Books of Accounts amount outstanding towards M/s.Maytas Infra Ltd., at Rs.1227.25. In view of reconciliation furnished, which Ld.CIT(DR) also verified and accepted, We do not see any reason to confirm any addition on this :- 5 -: I.T.A. No. 605 /Hyd/14 Gowthami Infratech P. Ltd.,

issue. Assessing Officer is directed to delete the additions so confirmed in the consequential order. Assessee's ground on this issue is allowed.

6. Next issue for consideration is with reference to disallowance of an amount of Rs.1,80,381/- towards expenditure for increase of authorized share capital. It was the submission before the Ld.CIT(A) that assessee paid only an amount of Rs.1,50,000/- and not Rs.1,80,381/-. The Ld.CIT(A) directed the Assessing Officer to verify the exact amount paid and disallow the amount accordingly. In spite of furnishing the ROC fees challan of Rs.1,50,000/-, the Assessing Officer confirmed the addition of Rs.1,80,381/-. It was the assessee's contention that only an amount of Rs.1,50,000/- is to be disallowed and not Rs.1,80,381/-. As amount to be disallowed under this head was only Rs.1,50,000/-, we direct the Assessing Officer to allow balance amount of Rs.30,381/-. Assessee's ground in this regard is allowed.

7. In the result, appeal is allowed.

Order pronounced in open Court on 16th January, 2015.

Sd/- Sd/- (SAKTIJIT DEY) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated 16th January, 2015.

TNMM :- 6 -: I.T.A. No. 605 /Hyd/14 Gowthami Infratech P. Ltd.,

Copy to :

1. Gowthami Infratech Private Limited, 6-3-1109/A/1, 3rd Floor, Navabharat Chambers, Somajiguda, Rajbhavan Road, Hyderabad-500 082.

2. Dy. Commissioner of Income Tax, IT Towers, Circle-2(2), Hyderabad.

3. CIT(A)-III, Hyderabad

4. CIT-II, Hyderabad

5. D.R. ITAT, Hyderabad.