M/ S Jai Prakash Associates Ltd., ... vs Department Of Income Tax

A.C.I.T., Vs. M/s Jai Prakash Associates Ltd., Central Circle-II, 5, Park Road, Hazaratganj, Lucknow. Lucknow. PAN:AABCB1562A (Appellant) (Respondent)

Appellant by Shri Anand Kumar Agarwal, C.I.T., D. R. Respondent by Shri B. P. Yadav, Cost Accountant Date of hearing 23/03/2015 Date of pronouncement 29/04/2015

ORDER

PER A. K. GARODIA, A.M.

Both these appeals are filed by the Revenue, which are directed against two separate orders of learned CIT(A)-III, Lucknow dated 22/02/2014 for the assessment year 2007-2008 and dated 05/02/2014 for the assessment year 2008-09. Both the appeals were heard together and are being disposed of by way of this common order for the sake of convenience.

2. First we take up the appeal for assessment year 2007-08 i.e. I.T.A. No.561/Lkw/2014. Ground No. 1 is as under:

"1. That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.2,01,849/- made on account of depreciation of Iraqi assets without appreciating the facts and material brought on record by the Assessing Officer."

2 3. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is covered in favour of the assessee by the Tribunal decision in assessee's own case for various assessment years from 2001-02 to 2006-07 and all the Tribunal decisions are available on pages 1 to 64 of the paper book.

4. We have considered the rival submissions. We find that this issue was decided by CIT(A) by following the Tribunal orders in assessee's own case for various assessment years. He has also given a finding that there is no change in the facts of the present year. Learned D.R. of the Revenue also could not point out any difference in the facts of the present year and therefore, we do not find any reason to take a contrary view in the present year. As per the Tribunal order brought on record by Learned A.R. of the assessee, it was held by Tribunal in earlier years that the compensation received by the assessee is to be brought to the concerned block of assets and the said bock of assets is to be reduced accordingly. This finding of the Tribunal is in line with the provisions of the Act and therefore, we decline to interfere in the order of CIT(A) on this issue. Ground No. 1 is rejected.

5. Ground No. 2 is as under:

"2(a) That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.5,69,011/- made on account of depreciation on temporary erections without appreciating the facts and material brought on record by the Assessing Officer.

2(b) That the Ld. CIT(A) has erred in law and facts in treating the project site-offices of the assessee, built of iron, cement and bricks etc. as temporary structures without appreciating that these structures were designed to last for the entire duration of projects which usually take ten to fifteen years for completion."

3 6. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is also covered in favour of the assessee by the Tribunal decision in assessee's own case for assessment years 2001-02 to 2006-07, copy of which is available in the paper book.

7. We have considered the rival submissions, perused the material available on record and gone through the orders of the authorities below and the Tribunal orders in assessee's own case for earlier years. We find that CIT(A) has given a clear finding that the issue in dispute is squarely covered in favour of the assessee by the Tribunal order in earlier years in assessee's own case. He has also given a finding that there is no change in the facts of the present year. Learned D.R. of the Revenue also could not point out any difference in facts in the present year. As per the Tribunal decisions available on record also, we find that in assessment years 2001-02 and 2002-03, the Tribunal has followed earlier Tribunal decision for assessment year 94-95 and 96-97. Hence, it is seen that this issue has been consistently been decided in favour of the assessee and no difference in facts could be pointed out by Learned D.R. of the Revenue. Hence, we do not find any reason to take a contrary view. Ground No. 2 is also rejected.

8. Ground No. 3 is as under:

"3(a) That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.2,17,200/- made on account of interest on overdue bills of Iraq work without appreciating the facts and material brought on record by the Assessing Officer.

3(b) That the Ld. CIT(A) has erred in law and facts in not appreciating that the assessee had unilaterally decided not to charge interest on such outstanding and that there was no evidence to show that the concerned parties had denied their liability to pay interest on outstanding bills of the assessee."

4 9. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is also covered in favour of the assessee by the Tribunal decision in assessee's own case for assessment years 2001-02 to 2006-07, copy of which is available in the paper book.

10. We have considered the rival submissions. Learned D.R. of the Revenue could not point out any difference in facts in the present year and since the order of CIT(A) is by following the Tribunal decisions in assessee's own case, we do not find any reason to take a contrary view. Ground No. 3 is also rejected.

11. Ground No. 4 is as under:

"4(a) That the Ld. CIT (A) has erred in law and on facts in holding that the retention money of Rs.14,55,17,044/- did not accrue to the assessee during the year under consideration and thereby deleting the addition of the said amount already accrued to the assessee, the said amount was clearly taxable as income of the assessee for the year under consideration.

4(b) That the Ld. CIT(A) has erred in law and facts in overlooking the provision of section 199 of the Act and in not appreciating that since the assessee had claimed credit for TDS on the said amount in its return income, it implied as per the provisions of the said section that the assessee had recognized the said amount as its income for the year under consideration.

4(c) That the Ld. CIT(A) has erred in law and on facts in giving the finding that the concept of real income also strengthens the contention of the assessee without appreciating the ratio of the decision of the Hon'ble Supreme Court reported in 158 ITR 102 according to which the real income theory cannot affect the income which had already accrued as per law."

5 12. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is also covered in favour of the assessee by the Tribunal decisions in assessee's own case for assessment years 2001-02 to 2006-07, copy of which is available in the paper book.

13. On a query from the Bench, it was submitted by Learned A.R. of the assessee that during the present year i.e. assessment year 2007-08, retention money was held by the parties to the extent of Rs.1,455.17 lacs whereas in the same year, the assessee offered to tax an amount of Rs.8,039.29 lacs on expiry of deferred liability period and the closing balance was to the extent of Rs.13,012.34 lacs. He also submitted that in the next year, the closing balance was reduced to Rs.6,701.21 lacs and was reduced to nil at the close of the financial year 2010 - 11 i.e. 31/03/2011 relevant to assessment year 2011-12.

14. We have considered the rival submissions. We find that CIT(A) has decided the issue in favour of the assessee by following the Tribunal decision in assessee's own case for various earlier years. No difference in facts could be pointed out by Learned D.R. of the Revenue. Moreover, during the present year, the assessee has reduced an amount of Rs.1,455.17 lac from its income on account of retention money but the assessee has offered a larger amount of Rs.8,039.29 lac being retention money not offered to tax in earlier years but offered to tax in present year on account of expiry of deferred liability period. Hence, it is seen that if the present year is considered in isolation, the amount offered to tax is more than the amount of income reduced from the income on account of retention money. This is also very important that at the end of the financial year 2010 - 11, the entire amount of retention money was offered to tax and considering this fact that no difference in facts could be pointed out by Learned D.R. of the Revenue, we 6

do not find any reason to take a contrary view. Accordingly, ground No. 4 is also rejected.

15. Ground No. 5 is as under:

"5. That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.50,81,002/- made on account of manufacturing expenses being 7.5% of the total expenditure incurred on repair to building without appreciating the facts and material brought on record by the Assessing Officer."

16. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is also covered in favour of the assessee by the Tribunal decision in assessee's own case for assessment years 2003-04 to 2006-07, copy of which is available in the paper book.

17. We have considered the rival submissions. We find that this issue was also decided by learned CIT(A) as per Tribunal decision in assessee's own case in earlier years. No difference in facts could be pointed out by Learned D.R. of the Revenue on this issue also. Therefore, we do not find any reason to take a contrary view in the present year on this issue also. Ground No. 5 is rejected.

18. Ground No. 6 is as under:

"6. That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.26,28,177/- made on account of miscellaneous expenses without appreciating the facts and material brought on record by the Assessing Officer."

19. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that this issue is also covered in favour of the assessee by the 7

Tribunal decision in assessee's own case for earlier assessment years, copy of which is available in the paper book.

20. We have considered the rival submissions. We find that this issue was also decided by learned CIT(A) as per Tribunal decision in assessee's own case in earlier years. No difference in facts could be pointed out by Learned D.R. of the Revenue on this issue also. Therefore, we do not find any reason to take a contrary view in the present year on this issue also. Ground No. 6 is rejected.

21. In the result, the appeal of the Revenue stands allowed.

22. Now we take up the Revenue's appeal for assessment year 2008-09 i.e. I.T.A. No.562/Lkw/2014. In this appeal, the Revenue has raised the following grounds:

"1. That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.1,77,716/- made on account of depreciation of Iraqi assets without appreciating the facts and material brought on record by the Assessing Officer.

2(a) That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.4,43,35,600/- made on account of depreciation on temporary erections without appreciating the facts and material brought on record by the Assessing Officer.

2(b) That the Ld. CIT(A) has erred in law and facts in treating the project site-offices of the assessee, built of iron, cement and bricks etc. as temporary structures without appreciating that these structures were designed to last for the entire duration of projects which usually take ten to fifteen years for completion.

3(a) That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.2,23,200/- made on account of interest on overdue bills of Iraq work without 8

appreciating the facts and material brought on record by the Assessing Officer.

3(b) That the Ld. CIT(A) has erred in taw and facts in not appreciating that the assessee had unilaterally decided not to charge interest on such outstanding and that there was no evidence to show that the concerned parties had denied their liability to pay interest on outstanding bills of the assessee.

4(a) That the Ld. CIT (A) has erred in law and on facts in holding that the retention money of Rs.6,11,54,776/- did not accrue to the assessee during the year under consideration and thereby deleting the addition of the said amount already accrued to the assessee, the said amount was clearly taxable as income of the assessee for the year under consideration.

4(b) That the Ld. CIT(A) has erred in law and facts in overlooking the provision of section 199 of the Act and in not appreciating that since the assessee had claimed credit for TDS on the said amount in its return income, it implied as per the provisions of the said section that the assessee had recognized the said amount as its income for the year under consideration.

4(c) That the Ld. CIT(A) has erred in law and on facts in giving the finding that the concept of real income also strengthens the contention of the assessee without appreciating the ratio of the decision of the Hon'ble Supreme Court reported in 158 ITR 102 according to which the real income theory cannot affect the income which had already accrued as per law.

5. That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.55,76,317/- made on account of manufacturing expenses being 7.5% of the total expenditure incurred on repair to building without appreciating the facts and material brought on record by the Assessing Officer.

6. That the Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.61,70,496/- made on account 9

of miscellaneous expenses without appreciating the facts and material brought on record by the Assessing Officer.

7. That the order of the Ld. CIT (A) being erroneous in law and on facts which needs to be vacated and the order of the A.O. be restored."

23. Both the sides agreed that the issues and facts involved in this year are identical to the facts and issues involved in Revenue's appeal for assessment year 2007-08 and the same can be decided on similar line. For assessment year 2007-08, all the issues have been decided by us against the Revenue in earlier part of this order and therefore, all the issues in the present year are also decided against the Revenue on similar line because no difference in facts could be pointed out by learned DR of the revenue on any of the issues.

24. In the result, the appeal of the Revenue stands dismissed.

25. In the combined result, both the appeals of the Revenue stand dismissed.

(Order was pronounced in the open court on the date mentioned on the caption page)

Sd/. Sd/.

(SUNIL KUMAR YADAV) ( A. K. GARODIA ) Judicial Member Accountant Member

Dated:29/04/2015 *C.L.Singh

Copy of the order forwarded to : 1. The Appellant 2. The Respondent. 3. Concerned CIT 4. The CIT(A) 5. D.R., I.T.A.T., Lucknow Asstt. Registrar