TaxTMI 
TaxTMI 
2024 (7) TMI 80
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....her and are being disposed of by this common order. 2. First, we take up appeal in ITA No. 73/Hyd/2017 for the A.Y 2008-09 filed by the assessee as the lead case and is adjudicated as under. 3. The assessee has raised the following grounds and additional grounds as under: 1. The order of the learned Commissioner of Income Tax (Appeals)-11, Hyderabad, is erroneous both on facts and in law so far as it is prejudicial to the appellant. 2. The learned Commissioner of Income Tax (Appeals)-11, Hyderabad, has erred in confirming the inadmissible expenditure of Rs. 13,42,84,130 relating to the Municipal Corporation of Indore site. The Assessing officer made the entire addition of Rs. 13,42,84,130 based on the uncorroborated document seized from the premises of a third party. Without considering the merits of the issue, the learned Commissioner of Income Tax (Appeals)-1 Hyderabad, has confirmed the inadmissible expenditure. The entire addition is liable to be deleted. 3. The learned Commissioner of Income Tax (Appeals)-11, Hyderabad, has erred in confirming the inadmissible expenditure of Rs. 1,40,000. The entire addition is liable to be ....
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....remises. These loose sheets and slip pads contain payment of a certain percentage of contract amounts payable to various persons. The slip pads also contain the names of two companies viz., M/s. Nagarjuna Construction Company Ltd and another company. These slip pads also mention the contract value awarded to M/s. Nagarjuna Construction Company Ltd. as 266.87crores. Inquiries revealed that the company M/s. Nagarjuna Construction Company Ltd. had been awarded contract works by the Govt. of Madhya Pradesh. Subsequently investigations were made. Various documents and evidence gathered by the DDIT (Inv.) Bhopal were forwarded to the Investigation Wing of Hyderabad. 6. Further, on 31.10.2009, search and seizure operation were carried out in Madhu Koda Group of cases. During the course of search, it was gathered that the company M/s. Nagarjuna Construction Company Ltd (NCCL) had made inadmissible expenditure by making payment to various persons in the guise of payments to sub-contractors and other expenditures. Hence, a survey operation u/s. 133A of the Income tax Act was conducted on 25.01.2010 in the case of the assessee company. 7. Subsequently, Search and Seizure operation u/s. ....
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....requested the Pr. Secretary, Urban Development Department, Bhopal to release the payment to the tune of Rs. 146 crores as on 11.06.2010. It was the contention of the assessee that up to the A.Y 2011-12 total work executed by the assessee was to the extent of Rs. 125 crores. The year-wise details of the work completed was as under: Sr.No. Assessment Year Total turnover for the year Cumulative turnover for the year 1 2009-10 27,52,67,209 27,52,67,209 2 2010-11 50,01,64,352 77,54,31,561 3 2011-12 48,18,80,243 1,25,73,11,804 4 2012-13 24,97,02748 1,50,70,14,552 5 2013-14 13,96,47,248 1,64,66,61,800 6 2014-15 1,46,83,579 1,66,13,45,379 7 2017-18 -3,82,53,080 1,62,30,92,299 Total 1623092299 13. The learned AR submitted that the Assessing Officer in Para 4.14 has reproduced the seized material seized from the premises of Mr. Mukesh Sharma and others at Bhopal and the following document at page 23 to 25 of the order referred to: 14. The typed copy of the page 23 is as under: 6.00 1.25 0.50 1.00 0.50 9....
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....cts takes place in secret and direct evidence about payment of such commission would be rarely available. An inference about such a transaction has to be drawn on the basis of the circumstances available on the record. Having' regard to the conduct of the assessee company as disclosed in their bank statement as noted above and also the sworn statements of the Directors' of the assessee-company as well as other material on record an inference could easily be drawn that the assessee-company paid the percentage of commission amounts as was noted in the seized diaries of Mukesh Sharma. As has been. held by the Supreme Court in the case of Sumati Dayal 214 ITR 801 (1995) SC "This raises the question whether the apparent can be considered as the real. As laid down by this court the apparent must be considered the real until it is shown that there are reasons to believe that the apparent is not the real and that the taxing authorities are entitled to look into the surrounding circumstances to find out the reality and the matter has to be considered by applying the test of human probabilities........" "..The transaction about purchase of winning ticket takes place in secre....
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..../-was awarded by the Indore Municipal Corporation, Indore vide their date of order dt. 27.02.2008, the financial year is taken as 2007-08 relevant to Asst. ear 2008-09. Moreover, the agreement was also signed between the two parties in the financial year 2007-08 and hence, the addition is made for the Asst. Year 2008-09. Addition of Rs. 13,42,84,130/-." 17. The learned CIT (A) has decided the issue from para 2.6.13 to 2.6.15 which reads as under: "2.6.13 Before choosing to place reliance the Supreme Court decision in the case of Sumati Dayal and the case of Durga Prasad More the Assessing Officer notes the seized material in situ has to be seen as circumstantial evidence. This stand has to be upheld since it is in the very nature of such transactions that there would be no direct evidence. That the scope of evidence under the Income-tax Act is wider than what is understood under the Evidence Act is well known. Evidence under the Income-tax Act can go beyond direct evidence to include material gathered by the Assessing Officer in an enquiry or material which is within his personal knowledge or such other material that may come into his possession subject only to the....
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.... claim for expenditure incurred by the Company in works awarded to certain subcontractors of whom seven were identified, was being withdrawn. This amount related to a sum of Rs. 7,13,73,002/- in F.Y.2007-08 (A.Y.2008-09) and Rs. 2,54,43,273/- in F.Y.2008-09 (A.Y.2009-10). Following up, in the assessment proceedings - where the assessee in the face of an enquiry by the Assessing Officer found it necessary to withdraw certain expenditure claimed in the same Indore project for similar reasons, the admission related to F.Y.2008-09 (A.Y.2009-10) amounting to Rs. 1,18,16,873/- and F.Y.2009-10 (A.Y.2010-11) amounting to Rs. 30,82,722/-. The fact that such unverifiable payments are being identified across multiple assessment years can sustain a reasonable hypothesis of cash outside the books deployed for unstated purposes including those identified by seized/impounded material discussed above in more than one assessment year. 2.6.15 While the nature of expenses incurred relevant to the Indore project would tend more to being loaded upfront rather than continue as a recurring expense, the fact remains that the work tends to receive administrative scrutiny in pha....
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....-II) stated that an amount of Rs. 65 crores was being admitted as undisclosed income in the hands of assessee company. He has further stated that he will furnish the breakup of this disclosure assessee year wise after verifying the entire seized material. In the course of post search proceedings, Shri A.A.V. Ranga Raju has made an admission of only Rs. 60,49,44,910/- related to the seized material. In view of this, Shri AAV Ranga Raju was asked to explain the discrepancy. In response Shri AAV Ranga Raju in his sworn statement dated that after verifying the seized material and considering the issues emerged during the course of post search proceedings, the income pertaining to the financial years 2005-06 to 2009-10 and up to the date of search i.e., 1st April, 2010 to 6th October, 2010 was arrived at Rs. 60.50 crores. He stated that however, considering the complexity of works the company is handling the issues emerged out of the proceedings an additional amount of Rs. 4,50,55,095/- is admitted to tax during the financial year 2010-11 to meet all the eventualities that may arise. In view of this an amount of Rs. 4,50,55,095/- is further admitted in the hands....
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....ubmitted that the reliance of the Assessing Officer and the learned CIT (A) in the case of Durga Prasad More is without any basis. 23. The ld LD.AR had also filed the following written submission in support of the ground and additional ground which is as under: "Gr. 2: Addition of Rs. 13,42 cr. being payment outside the books of account. The Assessing Officer has held that the assessee has incurred cash expenditure outside the books of account amounting to Rs. 13.42 cr. Based on the material recovered from the premises of one Mr. Mukesh Sharma, during the course of search in July 2008, the Assessing Officer concluded that the assessee must have paid commission of Rs. 24.60 cr. outside the books of account being 9.25% of contract value of Rs. 266.87 cr. The Assessing Officer further observed that the assessee has offered to tax certain alleged bogus expenses of Rs. 11.17 cr. (Rs. 9.68 cr. And Rs. 1.49 cr) and the payments to that extent are treated as explained. Accordingly, he has made the addition of balance amount of Rs. 13.43 cr. (Rs. 24.60 cr. - Rs. 11.17 cr.) for the year under consideration. The Ld. CIT (A) has redistributed....
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....onsideration. There is no question of making upfront payment of commission on the entire amount. The assessee, seasoned businessman was fully conscious about the fact that there is no certainty of getting the full contract work and the same is going to take few years for completion. The addition should be restricted to 9.25% of Rs. 126 cr., which comes to Rs. 0.49 cr. (Rs. 11.66 cr. - Rs. 11.17 cr.). 5. Further without prejudice to the above and strictly in the alternate, it is submitted that in respect of residual addition if any, the set off may be given in respect of additional income declared by the assessee as under: (i) Rs. 11,21,87,364/- in A.Y. 2010-11 (page no. 3 to 5 of assessment order). (ii) Rs. 4,50,55,095/- in A.Y. 2011-12 (page no. 8 of assessment order). 6. It is submitted that the amount of Rs. 11.21 cr. has been added in A.Y. 2010-11 and the nature of addition and the underlying transactions are identical to that of additions of Rs. 9.68 cr. and Rs. 149 cr. (in respect of which set off has been granted by the Assessing Officer himself). Since the above amount has already suffered a tax, th....
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....se of the Revenue which is as under: "A search was conducted in the case of Shri. Mukesh Sharma by the Bhopal unit of the department in July 2008 where in certain incriminating documents/loose slips relating Nagarjuna Construction Company Ltd. were found and seized which are appearing on page no 22 to 25 of the Assessment Order. As a consequential action, a survey and search actions were conducted in the case of the assessee NCC Ltd. in January 2010, where again certain incriminating documents were found and seized. One such page is appearing on page 18 of the assessment order, legible copy of which was filed by the Ld.AR of the appellant while arguing his case before the Hon'ble Tribunal. 2. Main issue relates to the addition of Rs. 13,42,84,130 made by the AO in the AY 2008-09 while passing the order us 153A r.w.s. 143(3) of the Act. The AO discussed the issue and his conclusions are in paragraphs 4.24 to 4.28 of his order. The ld.CIT (A) discussed the issue, arguments of the assessee on page nos. 3 to 17 of his order in para 2 and his conclusion are in paragraphs 2.6.14 and 2.6.15 of the order. 3. The AO, based on the incriminating documents e....
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....xceed 5%, therefore, the percentage 9.25 may be reduced. 6. I have made many oral submissions against the arguments of the Ld AR and the propositions made by him, this same are submitted in writing for kind consideration and extraction in the order as arguments of the department. (a) With regard to the proposition that percentage of estimation on 266.87 may be reduced, it is submitted that this proposition may not be accepted for the following reasons: (b) The paper on which Percentage of 7.8% and 5% are appearing was seized from the office premises of the assessee and the loose slips reproduced on page 23 and 24 of the assessment order on which 9.25% and Nagarjuna 266.87 (total contract value) are mentioned, were seized during the search in the case of Shri. Mukesh Sharma, the liaison/tout/broker working in IMC in getting contract works (c) As per jotting on the loose sheets the 9.25% of 266.387 crores was paid to the. certain officials at IMC who were involved in granting the contract work of 266.87 to the assessee. This payment was made upfront for granting the contract and it is different from 7.8% mentioned against the Officials in the Engin....
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....later years to AY 2008-09. (c) Further, each assessment is separate as per the ROI filed under 153A, therefore, no fresh deduction/set off can be given in at this stage. Reliance is placed on SC decisions in the case of M/s. Sun Engineering works Ltd. 198 ITR 297 (SC). 24. We have heard the rival contention of the parties and perused the material available on record and the judgements cited by the respective parties. In the present case, search and seizure action was carried out in the residential premises of one Shri Mukhesh Sharma in July, 2008. During the course of search, certain documents were found relating to the assessee. From the perusal of the documents, it was noticed that the assessee had received two contracts of Rs. 266.87 crores and for getting the said contracts, the assessee had made the payment of Rs. 9.25% on the contract value to Minister, Officials (Principal Secretary, Urban Administration and Development Commissioner, Urban Administration and Development Mayor, Commissioner Nagar Nigam etc. In the seized documents, the distribution of payments was mentioned as 6% (M) 1.25% (P, 0.25% to (C), 1% to (M) and 0.50% was also paid. Thus, total ....
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.... the addition, however, the ld.CIT(A) for the reasons reproduced hereinabove has distributed the amount in three assessment years and the Revenue is not in appeal against the said distribution. 24.2. Before us the contention of the assessee as mentioned hereinabove is that the documents found from the premises of third party cannot form the basis of the addition. In the present case, the survey has been carried out on 25.01.2010 in the premises of the assessee prior to the passing of the intimation u/s. 143(1) dt.09.03.2010 and thereafter, search and seizure operation was carried out in the premises of the assessee. We find no order u/s. 143(3) of the Act was passed by the Assessing Officer and search and seizure operation was carried out in the premises of the assessee and before that a survey action was also initiated. The argument of the assessee that the documents recovered from the premises of Mukesh Sharma cannot be taken into consideration, in our view, is without any basis as the Assessing Officer while passing the order was required to consider the evidences as may be produced by the assessee and after taking into account all the relevant materials which the Assessing O....
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....ey / gratification paid by the assessee for getting the contract cannot be permitted and the Revenue Authorities had rightly made the addition in the hands of the assessee. In view of above reasons and also on account of reasons given by the Assessing Officer / ld.CIT(A), we reject this argument of the assessee. 24.4. The alternative argument of the assessee was that the addition should be restricted to 9.25% of Rs. 126 crores (the value of the work which has been executed in A.Ys. 2008-09 to 2010-11). In our view, the above said argument is also required to be rejected. As mentioned hereinabove, 9.25% was paid by the assessee for grant of the contract of Rs. 267 crores and the contracts were awarded during the assessment years under consideration and therefore, the disallowance was required to be made for the assessment years under consideration. The argument of the assessee that there was no question of upfront payment made by the assessee after grant of the contract to the persons mentioned in the slip / documents found from the premises of Mukhesh Sharma, is required to be rejected. In fact, during the survey at the premises of the assessee, another sheet was found....
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....ed for A.Y. 2011-12 and the assessee is not in appeal before us. The grounds which have attained finality and when the assessee is not in appeal cannot be disturbed for the proceedings for A.Y. 2008-09. In the appeal of the Revenue for A.Y. 2011-12, this relief cannot be granted. The assessee in the additional ground and in alternative submission has sought to the telescoping of Rs. 11,21,87,364/- and Rs. 4,50,55,095/- (totaling to Rs. 15,72,42,459/-) as against the addition of Rs. 13,42,84,130/-. This relief cannot be granted as the sum of the amount would be more than the addition made by the Assessing Officer and confirmed by the ld.CIT(A). Accordingly, the ground No. 2 and the additional grounds raised by the assessee are dismissed. GROUND NO.3 24.8 The ground No. 3 of the assessee's appeal for A.Y. 2008-09 pertains to the addition of Rs. 1,40,000/- on account of unexplained expenditure. The assessee has not pressed the ground, therefore the same is dismissed as not pressed. 24.9 The Revenue filed the appeal vide ITA No. 77/Hyd/2017 for the A.Y 2008-09 and raised the following grounds: "1. Whether on the facts and circum....
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....the following reasons has allowed the appeal at page No. 34 vide para 7.1 to 7.3 as under: 28. Aggrieved with the order of the learned CIT (A), the Revenue is in appeal before the Tribunal. 29. At the outset it was submitted that the reason for filing the appeal was that for the earlier year, relief has been granted by the Tribunal and based on that the ld.CIT(A) has also granted relief and thereafter, Assessing Officer passed the order giving effect in favour of the assessee. It was submitted that the Revenue is in appeal before the Hon'ble High Court and the present appeal was filed only with a view to keep the issue alive. The learned DR also submitted that the Revenue had also filed the additional ground as reproduced above. The Ld.DR had also filed the written submissions in support of the case of the Revenue. The written submissions of the Revenue for disallowing the claim of the assessee u/s. 80IA is as under: "7.1 Assessee claimed deduction u/s. 80IA(4) of the Act for the works executed during the year. The AO disallowed the same relying on the arguments made in the assessment orders for the AYs.2005-06 to 2007-08, Ld. CIT (A) deleted the addition relyin....
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....15-16 and 2016- 17 in ITA No. 1514 and 1515/Hyd/2019 dated 26.05.2023. 34. The learned AR further submitted that the Revenue is bound to follow the principle of consistency. It was submitted that the fact of the previous A.Y are identical to the subsequent AYs. It was also contended that the projects for which the Department had granted 80IA (4), are continuing in the subsequent assessment years and therefore, the principle of consistency is required to be followed. The LD.AR had relied upon the following decisions: 1. CIT vs. Excel Industries (358 ITR 295) 2. Radhaswamy Sansangh vs. CIT 193 ITR 321 3. PCIT vs. Gujarat Narmada Valley 422 ITR 164 4. Prasad Multi Services Pvt Ltd vs. DCIT 423 ITR 542 5. CIT vs. Escorts Ltd 338 ITR 485 35. In rebuttal, the learned DR submitted that the Tribunal in the case of NCC Mytas for the A.Y 2006-07 after elaborate examination of the facts had decided the issue against the assessee and our attention was drawn to Paras 9 to 17 of the said decision which is to the following effect: "9.1 The assessee's first and foremost plea that we ought to adopt liberal interpretation while con....
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....ed a work contract as not entitled for the impugned deduction despite the fact that the concerned assessee satisfied all other conditions in sub-section (4) of section 80IA of the Act. We find force in Revenue's instant argument as the Finance Act, 2009 substitutes the earlier explanation that the same would not cover a works contract for the purpose of providing deduction qua industrial undertaking or enterprise engaged in infrastructure development, etc. 12. There is yet another equally important aspect which requires our apt adjudication at this stage i.e. of the clinching legislative expression in the latter explanation "nothing contained in this section shall apply in relation to a business referred to in subsection (4) which is in the nature of a works contract awarded by any person (including the central or the state government)". We note that honourable apex court yet another larger bench decision in Kartar Singh Bhadana Vs. Hari Singh Nalwa & Ors Civil Appeal No. 6931 of 2000 decided on 27.03.2001 had an occasion to deal with the expression "works" used in section 9-A of the Representation of People Act, 1951. Hon'ble court therein went by the shorter....
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.... agreement stipulated advance payments to the assessee qua supply of goods at the site. All these facts sufficiently indicate that the assessee, assuming that not accepting that it is the developer u/s. 80IA(4) of the Act, executed a works contract only under Explanation to section 80IA of the Act and therefore, not entitled for the impugned deduction. 14. The assessee next made a very strong endeavor to place reliance on a catena of case law (supra) including CIT Vs. ABG Heavy Industries Limited (2010) 322ITR 323 (Bom). We find that neither of these decisions deals with the interplay between the section 80IA(4) Vs. 80IA Explanation involving execution of works contract as is the factual position before us. The said case law distinguished, therefore. 15. Mr. Afzal's last argument seeks to buttress the point that such a strict interpretation employed in dealing with an instance of development of an infrastructure project would tantamount to closing the deduction chapter altogether and more particularly, when this assessee has borne all risks and responsibilities of the lift irrigation project by paying reduction money and performance guarantee(s) as well. We ho....
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....f the order passed by the Tribunal. No order was passed by the Hon'ble High Court staying the order of the Tribunal passed in the appeals of the assessee for the A.Y 2001-02 to 2007-08. Therefore, in the absence of any stay of the order passed by the Tribunal, the rule of consistency requires this Tribunal to follow the decision of the co-ordinate Bench of the Tribunal rendered in the similar facts. In fact, the Hon'ble Supreme Court in the case of Honda Siel Power Products Limited Vs. CIT reported in [2007] 165 Taxman 307 (SC) held as under : "13. "Rule of precedent" is an important aspect of legal certainty in rule of law. That principle is not obliterated by section 254(2) of the Income-tax Act, 1961. When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the Court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. In the present case, the Tribunal was justified in exercising its powers under section 254(2) when it was pointed out to the Tribunal that the judgment of the co-ordinate....
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.... were of the opinion that the goods ought not to be released pending the appeal, the straight-forward course for them is to obtain an order of stay or other appropriate direction from the Tribunal or the Supreme Court, as the case may be. Without obtaining such an order they cannot refuse to implement the order under appeal. 37. Following the above decisions of the Supreme Court, a Division Bench of the Bombay High Court in Ganesh Benzoplast Ltd. v. Union of India 2020 (374) ELT 552 held that non-compliance of orders of the appellate authority by the subordinate original authority is disturbing to say the least as it strikes at the very root of administrative discipline and may have the effect of severely undermining the efficacy of the appellate remedy provided to a litigant under the statute. Principles of judicial discipline require that the orders of the higher appellate authorities should be followed unreservedly by the subordinate authorities. 38. This principle has been reiterated by the Bombay High Court in Himgiri Buildcon & Industries Ltd. v. Union of India 2021 (376) ELT 257. 39. Therefore, the stand taken by the Assessing Officer that since th....
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....y the Tribunal and against the said decision, the Revenue is in appeal before the Hon'ble High Court. Once an issue has been decided by the Tribunal in assessee's own case for the earlier years, and the facts remain the same, then in that case, the order of the Tribunal in assessee's own case has to be followed as against the decision of Tribunal in the case of some other assessees wherein the facts were totally different. After passing of the order by the Tribunal in case of the assessee, there is no decision of the jurisdictional High Court or of the Hon'ble Supreme Court against the assessee, whereas there are number of decisions in favour of the assessee on this issue by various High Courts and different Benches of the Tribunal. 38.2 Secondly, the ld.CIT(A) while granting the relief to the assessee had called for the remand report from the Assessing Officer and based on the remand report only, the ld.CIT(A) has granted the relief to the assessee. Moreover, the sole reason for passing the order by the Assessing Officer was the detailed reasons mentioned in assessment order for the A.Ys. 2005-06 to 2007-08.......". As mentioned herein above, the Tribunal vide order dt.23.1....
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....record. The singular issue, which arises for consideration in this appeal is whether the tribunal is correct in holding that discount on the issue of ESOPs i.e., difference between the grant price and the market price on the shares as on the date of grant of options is allowable as a deduction under section 37 of the Act. Before proceeding further, it is apposite to take note of section 37(1) of the Act, which reads as under: Section 37(1) says that any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head, "Profits and Gains of Business or Profession". 7. Thus, from perusal of section 37(1) of the Act, it is evident that the aforesaid provision permits deduction for the expenditure laid out or expended and does not contain a requirement that there has to be a pay out. If an expenditure has been incurred, provision of section 37(1) of the Act would be attracted. It is also pertinent to note that....
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....es would also be expenditure incurred for the purposes of section 37(1) of the Act. The primary object of the aforesaid exercise is not to waste capital but to earn profits by securing consistent services of the employees and therefore, the same cannot be construed as short receipt of capital. The tribunal therefore, in paragraphs 9.2.7 and 9.2.8 has rightly held that incurring of the expenditure by the assessee entitles him for deduction under section 37(1) of the Act subject to fulfilment of the condition. 11. The deduction of discount on ESOP over the vesting period is in accordance with the accounting in the books of account, which has been prepared in accordance with Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999. 12. So far as reliance place by the revenue in the case of Infosys Technologies Ltd.(supra) is concerned, it is noteworthy that in the aforesaid decision, the Supreme Court was dealing with a proceeding under section 201 of the Act for non-deduction of tax at source and it was held that there was no cash inflow to the employees. The aforesaid decision is of no assistance to d....
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....4) in assessment year 2008-09 shall apply mutatis-mutandis in these appeals too. Accordingly, ground no.1 of Revenue for ITA Nos. 78, 79 and 80/Hyd/2017 is dismissed. 44. Now we deal with ground nos.2 and 3 of Assessee's appeal in ITA No. 74/Hyd/2017 for A.Y. 2009-10 GROUND NOS.2 AND 3 45. The Assessing Officer has discussed this issue on page no.39 to 49 of his order. Based on a seized paper (copy enclosed) concerning one of the subcontractors of the assessee, the Assessing officer has come to the conclusion that the assessee has incurred certain expenditure which is not allowable. 46. The ld.AR for the assessee had submitted that the addition made by the Assessing Officer is unsustainable for the following reasons : a) The contract given to M/s Bharat Engineering was on back-to-back basis, wherein the assessee was to earn fixed margin and had nothing to do with the actual expenditure incurred by M/s Bharat Engineering. b) Normally, in the case of back-to-back contract, the assessee is not Concerned with expenditure incurred by the sub-contractor because payments are always released only after receipt of money from the client. However, i....
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.... for in respect of ground no. 2 of the assessee's appeal for A.Y. 2008-09. 48. Per contra, ld.DR relied upon the order passed by the Assessing Officer and the ld.CIT(A). 49. We have heard the rival submissions and perused the material on record. The Assessing Officer in Para 7.7 of his order has mentioned that the inquiries were made from BECCPL about the amount of Rs. 50,35,000/- and thereafter, had recorded that the expenditure which was unexplained expenditure were forming part of the settlement amount paid by the assessee to BECCPL. The copy of the statement recorded u/s. 131 was also provided to the assessee. The assessee had given the reply and the Assessing Officer after considering the reply had made the disallowance of Rs. 1,48,03,480/-. On appeal, the ld.CIT(A) had restricted it to an amount of Rs. 50,35,000/-. The ld.AR had submitted that the contract was given to BECCPL on back-to-back basis since the contract was terminated in between and thereafter, it was assigned to another company, and therefore, as a full and final settlement, an amount of Rs. 1.48 crores was given to the said BECCPL. In fact, the loose sheets found during the course ....
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....nsustainable for the following reasons: (i) The contract was given to M/s. M. K. Constructions on a back-to back basis and, hence, the assessee is not concerned with the expenditure incurred by the sub-contractor. (ii) The assessee is not concerned with the expenditure as the payment is made to the subcontractor only when the corresponding payment is received from the client. However, in the present case, the contract was delayed due to certain reasons attributable to the client and in order to support the subcontractor, the payment was realized even prior to the corresponding receipt from the client. Therefore, the assessee had undertaken the exercise of examining the expenditure incurred by the subcontractor. The entire contract is based on principal-to-principal transaction and, hence, disallowance cannot be made in respect of expenditure allegedly incurred by the subcontractor. All the arguments made with respect to ground no. 2 and 3 of assessee's appeal for A.Y. 2009-10 are applicable in respect of this ground also. 52. Per contra, ld.DR relied upon the orders passed by the lower authorities. 53. Heard the rival submissions of both the parties and ....
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....omes to Rs. 36,68,780/-. Therefore, we found that only illegal payment made by the sub-contractor and reimbursed by the assessee would not be more than this amount of Rs. 36,68,780/- 54. However, with respect to the extra quantity, payment of Rs. 71,50,000/- though it was mentioned as departmental expenditure, but nothing was brought on record to show extra quantities, grounding and earth work done by MK Constructions would form part of the department commission. In view of the above, we do not find that the amount of Rs. 71,50,000/- can be said to be commission on illegal payment. The document which forms basis for the addition do no show that it was a commission paid by the MK Construction or by the assessee for clearance of its bills. In view of the above, we are of the opinion that the commission paid by the assessee to an amount of Rs. 36,68,780/- is required to be sustained being illegal / gratification money and the remaining amount of Rs. 71,50,000/- is required to be deleted and accordingly, we delete the same. Thus, this ground is partly allowed. 55. In the combined result, the appeals of the assessee in ITA Nos. 74 and 75/Hyd/2017....
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....S to Government (e) filing of tax deduction at source quarterly returns. As far as the assessee could remember all the subcontractors have produced proof that they were assessed to tax. v) The sub-contracts have been awarded work considering the locational advantage of the respective persons. The expenditure incurred on these sub-contractors are a part of the project execution expenditure. At no point of time, there could be any diversion of such expenditure for any other purpose. vi) All the transactions with the sub-contractors were duly recorded with the books of account regularly maintained by the company. vii) Despite taking all the above precautions and following the due procedure, it would not be possible to retain some of the sub- contractors and job workers forever. Some of them could be the fly by night operators. However, considering their strength in the project work location and their contacts and connections with the locals to overcome certain problems in implementing the project, the company had to award certain works to these sub-contractors. These are practicalities of the contract business which cannot....
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.....) 1 2007-08 2008-09 71373002 2 2008-09 2009-10 25443273 Total 96816275 Addition as admitted by the assessee in respect to payment to sub- contractors inadmissible according to the assessee. Penalty proceedings u/s 271(1)(c) of the Act are initiated for furnishing inaccurate particulars of income and concealment of income in this regard. Admitted addition Rs. 7,13,73,002/- Document 2 4.12 In this connection, it is to be stated that in the course of survey proceedings conducted simultaneously along with the search proceedings, a loose sheet vide PageNo.68 of Sl.No.9 was impounded from the office premises of the assessee- company at Bhopal. The loose sheet contained details of payments to be made for a project under Indore Municipal Corporation (IMC-Sewerage) Project to various officials. A copy of the loose sheet is reproduced as under: NAGARJUNA CONSTRUCTION COMPANY LTD S.No IMC-SEWERAGE WORK INDORE MISC.EXP PAYMENT DETAILS percentage NAME 1 Commissioner 2 Add.Commissioner 0.75 0.50 3 Superiendent Eng 1.50 4 Project Officer( CENTRAL) 0.50 5 Project Office (east) 0.50 ....
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....007-08 vide order u/s. 153A r.w.s. 143(3) dt. 28.03.2013, the claim of the assessee under Section 80IA is disallowed and added to the returned income. 9.2 Penalty proceedings u/s 271(1)(c) of the Act are initiated for furnishing inaccurate particulars of income and concealment of income in this regard. Addition: Rs. 35,32,06,010/- Document 6 7.1 The assessee disputed the addition vide Ground No.6 & 7 (in AY 2008-09) to the effect that basic facts of the eligible projects undertaken by the assessee were not appreciated. The objections raised in the written submissions are identical for the other assessment years 2009-10 to 2011-12 also. It was stated that the assessee was in the business of development of roads, bridges, water supply systems, irrigation projects and airports which were eligible for the deduction. Reference was made to the contractual agreement entered into with a government or government agency for constructing an infrastructure facility which provided for building as well as maintenance with its own financial resources, technical expertise, material, and manpower. It was also stated that all associated risks were....
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....e this office letter dated 22.01.2015 calling for an examination of the project details furnished in the light of the above referred decisions of the Hon'ble ITAT in the assessee's own case. The report of the Assessing Officer dated 03.02.2015 forwarded by the Addl. C.I.T., Central Range-1, Hyderabad on 17.02.2015 records that the Assessing Officer upon verification of agreements found that the like the 36 projects examined in earlier years the 19 projects commenced during the year also satisfied the conditions prescribed by the ITAT in the cited orders. As a result, the claim for deduction u/s.801A(4) in respect of the 55 projects relevant to A.Y.2008-09 now stands endorsed. Similarly, in AY 2009-10 the Assessing Officer reported that out of the 65 projects in respect of whose profits the deduction was claimed 28 projects continued since assessment years 2007-08 where the conditions were seen to have been satisfied in the remand proceedings directed by the ITAT. In respect of 13 projects there is an overlap with A.Y.2008-09 where verification showed that the contract agreements fulfilled the criteria setup by the Hon'ble ITAT referred to ....
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....d allowed as stated in the order consequential to the Hon'ble ITAT order. This was found to be in order. The balance 19 projects commenced during the year and were verified with agreements in respect of the same. As a result, it was found that the conditions as laid down by the Hon'ble ITAT in its order and as per the provisions of section 801A of the IT Act, 1961, were fulfilled in respect of these 19 projects too. Copy of the chart submitted by the assessee showing the 55 projects, duly verified is enclosed. A.Y 2009-10: For the year under consideration, the assessee company had claimed deduction u/s 801A in respect of profits from 65 projects. The assessee submitted chart giving details of the 65 projects specifying whether the conditions as laid down in the order of the Hon'ble ITAT as referred above were fulfilled. It was found that, out of the total 65 projects, 28 projects continued since the assessment year 2007-08 where deduction u/s 801A in respect of the same was examined and allowed as stated in the order consequential to the Hon'ble ITAT order. Further, 13 projects overlapped since A.Y 2008-09 where the agreements were already ver....
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.... Income Tax, Central Circle-1(1), Hyderabad. Document 8 1. 2. 3. 4. 5. Judgment of the Hon'ble Bombay High Court in the case of Jivatlal Purtapshi v. CIT (65 ITR 261) Relevant pages from the order of Pune Bench of the Hon'ble Tribunal in the case of Dr. D.Y. Patil Pratisthan v. DCIT for A.Y. 2006-07 in ITA No. 1592 and 1612/PN/11 dated 14.12.2012 Judgment of the Hon'ble Madras High Court in the case of Ramanlal Kamdar v. CIT (108 ITR 73) Judgment of the Hon'ble Punjab and Haryana High Court in the case of Banta Singh Kartar Singh v. CIT (125 ITR 239) Order of Hyderabad Bench of the Hon'ble Tribunal in the case of ITO v. Shri Ramanalal Gudivada for A.Y. 2016-17 in ITA No. 178/Hyd/2020 dated 06.10.2021 6. Order of Hyderabad Bench of the Hon'ble Tribunal in the case DCIT v. Tracks & Towers Infratech P. Ltd. for A.Ys. 2015-16 and 2016-17 in ITA Nos. 1514 and 1515/Hyd/2019 dated 26.05.2023 7. Judgment of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT (229 ITR 383) Document 9 à¤à¤¾à¤°à¤¤ सरकार वितà¥à¤¤ मंतà....
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....,12,97,840/- as expenditure on account of shares allotted under an Employee Stock Option Plan that was stated to have been approved by the Stock Exchange Board of India. The Assessing Officer held that the expenditure is not only notional in nature but also in the capital field. Even if the future loss of share premium can be seen as an expenditure it is in the nature of a contingent liability that cannot be charge on Revenue account. He also noted that a similar addition was made for A.Y.2007-08 which was upheld by the CIT(A). 8.1 The assessee company challenged this addition vide Ground No.8 stating that the claim for expenditure is based on the certainty of incurring the liability on account of the offer to its employees and this aspect was not considered by the Assessing Officer. In the written submissions the Ld. A.R. placed reliance on para 62 of the ITAT's order in its own case, dated 23.10.2013 in ITA No.1025/Hyd/2010 for A.Y.2007-08, where the claim was allowed with a direction to the Assessing Officer to examine the claim in the light of the Special Bench decision of the ITAT, Bangalore in the case of Biocon Ltd. v. Dy. CIT. ....