2015 (11) TMI 1214 - HC - Income Tax

Addition on account of difference in contract receipts shown by the Assessee and accounted for by its customer Uniproducts India Ltd. ( UIL ) - ITAT deleted the addition - Held that - With the ITAT having returned a definite finding about the Assessee following the percentage completion method and with the Revenue not contending that differential amount was not offered to tax in subsequent FY, the Court is not persuaded to hold that the impugned order of the ITAT suffers any perversity or gives rise to any substantial question of law. - Decided against revenue Addition on account of the purchase made from M/s. Amit Steel on the ground that the said party is not traceable - ITAT deleted the addition - Held that - ITAT has accepted the explanation offered by the Assessee that the purchase was in fact made from M/s. Amit Steel but was wrongly shown as having been made from M/s. Dharm Steel. This was perhaps on account of the fact that both proprietary concerns had the same proprietor. It appears that the Assessee also was able to produce the delivery challan for purchases made from M/s. Amit Steel and this was accepted by the ITAT. This finding of the ITAT having purely turned on facts, the Court is not persuaded to frame any question.- Decided against revenue Disallowance of service tax under Section 43B - ITAT deleted the addition - Held that - ITAT has noted that the service tax payable was not in fact shown as a deduction in the P&L account. Although a statement was made before the AO that the service tax was paid late, the fact remains that for the AY in question the Assessee had not claimed it as a deduction in the P&L Account. Consequently, the question of complying with Section 43B for the AY in question did not arise.- Decided against revenue

Summary

Issues:
1. Addition on account of difference in contract receipts
2. Addition on account of purchase from M/s. Amit Steel
3. Disallowance of service tax under Section 43B

Issue 1: The first issue pertains to the addition on account of the difference in contract receipts between the Assessee and UIL. The Assessee had disclosed receipts of a lesser amount compared to what UIL had debited in its Profit and Loss Account. The Assessee explained that some bills were accounted for in the following Financial Year due to pending defect liability period work. The AO rejected this explanation for lack of supporting documents. The CIT (A) called for a remand report, where the AO stated that the differential amount had not been accounted for in the books. The CIT (A) upheld the addition. However, the ITAT accepted that the Assessee followed AS-7 and the percentage completion method, concluding that the revenue from UIL was shown correctly. The Court found no perversity in the ITAT's order, especially since the Revenue did not argue that the differential amount was not offered for tax in the subsequent FY.

Issue 2: The second issue concerns the addition on account of a purchase from M/s. Amit Steel, which was mistakenly shown as a purchase from M/s. Dharm Steel. The ITAT accepted the Assessee's explanation, supported by the delivery challan from M/s. Amit Steel. Since this finding was factual, the Court did not find any reason to raise a question on this issue.

Issue 3: The final issue involves the disallowance of service tax under Section 43B. The ITAT observed that the service tax was not deducted in the P&L account for the relevant Assessment Year, even though a late payment was mentioned. As the Assessee did not claim it as a deduction, the requirement to comply with Section 43B did not arise. Consequently, the Court did not find grounds to raise any legal questions as urged by the Revenue.

In conclusion, the Court dismissed the appeal, upholding the ITAT's decision on all three issues after thorough analysis and consideration of the arguments presented by the parties involved.