2009 (3) TMI 259 - HC - Income Tax

Whether in law the hon ble Tribunal was right in deleting the addition of Rs. 8,69,000 made by the Assessing Officer as estimated expenses incurred by the assessee in earning dividend income ? - both the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal has come to a finding of fact that there were no expenses incurred by the assessee in earning dividend income and there were no administrative or personal expenses which could be said to be expenses for earning such dividend - Assessing Officer made an addition of Rs.3,11,00,273 on reconciliation of all the receipts of incomplete contracts. The Tribunal has found that similar additions made by the Assessing Officer were deleted for the assessment years 1996-97, 1997-98, 1998-99 and 1999-2000. - Revenue could not place any material before us to show that the orders of the Income-tax Appellate Tribunal for the assessment years 1996-97 to 1999-2000 were challenged. In the circumstances, according to us, question whether the tribunal was justified in deleting the addition made by AO in respect of incomplete contracts does not arise.

Summary

Issues:
1. Addition of value of closing work-in-progress
2. Disallowance of bad debts claimed by the assessee
3. Treatment of income on advances for future projects
4. Deletion of estimated expenses incurred in earning dividend income

Analysis:
1. The issue of the addition of Rs.3,11,00,273 as enhancement of the value of closing work-in-progress was raised. The Tribunal found that similar additions made by the Assessing Officer were deleted for previous assessment years. The Tribunal referred to a formula used for determining the value of work-in-progress, which included "payment received in respect of incomplete contracts up to 30th June." It was argued that this formula was applied for the relevant assessment year, and the assessee was entitled to the benefit of TDS as part of the total receivable amount. Since no challenge was made to the Tribunal's orders for the previous assessment years, the court concluded that this issue did not arise, and it was not pressed further.

2. The questions regarding the disallowance of bad debts claimed by the assessee and the treatment of income on advances for future projects were not pressed by the appellant as they did not arise from the judgment being appealed. Therefore, these issues were not further discussed or analyzed in the judgment.

3. The issue of the deletion of Rs. 8,69,000 as estimated expenses incurred by the assessee in earning dividend income was considered. Both the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal found as a fact that no expenses were incurred by the assessee in earning dividend income. They concluded that there were no administrative or personal expenses that could be categorized as expenses for earning such dividend income. Based on this finding, the court determined that this issue did not arise, and the appeal was summarily dismissed.