2013 (1) TMI 674 - AT - Income Tax

Assessee contended that The order appealed against, though made in pursuance to a section 263 order, is nevertheless an assessment under section 143(3) and, accordingly, the first appeal there-against would lie only before the first appellate authority Held that - in no uncertain terms, that even though the assessment under reference is titled as an assessment under section 143(3) read with section 263 of the Act, the same is in essence and substance only an order giving effect to the revisionary order, inasmuch as the ld. CIT has given clear directions to the assessing authority for carrying out specific additions/disallowances, leaving no room for verification or adjudication by the assessing authority. - CIT(A) has no power to hear appeal against such orders. Depreciation Claim of higher depreciation - Assets used to running them on hire - The assessee having claimed it at 40%, i.e., as against the normal 25% Held that - The assessee admittedly letting out tractors, i.e., presuming so, only when the same are not required for its construction purposes, no case for charge of depreciation at the higher rate on own tractor/s, is, under the circumstances made out for us to interfere with the order In favour of revenue Deduction in respect of Sales Tax Assessee paid Rs 40.53 lakhs as sales tax Paid excess of Rs. 5.91 lakhs adjusted against liabilities against earlier years - Held that - Under the circumstances, and in the interest of justice, we, therefore, only consider it fit and proper to restore the matter back to the file of the A.O. to undertake the necessary examination and verification, and decide the issue on the basis of the facts determined by him in accordance with law - Remand back to AO Addition on account of Retention money - Retention of a part of the value of a contract sub-contracted by the assessee to another - assessee had shown retention of the stipulated 8% - additional work done by the sub-contractor Held that - TDS certificate/s is issued for the total value of the contract (Rs.194.75 lakhs), the assessee could recognize income in its accounts only for the value for which work is certified, and for which it can be claim to be paid. unable to say as to how and on what basis ld. CIT has found the impugned amount to be unaccounted for, directing for its addition. In our view, that survives the assessee s explanation, however, is if the amount claimed by way of TDS is on the entire amount of Rs.194.75 lakhs, i.e., for which the TDS certificate stands issued to it, or is restricted to the amount proportionate to the amount accounted and claimed by it as its income for the year, i.e., Rs.179.31 lakhs. In favour of assessee

Issues Involved:
1. Maintainability of the appellate order.
2. Depreciation on tippers.
3. Depreciation on tractors.
4. Claim for sales-tax.
5. Retention of contract value in sub-contracting.

Issue-wise Detailed Analysis:

1. Maintainability of the Appellate Order:
The assessee argued that the appellate order was not maintainable as the Commissioner of Income-tax (Appeals) [CIT(A)] did not dispose of the appeal on merits but dismissed it on the basis of non-maintainability. The appellate order under section 263 of the Income-tax Act, 1961, was essentially an order giving effect to the revisionary order, leaving no room for verification or adjudication by the assessing authority. The Tribunal agreed with the CIT(A) that the appeal against such an assessment on merits was precluded by law, affirming that the CIT(A) rightly refrained from deciding the same. Consequently, the assessee's appeal against the impugned appellate order was rejected.

2. Depreciation on Tippers:
The assessee claimed depreciation on 12 tippers purchased on the last day of the previous year, which was allowed by the Assessing Officer (AO) without verification. During the hearing, the assessee's representative stated that this ground was not being pressed. Accordingly, the claim was dismissed as not pressed.

3. Depreciation on Tractors:
The assessee claimed depreciation at 40% on tractors, asserting they were hired out, which was not verified by the AO. The Commissioner of Income-tax (CIT) found the explanation unacceptable due to lack of substantiation and restricted the claim to the normal 25%. The Tribunal found no infirmity in the CIT's order, noting the absence of enquiry or application of mind by the AO, which made his order erroneous and prejudicial to the interest of the Revenue. The assessee failed to provide necessary details to substantiate the claim, leading to the Tribunal upholding the CIT's decision.

4. Claim for Sales-Tax:
The assessee claimed sales-tax of Rs.43.53 lakhs, but the CIT found the liability assessed at Rs.16.53 lakhs. The assessee clarified that the assessed liability was Rs.39.34 lakhs, not Rs.16.53 lakhs. The Tribunal noted that the AO had not examined the matter, and any payment in excess of the liability was not deductible. The CIT restricted the disallowance to Rs.4.18 lakhs and added Rs.1.72 lakhs as refund not offered as income. The Tribunal restored the matter to the AO for necessary examination and verification, directing the AO to decide the issue based on facts determined in accordance with the law.

5. Retention of Contract Value in Sub-Contracting:
The CIT found that the assessee had not retained the required 8% of the net consideration on a sub-contracted amount. The assessee explained that the entire contract receipt and mandatory charges were duly accounted for, and the difference was due to additional work by the sub-contractor. The Tribunal found the assessee's explanation correct and complete, noting that the entire contract value was accounted for, and the CIT's adverse inference was misconceived. The Tribunal directed the AO to verify the TDS aspect and modify the assessment accordingly.

Conclusion:
The assessee's appeal in ITA No. 1009/Hyd./2011 was dismissed, while the appeal in ITA No. 735/Hyd./2011 was partly allowed and partly allowed for statistical purposes. The Tribunal's order was pronounced in open court on 30.11.2012.

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