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TMI Blog2013 (1) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... rposes, 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 fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of the impugned appellate order, the same was gone through. The same clarifies, 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. We are, thus, in complete agreement with the ld. CIT(A) that his proceeding to decide the assessee s appeal against such assessment on merits is precluded by law, being hit by Explanation (c) to section 263(1) of the Act, and affirm that he has rightly refrained from deciding the same. In fact, the Assessing Officer himself, in response to the assessee s arguments before him, admits that he has no scope for applying his mind in respect of three of the four matters being dealt with by him. Further, we, on perusing the entire impugned revisionary order to satisfy ourselves with regard to the validity of the finding by the ld. CIT(A), i.e., of the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D.R. in view of the assessee having been allowed specific opportunity by the ld. CIT for the purpose, whereat the assessee failed to prove his claim (refer para 4.2 of the revisionary order). 5. We have heard the parties, and perused the material on record. We find no infirmity in the impugned order on the assessee s this ground. We have already noted the absence of any enquiry or application of mind by the AO in the matter, which would make his order per se erroneous to the extent that it is prejudicial to the interest of the Revenue. Merely crediting some sums in the accounts would not prove the fact of the same flowing by way of hire charges. We can understand of the assessee submitting the primary details, viz. the tractor numbers; the name/s and address/s of the party/s to which tractor/s were hired out; the terms, as well as the period thereof, etc., so that it has at least made out a prima facie case before us, which could then be considered for restoration for necessary verification. Why, the amounts having been received by the assessee in cash, would only have been duly receipted by him, so that some of the said basic information would flow there-from, while the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s order would not survive as there is no basis for a valid assumption of jurisdiction u/s. 263. Even as clarified by the Bench during the hearing, the wrong figure of Rs.16,53,127/- stated in the show cause notice notwithstanding, we could hardly disagree more with the ld. A.R. This is as apparently there continues to be a difference between the sales-tax liability for the relevant year as assessed and that paid by the assessee, so that an explanation for the balance would in any case need to be furnished in the section 263 proceedings. True, section 43B of the Act stipulates the condition of payment for deduction of the sums specified therein, which includes sales-tax, but the same is only an additional qualification, so that the sum should be otherwise deductible. Any payment in excess of the liability is only a payment in advance or in excess, and would thus not be entitled for deduction, which in the present case is only under section 37(1) of the Act. The whole premise of the show cause notice, as issued by the ld. CIT, is toward examining the assessee s claim for sales-tax, being apparently paid and, thus, made in excess of the assessed liability toward sales-tax. Further on, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r alia, Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC); Ram Pyari Devi Sarogi v. CIT, 67 ITR 84 (SC); Swaroop Vegetable Product Industries Ltd. v. CIT, 187 ITR 412 (All.);Gee Vee Enterprises v. CIT (Addl.), 99 ITR 375 (Del.); Rajalakshmi Mills Ltd. v. ITO, 121 ITD 343 (Chennai) (SB)]. 7.2 Coming to the merits of the case, the assessee has explained that the amount paid during the year, which is, in fact, substantially (Rs. 40.53) by way of tax deducted at source, recovered from his account against the bills raised by him on the contractees (with only the balance Rs.3 lakhs being paid by way of a direct payment), to the extent the same works to be in excess, i.e., Rs. 5.91 lakhs, has in fact been not refunded by the Sales Tax Department, but adjusted against the outstanding liability for earlier years, being the previous years relevant to financial years 2002-03 2003-04. The ld. A.R. would take us through the assessee s submissions in this regard dated 12/3/2009 before the ld. CIT (PB pg. 8-11), as also the tabular matrix for the earlier years (supra), to show that the payments made in those years, at which amount the claim for those years stands restricted to, is les ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities (claimed at Rs. 5.91 lacs) of the amount deemed as in excess on assessment of its liability under the relevant statute for the year, against the assessed liability for earlier years, which is outstanding, no case for any addition on this count is made out. Further, by way of abundant caution we may also add that as long as the adjustment qua the impugned amount stands made by the Sales Tax Department, it would not matter when the same is actually made. This is as even the determination of the liability for the current year by the relevant authorities is only on 31/3/2007, i.e., subsequent to the close of the relevant year, and which could not but be otherwise. That is, even the adjustment of the amount paid during the year against liability for the current year takes place later, even after close of the accounts for the year. The only question, therefore, that is relevant is whether the amount claimed as paid, i.e., Rs. 43.53 lacs (or any part thereof) was recoverable from the concerned Department as at the year-end. As such, if and to the extent the same is adjusted against the accrued liability outstanding as at the year-end, though the said adjustment is made later, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its accounts for the year. The fact, however, is that the assessee retained a lower amount, claiming the same to be on account of the additional work done by the sub-contractor. Surely, the entire contract having been sub-contracted, so that the assessee is not required to perform any work in relation thereto, the performance of additional work would only be with reference to the principal contract, entitling charge of additional amount by the assessee-contractor to the contractee. Or at least a query as to why no further claim, i.e., for the additional work carried out (through his sub-contractor), was made by the assessee, which would result in an additional income of Rs. 0.22 lacs (Rs.2.54 lakhs paid x 8/92), i.e., in addition to the stipulated 8% (Rs. 12.43 lacs), while the assessee s accounts admittedly reveal a profit of only Rs. 9.89 lacs (i.e., Rs. 12.43 lacs minus Rs. 2.54 lacs) on this contract. The assessee may well have an explanation for the same, but it cannot claim to have retained the entire 8% and, thus, met the query raised by the ld. CIT (vide his show cause notice) in full, so that he was, in proceeding further, traveling outside the said notice, and which canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ). Even though the assessee could not satisfactorily explain as to why, in that case, credit is allowed to it by the contractee for the full amount, which was stated to be on account of the peculiar method of accounting followed by the Government Departments, we consider that the assessee cannot be held responsible for this, as long as what is stated is true, i.e., that the work has actually been certified by the contractee at Rs.179.31 lakhs only. Further, the assessee having performed the entire work under the contract (though through its subcontractor), so that it would also have been correspondingly charged by the subcontractor for the entire work, it carried over the balance, uncertified work as its WIP as at the year-end. The assessee s explanation is, thus, correct and complete, so that the entire contract value, for which the bill/s were raised by it on the contractee, as well as on it by the sub-contractor, stands duly accounted for. There is no adverse finding by the ld. CIT with regard to any of these primary facts, i.e., apart from the TDS being deducted at a higher amount (for which we have found the assessee as not responsible). We are, under the circumstances, unable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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