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TMI Blog2013 (11) TMI 1274X X X X Extracts X X X X X X X X Extracts X X X X ..... ied PU Decks were defective and the BSP directed the TPI to re-supply the PU Decks or to suffer a recovery and due to rise in the price of PU Decks, the TPI chose to pay the damages and the recovery was made according to contractual terms during the year under consideration - While the same amount of recovery has been taken into account by the assessee during the financial year 2001-02. The financial year ended on 31.3.2002 and the assessee company has made all payments after end of financial year - the recovery of cost of MST Compound by BSP, the payment for erection of building Structures and Technological Structures to M/s HSCL and payment to M/s Andrew Yule & Co. Ltd. against Final Painting was actually settled and made after the end of financial year. - I.T.A.No.4971/Del/2010 - - - Dated:- 7-2-2013 - Shri S. V. Mehrotra And Shri Chandra Mohan Garg,JJ. For the Appellant : Smt. Ranu Mukherjee, Sr. DR For the Respondent : Shri G. N. Gupta ORDER Per Chandra Mohan Garg, Judicial Member This appeal has been filed by the Revenue against the order of Commissioner of Income Tax(A)-XIX, New Delhi in Appeal No. 104/2009- 10 dated 16.08.2010 for AY 2002-03. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 54 r/w Section 143(3) of the Act on 30.09.2009. The Assessing Officer concluded that the assessee could not furnish confirmation of L T Ltd. to confirm that the dispute in this regard has ended and the liability has actually crystallized during the year under consideration. On the issue of claim for recovery by Bhilai Steel Plant, the Assessing Officer concluded that from the letter submitted by the assessee, it could not be ascertained as to whether the liability has actually crystallized during the year under consideration. The Assessing Officer also disallowed an amount of Rs. 9,85,000 related to non-supply of M/S Compound equipment, Rs. 14,01,372 related to claim against building structure erection and technological structure erection and Rs.1,79,000 pertaining to the payment made to Andrew Yule Company in two parts, one for the cost of equipment, including excise duty and sales tax and packing charges etc. and another for freight only. 5. The aggrieved assessee filed an appeal before the Commissioner of Income Tax(A) which was partly allowed by the impugned order. Now, the revenue is before this Tribunal with the two grounds mentioned hereinabove. Simultaneously, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith following observations and findings:- "12.1 Claim against Extra Quantity by M/s Larsen Toubro: Larsen Toubro [hereafter called L T for short] was to supply the equipment within their Billing Schedule to M/s TPI as per provision of the contract. Since TPI's contract with Bhilai Steel Plant [hereafter called BSP for short] was turn-key basis, L T supplied equipments in accordance with drawings approved by BSP. This resulted in net surplus variation in quantum of equipments supplied by L T. Thus TPI purchased additional equipment from L T additional quantity of equipments over the Billing Schedule.] Thereafter the quantum of equipments and the rate was reconciled between TPI L T and a mutual settlement was signed on 21 December 2001 for an amount of Rs. 37,35,253.00 in respect of said additional equipment supplied by L T as against their claim of Rs.38.68 lakh claimed vide their letter dated 27th August 2001. Accordingly, an expenditure amounting to Rs. 37,35,253.00 only was debited to P L account in the accounting year 2001-02. According to AO a note sheet dated 21.12.2001 with regard to reconciliation of equipment is in the form of proposal and hence, he concluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPI has commissioned the plant on 12.12.2001. Therefore, the Assessing Officer was not justified in observing that the liability was not crystallized during the year under consideration. 11. The Assessing Officer disallowed the disputed payment with following observations:- "4.5. The amount of Rs. 31,42,500/- has been entered in the books by the assessee 31.03.2002 as a claim for recovery by BSP for no re-supply of P.U. Deck Equipment. Assessee was to supply P.U. Deck (part of equipment) to M/s BSP for which BSP was to Rs. 31.42 lakhs to assessee as per billing schedule between assessee and BSP. BSP made the payment as per contractual terms when supply was made. However at the time of trial run/commissioning of the project, it was found that the supplied PU Deck was defective BSP directed assessee either to re-supply the PU Deck or recovery for Rs. 31.42 lakhs was to be made from assessee. However, as the market price of the PU Deck had gone up during past years, assessee decided not to re- supply the P U Deck. Since, assessee was to construct the Project on Turn Key basis, assessee was not supposed to get the money from BSP for re-supply of PU Deck. Therefore, BSP decided to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile gone up, TPI informed to BSP to recover the above cost. Thus the recovery amounting to Rs.31,42,500.00 have been taken into P L account in the accounting year 2001 02, since TPI has commissioned the Plant on 12th December 2001. The following are the contents of the fax message dated 01.09.2001 with regard to supply of PU Decks from BSP to the assessee: "2) PU Decks for Vibrating Screen M/s TPI should supply PU Decks as per provisions of the contract. You are therefore requested to go ahead and supply the items in terms of the contract. You are also requested that air cleaner of the screen should also be commissioned immediately for improved performance. With kind regards." Since the assessee did not dispute, the liability is to be allowed in the impugned year only. Relief: Rs.31,42,500/- " 13. After thoughtful consideration of the facts and submissions of both the parties, at the outset we observe that the revenue has not disputed the point that the assessee made a payment of Rs.31,42,500 as damages PU Decks as per contractual terms when supply was made. This fact also has not been disputed by the revenue that at the trial run it was found that the supplied PU Dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action of the AO is justified. Confirmed: Rs. 9,85,000/- 12.4 Claim against Erection of Building Structure and Technological by M/s Hindustan Steelworks Construction Ltd. [hereafter called HSCL for short]: The Bhilai project was commissioned on 12th December 2001 and therefore, the entire amount of contractual receipt were accounted by TPI in financial year ending 31st March 2002. TPI has engaged M/s HSCL as sub-contractor for execution of erection of Building Structures and Technological Structures. Dispute arose between TPI and HSCL regarding the exact quantum the measurement of the work executed by HSCL and amount payable by TPI to HSCL. These disputes were resolved in a meeting between TPI HSCL held on 12th June 2002 wherein it was agreed that TPI will pay an amount of Rs. 14,01,372.00 to HSCL. Accordingly, HSCL raised the Invoices on 15th June 2002. Hence the action of the AO is justified in treating the liability as not related to the impugned year. Confirmed: Rs. 14,01,372/- 12.5 Claim against Final Painting M/s Andrew Yule Co. Ltd. [hereafter called AYCL for short]: According to the assessee the Bhilai project was commissioned on 12th December 2001 and therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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