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TMI Blog2015 (6) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... leting the addition of Rs. 73,61,294/- made on account of Mobilization advance. 2. The Ld.Commissioner of Income tax (A) has erred in law and on facts in deleting the addition of Rs. 13,20,000/- made on account of Director's remuneration. 3. The Ld.Commissioner of Income tax (A) has erred in law and on facts in deleting the addition of Rs. 16,06,500/- made on account of cessation of liability. 4. On the facts and circumstances of the case, the Ld.Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. 2.1 Briefly stated facts are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s.143(3) of the Income Tax Act,1961 (hereinafter referred to as "the Act") was framed vide order dated 23/11/2009, thereby the Assessing Officer (AO in short) made addition/disallowance of mobilization advance amounting to Rs. 73,61,294/-, disallowance of Directors' remuneration amounting to Rs. 13,20,000/- and made addition on account of cessation of liability of Rs. 16,06,500/-. The assessee feeling aggrieved by the assessment order, preferred an appeal before the ld.CIT(A), who after considering the submissions and following the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment order. It is seen that similar issue came up for consideration in appellant's own case for the A.Y.95-96. CIT(A) held as under:- "It is natural that the party paying advance will deduct the TDS at the time of payment itself because as per income tax provisions it is mandatory to deduct tax at the time of payment. Therefore, it will be wrong to say that in a case of receipt of advance, if TDS has been deducted the appellant has earned income in the same year. Therefore, the addition made by the A.O. deserve to be deleted. Further, it may be pointed out here that as per the provisions of section 199 of the Act, the credit of the TDS shall be given for the amount deducted for the assessment year for which such income is assessable. The appellant company had offered the income in the subsequent assessment year and therefore, the A.O. ought to have given the credit of the TDS in the year for which such income assessable, instead of treating the income of the subsequent year for the year under consideration. The A.O. while giving effect to this order, is directed to give credit of TDS accordingly." 2.1.2. On further appeal, Tribunal held as under:- "After hearing both the parties, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer did not accept assessee's claim holding that since the assessee was following mercantile system of accounting the accrual of income was independent of its receipt. In appeal before the Commissioner, the assessee contended that this uniform pattern has been followed year after year and in all previous years, the stand of the assessee has been accepted. The Appellate Commissioner deleted the addition relying on the decision of the Tribunal. Revenue had carried the order of CIT(Appeals) before the Tribunal. The Tribunal by its judgment dated 27.6.2008 dismissed the Revenue's appeal. Such decision of the Tribunal was carried further in appeal before this Court in Tax Appeal No.163 of 2009, which was dismissed by order dated 3.5.2011. 14. In the result, it would emerge that the central issue on which the Assessing Officer seeks to reopen the assessment previously framed after scrutiny, has been held in favour of the assessee. In that view of the matter, we do not find that the notice can be sustained in law and the same is, therefore, quashed. Petition is disposed of accordingly. Rule is made absolute accordingly." 5.1. In view of the judgement of the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs went up from Rs. 3.6 lakhs; Rs. 2.4 lakhs and Rs. 2.28 lakhs to Rs. 4.8 lakhs; Rs. 3.6 lakhs and Rs. 3.48 lakhs respectively in the current year. A.O. disallowed the entire remuneration paid to directors after discussing the issue at para-4 of the order. The appellant has been able to justify to some extent the payment of remuneration. The three directors are assessed to tax and the incomes returned by them are Rs. 7.81 lakhs; Rs. 3.27 lakhs and Rs. 2.98 lakhs respectively. Taking the facts of the case into consideration, I find it reasonable to direct the A.O. to allow the remuneration to the extent allowed in the immediately preceding A.Y. Thus disallowance of enhanced remuneration to the extent of Rs. 3.4 lakhs stands confirmed and the balance disallowance is deleted. This ground of appeal is partly allowed." 7.1. It is not controverted by the Revenue that in the immediately preceding years, i.e. AYs 2004-05 & 2006-07 the claim of the assessee in respect of the remuneration of Directors' claim was allowed in the scrutiny assessment passed u/s.143(3) of the Act. Since the Revenue has not placed any material on record suggesting that any change into the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred that the said liabilities have seized to exist. The Appellate Tribunal has rightly observed that the Assessing Officer shall have to prove that the assessee has obtained the benefits in respect of such trading liabilities by way of remission or cessation thereof which is not the case before us. Merely because the assessee obtained benefit of reduction in the earlier years and balance is carried forward in the subsequent year, it would not prove that the trading liabilities of the assessee have become non existent. 16. Moreover, as pointed out in the ease of Sugauli Sugar Works (P.) Ltd. (supra), vide the last five lines of the paragraph-6 of the judgement, the question whether the liability is actually barred by limitation is not a matter which can be decided by considering the assessee's case alone but has to be decided only if the creditor is before the concerned authority. In the absence of the creditor, it is not possible for the authority to come to a conclusion that the debt is barred and has become unenforceable. There may be circumstances which may enable the creditor to come with a proceeding for enforcement of the debt even after expiry of the normal period of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord and gone through the orders of the authorities below. The issue has been dealt with us while deciding the Departmental Appeal, i.e. in ITA No.923/Ahd/2011 for AY 2007-08(supra) in paragraph Nos.6 to 7.1. of this order, wherein we have dismissed the ground raised by the Revenue by upholding the order of the ld.CIT(A) in partly allowing the assessee's claim. Therefore, this ground of assessee's cross-objection is also rejected. 12. Ground Nos.2 & 3 are general in nature require no independent adjudication. As a result, assessee's cross-objection is dismissed. 13. Now, we take up the assessee's appeals; i.e. ITA No.1387/Ahd/2012 for AY 2008-09 and ITA No.2126/Ahd/2012 for AY 2009-10. (a) In ITA No.1387/Ahd/2012 for AY 2008-09, the assessee has raised the following concised grounds of appeal:- 1&2. Ld.CIT(A) erred in law and on facts in confirming disallowance of labour charges made by AO of Rs. 80,59,275/- on the basis that genuineness of the labour payment remained unproved. Ld.CIT(A) ought to have deleted the disallowance. It be so held now. 3. Alternatively and without prejudice to above, both the lower authorities erred in not appreciating that app offered for tax amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) decided the issues by observing as under:- "3.4. Taking into account the entirety of facts, I am inclined to agree with the contentions of the Ld.A.O. for the following reasons:- (a) In his counter comments the appellant has furnished new address in respect of these labour contractors. In addition to this the appellant has also furnished new PAN in respect of Bashirbhai Allahrakha. The bank statement reflecting payments to these concerns were also not before the A.O. during the remand report proceedings. These evidences can be accepted during the appellant proceedings only as per the provisions of Rule 46A of the I.T.Rules, 1962. For this purpose, the appellant has to make a specific request and hs to furnish documentary evidences to prove that his case is covered with from exceptions as mentioned in Rule 46A. The appellant has neither made a formal request to admit these additional evidences or filed evidences to prove that in his case the exceptions as mentioned in rule 46A are attracted, accordingly these evidences cannot be accepted. (b) During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to prove the genuineness of expenditure. In fact the appellant has failed to file any documentary evidences to prove the factum of labour jobs done by th4ese contractors. In absence of such vital evidences, genuineness of these expenses cannot be accepted. In view of above facts, I am of the considered view that genuineness of labour charges of Rs. 80,59,275/- remains unproved. Accordingly, I am inclined to agree with the Ld.A.O. and disallowance of Rs. 89,59,275/- is confirmed. This ground of appeal is dismissed." 13.4. It is evident from the order of ld.CIT(A) that he declined to accept the evidences on the basis that no formal request has been made. The contention of the assessee had been throughout both before the AO and the ld.CIT(A) that the assessee made payment to labour contractors, such payment was made for the purpose of business. We are unable to uphold the view of ld.CIT(A) since there is no dispute with regard to the fact that the assessee has carried out certain work. In this process, he employed labour contractors. No further inquiry is made by the authorities below for finding out the genuineness of claim of the assessee. In our considered view, the assessee ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee. Therefore, this year also, this ground of Assessee's appeal is also dismissed. 14.2. Ground Nos.2 & 3 are general in nature require no independent adjudication. 14.3. In the result, the appeal of the assessee in ITA No.2126/Ahd/2012 for AY 2009-10 is dismissed. 15. Lastly, we take up the Revenue's appeal, i.e. ITA No.2497/Ahd/2012 for AY 2009-10, wherein following grounds have been taken:- 1. The ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 85,50,913/- on account of Retention money added back to the income of the Assessee. ii) The ld.CIT(A) has further erred in law and on facts in relying on the decision of the Hon.Guj.High Court in Assessee's own case for the AY 1995-96 as the issue involved was of Advance money and not of Retention money. iii) On the facts and circumstances of the case, the Ld.Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. iv) It is, therefore, prayed that the order of the Ld.Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored. 15.1. First and second ground of Revenue's appeal are against deletion of addition of Rs. 85,50,913/- on account ..... X X X X Extracts X X X X X X X X Extracts X X X X
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