9911796707
TMI Blog2019 (9) TMI 1224X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the disallowance of Rs. 5,55,561/- made by the AO on account of works contract tax. 4. The assessee in the present case is a company which is engaged in the business of fabrication and erection of piping net work, manufacture of buttwelded pipe fittings and super heater econimiser coils. The return of income for the year under consideration was filed by it on 01.11.2004 declaring a total income of Rs. 2,15,82,920/-. In the profit and loss account filed along with the said return, a sum of Rs. 16,63,386/- was debited by the assessee on account of works contract tax. On perusal of the details of the same as furnished by the assessee, the AO found that the sum of Rs. 5,55,561/- was not related for the year under consideration. He, therefore, disallowed the claim of the assessee on account of works contract tax to the extent of Rs. 5,55,561/-. 5. The disallowance made by the AO on account of works contract tax was challenged by the assessee in the appeal filed before the Ld. CIT(A) and after considering the submissions made by the assessee as well as the material available on record, the Ld. CIT(A) deleted the said disallowance for the following reasons given in paragraph No. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipts were accounted for by the assessee in the year under consideration as found by the Ld. CIT(A). As rightly held by him, when the works was executed and amount of erection sales was accounted for and offered to tax in the year under consideration, deduction for the corresponding amount of works contract tax incurred on such erection sales / works receipt was rightly claimed by the assessee as deduction. The Ld. CIT(A) thus allowed the claim of the assessee by applying the matching principle and we do not find any infirmity in his impugned order giving relief to the assessee on this issue calling for any interference. The same is accordingly upheld and ground No. 1 is dismissed. 7. In Ground No. 2, the revenue has challenged the action of the Ld. CIT(A) in deleting the disallowance of Rs. 1,11,68,443/- made by the AO on account of alleged unascertainable payments to subcontractors. 8. In the profit and loss account a sum of Rs. 8,38,48,990/- was debited by the assessee on account of payments to sub-contractors. On perusal of the relevant details furnished by the assessee in this regard, the AO found that no tax at source was deducted by the assessee from the labour charges of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred in relating to the said unbilled sales, including amount payable to sub-contractors for the jobs executed by them were filed. Unbilled sales basically refers to revenue booked in the accounts on the percentage completion method for incomplete contracts at the end of the year. It was stated as unbilled sales because the contracts had to reach the desired stage of completion for rendering the appellant to raise the bills on the client. On back to back basis, the appellant also books corresponding expenditure incurred by it, including sub-contractor charges for earning the revenue so booked in the accounts. The methodology followed by the appellant in order to determine the unbilled revenue as well as the relation to expenses included in the subcontractor charges was filed. The expense incurred during the year was used to determine its percentage to total estimated cost. The same percentage was used to determine the revenue to be recognized during the year out of total contract revenue. In the unlikely event if the said subcontractors charges were held to be unascertained and the income chargeable to tax was increased in the hands of the appellant, simultaneously the reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and loss account, a sum of Rs. 44,707/- was debited by the assessee on account of Excise Duty. Since there was no corresponding credit made by the assessee in the profit and loss account on account of Excise Duty, the AO disallowed the claim of the assessee for Excise Duty of Rs. 44,707/-. 13. The disallowance made by the AO on account of Excise Duty was challenged by the assessee in the appeal filed before the Ld. CIT(A) and after considering the submissions made on behalf of the assessee as well as the material available on record, the Ld. CIT(A) deleted the said disallowance made by the AO for the following reasons given in paragraph No. 7.2 of his impugned order: "I have perused the assessment order and considered the submission of the appellant. The fact of the case is that the AO noted that the appellant had debited a sum of Rs. 44,707/- towards Excise Duty to the P & L account. However, he further noted that the corresponding credit had not been made in the P & L account, therefore, he disallowed the same. But the appellant argued that finished goods are valued inclusive of the excise duty. It had been clearly disclosed by clause 12(b) relating to details of deviations, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit. This claim of the assessee was not found acceptable by the AO for the following reasons given in his order: "i. Any adjustment (either negative or positive) to the net profit, for the purpose of computation of book profit, is limited to the specific items as specified in explanation below second proviso to section 115JB. None of the items of the said explanation deals with profit on sale of fixed assets. ii. Hon'ble Supreme Court in the case of Appollo Tyres Ltd. (255 ITR 273) held that no adjustments other than what has been specified in the explanation below second proviso to section 115JB is permissible for the purpose of computation of book profit." The AO accordingly made an addition of Rs. 3,11,81,581/- on account of profit on sale of fixed assets while computing the book profit of the assessee company u/s 115JB of the Act. 17. The addition made by the AO on account of profit on sale of fixed assests while computing the book profit u/s 115JB of the Act was challenged by the assessee in the appeal filed before the Ld. CIT(A) and after considering the submissions made by the assessee as well as the material available on record, the Ld. CIT(A) deleted the said additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the provisions of the Companies Act. Hence, it was held by the ITAT, that 'book profit' u/s 115J is intended to be confined to business profit & profits from realisation of any asset should not be included in computing book profit. Similar view was also held by the Delhi Bench of the ITAT in the case of Oswal Agro Mills Ltd vs. DCIT (1994) 51 ITD 447 (Del). In the case it was held that the STCG arising from the sale of Government securities are not to be treated as part of book profit computed u/s 115J. I have carefully considered the fact of the case and decisions cited by the appellant (supra) and thereby, I find merit in the argument of the appellant, therefore, the appeal on this ground is allowed." 18. We have heard the arguments of learned DR on this issue and also perused the relevant material available on record. As held by the Hon'ble Supreme Court in the case of Appollo Tyres Ltd vs CIT 255 ITR 273 relied upon by the AO in his order and cited by the learned DR at the time of hearing before us, the profit as shown in the accounts of the company, which are certified by the auditors of the company as having been maintained in accordance with the provisions of the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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