Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI
Before: Sh. A. D. JainDr. B. R. R. Kumar
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal has been filed by the Revenue against the order of ld. CIT(A)-20, New Delhi dated 31.03.2016.
Following grounds have been raised by the Revenue:
“1. In the facts and circumstances, the ld. CIT(A) has erred in deleting the addition on account of Salary and wages of Rs.3,50,000/-.
2. In the facts and circumstances, the ld. CIT(A) has erred in reducing gross receipt of Rs.5,29,46,623/- to Rs.2,09,55,200/- as the assessee is following accounting of income on work completion method. Therefore, no addition is warranted on the WIP shown as stock.”
Salary and Wages:
The assessee has debited expenses of Rs.1.71 crores on account of salaries, wages and other benefits. During the assessment proceedings, the assessee was asked to justify the same. Before the AO, the assessee produced muster roll in respect of wages, some of which are received by illiterates and accordingly thumb impressions have been taken on the muster roll. The AO disallowed the amount holding that the thumb impressions are not verifiable. We find no rationale in the reason given by the AO while disallowing the wages which are paid to labourers holding that the thumb impressions are not verifiable. The order of the ld. CIT(A) is affirmed on this ground.
Work-in-Progress:
As per the ITS details, during the relevant financial year, the assessee has received gross receipts of Rs.14,39.00,250. On perusal of the Profit & Loss account the assessee has booked the gross receipts Rs. 1,38,56,413/- including (Sales + Service Tax), Rs.14,11,659/- as (Interest income) the total gross receipt booked by the assessee Rs.1,52,68,072/- (Rs.1,38,56,413 + Rs.14,11,659).
During the course of assessment proceedings in response to the questionnaire issued dated 27.08.2013 assessee has submitted reconciliation of TDS as per 26AS viz a viz gross receipt as per 26AS and as per books of account. On perusal of reconciliation filed by the assessee, it was observed that the assessee has received mobilization advance of Rs. 7,56,85,555/- during the year under consideration which was not shown as a income by the assessee on which TDS credit is already disallowed in para no. 4 above. Further even after considering this mobilization advance in a gross receipts there was still difference in a gross receipt of amount Rs. 5,29,46,623/- booked by the assessee. On receipt of the reply of the assessee, the AO held that the assessee has shown an amount of Rs.2,09,55,220/- as a CWIP and Rs.3,19,50,000 as a secure advance. The AO held that the assessee has not booked correct income and added the amount of Rs. 5,29,46,623/- to the income of the assessee.
The submissions of the assessee reveal that during the year as per ITS details the total gross receipt of the assessee was Rs 14,39,00,250/-. The break up the same is as follows:
S. No. Amount received Nature of Amount received 1 7,56,85,555/- Mobilization advance 2 1,38,56,413/- Payment received against-sales 3 3,19,50,000/- Advance received against WIP 4 14,11,659/- Interest Income 5 2,09,55,220/- Provision booked by party( amount not received but TDS deducted) 14,39,00,250/- Total
Further, the assessee showed an amount of Rs.7,49,27,393/- as work-in- progress in profit and loss account. Against this Work-in-progress, the assessee received advances of Rs.3,19,50,000/- for which the bills were raised in subsequent period. Also an amount of Rs.2,09,55,220/- was provisionally booked by party and hence TDS was deducted on the same although amount was not received. In accordance with method of accounting, the assessee had recognized only the work which is completed. The assessee in the course of assessment proceedings submitted the necessary details and explanation to support that the amounts reflected in 26AS for the year under consideration were duly recorded in the books of accounts and were considered to determine the income liable to be taxed in the year under consideration.
The ld. CIT(A) altered the addition holding as under:
That the appellant is engaged in the business of civil construction projects.
2. That the appellant is following mercantile system of accounting. 3. That during the year under consideration the appellant has undertaken projects from 3 concerns i.e. DLF Universal limited, Delicious Marketing Pvt. Ltd. and DLF Home developers Ltd. 4. That during the year under consideration, the appellant has got mobilization advance of Rs.7,56,85,555/-. 5. That the appellant has got business receipts amounting to Rs.1,52,68,072/-, on account of completed works and booked it as gross receipts in the books of accounts. 6. That during the year under consideration the assessee has further credited an amount of Rs. 2,09,55,220/- and deducted tax at source also on the amount booked to the appellant. 7. That the appellant claimed that it has not got the amount of Rs.2,09,55,220/- and that is why has not credited it as income receipts in the P & L Account. 8. That the A.O has added the amount of Rs.2,09,55,220/- and closing stock of Rs.319,50,000/- shown as work in progress.
Once, TDS is deducted by the owner against the payment accrued, it has to be booked in the books of accounts of the appellant as amount already accrued. Therefore, the ld. CIT(A) held that the amount of Rs.2,09,55,220/- is required to be shown as business receipts in the year under consideration. Accordingly, the addition was confirmed to the extent of Rs.2,09,55,220/-. Thus, we find that the ld. CIT(A) has rightly given the remission of advances received against the work-in- progress/CWIP of Rs.3,19,50,000/-. We hold that the entire mobilization advance cannot be treated as income for the year. The assessee is not appealed against the confirmation of Rs.2,09,55,220/- by the ld. CIT(A). Ergo, we hereby affirm the order of the ld. CIT(A).
In the result, the appeal of the Revenue is dismissed. Order Pronounced in the Open Court on 12/04/2022.