COMMISSIONER OF INCOME TAX vs. M/S UNIQUE BUILDTECH ENG.

ITA/167/2014HC RajasthanRJHC01025389201427 April 2015Bench: GOVIND MATHUR,JAISHREE THAKUR2 pages

AI SummaryDismissed

What did the High Court hold?

The Tribunal held that it did not find any just reason to re-examine the first two proposed questions of law by the Revenue, as they had already been adjudicated by the same Court in a previous case, Commissioner of Income Tax, Udaipur Vs. Harish Chand Ahuja. Regarding the third proposed question, the Tribunal concurred with the findings of the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) had reasoned that the increase in site expenses was justifiable due to the expansion of the Assessee's work sites and various factors like material availability, transportation costs, labor, and increased costs of materials and diesel. The Commissioner of Income Tax (Appeals) also noted that the AO had admitted other expenses as reasonable and had not commented adversely on the auditors' reports or the maintenance of books of account, except for the site expenses not being commensurate with receipts. The Tribunal found that the appreciation of evidence by the Commissioner of Income Tax (Appeals) was adequate and also considered it appropriate to allow a sustained addition of Rs. 7 lacs as site expenses. The Tribunal concluded that the appeal did not involve any substantial question of law warranting interference.

What were the facts?

The appeal was filed by the Commissioner of Income Tax, Udaipur (Revenue) against M/s. Unique Buildtech Eng. Pvt. Ltd., Udaipur (Assessee) for the assessment year not specified. The Revenue challenged the order passed by the Commissioner of Income Tax (Appeals). The primary dispute revolved around the disallowance of site expenses claimed by the Assessee. The Assessing Officer (AO) had made a substantial disallowance of site expenses, stating they were not commensurate with the gross contract receipts. The Commissioner of Income Tax (Appeals) had appreciated the material on record and held that the increase in site expenses was justified due to the expansion of the Assessee's work sites and various other factors. The ITAT considered the findings of the Commissioner of Income Tax (Appeals) and also made a sustained addition of Rs. 7 lacs as site expenses.

What were the issues?

1. Whether the Tribunal was justified in not re-examining questions of law already adjudicated by this Court in Commissioner of Income Tax, Udaipur Vs. Harish Chand Ahuja (D.B. Income Tax Appeal No.203/2013), decided on 26.11.2014. 2. Whether the Commissioner of Income Tax (Appeals) was correct in holding that the disallowance of site expenses by the Assessing Officer was not justified, considering the increase in contract receipts and the various factors influencing site expenditure. Assessee's Contention: The judgment does not record any specific contentions made by the Assessee before the ITAT. However, the reasoning of the Commissioner of Income Tax (Appeals), which was accepted by the ITAT, implies that the Assessee had provided explanations for the increased site expenses, which were considered reasonable. Revenue's Contention: The Revenue, through the Assessing Officer, contended that the site expenses claimed by the Assessee were not commensurate with the gross contract receipts, warranting a substantial disallowance. The Revenue also proposed questions of law for adjudication by the Tribunal.

AI-generated summary — verify with the full judgment below

D.B. INCOME TAX APPEAL NO.167/2014 Commissioner of Income Tax, Udaipur Vs. M/s. Unique Buildtech Eng. Pvt. Ltd., Udaipur DATE OF ORDER : 27.4.2015 HON'BLE MR. JUSTICE GOVIND MATHUR HON'BLE MISS JUSTICE JAISHREE THAKUR Mr. KK Bissa, for the appellant ... So far as the question no.1 and 2 proposed by the Revenue are concerned, those have already been adjudicated by this Court in Commissioner of Income Tax, Udaipur Vs. Harish Chand Ahuja (D.B. Income Tax Appeal No.203/2013), decided on 26.11.2014, as such, we don't find any just reason to re-examine the same in the instant appeal. With regard to the proposed question no.3, suffice to mention that the Commissioner of Income Tax after appreciating the entire material available on record, held as under :- “I have considered the submissions of the appellant as well as the findings of the A.O. Given in the assessment order. It is an undisputed fact that during the year the contract receipts have been substantially increased in comparison to the immediately preceding year which means the site of work of the appellant has spread over to other site also and therefore the site expenditures are bound to be higher than that of last year and the A.O. Has not denied this fact in the assessment order. Further the expenditure at site depend upon the various factors like, availability of materials to be used in the site, expenses on transportation of materials to the

site side, availability of labours, increase in the cost of materials, diesel etc. Further, it is a fact that the A.O. Has admitted all other expanses as reasonable and genuine as he has neither commented upon nor made any allowance out of other expenses. It is also not a case of the A.O. That the auditors have made adverse comments on the site expenditure claimed and the A.O. Has noticed some serious defects in maintaining the books of account except that the expenditure claimed under the head site expenses is not commensurating with the gross contract receipts. This is not a sufficient reasons for making such substantial disallowance out of particular head. Further, from the assessment order, it appears that the A.O. Has not called for any explanation for the increase in the site expenses. If he had asked for such explanations, the appellant must have explained the reasons for such increase.” The Income Tax Appellate Tribunal while accepting the appreciation of evidence made by the Commissioner of Income Tax also considered it appropriate to allow sustained addition of Rs.7 lacs as site expenses. The findings arrived at are based on adequate appreciation of evidence and, as such, the instant appeal does not involve any substantial question of law that may warrant interference by this Court. The appeal is dismissed. [JAISHREE THAKUR], J. [GOVIND MATHUR], J. Sanjay

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