THE COMMISSIONER OF INCOME TAX vs. THE SARASWATIL INDUSTRIAL SYNDICATE

ITA No.233 of 2004 -: 1 :- IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.233 of 2004 Date of decision: July 05, 2013. The Commissioner of Income Tax, Panchkula ... Appellant v. The Saraswati Industrial Syndicate Ltd., New Delhi ... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Shri Yogesh Putney, Advocate, for the appellant. Shri Akshay Bhan, Advocate for the respondent. Rajive Bhalla

, J. (Oral): By this order, we shall dispose of ITA Nos.233 of 2004, 582 and 583 of 2006, 274, 295 and 298 of 2007. The revenue, challenges the correctness of orders, dated 30.9.2003 and 12.4.1993, passed by the Income Tax Appellate Tribunal, Delhi Bench 'B', Delhi, on the ground, that the orders passed by the Assessing Officer and the Commissioner of Income Tax (Appeals) have been set aside, by passing two contradictory orders pertaining to the same question, i.e., liquidated damages, claimed by the assessee-respondent. Counsel for the appellant, has taken us through the order,

ITA No.233 of 2004 -: 2 :- passed by the Income Tax Appellate Tribunal, and refers to a paragraph of the impugned order in support of his argument. The paragraphs referred to by counsel for the appellant read as follows:- “7. After considering the rival submissions and perusing the material on record, we find that assessee deserves to succeed in this ground. The reason for succeeding by assessee in this ground is that it is not in dispute that liquidated damages claimed by assessee pertains to contract completed during the year. It is also not disputed that there were delays beyond the stipulated date, which fell within the relevant previous year and they were payable as per the contract between the parties. It is also not disputed that the liquidated damages claimed by assessee were covered either by bank guarantee or funds retained by the customers. The CIT (Appeals) has also not doubted the allow ability of the damages payable by assessee. The learned CIT (Appeals) did not allow only on the ground that neither any officer himself allowed the liability in assessment years 1993-94, 1994-95, 1995-96 and 1996-97. Therefore, we direct the AO to allow these liabilities for the year under consideration and withdraw the deduction allowed in subsequent years i.e., Assessment years 1993-94 to 1996-97. We further noted that still an amount of

ITA No.233 of 2004 -: 3 :- Rs.26,92,575/- remains unpaid. The AO will also examine that whether any deduction has been allowed after assessment year 1996-97 or not, and if it is found that it was allowed in another subsequent year, then the same may also be withdrawn, as there is nothing on record to show that whether this amount of Rs.26,92,575/- has been paid by the assessee on account of delayed work completed. Therefore, the Assessing Officer is directed to verify that whether this amount has been paid by the assessee or still remains unpaid and if it is found that this amount is still shown as liability, in that case the deduction to this extent should not be allowed during the year under consideration. The reason for not allowing the deduction to this extent is that the liability is for assessment year 1991-92, which is the year under consideration, and now we are in assessment year 2003-04. However, if assessee gives a plausible explanation that why the amount is not paid, then in that case the AO is free to pass a fresh order on account of the liability of the extent of Rs.26,92,575/-. We order accordingly.” A perusal of the above paragraph, reveals that with respect to the claim relating to liquidated damages, the Income Tax Appellate Tribunal has recorded two different findings.

ITA No.233 of 2004 -: 4 :- Faced with this situation, counsel for the assessee, fairly concedes that the ITAT has committed an error and states that he has no objection if the appeal is allowed and the matter is remitted for adjudication afresh. We have heard counsel for the parties, perused the impugned order as well as the contradictory findings, reproduced above, and in view of statement made by counsel for the respondent, allow the appeal, set aside the impugned order and remit the matter to the Income Tax Appellate Tribunal, Delhi Bench 'B', Delhi, for adjudication afresh and in accordance with law, leaving the question of law, framed vide order dated 17.2.2005, open for adjudication, as and when and if the occasion so arises.

[ Rajive Bhalla ]

Judge

[Dr. Bharat Bhushan Parsoon] July 05, 2013. Judge kadyan