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Facts
The assessee, a company engaged in road construction, filed its return of income. The case was selected for scrutiny, and after various notices and proceedings, the Assessing Officer (AO) disallowed certain "financial closure charges" and recomputed the total income.
Held
The Tribunal noted that the impugned order was passed by the CIT(A) purportedly for rectification, but a prior order of the CIT(A) had already been set aside by the Tribunal and remanded for fresh adjudication. Therefore, the Tribunal set aside the impugned order and remanded the matter back to the CIT(A) for a fresh decision.
Key Issues
Whether the CIT(A) erred in disallowing financial closure charges and amortization of increased road construction costs, and whether the rectification order was valid when the original order was already set aside.
Sections Cited
253, 1961, 154, 250, 143(2), 142(1), 37, 246A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT & SHRI PARESH M JOSHI
आदेश / O R D E R
Per Paresh M Joshi, J.M.:
This is an appeal filed by the Assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the Act for brevity) as and by way second appeal before this Tribunal. The assessee is aggrieved by order bearing Number ITBA/NFAC/S/ 250/2023-24/1055815314(1) dated 29.04.2024 of Ld. CIT(A), Page 1 of 6
Bansal Pathways (Damoh-Katni) Pvt. Ltd A.Y. 2016-17 passed U/s 250 of the Act r.w.s. 154 of the Act which is hereinafter referred to as the “impugned order”. The relevant Assessment Year is 2016-17 and the corresponding previous year period is from 01.04.2015 to 31.03.2016.
FACTUAL MATRIX 2.1 That the assessee is a company engaged in construction of road under a concessionaire agreement with M/s MP State Road Development Corporation, Bhopal.
2.2 The return of Income (ROI) for Assessment Year 2016-17 was filed on 05.10.2016 declaring total income of Rs.1,56,53,990/-.
2.3 That the case of the assessee was selected for scrutiny under CASS and Notice u/s 143(2) of the Act was issued on 12.07.2017 which was duly served upon the assessee. That thereafter the notice u/s 142(1) of the Act along with a detailed questionnaire was issued on various dates. Thereafter a show cause notice was issued on 04.12.2018.
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Bansal Pathways (Damoh-Katni) Pvt. Ltd A.Y. 2016-17 2.4 In the show cause notice the assessee was called upon the show cause as to why deduction on account of “delayed financial closure” of Rs.4,93,72,000/- be not added to the cost of road, as it is directly relatable to the expenses incurred for road construction and the annuity from bonus be considered as Rs.26,60,19,902/- in computation of income instead of Rs.21,66,49,702/- as is shown in the computation of income.
2.5 The Ld. A.O in final analysis after taking into consideration the discussion and reply in so far as “financial closure charges” amounting to Rs.4,13,70,200/- which was claimed as expenses in profit and loss account disallowed the same u/s 37 of the Act and held the same to be in nature of capital expenses and is liable to added to the cost of road. The proportionate amortization cost of Rs.40,26,518/- was not allowed too, as same was not claimed in Return of Income.
2.6 The Ld. A.O in totality of facts recomputed the total income of the assessee as under:-
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Bansal Pathways (Damoh-Katni) Pvt. Ltd A.Y. 2016-17 Income as per Return Rs. 1,56,53,990/- Add: Addition on Rs. 4,93,70,200/- account of disallowance of financial closure charges. Income Assessed Rs. 6,50,24,190/- R/O Rs. 6,50,24,190/- 2.7 That the aforesaid order of Ld. A.O bearing No:
ITBA/AST/S/143(3)/2018-19/1014129515(1) dated 08.12.2018 which is hereinafter referred to as the “impugned assessment order”.
2.8 That the assessee being aggrieved by the “Impugned Assessment Order” prefers First appeal u/s 246A of the Act before Ld. CIT(A) who by the “impugned order” has dismissed the appeal of the assessee.
2.9 That the assessee being aggrieved by the “impugned order” has preferred this Second appeal u/s 253 of the Act and has raised following grounds of appeal against the “impugned order” in form No.36 before us which are as under:-
Grounds of Appeal:
“1. That the Ld. CIT(A) erred in maintaining addition of payment of damages on account of late Financial Closure as per term of Page 4 of 6
Bansal Pathways (Damoh-Katni) Pvt. Ltd A.Y. 2016-17 concessionaire agreement of Rs.4,93,70,200/- A.O. treating the same as capital expenditure forming part of cost of road construction and not part of revenue expenditure claimed by appellant in accordance with normally accepted accounting standards. 2. That the Ld. CIT(A) erred in not allowing amortization of Rs.40,26,516/- on increased cost of road construction as an alternate deduction.” Additional Grounds of Appeal:
“ That the impugned order u/s 154 r.w.s. 250 of Income tax Act, 1961 dt. 29.04.2024 is without jurisdiction and bad in law as the original order u/s 250 dt. 7.09.2023 which was subject matter of rectification proceeding was set aside by Hon’ble ITAT vide its order dt. 18.01.2024 with direction to pass fresh order after providing opportunity of hearing to appellant assessee” The hearing in the matter took place before this Tribunal on 11.03.2025 when Ld. AR for and on behalf of the assessee brought to our notice at the outset and threshold that “Impugned Order” is suo moto passed by the Ld. CIT(A) in terms of Section 154 r.w.s. 250 of the Act, however this Tribunal on earlier occasion had already set aside earlier original order u/s 250 of the Ld. CIT(A) bearing No.ITBA/NFAC/F/5154/2024-25/ 1064440120(1) dated 07.09.2023 vide their earlier order dated the matter was remanded and same is pending before Ld. CIT(A). Under these circumstances “impugned order” which is rectifying the already
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Bansal Pathways (Damoh-Katni) Pvt. Ltd A.Y. 2016-17 remanded order of Ld. CIT(A) (supra) also deserves to be set aside back to the file of Ld. CIT(A).
Order 5.1 In the premises set out herein above, the impugned order is set aside as and by way of Remand back to the file of Ld. CIT(A)
who shall decide both the matters together. 4.2 In result appeal of assessee is allowed for statistical purpose. Order pronounced in open court on 12.03.2025.
Sd/- Sd/- (BHAGIRATH MAL BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore िदनांक /Dated : 12/03/2025 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore
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