DCIT, CIRCLE-10, KOLKATA, KOLKATA vs M/S. SHELTER INFRA PROJECTS LTD., KOLKATA

Income Tax Appellate Tribunal, BENCH ‘B’ KOLKATA

Before: Hon’ble Shri J.Sudhakar Reddy, AM & Shri S.S.Viswanethra Ravi, JM ]

ITA No.1657/Kol/2016 M/s Shelter Infra Projects Ltd. A.Y.2007-08 1

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH ‘B’ KOLKATA [Before Hon’ble Shri J.Sudhakar Reddy, AM & Shri S.S.Viswanethra Ravi, JM ] ITA.No.1657/Kol//2014 Assessment year : 2007-08

D.C.I.T., Circle-10, -versus- M/s Shelter Infra Projects Ltd. Kolkata Kolkata (PAN: AABCC 2304 F) (Appellant) (Respondent)

For the Appellant: Shri S.Dasgupta, Addl. CIT(DR) For the Respondent: Shri K.K.Khemka, Advocate & Shri P.C.Nayak, AR

Date of Hearing : 04.01.2018. Date of Pronouncement : 14.03.2018.

ORDER PER J.SUDHAKAR REDDY, AM:

This is an appeal by the Revenue directed against the order of the Commissioner of Income Tax-(A)-XII, Kolkata relating to A.Y.2007-08. 2. The assessee is a company and is engaged in the business of civil construction and real estate. The revenue is in appeal on the following grounds :- “1.(i) That on the facts and circumstances of the case, the CIT(A) is erred both on facts as well as on law in deleting the addition of Rs. 1,00,00,000/- when Ld. CIT{A) himself agreed that there was irregularity in not maintaining the accounts as per AS-7 of 1983 or AS-7 of 2002.

1.(ii) That on the facts and circumstances of the case, the deletion of Rs. l,00,00,000/- was unjustified on the ground that no such addition was made in any other year i.e. applying the principles of res-judicata.

2(i) That on the facts and circumstances of the case, the ClT(A) was unjustified in deleting the addition of Rs. 31,71,419/- which was considered as income due to the fact that corresponding expenditure was booked by the assessee-company following mercantile system of accounting.

The CIT{A) has erred both in law and facts in directing to allow credit for TDS amounting to Rs. 5,94,955/- on Mobilization Advance which is in contravention of the provisions of Section 199(1).

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That the appellant craves leave to add additional ground{s) or alter or modify any of the grounds at the time appellate proceedings.”

After hearing the rival contentions , considering the papers on record and orders of the authorities below as well as case laws cited we hold as follows :

Ground No.1 is against the adhoc addition of Rs.1,00,00,000/- made to the gross profit declared by the assessee, by rejecting the books of the assessee and invoking section 145 of the Act. The ld. CIT(A) deleted this addition by observing that all the issues raised by the AO during the course of assessment and the numerous doubts raised about the integrity and maintenance of accounts as suggested and that the AO falls short of establishing any material deficiency impacting the estimation or determination of income contained in the contractual receipts. On facts he held that the AO has not made a case that the assessee has understated its expenditure or that it has understated its income. He also came to the conclusion that, the report of the auditor does not justify the AO to come to a conclusion that there are material defects in the accounts. He concluded that the AO is wrong on facts, in coming to the conclusion that there are deficiencies in the books of accounts listed by the AO. He also discussed the method of accounting followed by the assessee and held that the AO has not disputed or raised any objection about the profit computed by the assesee on various projects. He held that the rejection of books of accounts was wrongly done. He also pointed out that the method of accounting followed by the assessee in the earlier years and also in the later assessment years has not been disturbed by the AO and thus disturbing the assessment in the impugned assessment year would not be correct on the principles of consistency. He pointed out that the addition in question is 10% of the gross contract receipts and when considered with the profit declared by the assessee, G.P. would work out to 19% , which is much higher than the percentage of profit declared in the earlier years. He deleted the addition.

The ld. Departmental Representative could not controvert this factual finding of the ld. CIT(A). We also agree with this factual finding of the ld. CIT(A). Thus we uphold his order and dismiss ground no.1 of the revenue.

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Ground No.2 is against the deletion of Rs.31,71,419/- made on the ground that the assessee has done certain works but has not billed for the same. The assessee had disclosed this amount in the balance sheet as an asset under the head “work done but not billed”. This was done after taking this amount as contract receipts. The ld. CIT(A) held that this is a case of double addition. The ld. DR could not controvert the same. Hence we uphold the order of the First Appellate Authority and dismiss ground no.2 of the revenue.

Ground No.3 is on the issue of allowability of credit of TDS amounting to Rs.5,94,955/- on mobilisation advance, on the ground that this is in contravention of the provision of section 199(1) of the Act. The ld. CIT(A) directed the allowance of TDS credited on the ground that, it was consistently being done over the years.

Admittedly this mobilisation advance has not been disclosed as income by the assessee. It has not been declared as income of the assessee during this year. Section 199(3) of the Act reads as follows :-

“199(3) The Board may, for the purposes of giving credit in respect of tax deducted or tax paid in terms of the provisions of this Chapter, make such rules as may be necessary, including the rules for the purposes of giving credit to a person other than those referred to in sub-section (1) and sub-section (2) and also the assessment year for which such credit may be given.”

Rule 37BA(3)(ii) of the IT Rules reads as follows :-

“Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.”

In view of the above provision, credit of tax deducted at source on a sum of money which is not offered as income by the assessee during the year, cannot be granted. Thus this order of the First Appellate Authority is hereby reversed. The assessee may claim credit of TDS in accordance with law in the years in which the

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said mobilisation advance is offered as income. Thus ground no.3 of the revenue is allowed.

In the result the appeal of the revenue is allowed in part.

Order pronounced in the Court on 14.03.2018.

Sd/- Sd/- [S.S.Viswanethra Ravi] [ J.Sudhakar Reddy ] Judicial Member Accountant Member Dated : 14.03.2018. [RG Sr.PS] Copy of the order forwarded to: 1.M/s Shelter Infra Projects Ltd., DN-1, Salt Lake, Sector-V, Kolkata-91. 2. D.C.I.T., Circle-10, Kolkata. 3. C.I.T.(A)- XII, Kolkata 4. C.I.T-IV, Kolkata 5. CIT(DR), Kolkata Benches, Kolkata. True Copy By order,

Senior Private Secretary Head of Office/D.D.O, ITAT Kolkata Benches

DCIT, CIRCLE-10, KOLKATA, KOLKATA vs. M/S. SHELTER INFRA PROJECTS LTD., KOLKATA