Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (11) TMI 367 - AT - Income TaxShort valuation of closing jobs in progress - adding the same to the cost incurred by the taxpayer relating to the work pertaining to the unbilled amount - HELD THAT:- Taxpayer has made extensive submissions before the AO which have not been examined by the AO to decide the issue in controversy. AO rather decided the issue by following its own order for AY 2009-10 confirmed by the ld. CIT (A) and thereby made this addition on account of undervalued the closing job in progress. When undisputedly AO without applying his mind qua the year under assessment has made the addition by following its own order for AY 2009-10, which is no more in existence as the issue in controversy has been remitted back to the AO for de novo assessment by the Tribunal, it would not be in the interest of justice to deprive the AO to examine the submissions now made by the ld. AR for the taxpayer because the facts in entirety are required to be examined by the AO first and thereafter by ld. CIT (A), if so requires - Decided in favour of assessee for statistical purposes. Disallowance of loss incurred on the jobs commenced prior to 1st April, 2003 and after 1st April, 2003 respectively - HELD THAT:- AO has not applied his mind by examining the extensive submissions made by the taxpayer rather proceeded to make this addition by bluntly following its own order passed in AY 2009-10 and confirmed by the ld. CIT (A) in taxpayer's own case, which is no more in existence having been set aside by the Tribunal for de novo assessment, it would not be in the interest of justice to consider the arguments addressed by the taxpayer before the Tribunal as the same are required to be examined first by the AO by examining the facts of the case at hand in entirety, otherwise it will cause prejudice to the Revenue who has merely decided this issue by following its own order for AY 2009-10 which is no more in existence. So, this issue is also remitted back to the AO to decide afresh. Disallowance u/s. 40A(2)(b) - expenses having been incurred on behalf of its sister concern being not related to the business of the taxpayer company - HELD THAT:- When sub-contracted value for computing the losses out of the said project (Soil Health Card) has already been considered in AY 2009-10, the disallowance of aforesaid payment to CES Technologies Pvt. Ltd. would amount to double taxation. AO is directed to verify these facts and delete the addition accordingly. Ground No. 5 is determined in favour of the taxpayer. Disallowance of expenses - no job-wise details, vouchers or other evidences and absence of method of recognition of revenue followed by the taxpayer by following its own order for AY 2009-10 - HELD THAT:- DRP has reached the conclusion by deleting the disallowance made by the AO being the expenses pertaining to numerous projects i.e., pre-2003 and post-2003 after calling remand report from the AO. Ld. DR for the Revenue has failed to point out any infirmity and irregularity in the aforesaid findings. So, we find no perversity or illegality in the deletion of disallowance made by the ld. DRP, hence ground no. 1 of Revenue's appeal is determined against the Revenue. Disallowance of expenses claimed by the taxpayer having been incurred toward entrance fee and subscription - HELD THAT:- When in Annexure to Tax Audit Report Item No. 17D(1) it has been intimated that amount of ₹ 8,462/- is debited to P & L account being expenditure incurred at club entrance fee and subscription, causal observation made by the AO that same are not wholly and exclusively spent for business purpose, is not sustainable. So, keeping in view the meager amount and the fact that the same has been incurred as entrance fee and subscription for club has been rightly deleted by the ld. DRP. So, ground no. 2 of Revenue's appeal is determined against the Revenue. TP Adjustment - interest on delayed payment on receivables - DRP enhanced the addition by applying SBI rate as on 30th June of relevant previous year plus 150 basis point - taxpayer challenging the impugned addition is that the ld. DRP enhanced the addition without issuing prior notice to the taxpayer - HELD THAT:- Undisputedly, the amendment made by the Finance Act, 2012 in section 92B is prospective in nature DRP has enhanced addition on account of delayed payment on receivable without giving any notice to the taxpayer for said enhancement, the addition in question is not sustainable being hit by rule of natural justice. So, it would be in the interest of justice to remit the case back to ld. DRP to decide afresh in the light of what has been discussed hereinbefore, after providing an opportunity of being heard to the taxpayer. Needless to say that ld. DRP is also directed to take into account the rule of consistency as the LIBOR of the taxpayer has been accepted for charging interest on delayed receipts of receivables in the subsequent years. So, transfer pricing issue is decided in favour of the taxpayer for statistical purposes
|