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Deputy Commissioner of Income Tax Versus M/s. Techno Electric & Engineering Co. Ltd

2015 (5) TMI 895 - ITAT KOLKATA

Disallowance on account of retention money - money retained by the various Government contractees out of the contract value till the establishment of specific performances as specified and issuance of taking over certificate - CIT(A) deleted the addition - Held that:- The issue involved is duly covered by the decision CIT -vs.- Simplex Concrete piles (India) Pvt. Ltd. [1988 (12) TMI 52 - CALCUTTA High Court] wherein held that the payment of retention money is d eferred and is contingent on satis .....

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uly covered by the decision of Canara Bank [1991 (7) TMI 38 - KARNATAKA High Court] in which it was held that the interest ac crues or arises only on the record date or on the maturity date for the purpose of taxability. In the case of the assessee the interest on Bonds were payable on 31s t day of December and 30th day of June and, therefore, the interest for the period ended on 31s t March has not accrued and due to the assessee. In view of this fact, we do not find any infirmity or illegality .....

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pective. The impugned assessment is the assessment year 2007-08 while Rule 8D has been inserted w.e. f. 24th March, 2008. Therefore, the Assessing Officer, in our opinion, is not correct in law in allowing the disallowance by applying Rule 8D. We further noted that in the case of Sanjiv Jajodia -vs. - DCIT [2010 (9) TMI 1026 - ITAT KOLKATA] has taken the view that the disallowance under sec tion 14A out of the expenses should be rest ricted only to 1% of the dividend income. Ld. CIT(Appeals) res .....

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upporting documents and came to the conclusion that in respect of three parties, namely Steel Products Limited, Rukmani Elect ricals, and Unique St ructure amounting to ₹ 43,202/-, ₹ 21/-, ₹ 54,771/- respectively, documents are unreconciled. He, therefore, sustained the addition to that extent.D.R. before us even though vehemently relied on the order of the Assessing officer but could not brought to our knowledge how there is a mistake in the reconciliation as has been examined .....

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o prove the genuinity of the expenses. In view of this fact, we do not find any infirmity or illegality in the order of the ld. CIT(Appeals) sustaining the addition - Decided against assesse.

Disallowance of the commission payment - Held that:- Ld. A.R. even though vehemently contended that the commission paid by the assessee in the subsequent year has been allowed by the Assessing officer while determining the taxable income of the assessee, but he could not adduce any cogent materia .....

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the Respondent : Shri A.K. Tulsyan, FCA ORDER Per P.K. Bansal: The cross appeal s filed by the Revenue and assessee are out of the order of ld. Commissioner of Income Tax (Appeal s), C-III, Kolkata dated 22.12.2010 for the assessment year 2007-08. 2. Ground No. 1 in Revenue s appeal relates to the deletion of the disallowance of ₹ 18,50,91,037/- on account of retention money retained by the various Government contractees out of the contract value till the establishment of specific perform .....

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Assessing Officer, therefore, treated the same as income of the assessee and made the addition. When the matter went before the ld. CIT(Appeals), ld. CIT(Appeals) deleted the addition. 3. We have heard the rival submissions and carefully considered the same along with the order of the tax authorities below. We noted that the issue involved in this ground of appeal is duly covered by the decision of the Hon ble Jurisdictional High Court in the case of CIT -vs.- Simplex Concrete piles (India) Pvt. .....

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ounts of bills. The right to receiv e payment of 5% accrues on completion of work and only remaining 5% is deferred for a further period. The payment of retention money is d eferred and is contingent on satisfactory completion of the work and removal of defects and payment of damages, if any. Till then, there is no admission of liability and right to receive any part of the retention money accrues to the assessee . 4. Similar view has been taken by the following Hon ble High Court s in the follo .....

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(Allahabad)]; (viii) DIT -vs.- Ballast Nedam International (2013) 355 ITR 300 (Gujrat); (ix) Amarshiv Construction (Pvt.) Limited [102 DTR (Guj.) 33]. 5. Ld. D.R. even though before us vehemently relied on the order of the Assessing Officer but could not adduce any decision contrary to the one as has been taken by the Hon ble Jurisdictional High Court. In view of the aforesaid decision, we confi rm the order of the ld. CIT(Appeal s) and dismiss the Ground No. 1 taken by the Revenue. 6. Grounds N .....

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7; 9,50,000/- claimed as exempt under section 10(15) of the Act. Out of the sum of ₹ 1,96,10,750/- (difference), a sum of ₹ 88,69,516/- was shown as capital gain on sale and purchase of Bonds. There remains a difference of ₹ 1,07,41,234/-. The Assessing Officer treated the same as income of the assessee ignoring the contention of the assessee that though the interest has become due but has not accrued as the interest was payable on 30th June and 31s t December only and interest .....

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from record date to record date and on the record date TDS has also been deducted on the whole of the interest between two record dates. This fact further supports the claim of the assessee that interest income on Bond accrues only on the record date. Further, the accrued interest has been offered for taxation in the next year and same accounting system is followed by the assesese in next year as evident from the copy of Income tax return for the assessment year 2008-09 along with details of in .....

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e Kerala High Court in the case of CIT -vs.- Canara Bank referred to supra. We noted that the issue in this appeal is duly covered by the decision of the Hon ble Kerala High Court in the case of Canara Bank, in which it was held that the interest ac crues or arises only on the record date or on the maturity date for the purpose of taxability. In the case of the assessee the interest on Bonds were payable on 31s t day of December and 30th day of June and, therefore, the interest for the period en .....

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sallowance to 1% of ₹ 1,36,79,371/- in view of the decision of the Hon ble Calcutta High Court in the case of Sanjiv Jajodia - vs.- DCIT, CC-XIII, Kolkata in ITA No. 1509/Kol/2010. 13. We have heard the rival submissions and carefully considered the same. We noted that the Assessing Officer had disallowed the expenditure by invoking Rule 8D read with section 14A of the Income Tax Act. We noted that Rule 8D has been inserted by the Income Tax (5t h Amendment ) Rules, 2008 w.e.f. 24th March, .....

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Jajodia -vs. - DCIT in ITA No. 1509/Kol/2010 has taken the view that the disallowance under sec tion 14A out of the expenses should be rest ricted only to 1% of the dividend income. Ld. CIT(Appeals) respec tfully following the said decision has rest ricted the disallowance to ₹ 1,36,794/-. In view of this fact, in our opinion, no interference is called for in the order of the ld. CIT(Appeals) in rest ricting the disallowance to 1% of the dividend income. We accordingly confi rm the order o .....

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conciliation made by the assessee could not satisfy the Assessing Officer, and, therefore, he made the addition. The assessee went in appeal before the ld. CIT(Appeals) and again submitted the reconciliation in respect of all the four parties. Ld. CIT(Appeals) has duly examined the reconciliation made by the assessee along wi th the supporting documents and came to the conclusion that in respect of three parties, namely Steel Products Limited, Rukmani Elect ricals, and Unique St ructure amountin .....

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ng the addition as made by the Assessing Officer. We accordingly dismiss the ground taken by the Revenue. 17. ITA No. 287/Kol/2011 (Assessee s appeal) The fi rst ground of assessee s appeal relates to the sustenance of the disallowance on account of the insurance expenses amounting to ₹ 7,85,266/-. 18. Ld. A.R. before us even though contended that the amounts represent the various deductions made towards the insurance by the contractors, namely DVC, BHEL, ALSTOM totalling to ₹ 7,85,2 .....

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cordingly dismiss the Ground No. 1 taken by the assessee. 19. Ground No. 2 in assessee s appeal relates to the disallowance amounting to ₹ 11,00,000/- on account of the commission payment. 20. The Assessing Officer noted that the assessee has paid commission of ₹ 11,00,000/- to M/s. Kidar Sons Industries (P) Ltd. The Assessing Officer asked the assesee to prove the genuinity of the commission as well as to prove the services rendered by the assessee. The assessee stated that the amou .....

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