TMI Blog2014 (9) TMI 1141X X X X Extracts X X X X X X X X Extracts X X X X ..... tractee in the year under appeal. The assessee had shown that both the expenditure had arisen during the year only. Considering the above, we are of the opinion that the FAA was justified in deleting addition of ₹ 90.02 lakhs. Addition of retention money - Held that:- We find that the disputed amount has direct nexus with the agreement entered between the assessee and the Contractee, that at the time of passing the assessment order the AO the agreement was not in existence. We are of the opinion that without considering the same proper taxability of the assessee cannot be determined. Therefore, in the interest of justice matter is being restored back to the file of the AO for deciding the issue in light of the agreement dated 11.11.2009.He is directed to afford a reasonable opportunity of hearing to the assessee before deciding the assessment-year in which the income has to be taxed. Ground no.4 is allowed in favour of the AO, in part. Insurance reimbursement in respect of assets destroyed in flood - Held that:- We find that the FAA had directed the AO to verify two facts about the claim made by the assessee, before taking final decision. While giving effect to the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the same re resents disputed amount. The learned CIT(A) failed to appreciate that the assessee itself had not raised such claim in the Return of Income filed but was raised subsequently at the time of assessment proceedings (without having filed revised return) that too without substantiating the claim in assessment proceedings. No opportunity of hearing was given to the Assessing Officer by the CIT(A) during Appeal proceedings. 3) On the facts and circumstances of the case and in law, the learned Commissioner of Income-tax Appeals) erred in directing to delete an amount ₹ 36,01,792/- representing prior period interest expenditure and an amount ₹ 44,47,098/- representing prior period insurance claim against the taxable income. The learned CIT(A) failed to appreciate that these expenditure constitute prior period expenditure and the assessee failed to produce any detail evidence before the Assessing Officer to the effect such liabilities were incurred during the year in question. No opportunity of hearing was given to the Assessing Officer by the CIT(A) during Appeal proceedings. 4) In the facts and circumstances of the case and in law, the learned Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2 and 4 of the Department's appeal) could have been made during the course of assessment proceedings without filing a revised return, and were also duly substantiated and considered on merits by the learned Assessing Officer and rejected by him on merits alone. 2. The learned AO has also erred in challenging the order of the learned CIT(A) on the plea that the learned Assessing Officer was not given an opportunity of being heard during the course of appellate proceedings. 3. Without prejudice to the above, on the facts and in the circumstances of the case and in law the learned CIT (A), if at all, with a view to satisfy procedural compliances, ought to have directed the Respondent to raise additional grounds of appeal in respect of the captioned claims for which all the relevant material was available on the records of the Assessing Officer. 4. Without prejudice to the above, on the facts and in the circumstances of the case and in law the Respondents claim for deduction from/non-inclusion in income of the Respondent ₹ 53.86 crores being claims disputed by the Project Authorities be decided on merits. 5. Without prejudice to the above, on the facts and in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces, that it periodically asked the assessee to confirm the same as such, that the evidences produced before the AO clearly showed that the contractee had every intention not only to seriously dispute the above claims but also to recover the amounts in question rather speedily, that various letters produced by the assessee indicated that the contractee had not accepted a number of claims of the assessee to whom advances were released on adhoc basis towards those claims by the contractee, that the assessee was facing the attempts of the contractee to recover the disputed amounts in question, that entries in the books of accounts could not alter or affect the nature or quality of the transaction. Relying upon the case of Hindustan Land Development Housing Trust Ltd.(161 ITR 524),he allowed the appeal filed by the assessee. 2.2. Before us, Departmental Representative(DR) argued that the assessee had shown the disputed amount as receivable in the books of accounts, that disputes do not change the taxability of the accrued income. Authorised Representative(AR)supported the order of the FAA. On a specific query by the Bench it was stated by him that in the year 2009 and 2010 the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Work in Progress and debited to the Profit Loss Account along with the current year s expenses, that all the above expenses should be allowed as part of opening Work in Progress.AO did not agree with the assessee and held that the payment to partner had already disallowed, that other expenses were also stated by the auditor as prior period expenses, that same could not be treated as expenses of the year. Finally he made disallowance of ₹ 90,02,598/-(Rs. 36,01,792/-interest charges + Insurance Expenses,Rs.44,47, 098/-). 3.1.Aggrieved by the order of the AO, the assessee preferred an appeal before the FAA. Before him the assessee conceded that it was not pressing for the allowance of expenditure incurred on hiring of crane/crusher paid to NJPC and sundry expenses. However, insurance and interest charges were vehemently contended. Accordingly, he upheld the disallowance in respect of expenditure incurred on hiring of crane/crusher and sundry expenses. About the remaining two items he held the details of interest-expenditure and insurance expenditure were submitted to the AO, that the bills of work approved by NJPC had been furnished in the assessment proceedings which in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee submitted a letter, dated 31.12. 2004, stating that the sum of ₹ 1,07,10,90,021/-, being Retention Money retained by the project authority should be excluded from the income. It also submitted details of Retention Money collected by it by providing bank guarantee to the Contractor. It also filed justification for the request made by it. After considering the letter, the AO held that entire work bill amount had been received by it, that the statement showed the details of bank guarantee furnished for release of Retention Money, details of actual Retention Money was available that it was the amount of bank guarantee valued that was retained by project authorities against any possible obligation on account of defects during the warrantee period, that details of any defect or any other basis for the claim made by it had been filed. Rejecting the submission of the assessee, the AO disallowed the entire claim i.e.Rs.107.10 Crores. 4.1.In the appellate proceedings before the FAA, the assessee stated that Retention Money retained year after year did not become income of the assessee unless and until same were released by the project authorities, that the contractee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve heard the rival submissions and perused the material before us.We find that the disputed amount has direct nexus with the agreement entered between the assessee and the Contractee, that at the time of passing the assessment order the AO the agreement was not in existence. We are of the opinion that without considering the same proper taxability of the assessee cannot be determined. Therefore, in the interest of justice matter is being restored back to the file of the AO for deciding the issue in light of the agreement dated 11.11.2009.He is directed to afford a reasonable opportunity of hearing to the assessee before deciding the assessment-year in which the income has to be taxed. Ground no.4 is allowed in favour of the AO, in part. 5.Next ground pertains to insurance reimbursement of ₹ 2.20 Crores in respect of assets destroyed in flood. During the assessment proceedings, the AO found that the assessee had received a sum of ₹ 6.61 Crores that was shown under the head income from other sources, that the assessee had claimed that ₹ 2.20 Crores represented reimbursement of the value of assets destroyed in flood. The AO held that ₹ 2.20 Crores were to be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings, the FAA held that the assessee had paid the contributions in the month of April, that following the decision of jurisdictional Tribunal the AO should allow the claim made by the assessee. 6.2. Before us, the DR stated that the issue could be decided on merits.AR argued that all the payments were made well before the due date of filing of return of income. He referred to the page no of the paper book. We have heard the rival submissions. It is found that the assessee had paid the disputed sums before the due date of filing of return as envisaged by the provisions of section 139(1)of the Act. Therefore, confirming the order of the FAA, we decide ground no.6 against the AO. 7. Last ground of appeal is about contribution to superannuation fund (SF),amounting to ₹ 99, 013/-.During the assessment proceedings the AO found that the assessee had made payment to the assessee had made payment to SF of Hindustan Construction Company(HCC),the parent group company. He held that the contribution made by the assessee was not towards SF of the assessee and hence as per the provisions of section 40(A)(9)of the Act, claim made by it had to be disallowed. 7.1.FAA, after consideri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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