Income Tax Appellate Tribunal - Chennai
Assistant Commissioner Of Income Tax vs Franco Tossi Ingegneria, S.P.A. on 23 February, 2004
Equivalent citations: (2004)83TTJ(CHENNAI)137
ORDER
N. Vijayakumaran, J.M.
1. This appeal by the Revenue is directed against the order of the CIT(A)-VII, Chennai dt. 13th Nov., 1996. It relates to the asst. yr. 1994-95.
2. The issue in dispute is on the application of provisions of Section 44BBB of the IT Act, 1961. The assessee received payment from Neyveli Lignite Corporation (NLC) under a contract. The assessee is a non-resident foreign company registered in Itlay entered into contract with NLC, a public sector undertaking for Government of India. This contract relates to unloading, erection, testing and commissioning of 3 Nos. of steam turbine generators with accessories.
3. For this assessment year the assessee submitted its return of income on 21st July, 1994, declaring the income as NIL. The assessee has been submitting the return of income since the asst. yr. 1982-83. By applying Rule 10 of the IT Rules, 1962, the AO has been taking a final stand from the asst. yrs. 1982-83 to 1993-94 that the profit or loss will be ascertained and assessed on the completion of the entire contract work and the assessment was closed as N.A. (no assessment) on no loss or no income basis on all the assessment years. This was accepted by the assessee without dispute. But for this assessment year the assessee was asked to submit the consolidated P&L a/c for the period from 1st Jan., 1981 to 31st March, 1994, in which the assessee has shown a net loss. In that P&L a/c the following payments made by the NLC were also shown :
Income Amount Erection payments from NLC 4,13,32,672 Specialist services 4,57,943 Service charges 8,40,000 Miscellaneous receipts 12,44,317 Difference in exchange 11,70,200 4,90,45,132 The AO was of the view that 10 per cent of the above from the contract was liable to be assessed in this assessment year under the provisions of Section 44BBB. He, accordingly, brought to tax Rs. 49,04,510.
4. On appeal to the CIT(A), the assessee contended that provisions of Section 44BBB will not be applicable as the provisions came into force only from 1st April, 1990. The last bill raised by the assessee with regard to the erection work was raised on 16th April, 1988 and the last bill with regard to specialist services was raised on 26th April, 1989. As these bills were raised prior to the period 1st April, 1990, no income accrued to the assessee that can be assessed after that date. This contention was accepted by the CIT(A) who in turn allowed the appeal. Aggrieved on this, the Department is in appeal before us.
5. The learned Departmental Representative vehemently contended that the order of the GIT(A) is wrong and it is not in accordance with law. He fairly submitted that Section 44BBB came into effect from 1st April, 1990 and, therefore, applicable to the asst. yr. 1990-91. The memorandum explaining the provisions of the Finance Bill will also support the same view. The bill in respect of specialist services in the case of the assessee was raised only on 26th April, 1989 and this fell within the previous year relevant to the asst. yr. 1990-91. Therefore, this clearly attracts Section 44BBB. He further went and contended that the assessee itself vide its letter dt. 24th Jan., 1995, admitted that the contract had been completed only on 5th Nov., 1993. The learned Departmental Representative further contended that this was an admitted fact, it must be taken that the income from the project accrued to the assessee only on this date and, therefore, the income liable for the asst. yr. 1994-95 which was rightly taxed by the AO. Section 44BBB was a procedural section and, therefore, its retrospective effect to the pending proceedings is also a possible view. The learned Departmental Representative then invited our attention that in the assessee's case, the assessment proceedings right from the asst. yr. 1982-83 till 1993-94 completed on no income or no loss basis. This is because it was understood that the income from the project would be assessed in its entirety in the year in which the project was completed. By referring to the consolidated P&L a/c he submitted that the assessee had shown a net loss of Rs. 5,80,69,876 for the period from 1st Jan., 1981 to 31st March, 1994. The entire payment made by the NLC to the assessee amounted to Rs. 4,90,45,132. Finally the learned Departmental Representative submitted that as per Section 44BBB, the 10 per cent of the payment to be deemed profit which was rightly assessed by the AO in his order. However, the CIT(A) has set aside the order of the AO on the ground that Section 44BBB is not applicable to the case present as according to the CIT(A) the said unit s were completed before the applicability date of Section 44BBB. In other words, the CIT(A) found that the works in respect of the contract were completed by the assessee by 30th April, 1989, i.e., prior to the date of coming to the force of the Section 44BBB.
6. The learned counsel for the assessee opposed the appeal of the Revenue. The learned counsel for the assessee submitted that the assessee itself got confused over the taxation laws prevailing in India. By inviting the memorandum and certificate of the provisional taking over of the various unit s as available in the paper book including the statement of details of receipts of the contractors, specialisits payments including the complete details of the bills and payments in respect of the erection bills raised and the letter dt. 24th Jan., 1995, the consolidated P&L a/c for the period 1st Jan., 1981 to 31st March, 1994 and referring to all the above cited materials, the learned counsel for the assessee contended particularly with reference to Clause 2.9 that the provisional take over which stated that upon 30 days of satisfactory commercial operation the owner shall take over the equipment provisionally. Referring to Clause 7 which deals with payment, the learned counsel contended that although it was stipulated that all payments made during the course of the contract would be on account of payments, the final payment would be made on completion of all the works and on fulfilment by the contractor (assessee). All the liabilities under the contract is also to be included except the guarantee obligations. The proportionate payment to be made in the course of the contract is envisaged in Clause 7.10.
7. Referring to Clause 13.1 in respect of the guarantee, he submitted that the warranty period for each turbine generator and its ancillaries was 12 calendar months commencing from the date of provisional take over. At this point the learned counsel for the assessee referred to us to p. 79 of the paper book and pointed out that the date of provisional take over in respect of unit III was on 29th Sept., 1986 and the guarantee period came to an end on 28th Sept., 1987, in respect of unit II the respective dates are 8th May, 1987 and 7th May, 1988 and in respect of unit I, the dates are 23rd April, 1988 and 23rd April, 1989. The learned counsel for the assessee also referred to Clause 1.1 which defines the completion of the contract and states that unless otherwise terminated under the provision to any other relevant clause this contract shall be deemed to have been completed at the expiration of the guarantee period as provided for under the clause "guarantee". He, therefore, submitted that with reference to the Clauses 2.9, 7.1, 13.1 and 31.1 it would be clear that the understanding of the assessee and NLC in respect of completion of the contract was the ending of the 12 months period after the provisional takeover. In this case, therefore, the contract with regard to unit III came to an end on 28th Sept., 1987, unit II on 7th May, 1988 and in respect of unit I on 23rd April, 1989. He submitted that in view of this clear definition and understanding in the contract neither the assessee nor the Department could extend the date of completion of the contract. In view of this, it could not either under the provisions of the IT Act or any stretch of imagination be held that the contract was completed in the previous year relevant to asst. yr. 1994-95. He then pointed out to the letter dt. 24th Jan., 1995, which had been filed before the AO and was referred to by the learned Departmental Representative in which the assessee has stated that the contract had come to an end on 5th Nov., 1993. At p. 3 of the letter, the facts regarding the generator rotor of the second unit having certain vibration problems was mentioned. It was also pointed out that the delay in carrying out the said repairs was due to the fact that NLC could not make arrangements for releasing the rotor to the assessee. The rotor has been purchased from a different company and the obligation to repair the same was primarily on that company. The rotor had to be sent to Italy for carrying out the necessary repairs and due to this there was delay in reinstalling the same. Even though this obligation was that of the manufacturer company and only a vicarious liability of the assessee herein it cannot be said that the contract did not come to an end because as per Clause 31.1 the contract is deemed to have been completed at the expiry of the guarantee period. Therefore, the subsequent period cannot be considered as an extension of the contract period. He submitted that even in this letter all that was mentioned was that the contractual obligations came to an end during November, 1993 and not that the contract itself was completed in November, 1993, Neyveli Lignite Corporation had already paid to the assessee all the moneys due and nothing was outstanding except the contract guarantee amount withheld, i.e., akin to retention money. He also submitted that whatever the assessee had mentioned due to misunderstanding of the interpretation of the provisions of the contract should not and cannot be held against the assessee and only the terms of the contract should govern the assessment of the income. The learned counsel submitted that it was no doubt that most of the assessments had been completed on the basis of "no income or no loss" basis but it was not correct to say, as mentioned in ground No. 2.3 of the appeal filed by the Department, that all the assessments from the asst. yrs. 1982-83 to 1993-94 had been completed on this basis. He pointed out that with regard to the year ending 31st Dec., 1987, relevant to the asst. yr. 1988-89, the assessee had filed a return of loss of Rs. 5,82,100 which return had been accepted and an assessment completed under Section 143(1). Similarly for the year ending 31st March, 1989, i.e., asst. yr. 1989-90 the assessee had filed a return claiming a loss of Rs. 2,01,64,635. This return and loss were also accepted and an order passed under Section 143(1)(a) (respective copies are filed at pp. 70 and 75 of the paper book).
8. The learned counsel for the assessee submitted that in all the years Neyveli Lignite Corporation had been paying money to the assessee as and when the bills were raised and these amounts were treated as advances to be adjusted later on. Therefore, in the asst. yrs. 1982-83 to 1985-86 no amounts were taken as receipts or income to the P&L a/c and only the expenditure incurred was taken to the P&L a/c. However in the asst. yrs. 1987-88, 1988-89 and 1989-90 the assessee has carried to the P&L a/c out of the amounts received as advances in the earlier years that proportionate amount that pertained to the unit in respect of which work was completed under the head "work completed on one unit ". This would show that the assessee had declared these amounts as income accrued during those years and therefore, the income from these unit s in respect of which the contract work was completed were declared and after deducting expenditure a loss was returned. This would show that the income from these two units, viz., unit II and unit I had suffered tax already.
9. With regard to the year ending 31st March, 1990, i.e., asst. yr. 1990-91 no amounts were received towards the erection work and, therefore, no income was returned for this year and the assessment was completed on a "no income or no loss" basis even though the guarantee period with regard to unit I expired during this period. However, in the next asst. yr. 1991-92, the assessee had received its last instalment of erection charges and it had filed a return declaring a profit of Rs. 6,82,224 and claimed a set off with regard to the carried forward losses of the earlier years. However, the then AO closed this assessment also on a "no income or no loss" basis. Subsequent to this and prior to and including the asst. yr. 1994-95 the assessee has not received any amount from NLC towards any of the heads shown in the tabular statement. He, therefore, submitted that in the asst. yrs. 1988-89 and 1989-90 an amount of Rs. 3,02,10,878.21 had already been subjected to assessment proceedings and the income earned in respect of unit II and unit I had already been processed and computed and had resulted in the losses declared being accepted in the assessment orders passed. He, therefore, submitted that the grounds raised and contentions by the Department that all the assessments were completed on a "no income or no loss" basis was not correct. In fact, by completing these two assessments accepting the losses, the Department and the assessee would appear to have applied the terms of the contract as above explained and computed the income or loss arising on the completion of the contract in respect of each unit as having accrued on 28th Sept., 1987 and 7th May, 1988, which were the deemed dates of completion of the contract as per Clause 31.1. He, therefore, submitted that this amount of Rs. 3,02,10,878.21 which had already been processed and brought to tax under the provisions of the IT Act could not once again be brought to tax in any other assessment year under any provision of law. As regards the asst. yr. 1987-88 also the assessee had similarly carried to the P&L a/c the proportionate amount with respect to unit III, but in this year the AO had completed the assessment under Section 143(3) on a "no income or no loss" basis. The counsel submitted that with regard to the balance of Rs. 1,88,34,254.51 these amounts had already been received and accounted for in the books of accounts in the assessment years prior to the asst. yr. 1994-95 and, therefore, could not be brought to tax under Section 44BBB in the asst. yr. 1994-95 as Section 44BBB does not contemplate a consolidation of the receipts and assessment in one year. The learned counsel for the assessee took us through the provisions of Section 44BBB and submitted that what was to be brought to tax under the section was a sum equal to 10 per cent of the amount paid or payable whether in India or out of India to an assessee in respect of the stipulated work. The section is very clear that it applies to payments actually made or amounts that accrued and became payable during each assessment year and does not contemplate a consolidation or aggregation in any specific assessment year. He, therefore, submitted that the amounts received by the assessee even though made as on account payments could not be assessed in the asst. yr. 1994-95 as a consolidated amount. The Department could not now seek to assess these amounts deeming it to have been received in the previous year 31st March, 1994, relevant to the asst. yr. 1994-95. He submitted that this was what the Department was seeking to do. The learned counsel for the assessee also submitted that even in respect of all these years the assessments have ultimately been completed on a 'no income no loss' basis and the orders have been passed under Section 143(3) and, therefore, the assessment orders determining the income at 'NIL' for those years. Therefore, even of this account the amounts received during these assessment years and the income or loss accruing during these years cannot once again be taxed. Fie also pointed out that in the asst. yr. 1994-95 the assessee had filed a return declaring a loss of Rs. 5,80,69,876 even on the basis of a consolidated P&L a/c. This return was filed even though no amounts were paid or payable by NLC during the previous year relevant to this assessment year. As regards the contentions of the senior Departmental Representative that the provisions of Section 44BBB being procedural and would have retrospective effect, he submitted that neither the notes on clauses nor the memorandum explaining the provisions of Finance Bill, 1989 gave any indication that the provisions are to be applied retrospectively. The provision itself is very clear that it comes into effect from the asst. yr. 1990-91 and any amount received or becoming payable subsequent to the section coming into effect would be taxed under Section 44BBB. At this juncture, the Bench asked him whether if it was held that the section was procedural and, therefore, could be applied retrospectively could not the amounts received be taxed under Section 44BBB. To this he replied that even in that event it was only the amount received or payable in each year that could be taxed under Section 44BBB and that if so the same was taxable only in that year and not in the asst. yr. 1994-95 on an aggregation basis as done by the AO in this case. He submitted that even in respect of the asst. yrs. 1990-91 and 1991-92 in which years Section 44BBB would be applicable, the amounts that could be brought to tax would be only 10 per cent of the amount actually received during those years. He submitted that the section had to be applied to each specific assessment year and in respect of the payments received or payable in each particular assessment year and could not in any event be applicable for the asst. yr. 1994-95 as no amount was either paid or payable on account that it had accrued for payment in the asst. yr. 1994-95. The learned counsel for the assessee submitted that in all the years in which the assessment proceedings had been completed on "No Income No Loss" basis it had been done as the AOs in those years had accepted that the project would end up in a huge loss and in fact the consolidated accounts do show a loss of Rs. 5,80,69,876. Therefore, the Department having agreed to compute the income or loss at the end could not now give a goby to this understanding and seek to assess the entire income under Section 44BBB. The assessee's counsel submitted that he was supporting the order of the CIT(A) that the provisions of Section 44BBB were not applicable to the asst. yr. 1994-95 as even though the section was applicable after 1st April, 1990 and all the payments' having been received and the contract having come to an end much prior to 31st March, 1994, the assessment made for the asst. yr. 1994-95 could not be sustained and the appeal filed by the Department deserves to be dismissed and the order of the CIT(A) be confirmed.
10. We have considered the rival submissions carefully and perused the material on record. The assessee's counsel has put the facts relating to the issue before us. These facts have not been disputed by the senior Departmental Representative and we proceed to dispose of the matter on the basis of these admitted facts. The matter raised in the appeal before us needs consideration of the provisions of Section 44BBB, its implications and the manner of its application to the facts of the case of the assessee before us. At the outset, we have to agree with the learned senior Departmental Representative that the provisions of Section 44BBB which came into effect from 1st April, 1990, would be applicable to the previous year 1st April, 1989 to 31st March, 1990, i.e., the asst. yr. 1990-91 and subsequent years. To this, even the learned counsel for the assessee has no serious contest. However having said that, the matter before us for consideration is whether the AO was correct in bringing to tax the sum of Rs. 49,04,510 as the income of the assessee for the asst. yr. 1994-95.
11. In order to decide this issue it would be necessary to consider the provisions of Section 44BBB and to find out the ambit and scope of the application of the section. The section would be applicable to the line of business in which the assessee before us is involved. The section states that a sum equal to 10 per cent paid or payable whether in or outside India to the said assessee on account of civil construction, erection, testing or commissioning shall be deemed to be profits and gains of such business chargeable to tax under the head 'profits and gains of business or profession'. The assessee's counsel had submitted that this provision has to be applied for each assessment year and in respect of the amounts paid or becoming payable within the specific assessment years and that it does not contemplate the consolidation of the entire income in any one assessment year. In short, the submission is that a sum equal to 10 per cent of the contract amount as and when paid shall be deemed to be the profits and gains chargeable under the head 'profits and gains from business or profession. We are of the view that this submission of the assessee is supported by the intention, tenor, and the wordings of the section. The provisions of Section 44BBB apply in respect of each of the assessment years in which the concerned assessee does business in India and is, therefore, liable to taxation in India. We are of the view that the section has to be applied in respect of all amounts paid or payable during each relevant assessment year. This view is based on a practical appreciation of the fact that the collection of tax is contemplated for each year. We find that this view that we hold also found favour with the Authority for Advance Rulings which has similarly interpreted the section in the cases of N.V. Jan De Nul In re (1999) 236 ITR 489 (AAR) and Van Oord Acz B v. In re (2001) 248 JTR 399 (AAR). We would, therefore, uphold the submission of the learned counsel for the assessee on this aspect.
12. The next submission made by the learned counsel for the assessee was that the ground No. 2.3 raised in the Departmental appeal is not fully correct. The assessee in this case has been regularly filing its return of income and these returns have been processed. In some years, the assessments have been closed as "NA - No Income No Loss" basis. However, as pointed out by the assessee's counsel for the asst. yrs. 1988-89 and 1989-90 the assessments have been completed accepting the loss returned by the assessee in these two years. The acceptance has been by way of orders passed under Sections 143(1) and 143(1)(a), respectively. It has not been brought to our notice that these orders are not final and it is an accepted fact that they are final. In view of this, the grounds raised by the Department in ground No. 2.3 of the grounds of appeal are not factually correct and have to be rejected. We had perused the assessment orders for the asst. yrs. 1988--89 and 1989-90 found at pp. 70 and 75 of the paper book and note that these two assessments have not been completed on a "No Income No Loss" basis and computation of loss returned by the assessee is accepted. We have not been shown by the Departmental Representative that these two assessments are not final. As pointed out by the learned counsel for the assessee, the assessee has declared in these two assessment years the proportionate income that pertained to two of the unit s as the work relating to these two unit s had been completed during the relevant periods. The income, which includes loss, arising from these two unit s has therefore undergone the process of assessment. The Department having thus accepted the returns filed we have to agree with the learned counsel's submission that the turnover amounting to Rs. 3,02,10,878.21 and the income or loss embedded therein cannot be taxed once again. This would amount to double taxation. The effect of having thus accepted the losses returned in the two assessment years would be that process of computation of income has become final as regards these two years. The computation thus accepted and made cannot be tampered with otherwise than by procedure available under the IT Act for recomputation of income. It is not the contention of the Department that these two assessments are invalid or not in effect. We, therefore, hold that this amount of Rs. 3,02,10,878.21, which is a component part of the larger figure of Rs. 4,90,45,132.72 considered by the AO cannot under any circumstances be taxed in the asst. yr. 1994-95 under the provisions of Section 44BBB as done in the assessment order before us.
13. After excluding the abovementioned amount of Rs. 3,02,10,878.21 the balance left over is an amount of Rs. 1,88,34,254.51. Could this amount be brought to tax under Section 44BBB and, if so, in the asst. yr. 1994-95? As admitted by both the sides this amount is the residue after excluding the amounts of receipts processed in the asst. yrs. 1988-89 and 1989-90. It is also an admitted fact that this amount had been declared in the respective returns filed for the asst. yrs. 1986-87, 1987-88, 1990-91 and 1991-92 on the basis of amounts received during the relevant periods. The assessments for all these years, however, have been ultimately completed under the provisions of Section 143(3) as "NA - No Income No Loss". This being the admitted factual position how is this amount of Rs. 1,88,34,254.51 to be treated. In the case before us it is clearly apparent that no amount was paid nor was any amount payable during the asst. yr. 1994-95. All amounts both paid and payable had already been received and accounted for by the assessee in the earlier years. Nothing was outstanding nor accrued to the assessee during the previous year relevant to the asst. yr. 1994-95. It is not even the case of the Department that any amount was either paid or payable or that the income accrued to the assessee during this year. In view of the above, as the entire amount of Rs. 1,88,34,254.51 has been received and accounted for in the years prior to the asst. yr. 1994-95 we hold that this amount cannot also be brought to tax in the asst. yr. 1994-95. Further, as has been mentioned earlier all the assessments have been completed under Section 143(3) and closed "No Income No Loss". We are of the view that these orders would also amount to assessment orders and if their finality has to be upset the same can be done only in a manner available under the Act for re computation. Therefore, on this ground also the amount of Rs. 1,88,34,254.51 cannot be taxed in the asst. yr. 1994-95.
14. The next aspect of the matter to be considered is the contentions of the learned senior Departmental Representative that the provisions of Section 44BBB are procedural and therefore, has retorspective effect. The introduction of Section 44BBB brought into the IT Act, for the first time as a new procedure for taxing the income of foreign companies operating in India. Prior to this all assessees operating in India were governed by the normal procedure of following the income as disclosed in the P&L a/c subject to the application of the provisions of the IT Act in computing the taxable income. By the introduction of Section 44BBB there was a complete departure from this procedure and a substitution by a new procedure. Now it is no doubt true that the process of computation of income is a procedural matter but does it follow that all procedural amendments will be retrospective in application. We are of the view that by introduction of the new procedure of computing income under Section 44BBB the right, hirtherto available, to assessees to have its income computed on the basis of the accounts maintained by it and the assessment of the income disclosed in its P&L a/c drawn up on the basis of these books of accounts has been taken away. When a right of the assessee is taken away it cannot be said that the section is purely procedural. In such circumstances, it could only be said that the provision is partly substantial and partly procedural.
15. The Supreme Court in the case of Jose Da Costa v. Bascora Sadashiva Sinai Narcomin AIR 1975 SC 1843 laid down as follows :
"Before ascertaining the effect of the enactments aforesaid passed by the Central legislature on pending suits or appeals, it would be appropriate to bear in mind two well-established principles, The first is that while provisions of a statute dealing merely with matters of procedure may properly, unless that construction be textually inadmissible, have retrospective effect attributed to them, provisions which touch a right in existence at the passing of the statute are not to be applied retrospectively in the absence of express enactment or necessary intendment."
From the above ruling it is clear that where any rights are touched upon then retrospectively will not be automatic but has to be specific. Therefore, Section 44BBB will be applicable to and from the asst. yr. 1990-91 to all subsequent years but not to any of the earlier years and is not retrospective in operation.
16. Thus every ground of the Department will support the assessee's contention that amounts are taxable in the year of receipt or accrual and not later on. When the Department seeks to have the section made applicable in respect of earlier assessment years it means that it is seeking to assess the amounts paid or payable in those earlier years. This means that the amounts paid or payable are taxable as such only in the years of actual receipt and not subsequently. For the asst. yr. 1994-95, it is not necessary to seek retrospective application of the section as the section is already applicable w.e.f. 1st April, 1990. If it is the case of the Department that by retrospective application they are seeking to tax amounts paid or which were payable in earlier years, for which the assessment proceedings have been completed, in a subsequent year in which the section is applicable we are unable to uphold such an action on the ground that the principle of retrospectivity is not meant to be applicable in that manner. Retrospective application would mean that a section brought on the statute in a subsequent assessment year is sought to be applied to income earned in an earlier assessment year and in the assessment proceedings of that earlier assessment year as such. That is not what the AO in this case is seeking to do. For all these reasons abovementioned we hold that Section 44BBB is not applicable retrospectively and more essentially so to the facts of this case.
17. Finally, we will take up for decision the contention of the learned senior Departmental Representative relying on ground No. 2.2 regarding the impact of the letter dt. 24th Jan., 1995. The only submission of the Departmental Representative is that the assessee had itself informed the Department in its letter dt. 24th Jan., 1995, that the contract was completed in November, 1993. The assessee's counsel vehemently argued that the interpretation given by the assessee itself on the terms of the contract was not correct and that the work in respect of the contract had already been completed much earlier as is clear from the memorandum of provisional taking over of each individual steam turbine generator as found at pp. 28 to 42 of the paper book filed. The delay in handing over the rotor for repair as mentioned by the assessee in its above-mentioned letter was also partly due to the fact that Neyveli Lignite Corporation had not made any alternative arrangements for releasing the rotor in order to send it for repairs. Therefore, this delay has occurred due to a contributory factor by Neyveli Lignite Corpn. itself and it cannot be said that the contract had not been completed by the assessee before that date. This is a factor that should be kept in mind while determining the date of completion of the project. A copy of this letter has been found at p. 65 of the paper book filed. We have perused the letter. In the letter, the assessee has stated that the contract was completed in November, 1993, on the basis that as per Clause 31.0 the contract is considered complete after the expiry of the guarantee period. The assessee has also stated later on in the same letter that after handing over the rotor duly repaired on 5th Nov., 1993, it marked the completion of all contractual obligations. The assessee, as we can see it, has not anywhere stated that the income accrued to it on 5th Nov., 1993, but has in fact stated that they have shown the progressive payments received from NLC from time to time as advances and taken them as income in 1986, 1987 and 1988 when the first, second and third unit s were commissroned and provisionally taken over. This would show that the assessee has taken the stand that the income from the three unit s has already been declared earlier. It had filed the consolidated P&L a/c to show that its stand that the project had in fact ended in a huge loss was correct. This in our view, it cannot be taken as admission by the assessee that the entire income was taxable in the asst. yr. 1994-95, The assessee had accepted the completion of the assessments on "No Income No Loss" basis in good faith accepting that its ultimate loss would justify its stand that it would not have any taxable income. In fact in the asst. yr. 1991-92 we note that the assessee had declared a profit and claimed set off of carried forward loss but the Department completed the assessment for this year as "No "Income No Loss". This was done despite the fact that from the asst. yr. 1990-91 Section 44BBB was applicable. Therefore, the letter dt. 24th Jan., 1995, must be considered in the above context in which it was written and also keeping in mind the actions of both the Department and the assessee in the earlier years. We do not read any admission as alleged by the Department that the assessee has consented to be assessed to tax under Section 44BBB in the asst. yr. 1994-95. In fact the assessee has already stated that it has considered as its income the amounts received from time to time in the years 1986, 1987 and 1988. In any event, any concession, if made, which is contrary to the legal rights of an assessee cannot be binding on the assessee. The assessee's counsel has in the paper book filed given elaborate details of the bills raised in respect of specialist service during the guarantee period which is at p. 43 and it is in this sheet that we find reference to the bill dt. 26th April, 1980, which relates to the period of work carried out during the period 23rd March, 1989 to 22nd April, 1989. The bill having been raised during the period 23rd March, 1989 to 22nd April, 1989. The bill having been raised on 23rd April, 1989, obviously became payable only during the period ending 31st March, 1990. As regards the bill with regard to the erection, these are found at pp. 44 to 64 of the paper book and on a perusal of the same it will be noticed that the last bill raised in respect of erection work is dt. 16th April, 1988 under covering letter dt. 19th April, 1988, which is found noted at p. 63 of the said set of papers and, therefore, this bill had become payable during the previous year ending 31st March, 1989, relevant to the asst. yr. 1989-90.
The amounts in respect of these bills also had been received by the assessee and, therefore, nothing was left to be paid to the assessee or payable to the assessee in the asst. yrs. 1992-93, to 1994-95. We are, therefore, of the considered view that no amount whatsoever was available for being brought to tax in the previous year ending 31st March, 1994, relevant to the asst. yr. 1994-95 as no payment was made nor was any amount payable and further no amount accrued to the assessee during this period. We, therefore, reject this ground of the Department also. Having considered the issues raised before us and having come to the conclusions abovementioned we are of the view that the grounds taken by the Department are not tenable in the eye of law. We uphold the findings of the CIT(A) as reasonable and it is in accordance with law. 18. In the result, the appeal of the Department is dismissed.