Income Tax Appellate Tribunal - Delhi
M/S. Ramprastha Estate (P) Ltd., New ... vs Dcit, New Delhi on 15 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'E' NEW DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI L.P.SAHU, ACCOUNTANT MEMBER
ITA No. 2225/Del/2016
(ASSESSMENT YEAR: 2012-13)
Ramprastha Estate (P.) Ltd., vs DCIT,
C-10, C-Block, Main Market, Circle-15(1),
Vasant Vihar, New Delhi-110057. New Delhi.
PAN-AADCR3869E
(Appellant) (Respondent)
Appellant by Sh. Rajesh Jain, CA
Respondent by Sh. S.R.Senapati, Sr.DR
Date of Hearing 12.03.2018
Date of Pronouncement 15.03.2018
ORDER
PER BHAVNESH SAINI, JUDICIAL MEMBER
This appeal by the assessee has been directed against the order of Ld.CIT(A)-7, New Delhi dated 08.03.2016 for AY 2012-13, challenging the upholding of addition of Rs.1,03,57,150/- u/s 40(a)(ia) of the Income Tax Act, 1961 (in short "Act") made by the AO on account of non-deduction of TDS.
2. Briefly stated facts are that the assessee company filed return of income declaring loss of Rs.14.93 crores. The main objects of the company are to carry on the business of developers, colonizer, builders, contractors, agents in real estate. During the course of assessment proceedings, the assessee filed revised computation of its income vide letter dated 23.07.2014, wherein it has disallowed an amount of Rs.1,03,57,150/- which is payment to M/s Dhanna Nandu Sons Civil Contractors on which TDS was not deducted within the period allowed. The details of which were placed on record. The AO disallowed the amount in question u/s 40(a)(ia) of the Act. It is also noted that the Page | 1 ITA No. 2225/Del/2016 assessee did not revise the return within the time allowable u/s 139(5) of the Act. Penalty proceedings were also initiated.
3. The assessee challenged the addition before Ld.CIT(A). The submissions of the assessee are reproduced in the appellate order in which the assessee briefly explained the revised computation of income vide letter dated 23.07.2014 was filed before the AO disallowing the amount u/s 40(a)(ia) where no TDS was deducted which was misconceived. It was further claimed that the assessee did not claim the amount in question as expenses but debited the same in the current assets under the heading 'inventories', Schedule-14 under the sub-heading 'work in progress' of Rs.3,50,27,74,261/-. The assessee company engaged in the business of real estate debited all the project expenses like purchase of lands, incidental expenses or development of land like payment made to the contractors to work in progress and did not claim the same in the P&L A/c as expenditure. Since the assessee did not claim expenses in the P&L A/c, therefore, wrong offer was made to disallow the expenses under mistaken facts. There is no bar in claiming the deduction now.
4. Ld.CIT(A) considering the explanation of the assessee and material on record confirmed the addition, his finding in para 4.2 of the order is reproduced as under:-
4.2. "I have carefully considered the order passed by the AO and the submissions filed by the Ld. AR. During assessment proceedings, the appellant furnished a revised computation of income disallowing an amount of Rs.1,03,57,150/- within the meaning of section 40(a)(ia) of the Act. The submission of the Ld. AR that provisions of section 40(a)(ia) shall not get attracted as the said expenditure is not claimed in the P & L A/c is not a valid explanation. It is evident from schedule 19 of the Balance sheet that the said expenditure is claimed by way of purchases which has gone Page | 2 ITA No. 2225/Del/2016 to enhance the closing stock (WIP) disclosed at the end of the year. In effect, therefore, the expenditure is claimed, as it is debited as purchases in the current asset account. The impugned expenditure of Rs.1,03,57,150/- is embedded in the WIP which is valued at cost at the end of the year. It is only because of the presentation of the accounts that the impugned amount is not shown as expense claimed in the P & L A/c but debited to current assets under schedule 14 of the Balance sheet. As mentioned above schedule 19 of the same Balance sheet shows that the said expenditure is accounted for under the head change in inventories of FGs/WIP/SIP. The mischief of section 40(a)(ia) is squarely applicable in the facts of the case as it is a technical disallowance of expenditure where TDS has not been deducted as per provisions of law. In view thereof, the revised computation of income filed by the appellant is in order. It is evident that the appellant is agitating the issue in appeal only because the AO initiated penalty proceedings u/s 271(1)(c) with reference to the impugned disallowance. The reliance placed by the Ld.AR on the judgement of the jurisdictional High Court is of no help as the facts are distinguishable. In the instant case, the issue is not of source of income but of a disallowance on account of infraction of provisions of section 195 of the Act. In view thereof, no interference is called for with the disallowance and the same is confirmed. This ground of appeal is ruled against the appellant."
5. Ld. Counsel for the assessee reiterated the submissions made before the authorities below and referred to Paper Book page 34 which is letter dated 23.07.2014 through which the assessee made surrender of amount in question for taxes. Paper Book page 8 is P&L A/c to show no separate claim of deduction have been made of the amount in question. He has submitted that the assessee was following Percentage Computation Method and debited the amount in question to work in progress. He has submitted that till date, the assessee did not debit the amount in question in P&L A/c. He has relied upon Page | 3 ITA No. 2225/Del/2016 the order of ITAT, Hyderabad Bench in the case of Aditya Housing & Infrastructure Development Corporation P.Ltd. vs DCIT [2014] 42 CCH 0072 (Hyd. Trib.) in which it was held that disallowance can be made only out of amounts claimed in the P&L A/c.
6. On the other hand, Ld. Sr. DR relied upon the orders of the authorities below.
7. We have considered the rival submissions and perused the material on record. It is not in dispute that the assessee company was carrying on business of developers, colonizers, builders, contractors and is in real estate business. The AO during the course of examination of the issue, verification of the books of accounts and material on record, found that the assessee has not deducted TDS on the amount in question, therefore, it is disallowable u/s 40(a)(ia) of the Act. The assessee in response thereto filed a letter dated 23.07.2014 (Paper Book Page 34) in which the assessee admitted that the assessee has not deducted TDS on the amount in question as per law and the same needs to be disallowed. The assessee filed statement of expenses payable. The assessee, therefore, offered a sum of Rs.1,03,57,150/- to be disallowed in the computation of income, being inadvertently left out. The assessee also filed revised computation of income to the fact and also stated that the amount is offered for tax subject to no penal action. The AO in view of the admission of the assessee to pay tax on the impugned amount accepted the offer of the assessee and made the addition of the impugned amount on agreed basis. It is well-settled law that no appeal lies on agreed additions. We rely upon the decision of Bombay High Court in the case of Jiwat Lal Purpapshi 65 ITR 261 (Bom.), decision of Kerala High Court in the case of Vama Davan Page | 4 ITA No. 2225/Del/2016 Bhanu 330 ITR 559 (Ker.) and decision of Punjab & Haryana High Court in the case of Banta Singh Kartar Singh 125 ITR 239 (P&H). Ld. Counsel for the assessee relied upon the decision of the Hon'ble Supreme Court in the case of NTPC vs CIT [1998] 229 ITR 383 (SC) and submitted that tax can be levied at income earned by the assessee. He has submitted that the assessee made a wrong offer for taxing the amount in question before the AO. Ld.CIT(A) considered the explanation of the assessee whether provision of section 40(a)(ia) of the Act, are attracted in this case. Ld.CIT(A) noted from Schedule 19 of the balance sheet that the said expenditure is claimed by way of purchases which has gone to enhance the closing stock (WIP) disclosed at the end of the year. It was found that, in effect, the expenditure is claimed as it is debited as purchases in the current asset account. The impugned expenditure is embedded in the work in progress which is valued at cost at the end of the year. Ld.CIT(A) in view of these facts found that it is only a case of presentation of the accounts that the impugned amount is not shown as expenses claimed in the P&L A/c but debited to current assets under Schedule 14 of the balance sheet. Schedule 19 of the balance sheet shows that the said expenditure is accounted for under the head change in inventories of FG/WIP/SIP. Ld.CIT(A), therefore, correctly noted that the assessee made claim of the expenditure on which no TDS has been deducted, therefore, it is disallowable. Ld. Counsel for the assessee did not dispute the finding of fact recorded by Ld.CIT(A) and admitted that the amount in question is debited to work in progress. In case of builders/ contractors/ real estate business, the purchase of material for the purpose of business is an essential item for completion of the contract, therefore, all the purchases made are expenditure Page | 5 ITA No. 2225/Del/2016 related to the business. Therefore, mere making entries in a different way would not absolve the assessee from deducting TDS on material so purchases from civil contractor for the purpose of business. These facts, therefore, show that there is no mistaken facts in making offer to surrender amount in question before the AO. In these circumstances, the assessee cannot resile from his statement and admission made before the AO. The facts and circumstances clearly justify the orders of the authorities below in making the addition. Since the assessee agreed for addition before the AO and there was no justification to withdraw from the offer of surrender, no interference is called for in the matter. Appeal of the assessee is not maintainable in the present form and has no merit as well.
8. In the result, the appeal of the assessee is dismissed.
Pronounced in the open court on 15.03.2018.
Sd/- Sd/-
(L.P.SAHU) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date:- 15th March, 2018
*Amit Kumar*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
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