Gujarat High Court
Commissioner Of Income TaxI vs B M S Projects Pvt Ltd....Opponent(S) on 13 January, 2014
Bench: Akil Kureshi, Sonia Gokani
O/TAXAP/774/2013 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL No. 774 of 2013
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COMMISSIONER OF INCOME TAXI....Appellant(s)
Versus
B M S PROJECTS PVT LTD....Opponent(s)
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Appearance:
Mr SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1
Mr MANISH J SHAH, ADVOCATE for the Opponent(s) No. 1
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CORAM: HONOURABLE Mr. JUSTICE AKIL KURESHI
and
HONOURABLE Ms. JUSTICE SONIA GOKANI
13th January 2014
ORAL ORDER (PER : HONOURABLE Ms. JUSTICE SONIA GOKANI)
Following is the proposed question of law in the present Tax Appeal arising out of the order dated 21st January 2013 of the Income Tax Appellate Tribunal, Ahmedabad {"Tribunal" for short] in ITA No. 748/Ahd/2009, for A.Y 200506 : "Whether the Hon'ble ITAT is right in deleting the addition of Rs. 3,40,51,847/= made on account of disallowance of payment made to subcontractors of Rs.
3,40,51,847/= as the assessee failed to prove genuineness of payments made ?"
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O/TAXAP/774/2013 ORDER While deciding Tax Appeal No. 775 of 2013, identical question had arisen for our consideration, where we have held thus : "2. This Tax Appeal is preferred challenging the order of the IncomeTax Appellate Tribunal, Ahmedabad ["Tribunal" for short] dated 21st January 2013, raising following substantial questions for our consideration : {A} "Whether the Hon'ble ITAT is right in deleting the addition of Rs. 3,40,51,847/= made on account of disallowance of payment made to subcontractors of Rs. 3,40,51,847/= as the assessee failed to prove genuineness of payments made ?"
{B} Whether the Hon'ble ITAT is right in deleting the addition made u/s. 40a(ia) of the Income Tax Act on account of payment of transportation charges of Rs. 11,36,949/= as the provisions in Finance Bill, 2010 clearly states that the amendment by the Finance Act, 2010 is w.e.f 1st April 2010 is proposed to take effect from 01.4.2010 and will accordingly apply in relation to the assessment year 201011 and subsequent years ?"
3. Factual details necessary for adjudication of the issues are as followings : 3.1 The assessee company is engaged in the business of construction of infrastructural projects mainly the water supply projects. The principal source of income of the assessee is the job work receipts from various construction related job works done for and on behalf of the predominantly government or public sector undertakings. For the A.Y 200506, return of income was filed by the assessee which was taken in scrutiny. It was noticed by the Assessing Officer that the major expenses incurred by the assessee were on account of job works which were subcontracted to various persons for carrying out the work contracted out to the assessee. The assessee had subcontracted the works to the tune of Rs. 3,41,38,500/= in the financial year Page 2 of 5 O/TAXAP/774/2013 ORDER 200405.
3.2 After examination of the issue thoroughly, the Assessing Officer had made an addition of Rs. 3.41 Crores [rounded off], which had aggrieved assesseerespondent who carried such decision in the form of second appeal before the CIT [A]. 3.3 CIT [A] after an elaborate examination of the issue had given respite to the assessee to the tune of Rs. 2.54 Crores [rounded off] and thus confirmed only Rs. 86.48 lakhs out of the total disallowances of Rs. 3.41 Crores.
3.4 This was carried to the Tribunal by the Department. The Tribunal had deleted entire addition of Rs. 3.40 Crores [rounded off]. Aggrieved by the same, the present Tax Appeal has been preferred by the Revenue raising aforementioned questions of law.
4. We have heard learned counsel Shri Sudhir Mehta for the Department and learned senior advocate Shri J.P Shah for the assesseerespondent.
5. It could be noticed from the material on record that a detailed inquiry was conducted by all the authorities, and the Assessing Officer deemed it fit to call for the information under section 133 [6] of the Act in respect of nearly seventy six parties. The Assessing Officer on account of the fact that there was a report of the inspector stating that the premises had been vacant and some of the persons had never worked from their residential premises nor was it possible to recognize these persons in the vicinity, concluded that these were bogus parties. The Assessing Officer also noted that the address given was identical and they were registered from a single place. On account of non production of the parties as witness, the Assessing Officer deemed it fit to disallow a sum of Rs. 3.40 Crores made towards expenses claimed.
6. It could also be noticed that the remand report was also called for by the CIT [A]. The Assessing Officer furnished one on 14th November 2008 and a supplementary report was also furnished on 15th December 2008. As above above, the CIT [A] decided the issue confirming the part of the amount to the extent of Rs. 2.31 Crores. The Tribunal exhaustively noted the details furnished by both the sides and also quoted CIT [A] to conclude that on due opportunity afforded to both the sides, CIT [A] had Page 3 of 5 O/TAXAP/774/2013 ORDER approached the issue properly. On the ground of residential addresses and the registration address of some of the subcontractors being the same, the Tribunal noted that there did not find any reason to disbelieve the evidence. 6.1 It has also been argued before us by learned senior counsel Mr. Shah that these being the subcontractors who are mainly on the move from one place to another and therefore, ordinarily for the convenience of one and all, the address given by many of them was the same address. It could be also noticed that the TDS was deducted on payments made to these subcontractors and other details were also furnished. From the totality of the facts, the Tribunal has committed no error in deleting the entire addition made by the Assessing Officer. The entire issue is based on factual matrix. From the sufficiency of evidence, when the Tribunal has held in favour of the assessee and when no question of law much less substantial question of law has arisen, this issue deserves no further consideration on merits.
7. The second question pertains to addition made under section 40(a)(ia) of the Act by the assessee to the subcontractors for the period from April 2004 to February 2005 on which TDS has been paid on 24th May 2005. This issue has already been addressed by this Court in the case of Commissioner of Income TaxIII v. Gujarat Narmada Valley Fertilizers Company Limited, reported in [2013] 35 Taxmann.com 638 (Guj) and in Tax Appeal No. 412/2013 & allied appeals, wherein, it is held that amendment in section 40 (a)(ia) of the Incometax Act by the Finance Act of 2010 has retrospective effect. Reference also needs to be made to a decision of this Court in Tax Appeal No. 706/2010 decided on 18th July 2011. Since the issue is already answered, the present Tax appeal requires no further consideration.
8. Resultantly, these Tax Appeals fail and are accordingly dismissed. No costs."
This tax appeal, therefore, is dismissed.
{Akil Kureshi, J.}
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O/TAXAP/774/2013 ORDER
{Ms. Sonia Gokani, J.}
Prakash*
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