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M.V. Nayar, A.M.

1. This is an appeal filed by the assessee against the order dt. 19th July, 2006 of the CIT(A)-XVII, Kolkata, for asst. yr. 2003-04. In this appeal by the assessee, the following grounds have been raised:

1. That the learned CIT(A) misunderstood the clarification and submission of the appellant and erred in confirming the addition of Rs. 84,10,927 at Amta Work, Rs. 46,90,650 at Alipurduar Work which may kindly be deleted.
2. The accounts of the assessee are audited and principles of accountancy have been followed correctly and the learned CIT(A) erred in understanding the clarification.
3. In respect of addition of work-in-progress amounting to Rs. 57,28,926, it is stated that the process of measuring and calculation is wrong and the learned CIT(A) erred in properly appreciating the fact and confirming the addition; the same may kindly be deleted.

2. The first two grounds are against sustenance of additions of Rs. 84,10,927 in respect of Government sub-contract works for Amta-Jhikara Road and Rs. 46,90,650 for Alipurduar Siltorsa Bridge by the CIT(A). The facts, in brief, relating to these additions are that the assessee carries on contract business under the name and style of M/s Neo Build Corporation. Vide agreement dt. 1st June, 2001 by and between the assessee and M/s Mackintosh Burn Ltd. (in short MBL), M/s MBL awarded sub-contract Government work of construction of RCC double lane road bridge along Amta-Jhikira Road, Howrah. As per the agreement, rates for the entire work shall be at par as per the specified P.W.--(Roads) Schedule effective from 15th Dec., 1999. The agreement also stipulates payment against assessee's. RA bills and final bill to be settled and made clear to the assessee on back-to-back with the corresponding payment to MBL by its client, i.e. Government of West Bengal. With regard to Alipurduar contract, vide agreement dt. 8th March, 2002, the assessee was awarded with the said work by MBL @ 7.50 per cent below the priced schedule of the Department. Regarding payment, the agreement says payment against assessee's RA bills and final bill duly certified and recommended by MBL's site-incharge and the payment will be settled and made clear to the assessee on back-to-back with the corresponding payment to MBL by its client, i.e. Government of West Bengal.

4.1 The stand of the assessee in respect of Alipurduar project was similar to that of Amta project. The CIT(A) found that the AO made the addition on identical grounds as in the case of Amta sub-contract. He, therefore, following his reasonings adopted for addition in respect of Amta sub-contract upheld the addition of Rs. 46,90,650 in respect of Alipurduar sub-contract also. Being aggrieved, the assessee is in appeal.
5. The learned Counsel for the assessee narrated the facts of the case with reference to several documents placed in the paper book filed before us, which, inter alia, included copies of contract by and between MBL and assessee, RA bills for the aforesaid two sub-contract projects, ad hoc payments received against RA bills, bills passed by the Government of West Bengal, certificate of TDS, etc. His submissions in regard to Amta project are summarized as under:

Similar submissions were made for addition of Rs. 46,90,650 in respect of Alipurduar project. It was, therefore, submitted that under the given facts, circumstances of the case and established position in law, the additions made of Rs. 84,10,927 and Rs. 46,90,650 for Amta and Alipurduar projects, respectively should be deleted.

6. The learned Departmental Representative, on the other hand, relied upon the orders of the Revenue authorities and submitted that the CIT(A) after carefully considering the facts of the case, nature of payment, accounting policy under mercantile system of accounting, etc. has rightly upheld the addition and the same deserves to be upheld.