Income Tax Appellate Tribunal - Rajkot
M/S Pavan Construction Co, ... vs The Income Tax Officer, Ward 1(3), ... on 15 October, 2018
आयकर अपील य अ
धकरण, राजकोट यायपीठ, राजकोट ।
IN THE INCOME TAX APPELLATE TRIBUNAL
RAJKOT BENCH, RAJKOT
सव ी राजपाल यादव या यक सद य एवं olhe vgen] ys[kk lnL;,
lnL; के सम ।
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND
SHRI WASEEM AHMED, ACCOUNTANT MEMBER
I.T.A. Nos. 760 & 761/Rjt/2010
(Assessment Years : 2005-06 & 2006-07)
Income Tax Officer, बनाम/ M/s. Pavan Const. Co.,
Ward - 1(3), Vs. 285, Vrundavan
Rajkot. Society, Kalavad
Road, Rajkot.
Cross Objection Nos. 32 & 33/Rjt/2010
(in I.T.A. Nos. 760 & 761/Rjt/2010)
(Assessment Year : 2005-06 & 2006-07)
M/s. Pavan Const. Co., बनाम/ Income Tax Officer,
285, Vrundavan Society, Vs. Ward - 1(3),
Kalavad Road, Rajkot. Rajkot.
थायी ले खा सं . /जीआइआर सं . / PAN/GIR No. : AAGFP 9560 L
(अपीलाथ'/Appellant) .. (()यथ' / Respondent)
Assessee by : Shri M. J. Ranpura, A.R.
Revenue by: Shri Praveen Kumar, Sr.D.R.
ु वाई क- तार ख/
सन Date of Heari ng 11-09-2018
घोषणा क- तार ख /Date of Pronounce ment 15-10-2018
आदे श / O R D E R
PER WASEEM AHMED, ACCOUNTANT MEMBER:
The two captioned appeals along with two Cross Objections have been filed at the instance of the Revenue and assessee against the separate orders of the Commissioner of Income Tax(Appeals)-I, Rajkot ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07 -2- [CIT(A) in short] dated 01/12/09 & 02/12/09 relevant to Assessment Years (AYs) 2005-06 & 2006-07.
The issue involved in both the appeals filed by the revenue are common. Therefore both the appeals have been clubbed together for brevity, convenience, and adjudication.
2. First, we take up ITA No. 760/Rjt/2010 pertaining to Assessment Year 2005-06. The revenue has raised the following grounds of appeal:
"1. The Ld.CIT(A)-I, Rajkot has erred in law and on fact of the case in deleting the additions as shown as under:-
(i) Addition on a/c of cash credit u/s.68 Rs.50,00,000/-
(ii) Addition on a/c of under valuation of stock Rs.44,00,000/-
(iii) Disallowance out of labour instru. Expenses Rs.72,485/-
(iv) Disallowance out of interest to partners Rs.10,854/-
(v) Addition on a/c of Capitalization of expenditure Rs.4,72,109/-
(vi) Addition u/s 40A(3) Rs.13,98,537/-
(vii) Addition u/s 41(1) Rs.8,12,550/-
(viii) Disallowance out of various expenses Rs.2,98,272/-
2. On the facts of the case, Ld.CIT(A) ought to have upheld the order of the Assessing Officer.
3. It is therefore prayed that the order of the Ld.CIT(A) may be set aside and that of the Assessing Officer be restored."
3. The first issue raised by the revenue is that ld CIT(A) erred in deleting the addition made by the AO for Rs. 50,00,000/- u/s 68 of the Act.
4. The facts as culled out from the record are that the assessee is a partnership firm and engaged in the business of Civil Construction. The ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07 -3- assessee during the year has raised Bills to M/s. Sutreja & Co. for Rs. 47,94,775/- only. The details of the bills raised to M/s. Sutreja & Co. stands as under:
Rs.39,10,758 Bill dated 21/8/2004
Rs.8,84,017 Bill dated 4/11/2004
Rs.47,94,775 Total
4.1 The AO on enquiry u/s 133(6) of the Act obtains the information
about the payment made by M/s. Sutreja & Co. to the assessee as detailed under:
Rs.38,71,651 Bank of Baroda, Rajkot dated
21/8/2004.
Rs.39,107 TDS
Rs.8,75,000 Bank of Baroda, Rajkot dated
4/11/2004
Rs.9,017 TDS
Rs.40,00,000 Bank of Baroda, dated 12/12/2004
Rs.10,00,000 Bank of Baroda, dated 21/12/2004
Rs.97,94,775 Total
4.2 The AO also observed that M/s. Sutreja & Co. has shown a sum of
Rs. 50,00,000/- in its books of accounts as receivable from the assessee. However, the AO further observed that the assessee has not shown any payable to M/s. Sutreja & Co. in its books of accounts for Rs. 50,00,000/- .
4.3 On question by the AO, the assessee did not deny the receipt of Rs. 50,00,000/- from M/s. Sutreja & Co. The assessee also failed to furnish details of the mismatch as discussed above with the cogent reasons.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07 -4- In view of above, the AO treated the sum of Rs. 50,00,000/- as unexplained cash credit u/s 68 of the Act and added to the total income of the assessee.
5. Aggrieved, assessee preferred an appeal to ld. CIT(A). The assessee before the ld CIT(A) filed a reconciliation statement justifying the difference observed by the AO for Rs.50,00,000/-. The copy of the reconciliation statement reads as under:
Debit Credit
Date Desc. Amt(Rs.) Date Desc. Amt(Rs.)
21.08.2004 Bill 39,10,758 21.08.2004 Bill 38,71,651
04.11.2004 Bill 8,84,017 21.08.2004 TDS 39,107
31.03.2005 Bill 50,59,000 04.11.2004 Bill 8,75,000
04.11.2004 TDS 9,017
13.12.2004 Bill 40,00,000
21.12.2004 Bill 10,00,000
31.03.2005 TDS 59,000
Total 98,53,775 98,53,775
5.1 The assessee also submitted that there were some accounting
entries which were wrongly posted in the books of accounts. Therefore the difference was observed by the AO during the assessment proceedings.
5.2 The assessee further submitted that it has accounted for receipt of Rs. 50,00,000/- from M/s. Sutreja & Co. as its income vide Bill dated 31.03.2005. Therefore there was no liability shown in its books of accounts for Rs. 50,00,000/- as amount payable to M/s. Sutreja & Co.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07 -5- 5.3 The ld CIT(A) after considering the submission of the assessee deleted the addition made by the AO by observing as under:
"6. I find that so far as source & nature of deposit is concerned, it is apparent from the order that the money was received by cheque from M/s.Sutreja & Co., on whose behalf appellant was doing sub-contract work. Tax was also deducted at source by M/s.Sutreja & CO. Thus, there can be no reason to invoke sec.68 in such a situation because, if this liability is reflected in the balance-sheet, then there would be a balance sheet difference on the ''asset side'', which cannot be added as income. Apart from that since the source and nature of transaction alongwith identity of the creditor is established, there can be no case for addition u/s.68 of the Act and addition u/s.68 of Rs.50,00,000 is deleted.
It is also seen that assessee has shown contract work worth well over Rs.72 lacs from others, which may include this amount, as there is no description from whom this work was taken and still this has been shown as construction.
7. However, here it is to be noted that it has been claimed that contract receipt was in fact related to Shri Parvinchandra Jadeja, who happens to be a partner of this firm and in such situation this item should have been considered in his hands. Hence addition of Rs.68,00,000 made u/s.68 is deleted."
(Note : the correct amount should be Rs. 50 lacs.) Being aggrieved by the order of ld CIT(A) Revenue is in appeal before us.
6. The ld DR before us submitted that the assessee has not proved the genuineness of the transaction u/s 68 of the Act. Therefore the amount received from M/s. Sutreja & Co. is liable to be added u/s the provision of Section 68 of the Act.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07 -6- 6.1 The ld DR vehemently supported the order of AO.
7. On the other hand the ld. AR before us submitted that the amount from M/s. Sutreja & Co. was received by the assessee through banking channel. The amount was received by the firm on behalf of its partner which has been taxed in the hands of the partner therefore the same cannot be added in the hands of the firm otherwise it will lead to double addition.
7.1 The ld AR vehemently supported the orders of ld CIT(A).
8. We have heard the rival contentions and perused the materials available on record. In the instant case, the assessee has received a sum of Rs.50,00,000/- from M/s. Sutreja & Co. which was not shown by it as payable in its balance sheet as on 31.03.2005. However, the AO observed that M/s. Sutreja & Co. has shown a sum of Rs. 50,00,000/- as receivable from the assessee. Thus, the addition was made by the AO u/s 68 of the Act on account of the difference between the books of accounts of the assessee vis-à-vis books of accounts of M/s. Sutreja & Co.
However, the ld. CIT(A) deleted the addition made by the AO by observing that the balance sheet of the assessee is tallied and there is no difference in the amount of asset side and liability side of the balance sheet. The identity of the person which has given money to the assessee was established. Thus there cannot be any addition u/s 68 of the Act.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07 -7- 8.1 From the preceding discussion, we note that the addition was made by the AO on the ground that the assessee has not shown any liability in its books of account in the name of M/s. Sutreja & Co. However, the assessee before the AO has shown a value of sub contract income for Rs.1,07,37,792/- in the name of M/s. Sutreja & Co. which evidences that the amount received from the firm for Rs.50,00,000/- has been included in the value of the work done on behalf of M/s. Sutreja & Co. Thus, the Assessee has shown the receipt of Rs.50,00,000/- as its income in the profit and loss account then there is no question of showing the same as liability in the balance sheet of the assessee. The fact that the assessee has shown income from sub contractor from M/s. Sutreja & Co. for Rs. 1,07,37,792/- was very much in the knowledge of the AO at the time of assessment proceedings but the AO has not commented on the income shown by the assessee from M/s. Sutreja & Co.
8.2 It is also beyond doubt that M/s. Sutreja & Co. has shown the amount receivable in its books of accounts from the assessee but the treatment in the books of accounts of M/s. Sutreja & Co. cannot be a ground for making the addition in the hands of the assessee in the given facts and circumstances. Thus, we are of the considered opinion that once, the assessee has offered receipt of Rs.50,00,000/- as its income, no addition for the same can be made u/s 68 of the Act in the given facts and circumstances.
8.3 We also note from the submission made by the assessee before the ld CIT(A) that the assessee has raised a bill to M/s. Sutreja & Co. dated ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07 -8- 31.03.2005 for Rs.50,59,000/- and on the same, TDS was deducted by M/s. Sutreja & Co. which was duly claimed by the assessee in its income tax return. The assessee has also filed a statement showing the details of the bills raised to M/s. Sutreja & Co. during the year which were offered to tax. The same has been reproduced somewhere in the preceding year. The ld DR has not brought anything contrary to the finding of ld CIT(A).
8.4 At the time of hearing we express from the Bench that matter shall be restored to the file of AO to verify the fact whether the receipt of Rs. 50,00,000/- has been taxed in the hands of the partner of the firm or not. If it is taxed in the hands of the partner of the firm then there will be no further addition. However, on reading the file subsequent to the hearing it was observed that the assessee has already shown the receipt of Rs. 50,00,000/- as its income. Therefore, we are not inclined to restore this matter to the file of AO for fresh adjudication as per the provision of law. Once, it is proved that the income has been offered by the assessee, in our considering view, the question of making the addition for the same u/s 68 of the Act does not arise. Hence, the ground of appeal of the Revenue is dismissed.
9. The second issue raised by the Revenue is that ld CIT(A) erred in deleting the addition of Rs. 44,00,000/- made by the AO on account of undervaluation of closing stock.
10. The assessee in its balance sheet has shown the closing stock as on 31.03.2005 as detailed under:
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
-9-
Item Quantity (Ton) Value(Rs.)
Kapchi 546.000 1,49,784/-
Damur 30.589 3,25,467/-
Total 4,75,251
However, the AO during the assessment proceedings observed that the assessee has shown purchases of Kapchi in cash for Rs. 44,00,000/- as on 31-3-2005. As per the AO, the assessee has not shown the value of purchases of Rs. 44,00,000/- in its closing stock. Therefore the AO was of the view that the assessee has undervalued its stock by Rs. 44,00,000/. Accordingly, the AO made the addition of Rs.44,00,000/- to the total income of the assessee on account of undervaluation of closing stock.
11. Aggrieved, assessee preferred an appeal to ld CIT(A). The assessee before the ld CIT(A) submitted that it has been purchasing the Kapchi on regular basis from the supplier. These suppliers do not raise the bill immediately on the supply of Kapchi to the assessee. In fact, these suppliers used to raise the bill after accumulating the various supplies made to the assessee in a single Bill. Accordingly, the assessee claimed that supply of Kapchi was received by it much before the Bill raised by the supplier on regular intervals.
11.1 The assessee also claimed that it was not possible to maintain the inventory of certain items of the stock such as Kapchi, sand, bricks etc as these were lying scattered at various construction sites. Therefore, the ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 10 -
measurement of the same was difficult. Thus the value of the closing stock was made on estimated basis.
11.2 The assessee further submitted that the value of Rs. 44,00,000/- represents the purchases of Kapchi of 880 fully loaded trucks which is not possible to purchase at the end of the year. It is because the activity of the assessee is going on regular basis where the raw material i.e. Kapchi is being used.
11.3 The ld CIT(A) after considering the submission of the assessee deleted the addition made by the AO by observing as under:
"10. I have carefully considered the issue and I have also gone through the "Kapachi" (grit) account. It is to be noted that main work of the appellant is of "road construction" in which kapachi is one of the major items required. Total purchase of kapachi during the entire year is of Rs.62,07,636 which is just reasonable to achieve the contract receipts of over Rs. 15 crores. If the amount of Rs.44,00,000 is reduced from this, then it would mean that the work was completed using grit (kapachi) worth Rs.18 lacs only, which is an impossibility. It is also a fact that apart from purchases made in lots, the assessee purchases kapachi from local queries, in small lots and payments are made then and there in cash and entries are noted in the books on a particular date. This is proved by the fact that vouchers for these purchases are of different dates and not that of 31-03-05 only. The AO has purely gone by the consolidated entry passed in the books on 31-03-05, During the course of hearing appellant had produced such vouchers and some vouchers as sample have been kept on record, which shows that the vouchers are of different dates and not of one date and purchases are also made from a number of parties like Verso Stone Crusher, Gayatri Stone Crusher, Bapa Sitaram Stone Crusher, Ajanta Stone Crusher, Bapa Ramdeo Stone Crusher and others. This clearly shows that plea of the appellant is correct that items supplied on various dates through rough chittis, copies of which are with the appellant were accounted for at the end of the year. If total consumption visa-vis work done is seen, then also the ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 11 -
kapachi worth this amount was bound to be consumed during the year. It is also seen that the AO has made this addition in a routine manner, without noticing that kapchi worth Rs.1,49,784 was shown as closing stock. The AO has added Rs.44 lacs without giving credit or the amount shown as closing stock. In nutshell, it is seen that for ring contract work worth about Rs.15 crores, appellant had in all used Rs.60,50,000 worth of kapachi, which includes purchases entered in Dooks on 31-03-05, though actually purchased on various dates. Thus, the consumption is quite normal and, there can be no closing stock as determined by the AO. This addition is, therefore, deleted.
11. There is another reason to show that no fruitful purpose can be served, even if it is presumed for a moment that this addition is required, because this amount will have to be reduced from income in the next year, which has not been done by the AO. The tax rate & income etc. are all of similar type in both the years and in next year no addition on account of such undervaluation has been made. Thus, if this excess stock is taken to be consumed in next year, it would mean that in A.Y. 2006-07, there was excess consumption of kapachi. Considering the above, addition of Rs.44,00,000 is deleted."
Being aggrieved by the order of ld. CIT(A) Revenue is in appeal before us.
12. Both the parties before us relied on the order of authorities below as favorable to them.
13. We have heard the rival contentions and perused the materials available on record. In the instant case, the addition was made by the AO for Rs. 44,00,000/- on the ground that the assessee has not taken the purchase value dated 31.03.2005 in its closing stock. However, the ld. CIT(A) deleted the addition by observing that the assessee has made purchases much before the actual bill raised by the supplier of Kapchi. In ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 12 -
fact, the assessee was purchasing Kapchi on frequent basis which was utilized in the construction but the bill was raised by the supplier at the end of the year. Therefore, as per the ld CIT(A) the addition cannot be made on account of undervaluation of closing stock.
From the preceding discussion we note that the ld. CIT(A) has clearly recorded the fact that the assessee has been purchasing the raw material i.e. Kapchi on regular basis and same was utilized in the construction which proves that the value of the construction shown by the assessee has increased on account of utilization of Kapchi. Had the assessee not utilized its raw material i.e. Kapchi then it would have been reflected in the balance sheet as well as trading account as on 31.03.2005 as closing stock. Since, the Kapchi has been utilized in the construction of the assessee which has resulted increment in the value of construction. Thus, the ultimate effect becomes tax neutral.
13.1 In addition to the above, we also note that the closing stock becomes opening stock of the subsequent year. Therefore, the addition of Rs. 44,00,000/- to the total income of the assessee on account of undervaluation of closing stock will be taxed neutral as the closing stock will become opening stock of the subsequent year. As a result, there will not be any effect on the income of the assessee except the income of the current year will increase but the income of the subsequent year will decrease in the given facts and circumstances.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 13 -
13.2 The genuineness and the reasonableness of the purchases made by the assessee for its raw material Kapchi has not been doubted. The ld. CIT(A) has also given the finding that the expenses claimed by the assessee for its raw material Kapchi is commensurate with the volume of the business of the assessee.
13.3 We also find that the AO has not pointed out any defect in the submission of the assessee i.e. the raw material Kapchi was purchases on regular basis but the Bill was raised by the supplier at end of the financial year. In case, the AO doubts on the submission of the assessee then he was to verify the same from supplier of the raw materials by issuing the notice u/s 133(6)/131 of the Act. But the AO has not done so while passing the assessment order.
13.4 It is also worth mentioning that the assessee has shown Kapchi in its closing stock for a value of Rs.1,09,784/- but the AO without adjusting the same has made the addition of the entire purchases of Kapchi for Rs.44,00,000/- on account of undervaluation of closing stock. In view of above, we do not find any reason to interfere in the finding of the ld. CIT(A). Hence, the ground of appeal of the Revenue is dismissed.
14. The next issue raised by the Revenue is that ld CIT(A) erred in deleting the addition made by the AO for Rs. 72,485/- on account of labor instrument expenses.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 14 -
15. The assessee during the year has incurred expenses on the purchases of Spades, ghamelas, buckets and other instrument for Rs. 2,89,943/- only. These instruments were used for the carrying the construction material.
However, the AO during the assessment proceedings observed that these instruments were neither shown in closing stock nor any scrap value was shown in the profit and loss account. Therefore, the AO disallowed 25% of such expenses for Rs.72,485/- and added to the total income of the assessee.
16. Aggrieved, assessee preferred an appeal to ld. CITA). The assessee before the ld CIT(A) submitted that the items as discussed above are not usable after some time. This scrap value of these items is either negligible or lost at the work site. Accordingly, no addition on account of these items is warranted.
16.1 Ld CIT(A) deleted the addition made by the AO by observing as under:
"14. I find merit in the above submissions. Looking to the turnover of well over Rs.15 crores, spanning at various sites total expenditure claimed at Rs.2,89,943/- is negligible. It is also a fact that these carrying items become unusable very soon in road construction work. This addition of Rs.72,485 is, therefore, deleted."
Being aggrieved by the order of Ld CIT(A) Revenue is in appeal before us.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 15 -
17. Both the parties before us relied on the order of authorities below as favorable to them.
18. We have heard the rival contentions and perused the materials available on record. Considering the turnover of the assessee i.e. Rs.15 crores, we are of the view that these items usual become obsolete after their use and accordingly these items have no economic value. Therefore, in our considered view there is no infirmity in the order of ld CIT(A). Hence, this ground of appeal of the Revenue is dismissed.
19. The next issue raised by the assessee is that ld CIT(A) erred in deleting the addition made by the AO for Rs.10,854/- on account of interest to the partners.
20. The assessee in the immediate preceding A.Y. 2004-05 did not claim depreciation. Accordingly, the AO opined that the assessee has declared higher amount of profit in its books of accounts resulting higher share of profit to the partners of the firm.
20.1 As a result of higher apportionment of the profit to the partners, the partner's capital increased resulting higher amount of deduction of interest on interest on partner's capital u/s 40(b) of the Act. Accordingly, the assessee workout the amount of interest paid to the partners on the higher amount of profit on account of non-claim of depreciation for Rs.10,854/- accordingly, the AO made the disallowance of Rs.10,854/- and added to the total income of the assessee.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 16 -
21. Aggrieved, assessee preferred an appeal to ld CIT(A). The assessee before the ld CIT(A) submitted that the assessee had to pay tax on the higher amount of profit resulted due to non-claim of depreciation which suffered tax @35% on the income. Thus, the Revenue was benefited on account of non-claim of depreciation by the assessee. Therefore, no addition on account of interest paid to the partners on their capital can be made u/s 40(b) of the Act.
21.1 The assessee also submitted that the Revenue on one hand has not given the deduction on account of depreciation which is legitimate claim of the assessee. On the other hand, the Revenue is disallowing interest on the higher amount of profit apportioned to the partners which has already been suffered the tax. Thus it will lead to double addition to the assessee.
21.2 In addition to the above, the assessee also submitted that excess profit does not pertain to the year under consideration. Therefore no adjustment on account of interest on the capital claimed by the assessee can be made.
21.3 The ld CIT(A) after considering the submission of the assessee deleted the addition made by the AO by observing as under:
"18. I find merit in above submission. It was for the AO to allow depreciation in earlier year, as it was mandatory. It was probably not done, because income would have become negative. In any case, as per the assessment and appellate orders of the earlier year, it is seen that the net profit addition of Rs.75,000 and Rs.1,00,000 was sustained in earlier two years, which is much more than the alleged reduction in ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 17 -
depreciation. If notional adjustment for the addition was made, then there would be no case for any disallowance. Disallowance of Rs.10,854/- is, therefore, deleted."
Being aggrieved by the order of ld CIT(A) revenue is in appeal before us.
22. Both the appeals before us relied on the order of authorities below as favorable to them.
23. We have heard the rival contentions and perused the materials available on record. It is a fact on record that the assessee claimed interest on the capital which was brought forward from the earlier year. Even the assessee has apportioned higher amount of profit to its partner's capital account in the earlier year that would not have any impact in the year under consideration. In our considered view, if any adjustment was to be made on account of apportionment of higher amount of profits to the partners that should have been made in the immediate preceding assessment year to which the adjustment pertains.
23.1 It is also undisputed fact that the higher amount of profit has suffered income tax @ 35% whereas the assessee has claimed interest on such higher amount of profit @12%. Thus, in any way the Revenue was benefited on account of depreciation not claimed by the assessee in the immediate preceding assessment year.
23.2 It is also beyond the doubt that the claim for the depreciation has to be allowed by the AO mandatorily as per the provision of Section 32 ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 18 -
of the Act but the AO has not allowed the same to the assessee in the immediate preceding Assessment Year. In our considered view, it was the duty of the AO to allow the depreciation to the assessee. The fact that the assessee omitted to claim the same in its income tax return was not in doubt. Thus, we are of the view that the AO has not discharged his function as prescribed under the provision of law. In view of above, we hold that there is no infirmity in the order of ld CIT(A). Hence, the ground of appeal of the Revenue is dismissed.
24. The next issue raised by the assessee is that ld. CIT(A) erred in deleting the addition made by the AO for Rs. 4,72,109/- on account of capitalization of expenditure.
25. The assessee during the year has claimed expenses under the head machinery repairing. The details of the expenses stand as under:
On May 28 Rs.787399/-
On July 3, Rs.150000/-
On July 3 Rs.150000/-
On December Rs.54000/-
25.1 The AO during the year observed that the machinery repair expenses are capital in nature. Therefore, the same cannot be allowed as revenue in nature. Accordingly, the AO treated the entire machinery repairing expenses of Rs.11,41,399/- as capital in nature. Accordingly, the AO allowed depreciation on such expenditure @12.5% of Rs. 11,41,399/- and disallowed the balance amount of Rs.9,98,725/- (11,41,399 - 1,42,674) and added to the total income of the assessee.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
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26. Aggrieved, assessee preferred an appeal to ld CIT(A). The assessee before the ld CIT(A) claimed that all the expenses incurred under the head machinery repair are revenue in nature. The assessee in support of his claim filed the details of the repair expenses along with addresses of the parties which carried out the repairing work.
26.1 The assessee also submitted that no disallowance on account of machinery expenses was made by the tax auditor furnished in the tax audit report in form 3CD. In the audit report, the amount of capital expenditure was shown as Nil. However, the Ld CIT(A) after considering the submission of the assessee allowed the grounds of appeal of the assessee in part by observing as under:
"21. I have considered the above and I have also gone through the details of machinery repair expenses. I find that payments made on July, 3 and December, 1 are purely related to repairing of Fourbin feeder, Dryer unit and Asphalt tank. The bills show that these are for repair and reconditioning of existing machinery, which undergoes wear and tear due to heavy road work. These cannot be treated to be capital in nature. However, the first item costing Rs.7,87,399 is for purchase of machinery and is definitely a capital asset. The AO is, therefore, directed to treat this item only as capital expenditure and allow depreciation at the rates provided in Rules on this and work out the disallowance accordingly. He will also note that depreciation in later years should also be allowed to the appellant as per law."
Being aggrieved by the order of ld CIT(A) revenue is in appeal before us.
27. Both the appeals before us relied on the order of authorities below as favorable to them.
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28. We have heard the rival contentions and perused the materials available on record. In the instant case, the AO treated the machine repairing expenses as capital in nature. Accordingly, the AO disallowed the same after giving deduction of the depreciation @12.5% thereon.
However, the ld CIT(A) treated the part of the machinery repairing expenses incurred for the reconditioning of the existing machineries. As per the ld CIT(A) the amount of repairing expenses was representing the normal wear and tear expenses. Therefore the same cannot be treated as capital in nature.
From the preceding discussion, we note that the ld CIT(A) has given clear finding that the expenses incurred by the assessee amounting to Rs.3,54,000/- is normal wear & tear expenses which were incurred due to heavy work load. The ld DR before us has not brought anything contrary to the finding of ld CIT(A). Hence, we have no alternate except to confirm the order of Ld CIT(A). Thus, the ground of appeal of the Revenue is dismissed.
29. The next issue raised is that ld CIT(A) erred in deleting the addition made by the AO for Rs. 13,98,537/- u/s 40A(3) of the Act.
30. The assessee during the year has claimed several expenses which were incurred in cash exceeding Rs.20,000/-. The detail of such expenditure is reproduced as under:
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(i). 1923363 Canteen expenses. (ii). 4400000 Purchase of Kapchi (iii). 481134 Indian Oil Highway Point (iv). 175670 Purchase of Oil (v). 104021 Machinery & Vehicle repairing (vi). 63000 Purchase of air compressor
31. On question by the AO, the assessee submitted that in none of the cases the individual expenditure is exceeding Rs.20,000/- . As such there can be a situation that the payment has been made exceeding Rs.20,000/-
but the individual expenses do not exceed Rs.20,000 in a day.
However, the AO disagreed with the submission of the assessee and invoked the provision of Section 40A(3) of the Act. Accordingly, the AO made the disallowance of Rs. 14,09,437/- (20% of Rs.70,47,188/-) and added to the total income of the assessee.
32. Aggrieved, assessee preferred an appeal to ld CIT(A). The assessee before the ld CIT(A) submitted as under:
(i) Canteen expenses are expenses incurred for providing food to the workers and employees on site. These expenses are incurred in piece meal, and the provisions are purchased as per need. Not a single bill exceeds Rs.20,000/- Further, the provisions are purchased from places nearby the work site, which would naturally be a remote area. It is impossible to make payments other than by cash to provision stores in remote areas. Therefore, considering the fact that not a single payment exceeded Rs20,000as also looking to the fact that nature of such expenditure falls under the exception category as specified under Rule 6DD(j), the same may kindly be deleted.
(ii) Purchase of Kapchi is made from local query which is established near work sites. These queries are usually run by village people hardly having access to banks. Whenever payments by cheques are insisted, they are reluctant to deal with the appellant primarily due ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
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to their limited access to banks and also due to the time taken for encashing the payments. Therefore, looking to the fact that nature of such expenditure falls under the exception category as specified under Rule 6DD(j), the same may be kindly be deleted.
(iii) Purchase from Indian Oil Highway Pint and Purchase of Oil are purchases of diesel, grease and oil for machineries dumper, tractors and cranes. These purchases are undoubtedly less than Rs.20,000/- These purchases are from petrol pumps which are situated near the work sites, which are in remote areas. Therefore, in all likelihood, these pumps accept only cash. Therefore, looking to the fact that nature of such expenditure falls under the exception category as specified under Rule 6DD(j), the same may kindly be deleted.
(iv) Machinery and Vehicle repairing charges are paid for repairing of machineries and vehicles at the site. Sometimes the repairing needs mechanics at the site to carry our the repairing work. The payment of these repairing are paid in cash to the mechanics. The payment are undoubtedly less than Rs20000/-. Therefore, looking to the fact that nature of such expenditure fall under the exception category as specified under Rule 6DD(j), the same may kindly be deleted.
(v) Purchase of Air Compressor is capital in nature which is capitalized. The disallowance of the same does not arise, as the same has anyway not been claimed as expenditure. Therefore, the disallowance u/s.40A(3) on the same may kindly be deleted.
(c) In view of the above, it is humbly prayed that, all the payments (excepts [v] above) are met out of business expediency and there is no single bill which exceeds Rs 20000/-. Further, they fall under the exceptions mentioned under Rule 6DD(j). The payments for purchases of compressors do not fall under the purview of section 40A(3) as the same has been capitalized and not claimed as revenue expenditure. In view of the above facts, it is therefore prayed that the above disallowance may kindly be deleted.''
33. The ld CIT(A) after considering the submission of the AO deleted the addition in part made by the AO by observing as under:
"12. I have carefully considered the issue and I have also seen the details in this regard. The major item in this is related to kapachi purchase of Rs.44 lacs and while discussing the issue related to undervaluation of closing stock it has been pointed our that these ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
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purchases are from various parties and even dates are different. Individual payment vouchers signed by the recipients are all below Rs.20000. The purchase of this material is not doubted by the AO and it is also a fact that these purchases have been made at work site, where appellant does not have bank account. Provision for clubbing of payments made in a day has been brought on statue w.e.f. 1-4-2009 only and therefore, if prior to that multiple payments below Rs.20000 is made to even one person in a single day, then these provisions cannot be attracted. Similar is the position in respect of canteen expenses, purchase of oil, wood etc. where small items have been purchased and paid for. These items and related receipts are voluminous and have been seen on test check basis. Similarly, complete details of vehicle repairing show that there is no payment exceeding Rs.20,000 to any party. In machinery repairing expenses, payment of Rs.54,000 has been made in cash and hence addition is restricted to Rs.10,900 and the balance is deleted."
Being aggrieved by the order of Ld CIT(A) Revenue is in appeal before us.
34. Both the appeals before us relied on the order of authorities below as favorable to them.
35. We have heard the rival contentions and perused the materials available on record. In the instant case, the disallowance was made by the AO on the ground that the assessee has incurred expenses exceeding Rs.20,000/- in a day. Therefore, the AO was of the view that the assessee has violated the provision of Section 40A(3) of the Act. Accordingly, the disallowance was made by the AO.
36. Now the issue before us arises for our adjudication so as together the assessee has violated the provision of Section 40A(3) of the Act.
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From the preceding discussion, we note that the Ld CIT(A) has given very clear finding that the individually payment vouchers signed by the recipient are below Rs. 20,000/- in relation to the purchases of kapchi for Rs.44,00,000/-. Therefore the ld. CIT(A) was of the view that there is no violation of the provision of Section 40A(3) of the Act.
37. The genuineness of the purchases of raw material was not doubted by the AO.
38. The ld. CIT(A) also observed that the purchases were made for the different the work site where the banking facility was not available. The ld CIT(A) also observed that the assessee has purchased/incurred expenses in small quantity/value but the entry was made in the books of accounts after clubbing several entries because of voluminous record. The ld DR has not brought any defect in the finding of ld CIT(A) as discussed above. Thus, we are of the view that the expenses has been incurred by the assessee without violating the provision Section 40A(3) of the Act. Accordingly no disallowance is warranted. Hence we do not find any infirmity in the order of ld CIT(A). Thus, the ground of appeal of the Revenue is dismissed.
39. The next issue raised by the assessee is that ld CIT(A) erred in deleting the addition made for Rs. 8,12,550/- u/s 41(1) of the Act.
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40. The assessee during the year has shown liability on account of sundry creditors which were carried forward from the earlier years. The details of sundry creditors stand as under:
(i) Ample Construction Co. Rs.8,12,550/-
(ii) Ashka Buildcon Rs.8,00,015/-
40.1 The assessee during the assessment proceedings claimed that the liability has not ceased to exist and it is very much appearing in the books of accounts. Therefore no addition u/s 41(1) of the Act can be made.
However, the AO disagreed with the submission of the assessee on the ground that no documentary evidence with regard to the addresses of the parties, correspondence of any dispute and any letter for the recovery of the said outstanding balance was filed. Therefore, the AO invoked the provision of Section 41(1) of the Act and disallowed the same of Rs.16,12,565/-. The disallowance made by the AO was added to the total income of the assessee.
41. Aggrieved, assessee preferred an appeal to ld CIT(A). The Assessee before the ld CIT(A) submitted that its books of accounts audited u/s 44AB of the Act. There was also no disqualification in the tax audit report.
41.1 The assessee also submitted that the liability in its books of accounts has not ceased to exist. Therefore no disallowance can be made.
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However, the ld. CIT(A) after considering the submission of the assessee deleted the addition made by the AO in part by observing as under:
"27. I have carefully considered the above. So far as balance in the name of M/s.Ample Construction Co. is concerned, appellant has categorically stated that there was an outgoing dispute with that party regarding settlement of accounts. Therefore, merely because that party was not reflecting the amount as receivable in its account, it would not mean that appellant's liability had ceased to exist. This needed further enquiry by the AO from M/s.Ample Construction Co. as to how they had treated this in their accounts, whether by law or writing it off as bad debt or remission. In absence of any such enquiry, unilateral act of the other party cannot result in cessation of liability in appellant's own case. This aspect has already been clarified in the decision relied upon by the appellant. Therefore, addition of Rs.8,12,550 is deleted. The AO may, however, verify this aspect in pending assessment and take appropriate action.
28. So far as the liability in the name of M/s.Ashka Buildcon in concerned, the appellant has not furnished any details like address of this concern at any stage. If no such details are available, then this liability itself becomes fictitious. As no details have been filed regarding identity and address of this party even at the time of hearing of appeal, this is fictitious liability and hence addition is even otherwise justified. Hence, addition of Rs.8,00,115 representing fictitious liability in the name of M/s.Ashka Buildon is confirmed."
Being aggrieved by the order of ld. CIT(A) Revenue is in appeal before us.
42. Both the ld. DR & AR before us relied on the order of authorities below as favorable to them.
43. We have heard the rival contentions and perused the materials available on record. It is undisputed fact that the liability was very much ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
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appearing in the books of accounts of the assessee. This fact was not disputed by the AO. It is well settled law that the provisions of Section 41(1) of the Act cannot be invoked until and unless the liability ceased to exist in the books. As the liability was not written off by the assessee in its books of accounts, in our considered view no addition can be made u/s 41(1) of the Act. In this regard, we find support and guidance from the order of Gujrat High Court in case of Principal Commissioner of Income- Tax-1 v. Babul Products Pvt. Ltd. reported in 96 taxmann.com 82. The relevant extract of same is read as under:
"3. Now so far as proposed question no.(b) is concerned, the same is squarely covered against the revenue in view of the decision of the Hon'ble Supreme Court in the case of Commissioner v. Mahindra & Mahindra Ltd. [2018] 93 taxmann.com 32/255 Taxman 305. The factual matrix, which came to be considered by the learned Tribunal is that the learned Tribunal while deleting the addition made under Section 41(1) of the Income Tax Act on account of cessation of the liability, namely, the assessee had not written off the liability in the books of accounts, and therefore, the liability with respect to debtors is not ceased is concerned, considering the aforesaid factual matrix and when in the books of accounts the assessee carried forward and continued the liability and has not written off, no error has been committed by the learned Tribunal in deleting the addition of Rs.54,24,294/- made by the learned Assessing Officer under Section 41(1) of the Income Tax Act on account of cessation of liability."
Respectfully, following the same we do not find any infirmity in the order of ld CIT(A). Hence, ground of appeal of the Revenue is dismissed.
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44. The last issue raised by revenue is that ld CIT(A) erred in deleting the addition made by the AO for Rs. 2,98,272/- on account of various expenses incurred during the year.
The assessee during the year has claimed certain expenses as detailed under:
Sr No. Particulars Amount
1. Vehicle Expenses 1,94,185/-
2. Vehicle repairing expenses 15,81,311/-
3. Telephone expenses 90,863/-
Total 18,66,359/-
44.1 The AO during the assessment proceedings was of the view that the personal use out of the above expenses cannot be ruled out. Therefore he made the disallowance of Rs. 3,73,272/- being 20% of the 18,66,359/- and added to the total income of the assessee.
45. Aggrieved, assessee preferred an appeal to ld. CIT(A). The assessee before the ld CIT(A) submitted that the above amount of expenses is represented by 1% of the gross receipt of the assessee i.e. Rs.15.25 crores.
45.1 The nature of the business of the assessee requires extensive travelling therefore these expenditures were incurred exclusively for the purpose of business.
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45.2 The assessee also submitted that there was no specific defect as pointed out by the AO suggesting that there is a personal element of the assessee in such expenses.
45.3 The assessee also submitted that no defect was pointed out in the books of accounts of the assessee which were duly audited.
45.4 There is no provision for making the disallowance under the income tax Act on ad-hoc basis.
45.5 All the expenses were incurred exclusively for the purpose of the business therefore no disallowance can be made by the AO.
However, the ld CIT(A) after considering the submission of the assessee deleted the addition made by the AO in part by observing as under:
"31. I have considered the issue carefully. I find that considering the turnover the expenses claimed are not very high. It is also seen that major portion of vehicle repairing expenses relates to vehicles used in the business by staff, at site and vehicle used with hot mix plant, Crusher and Roller. It is also seen that in two earlier years net profit rate was estimated and upto appellate level such addition was sustained at Rs.75,000 and Rs.1,00,000 respectively. Therefore, there appears to be no reasons for such high disallowance. Considering the fact that turnover of the appellant is above Rs.15 crores and the work is being done at many sites, personal element in these expenses would be nominal and therefore, the disallowance is restricted to Rs.75,000."
Being aggrieved by the order of ld. CIT(A) revenue is in appeal before us.
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46. Both the appeals before us relied on the order of authorities below.
47. We have heard the rival contentions and perused the materials available on record. At the outset, we find that disallowance was made by lower authorities on ad hoc basis. However from the above it is clear that the AO has not pointed out any specific details in the expenses claimed by the assessee. In these circumstances, we are of view that the estimated disallowance is not sustainable in the eyes of law. In this connection, we also rely in the order of Co-ordinate Bench of ITAT Kolkata in the case of Animesh Sadhu Vs. ACIT in ITA 11/Kol/2013 Dated 12.11.2014. The relevant extract is reproduced below.:-
"8. We have considered the rival submissions. A perusal of the assessment order shows that the Assessing Officer has disallowed 20% of the expenses on estimate basis on the ground that no independent verification to be made to find out the authenticity of the expenses. Ld. CIT(Appeals) has reduced the same on the same ground. However, we are of the view that no estimated disallowance scan be made for inability to make independent verification. If any specific expenditure is unverifiable or is un-vouched, then such specific expenditure is disallowable. Her no such specific identification has been done. In these circumstances, we are of the view that the estimated disallowance as confirmed by the ld. CIT(Appeals) is unsustainable. Consequently the same stands deleted. In the result, Grounds No. 2 & 3 of the assessee's appeal stand allowed."
Respectfully, following the order of the Co-ordinate Bench (supra), we confirm the order of the ld. CIT-A and direct the AO to delete the addition made him. Hence, this ground of appeal of the Revenue is dismissed.
48. In the result the appeal of the Revenue is dismissed.
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49. Now coming to the Cross Objection No.32/Rjt/2010 for Asst. Year 2005-06. Assessee has raised following grounds of appeal in its CO:
"1.0 The ground of cross-objections mentioned hereunder is without prejudice to one another.
2.0 The Ld. Commissioner of Income-tax (Appeals)-1, Rajkot [hereinafter referred to as the CIT(A)] erred on facts as also in law in treating the machinery repairing expenses to the tune of Rs. 7,87,399/- as expenditure of capital nature. The AO may kindly be directed to treat the same as revenue in nature 3.0 The Ld. CIT(A) erred on facts as also in law in confirming the disallowance made u/s.40A(3) of the Income-tax Act, 1961 (hereinafter referred to as the "Act") to the tune of Rs. 10.900/-. The disallowance may kindly be directed to be deleted. 4.0 The Ld. CIT(A) erred on facts as also in law in confirming the addition made u/s.41(1) of the Act in respect of credit balance appearing in the balance sheet at Rs.8,00,015/- of Ashka Buildcon considering the same as fictitious liability. The addition may kindly be directed to be deleted.
5.0 The Ld. CIT(A) erred on facts as also in law in confirming the disallowance out of various expenses to the tune of Rs. 75,000/- on lump sum basis on account of alleged personal element involved in it. The disallowance may kindly be directed to be deleted."
50. At the outset, the ld Counsel for the assessee submitted that due to smallness of the amount, he has been instructed by the assessee not to press any of the ground in the CO. Thus, grounds raised in the Cross Objections are dismissed.
51. In the result, Cross Objection is dismissed.
52. Now coming to revenue's appeal in ITA No.761/Rjt/2010 for Asst. Year 2006-07. Following grounds of appeal has raised:
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1. The Ld. CIT(A)-1, Rajkot has erred in law and on fact of the case in deleting the additions as shown hereunder:-
(i) Disallowance u/s 40(a)(ia) Rs. 58,86,182/-
(ii) Disallowance of late work charges being Rs. 2,22,192/-
penalty in nature
(iii) Disallowance of overdue and bounce charges Rs. 54,132/-
(iv) Disallowance of capital expenditure Rs. 6,39,983/-
(v) Accrued interest on fixed deposit Rs.1,32,483/-
(vi) Addition of low G.P. 3,79,213/-
(vii) Canteen expenditure 2,31,524/-
(viii) Labour Charge expenditure 7,71,197/-
(ix) Transport expenses 1,24,8227
(x) Car loan interest 16,014/-
(xi) Vehicle, telephone & vehicle depreciation. Rs. 3,87,633/-
Expenses
2. On the facts of the case, Ld. CIT(A) ought to hove upheld the order of the Assessing Officer.
3. It is therefore prayed that the order of the Ld. CIT(A) may be set aside and that of the Assessing Officer be restored."
53. The first issue raised by the Revenue is that ld CIT(A) erred in deleting the addition made by the AO for Rs. 58,86,182/- on account of non-deduction of TDS u/s 40(a)(ia) of the Act.
54. Briefly stated facts are that the assessee is a partnership firm and engaged in the business of construction work. The assessee during the year has claimed an expense of Rs. 58,86,182/- on account of sub- contract given to M/s. Rajchamunda Construction. The assessee has incurred such expense without deducting the TDS u/s 194-C of the Act. Accordingly, the AO disallowed the same and added to the total income of the assessee.
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55. Aggrieved, assessee preferred an appeal to ld CIT(A). The assessee before the ld CIT(A) submitted that the payment made to M/s. Rajchamunda Construction was made on account of purchases of cement etc. as well as reimbursement of the expenditure on the crushing stones. Therefore the provisions of TDS are not attracted on the payment made to M/s. Rajchamunda Construction. The assessee in support of his claim also filed the supporting evidences before the ld CIT(A).
The CIT(A) after considering the submission of the assessee deleted the addition made by the AO by observing as under:
"5. I have carefully considered the entire issue and I have also gone through the copy of accounts of M/s. Rajchamunda Construction Co. in the books of appellant and I have also" gone through the annual accounts and tax audit report of the appellant. To examine the issue in right perspective it is necessary to note that the appellant is a road contractor and he himself is receiving contract in its own name and is also doing work by taking sub-contracts from other parties and its total turnover is well over Rs.15 crores. The appellant has filed copy of accounts which clearly shows that in fact the payment made to M/s. Rajchamunda Construction Co. was for purchase of material like steel, cement and some payments were made by them to various stone crushers on behalf of the appellant, which was reimbursed. Therefore, apparently the amount paid to M/s. Rajchamunda Construction Co. is for purchase of material and not for any sub-contract. It is relevant to note that in the annual accounts of the appellant, there is no contract which has been further given on sub-contract by the appellant. The expenses are on account of purchases and under various other specific heads, there is no payment on account of sub-contract and no work has been given on sub-contract by the appellant. Rather the appellant has himself received sub-contracts worth Rs.4.21 crores. This in fact proves the point of the appellant that payment made to Ramchamunda Construction Co. was for purchase of material either from them or was reimbursement of payment made by them on appellant's behalf. Copy of account proves the same. Apart from that, if tax audit report is seen it is noticed from para 24 of the tax audit report that in fact appellant had ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
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received a loan of Rs.25 lacs from M/s. Rajchamunda Construction Co. Therefore, it is apparent that transaction was related to this loan as well as purchase of material like steel and stone. (There is no mention of any sub-contract either in trading account or in profit & loss account or in the tax audit report. Apparently no addition should have been made without any enquiry from Rajchamunda Construction Co. and merely believing a particular copy of account is immaterial when the audited accounts of the appellant shows an entirely different picture. As discussed earlier, appellant has not given any sub-contract to any other party and this fact is apparent from the tax audit report as well as the annual account. The copy of account shows that payment was made for purchase of steel and for purchase of kapachi etc. for which payment was made by M/s. Rajchamunda Construction Co. on behalf of the appellant and the payment is in fact reimbursement of such expenses and for purchase of material. It is also partly related to the loan taken which is mentioned in the audit report. All these factors have not been properly appreciated by the AO and therefore, it is apparent that there was no sub-contract awarded by the appellant to M/s. Rajchamunda Construction Co. so that provisions of sec.40(a)(ia) could apply. This addition is, therefore, deleted."
Being aggrieved by the order of ld CIT(A) Revenue is in appeal before us.
56. The ld DR before us vehemently supported the order of Ld CIT(A) whereas, the ld AR before us filed a paper book which is running from pages 1-60 and submitted that the payment to M/s. Rajchamunda Construction Co. is representing the purchase of materials.
57. Besides the above, the ld AR also submitted that it has reimbursed the expenditure to M/s. Rajchamunda Construction Co. on account of stone crushing.
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In view of above, the ld AR submitted that the provision of Section 194C cannot be attracted and accordingly no disallowance can be made on account of non-deduction of TDS.
58. We have heard the rival contentions and perused the materials available on record. On perusal of the audited financial statements which are placed on pages 13-31 of the paper book, we note that the assessee has not claimed any expense on account of sub-contract basis. In fact, the assessee has claimed expenses for the purchase of raw-materials amounting to Rs. 7,17,10,661/- only.
58.1 The ld CIT(A) has given very categorical finding that the assessee has made purchases from M/s. Rajchamunda Construction Co. for the raw material like steel, cements etc. 58.2 Similarly, we also note that certain cost was incurred on account of stone crushing which was reimbursed by the assessee to M/s. Rajchamunda Construction Co. It is a settled law that the provisions of TDS are not attracted on the reimbursement of the expenses.
In view of above, we hold that the payment to M/s. Rajchamunda Construction Co. is outside the purview of provision of Section 194C of the Act. Accordingly, we do not find any infirmity in the order of ld CIT(A). Hence, the ground of appeal of the Revenue is dismissed.
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59. The second issue raised by Revenue is that ld CIT(A) erred in deleting the addition made by the AO for Rs. 2,22,192/- and 54,132/- on account of penalty.
60. The assessee during the year has claimed an expense of Rs.2,22,192/- on account late work charges which was considered by the AO as penalty in nature.
61. Similarly, the AO also observed that the assessee has claimed an expense of Rs.54,132/- on account of overdue and cheque bounce charges which is penalty in nature. Therefore, the AO was of the view that these expenses being penalty in nature cannot be allowed as deduction u/s 37(1) of the Act. Accordingly, the AO disallowed the same and added to the total income of the assessee.
62. Aggrieved, assessee preferred an appeal to ld CIT(A). The assessee before the ld CIT(A) submitted that the penalty paid by it is not on account of infringement of any law. Therefore the same cannot be disallowed u/s 37(1) of the Act.
The ld CIT(A) after considering the submission of the assessee deleted the addition made by the AO by observing as under:
"8. I find merit in the submission of the appellant. (If any amount is paid for breach of law, the same can be disallowed, but payment made for late completion of work and overdue and bounce charges paid to bank cannot be equated with penalty for infringement of low so that this disallowance could be made. Therefore, these two disallowances are deleted."
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Being aggrieved by the order of ld CIT(A) revenue is in appeal before us.
63. Both the parties before us relied on the order of authorities below as favorable to them.
64. We have heard the rival contentions and perused the materials available on record. The expenses incurred by the assessee on account of late payment charges, overdue and cheque bouncing charges were arising in the normal course of business. Thus, the charges were not paid for the violation of any law. Therefore, we are of the view that there is no infirmity in the order of ld CIT(A). Hence, the ground of appeal of the revenue is dismissed.
65. The next issue raised by the revenue is that ld CIT(A) erred in deleting the addition made by the AO for Rs.6,39,983/- on account of capital expenditure.
66. The assessee during the year has claimed vehicle repairing expenses of Rs.15,51,410/-. The AO during the year observed that certain expenses amounting to Rs. 8,89,983/- are representing capital in expenditure which cannot be allowed as deduction. The necessary detail of the capital expenditure has been specified by the AO on page 5 & 6 of his order. Accordingly, the AO disallowed the same on the ground that these expenditures are capital in nature and added to the total income of the assessee.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 38 -
67. Aggrieved, assessee preferred an appeal to ld. CIT(A). The assessee before the ld CIT(A) submitted that the vehicles and machinery were used for the purpose of the business. Therefore, the normal repair and maintain expenses were incurred on such vehicles and machineries. There was not coming existence of any capital assets out of such expenditure. The assessee also relied in support of his claim on the tax audit report.
67.1 The assessee also submitted that there was no benefit of enduring nature accrued to it out of such expenditure.
The ld CIT(A) after considering the submission of the assessee deleting the addition in part by observing as under:
"11. I have carefully considered the submissions. Before proceeding further it is to be pointed out that if these items were capital in nature, then atleast AO should have allowed depreciation on that. But the AO has not done so. However, after going through the details of expenses I find that most of the expenditure is related to repairing and replacement of tyres, tubes etc. For example, first five items are incurred for purchase of tyres & tubes for various vehicles, crane and other equipments used in the business of construction. Replacement of tyres & tubes etc. is purely revenue in nature and it cannot be treated as capital in nature. Similar is the position with respect to other items which relate to basically repair work. For example, all the bills of Bharat Automobiles are in respect of minor replacement of more than 100 small items in vehicles. Therefore, the AO was not correct in treating these items as capital in nature. However, I find that the last item which is shown as payment to Dena Bank is not related to any vehicle repairing because bills in that respect has not been produced and it is not known as to what is the nature of this expenditure and this has to be , disallowed. Therefore, this disallowance is restricted to Rs.2,50,000, which is ' clearly not an allowable item. This disallowance is, therefore, restricted to Rs.2,50,000/-."
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 39 -
Being aggrieved by the order of ld CIT(A) Revenue is in appeal before us.
68. Both the parties before us relied on the order of authorities below as favorable to them.
69. We have heard the rival contentions and perused the materials available on record. In the instant case, the assessee has claimed vehicles repairing expenses amounting to Rs.15,51,409/-. Out of such expenditure the AO treated the sum of Rs. 8,89,983/- as capital in nature. Accordingly, the AO disallowed the same.
From the preceding discussion we note that the AO has admitted the genuineness of the expenditure incurred by the Assessee under the head vehicle repairing maintenance. The only issue of the AO was that some of the expenditures are capital in nature and therefore these were disallowed. In our considered view, once the AO has treated the expenditure capital in nature then it was his duty to allow the depreciation thereon. But the AO grossly erred to do so.
69.1 Moreover, we note that the CIT(A) has given clear finding that these expenses were incurred by the assessee in routine manner which are not also represented by any capital assets. The ld DR has not brought anything on record contrary to the finding of ld CIT(A). Hence, we do ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 40 -
not find any reason to interfere in the order of ld CIT(A). Hence, the ground of appeal of the Revenue is dismissed.
70. The next issue is that ld CIT(A) erred in deleting the addition made by the AO for Rs. 1,32,483/- on account of interest income accrued on fixed deposits.
71. The AO during the assessment proceedings observed that the assessee has shown fixed deposit in Cooperative Bank amounting to Rs. 13,24,837/- but the AO has not offered any income on account of interest accrued on such fixed deposits. As per the AO, the assessee is following the mercantile system of accounting therefore, the AO was of the view that the assessee has under stated his income. Accordingly, the AO worked out the interest income of Rs.1,32,483/- being 10% of 13,24,837/- and added to the total income of the assessee.
72. Aggrieved, assessee preferred an appeal to ld CIT(A) who has deleted the addition by observing as under"
"14. I find from the profit & loss account that bank interest on this fixed deposit has already been offered to tax and total interest income shown is Rs.2,22,396/-. This addition is apparently superfluous and therefore, deleted."
Being aggrieved by the order of ld CIT(A) Revenue is in appeal before us.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 41 -
73. Both the parties before us relied on the order of authorities below as favorable to them.
74. We have heard the rival contentions and perused the materials available on record. There is no dispute that the assessee has shown interest income amounting to Rs. 2,22,396/- in its books of accounts which were offered to tax. Thus the assessee has duly recognized the interest income on the fixed deposits. Therefore we do not find any reason to interfere in the order of ld CIT(A). Hence, the ground of appeal of the Revenue is dismissed.
75. The next issue raised by the Revenue is that ld. CIT(A) erred in making the addition of Rs. 3,79,213/- on account of low GP.
76. The assessee in the earlier years has shown the GP as detailed under:
"4.0 Details of gross profit (GP) ratio and turnover for the relevant previous year and preceding two previous years are as under:
A.Y. Construction GP (Rs.) GP(%)
Receipts (Rs.)
2006-07 151685385 10730849 7.07
2005-06 152429828 14300554 9.38
2004-05 80006815 2983497 3.73
From the above details, the AO observed that there is a short fall in gross profit ratio by 2.31% in comparison to the last year.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 42 -
76.1 On question by the AO, the assessee submitted that the fall in the GP was due to increase in the cost of raw material such as steel, cement etc. 76.2 The assessee also claimed that the rates of these raw materials were highly fluctuating and it could not succeed in getting the bids at a higher rate from the parties. Therefore, there is a fall in the gross profit ration in the year under consideration.
However, the AO disagreed with the submission of the assessee and accordingly made a lump sum addition of Rs.7,58,426/- being 0.5% of gross receipts which was added to the total income of the assessee.
77. Aggrieved, assessee preferred an appeal to ld CIT(A). The assessee before the ld CIT(A) submitted that there was no defect pointed out by the AO during the assessment proceedings in the books of accounts which were duly audited u/s 44AB of the Act. There was no disqualification in the tax audit report.
77.1 The AO has not rejected the books of account u/s 145(3) of the Act. It is a settled law the profit can be estimated only after rejecting the books of accounts. The assessee also submitted that there cannot be fixed margin of gross profit as the prices of the raw material keeps on fluctuating.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 43 -
77.2 There was no cogent reason specified by the AO by enhancing the gross profit ratio by 0.5% of the gross receipts. The assessee in support of his claim also relied on the order of various courts.
However, the ld CIT(A) after considering the submission of the assessee reduced the addition from 0.5% to 0.25% of the gross turnover by observing as under:
17. I have carefully considered the issue. I find that as compared to earlier year, the GP has gone down from 9.38% to 7.07% though turnover more or less remained the same. The appellant has explained that this was due to rise in price of raw material, but it is also a fact that there are various defects in vouchers related to trading account of the appellant. For example, in respect of canteen expenses, labour charge expenses, transport expenses etc. the AO has pointed out in the asstt. order that the vouchers are defective, without serial No. without signature of the person making the payment and without specific narration of work done etc. and they were not fully verifiable. In respect of canteen expenses it has been held that part of this relates to personal and non-business user a so. All these items form part of trading account and have a bearing on gross profit. Therefore, the GP rate shown by the appellant is not acceptable as it is. It is, however, seen that in A.Y. 2004-05 when GP rate was 3.73% final addition of Rs. 1 lakh was made. Therefore, considering the overall position and considering the fact that reasoning given by the appellant to the extent of fall in GP are in general in nature, it would be appropriate if addition on account of low GP is made at 0.25% as against half percentage adopted by the AO and, therefore, addition in GP is restricted to Rs. 3,79,213."
Being aggrieved by the order of ld CIT(A) Revenue is in appeal before us.
78. Both the parties before us relied on the order of authorities below as favorable to them.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 44 -
79. We have heard the rival contentions and perused the materials available on record. In the instant case, the addition on account of GP ratio was made due to the fact that there was declined in the GP ration in the current year in comparison to the last year. There was a decline of 2.31% in the gross profit ratio. Therefore, the addition was made by the AO @0.5% of the gross turnover on account of low gross profit.
79.1 It is undisputed fact that the books of accounts of the assessee were subject to audit u/s 44AB of the Act. There was no specific defect pointed out by the AO with regard to the purchases and other direct cost suggesting that the assessee has booked any inflated expenses. In our considered view, the cost of the raw material as well as the bids prices keeps on fluctuating in this competitive environment. Therefore we are of the view that no fix margin can be prescribed for any particular year. Thus, the question of GP arises where the assessee has inflated the direct expenses. As there is no allegation in the order AO for the inflation of the expenses, therefore we do not find any reason to interfere in the finding of ld CIT(A). Hence, the ground of appeal of the Revenue is dismissed.
80. The next grievance of the Revenue is that ld CIT(A) erred in deleting the addition made by the AO for Rs.2,31,524/-, 7,71,197/- and 1,24,822/- on account of canteen expenditure, labour charge expenditure and transport expenditure.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 45 -
81. The assessee during the year has claimed canteen expenditure of Rs.2,31,524/-, labour charge expenditure of Rs. 3,85,59,882/- and transport expenses of Rs.62,42,079/- only. The AO during the assessment proceedings found certain defects in the supporting vouchers on the basis of which the expenditure was claimed accordingly, the AO made the following disallowances:
Description Expenditure Ratio of Disallowance disallowance Canteen expenses 23,15,241 10% 2,31,524 Labour charge 3,85,59,882 2% 7,71,197 expenses Transport expenses 62,42,079 2% 1,24,822 Total 4,71,17,202 11,27,543 The above disallowances were added to the total income of the assessee.
82. Aggrieved, assessee preferred an appeal before the ld. CIT(A). The assessee before the ld. CIT-A submitted as under:
"(b) As submitted earlier, the appellant executing civil contract work at various sites and deployed large number of workers at respective sites for construction work. The canteen expenses labour charge expenses and transportation expenses are inevitable factor for smooth work progress. The expenses are incurred at the place of work sites and vouchers are prepared at the place of incidence of such expenses by supervisor or person responsible for making such payments. These persons are not qualified to prepare systematic vouchers to satisfy statutory obligations. The expenses in question are quite reasonable having regards to the quantum of work at various sites and deployment of workers.
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 46 -
(c) The appellant is maintaining regular books of account, which are duly supported by related documents. The books of account are subject to audit u/s 44AB of the Act, There is no disqualification in audit report. The insignificant mistakes in some vouchers cannot be base for estimated disallowance on mere presumption. Further, the estimated addition in itself is a practice without any sanction of law.
(d) The assessing officer has not rejected the books of account by resorting to section 145(3) of the Act, It is settled law that unless the book result is rejected, trading additions could not be made.
(e) It is the essence of the decision of Hon'ble Tribunal, Rajkot Bench, Rajkot the case of Girish M, Mehta (2006) 99 TTJ (Rajkot) 394 that the significant mistakes in vouchers cannot be 3 base for adverse finding,
(f) In view of the above, it is prayed that the total disallowances made at Rs.11,27,543/- may kindly be deleted."
82.1 The assessee also submitted that once the GP addition has been made, there is no question of making the disallowance of the expenses forming part of the trading account.
82.2 The ld CIT(A) after considered the submission of the assessee deleting the addition made by the AO by observing as under:
"20. I have carefully considered the entire submissions and I find that these expenses are not very high if turnover of the appellant which is well over Rs. 15 crore is taken into account. I also find that similar expenses were incurred in earlier years, but only addition on account of low net profit rate was made. It is also seen that all these three items form part of trading account on which GP has been worked out and addition has been separately made by the AO. Once book results are not acceptable and GP addition is made, there would be no reason to make further disallowance out of items which are considered for working out the GP. The trading account of appellant shows that labour charges, transport expenses and canteen expenses form part of trading account and, as addition on account of estimation of GP has been sustained partly, no disallowance can be made out of expenses debited in trading account. These disallowances of Rs.2,31,524 out of canteen expenses, ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 47 -
Rs.7,71,196 out of labour charges and Rs.1,24,822 out of transport expenses are deleted."
Being aggrieved by the order of ld CIT(A) Revenue is in appeal before us.
83. Both the parties before us relied on the order of authorities below as favorable to them.
84. We have heard the rival contentions and perused the materials available on record. The disallowances was made by the AO for the expenditures as discussed above on the ground that the supporting vouchers were defective. The disallowance was made by the AO on estimated basis.
84.1 From the preceding discussion, we note that the reasonableness of the expenses claimed by the assessee were not doubted which evidences that the aforesaid expenses claimed by the assessee were commensurate to the turnover declared by the assessee. Thus, we are of the view, the technical flaw in the supporting documents cannot be reason for making the disallowances on estimated basis. In this regard, we find support and guidance from the order of this tribunal, Rajkot Bench in the case of Girish M. Mehta reported in 99 TTJ 394 wherein it was held as under:
"16. In the instant case no mistake has been pointed out by the Assessing Officer either in the books of account or in the statement of purchases, sales and stock which was maintained quantitatively on day- to-day basis. The findings recorded by the CIT(A) at page Nos. 3 and 4 have not been controverted by the department by bringing any positive material on record. We are, therefore, inclined to agree with the ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 48 -
learned AR, Mr. Rindani, that the assessee has maintained proper books of account and full details regarding the purchases, sales and stock registers were furnished to the Assessing Officer in which no defect whatsoever was pointed out, thus there was no reason before the Assessing Officer for rejecting the book results and thereby estimating the profit merely by comparing the assessee's G.P. rate. M/s. Gayatri Bullion, which was standing entirely on different footings than the assessee."
84.2 Besides the above we also note that the GP addition was also made by the AO @0.5% of the turnover which was restricted by the ld CIT(A) 2.25% of the gross turnover. Thus, we are of the view that no separate addition can be made to the expenses pertaining to the trading account. Once the addition on account of GP has been made by the AO therefore we are of the view, the other additions made by the AO are not sustainable. Hence, we do not find any reason to interfere in the finding of ld CIT(A). Thus, the ground of appeal of the Revenue is dismissed.
85. The last issue of the Revenue is that ld CIT(A) erred in deleting the addition made by the AO for Rs.16,014 and 3,87,633/- on account of car loan interest, vehicle expenses, telephone and vehicle depreciation.
86. The assessee during the year has claimed expenses as detailed under:
Sr. No. Particulars Amount
1. Telephone Expenses 1,77,224/-
2. Vehicle Expenses 17,23,407/-
3. Depreciation 4,12,537/-
4. Interest in carry loan 80,068/-
Total 23,92,236/-
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 49 -
86.1 The AO during the assessment proceeding was of the view that the personal use of the aforesaid expenses cannot be ruled out. Therefore he made the disallowances of all the aforesaid expenses @20% amounting to Rs. 23,92,236/- and added to the total income of the assessee.
87. Aggrieved, assessee preferred an appeal to ld CIT(A) who has deleted the addition in part made by the AO by observing as under:
"21. I find that similar issue had arisen in A.Y. 2005-06 except for disallowance out of interest on car loan. So far as disallowance out of interest on car loans is concerned, I find that these loans were coming from earlier years, where no such disallowance was ever made. In any case, the cars were basically purchased for the purpose of business and interest on borrowed capital has to be allowed. Therefore, disallowance of interest on car loans amounting to Rs.16,014 is deleted.
21. So far as disallowance out of vehicle expenses, telephone expenses and vehicle depreciation is concerned, I find that similar issue arose in appellant's own case for A.Y. 2005-06 in Appeal No.295/07-08 dated 01/12/10, where disallowance was restricted to Rs.75,000. As fact are identical, this disallowance is restricted to Rs.75,000 for the reasons discussed therein."
Being aggrieved by the order of ld CIT(A) revenue is in appeal before us.
88. Both the parties before us relied on the order of authorities below as favorable to them.
89. We have heard the rival contentions and perused the materials available on record. In the instant case, the AO made the disallowance ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 50 -
assuming that the assessee must have incurred some expenses for its personal use which cannot be allowed as deduction u/s 37(1) of the Act.
From the preceding discussion, we note that the disallowance made by the AO was without pointing out any specific defect suggesting that the assessee has used the car/telephone for its personal use. Thus, we hold that the disallowance was made by the AO on his surmises and conjuncture which is not permissible under the provision of law.
90. In the result, appeal of the Revenue is dismissed.
91. Now coming to the Cross Objection No.33/Rjt/2010 for Asst. Year 2006-07. Assessee has raised the following grounds of appeal in its CO:
1.0 The ground of cross-objections mentioned hereunder is without prejudice to another.
2.0 The ld. Commissioner of Income-tax (Appeals)-l, Rajkot [hereinafter referred to the "CIT(A)"] erred on facts as also in law in confirming disallowance out telephone expense, vehicle expense and proportionate depreciation to the tune Rs. 75,000/-
on lump sum basis on account of alleged personal element involve it. The disallowance may kindly be directed to be deleted.
3.0 The ld. CIT(A) erred on facts as also in law in treating Rs.2,50,000/- debited under the head Vehicle & Machinery Repairing Expenses as expenditure of capital nature.
4.0 The ld. CIT(A) erred on facts as also in law in retaining the addition of Rs.3,79,213/- on lump sum basis on account of alleged low Gross Profit. The addition may kindly be directed to be deleted."
ITA Nos.760 & 761/Rjt/2010 And CO No.32 & 33/Rjt/2010 M/s. Pavan Cosnt. Co.
A.Ys. 2005-06 & 2006-07
- 51 -
92. At the outset, the ld. Counsel for the assessee submitted that due to smallness of the amount, he has been instructed not to press any of the ground raised in the CO. Thus, the grounds raised in the Cross Objection are dismissed.
93. In the combined result, both the appeals and cross objections are dismissed.
This Order pronounced in Open Court on 15/10/2018
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(RAJPAL YADAV) (WASEEM AHMED)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 15/10/2018
Priti Yadav, Sr.PS
आदे श क
त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ' / The Appellant
2. ()यथ' / The Respondent.
3. संबं
धत आयकर आयु3त / Concerned CIT
4. आयकर आयु3त(अपील) / The CIT(A)- I, Rajkot.
5. 4वभागीय ( त न
ध, आयकर अपील य अ
धकरण,राजोकट/DR,ITAT, Rajkot
6. गाड फाईल / Guard file.
आदे शानुसार/ BY ORDER,
स)या4पत ( त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar)
आयकर अपील!य अ"धकरण, राजोकट / ITAT, Rajkot