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17-05-2019, Uttar Pradesh Rajkiya, Tribunal Lucknow

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3 months 4 weeks ago #9504 by amit
Section -
Order Date - 17-05-2019
Favouring - Assessee
Court - Tribunal Lucknow
Appellant - Uttar Pradesh Rajkiya Nirman Nigam Limited
Respondent - DCIT
Justice - A. D. JAIN VP & T. S. KAPOOR AM
Citation - 519Taxpundit267
Appeal No. - ITA No.317/LKW/2017
Asstt. Year - 2010-11

Order

PER : A. D. JAIN, V.P

These cross-appeals are preferred by the assessee as well as the Revenue against the order of the ld. CIT(A)-II, Lucknow, dated 10/3/2017 for the assessment year 2010-11.

2. The sole ground of appeal, taken by the assessee in its appeal in ITA No.314/LKW/2017 is, as follows:-

“The ld. CIT(A)-2, Lucknow erred on facts and in law in not appreciating that no addition should be made with regard to the direct expenses incurred on behalf of the client shown in the Contract Account. Thus, the addition on account of Labour Cess should not be made.

3. The grounds of appeal taken by the Department are, as below:-

1. The CIT(A), Lucknow has erred in law and on facts in deleting the disallowance u/s 40(a)(ia) of the I. T. Act, 1961 amounting to Rs.86,96,73,557/- ignoring the fact that the provisions of sec 40(a)(ia) are applicable in respect of expenses claimed as deduction under the head "Profit & Gains from business or Profession”.

2. The CIT(A), Lucknow has erred in law and on facts in deleting the disallowance u/s 40(a)(ia) of the I.T. Act 1961 amounting to Rs.86,96,73,557/ ignoring the fact section 40(a)(ia) read with section 194C of the I.T. Act is applicable in case of carrying out any work including supply of labour for carrying out any work.

3. The CIT(A), Lucknow, has erred in law and on facts in deleting the addition of Rs.11,31,25,121/- without appreciating the fact that the credit balance in clients account is in respect of projects which were completed more than 15 years ago and hence there is cessation of liability.

4. The CIT(A), Lucknow has erred in law and on facts in directing the Assessing Officer to accept the revised computation of income and deleting the addition of Rs.2,42,57,570/- on account of depreciation ignoring the fact that the assessee can revise its income only by filing revised return of income.

5. The CIT(A), Lucknow has erred in law and on facts in directing the Assessing Officer to accept the revised computation filed by the assessee wherein the assessee has added back Rs.11,96,948/- on account of loss on sale of ignoring the fact that the assessee can revise its income only by filing revised return of income.

6. The CIT(A), Lucknow has erred in law and on facts in deleting the disallowance of Rs.23,54,235/- on account of prior period expense without appreciating the fact that the assessee was unable to prove before the assessing officer that the expenses crystallized during the year under consideration.

7. The CIT(A), Lucknow has erred in law and on facts in deleting the addition of Rs.39,46,18,444/- on account of interest income without appreciating the fact that in F.Y. 2008-09 (A.Y.2009-10) the assessee has not credited accrued interest of Rs.39,46,18,444/- in interest income and thus reversal of above amount from current year’s interest income is not allowable.

7.1 The CIT(A), Lucknow has erred in law and on facts in deleting the addition of Rs.39,46,18,444/- on account of interest income without appreciating the fact that assessee is claiming TDS relating to accrued interest on unutilized funds and therefore as per provisions of Sec. 198 & 199 of the I.T. Act, the accrued interest is the income of the assessee.

8. The CIT(A), Lucknow has erred in law and on facts in deleting the addition of Rs.19,27,197/- on account of expenses relating to purchase of material without appreciating the fact that the bills/vouchers for the purchase were not raised during the year under consideration.

9. The CIT(A), Lucknow has erred in law and on facts in deleting the addition of Rs.9,43,41,057/- on account of "income wrongly credited in previous year written back" without appreciating the fact that the assessee company's accounting policy cannot override Accounting Standard and Income Tax Act and therefore irrespective of the fact that the company has reversed the profit shown in earlier years as per CAG comment the same should be added back for computing taxable income at the time of filing of return.

10. The CIT(A), Lucknow has erred in law and on facts in deleting the addition of Rs.26,95,93,097/- on account of interest income earned on client’s unutilized funds without appreciating the fact that the assessee is following mercantile system of and therefore interest income of Rs.26,95,93,097/- relating to A.Y. 2010-11 has to be assessed in the A.Y. 2010-11 only. 10.1 The CIT(A), Lucknôw has erred in law and on facts in deleting the addition of Rs.26,95,93,097/- on account of interest income earned on client’s unutilized funds without appreciating the fact that in A.Y. 2011-12, the assessee has considered Rs.27,18 34,136/- as income in prior period adjustments in th P&L account but reduced this amount from income in computation of income.

11. The CIT(A) Lucknow has erred in law and on facts in deleting the addition of Rs.1,38,77,000/- by observing that the amount of Rs.1,38,77,000/- has been shown as income in subsequent year without appreciating the fact the above fact is not verifiable from the assessment record.

4. The facts of the case are that for the assessment year 2010- 2011, the assessee had filed the return of income showing total Income of Rs.225,87,22,062/-. The assessment was completed by the AO on an income of Rs.422,01,39,715/-, making various additions, vide order passed under section 143(3) of the Act.

5. Aggrieved by the order of the A.O, assessee preferred an appeal before the ld. CIT(A), who partly allowed the appeal of the

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