Commissioner of Income Tax vs Shapoorji Pallonji and Co. Ltd.

The questions of law as raised in this appeal are as follows:

(A) Whether on the facts and in the circumstances of the case and in law the hon''ble Tribunal was right in deleting the addition of Rs. 3,11,00,273 made by the Assessing Officer as enhancement of the value of closing work-in-progress even though the assessee had on one hand not included the said amount in its gross receipts relating to incomplete contracts but on the other hand claimed the benefit of TDS on the said amount in its return of income ?

(B) Whether on the facts and in the circumstances of the case and in law the hon''ble Tribunal was right in deleting the addition of Rs. 2,50,000 made by the Assessing Officer as disallowance of bad debts claimed by the assessee u/s 36(1)(vii) of the Act by holding that the said amount represented a business expenditure u/s 37 of the Act ?

(C) Whether on the facts and in the circumstances of the case and in law the hon''ble Tribunal was right in considering the income on advances made by the assessee-company for the purpose of taking up any future projects is a business expense and not a capital income ?

(D) Whether on the facts and in the circumstances of the case and in law the hon''ble Tribunal was right in deleting the addition of Rs. 8,69,000 made by the Assessing Officer as estimated expenses incurred by the assessee in earning dividend income ?

Counsel appearing for the appellant states that he is not pressing the questions (B) and (C) as they do not arise from the judgment impugned in this appeal.

In so far as question (A) is concerned, we find that the Assessing Officer made an addition of Rs. 3,11/00,273 on reconciliation of all the receipts of incomplete contracts. The Tribunal has found that similar additions made by the Assessing Officer were deleted for the assessment years 1996-97, 1997-98, 1998-99 and 1999-2000. Counsel for the respondents have placed on record the judgment of the Income Tax Appellate Tribunal in respect of the assessment year 1992-93. The same records that a dispute about the determination of value of work-in-progress arose first time in the assessment years 1971-72 and 1972-73 and the Department suggested a formula for determining the value of work-in-progress. Paragraph 4 of the said order of the Income Tax Appellate Tribunal enumerates the formula which was ultimately accepted and one of the components of the same was "payment received in respect of incomplete contracts up to 30th June". It was contended that the same formula has been used for the relevant assessment year and under this component-assessee was entitled to the benefit of TDS which was effectively a part of the total receivable amount. Counsel appearing for the Revenue could not place any material before us to show that the orders of the Income Tax Appellate Tribunal for the assessment years 1996-97 to 1999-2000 were challenged. In the circumstances, according to us, question (A) does not arise.

In so far as question (D) is concerned, both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal has come to a finding of fact that there were no expenses incurred by the assessee in earning dividend income and there were no administrative or personal expenses which could be said to be expenses for earning such dividend. In this view of the matter, question (D) does not arise. Consequently, appeal is summarily dismissed.