DEPUTY COMMISSIONER OF INCOME TAX Vs. MUPPA HOMES PVT. LTD.
LAWS(IT)-2014-5-67
INCOME TAX APPELLATE TRIBUNAL
Decided on May 23,2014

DEPUTY COMMISSIONER OF INCOME TAX Appellant
VERSUS
Muppa Homes Pvt. Ltd. Respondents

JUDGEMENT

CHANDRA POOJARI,AM. - (1.) THIS appeal by the Revenue is directed against the order of the CIT(A) -V, Hyderabad dated 29.11.2012 for assessment year 2009 -10.
(2.) THE Revenue raised the following grounds: 1. The order of the CIT(A) is erroneous in law and on facts of the case. 2. The CIT(A) ought to have appreciated the AO making addition of expenditure claimed to have executed by non -existing company. 3. The CIT(A) ought to have enquired into genuineness how a contract was allocated to a non existing company.
(3.) THERE is only one issue in this appeal and that relates to the disallowance of development contract expenditure amounting to Rs. 17,05,38,557. The facts of the case are that during the year the assessee company obtained land development works at Koduru Village, Chilamattur Mandal from M/s. Lepakshi Knowledge Hub (M/s. Lepakshi for short) for a total value of Rs. 20.25 Crores. The assessee company entrusted the above work on subcontract to M/s. GKC Projects Limited (for short M/s. GKC) for total consideration of Rs. 17.62 Crores. During scrutiny proceedings, the Assessing Officer received information in the case of M/s. Advik Builders and Consultants Pvt. Ltd. (for short M/s. Advik) that they have executed a part of land levelling work amounting to Rs. 4,99,55,400 at Chilamattur for M/s. GKC, which was subcontracted to them by the assessee company. The Assessing Officer found that the company M/s. Advik had not proved the genuineness of its claims towards expenditure for its contract works and sundry creditors, etc. Therefore, the Assessing Officer held that M/s. Advik is a non -existent company and accordingly disallowed total expenditure claimed by the assessee company towards development contract expenditure work amounting to Rs. 17,05,38,557 paid to M/s. GKC. On appeal, the CIT(A) observed that during the relevant assessment year, the assessee company got a contract for land development works at Koduru Village, Chilamattur Mandal from M/s. Lepakshi for Rs. 20.25 crores. The assessee company gave the above contract to M/s. GKC for Rs. 17.62 crores on subcontract. In turn, M/s. GKC gave the work to various sub -contractors, in which M/s. Advik had done a part of work. The assessee during the first appeal proceedings produced evidences like copy of agreement between the assessee -company and M/s. Lepakshi, copy of agreement between the assessee and M/s GKC, bills raised, TDS certificates, bank statements and copies of assessment orders of M/s. GKC and M/s. Advik. It has also produced the confirmation letter from M/s. GKC regarding completion of work.;


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