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From the Courts »
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 ITO vs. Vikram A. Pradhan (ITAT Mumbai)

A.C.I.T.,Circle-2(1), Room no. 398D, CR Building,IP Estate,New Delhi V/s. M/s Bhayana Builders (P) Ltd., 7, Factory Road, Near Safdarjung Hosptial, New Delhi
October, 03rd 2012
       IN THE INCOME TAX APPELLATE TRIBUNAL DELHI `A' BENCH
      BEFORE SHRI HARI OM MARATHA , JM & SHRI A.N. PAHUJA, AM


                           ITA nos..897,1878 &1879/Del/2012
                        Assessment years : 2005-06 to 2007-08

A.C.I.T.,Circle-2(1), Room V/s .                  M/s Bhayana Builders (P)
no. 398D, CR Building,IP                          Ltd., 7, Factory Road, Near
Estate,New Delhi                                  Safdarjung Hosptial, New
                                                  Delhi
                        [PAN :AAACB 4147 N]
(Appellant)                                            (Respondent)

                 Revenue   by          Shri Anuj Tiwari, AR
                 Assessee by           Shri Pirthi Lal, DR


                Date of hearing                   30-08-2012
                Date of pronouncement             01-10-2012





                                    ORDER


 A.N. PAHUJA:- These three appeals filed by the Revenue on            22.02.2012
 against an order dated 7.12.2011 for the AY 2005-06 ; on 24.04.2012 against an
 order dated 07.02.2012 for the AY 2006-07 and on 24.4.2012 against an order
 dated 27.2.2012 of the AY 2007-08 of the ld. CIT(A)-V, New Delhi, raise the
 following grounds:


 I.T.A. No.897/D/2012


              "1. The ld. CIT(A) has erred on facts and in law in treating
                  the reopening of the case u/s 147 of the I.T. Act as
                  invalid and cancelling the order passed u/s 147/143(3) of
                  the I.T. Act.

              2. The appellant craves leave for reserving the right to
                 amend, modify, alter, add or forego any grounds of
                 appeal at any time before or during the hearing of this
                 appeal."
                                        2     ITA nos.897,1878&1879/Del./2012



I.T.A. No.1878/D/2012


             1. "The ld. CIT(A) has erred on facts and in law in allowing
                the ground of appeal of the assessee challenging the
                reopening of the case u/s 147 of the I.T. Act. The CIT(A)
                has not appreciated that in the original assessment the
                Assessing Officer has not considered the issue as to
                whether the expenditure on wooden shuttering and
                centering material is revenue as per the law.

             2. The ld. CIT(A) has erred on facts and in holding that
                wooden shuttering and centering is to be allowed as
                revenue expenses.

             3. The appellant craves leave for reserving the right to
                amend, modify, alter, add or forego any grounds of
                appeal at any time before or during the hearing of this
                appeal."

I.T.A. No.1879/D/2012


             1. "The ld. CIT(A) has erred on facts and in deleting the
                disallowance of commission paid to M/s Brainstreet Marketing
                (P) Ltd. at ``18,85,000/-,

             2.    The learned CIT(A) has erred on facts and in holding that
                  wooden shuttering and centering is to be allowed on
                  consumption basis as revenue expenses.

             3. The appellant craves leave for reserving the right to amend,
                modify, alter, add or forego any grounds of appeal at any time
                before or during the hearing of this appeal."

2.           At the outset, the Bench rejected the request for adjournment on
behalf of the assessee and considering the nature of issues and findings of the
ld. CIT(A),proceeded to dispose of these appeals after hearing both the parties.


3.       Adverting first to ground no.1 in the appeal of the Revenue for the AY
2005-06, facts, in brief, as per relevant orders are that assessment in this case
                                        3     ITA nos.897,1878&1879/Del./2012


was initially completed vide order dated 5th December, 2007 u/s 143(3) of the
Income-tax Act, 1961 (hereinafter referred to as the `Act'), determining an income
of ``1,10,87,180/- in pursuance to return filed on 27th October, 2005, declaring an
income of ``1,10,50,707/-. Subsequently, on perusal of assessment records, the
AO noticed that on account of allowance of claim of wooden shuttering and
centering expenses, income of the assessee had escaped assessment, the
expenditure being capital in nature, in the opinion of the AO. Accordingly, the AO
recorded the following reasons in terms of provisions of section 148 (2) of the
Act:


       "Note for reasons to believe u/s 147 of the I.T. Act in the case
       of Bhayana Builders Pvt. Ltd. assessment year 2005-06 PAN
       AAACB 4147N

       The return of income for the assessment year 2005-06 was filed on
       27.10.2005 declaring an income of ``1,10,50,707/- and the
       assessment was completed u/s 143(3) of the Act on 5.12.2007 at
       an income of ``1,10,87,180/-.

       On perusal of assessment records, it is detected that during the
       previous year relevant to assessment year 2005-06, the assessee
       company had debited an amount of ``2,60,28,512/- on account of
       shuttering and centering expenses which includes wooden
       shuttering and centering as well as steel shuttering and centering.
       Out of total expenses of ``2,60,28,512/-, the assessee company
       had claimed expenses amounting to ``2,42,56,947/- on account of
       wooden shuttering and centering and an expenses of ``17,71,565/-
       on account of steel shuttering and centering. Only an amount of
       ``17,71,565/- being steel shuttering and centering was taken as
       capital expenditure and ``2,42,56,947/- as revenue expenditure,
       whereas, the whole amount i.e. ``2,60,28,512/- should have been
       taken as capital expenditure and only depreciation at the prescribed
       rate i.e. @25% on ``2,42,56,947/- to be allowed.

       In view of the above, I have reason to believe that an amount of
       ``2,42,56,947/- chargeable to tax has escaped assessment for the
       assessment year 2005-06 and, hence, clearly attracts the
       provisions of clause (c) of Explanation 2 to Section 147 of the I.T.
       Act."
                                       4     ITA nos.897,1878&1879/Del./2012


3.1          After recording the aforesaid reasons, the AO issued a notice u/s
148 of the Act on 2nd July, 2010. In response, the assessee filed return on 9th
August, 2010. During the course of reassessment proceedings on 8th October,
2010, the assessee raised objections against initiation of proceedings u/s 148 of
the Act relying, inter alia, on a number of judicial pronouncements. However,
the AO rejected these objections and upheld the validity of reopening of the
assessment in the light of decisions in Teekoy Rubbers (India) Limited Vs. CIT
(Ker) 181 ITR 387; Renusagar Power Co. Ltd. Vs. Income-tax Officer and
another (All) 117 ITR 719; M.A. Chidambaram Vs. CIT (Mad) 216 ITR 175; Tube
Suppliers Ltd. Vs. CIT (Mad) 216 ITR 596 and CIT Vs. First Leasing Company of
India Ltd. (Mad) 241 ITR 248.





3.2          The AO, thereafter, showcaused the assessee as to why the
expenditure of ``2,42,56,947/- on wooden shuttering and centering expenses be
not treated as capital in nature. In response, the assessee stated that the total
amount of ``2,60,28,512/-       comprised wooden shuttering and scaffolding-
`2,42,96,947.70 and steel centering & shuttering-`17,31,565.30 . The assessee
treated an amount of ``17,71,565/- steel shuttering & centering expenses capital
in nature while claiming remaining expenses on wooden shuttering & scaffolding
revenue in nature on the ground that the ply and batten consumed for making
base of casting and flooring of multistoried building, remained soaked with
concrete mixtures and watering for about 4 weeks at a stretch ;since this ply and
batten could at the most be used, not more than 3 to 4 times, therefore, the
amount was clamed as revenue expense. However, the AO did not accept the
submissions of the assessee while relying upon decisions in Scientific
Engineering House Pvt. Ltd. Vs. CIT (1986) 157 ITR 86 (SC); Orissa Cement Ltd.
Vs. CIT (1969) 73 ITR 14, 20 (Del.); CIT Vs. Bank of India Ltd.(1979) 118 ITR
809 (Bom); CIT Vs. Elecon Engg. Co. Ltd. (1987) 166 ITR 16 (SC) and CIT Vs.
Sri Krishna Bottlers Pvt. Ltd. (1989) 175 ITR 154(AP) and concluded that wooden
shuttering and centering material was plant. Consequently, the AO disallowed
the claim, treating the amount as capital in nature, resulting in disallowance of
                                        5     ITA nos.897,1878&1879/Del./2012


``1,82,22,710/- after allowing depreciation @25% on the amount of wooden
shuttering and centering..


4.            On appeal, the assessee questioned the validity of reopening of the
assessment, relying, inter alia, on the decision of Hon'ble Apex Court in CIT Vs.
PVS Beedies Pvt. Ltd. 237 ITR 13 (SC) and CIT Vs. Simbaoli Sugar Ltd. (2011)
333 ITR 470(Del.). The assessee pointed out that the original return filed by
them was selected for scrutiny and the AO required the assessee to submit the
following details:-
       1)     "Copy of ledger a/c of centering and shuttering ­ wood, purchased
              during the year under reference;
       2)     Copy of ledger a/c of steel shuttering, purchased during the year
              under reference.
       3)     Copy of ledger a/c of centering, shuttering and scaffolding
              consumed during the year ended 31.3.2005 along with working
              thereof."

4.1    The assessee having submitted complete details vide letter dated
15.10.2010, there was complete disclosure of facts relating to claim of expenses
on wooden shuttering centering, scaffolding etc. Since the assessee had already
disclosed the primary facts, relying upon decisions in CIT Vs. Bhaji Lavji, 79 ITR
582; Income-tax Officer Vs. Lakhmani Mewal Das, 103 ITR 437 (SC); CIT Vs.
Motor & General Finance Ltd., (2009) 184 Taxman 465 (Del), the assessee
argued that reopening of the assessment was invalid. Inter alia, the assessee
relied upon a number of decisions in CIT Vs. Kelvinator of India Ltd., 256 ITR 1
(Del-FB); CIT Vs. Goetze (India) Ltd., (2010) 321 ITR 431 (Delhi); Asteroids
Trading and Investments (P) Ltd. Vs. DCIT (2009) 308 ITR 190; CIT Vs. Eicher
Ltd. (2007) 294 ITR 310 (Delhi); Carlton Overseas (P) Ltd. Vs. Income-tax Officer
(2010) 188 Taxman 11 (Delhi); Satnam Overseas Ltd. Vs. Addl. CIT (2010) 188
Taxman 172 (Del); Sudhir Gensets Ltd. Vs. Income-tax Officer (2011) 201
Taxman 216 (Delhi)(Mag.); CIT Vs. Random Constructors Pvt. Ltd. (2010) 186
Taxman 303 (P&H); CIT Vs. Indian Farmers Fertilizers Co-operative Ltd.(2008)
171 Taxman 379 (Delhi); National Dairy Development Board Vs. DCIT (2011)
                                        6     ITA nos.897,1878&1879/Del./2012


242 CTR (Guj) 302; CIT Vs. Simbhaoli Sugar Mills Ltd. (2011) 333 ITR 470
(Delhi); Legato Systems (India) Pvt. Ltd. Vs. DCIT (2010) 187 Taxman 294
(Delhi); Diwakar Engineers Ltd. Vs. Income-tax Officer (2010) 187 Taxman 327
(Delhi); Jal Hotels Co. Ltd. Vs. Ass. DIT (2009) 184 Taxman 1 (Delhi). In the
light of these submissions and decisions, the ld. CIT(A) concluded as under:-


      "3.4           I have carefully considered the assessment order as
      well as the contentions of the appellant raised in the written
      submission. From para 4 of the original assessment order passed
      u/s 143(3), it is seen that there was a discussion in the order on the
      issue of expenses claimed on shuttering and centering, both
      wooden and steel, for which the AO had called for necessary
      details. The AO after examination of the details had allowed the
      expenses in respect of wooden shuttering and centering by
      following the decision in earlier assessments and after applying his
      mind to the issue. While, he had allowed expenses on wooden
      shuttering and centering and scaffolding on consumption basis, he
      had capitalized the expenditure claimed by the assessee on steel
      shuttering and centering and allowed depreciation thereon after
      taking into account the brought forward written down value of such
      materials. It may be added here that there may not be detailed
      reasons recorded in the assessment order on analysis of material
      on record. The Full Bench of the Jurisdictional High Court of Delhi
      in the case of CIT Vs. Kelvinator of India Ltd. had rejected the
      submissions of the department by holding that where the detailed
      reasons are not recorded, it may justify the reopening of the case.
      It was held that this submission is fallacious and the Full Bench
      decision of the Delhi High Court has also been confirmed by the
      Supreme Court in CIT Vs. Kelvinator of India Ltd., (2010) 320 ITR
      521 (Supreme Court).

             It is also seen that the department has been consistently
      following its earlier orders of treating the expenditure on wooden
      shuttering and centering and scaffolding on a consumption basis
      and capitalizing the expenditure of steel shuttering and centering
      and allowing depreciation thereon. This is a settled issue, as the
      assessee has also accepted the same.

            In view of the facts of the present case and various decisions
      on the issue, I find that the primary facts were before AO and the
      same has been considered and discussed in the original
      assessment order. Since the re-assessment has been completed
                                       7     ITA nos.897,1878&1879/Del./2012


      on the same set of facts, the reopening is held to be invalid.
      Consequently, the order u/s 143(3) read with section 148 stands
      annulled.

             Since the reopening u/s 147 has been held to be invalid and
      order passed in pursuance to reopening stands cancelled, the
      grounds on merit have become only of academic nature and
      requires no specific comments."



5.           The Revenue is now in appeal before us against the aforesaid
findings of the ld. CIT(A). The ld DR while carrying us through the assessment
order, supported the findings of    the AO while the ld. AR on behalf of the
assessee relied upon the findings in the impugned order.


6.           We have heard both the parties and gone through the facts of the
case. Indisputably the original assessment in this case was completed vide order
dated 15th December, 2007 u/s 143(3) of the Act, determining income of
``1,10,87,180/- in pursuance to return declaring income of ``1,10,50,707/- filed
on 27th October, 2005. Thereafter, the AO reopened the assessment on 2nd July,
2010 u/s 147 of the Act i.e. four years after the end of the aforesaid assessment
year on the ground that wooden shuttering and centering were capital in nature,
even when during the course of original assessment proceedings, issue had
been examined by the AO after raising queries and amount was allowed as
revenue expenditure . As pointed out by the ld. CIT(A) , the AO raised a specific
query regarding claim of wooden shuttering and centering expenses and the
assessee filed relevant details vide letter dated 15th October, 2007. No failure
on the part of the assessee in relation to material facts in respect of
wooden shuttering & centering expenses in the original assessment
for the    year under consideration,         has   been    attributed    in   the
aforesaid reasons recorded by the AO nor the ld. DR ascribed any
such failure to the assessee, before us. The reasons do not indicate
why and how the assessee failed to make full and true disclosure of
                                           8      ITA nos.897,1878&1879/Del./2012


material    facts   in   relation    to    wooden        shuttering    &   centering
expenses. As pointed out by the ld. CIT(A), during the course of
assessment proceedings the AO had raised a specific query relating to wooden
shuttering & centering expenses and indisputably, the assessee submitted
a detailed reply dated 15.10.2007. W e find that the facts mentioned in the
aforesaid reasons were available with the AO even at the time of
finalizing the initial assessment completed u/s 143(3) of the Act on
5.12.2007. On the basis of same material, if the AO takes a different
view subsequently,         after expiry of 4 years from the end of the
assessment year, that would not confer any jurisdiction on the AO to
issue notice u/s 148 of the Act. The scope and effect of section 147
as substituted with effect from April 1, 1989, as also sections 148 to
152 are substantially different from the provisions as they stood
prior to such substitution. Under the old provisions of section 147,
separate clauses (a) and (b) laid down the circumstances under
which income escaping assessment for the past assessment years
could be assessed or reassessed. To confer jurisdiction under
section 147(a), two conditions were required to be satisfied- firstly
the AO must have reason to believe that income, profits or gains
chargeable to income tax have escaped assessment, and secondly
he   must   also    have    reason    to       believe   that   such   escapement
occurred due to reason of either omission or failure on the part of
the taxpayer to disclose fully or truly all material facts necessary for
his assessment of that year. Both these conditions were conditions
precedent to be satisfied before the AO could have jurisdiction to
issue notice under section 148 read with section 147(a).But under
the substituted section 147, existence of only the first condition
suffices. In other words if the Assessing Officer, for whatever
reason, has reason to believe that income has escaped assessment,
it confers jurisdiction to reopen the assessment. However, both the
conditions must be fulfilled if the case falls within the ambit of the
                                         9   ITA nos.897,1878&1879/Del./2012


proviso to section 147. Since in the              case under consideration,
notice u/s 148 had been issued only on 2.7.2010 that is after four
years from the end of relevant assessment year, apparently, the
issue that arises for our consideration is as to whether there was
any failure on the part of the assessee to disclose fully and truly all
material    facts?   No    such    failure   is   either   evident       from   the
assessment order or the reasons recorded by the AO nor has been
pointed out before us by the ld. DR. Indisputably, the AO chose to
reopen the assessment completed u/s 143(3) of the Act after
recording reasons, wherein no such failure as has been envisaged
in proviso to sec. 147 of the Act, has been attributed to the
assessee. In Rakesh Aggarwal v. Asst. CIT [1997] 225 ITR 496,
Hon'ble Delhi High Court held that in view of the proviso to section
147, notice for reassessment under section 148 would be illegal if
issued     more   than    four   years   after    the   end   of   the    relevant
assessment year unless failure is ascribed to the assessee in
disclosing fully and truly all material facts necessary for his
assessment. Hon'ble Gujrat High Court while adjudicating a similar
issue held in Shree Tharad Jain Yuvak Mandal v. ITO [2000] 242
ITR 612 as under:
" A perusal of the aforesaid provision goes to show that under the
proviso to section 147, the foundation of conferring jurisdiction on
the Assessing Officer to assess or reassess the income for any
assessment year beyond the end of four years from the end of
relevant assessment year must be omission or failure on the part of
an assessee to make a return under section 139 for any assessment
year or to disclose fully and truly all material facts necessary for his
assessment for that year and that the Income-tax Officer has reason
to believe that the income chargeable to tax has escaped
assessment for that year. In the absence of any such omission or
failure on the part of the assessee, taking action for assessment or
reassessment is not permissible for any year after the expiry of four
years from the relevant assessment year.
The scope of the assessee's duty to disclose fully and truly all
material facts necessary for assessment in the context of the
provisions of section 34 of the Indian Income-tax Act, 1922, has
                                     10   ITA nos.897,1878&1879/Del./2012


been succinctly stated by the Supreme Court by their Lordships in
Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191. The court
observed:
"There can be no doubt that the duty of disclosing all the primary facts
relevant to the decision of the question before the assessing authority
lies on the assessee."
The court further said:
"Does the duty, however, extend beyond the full and truthful disclosure of
all primary facts? In our opinion, the answer to this question must be in
the negative. Once all the primary facts are before the assessing
authority, he requires no further assistance by way of disclosure. It is for
him to decide what inferences of facts can be reasonably drawn and what
legal inferences have ultimately to be drawn. It is not for somebody else-
far less the assessee-to tell the assessing authority what inferences,
whether of facts or law, should be drawn."

6.1   Again in the case of Patidar Oil Cake Industries Vs. DCIT, 270
ITR 347(Guj), Hon'ble Gujrat High Court held
   "In the light of the fact that the assessments have been sought to
be reopened after a period of four years from the end of each of the
assessment years in question, the provisions of section 147 of the
Act mandate that the Assessing Officer shall be vested with the
jurisdiction to initiate reassessment proceedings only in case there
is any omission or failure on the part of the assessee to disclose
fully and truly all material facts necessary for the assessment for the
year under consideration and such failure should result in income
chargeable to tax escaping assessment. On a plain reading of the
aforesaid provisions and the reasons recorded, it becomes clear
that there cannot be ascribed any failure or omission to the
petitioner so as to vest the Assessing Officer with jurisdiction to
reopen the assessments which were already finalised. In the
circumstances, for the assessment years 1986-87, 1987-88 and
1988-89 in the light of the fact that the initiation by issuance of
impugned notices is beyond the period of four years and the
prerequisite conditions stipulated by section 147 of the Act are not
fulfilled, there is no case made out for upholding the proposed
reassessment. The notices for all the four years are, therefore, bad
in law and are quashed and set aside."

6.2       In the case of       Devidayal Rolling Mills & Another Vs.
Y.R.Saini,ACIT,285 ITR 514,Hon'ble Bombay High Court held that
where an assessment order passed u/s 143(3) of the Act is sought
                                    11     ITA nos.897,1878&1879/Del./2012


to be reopened beyond four years from the end of relevant
assessment year, the Revenue must establish that there was failure
on the part of the assessee to disclose fully and truly all material
facts relevant for the purposes of the assessment.


6.3   In the case of     Mercury Travels Ltd. Vs. DCIT & Another,258
ITR 533(Cal.), Hon'ble High Court        in the light of facts of the case
concluded    that   no    income   chargeable     to   tax   had   escaped
assessment for those assessment years due to failure of the
assessee to disclose fully and truly all material facts necessary for
its assessment.


6.4     In Priyanka Carbon & Chemical Industries (P) Ltd. vs. DCIT
(2008) 15 DTR (Guj.) 31, Hon'ble High Court held that when factual
data was available with the AO at the time of assessment, on the
same very material, if the AO takes a different view subsequently
and that too after expiry of four years from the end of the relevant
assessment year, that would not confer any jurisdiction on the AO to
issue notice u/s 148 of the Act. Similar view was taken in ACIT vs.
Jagdishbhai Nanubhai Tekrawala (2008) 12 DTR (Guj) 270,


6.5    In Vareli W eavers Pvt. Ltd. vs. DCIT (1999) 240 ITR 77 (Guj)
also notices under section 148 read with section 147 of the Act were
quashed by the Hon'ble High Court, there being no whisper in the
reasons recorded by the AO about failure on the part of the
assessee to disclose truly and fully all material facts .


6.6       In CIT Vs. DCM Ltd.,(2009) 24 DTR(Del.) 72,Hon'ble
jurisdictional High Court found that      there was no allegation in the
reasons recorded by the AO that the assessee had failed to file its
return or that it had failed to disclose fully and truly all material
                                       12   ITA nos.897,1878&1879/Del./2012


facts in its return      nor was there any allegation by the Assessing
Officer that the assessee had        failed to disclose fully and truly all
material facts in its return of income nor even there              was    any
allegation regarding escapement of income. In these circumstances,
Hon'ble High Court upheld that findings of the Tribunal that notice
u/s 148 of the Act ,having been issued after four years, the
reopening of the assessment was not valid.


6.7    In    CIT     &   Another Vs.    Foramer France, 264 ITR 566
(SC),Hon'ble Apex Court upheld the order of the Hon'ble Delhi High
Court in concluding that when there was admittedly no failure on the
part of the assessee to make a return or to disclose fully and truly
all material facts necessary for the assessment, the proviso to the
new section 147 of the Act squarely applied, and the impugned
notices were barred by limitation mentioned in the proviso.


6.8         In   Supreme Travels (P) Ltd. vs. DCIT, 182 Taxman
216(Bom.), Hon'ble Bombay High Court held that the Assessing
Officer can reopen the assessment only if the ingredients of section
147 are fulfilled.


6.9      In Gujarat Carbon and Industrial Ltd. vs. Jt. CIT [2008] 307
ITR 271 (Guj), Hon'ble High Court in the absence of any failure on part
of the assessee to fully and truly disclose all material facts relevant for the
assessment of the assessment year in question, concluded that the impugned
notice under s. 148 issued beyond a period of four years from the end of the
relevant assessment year, is required to be quashed.

6.10     Likewise in Gujrat Fluorochemicals Ltd. vs. DCIT [2009] 319
ITR 282 (Guj), Hon'ble High Court concluded that                the assessee
having made full disclosure of material facts in the return which was
                                         13     ITA nos.897,1878&1879/Del./2012


accompanied by several enclosures, assessment could not be reopened beyond
four years from the end of the relevant assessment year for the reason that
certain income has been wrongly assessed under the head `Capital gains '
instead of ` Profits and gains of business or profession'.

6.11     In Nikhil K Kotak vs. Mahesh Kumar, AO [2009] 319 ITR 445
(Guj) also it was held that in the absence of any averment of the Revenue
that there was any omission or failure on the part of the assessee to disclose fully
and truly all material facts relevant for the assessment of the assessment year in
question, impugned notice under s. 148 issued beyond a period of four years
from the end of the relevant assessment year is bad in law and without
jurisdiction.



6.12      In Cadila Healthcare Ltd. vs. Dy. CIT [2010] 41 DTR 145
(Guj), Hon'ble High Court            concluded that in the absence of any
averment in the reasons recorded by the AO for reopening the assessment that
the petitioner has failed to disclose fully and truly any material fact necessary for
its assessment for the year under consideration or any new material or facts
coming to the notice of the AO leading to the conclusion that income had
escaped assessment, the ingredients of the proviso to s. 147 are not satisfied
and, therefore, entire proceedings under s. 147 initiated pursuant to the
impugned notice after expiry of four years from the end of the relevant
assessment year were without jurisdiction and cannot be sustained.

6.13            In Mihir Textiles Ltd. vs. Jt. CIT [2010] 43 DTR 11
(Guj),Hon'ble High         Court held that the petitioner having submitted
audited books of accounts, P&L a/c, and balance sheet along with notes and also
made a specific disclosure in the form of a note regarding transfer of its
undertaking, it cannot be said that the petitioner is guilty of not making full and
true disclosure and, therefore, notice under s. 148 issued after the expiry of four
years from the end of the relevant assessment year is quashed and set aside.
                                          14    ITA nos.897,1878&1879/Del./2012



6.14     Similar view was taken in decision dated 28.11.2011 in                 CIT vs.
Purolator India Limited in ITA no. 489/Del./2011 and decision dated 1.12.2011 in
BLB Limited vs. ACIT in WPC 6884/2010,JSRS Udyog Limited & Another vs.
ITO,313 ITR 321(Del.);Wel Intertrade Private Limited vs. ITO,308 ITR 22(Del.)
and in a recent decision dated 11.11.2011 in ITA no.87 /2010 in Atma
Ram Properties Pvt. Ltd. vs. DCIT by the Hon'ble jurisdictional High
Court.


6.15     In Haryana Acrylic Manufacturing Co., 308 ITR 38 (Del.),,
Hon'ble jurisdictional High Court, inter alia, concluded as under:
    "20. In the reasons supplied to the petitioner, there is no whisper, what to
speak of any allegation, that the petitioner had failed to disclose fully and truly all
material facts necessary for assessment and that because of this failure there
has been an escapement of income chargeable to tax. Merely having a reason to
believe that income had escaped assessment, is not sufficient to reopen
assessments beyond the four year period indicated above. The escapement of
income from assessment must also be occasioned by the failure on the part of
the assessee to disclose material facts, fully and truly. This is a necessary
condition for overcoming the bar set up by the proviso to section 147. If this
condition is not satisfied, the bar would operate and no action under section 147
could be taken. We have already mentioned above that the reasons supplied to
the petitioner does not contain any such allegation. Consequently, one of the
conditions precedent for removing the bar against taking action after the said four
year period remains unfulfilled. In our recent decision in Wel Intertrade (P.)
Ltd.',308 ITR 33(Del.) we had agreed with the view taken by the Punjab and
Haryana High Court in the case of Duli Chand Singhania,269 ITR 192 that, in the
absence of an allegation in the reasons recorded that the escapement of income
had occurred by reason of failure on the part of the assessee to disclose fully and
truly all material facts necessary for his assessment, any action taken by the
Assessing Officer under section 147 beyond the four year period would be wholly
without jurisdiction. Reiterating our viewpoint, we hold that the notice dated 29-3-
2004 under section 148 based on the recorded reasons as supplied to the
petitioner as well as the consequent order dated 2-3-2005 are without jurisdiction
as no action under section 147 could be taken beyond the four year period in the
circumstances narrated above."
                                         15    ITA nos.897,1878&1879/Del./2012


6.16          Here we may also refer to decision in Gruh Finance Ltd. v.
JCIT(Assessment) 243 ITR 482Guj) ,wherein Hon'ble High Court observed, inter
alia, as under:
     "In so far as the expressions "reason to believe" and "change of opinion" are
concerned, we are of the view that though the material was available on record,
at the time of first assessment, when no conscious consideration of the material
is made and a mistake has been committed, it would not, in any case, create an
embargo or a ban on the competent officer to exercise powers under the
amended section 147 of the Income-tax Act, 1961, as prima facie, there could
not be "change of opinion" in that factual scenario. It has also not been shown to
us on behalf of an assessee. If conscious application of mind is made to the
relevant facts and material available or existing at the relevant point of time while
making assessment and again a different or divergent view is sought, it would
tantamount to "change of opinion", whereas, in the case of existing material, no
conscious attempt has been made, it would tantamount to mistake in not
considering the relevant point or proposition and it would not be a "change of
opinion".

6.17         As regards change of opinion, we may reiterate that the
assessee made disclosure of wooden shuttering and centering expenses during
the course of original assessment proceedings ,when the AO raised a specific
query relating to these expenses and indisputably, the assessee submitted a
detailed reply dated 15.10.2007. These facts have not been disputed before us.
In this context , we find that Hon'ble Apex Court while affirming the decision of
Hon'ble Delhi High Court in Kelvinator of India Ltd.(supra) and going through the
changes made to section 147 of the Act observed as under:
"....., we find that, prior to the Direct Tax Laws (Amendment) Act, 1987,
reopening could be done under the above two conditions and fulfilment of the
said conditions alone conferred jurisdiction on the Assessing Officer to make a
back assessment, but in section 147 of the Act (with effect from 1st April, 1989),
they are given a go-by and only one condition has remained, viz., that where the
Assessing Officer has reason to believe that income has escaped assessment,
confers jurisdiction to reopen the assessment. Therefore, post-1st April, 1989,
power to reopen is much wider. However, one needs to give a schematic
interpretation to the words "reason to believe" failing which, we are afraid,
section 147 would give arbitrary powers to the Assessing Officer to reopen
assessments on the basis of "mere change of opinion", which cannot be per se
reason to reopen. We must also keep in mind the conceptual difference between
power to review and power to reassess. The Assessing Officer has no power to
review ; he has the power to reassess. But reassessment has to be based on
                                          16     ITA nos.897,1878&1879/Del./2012


fulfilment of certain preconditions and if the concept of "change of opinion" is
removed, as contended on behalf of the Department, then, in the garb of
reopening the assessment, review would take place. One must treat the concept
of "change of opinion" as an in-built test to check abuse of power by the
Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power
to reopen, provided there is "tangible material" to come to the conclusion that
there is escapement of income from assessment. Reasons must have a live link
with the formation of the belief. Our view gets support from the changes made to
section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws
(Amendment) Act, 1987, Parliament not only deleted the words "reason to
believe" but also inserted the word "opinion" in section 147 of the Act. However,
on receipt of representations from the companies against omission of the words
"reason to believe", Parliament reintroduced the said expression and deleted the
word "opinion" on the ground that it would vest arbitrary powers in the Assessing
Officer. We quote hereinbelow the relevant portion of Circular No. 549 dated
October 31, 1989 ([1990] 182 ITR (St.) 1, 29), which reads as follows

:"7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression
`reason to believe' in section 147.-A number of representations were received against
the omission of the words `reason to believe' from section 147 and their substitution by
the `opinion' of the Assessing Officer. It was pointed out that the meaning of the
expression, `reason to believe' had been explained in a number of court rulings in the
past and was well settled and its omission from section 147 would give arbitrary powers
to the Assessing Officer to reopen past assessments on mere change of opinion. To allay
these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the
expression `has reason to believe' in place of the words `for reasons to be recorded by
him in writing, is of the opinion'. Other provisions of the new section 147, however,
remain the same."

For the aforestated reasons, we see no merit in these civil appeals filed by the
Department ; hence, dismissed with no order as to costs."

6.18    The aforesaid observations of the Hon'ble Apex Court when
viewed in the light of facts and circumstances in the case before us,
lead us to an inescapable conclusion that the AO reopened the
assessment         in   relation    to   wooden      shuttering     and     centering
expenses merely on the basis of change of opinion and no `tangible
material' was brought on record before initiating action u/s 147 of
the Act.
                                       17     ITA nos.897,1878&1879/Del./2012


6.19    Moreover, Hon'ble Madras High Court in their decision dated
3.8.201 in CIT vs. M/s Baer Shoes (India) Pvt. Ltd, In ITA no.706 of
2010,following the view taken by Hon'ble Gujrat High Court in Austin
Engineering Co. Ltd. vs. JCIT,312 ITR 70,concluded on the issue of reopening of
assessment on the basis of subsequent decision of Hon'ble Supreme Court, in
the following terms:


"4. We are not able to countenance the said submission made by the learned
standing counsel for the appellant. In the present case on hand, the assessee at
the time of filing return for the assessment year 1999-2000 has disclosed all the
materials before the Assessing Officer and claimed deduction under Section
80HHC. Even before the earlier proceedings initiated under Section 147, it is not
the case of the Revenue that the assessee has not disclosed the materials.
Therefore, on a consideration of the materials available on record, the Assessing
Officer passed an order on the earlier two occasions. Thereafter, the Assessing
Officer has sought to reopen the assessment once again invoking the power
under Section 147 of the Act, which, in our considered opinion, is not permissible
in law on the facts of the case.

5. The judgment rendered by the Hon'ble Supreme Court is an expression of
opinion on the interpretation of statute. The power under Section 147 will have to
be invoked by the Assessing Officer in accordance with the said provision. In
other words, merely because a judgment has been rendered, the same cannot
be a ground for reopening the assessment under Section 147 of the Act. The
Hon'ble Gujarat High Court in Austin Engineering Co. Ltd. vs. JCIT (312 ITR 70)
has taken the view that in a case where the material facts were fully disclosed
and the assessment was completed allowing deduction under Section 80HHC on
export incentive, such an assessment cannot be reopened based upon a
subsequent decision of the Supreme Court, since it merely would amount to a
change of opinion. We are in respectful agreement with the judgment of the
Gujarat High Court on the proposition of law laid down therein."



7.     To sum up, in the instant case,         as is apparent from the facts
narrated in the impugned orders, the AO reopened the assessment
completed on 5.12.2007 u/s 143(3) of the Act merely on the basis
of     facts already available before him at the time of original
assessment proceedings. Not even a whisper is evident from the
reasons recorded or the facts narrated in the impugned order as to
                                         18      ITA nos.897,1878&1879/Del./2012


whether or not there was any failure on the part of the assessee in
disclosing fully and truly all material facts necessary for his
assessment. The reasons do not indicate why and how the assessee
failed to make full and true disclosure of material facts in relation to
royalty expenses. W e are of the opinion that any such failure as is
envisaged in the proviso to sec. 147 of the Act, is a matter of fact
alone    and    there    can        be      no   deemed      failure    .        In     these
circumstances, in absence of any failure on the part of the assessee
to disclose fully and truly all material facts necessary for its
assessment for the assessment year under consideration, the notice
under section 148 of the Act having been issued after the expiry of a
period of four years from the end of the relevant assessment year,
the very initiation of proceedings under section 147 of the Act
stands vitiated and as such cannot be sustained, the ingredients of
section 147 having not            been fulfilled. In view of the foregoing,
especially in the light of consistent view taken in aforesaid decisions
of      the    Hon'ble     jurisdictional     High   Court      and    other           Courts,
considering the facts and circumstances of the case, we are of the
opinion that     there is nothing to suggest that all the primary facts
were    not    disclosed     by   the   assessee     at   the    time       of        original
assessment completed u/s 143(3) of the Act nor any failure on the
part of the assessee to disclose fully and truly all the material facts
has been ascribed in the circumstances narrated before us. It
cannot be said that the assessee suppressed any material facts.                             It
is well-settled that if a notice under section 148 of the Act has been
issued without the jurisdictional foundation u/s 147 of the Act being
available to the AO, the notice and the subsequent proceedings will
be without jurisdiction and thus, liable to be struck down . In view
thereof, we have no hesitation in upholding the findings of the ld.
CIT(A) in quashing the reassessment order. Consequently, ground
no. 1 in the appeal is dismissed..
                                       19     ITA nos.897,1878&1879/Del./2012



8..          Now adverting to ground no.1 in the appeal of Revenue for
assessment year 2006-07, facts in brief, as per relevant orders are that original
assessment in this case was completed on an income of ``1,32,63,670/- vide
order dated 27th May, 2008, u/s 143(3) of the Act, in pursuance to return
declaring income of `1,25,33,804/- filed on 20th November, 2006. Subsequently,
the AO recorded the following reasons in terms of provisions of section 148 (2) of
the Act:


       "Note for reasons to believe u/s 147 of the I.T. Act in the case
       of Bhayana Builders Pvt. Ltd. assessment year 2006-07 PAN
       AAACB 4147N

       The return of income for the assessment year 2006-07 was filed on
       20.11.2006 declaring an income of ``1,25,33,804/- and the
       assessment was completed u/s 143(3) of the Act on 27.05.2008 at
       an income of ``1,32,63,670/-.

       On perusal of assessment records, it is detected that during the
       previous year relevant to assessment year 2006-07, the assessee
       company had debited an amount of ``2,31,96,085/- on account of
       shuttering and centering expenses which includes wooden
       shuttering and centering as well as steel shuttering and centering.
       Out of total expenses of ``2,31,96,085/-, the assessee company
       had claimed expenses amounting to ``2,15,89,571/- on account of
       wooden shuttering and centering and an expenses of `16,06,514/-
       on account of steel shuttering and centering. Only an amount of
       ``16,06,514/- being steel shuttering and centering was taken as
       capital expenditure and ``2,15,89,571/- as revenue expenditure,
       whereas, the whole amount i.e ``2,31,96,085/- should have been
       taken as capital expenditure and only depreciation at. the
       prescribed rate i.e. @15% on ``2,15,89,571/- to be allowed.

       In view of the above, I have reason to believe that an amount of
       ``2,15,89,571/- chargeable to tax has escaped assessment for the
       assessment year 2006-07 and, hence, clearly attracts the
       provisions of clause (c) of Explanation 2 to Section 147 of the I.T.
       Act. Therefore, notice u/s 148 of the Act is issued."

8.1 Accordingly, the AO Issued a notice U/s 148 of the Act on 2nd July, 2010. In
response, the assessee filed return on 9th August, 2010.For similar reasons as
                                        20    ITA nos.897,1878&1879/Del./2012


were adduced in his order for the AY 2005-06,the AO after rejecting objections
of the assessee against reopening of the assessment, treated the amount of
``2,15,89,571/- on wooden shuttering as plant and therefore, capital in nature. As
a result disallowance of ``1,56,17,730/- was made after allowing depreciation
@25%.


9.            On appeal, the assessee questioned the validity of reopening of the
assessment. Relying upon the order of his predecessor for the AY 2005-06, the
ld. CIT(A) quashed the reassessment in the following terms:-


       "5.            In the similar facts and circumstances, my
       predecessor, in her order dated 7.12.2011 for the assessment year
       2005-06 has held the reopening of assessment as `contrary to law'
       after making a detailed discussion on the legal position so far as
       section 147 is concerned. I do not find any reason for not following
       the appeal order for the assessment year 2005-06. Section 147
       does not postulate conferment of power on the Assessing Officer to
       initiate reassessment proceedings on a mere change of opinion on
       the same set of facts. Matters which have been considered and
       decided cannot be reopened ­ CIT Vs. Kelvinator of India Ltd. 320
       ITR 561 (Supreme Court) and Legato Systems (India) (P ) Ltd. Vs.
       DCIT 187 Taxman 294(Del).           Therefore, the reopening of
       assessment is held as `contrary to law'. The grounds of appeal
       challenging the reopening of the assessment are allowed."

9.1           As regards on merits of the claim, the ld. CIT(A) allowed the claim
in the following terms:-


       "6.            Even on merits, as regards the expenditure on
       wooden shuttering and centering, the department has been
       consistently following its earlier orders of treating the expenditure
       on wooden shuttering and centering and scaffolding on a
       consumption basis and capitalizing the expenditure of steel
       shuttering and centering and allowing depreciation thereon. This is
       a settled issue, as the assessee has also accepted the same.
       Therefore, following the principles of law of consistency in respect
       of settled issues, wooden shuttering and centering is to be allowed
       on consumption basis as revenue expenditure. It is accordingly
                                       21      ITA nos.897,1878&1879/Del./2012


      held as allowable. The ground of appeal pertaining to this item is
      allowed."

10.           The Revenue is now in appeal before us against the aforesaid
findings of the ld. CIT(A). The ld DR while carrying us through the assessment
order, supported the findings of    the AO while the ld. AR on behalf of the
assessee relied upon the findings in the impugned order.


11.           We have heard both the parties and gone through the facts of the
case. Indisputably, the original assessment in this case was completed on 27th
May, 2008 determining income of ``1,32,63,670/- in terms of order u/s 143(3) of
the Act in pursuance to return declaring income of ``1,25,33,804/- filed on
20.11.2006. Thereafter, the AO reopened the assessment on 2nd July, 2010 u/s
147 of the Act on the ground that wooden shuttering and centering expenses
were capital in nature, even when during the course of original assessment
proceedings, issue had been examined by the AO in para 4 of the assessment
order after raising queries and amount was allowed as revenue expenditure . As
pointed out by the learned CIT(A), the AO, following his orders of earlier years
has consistently been treating the expenditure on wooden centering and
scaffolding as revenue in nature    on consumption basis and capitalizing the
expenditure of steel shuttering & centering while allowing depreciation thereon.
Accordingly, the ld. CIT(A) concluded that reopening of the assessment on a
mere change of opinion on the same set of facts is contrary to law. As already
stated in Gruh Finance Ltd. (supra) ,Hon'ble Gujrat High Court observed in their
decision that `if conscious application of mind is made to the relevant facts and
material available or existing at the relevant point of time while making
assessment and again a different or divergent view is sought, it would
tantamount to "change of opinion", whereas, in the case of existing material, no
conscious attempt has been made, it would tantamount to mistake in not
considering the relevant point or proposition and it would not be a "change of
opinion". In the instant   case, the assessee        made disclosure of wooden
shuttering   and   centering   expenses     during   the   course   of   assessment
                                       22    ITA nos.897,1878&1879/Del./2012


proceedings, when the AO raised a specific query relating to these expenses
and the issue has been considered in detail in para 4 of the assessment dated
27.5.2008.These facts have not been disputed before us. In this context , we find
that Hon'ble Apex Court while affirming the decision of Hon'ble Delhi High Court
in Kelvinator of India Ltd.(supra) and going through the changes made to section
147 of the Act concluded that "the AO has no power to review ; he has the
power to reassess. But reassessment has to be based on fulfilment of certain
preconditions and if the concept of "change of opinion" is removed, as contended
on behalf of the Department, then, in the garb of reopening the assessment,
review would take place. One must treat the concept of "change of opinion" as
an in-built test to check abuse of power by the      Assessing Officer." These
observations of the Hon'ble Apex Court when viewed in the light of
facts and circumstances in the case before us, lead us to an
inescapable conclusion that the AO reopened the assessment                     in
relation to wooden shuttering and centering expenses merely on the
basis of change of opinion and no `tangible material' was brought on
record before initiating action u/s 147 of the Act.

11.1       In the present case the re-opening of assessment is sought to be
effected within a period of four years of the expiry of the relevant assessment
year. However, it is now a well settled position of law that a mere change of
opinion would not justify the Assessing Officer in seeking a recourse to the
powers under Section 147 and 148 and there must be tangible material before
the Assessing Officer to prove that income chargeable to tax has escaped
assessment. The principle that there must be tangible material on the basis of
which an assessment is sought to be re-opened even within a period of four
years is now established in view of the aforesaid judgment of the Hon'ble
Supreme Court in M/s.Kelvinator of India Limited(supra). Same view has been
reiterated in D. T. & T. D. C. Ltd. v. ACIT,324 ITR 234(Del.);Asteroids Trading &
Investment P. Ltd. vs DCIT,(2009) 308 ITR 190 (Bom) ; ICICI Prudential Life
Insurance Co. Ltd. (2010) 325 ITR 471 (Bom); Bhavesh Developers vs. A.O.
                                       23     ITA nos.897,1878&1879/Del./2012


(2010) 224 CTR 160 (Bom) and Aventis Pharma Ltd. vs. Astt. CIT (2010) 323
ITR 570 (Bom) (577).

11.2       In view of the foregoing, especially when the ld. DR did not
place any material before us so as to enable us to take a different
view in the matter, we are of the opinion that the very initiation of
proceedings under section 147 of the Act stands vitiated and as
such cannot be sustained, the ingredients of section 147 having not
been fulfilled. It is well-settled that if a notice under section 148 of
the Act has been issued without the jurisdictional foundation u/s 147
of the Act being available to the AO, the notice and the subsequent
proceedings will be without jurisdiction and thus, liable to be struck
down . In view thereof, we           have no hesitation in upholding the
findings of the ld. CIT(A) in         quashing the       reassessment order.
Consequently, ground no. 1 in the appeal is dismissed. As a corollary,
ground no.2    in the appeal    does not survive for our adjudication and       is ,
therefore, treated as infructuous.



12. Adverting now to ground no.1 in the appeal of the Revenue for the
AY2007-08 relating to disallowance of claim of ``18,85,000/- on account of
commission paid to M/s Brainstreet Marketing (P) Ltd., the assessee filed original
return reflecting income of 7,50,11,940 on 30.10.2007,which was revised on
19.07.2008 declaring income of ``7,44,92,693/-.The said return was processed
on 28.03.2009 u/s 143(1) of the Act. Subsequently, Income-tax Officer Ward
3(1), New Delhi informed the AO in the instant case that in the case of M/s
Brainstreet Marketing (P) Ltd. in the AY 2007-08, it emerged from the statement
of Shri Amit Kumar Aggarwal, director of the said company and four other
commission agents that the commission received from M/s Bhayana Builders (P)
Ltd. was bogus.     On the basis of this     information, the AO reopened the
assessment u/s 147 of the Act with the service of a notice u/s 148 of the Act
issued on 13.11.2009. In response to this notice, the assessee filed return on
                                       24     ITA nos.897,1878&1879/Del./2012


10th December, 2009. During the course of reassessment proceedings, the AO
asked the assessee as to why commission paid to M/s Brainstreet Marketing (P)
Ltd. to the extent of ``18,85,000/- be not disallowed. In response, the assessee
replied that the learned CIT(A) vide his order dated 15th October, 2010 in Appeal
No.140/09-10 in the case of M/s Brainstreet Marketing (P) Ltd. had categorically
concluded that commission paid to them was genuine expenditure and has been
treated as business income of the said company.        However, the AO did not
accept the submissions of the assessee on the ground that the aforesaid order of
the ld. CIT(A) in the case of M/s Brainstreet Marketing (P) Ltd. had not been
accepted and there was no evidence of service rendered by the said company to
the assessee. As a result ,amount of ``18,85,000/- was disallowed.



13.          On appeal, the ld CIT(A) relying upon the aforesaid said order
dated 15th October, 2010 of the ld. CIT(A) in appeal No.140/09-10 in the case of
M/s Brainstreet Marketing (P) Ltd. deleted the disallowance, holding as under:-


      "3.2         The issue involved and the submission made by the
      appellant have been considered.
      i)           The AO's only ground of disallowing commission
      payment by the appellant to M/s Brainstreet Marketing (P) Ltd. has
      been that the department has not accepted the order of CIT(A)-VI,
      New Delhi, in which the CIT(A) has held the commission receipt by
      M/s Brainstreet Marketing (P) Ltd. from the appellant as a genuine
      transaction and has directed the same to be accepted as `business
      income' of M/s Brainstreet Marketing (P) Ltd. as against the same
      being assessed as `other income' by the AO; otherwise the AO has
      not brought any thing on record to show that the transaction was
      bogus.

      ii)           For a commission payment to be treated as genuine,
      identity of the payee should be established, there should be no
      doubt as to the services rendered, there should be direct nexus
      between the services rendered and the business activity of the
      appellant; and payment should be reasonable keeping in view the
      business line of the appellant and further there should be no doubt
      as to the payment of money. The AO has not brought any thing on
      record to show that any of the aforesaid conditions is not fulfilled.
                                        25     ITA nos.897,1878&1879/Del./2012



      iii)          The undersigned has seen the assessment record.
      Orders from as many as 12 parties were arranged by M/s
      Brainstreet Marketing (P) Ltd.. for the appellant details as to these
      parties is available at (page 37 of PB). This list pertains to
      `Calculations of Agency Commission to be paid to Brain Street
      Marketing (P) Ltd.' Below this list, there is a noting "kind atten:- Mr.
      Nitin Bhayana, director. We have received the above orders
      through Brain Street please approve the payment of their
      commission `75 per sq. mtr." This is signed as on 2.06.2006.

             There are invoices (pg 35 & 36 of PB) issued by M/s
      Brainstreet Marketing (P) Ltd. showing commission charges of
      ``9,50,00,000/- and ``9,35,00,000/-. Service Tax @12% and
      education cess @2% has been charged on each of the aforesaid
      amounts. Then there is confirmation (pg 34 of PB) of accounts
      showing payments to M/s Brainstreet Marketing (P) Ltd. after
      deducting TDS of ``59,818 and ``58,874/- at the time of crediting
      amount of ``10,49,444/- and ``10,66,280/-. TDS has been duly
      deposited in govt. a/c. Certificate in form No.16A is available at
      page 112 of PB. From the aforesaid it may be seen that TDS was
      deducted from the commission payment to M/s Brainstreet
      Marketing (P) Ltd. and M/s Brainstreet Marketing (P) Ltd. have also
      charged service tax etc. on the payments received by it for the
      services given to the appellant."

14.          The Revenue is now in appeal before us against the aforesaid
findings of the ld. CIT(A). The ld DR while carrying us through the assessment
order, supported the findings of     the AO while the ld. AR on behalf of the
assessee relied upon the findings in the impugned order.


15.          We have heard both the parties and gone through the facts of the
case. As is apparent from the facts of the case, the AO disallowed the claim for
deduction of payment of commission to M/s Brainstreet Marketing (P) Ltd on the
basis of findings of the AO in the case of the said company. On appeal , the ld.
CIT(A) in that case allowed the claim , the transaction having been found to be
genuine . The ld. CIT(A) in the impugned order found on perusal of records that
M/s Brainstreet Marketing (P) Ltd. arranged orders for the assessee from as
many as 12 parties and tax has already been duly deducted at source from
                                        26     ITA nos.897,1878&1879/Del./2012


payments to them and credited to the account of the Government. In nutshell,
the ld. CIT(A) allowed the claim on the basis of services rendered by the said
company to the assessee. In the light of these findings, especially when the ld.
DR did not place before us any material ,controverting the aforesaid findings of
the ld. CIT(A) so as to enable us to take a different view in the matter, we are not
inclined to interfere. Therefore, ground no.1 in the appeal f the Revenue for the
AY 2007-08 is dismissed.


16..         Ground no.2 in the appeal of the Revenue for the AY 2007-08
relates to disallowance of expenditure of ``1,38,76,932/- on wooden shuttering
and centering. Relying upon his own orders for preceding AYs 2005-06 & 2006-
07, the AO disallowed the claim of wooden shuttering and centering, treating the
same capital in nature. Accordingly, the AO after allowing depreciation, restricted
the disallowance to ``67,19,302/-.


17.          On appeal, the ld. CIT(A), following the decision of Hon'ble Punjab
& Haryana High Court in the case of CIT Vs. Random Constructors Pvt. Ltd.
(2010) 186 Taxman 303 (P&H), deleted the disallowance in the following terms:-


       "4.2           The issue involved and submissions made by the
       appellant have been considered.             Department has been
       consistently following its earlier orders of treating the expenditure
       on wooden shuttering and centering and scaffolding on a
       consumption basis and capitalizing the expenditure of steel
       shuttering and centering and allowing depreciation thereon. This is
       a settled issue, as the assessee has also accepted the same.
       Therefore, following the principles of law of consistency in respect
       of settled issues, wooden shuttering and centering is to be allowed
       on consumption basis as revenue expenditure. The Hon'ble High
       Court of Punjab & Haryana in its judgments noted above has also
       held that wooden shuttering material is an allowable revenue
       expenses even if the same could be used in a subsequent financial
       year. It is accordingly held as allowable. The ground of appeal
       pertaining to this item is allowed."
                                        27    ITA nos.897,1878&1879/Del./2012


18.             The Revenue is now in appeal before us against the aforesaid
findings of the ld. CIT(A). The ld DR while carrying us through the assessment
order, supported the findings of     the AO while the ld. AR on behalf of the
assessee relied upon the findings in the impugned order.


19.    We have heard both the parties and gone through the facts of the case.
Indisputably, in the preceding years starting from AY 1998-89 until assessment
year 2003-04, the claim of the assessee has been accepted treating the amount
incurred on wooden shuttering and centering, revenue in nature. Following the
principles of    consistency , the ld. CIT(A) allowed the claim for deduction of
expenditure on      wooden shuttering and centering on consumption basis as
revenue expenditure. Similar view was taken by Hon'ble Punjab & Haryana High
Court in M/s Random Constructors Pvt. Ltd.(supra),relied upon by the ld.
CIT(A).Since the ld. DR did not place before us any material ,controverting the
aforesaid findings of the ld. CIT(A) nor brought to our notice any contrary
decision, so as to enable us to take a different view in the matter , we are not
inclined to interfere. Therefore, ground no.2 in the appeal of the Revenue for the
AY 2007-08 is dismissed.




20.   No additional ground having been raised before us in terms of residuary
ground no.2 in the appeal of the Revenue for the AY 2005-06 & ground no.3 in
their appeals for the AY 2006-07 & 2007-08, accordingly, these grounds are
dismissed.


21.     No other plea or argument was made before us.
                                      28     ITA nos.897,1878&1879/Del./2012


22.          In result, these three appeals are dismissed.
                 Order pronounced in open Court

          Sd/-                                          Sd/-
(HARI OM MARATHA)                                (A.N. PAHUJA)
 (Judicial Member)                             (Accountant Member)

NS

Copy of the Order forwarded to:-

1 Assessee
2. A.C.I.T.,Circle-2(1), Room no. 398D, CR Building,IP Estate,New
Delhi
3. CIT concerned.
4. CIT(A)-V, New Delhi
5. DR, ITAT,'A' Bench, New Delhi
6. Guard File.
                                                        BY ORDER,


                                                             Deputy/Asstt.Registrar
                                                                       ITAT, Delhi
 
 
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