Case Number: ITA 2405/DEL/2022
Appellant: DCIT, Central Circle -15, New Delhi
Respondent: B.L. Kashyap & Sons Ltd, New Delhi
Assessment Year: 2017-18
Case Filed On: 2022-09-28
Order Type: Final Tribunal Order
Date of Order: 2023-05-29
Date of Pronouncement: 2023-05-29
The Deputy Commissioner of Income Tax (DCIT), Central Circle-15, New Delhi, filed an appeal against B.L. Kashyap & Sons Ltd concerning the disallowance of mobilization advances for the assessment year 2017-18. This case was heard alongside ITA No. 2404/Del/2022 for the assessment year 2016-17 due to similar issues involved.
The respondent, B.L. Kashyap & Sons Ltd, is engaged in construction and allied services. The main issue in the appeal was the addition of mobilization advances as undisclosed income under Section 68 read with Section 115BBE of the Income Tax Act, 1961.
The Revenue raised multiple grounds of appeal, primarily challenging the deletion of additions made by the Assessing Officer (AO) for mobilization advances and disallowance of salary and wages. The Revenue argued that the assessee did not provide sufficient project-wise details and revenue calculations, leading to the AO’s additions.
The tribunal, consisting of Sh. N.K. Billaiya, Accountant Member, and Sh. Anubhav Sharma, Judicial Member, reviewed the case. The tribunal found that the AO’s conclusions were factually incorrect and that the CIT(A) had rightly deleted the additions due to the absence of defects in the books or vouchers provided by the assessee.
The tribunal noted that the assessee consistently followed the Percentage of Completion Method (POCM) for recognizing mobilization advances as revenue over the project’s duration. The AO’s ad hoc disallowance without pointing out any accounting shortcomings was deemed unsustainable.
The tribunal’s final judgment dismissed the Revenue’s appeals for both assessment years 2016-17 and 2017-18 on merits. The cross objections raised by the assessee were also dismissed as not pressed.
The judgment concluded that the additions made by the AO lacked substantial basis, and the CIT(A)’s order to delete these additions was upheld.
The Income Tax Appellate Tribunal, Delhi Bench ‘H’, ruled in favor of B.L. Kashyap & Sons Ltd, affirming the CIT(A)’s decision to delete the additions made on account of mobilization advances and disallowance of salary and wages for the assessment year 2017-18.
This case underscores the importance of adhering to consistent accounting practices and providing detailed documentation to support financial claims during tax assessments.
DCIT vs. B.L. Kashyap & Sons Ltd: Disallowance of Mobilization Advances for AY 2017-18
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