Ita/185/2000 Of M/S.vedicattu Engineering Company v. The Commr. Of Income Tax, Alappuzha

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR MONDAY, THE 21ST JANUARY 2008 / 1ST MAGHA 1929 ITA.No. 185 of 2000() --------------------- ITA.157/COCH/1997 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT:APPELLANT: ----------------- M/S. VEDICATTU ENGINEERING COMPANY,N MUTTAR, ALAPPUZHA BY ADV. SRI.C.KOCHUNNY NAIR SRI.DALE P.KURIEN RESPONDENT: RESPONDENT: ------------- THE COMMISSIONER OF INCOME TAX, WARD I, ALAPPUZHA BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 21/01/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: -------------------------------------------- I.T.A. No. 185 OF 2000 -------------------------------------------- Dated this the 21st day of January, 2008 JUDGMENT C. N. Ramachandran Nair,J. The question raised in this appeal filed by the assessee is againstthe validity of suo motu revisional proceedings completed by theCommissioner under Section 263 of the I.T. Act and upheld by theTribunal. The assessee was admittedly a contractor engaged in civilwork. The receipt pertaining to income from contract was estimated at10% of the gross receipt and balance 90% was allowed as deduction.The assessee had raised dispute in Arbitration, got Award and got itconfirmed by the sub court. Following the estimation of income madein respect of original contract receipt, the assessee returned 10% of thearbitration award amount towards income. Even though the assessingofficer accepted it, the Commissioner reversed the order under Section263 of the I.T. Act and remanded the matter for recomputation ofincome. On further appeal, the Tribunal confirmed the order of theCommissioner, against which this appeal is filed. 2. We do not find any grievance for the assessee in as much asassessment was only set aside and remanded by the Commissionerunder Section 263 wherein it is open to the assessee to contest theestimation of income. So far as validity of Section 263 proceedings isconcerned, we are unable to accept the assessee's contention that theorder passed by the Officer is not prejudicial to the interest of therevenue. If 90% of the expenses was allowed in the computation ofincome from contract, then the further claim of 90% against thearbitration award amount is not tenable. If the Commissioner has notexercised suo motu revisional power, then the consequence would havebeen loss of revenue and so much so Commissioner was justified ininvoking powers under Section 263. Since the issue of determinationof addl. income from the arbitration award is left open, this appeal isdismissed leaving freedom to the assessee to contest the matter onmerits. (C.N.RAMACHANDRAN NAIR)Judge. (T.R.RAMACHANDRAN NAIR) Judge. kk