The Commissioner Of Income Tax, Panchkula v. The Saraswati Industrial Syndicate Ltd., New Delhi

IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANAAT CHANDIGARH ITA No.233 of 2004 Date of decision: July 05, 2013. The Commissioner of Income Tax, Panchkula ... Appellant v. The Saraswati Industrial Syndicate Ltd., New Delhi ... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLAHON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present:Shri Yogesh Putney, Advocate, for the appellant.Shri Akshay Bhan, Advocate for the respondent. Rajive Bhalla, J. (Oral): By this order, we shall dispose of ITA Nos.233 of 2004,582 and 583 of 2006, 274, 295 and 298 of 2007. The revenue, challenges the correctness of orders, dated30.9.2003 and 12.4.1993, passed by the Income Tax AppellateTribunal, Delhi Bench 'B', Delhi, on the ground, that the orders passedby the Assessing Officer and the Commissioner of Income Tax(Appeals) have been set aside, by passing two contradictory orderspertaining to the same question, i.e., liquidated damages, claimed bythe assessee-respondent. Counsel for the appellant, has taken us through the order, passed by the Income Tax Appellate Tribunal, and refers to a paragraphof the impugned order in support of his argument. The paragraphsreferred to by counsel for the appellant read as follows:- “7. After considering the rival submissions and perusingthe material on record, we find that assessee deserves tosucceed in this ground. The reason for succeeding byassessee in this ground is that it is not in dispute thatliquidated damages claimed by assessee pertains tocontract completed during the year. It is also not disputedthat there were delays beyond the stipulated date, whichfell within the relevant previous year and they were payableas per the contract between the parties. It is also notdisputed that the liquidated damages claimed by assesseewere covered either by bank guarantee or funds retained bythe customers. The CIT (Appeals) has also not doubted theallow ability of the damages payable by assessee. Thelearned CIT (Appeals) did not allow only on the groundthat neither any officer himself allowed the liability inassessment years 1993-94, 1994-95, 1995-96 and 1996-97.Therefore, we direct the AO to allow these liabilities for theyear under consideration and withdraw the deductionallowed in subsequent years i.e., Assessment years 1993-94to 1996-97. We further noted that still an amount of Rs.26,92,575/- remains unpaid. The AO will also examinethat whether any deduction has been allowed afterassessment year 1996-97 or not, and if it is found that itwas allowed in another subsequent year, then the same mayalso be withdrawn, as there is nothing on record to showthat whether this amount of Rs.26,92,575/- has been paidby the assessee on account of delayed work completed.Therefore, the Assessing Officer is directed to verify thatwhether this amount has been paid by the assessee or stillremains unpaid and if it is found that this amount is stillshown as liability, in that case the deduction to this extentshould not be allowed during the year under consideration.The reason for not allowing the deduction to this extent isthat the liability is for assessment year 1991-92, which isthe year under consideration, and now we are inassessment year 2003-04. However, if assessee gives aplausible explanation that why the amount is not paid, thenin that case the AO is free to pass a fresh order on accountof the liability of the extent of Rs.26,92,575/-. We orderaccordingly.” A perusal of the above paragraph, reveals that with respectto the claim relating to liquidated damages, the Income Tax AppellateTribunal has recorded two different findings. Faced with this situation, counsel for the assessee, fairlyconcedes that the ITAT has committed an error and states that he has noobjection if the appeal is allowed and the matter is remitted foradjudication afresh. A perusal of the above paragraph, reveals that with respectto the claim relating to liquidated damages, the Income Tax AppellateTribunal has recorded two different findings. Faced with this situation, counsel for the assessee, fairlyconcedes that the ITAT has committed an error and states that he has noobjection if the appeal is allowed and the matter is remitted foradjudication afresh. We have heard counsel for the parties, perused theimpugned order as well as the contradictory findings, reproducedabove, and in view of statement made by counsel for the respondent,allow the appeal, set aside the impugned order and remit the matter tothe Income Tax Appellate Tribunal, Delhi Bench 'B', Delhi, foradjudication afresh and in accordance with law, leaving the question oflaw, framed vide order dated 17.2.2005, open for adjudication, as andwhen and if the occasion so arises. [ Rajive Bhalla ] Judge [Dr. Bharat Bhushan Parsoon] Judge