M/s Ircon International Ltd., New Delhi V. DCIT, New Delhi

CO 171/DEL/2014

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3713 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 05-04-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-04-2017
• Assessment Year: 2005-2006
• Appeal Filed On: 02-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJIT SINGH
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Principle of natural justice; Condonation of delay; Capital expenditure
• Section: 37(1); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO. 5464 /DEL/201 3 A.Y. : 2005 - 06 DCIT, CIRCLE 11(1), NEW DELHI VS. M/S IRCON INTERNATIONAL LTD. C-4, DISTRICT CENTRE, SAKET, NEW DELHI 110 017 (PAN: AAACI0684H) (ASSESSEE) (RESPONDENT) AND C ROSS OBJECTION NO. 171 /DEL/201 4 IN I.T.A. NO.5464/DEL/2013 A.Y. : 2005 - 06 M/S IRCON INTERNATIONAL LTD. C-4, DISTRICT CENTRE, SAKET, NEW DELHI 110 017 (PAN: AAACI0684H) VS. DCIT, CIRCLE 11(1), NEW DELHI ( ASSESSEE ) (RESPONDENT) REVENUE BY : SH. SANJIT SINGH, CIT(DR) ASSESSEE BY : DR. RAKESH GUPTA, ADV. & SH. SOMIL AGARWAL, ADV. ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THIS APPEAL AND ASSESSEE HAS FILED THE CROSS OBJECTIONS AGAINST THE IMPUGNED ORDER OF THE LD. CIT(A)- XV, NEW DELHI RELEVANT TO ASSESSMENT YEAR 2005-06. 2 2. THE GROUNDS RAISED BY THE REVENUE READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANCE OF RS. 7,03,13,820/- MADE IN RESPECT OF TECHNICAL KNOW-HOW FEE BEING CAPITAL EXPENDITURE TO RS. 1,40,43,534/- ONLY AND HAS ALSO ERRED IN HOLDING THAT THIS CLAIM OF THE ASSESSEE WAS OF REVENUE IN NATURE. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A)- XV, NEW DELHI BEING CONTRARY TO THE FACTS ON RECORD AND THE SETTLED POSITION OF LAW, BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. THE GROUNDS RAISED BY THE ASSESSEE IN CROSS OBJE CTION READ AS UNDER:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT QUASHING THE IMPUGNED ASSESSMENT ORDER FRAMING BY AO WITHOUT COMPLYING THE MANDATORY CONDITIONS OF SECTION 147 TO 151 AND REOPENING OF THE CASE AND FRAMING THE IMPUGNED ASSESSMENT ORDER IS BAD IN LAW, BARRED BY LIMITATION AND BEYOND THE JURISDICTION OF THE AO AND MORE SO THE REASONS RECORDED ARE INVALID IN THE EYES OF LAW AND THERE IS NO VALID SATISFACTION AS PER LAW U/S. 151 OF THE INCOME TAX ACT, 1961. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN NOT QUASHING THE IMPUGNED ASSESSMENT ORDER FRAMED BY AO U/S. 143(3)/147 IS BEYOND JURISDICTION, BAD IN LAW, ILLEGAL, UNJUSTIFIED, AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND VOID AB INITIO AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 3 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF AO IN MAKING DISALLOWANCE OF RS. 1,40,43,534/- ON ACCOUNT OF AGENCY COMMISSION BY OBSERVING THAT THE SAME IS NOT ALLOWABLE U/S. 37(1) OF THE INCOME TAX ACT, 1961. 4. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF AO IN MAKING DISALLOWANCE OF RS. 1,40,43,534/- ON ACCOUNT OF AGENCY COMMISSION IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THAT THE CROSS OBJECTOR CRAVES THE LEAVE TO ADD, AMEND, MODIFY, DELETE ANY OF THE GROUND(S) OF CROSS OBJECTION BEFORE OR AT THE TIME OF HEARING. 4. THE FACTS NARRATED BY THE REVENUE AUTHORITIES ARE NOT DISPUTED BY BOTH THE PARTIES, HENCE, THE SAME ARE NOT R EPEATED HERE FOR THE SAKE OF BREVITY. 5. AT THE TIME OF HEARING, LD. COUNSEL OF THE ASSESSE E SEEKS PERMISSION TO SUPPORT THE ORDER OF THE LD. CIT(A) UNDER RULE 27 ON THE GROUNDS AS ALREADY MENTIONED IN THE CROSS OBJECTI ON AND RELIED UPON VARIOUS CASE LAWS BY WAY OF FILING THE PETITIO N DATED 04.5.2017 U/R 27 OF THE APPELLATE TRIBUNAL RULES, 1963. HE FU RTHER STATED THAT THE ISSUES INVOLVED IN THE PETITION AS WELL IN THE CRO SS OBJECTION FILED BY THE ASSESSEE ARE SIMILAR AND LEGAL IN NATURE , WHICH DID NOT RAISE BEFORE THE LOWER AUTHORITIES, THEREFORE, HE REQU ESTED THAT THE ISSUES INVOLVED IN THE CROSS OBJECTION MAY BE DECIDE D FIRST. LD. DR STRONGLY OBJECTED AND STATED THAT ASSESSEE SHOULD RAIS E ADDITIONAL GROUNDS INSTEAD OF ARGUING APPLICATION U/R. 27 OF THE ITAT, RULES. 4 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE LEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE APPLICAT ION U/R 27 OF THE ITAT RULES, 1963; IMPUGNED ORDER AND THE APPLICATION FOR CONDONATION OF DELAY. WE FIND THAT THERE IS A DELA Y OF 151 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. IN THIS REGARD , THE ASSESSEES A.R. HAS FILED AN APPLICATION DATED 09.10.2015 REQU ESTING FOR CONDONATION OF DELAY IN FILING THE APPEAL. AFTER PERU SING THE AFORESAID APPLICATION DATED 09.10.2015, WE ARE OF T HE CONSIDERED VIEW THAT THERE WAS NO DELIBERATE DELAY ON THE PART OF THE ASSESSEE AND ASSESSEE HAS SUFFICIENT REASONS FOR CAUSING THE DELAY IN FILING THE CROSS OBJECTION, HENCE, THE DELAY IN FILING THE C ROSS OBJECTION IS CONDONED. 7. WE FURTHER FIND THAT LD. COUNSEL OF THE ASSESSEE SEEKS PERMISSION TO SUPPORT THE ORDER OF THE LD. CIT(A) UND ER RULE 27 OF THE ITAT RULES, 1963 ON THE EXACTLY SIMILAR GROUNDS A S RAISED IN THE ASSESSEES CROSS OBJECTION AND RELIED UPON VARIO US CASE LAWS BY WAY OF FILING THE PETITION DATED 04.5.2017 U/R 27 OF THE APPELLATE TRIBUNAL RULES, 1963. WE NOTE THAT THE ISSUES INVOLVE D IN THE PETITION U/R. 27 AS WELL IN THE CROSS OBJECTION FILE D BY THE ASSESSEE ARE SIMILAR AND LEGAL IN NATURE, WHICH WERE NOT RAIS ED BEFORE THE LOWER AUTHORITIES. KEEPING IN VIEW OF THE FACTS AND C IRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE ISSUES INVOLVED IN THE REVENUES APPEAL AS WELL AS ASSESSEES CROSS OBJECTION/PETITION U/R. 27 OF THE ITAT RULES, 1963 RE QUIRE THOROUGH INVESTIGATION AND FRESH ADJUDICATION AT THE LEVEL OF THE ASSESSING OFFICER. THEREFORE, IN THE INTEREST OF JUSTICE, WE REMIT BACK THE ISSUES IN DISPUTE TO THE FILE OF THE AO WITH THE DIREC TIONS TO DECIDE THE SAME AFRESH, BY FIRST DEALING WITH LEGAL ISSUES R AISED IN THE CROSS OBJECTION AND GIVE ADEQUATE OPPORTUNITY OF BE ING HEARD TO 5 THE ASSESSEE. THE ASSESSEE IS AT LIBERTY TO RAISE AN Y OTHER GROUND BEFORE THE AO. 8. IN THE RESULT, THE REVENUES APPEAL AS WELL AS ASSE SSEES CROSS OBJECTION STAND ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON 05/04/2018. SD/- SD/- [PRASHANT MAHARISHI] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE:05/04/2018 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES