M/sd. SRB Consultancy (P) Limited, Bhubaneswar V. DCIT,Corporate Circle-1(1), Bhubaneswar

CO 2/CTK/2022

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4325 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2017-2018
• Appeal Filed On: 07-03-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DILLIP KUMAR MOHANTY
• Keywords: Sale consideration of property below Jantri Value; Business income; Depreciation; Fair market value; Capital Gains
• Section: 68; 69; 6; 80IA; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE AND ARUN KHODPIA, ACCOUNTANT MEMBER Dy. CIT, Aayakar Bhavan, Bhubaneswar. PAN/GIR No. (Appellant M/s. SRB Consultancy Pvt Ltd., 5 th floor, IDCO Tower, Janapath, Bhubaneswar PAN/GIR No. (Appellant Per Bench This is CIT(A),1, Bhubaneswar the assessment year IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI GEORGE MATHAN, JUDICIAL AND ARUN KHODPIA, ACCOUNTANT MEMBER ITA No. 11 /CTK/2021 Assessment Year : 2017-18 Dy. CIT, Aayakar Bhavan, Bhubaneswar. Vs. M/s. SRB Consultancy Pvt Ltd., 5 th floor, IDCO Tower, Janapath, Bhubaneswar. No.AAHCS 4167 Q (Appellant) .. ( Respondent C.O.No.02/CTK/2022 (in ITA No. 11 /CTK/2022) Assessment Year : 2017-18 M/s. SRB Consultancy Pvt Ltd., floor, IDCO Tower, Janapath, Bhubaneswar Vs. Dy. CIT, Aayakar Bhavan, Bhubaneswar PAN/GIR No. (Appellant) .. ( Respondent Assessee by : Shri Dillip Kumar Mohanty Revenue by : Shri S.K.Mohapatra, Date of Hearing : 17 /5/ 20 Date of Pronouncement : 17 / O R D E R an appeal filed by the revenue against the order of the CIT(A),1, Bhubaneswar dated 22.9.2020 in Appeal No.0284/2019 the assessment year 2017-18. Page1 | 13 IN THE INCOME TAX APPELLATE TRIBUNAL, JUDICIAL MEMBER AND ARUN KHODPIA, ACCOUNTANT MEMBER M/s. SRB Consultancy Pvt Ltd., floor, IDCO Tower, Janapath, Bhubaneswar. Respondent) /CTK/2022) Dy. CIT, Aayakar Bhavan, Bhubaneswar Respondent) Dillip Kumar Mohanty , AR S.K.Mohapatra, CIT (DR) / 2022 /5/2022 against the order of the dated 22.9.2020 in Appeal No.0284/2019-2020 for ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page2 | 13 2. The assessee has also filed cross objection in revenue’s appeal in ITA No.11/CTK/2021. 3. In revenue;s appeal, the following grounds have been raised: “1. On the facts and in circumstances of the case, the CIT(A) is not justified in law as well as facts in deleting the addition of Rs.2,52,32,767/-mace by the AO on account of Disallowance of Deduction claimed u/s.80- IA. 2. On the facts and in circumstances of the case, the CIT(A) is not justified in law as well as facts in deleting the addition of Rs.6,64,84,246/-made towards Unexplained investment u/s.69 r.w.s.68 in equity shares and Mutual Fund. 3. On the facts and in circumstances of the case, the CIT(A) is not justified in law as well as facts in restricting the disallowance to 5% against the additions made towards (i) Expense of repair of Vehicle, (ii) Disallowance of depreciation claimed and (iii) Power and fuel expenses of vehicles. 4. On the facts and in circumstances of the case, the CIT(A) is not justified in law as well as facts in deleting the addition of Rs.51,59,675/-made towards Tour and Travel Expense. 5. On the facts and in circumstances of the case, the CIT(A) is not justified in law as well as facts in deleting the addition capital gain on sale of assets of Rs.1,53,02,230/-.” 4. In Cross objection, the assessee has filed a consolidated grounds consisting of 10 grounds, as follows: “1. For that the order of the CIT (A), in deleting the addition of Rs. 2,52,32,767/-against the disallowance of deduction claimed U/s. 80IA, being just & proper, be upheld 8s the departmental ground on this account be dismissed. ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page3 | 13 2. For that the order of the CIT (A) in deleting the addition of Rs. 6,64,84,264/-made towards unexplained investment U/s. 69 read with Section 68, being just 86 proper be upheld 8& the departmental ground on this account be dismissed. 3. For that even if assuming but not admitting that as held by the CIT (A) the disclosed receipt of Rs. 29,61,593/- disclosed under the head business income voluntarily are to be treated as rental income under the head "Income from House Property", however, the CIT (A) has erred in law failing to consider the standard deduction, available/allowable to the respondent U/s. 24(a) of the Income Tax Act, 1961 i.e. @ 30% of the rental income 85 hence the respondent be allowed standard deduction in the event, they are considered as income from House Property. 4. For that when the forums below including the CIT (A) has accepted the vehicles (as reflected in the Fixed Asset Schedule) to be owned by the respondent company 8& failed to bring any material into record pointing any evidence of personal use 8s the depreciation have been allowed on year to year, the present estimated disallowance of depreciation @ 5% only in absence of log book are not only erroneous, however, illegal 8s not sustainable on fact & law. Hence, the depreciation as claimed are to be allowed. 5. For that when the forums below including the CIT (A) has not doubted the expenses under the head repair & maintenance to the tune of Rs. 14,39,135/- to be genuine 85 bonafide 85 suggests, estimated disallowance of the same @ 5% only in absence of maintenance of Log Book is not only erroneous but illegal, not sustainable on fact 8s law. Hence, the repair 85 maintenance at Rs. 14,39,135/- are to be allowed. 6. For that when the forums below including the CIT (A) has not doubted that expenses under the head 'Fuel" is only at Rs. 1,81,215/- [out of Rs. 8,89,342.00, which includes Electricity and Water Charges of Rs. 7,08,127/-] relatable to the vehicle only, the estimated disallowance @ 5% based only on assumption 8& presumption, that personal use cannot be ruled out is not only erroneous, but illegal 8& not sustainable on fact 8s law. Hence, the fuel expenses at Rs. 1,81,215/- expenses are to be allowed in full. 7. For that the order of the CIT (A) in deleting the addition of Rs. 51,59,675/-under the head Tour 85 Travel expenses, being just 8& ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page4 | 13 proper be upheld 8& the departmental appeal on this ground be dismissed. 8. For that the order of the CIT (A) in deleting the addition of Rs. 1,53,02,230/-on account of Capital Gain, being just & proper be upheld & the departmental appeal on this ground be dismissed. 9. The Respondent crave leave to add/alter/amend any of the grounds of cross objection as urged either before or at the time of hearing. 10. That for these & other grounds if any that will be adduced at the time of hearing, it is prayed to uphold the allowances of deduction as allowed by the CIT (A) for SL No. 1 , 2, 7 & 8 and allow the deductions as claimed by the respondent for SI No.3, 4,5 & 6 and/or any other order (s) be passed as your honour may deem proper 8s fit, in the substantial interest of justice & equity.” 5. The appeal filed by the revenue is delayed by 54 days. The revenue has filed condonation petition, stating that due to nation-wide lockdown for COVID-19 pandemic, offices were closed and subsequently worked with limited officers/officials. Further, due to introduction of Vivad Se Viswas Scheme, the officers were engaged in implementation of the scheme, therefore, there was delay of 54 days in filing the appeal before the Tribunal. Ld CIT DR reiterated the contentions in condonation petition. 6. After hearing both the sides, we are satisfied that there was sufficient cause in filing the appeal delay by 56 days by the revenue. Hence, we condone the delay of 56 days and admit the appeal for hearing. 7. Shri S.K.Mohapatra, ld CIT DR appeared on behalf of the revenue and Shri Dillip Kumar Mohanty, ld AR appeared on behalf of the assessee. ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page5 | 13 8. In respect of Ground No.1 of revenue, it was submitted by ld CIT DR that the issue was against the action of the ld CIT(A) in deleting the disallowance made by the AO in respect of deduction u/s. 80IA of the Act. Ld CIT DR drew our attention to page 2 of the assessment order, wherein, the AO has specifically mentioned that in absence of any supporting documents regarding the claim of deduction u/s. 80IA (4)(iv) of the I.T.Act, 1961, the deduction has been denied. Ld CIT DR further drew our attention to order of the ld CIT(A) in pages 10 and 11 wherein, the ld CIT(A) has deleted the addition. Ld CIT DR vehemently opposed the order of the ld CIT(A). It was his prayer that the order of the AO be restored. 9. In reply, ld AR submitted that all the details had been provided in the course of remand proceedings. 10. We have considered the rival submissions. Perusal of the order of the ld CIT(A) shows that the ld CIT(A) has taken into consideration the fact that all the evidences required had been provided in the course of remand proceedings. Perusal of remand report, as extracted by ld CIT(A) in para 4.1 of his order at page-5, shows that the AO has recognized that the assessee is in the business of power generation since financial year 2010-11 and the assets had been installed in three different States in the assessment years 2011-12 and 2013-14. It is clear that the assessee has been granted the benefit of deduction u/s. 80IA of the Act during the earlier assessment years and the AO in the remand proceedings only submits that ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page6 | 13 the physical verification of the assets has not been done. Admittedly, the physical verification was not possible during the relevant period on account of bar by the CBDT in respect of physical verification on account of COVID pandemic. In any case, it is only after verification, the deduction has been granted to the assessee during the earlier assessment years. This being so, we find no error in the order of the ld CIT(A), which does not call for any interference. Consequently, the order of the ld CIT(A) on this issue stands confirmed. Ground No.1 of revenue thus stands dismissed. 11. In respect of Ground No.2 of appeal of the revenue, it was the submission of ld CIT DR that the issue was against the action of the ld CIT(A) in deleting the addition made by the AO towards unexplained investment u/s. 69 r.w.s 68 of the Act. 12. Ld CIT DR drew our attention to page 3 para 4 of the assessment order, wherein, the AO categorically mentions that the investments are though disclosed in the books of account, the source of the same remained unexplained. Ld CIT DR drew our attention to page 15 para 5.3 of the order of ld CIT(A), wherein, the ld CIT(A) has deleted the same on the findings that the evidences of Mutual Funds were produced and details of investments were produced before the AO during remand proceedings. It was the submission that the order of the AO was liable to be restored. ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page7 | 13 13. In reply, ld AR drew our attention to the extracts of the remand report at para 5.1 of the order of the ld CIT(A), wherein, in the remand report, the AO has specifically mentioned that substantial investments in Mutual Funds amounting to Rs.6.09 crores can be attributable to the receipt of Rs.10.18 crores received by the assessee in the bank account with HDFC OD account. It was the submission that the AO has basically accepted the investments made in the remand proceedings but had only questioned the same on account of independent third party verification. It was the submission that no third party verification could be possible in respect of Mutual Fund investment as the same were supported by documents. He vehemently supported the order of the ld CIT(A). 14. We have considered the rival submissions. Perusal of the order of the ld CIT(A) clearly shows that ld CIT(A) has taken into consideration the fact that all the evidences were produced before the AO in the remand proceedings and the AO has done all necessary verification and has given a positive verification in respect of investments, the source for the same has also been shown by the assessee. This being so, as the Revenue has not been able to dislodge any of the findings of fact as arrived at by the ld CIT(A), we find no error in the order of the ld CIT(A) on this issue. Consequently, Ground No.2 of the revenue stands dismissed. 15. In respect of Ground No.3 of appeal, it was submission of ld CIT DR that the issue was against the action of the ld CIT(A) in restricting the ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page8 | 13 disallowance to 5% of the expenses in respect of repairs of vehicles, disallowance of depreciation and power and fuel expenses of vehicles. 16. Ld CIT DR drew our attention to page 6 of the assessment order, wherein, the AO mentions that the details of vehicles, Model No. and date of purchase etc had not been produced for verification. Ld CIT DR further drew our attention to page 26 para 9.1 of the order of ld CIT(A), wherein, in para 9.4 the ld CIT(A) had made disallowance of 5% of the expenses, by following the decision of Co-ordinate Bench of the Delhi Tribunal in the case of Vinay Bhasin vs ACIT in ITA No.6904/Del/2017. It was the submission that the ld CIT(A) has estimated disallowance of 5% of the expenses on account of personal use of the vehicle. It was the submission that the order of the AO was liable to be restored. 17. In reply, ld AR submitted that the disallowance is actually not called for. It was his further submission that this issue is raised by the assessee in Cross objection in Ground No.4,5 & 6. It was the submission that he does not wish to press these grounds in Cross objection. 18. We have considered the rival submissions. Perusal of the order of the ld CIT(A) shows that the details required by the AO had been produced in the remand proceedings and consequently, the ld CIT(A) has been extremely reasonable in restricting the disallowance to 5% towards personal use of the car. Ld CIT(A) has made the restriction basically on the ground ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page9 | 13 that no log book has been maintained. As the Revenue has not been able to produce any facts or evidences to dislodge the findings of the ld CIT(A) on this issue, we find no error, which calls for any interference, which is confirmed. Consequently, Ground No.3 of the revenue stands dismissed and Ground Nos.4,5 & 6 of the cross objection stand dismissed. 19. In respect of Ground No.4 of the revenue, it was submitted by ld CIT DR that it was against the action of the ld CIT(A) in deleting the addition made towards tours and travel expenses. 20. Ld CIT DR drew our attention to page 7 of the assessment order, wherein, the AO has disallowed the expenses towards tour and travels on the ground that self-supporting details, bills/vouchers and ledger copy in respect of the claim had not been produced by the assessee. ld CIT DR drew our attention to page 33 para 10.3 of the order of the ld CIT(A), wherein, the ld CIT(A) has deleted the disallowance after considering the fact that all the evidences were filed before the AO in the course of remand proceedings. It was the submission that ld CIT(A) has deleted the addition on the ground that no such addition was ever made in the previous assessment years, wherein, assessee’s assessment had been taken up for scrutiny, therefore, the order of the AO was liable to be restored. 21. In reply, ld A.R. supported the order of the ld CIT (A). ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page10 | 13 22. We have considered the rival submissions. Perusal of the order of the ld CIT(A) at para 10.3 shows that though the evidences had been produced before the AO, no discussion has been made by the AO in his remand report. Admittedly, on consideration of the remand report, it is presumed that the AO had nothing to comment in respect of the issue in the remand proceedings. This being so, the ld CIT(A) has rightly deleted the disallowance and we find no reason to interfere with the order of the ld CIT(A). Consequently, Ground No.4 of the revenue stands dismissed. 23. In respect of Ground No.5 of revenue, it was the submission of the ld CIT DR that the issue was against the action of the ld CIT(A) in deleting the addition made by the AO in respect of capital gain on sale of assets. 24. Ld CIT DR drew our attention to page 6 para 10 of the assessment order, wherein, the AO has recomputed the long term capital gains. It was his submission that all the details were not produced before the AO, therefore, the AO had made the disallowance. Ld CIT DR drew our attention to page 36 para 11.3 of the order of ld CIT(A), wherein, the ld CIT(A) has considered the fact that all the details were produced before the AO in the course of remand proceedings being the sale consideration in respect of car and same was also considered in the computation of long term capital gain. Ld CIT(A) has also considered the fact that there are sale of shares of Golden Anchor Pvt Ltd., and Rams Assorted Cold Storage ltd., It was his submission that in the remand proceedings, the AO had ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page11 | 13 mentioned that the fair market value in respect of shares had not been provided by the assessee. It was the submission that the order of the AO is required to be restored. 25. In reply, ld AR supported the order of the ld CIT(A). 26. We have considered the rival submissions. Perusal of the order of the ld CIT(A) clearly shows that the ld CIT(A) has considered the fact that the evidences were produced before the AO in the course of remand proceedings and the AO in his remand report has also accepted the fact that the receipt from sale of shares had been recorded and reflected in the books of account of the assessee. Admittedly, in the remand proceedings, the AO mentioned that the fair market value of the shares was not provided by the assessee. Perusal of the order of the ld CIT(A) clearly shows that he has considered the fact that newly added section 50CA of the Act was applicable for assessment year 2018-19, wherein, it makes it necessary to determine the fair market value, even for a seller to ascertain capital gains in a sale transaction. Ld CIT(A) has considered the fact that the impugned assessment year is 2017-18 and consequently, the fair market value in respect of sale of shares is not a requirement. On this ground, the ld CIT(A) has deleted the addition. We find no error in the order of the ld CIT(A) on this issue. Consequently, Ground No.5 of revenue stands dismissed. ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page12 | 13 27. Ground Nos.1,2,7 & 8 of cross objection are in support of the order of the ld CIT(A). As we have upheld the order of the ld CIT(A), Ground Nos.1 to 7 and 8 of cross objections stand dismissed. 28. In respect of Ground No.3 of cross objection of the assessee, it was the submission of ld AR that the ld CIT(A) has directed that income received by the assessee as rent from SPA Insurance Broking Services was liable to be assessed under the head “ income from house property”. Ld AR drew our attention to paras 7 to 7.3 of the order of the ld CIT(A). It was the submission that though the ld CIT(A) has directed that the rental income is liable to be assessed under the head “ income from house property”, the AO has not given the assessee the benefit of section 24 of the Act 29. In reply, ld CIT DR submitted that if the standard deduction has not been given, then it has to be considered u/s.154 of the Act. 30. We have considered the rival submissions. Admittedly, the assessee has claimed that deduction u/s.24 in respect of income assessed under the head “ income from house property” has not been given. This being so, it is directed that the AO shall recomputed the income from rent as “ income from house property” separately as directed by the ld CIT(A) in para 7.3 of his order and grant the assessee permissible deduction as available. The AO shall also disallow the proportionate depreciation and repair expenses as ITA No. 11 /CTK/2022 C.O.No.02/CTK/2022 Assessment Year : 2017-18 Page13 | 13 directed by the ld CIT(A). Consequently, Cross objection in Ground No.3 stands partly allowed for statistical purposes. 31. Ground Nos.9 & 10 of cross objection are general in nature, hence requires no separate adjudication. 32. In the result, appeal of the revenue is dismissed and cross objections of the assessee are partly allowed. Order dictated and pronounced in the open court on 17 /5/2022. Sd/- sd/- (Arun Khodpia) (George Mathan) ACCOUNTANT MEMBER JUDICIAL MEMBER Cuttack; Dated 17 /05/2022 B.K.Parida, SPS (OS) Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : Dy. CIT, Aayakar Bhavan, Bhubaneswar 2. The Respondent. M/s. SRB Consultancy Pvt Ltd., 5 th floor, IDCO Tower, Janapath, Bhubaneswar 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//