M/s. Marudhar Services Pvt. Ltd., New Delhi V. ITO, New Delhi

CO 280/DEL/2014

• Counselvise Citation: [2016] 112 COUNSELVISE.COM (IT) 4294 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 17 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 08-08-2016
• Assessment Year: 1990-1991
• Appeal Filed On: 07-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Tax effect; Set aside
• Section: 268A; 144

Judgement Text

ITA NO. 75/D/2014 & CO NO. 280/D/2014 M/S MARUDHAR SERVICES P. LTD. PAGE 1 OF 8 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E, NEW DELHI BEFORE SHRI J.S. REDDY, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 75/DEL/2014 ASSESSMENT YEAR: 1990-91 ITO WARD 6(2), ROOM NO. 185, C.R. BUILDING, NEW DELHI. VS M/S MARUDHAR SERVICES P. LTD. 4, COMMUNITY CENTRE, EAST OF KAILASH, NEW DELHI. M-110 (APPELLANT) (RESPONDENT) & CO NO. 280/DEL/2014 ASSESSMENT YEAR: 1990-91 M/S MARUDHAR SERVICES P. LTD. 4, COMMUNITY CENTRE, EAST OF KAILASH, NEW DELHI. M-110 VS ITO WARD 6(2), ROOM NO. 185, C.R. BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJESH KUMAR, SR. DR RESPONDENT BY : NONE DATE OF HEARING : 08.08.2016 DATE OF PRONOUNCEMENT : 24.08.2016 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 25.10.2013 OF CIT (A)-IX, NEW DELHI FOR AY ITA NO. 75/D/2014 & CO NO. 280/D/2014 M/S MARUDHAR SERVICES P. LTD. PAGE 2 OF 8 1990-91, WHEREIN THE LD. CIT (A) HAS DELETED ADDITI ONS AMOUNTING TO RS. 27,98,581/-. 2. THE LD. D.R., ALTHOUGH SUPPORTED THE ORDER OF T HE ASSESSING OFFICER, BUT COULD NOT CONTROVERT THE FAC T THAT TAX EFFECT IN THIS APPEAL IS LESS THAN RS.10,00,000 /-. 3. FROM CLAUSE 10 OF THE CBDT CIRCULAR NO. 21/2015 DATED 10/12/2015 IT IS CLEAR THAT THESE INSTRUCTION S ARE APPLICABLE TO THE PENDING APPEALS ALSO AND THERE IS CLEAR CUT INSTRUCTION TO THE DEPARTMENT TO WITHDRAW OR NO T TO PRESS THE APPEALS FILED BEFORE THE ITAT WHEREIN TAX EFFECT IS LESS THAN RS.10,00,000/-. THESE INSTRUCTI ONS ARE OPERATIVE RETROSPECTIVELY TO THE PENDING APPEALS AL SO. 4. KEEPING IN VIEW THE CBDT CIRCULAR NO.21 OF 2015 DATED 10.12.2015 AND ALSO THE PROVISIONS OF SECTION 268A OF INCOME TAX ACT, 1961, WE ARE OF THE VIEW TH AT THE REVENUES APPEAL IS LIABLE TO BE DISMISSED. ITA NO. 75/D/2014 & CO NO. 280/D/2014 M/S MARUDHAR SERVICES P. LTD. PAGE 3 OF 8 5. IN VIEW OF THE ABOVE, WITHOUT GOING INTO MERITS OF THE CASE, WE DISMISS THE APPEAL FILED BY THE DEPART MENT. WE DO, HOWEVER, ADD THAT IF ON VERIFICATION OF THE FACTS AND THE CALCULATION OF THE TAX EFFECT, THE DEPARTME NT FEELS THAT THE TAX EFFECT HAS BEEN WRONGLY CALCULATED, DEPARTMENT SHALL BE FREE TO MOVE A MISCELLANEOUS APPLICATION FOR THE RECALL OF THIS ORDER. 6. AS FAR AS THE CO FILED BY THE ASSESSEE IS CONCER NED, IT SUPPORTS THE ORDER OF THE LD. CIT (A) ON THE ISSUE OF DELETION OF RS. 27,98,581/-. GROUND NO. 1 OF THE CO BECOMES IN FRUCTUOUS IN VIEW OF THE DISMISSAL OF TH E DEPARTMENTAL APPEAL. 7. THE CO ALSO CONTESTS THE CONFIRMATION OF DISALLO WANCE MADE OUT OF SALARY AND LEGAL CONSULTANCY EXPENSES. IT IS SEEN THAT THIS IS THE THIRD ROUND OF LITIGATION IN THIS CASE. ITA NO. 75/D/2014 & CO NO. 280/D/2014 M/S MARUDHAR SERVICES P. LTD. PAGE 4 OF 8 THE ORIGINAL ASSESSMENT WAS COMPLETED U/S 144 OF TH E ACT AT AN INCOME OF RS. 11,72,590/- WHICH INCLUDED A DISALLOWANCE OF RS. 2 LAKS OUT OF SALARY AND LEGAL CONSULTANCY EXPENSES. ON APPEAL, THE LD. CIT (A) DE LETED THE DISALLOWANCE OF RS. 2 LAKHS VIDE ORDER DATED 23.12.1993. AGGRIEVED, THE DEPARTMENT PREFERRED AN APPEAL BEFORE THE ITAT AND THE ITAT VIDE ORDER DATE D 19.03.2001 IN ITA NOS. 6484 & 6485/DEL/1995 SET ASI DE THE ORDER OF THE LD. CIT (A) AND RESTORED THE MATTE R TO THE FILE OF THE AO. SUBSEQUENTLY, ASSESSMENT WAS COMPLETED ON 31.03.2003 U/S 143(3)/250 AT RS. 29,45,020/- AFTER DISALLOWING, AMONG OTHER DISALLOWANCES, RS. 49,827/- OUT OF SALARY AND RS. 81,513/- OUT OF LEGAL CONSULTANCY. ON FURTHER APPEA L, THE LD. CIT (A) VIDE ORDER DATED 14.07.2003 DISMISSED T HE ASSESSEES APPEAL EX PARTE AND UPHELD THE ADDITIONS. ON SECOND ROUND OF APPEAL BEFORE THE ITAT, THE ITAT VI DE ITA NO. 75/D/2014 & CO NO. 280/D/2014 M/S MARUDHAR SERVICES P. LTD. PAGE 5 OF 8 ORDER DATED 02.07.2009 IN ITA NOS. 914 AND 915/DEL/2004 RESTORED THE MATTER TO THE FILE OF CIT (A). THE LD. CIT (A) AGAIN CONFIRMED THE ADDITION AND NO W THE ASSESSEE HAS CHALLENGED THE CONFIRMATION IN GRO UND NO. 2 OF THE CO. 8. A PERUSAL OF THE ASSESSMENT ORDER ON THIS ISSUE SHOWS THAT ON PAGE 11, THE AO HAS DEALT THE ISSUE AT LENG TH. THE AO HAS NOTED THAT REGARDING SALARY EXPENSES CLAIMED AT RS. 1,99,307/-, EXCEPT INCOMPLETE DETAILS NOTHING H AS BEEN FURNISHED. VOUCHERS AND SALARY REGISTER HAS AL SO NOT BEEN PRODUCED BEFORE THE AO. THE AO FURTHER NOTED T HAT AS PER THE DETAILS OF SALARY, THE COMPANY HAS EMPLO YED 22 EMPLOYEES BUT IN ABSENCE OF SUPPORTING VOUCHERS AND RECORDS IT WAS UNJUSTIFIED TO ACCEPT THE CLAIM OF T HE ASSESSEE ESPECIALLY BECAUSE IN THE IMMEDIATE PRECED ING YEAR THE ASSESSEE HAD PAID SALARY ONLY TO THE TUNE OF RS. ITA NO. 75/D/2014 & CO NO. 280/D/2014 M/S MARUDHAR SERVICES P. LTD. PAGE 6 OF 8 31,717/-. THE AO ALSO NOTED THAT NO MAJOR DEVIATION HAD TAKEN PLACE IN THE SCALE OF ACTIVITIES OF THE ASSES SEE AS COMPARED TO THE IMMEDIATELY PRECEDING YEAR. THE AO PROCEEDED TO DISALLOW RS. 49,827/- BEING 1/4 TH OF THE SALARY EXPENSES CLAIMED. ON THE ISSUE OF LEGAL CONSULTANCY CHARGES, THE AO HAS MADE GIVEN VERY SPE CIFIC FINDINGS AND HAS POINTED OUT THE BILLS/VOUCHERS WHI CH WERE NOT AVAILABLE ON RECORD AND THEREAFTER PROCEED ED TO DISALLOW AN AMOUNT OF RS. 81,513/-. THE LD. CIT (A) UPHELD THE REASONING ADOPTED THE AO. HOWEVER, IN TH E ENTIRE REPEATED ROUNDS OF ASSESSMENTS AND APPEALS, THE LD CIT (A) FAILED TO APPRECIATE ONE VERY IMPORTANT POINT THAT THE ITAT HAD RESTORED THE MATTER TO THE FILE O F THE AO IN THE FIRST INSTANCE ONLY FOR THE LIMITED PURPO SE OF DETERMINING THE PROFIT ON DELINKING OF LAND AND HEN CE THE SAME DID NOT GIVE THE AO THE POWER TO SCRUTINIZE TH E ENTIRE CASE DE NOVO. IT IS ALSO A FACT ON RECORD THAT THE ITA NO. 75/D/2014 & CO NO. 280/D/2014 M/S MARUDHAR SERVICES P. LTD. PAGE 7 OF 8 DEPARTMENT HAD NOT RAISED ANY GROUND BEFORE THE ITA T CHALLENGING THE IMPUGNED DELETION OF RS. 2,00,000/- IN THE VERY FIRST ROUND OF LITIGATION. HENCE, THE APPR OACH BY THE AO IN MAKING THIS DISALLOWANCE IS NOT LEGALLY T ENABLE. HENCE, WE SET ASIDE THE ORDER OF THE LD. CIT (A) ON THIS ISSUE AND DIRECT THE AO TO DELETE THIS ADDITION. 9. IN THE RESULT, THE CO OF THE ASSESSEE IS PARTLY ALLOWED. 10. IN THE FINAL RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED AND THE CO OF THE ASSESSEE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE COURT ON 24.08.2016 SD/- SD/- (J.S. REDDY) (SUDHA NSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24.08.2016 *KAVITA ARORA ITA NO. 75/D/2014 & CO NO. 280/D/2014 M/S MARUDHAR SERVICES P. LTD. PAGE 8 OF 8 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR