DCIT, CIRCLE-4(2), NEW DELHI V. CANDOR KOLKATA ONE HI- TECH STRUCTURES PVT. LTD., MAHARASHTRA

MA 275/DEL/2024

AI Insights

The case involves the Revenue's Miscellaneous Application seeking recall of the Tribunal's order in ITA No. 6937/Del/2018, which pertained to the assessment year 2013-14. The original dispute involved several disallowances made by the Assessing Officer (AO) under various sections, including disallowance of brokerage and income from non-80IAB sources. The Tribunal had partly allowed the assessee's appeal, which the Revenue sought to challenge through the Miscellaneous Application. The Tribunal dismissed the application, finding no merit in the Revenue's arguments and noting that the issues raised were not apparent mistakes but disagreements with the Tribunal's decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314106 (ITAT-DELHI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-05-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Other Referred Cases: M/s Candor Gurgaon Two Developers and Projects Pvt. Ltd. vs. ITAT, Meghalaya Steels Ltd. Vs. CIT
• Laws Referred To: I.T. Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDER KUMAR SINGH
• Assessee Lawyers: K..M. GUPTA; HONBLE; HONBLE
• Keywords: Business income; Tax effect; Source of fund
• Section: 143(3); 14A

Judgement Text

" 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B- Friday, NEW DELHI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR US, JUDICIAL MEMBER MA NO. 275/Del/2024 (IN ITA NO. 6937/DEL/2018) A.Y. 2013-14 DCIT, CIRCLE 4(2), VS CANDOR KOLKATA ONE HI-TECH NEW DELHI STRUCTURES PVT. LTD. (Formerly known as Unitech Hi-Tech Structures P. Ltd. and earlier known as Unitech Hi-Tech Structures Ltd.) 1102, Tower-B, 11th floor, Peninsula Business Park, Senapati Bapat Road, Lower Parel, Mumbai, Maharastara-400013 (PAN: AAACU7918A) (Appellant) (Respondent) Assessee by : Sh. K..M. Gupta, Adv. Department by : Sh. Virender Kumar Singh, Sr. DR Date of Hearing : 09.05.2025 Date of pronouncement : 09.05.2025 2 ORDER PER SHAMIM YAHYA, AM By way of this Miscellaneous Application, Revenue seeks recall of the order of this Tribunal passed in Assessee’s I.T.A. No. 6937/Del/2018 (AY 2013-14 decided vide order dated 22.11.2023. 2. At the time of hearing, Ld. DR reiterated the contentions made in the misc. application, which reads as under and requested to recall the order of the Tribunal:- “Sub.: Miscellaneous Application u/s 254(2) of the I.T. Act, 1961 in the case of M/s. Candoor Kolkata One Hi Tech Structure Pvt. Ltd. Vs. Dy CIT, Circle Circle 4(2), New Delhi for A.Y. 2013-14 (PAN: AAACU7918A)-reg. - Ref.No.: ITA No.6937/Del/2018 dated 22.11.2023 Kindly refer to the Hon'ble ITAT's order vide in ITA No.6937/Dcl/2018 dated 22.11.2023 (copy enclosed for ready reference) passed consolidated order by the Hon'ble ITAT, Delhi Bench 'B', New Delhi in the aforesaid case for A.Y. 2013-14. 2. The facts of the case are enumerated as under: The assessee company filed its ROl on 30/11/2013 declaring income of Rs.46,44,59,489/-. The case was selected for Scrutiny and order u/s 143(3) was passed on 30.12.2016 after making following additions : (i.) Disallowance of brokerage amounting to Rs. 1,58,22,131/ - 3 (ii) Disallowance u/s 14A rwr 8D - Rs. 10,03,470/ - (iii) Disallowance on account of Non 80-1AB Income amounting to Rs. 1,68,66,876/ - (Car Parking Rental Income - 3,38,53,200/- Income from health club amounting to Rs. 33,93,477/ - Income from Food Court amounting to Rs. 48,56,499/- Interest income amounting to Rs. 47,63,700/- 3. Aggrieved with the order of the AO, the assessee filed appeal before Ld. CIT(A), and the same was allowed partly by the Ld. 4. Aggrieved with the order of the CIT(A), the assessee filed appeal before Hon'ble ITAT and the same has been partly allowed by the Hon'ble ITAT vide ITA No. 6937/Del/2019 dated 22/11/2023 commented that:- 4.1 The issue no. 1 Pertains to the Disallowance of brokerage amounting to Rs.1,58,22,131-. The relevant paragraph of the Hon'ble ITAT order is reproduced as below:- 6. Ld. Counsel of the assessee submitted that in assessee’s group concern, on similar facts and circumstances, ITAT had decided the issue in favour of the assessee. 7. Per contra, ld. DR for the Revenue did not dispute this proposition. 8. We note that ITAT in bunch of appeals being ITA No. 7839/Del/2018 & Ors. In the case of M/s Candor Gurgaon Two Developers and Projects Pvt. Ltd. vide order dated 14.6.2023 has decided the similar issue as under:- “8. As with regard to the issue no. 5 being ground of brokerage on ITA No. 3879/Del/2018, it can be observe that the invoices produced on behalf of the appellant at page no. 1 and 3 of the paper book clearly mention the details of the premises let out and the party to whom the 4 lease was made. The copies of lease deed have also been placed on record. Ld. Tax Authorities have fallen in error in want of more evidences. When assessee is engaged in the business of rental of the properties then engaging brokers for procurement of the tenants is a common practice and the expenses of brokerage thus, have to be considered to have been incurred in ordinary course of business.” 9. Apart from that Ld. Counsel for the assessee has argued that in any case, the whole income of the assessee is tax free by virtue of Section 80IAB of the Act so the disallowance of expenditure makes the issue revenue neutral. Thus, the ground raised in ITA No.3879/Del/ 2018 is decided in favour of the assessee.\" “9. We find that the aforesaid case is fully applicable in the present case and accordingly. this issue is decided in favour of the assessee. AO comments:- In view of the above, the decision of ITAT not acceptable on merits since the assessee has failed to establish the nexues between the expense on the brokerage and the business. The assessee was asked to produce a copy of agreement between two parties or any document to prove that the said companies have actually helped the assessee to find tenants as claimed and nothing apart from a bill was provided. The assessee was failed to explain which services were provided in lieu of the brokerage paid. The issue no 2, The question of denial of deduction us 80-IAB of the Act, Car Parking Rental Income - 38,53,200/-:- \"11. Against this order, assessee is in appeal before us. We have heard both the parties and perused the records. 5 12. Ld. Counsel of the assessee submitted that these soruces of income are linked to the main activities of the assessee referred to Paper Book Page No. 89 where by Notification of the Government of India dated 27th October 2006, certain operations were listed to be used by the Board of Approval while approving authorised operations in the SEZ. This list included parking, club house, shopping arcade, convention centre. etc. Furthermore, Id. Counsel of the assessee referred to the ITAT decision in assessee's group cases (supra) where similar disallowances have been decided in favour of the assessee. 13. Per contra, Id. DR for the Revenue could not dispute the aforesaid proposition. 14. Upon careful consideration, we find that these activities, which were denied by the authorities u/s 80-IAB, are linked to main activities which are duly covered by the above Notification in this regard. Furthermore, this ITAT in bunch of appeals being ITA No.7839/Del/2018 & ors. in the case of M/s. Candor Gurgaon Two Developers and Projects Pvt. Ltd. (supra) has allowed 80-IAB deduction in similar circumstances by holding that the issue is covered in favour of the assessee by Hon'ble Supreme Court judgement in the case of Meghalaya Steels Ltd. Vs. CIT (2016) 67 taxmann.com 158 (SC). In the same order, in para no. 5, ITAT has allowed deduction towards section 80-IAB towards car parking rental in favour of the assessee. We find that the above instances are assessee’s group cases and cover the issue in favour of the assessee. Accordingly, we hold that assessee is entitled to deduction u/s. 80-IAB towards car parking income, income from health club from food court and interest income. This issues is decided in favour of the assessee. AO comments:- The assessee is engaged in the business of developing SEZ in IT/ITES sector. The Income from leasing out of SEZ is allowed by AO as business income of the assessee u/s 80IAB. As a part of development and leasing of premises situated in SEZ, the assessee has leased out car parking situated in the SEZ. premises 6 and had earned income from leasing of the aforesaid car parking. Developing such parking areas and providing related services has a direct nexus to the developments of SEZ. The income from car parking rentals is an incidental activity and SEZ cannot be seen in isolation. Car parking cannot be separated from the main business of SEZ and cannot be in isolation. In view of the above, the decision of Hon'ble ITAT in treating the lease rental from car parking as an allowable deduction u/s 801AB is acceptable on merits and no further appeal is recommended on this issue. (On similar issue in the case of M/s Candor Gurgaon Two Developer and Projects Ltd) AY 2013-14 no further appeal was recommended Copy of Notice are placed on record) 4.3 The issue no 3, The question of denial of deduction u/s 80- JAB of the Act, Income from health club amounting to Rs. 33,93,477/, Income from Food Court amounting to Rs. 48,56,499/- Interest income amounting to Rs. 47,63,700/-: \"11. Against this order, assessee is in appeal before us. We have heard both the parties and perused the records. 12. Ld. Counsel of the assessee submitted that these sources of income are linked to the tain activities of the assessee and referred to Paper Book Page No.89 where by Notification of the Government of India dated 27th October 2006, certain operations were listed to be used by the Board of Approval while approving authorised operations in the SEZ. This list included parking, club house, shopping arcade, convention centre, etc. Furthermore, Id. Counsel of the assessee referred to the ITAT decision in assessee's group cases (supra) where similar disallowances have been decided in favour of the assessee. 13. Per contra, Id. DR for the Revenue could not dispute the aforesaid proposition. 14. Upon careful consideration, we find that these activities, which were denied by the authorities u/s 80-1AB, are linked to main activities which are duly covered by the above Notification 7 in this regard. Furthermore, this ITAT in bunch of appeals being ITA No. 7839/Del/2018 & ors. in the case of M/s. Candor Gurgaon Two Developers and Projects Pvt. Ltd. (supra) has allowed 80-JAB deduction in similar circumstances by holding that the issue is covered in favour of the assessee by Hon'ble Supreme Court judgement in the case of Meghalaya Steels Ltd. Vs. CIT (2016) 67 taxmann.com 158 (SC). In the same order, in para no.5, ITAT has allowed deduction towards section 80-1AB towards car parking rental in favour of the assessce. We find that the above instances are assessee's group cases and cover the issue in favour of the assesser. Accordingly, we hold that assessee is entitled to deduction u/s 80-IAB towards car parking income. income from health club, income from food court and interust income. This issue is decided in favour of the assessee. AO comments:: In view of the above, the decision of ITAT not acceptable on merits. The rest activities are not an integral part of SEZ and can operate on isolation. These amenities might have been provided by the assessee to attract companies. But the profit out of these activities is no eligible for deduction u/s 801 AB of the Act. On perusal of the order of Hon'ble ITAT, it is noticed that issued mentioned in Sr. No. 4.1. & 4.3 are not found acceptable on merits. But the tax effects is below the enhanced limits for filing appeals by the Department before the Income Tax Appellate Tribunals, High Courts and Supreme Court, as per the circulated no 5/2024 dated 15/03/2024 It may also be mentioned that the case is not covered under any exceptions as per Board Circulars circulated no 5/2024 dated 15/03/2024. Therefore, further appeal is NOT RECOMMENDED in this case. Hence, the miscellaneous application is filed on the following grounds i. Whether on the facts and circumstances of the case the ITAT has erred in deleting the addition made on account of disallowance of brokerage expenses amounting to Rs. 1,58,22,131/- as the said payment of brokerage is mere a 8 management of the assessee with a view to enhance the expenses and reduce the profit. ii. Whether on the facts and circumstances of the case the ITAT has erred in deleting the addition on account of u/s 80IAB of the Act on income from club, income from food court and interest income aggregating to Rs. 1,30,13,676/- iii. The appellant craves leaves for reserving the right to amend Modify, Alter, Add, or forego any grounds) of appeal at any time before or during the hearing of this 5. In view of the above ground, the PCIT-1, Delhi has granted approval for filing Misc. Application before Hon'ble ITAT in ITA No.6937/Del/2018 dated 22.11.2023. The copies of the following orders are enclosed in for filing Miscellaneous Application before Hon'ble ITAT as per order sheets pages no. 1 to 10 (Copy of order sheet enclosed herewith). 1. Copy of Order of Hon'ble ITAT dated 22.11.2023 2. Copy of the Pr. CIT-1's approval letter dated 09.05.2024 3. Order sheet dated 12.04.2024” 3. Per contra, Ld. AR has submitted that since there is no apparent mistake in the order of the Tribunal, hence, the misc. application filed by the Department is not sustainable in the eye of law and may be dismissed as such. 4. We have heard both the parties and perused the records. During the hearing, a query was raised by the Bench from the Ld. DR that which mistake is apparent in the order of the Tribunal. Ld. DR unable to point out any apparent mistake in the order of the Tribunal. 9 5. In view the aforesaid factual matrix, we are of the considered opinion that there is no mistake apparent in the order of the Tribunal dated 22.11.2023 and Revenue is seeking a review of the Tribunal’s order in the garb of rectification, which is not permissible u/s. 254(2) of the I.T. Act and, therefore, the Miscellaneous Application, being devoid of any merit and dismissed the same as such. 6. In the result, the Misc. Application filed by the Revenue is dismissed. Order pronounced on 09/05/2025 upon conclusion of hearing. Sd/- Sd/- [YOGESH KUMAR US] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER SR Bhatnagar Copy forwarded to: - 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT By Order, Assistant Registrar, ITAT, Delhi Benches 10 "