INDIA HOUSING,KOLKATA V. ACIT, CIR-54, KOLKATA. , KOLKATA

MA 37/KOL/2024

AI Insights

The case involves India Housing, the appellant, contesting the disallowance of supervision charges by the DCIT, Circle 54, Kolkata, the respondent, for the assessment years 2013-14 and 2014-15. The Tribunal initially set aside the issue for further verification but later recalled its order to decide the matter afresh. The Tribunal examined the precedents and factual matrix, including a similar case where the supervision charges were allowed, and found no infirmity in the expenses claimed by India Housing. The Tribunal's decision was influenced by the absence of any demonstrable excess over fair market value for the services provided and the legitimate business needs for such expenditures.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 41666 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 28-11-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-11-2024
• Assessment Year: 2014-2015
• Appeal Filed On: 22-05-2024
• Other Referred Cases: ITA No.125/KOL/2015, ITA No.30 of 2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHIJIT KUNDU
• Assessee Lawyers: P. K. BANSAL
• Keywords: Set aside
• Section: 143(3); 37(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “B”, MUMBAI BEFORE SHRI. RAJESH KUMAR, ACCOUNTANT MEMBER AND ANIKESH BANERJEE, JUDICIAL MEMBER M.A. Nos. 36 & 37/KOL/2024 (Arising out of I.T.A Nos.1218 & 1219/KOL/2023 (Assessment Years: 2013-14 & 2014-15) India Housing, 2A, Sahara India Sadan, Shakespeare Sarani, Kolkata- 700 071 PAN: AABFI8377B vs DCIT, Circle 54, Kolkata 169 A.J.C. Bose Road, 1st Floor, Kolkata APPLICANT RESPONDENT I.T.A Nos.1218 & 1219/KOL/2023 (Assessment Years : 2013-14 & 2014-15) India Housing, 2A, Sahara India Sadan, Shakespeare Sarani, Kolkata- 700 071 PAN : AABFI8377B vs DCIT, Circle 54, Kolkata 169 A.J.C. Bose Road, 1st Floor, Kolkata APPELLANT RESPONDENT Assessee by : Shri P.K. Bansal, AR Respondent by : Shri Abhijit Kundu, CIT DR Date of hearing : 07/11/2024 Date of pronouncement : 28/11/2024 O R D E R 2 M.A. No36 & 37 /KOL/21024 ITA No.1218 & 1219 /KOL/2023 India Housing PER BENCH: The assessee filed the miscellaneous applications No. 36 & 37/KOL/2024 arising out of ITA No.1218 & 1219/KOL/2023. It was pointed out that ground No.3 pertaining to the issue of supervision charges, which was incidental to the business of the assessee, was covered in favour of the assessee, by the order of the co-ordinate bench of the ITAT, Kolkata Bench, vide order dated 11/12/2019 in ITA No.125/KOL/2015 for A.Y. 2011-12, whereas the Tribunal set aside the issue to the Ld.AO for further verification whether the same issue was duly covered by the order of the co-ordinate bench of Kolkata and vide paragraph 18 has inadvertently held that “Considering the above ground nos. 1, 2, 3 & 6 are allowed for statistical purposes,”. The assessee therefore, pleads that the mistake may be corrected. 2. We heard the parties and perused the records. We find that the averment made by the assessee is borne out of record. Accordingly, we recall our order dated 15/03/2024 in ITA Nos.1218 & 1219/KOL/2023 to decide the issue in ground No.3 afresh. As a result, the miscellaneous applications filed by the assessee are allowed. ITA No.1218 & 1219/KOL/2023 3. Ground No.3 in both these appeals is recalled vide paragraph 2 above, for deciding the issue afresh. Upon hearing the parties we find that the ground pertains to disallowance of supervision charges is covered in favour of the assessee by the decision of the co-ordinate bench vide order dated 11/12/2019 in 3 M.A. No36 & 37 /KOL/21024 ITA No.1218 & 1219 /KOL/2023 India Housing ITA No.125/KOL/2015 for A.Y. 2011-12, whereby the co-ordinate bench dismissed the ground raised by the revenue by observing as under:- \"15. We note that the supervision charges have been paid by assessee as per an agreement. The assessee has deducted tax at source while making payment. The payment was made through banking channel. The Id. Assessing Officer was aware about the assessee^s agreement. The assessee has paid service tax on the mall management expenses and, therefore, there arises no occasion of doubting genuineness of the expenses. The Id. Assessing Officer has not demonstrated as to how the expenditure incurred by the assessee for giving overall mall management supervision work to M/s. Sahara Prime City Ltd. was in excess of the fair market value of service or facility or was not as per legitimate needs of the business of the assessee. The maintenance of huge mall having area of 2,50,000 sq. ft., the assessee has to incur management supervision charges. Moreover, AO has not rejected books of accounts of the assessee and assessment is framed by AO under section 143(3) of the Act. Based on the factual position narrated above, we are of the view that there is no infirmity in the order of Id. CIT(A). We note that for eligibility of an allowance u/s 37(1) of the Act, there should be a nexus between the expenditure and the purpose of the business and the expenditure should have been wholly and exclusively laid out for that purpose. Once these facts are established, the revenue cannot justifiably claim to put itself in the arm chair of business man or in a position of the Board of Director and assumed the role of ascertaining how much is reasonable expenditure having regard to the circumstances of the case. We note that the assessee has incurred management supervision charges for the purpose of business and if the expenditure is incurred Cross Objection No.l6/Kol/2015 & M/s India Housing bona fide in relation to business activity then it would be an allowable expenditure. That being so, we decline to interfere in the order passed by Id. CIT(A), his order on this issue is hereby accepted and grounds of appeal raised by the Revenue is dismissed.\" 4 M.A. No36 & 37 /KOL/21024 ITA No.1218 & 1219 /KOL/2023 India Housing 4. We further observe that the issue was challenged before the Hon’ble High Court of Calcutta bearing ITA No.30 of 2020, copy of which is enclosed at paper book page 135 wherein the Hon’ble Calcutta High Court ruled that the deletion of addition made by the Assessing Officer on supervision charge under section 40A(ii) of the Income Tax Act,1961 was a purely factual exercise and perversity in the order was not shown. 5. In view of the above, respectfully following the precedents, we allow ground No.3 of the assessee. 6. Accordingly, grounds 3 & 4 are allowed, grounds 1,2 & 6 are allowed for statistical purpose and grounds No.5,7 & 8 are general in nature which need no adjudication. Facts and circumstances in ITA No.1219/KOL/2023 being identical, the decision arrived at in ITA No.1218/KOL/2023 is applicable mutatis mutandis to ITA No.1219/KOL/2023 also. 6. In the result, ITA Nos 1218 & 1219/KOL/2023 are partly allowed for statistical purpose. Order pronounced in the open court on 28th day of November 2024. Sd/- Sd/- (RAJESH KUMAR) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, दिन ांक/Dated: 28/11/2024 Pavanan 5 M.A. No36 & 37 /KOL/21024 ITA No.1218 & 1219 /KOL/2023 India Housing Copy of the Order forwarded to: 1. अपील र्थी/The Appellant , 2. प्रदिव िी/ The Respondent. 3. आयकर आयुक्त CIT 4. दवभ गीय प्रदिदनदि, आय.अपी.अदि., मुबांई/DR, ITAT, Mumbai 5. ग र्ड फ इल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, Mumbai "