Dy. Commissioner of Income Tax , Circle-1(2), Hyderabad V. Country Club Hospitality & Holidays Limited, Hyderabad

ITA 1045/Hyd/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8051 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 07-06-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 22-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P MURALI MOHANA RAO
• Assessee Lawyers: B BALAKRISHNA
• Keywords: Earning of tax free income; TDS; Rule 8D
• Section: 43B; 143(3); 14A; 37(1); 80G; 139(1); 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L . P . SAHU, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 1045 & 1346 /HYD/20 18 (ASSESSMENT YEAR : 20 14 - 15 ) DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(2), HYDERABAD. .. APPELLANT . VS. COUNTRY CLUB HOSPITALITY & HOLIDAYS LTD., HYDERABAD. PAN AAACC8276B .. RESPONDE NT /CROSS APPE LLANT . ASSESSEE BY : SHRI P. MURALI MOHANA RAO. RESPONDENT BY : SHRI B. BALAKRISHNA. (D.R.) DATE OF HEARING : 7.6. 2021. DATE OF PRONOUNCEMENT : 23 .0 8 .2021. O R D E R PER SHRI S.S. GODARA, J.M. : TH ESE REVENUES AND ASSESSEE'S CROSS APPEALS ITA NOS.1045 & 1346/HYD/2018 FOR ASST. YEAR 2014 - 15 ARISE FROM THE COMMISSIONER OF INCOME TAX (APPEALS) - 1 , HYDERABAD S ORDER DT. 26.02 .201 8 PASSED IN CASE NO. 0230/CIT(A) - 1/HYD/2016 - 17/2017 - 18 IN PROCEEDINGS UNDER SECTION 143(3) OF INCOME TAX ACT, 1961 (THE ACT). 2 ITA NO S . 1045 & 1346/HYD/2018 HEARD BOTH PARTIES. CASE FILES PERUSED. 2. WE COME TO THE REVENUES APPEAL 1045/HYD/2018 . I TS FIRST AND FOREMOST GROUND SEEKS TO REVIVE THE ASSESSING OFFICERS ACTION DISALLOWING THE EXPENDITURE INCURRED TOWARDS PAYMENT OF RCI FEE OF RS .6,47,419. ITS SOLE ARGUMENT BEFORE US IS THAT THE ASSESSING OFFICER HAD RIGHTLY DISALLOWED THE IMPUGNED SUM ON ACCOUNT OF NON - DEDUCTION OF TDS UNDER SECTION 40 ( A ) (IA) OF THE ACT FOLLOWED BY THE ASSESSEE'S AGREEMENT. WE FAIL TO EXPRESS OUR CONCURRENCE WIT H THE REVENUES GRIEVANCE IN VIEW OF THE FACT THAT THE ASSESSING OFFICER HA D NOT QUOTED ANY SPECIFIC PROVISION FOR INVOKING CHAPTER XVII OF THE ACT AS TO UNDER WHICH HEAD THE ASSESSEE WAS LIABLE TO DEDUCT TDS THEREUPON. AND ALSO THAT HON'BLE APEX COURTS DECISION (2011) 5 SCR 897 URVIBEN CHIRAGBHAI SH ETH VS. VIJAY B HAI SHAM BUBHAI JORANPUTRA & ORS HOLDS THAT SUCH A CONCESSION IS MADE, THE SAME IS SACROSANCT I F MADE BEFORE A COURT OF RECORD ONLY. WE THEREFORE UPHOLD THE CIT(A)S ACTION IN DELETING THE RC I 3 ITA NO S . 1045 & 1346/HYD/2018 PAYMENT DISALLOWANCE OF RS.6,47,419. THIS FIRST AND FOREMOST SUBSTANTIVE GROUND OF REVENUE IS REJECTED. 3. NEXT SUBSTANTIVE GROUND COMES DISALLOWANCE OF 14A R.W. RULE 8D OF RS. 2 , 08 , 04,0 86 MADE BY THE ASSESSING OFFICER AND DELETED BY THE CIT(A). SUFFICE TO SAY, THE ASSESSEE HAS NOT DERIVED ANY EXEMPT INCOME IN THE RELEVANT PREVIOUS YEAR. WE THEREFORE QUOTE CIT VS. CORRTECH ENERGY PVT. LTD. 223 TAXMAN 130 (GUJ) ; CIT VS. CHETTINAD LOGISTICS PVT. LTD. 80 TAXMANN.COM 221 (MAD) AND CHE M INVEST LTD. VS. CIT (2015) 378 ITR 33 (DEL) THAT THE IMPUGNED STATUTORY PROVISION APPLIES ONLY IN RELATION TO EXAMINE INCOME THAN HAVING ANY INDEPENDENT EXIGIBILITY THAT THE CIT(A) HAS RIGHTLY REVERSED THE ASSESSING OF FICERS ACTION TO THIS EFFECT. THE REVENUES INSTANT LATTER SUBSTANTIVE GROUND AS WELL AS ITS MAIN APPEAL ITA 1045/HYD/2018 FAIL ACCORDINGLY. 4. WE NOW ADVERT TO THE ASSESSEE'S CROSS APPEAL ITA 1346/HYD/2018. ITS FIRST AND FOREMOST SUBSTANTIVE GRIEVANCE CHALLENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES' ACTION DISALLOWING EMPLOYEES CONTRIBUTION 4 ITA NO S . 1045 & 1346/HYD/2018 TOWARDS PF AND ESI TO THE TUNE OF RS.2,38,17,452 ON ACCOUNT OF THE FACT THAT THE SAME HAD BEEN DEPOSITED BEFORE FILING OF RETURN U/S.139(1) OF THE A CT BUT BEYOND THE TIME STIPULATED IN THE CORRESPONDING STATUTE. WE NOTICE IN THIS FACTUAL BACK DROP THAT THE LEGISLATURE HAS AMENDED BOTH 36 (1) (VA) AS WELL AS 43B VIDE FINANCE ACT, 2021 BY INSERTING EXPLANATION(S) 2 AND 5 W.E.F. 1.4.2021 THAT THE SAME DEAL EXCLUSIVELY DEAL WITH EMPLOYEES AND EMPLOYER CONTRIBUTION TO ESI & PF RESPECTIVELY THEREBY HOLDING THAT THE SAID CONTRIBUTIONS HAVE TO BE DEPOSITED AS PER CORRESPONDING STATUTORY PROVISION I.E. BEFORE DATE OF FILING OF RETURN U. 139(1) OF THE ACT ONLY . I T HAS BEEN FURTHER MADE CLEAR AT THE SAME TIME BY WAY OF E XPLANATORY M EMORANDUM TO FINANCE ACT, 2021 THAT FOREGOING AMENDMENT(S) CARR IES ONLY PROSPECTIVE EFFECT W.E.F. 1.4.2021. WE MAKE IT CLEAR THAT WE ARE IN ASSESSMENT YEAR 2014 - 15 ONLY. WE THUS TAKE NOTE OF THE ABOVE STATED STATUTORY AMENDMENT AND HOLD THAT THE IMPUGNED EMPLOYEES CONTRIBUTION TO PF AND ESI DISALLOWANCE OF RS.2,38,17,4 52 DESERVES TO BE DELETED . ORDERED ACCORDINGLY. 5 ITA NO S . 1045 & 1346/HYD/2018 5. NEXT COMES THE ASSESSEE'S THIRD GRIEVANCE SEEKING TO REVERSE BOTH THE LOWER AUTHORIT I ES' ACTION DISALLOW ING ITS SECTION 80G CLAIM AS WELL AS OTHER DEDUCTION I.E. TRAVELLING, CONVEYANCE EXPENSES AND MISCELLANEOUS EXPENSES OF RS.1,59,354; RS.32,43,051 AND RS.3 LAKHS RESPECTIVELY , TOTALING TO RS.37,02,405. 6. LEARNED COUNSEL STATED VERY CLEARLY THAT THE ASSESSEE IS NOT PRESSING FOR THE FIRST AND FOREMOST HEAD OF 80G DISALLOWANCE OF RS.1,59,354 KEEPING IN MIND SMALLNESS OF THE SUM INVOLVED. REJECTED ACCORDINGLY. 7. WE NEXT NOTICE THAT THE LEARNED LOWER AUTHORITIES' HAVE PROCEEDED TO DISALLOW THE ASSESSEE'S TRAVELLING AND CONVEYANCE AS WELL AS MISCELLANEOUS EXPENSES OF RS.32,43,051 AND RS.3 LAKHS RESPECTIVELY ALLEGING ITS FAILURE 6 ITA NO S . 1045 & 1346/HYD/2018 TO PROVE THE SAME TO HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS U. 37(1) OF THE ACT. 8. FACED WITH THIS SITUATION, WE ARE OF THE OPINION THAT AN ASSESSEE INCUR S SUCH EXPENSES F OR RUNNING DAY TO DAY BUSINESS AS WELL AS NECESSARY TRAVELS FOR THE SAME WHICH COULD NOT BE ALTOGETHER RULED OUT. THE FACT ALSO REMAINS THAT IT HAS NOT BEEN ABLE TO PROVE EACH AND EVERY EXPENDITURE BY WAY OF FILING THE NECESSARY COGENT EVIDENCE. WE THERE FORE DEEM IT FIT IN THESE CIRCUMSTANCES THAT A LUMP SUM DISALLOWANCE OF RS.10 LAKHS AND RS.1 LAKH , RESPECTIVELY , WOULD MEET THE ENDS OF JUSTICE WITH A RIDER THE SAME CANNOT BE TREATED AS PRECEDENCE. THE ASSESSEE GETS PART RELIEF OF RS.22,43,051 AND RS.2 L AKHS; RESPECTIVELY. NECESSARY COMPUTATION SHALL FOLLOW AS PER LAW. THE ASSESSEE'S INSTANT CROSS APPEAL 1346/HYD/2018 IS PARTLY ALLOWED. 9. TO SUM UP, THE REVENUES APPEAL 1045/HYD/2018 IS DISMISSED AND ASSESSEE'S CROSS APPEAL 1346/HYD/2018 IS 7 ITA NO S . 1045 & 1346/HYD/2018 PARTL Y ALLOWED IN FOREGOING TERMS . A COPY OF THE COMMON ORDER BE PLACED IN THE RESPECTIVE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 23RD AUG. , 2021. SD/ - SD/ - (L .P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 23 .0 8 .2021. * REDDY GP COPY TO : 1. M/S.COUNTRY CLUB HOSPITALITY & HOLIDAYS LTD., 5 - 9 - 16,AMRUTHA CASTLE, OPP. SECRETARIAT, SAIFABAD, HYDERABAD - 500 063 2. DCIT, CIRCLE 1(2), HYDERABAD. 3. PR. C I T - 1 , HYDERABAD. 4. CIT(APPEALS) - 1, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.