M/s. Panarc Consulting Group Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 1411/DEL/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8947 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 13-07-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 11-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR CHOPRA
• Assessee Lawyers: K SAMPATH SH V RAJA KUMAR
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI H. S. SIDHU, JUDICIAL MEMBER I.T.A. NO.1411/DEL/2015 ASSESSMENT YEAR: 2011-12 M/S PANARC CONSULTING GROUP PVT. LTD., VS. INCOME T AX OFFICER, 304, 3 RD FLOOR, TIMES CENTRE BUILDING, WARD-19(3), NEW DEL HI GOLF COURSE ROAD, NEW DELHI (PAN:AAFCP4288H) (ASSESSEE) (RESPONDENT) ASSESSEE BY : SH. K SAMPATH, ADVOCATE SH. V. RAJA KUMAR, ADVOCATE REVENUE BY : SH. MANOJ KUMAR CHOPRA, SR. DR. ORDER THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 26.12.2014 PASSED BY THE LD. CIT(A)-7, DELHI, RELAT ING TO ASSESSMENT YEAR 2011-12 ON THE FOLLOWING GROUNDS OF APPEAL:- 1. THE AUTHORITIES BELOW ERRED IN PASSING THE ORDE R WITHOUT APPRECIATING NEITHER THE FACTS OF THE CASE NOR THE DECIDED CASE BROUGHT TO THEIR NOTICE AND THUS THE ORDER SUFFERS FROM THE PRINCIPLES OF JUDIC IAL DISCIPLINE AND IS LIABLE TO BE VACATED AND ADDITION DELETED. 2. THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE AD DITION OF RS.6,17,315/- BEING THE AMOUNT OF INTEREST PAID ON SHARE APPLICAT ION MONEY TO SHRI ARVIND RAJ ARORA AND SHRI GAURAV MARKENDE ON THE FACTS AND CIRC UMSTANCES OF THE CASE. THE DISALLOWANCE HAS BEEN CONFIRMED BY THE LD. CIT (APP EALS) ON WRONG PREMISES AND WITHOUT FOLLOWING THE PRINCIPLES LAID DOWN IN T HE CASE OF ROHIT EXHAUST SYSTEMS PVT LTD M DEPARTMENT OF INCOME TAX, ITAT, PU NE AND DEPUTY COMMISSIONER OF INCOME TAX VS M/S MANIPAL INDUSTRIE S LIMITED 3. THE LD. CIT (APPEALS) ERRED IN CONFIRMING THE DI SALLOWANCE OF RS.6,50,000/- BEING THE AMOUNT OF CONSULTANCY CHARG ES PAID TO SHRI ARVIND RAJ ARORA ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 4. THE LD. AUTHORITIES BELOW ERRED IN NOT APPRECIAT ING THE FACT THAT THE INTEREST AND CONSULTANCY CHARGES SO PAID TO SHRI ARVIND RAJ A RORA WERE DECLARED BY HIM IN HIS INCOME TAX RETURN AND TAX AT THE RATE OF 30% AND AS SUCH NO USEFUL PURPOSE WAS BEING SERVED BY THE DEPARTMENT IN MAKIN G A DISALLOWANCE ON SUCH FACTS. WITHOUT PREJUDICE TO GROUND NO. 2 AND 3 ABOVE DIREC TIONS MAY BE ISSUED TO THE AUTHORITIES BELOW TO EXCLUDE THE AMOUNT RS. 6,1 7,315/- AND RS. 6,50,000/- FROM THE TOTAL INCOME OF THE DIRECTORS ON THE PRINC IPLE THAT THE SAME INCOME CANNOT BE TAXED TWICE. 2. I HAVE HEARD BOTH THE PARTIES, PERUSED THE ORDER S PASSED BY THE REVENUE AUTHORITIES, INCLUDING THE PAPER BOOK FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE CONTAINING PAGES 1 TO 38 IN WHICH THE LEARNED COUNSEL FOR THE ASSESSEE HAS FILED A COPY OF LETTER DATED 22.02 .2013 BEFORE THE AO ALONGWITH SELECT DOCUMENTS, COPY OF LETTER DATED 07 .11.2013 BEFORE AO ALONGWITH FORM 26-AS AND OTHER DOCUMENTS, COPY OF L ETTER DATED 20.11.2013 BEFORE ALONGWITH RETURNS, BANK STATEMENT AND PROFILE OF KEY PERSONNEL, COPY OF SHOW CAUSE NOTICE DATED 10.01.20 14 AND COPY OF LETTER DATED 20.01.2014 BEFORE AO. THE LEARNED COUN SEL FOR THE ASSESSEE ALSO CERTIFIED THAT THE SAID PAPERS ARE PART OF REC ORD BEFORE THE ASSESSING OFFICER. LEARNED COUNSEL FOR THE ASSESSEE HAS STATE D THAT THE ASSESSEE HAS FILED ALL THE DOCUMENTARY EVIDENCES FOR SUBSTANTIAT ING THE CLAIM OF ASSESSEE WHICH HAS NOT BEEN PROPERLY CONSIDERED BY THE REVENUE AUTHORITIES. HE REQUESTED THAT AS REGARDS TO ISSUE INVOLVED IN GROUND NO. 1 RELATING TO ADDITION OF RS. 617315/- ON ACCOUNT O F INTEREST PAID ON SHARE APPLICATION MONEY TO SHRI. ARVIND RAJ ARORA AND SHR I. GAURAV MARKANDE. HE STATED THAT THIS ISSUE HAS ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT DELHI BENCHES SMC BENCH, NEW DELHI IN ITA NO. 3 1411/DEL/2015 DATED 13.07.2016. HE DRAW MY ATTENTIO N TOWARDS PARA 4 PAGE NO. 2 OF THE AFORESAID ORDER DATED 13.07.2016. HE STATED THAT THE REVENUE AUTHORITIES HAS NOT FILED ANY CONTRADICTORY EVIDENCE TO NEGATIVE THIS ORDER. HE REQUESTED THAT THIS ADDITION OF RS. 617315/- MAY BE DELETED, IN VIEW OF THE REASONING MENTIONED IN THE ORDER DATED 13.07.2016. AS REGARDS TO SECOND ADDITION REGARDING DISALLOWANCE OF RS. 6,50,000/- ON ACCOUNT OF CONSULTANCY CHARGES PAID T O SHRI. ARVIND RAJ ARORA. LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THIS ISSUE REQUIRES THOROUGH CONSIDERATION AT THE LEVEL OF ASSESSING OF FICER BECAUSE THE ASSESSEE HAS FILED ALL THE DOCUMENTARY EVIDENCES SU PPORTING THIS CLAIM WHICH HAS NOT BEEN PROPERLY CONSIDERED BY THE REVEN UE AUTHORITIES. 3. LEARNED DR RELIED UPON THE ORDERS PASSED BY THE REVENUE AUTHORITIES. 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE ORDERS PASSED BY THE AUTHORITIES BELOW, I AM OF THE VIEW THAT AS REG ARDS TO THE ADDITION OF RS. 06,17,315/- ON ACCOUNT OF INTEREST PAID TO SHRI . ARVIND RAJ ARORA AND SHRI. GAURAV MARKANDE, THE REVENUE AUTHORITIES HAS DISALLOWED THIS CLAIM ON ACCOUNT OF NON FURNISHING OF EVIDENCES OF SUPPOR TIVE DOCUMENTS IN SUPPORT OF THE CLAIM AND ASSESSEE COULD NOT ALLOT SECURITIES WITHIN THE STIPULATED PERIOD OF 60 DAYS AND THE INTEREST WAS P AID @ 12% PER ANNUM, IN VIEW OF THE NOTIFICATION OF THE MINISTRY OF COMP ANY AFFAIRS DATED 14.12.2011 AS REPRODUCED AT PAGE NO. 3 & 4 OF THE I MPUGNED ORDER. 5. I HAVE GONE THROUGH THE PROVISION OF SECTION 36( 1)(III) OF THE ACT. THIS SECTION ALLOWS DEDUCTION TO THE ASSESSEE IN RE SPECT OF AMOUNT OF THE 4 INTEREST PAID ON THE CAPITAL BORROWED FOR THE PURPO SE OF THE BUSINESS OR PROFESSION. THIS SECTION, NOWHERE RESTRICTS THE DIS ALLOWANCE IN RESPECT OF INTEREST PAID ON THE SHARE APPLICATION MONEY. THE S HARE APPLICATION MONEY UNTIL THE SHARES ARE NOT ALLOTTED, IS CAPITAL , BORROWED FOR THE PURPOSE OF THE BUSINESS OR PROFESSION. UNTIL AND UN LESS, THERE IS AN EMBARGO AND RESTRICTION UNDER SECTION 36(1)(III), I N MY OPINION, NO DISALLOWANCE CAN BE MADE IN RESPECT OF INTEREST PAI D ON THE SHARE APPLICATION MONEY. UNTIL AND UNLESS THE SHARES ARE ALLOTTED, THE SHARE APPLICATION MONEY CAN BE REFUNDED TO THE PERSONS FR OM WHOM THE MONEY HAS BEEN RECEIVED, THUS IT REMAINS IN SHAPE OF CAPI TAL BORROWED. 6. KEEPING IN VIEW, THE FACTS AND CIRCUMSTANCES EXP LAINED ABOVE, I DELETE THE DISALLOWANCES AMOUNTING TO RS. 617315/- ON ACCOUNT OF INTEREST PAID ON SHARE APPLICATION MONEY TO SHRI. A RVIND RAJ ARORA AND SHRI. GAURAV MARKANDE. IN THE RESULT, ISSUE INVOLVE D IN GROUND NO. 2 IS DECIDED IN FAVOUR OF THE ASSESSEE. 7. AS REGARDS TO THE DISALLOWANCE OF RS. 6,50,000/- BEING AMOUNT OF CONSULTANCY CHARGES PAID TO SHRI. ARVIND RAJ ARORA, I AM OF THE CONSIDERED VIEW THAT ASSESSEE HAS FILED ALL THE DOCUMENTARY EV IDENCES BEFORE THE REVENUE AUTHORITIES WHICH HAS NOT BEEN PROPERLY CON SIDERED. THEREFORE, IN THE INTEREST OF JUSTICE THIS ISSUE IS SET ASIDE TO THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH, AS PER LAW, AFTER GIVING FU LL OPPORTUNITY OF HEARING TO THE ASSESSEE AND FOR PRODUCING THE EVIDENCE AND DECIDE THE SAME IN AS PER LAW. 5 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 15/01/2020. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 15/01/2020 SH COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES