ACIT, New Delhi V. M/s. Chimes Holdings, New Delhi

ITA 1501/DEL/2014

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1707 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 2
• Next Hearing Date: 24-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: YATENDRA SINGH SR D

Judgement Text

1 ITA 1501/DEL/14 ACIT VS. CHIMES HOLDING IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2 NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER ITA NO. 1501/DEL/2014 ASSTT. YRS: 2008-09 ACIT CIRCLE-24(1), VS. CHIMES HOLDINGS, NEW DELHI. 55, CHIMES, SULTANPUR FARMS, NEW DELHI. PAN: AABFU 9631 J ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI YATENDRA SINGH SR. DR ESPONDENT BY : SHRI RAHUL KHARE ADV. DATE OF HEARING : 24/07/2015. DATE OF ORDER : 09/10/2015. O R D E R PER S.V. MEHROTRA, A.M.. : THIS APPEAL, PREFERRED BY THE REVENUE, IS DIRECTE D AGAINST THE ORDER DATED 19-12-2013, PASSED BY THE LD. CIT(A)-IX, NEW DELHI IN APPEAL NO. TR-123/13-14, RELATING TO A.Y. 2008-09. GROUNDS RAI SED ARE AS UNDER: 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE DISALLOWANC E OF RS. 30,45,595/- ON ACCOUNT OF EXPENSE, DESPITE THE FACT THAT THE ASSESSEE HAD FAILED TO PROVE GENUINENESS OF NEXUS O F EXPENDITURE WITH BUSINESS. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 30,45,595/- ON ACCOUNT OF EXPENSES, DESPITE THE FAC T THAT THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE REGARDI NG 2 ITA 1501/DEL/14 ACIT VS. CHIMES HOLDING GENUINENESS OF INCURRING THE SALARY AND CONSULTANCY EXPENSES FOR THE PURPOSE OF BUSINESS AND EVEN THE DETAILS OF PARTIES FROM WHOM CONSULTANCY RECEIVED WAS NOT PROVIDED BY THE A SSESSEE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS PERVERSE BOTH IN FACTS AND LAW. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE O F THE HEARING OF THE APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM, IN THE RELEVANT ASSESSMENT YEAR, WAS ENGAGED IN THE BUSINE SS OF PROVIDING MANAGEMENT CONSULTANCY SERVICES FOR PROVIDING MANAG EMENT INVENTORYING & CONSULTING SERVICES FOR ESTABLISHMENT OF NEW PROJ ECTS AND TO PROVIDE ADVISORY SERVICES FOR EFFECTIVE ADMINISTRATION, ORG ANIZATION DEVELOPMENT AND IMPROVEMENT OF THE NEW OR EXISTING BUSINESS, TO ENG AGE IN THE BUSINESS OF REAL ESTATE PROMOTION, DEVELOPMENT AND PROJECT MANA GEMENT. THE ASSESSEE HAD FILED RETURN OF INCOME DECLARING NIL INCOME. TH E ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 7,23,128/- AS UN DER: RETURNED INCOME/LOSS (-) 23,22,467 ADD: 11/12 TH OF TOTAL EXPENSES CLAIMED DISALLOWED 30,45,595 ASSESSED INCOME RS. 7,23,128 2.1. LD. CIT(A), WHILE PARTLY ALLOWING THE ASSESSEE S APPEAL, DELETED THE DISALLOWANCE OBSERVING AS UNDER: DURING THE APPELLATE PROCEEDING, THE APPELLANT SUB MITTED THAT IN THE CASE OF ASSESSEE FOR THE A.Y. 2007-08 THE HO N'BLE ITAT, NEW DELHI VIDE ORDER DATED 30.09.2013 IN ITA NO. 3419/DEL/2012 HAS GIVEN DECISION IN FAVOUR OF THE A PPELLANT 3 ITA 1501/DEL/14 ACIT VS. CHIMES HOLDING DISMISSING THE APPEAL OF THE REVENUE AGAINST ORDER OF THE LD. CIT(A) MENTIONED ABOVE. THE HON'BLE ITAT HELD THAT, 'WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MATERIAL ON RECORD, CASE LAW CITED BY RIVAL SIDE AND FIND THAT LD. CIT(A) HAS CONSIDERED EACH AND EVERY ASPECT OF THE MATTER AND PASSED A VERY ELABORATE AND REASONED ORDER. THE CONCLUSION AS DRAWN AND IS REPRODUCED IN EARLIER PART OF THIS ORDER GIVES ADEQUATE BASIS. NEITHER ANY INFIRMITY NOR ANY FLAW HAS BEEN NOTICED IN SUCH CONCLUSION AS DRAWN BY LD. CIT(A) NOR ANY CONVINCING REASON HAS BEEN GIVEN TO TAKE A DIFFERENT VIEW. THEREFORE, CONSIDERING THE ENTIRETY OF THE FACTS, CIRCUMSTANCE S AND MATERIAL ON RECORD AND WHILE CONCURRING WITH CONCLUSION AND FINDING OF LD. CIT(A), WE UPHOLD HIS ORDER AND DISMISS THE APPEAL OF THE REVENUE BEING DEVOID OF ANY MERIT'. IN VIEW OF THE DECISION OF THE HON'BLE ITAT, IN THE CASE OF APPELLANT, ON THE SAME FACTS AND CIRCUMSTANCES, THE ADDITION MADE ON THIS ACCOUNT IS DELETED AND THIS GROUND OF APPEAL IS ALLOWED. 3. I HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE LD. CIT(A) IN ARRIVING AT HIS CONCLUSI ON HAS RELIED ON ITAT ORDER IN ASSESSEES OWN CASE FOR AY 2007-08. FURTHE R, I FIND THAT THE SAID ORDER OF THE ITAT HAS BEEN UPHELD BY THE HONBLE DE LHI HIGH COURT VIDE ORDER DATED 24-11-2014 IN ITA NO. 178/2014, INTER A LIA, OBSERVING AS UNDER: 7. THE FINDING OF THE TRIBUNAL AFFIRMING THE FINDIN GS GIVEN BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS ESSENTI ALLY FACTUAL IN NATURE. THE ASSESSEE HAD SET UP NEW BUSI NESS AND HAD ACCORDINGLY ENGAGED SERVICES OF DIFFERENT EMPLOYEES WHO WERE 4 ITA 1501/DEL/14 ACIT VS. CHIMES HOLDING PAID SALARIES AND IDS ON THE SALARY WAS DEDUCTED. N O ATTEMPT WAS MADE BY THE ASSESSING OFFICER TO QUESTION THE S AID EMPLOYEES AND VERIFY FROM THEM WHETHER THEY HAD ACT UALLY UNDERTAKEN ANY WORK AS WAS STATED BY THE RESPONDENT ASSESSEE. REGARDING PROFESSIONAL OR CONSULTANCY FEE PAID, DET AILS WITH REGARD TO SERVICES RENDERED WAS CLEARLY INDICATED. THE ASSESSING OFFICER, IT IS ACCEPTED DID NOT WRITE AND DID NOT CARRY OUT FURTHER INVESTIGATION OR QUESTION THE CONSULTAN TS. COPY OF THE AGREEMENTS FILED BY THE ASSESSEE WITH THE CONSU LTANTS AND THEIR DETAILS WERE SIMPLY IGNORED BY THE ASSESSING OFFICER. 8. WHETHER OR NOT TO ENGAGE A PARTICULAR PERSON AS AN EMPLOYEE IS A BUSINESS DECISION OF THE ASSESSEE. WHETHER IT IS PRUDENT OR WISE ARE IRRELEVANT. REASONABLENESS OF THE PAYMENT CANNOT BE EXAMINED AND GONE INTO BY THE ASSESSING OFFICER, UN LESS PERMITTED BY THE STATUTE AS IN CASE OF RELATED OR A SSOCIATED PERSON OR WHEN THE TRANSACTION OR RELATIONSHIP IS N OT AT ARMS? LENGTH. AN ASSESSING OFFICER CAN GO INTO THE QUESTI ON, WHETHER THE EXPENDITURE INCURRED IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. EXPENDITURE WHICH IS NOT GENUI NE WOULD NOT BE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BU SINESS. FOR DECIDING THE SAID ASPECT, FACTS HAVE TO BE ASCERTAI NED AND THEREAFTER FINDING CAN BE GIVEN, THAT THE EXPENDITU RE DID NOT RELATE TO BUSINESS BUT WAS MADE FOR SOME OTHER AND NON BUSINESS PURPOSE OR OBJECT. IN THE PRESENT CASE, TH E ASSESSEE HAD CLAIMED THAT THEY HAD EMPLOYED SERVICES GIVING FULL DETAILS OF THE EMPLOYEES INCLUDING THEIR ADDRESSES, THEIR Q UALIFICATIONS AND THEIR P AN NUMBERS. IN CASE THE ASSESSING OFFIC ER FELT THAT THE EXPENDITURE INCURRED WAS NOT WHOLLY OR EXCLUSIV ELY FOR THE PURPOSE OF BUSINESS BUT MERELY A SHAM AND CAMOUFLAG E, INVESTIGATION BY MAKING INQUIRIES FROM THE EMPLOYEE S WAS NECESSARY. THE CONCLUSION REACHED BY THE ASSESSING OFFICER IS RATHER PRESUMPTORY AND BASED ON ASSUMPTIONS. 5 ITA 1501/DEL/14 ACIT VS. CHIMES HOLDING WE THEREFORE DO NOT FIND ANY REASON TO INTERFERE WI TH THE IMPUGNED ORDER AND UPSET THE FACTUAL FINDINGS AFFIR MED BY THE TRIBUNAL, ACCEPTING THE REASONS GIVEN BY THE COMMIS SIONER OF INCOME TAX (APPEALS). THE APPEAL IS ACCORDINGLY DIS MISSED. 3.1. NO CHANGE IN FACTS FOR THE ASSESSMENT YEAR UND ER CONSIDERATION HAVE BEEN POINTED OUT BY EITHER OF THE PARTIES. THE ORDE R OF LD. CIT(A) BEING IN CONFORMITY WITH THE EARLIER ORDER OF THE ITAT FOR E ARLIER YEAR, WHICH IN TURN HAS BEEN AFFIRMED BY THE HONBLE HIGH COURT, I SEE NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). THE ORDER OF CIT(A) I S ACCORDINGLY UPHELD. 4. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 09/10/2015. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED: 09/10/2015. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. 6 ITA 1501/DEL/14 ACIT VS. CHIMES HOLDING -+ DATE INITIAL 1. DRAFT DICTATED ON -10.2015 PS 2. DRAFT PLACED BEFORE AUTHOR .10.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.