DCIT, New Delhi V. M/s. Nile Tech Ltd., New Delhi

ITA 1599/DEL/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5668 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 19-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S R SENAPATI
• Keywords: Business income; Business expenditure
• Section: 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: E: NEW DELHI) BEFORE SHRI N.K SAINI, ACCOUNTANT MEMBER & SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO:- 1599 /DEL/2015, ( ASSESSMENT YEAR: 2010-11) THE DCIT CIRCLE 18(2), NEW DELHI. VS. M/S NILE TECH LTD., B-17, MAHARANI BAGH, NEW DELHI-110065 PAN NO: AACCN3608E APPELLANT RESPONDENT REVENUE BY : SH. S. R. SENAPATI (SR. DR) ASSESSEE BY : SH. ANIL BHALLA (CA) DATE OF HEARING : 11.06.2018. DATE OF PRONOUNCEMENT : 22/06/2018. ORDER PER: KULDIP SINGH, JM THE APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE- 18(2), NEW DELHI. (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILI NG THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATE D 12.12.2014 QUA ASSESSMENT YEAR 2010-11 PASSED BY LD. CIT(A)-6, DEL HI, ON THE GROUNDS INTER ALIA THAT:- 2 ITA NO-1599/DEL/2015. M/S NILE TECH LTD., NEW DELHI. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE & IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE M ADE BY THE AO ON ACCOUNT OF PRE COMMENCEMENT EXPENSES WITHOUT CONSIDERING THE FACT THAT DURING THE YEAR UNDER CON SIDERATION THE ASSESSEE EARNED RENTAL INCOME UNDER THE HEAD I NCOME FROM HOUSE PROPERTY AND INCOME FROM OTHER SOURCE S FOR WHICH IT DULY CLAIMED STANDARD DEDUCTION AND INTERE ST ON BORROWED CAPITAL AND DID NOT CARRY ON ANY BUSINESS ACTIVITY AGAINST WHICH BUSINESS EXPENSES COULD BE ALLOWED. 2. THAT THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AN D IS NOT TENABLE ON FACTS AND IN LAW. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, A MEND OR FORGO ANY GROUND(S) OF APPEAL EITHER BEFORE OR AT THE TIM E OF HEARING OF THE APPEAL. 2 . BRIEFLY STATED THE FACTS NECESSARY TO ADJUDICATE THE ISSUES AT HAND ARE: THE ASSESSING OFFICER (AO) MADE ADDITION OF RS. 3,1 6,76,312/- ON ACCOUNT OF PRE COMMENCEMENT EXPENSES ON THE GROUND T HAT THE ASSESSEE COMPANY WAS NOT IN A POSITION TO COMMENCE ITS BUSIN ESS BEFORE 11.11.2009 NOR IT COMMENCED THE SAME. THE AO RELIED UPON OCCUPATION CERTIFICATES ISSUED BY HARYANA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD. (HSIIDC) SHOWING THAT THE BUILDING WAS STILL UNDER CONSTRUCTION AND THE EXPENSES INCURRED FOR THE SAME ARE LIABLE TO BE CAPITALIZED. 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A) BY WAY OF FILING THE APPEAL, WHO HAS DELETED THE DISALLOWANCE OF RS. 3,16,76,312/- ON ACCOUNT OF PRE COMMENCEMENT EXPENSES BY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE T HE TRIBUNAL BY WAY 3 ITA NO-1599/DEL/2015. M/S NILE TECH LTD., NEW DELHI. OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES O F THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDER PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE F ACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LD. DR FOR THE REVENUE CHALLENGING THE IMPUGNED ORDER CONTENDED INTER ALIA THAT WHEN HSIIDC HAS ISSUED TH E OCCUPATION CERTIFICATE ON 11.11.2009, EXPENSES CLAIMED BY THE ASSESSEE HAS RIGHTLY BEEN DISALLOWED BY THE AO; THAT THE ASSESSEE HAS FA ILED TO PROVE THAT THE COMPLETION OF BUILDING TOOK PLACE WITH EFFECT FROM 1.5.2009. 6 . HOWEVER, ON THE OTHER HAND, LD. AR FOR THE ASSESS EE TO REPEL THE ARGUMENTS ADDRESSED BY LD. DR FOR THE REVENUE CONTE NDED THAT THE CONSTRUCTION OF BUILDING WAS COMPLETED ON 30.4.2009 AS PER, NO OBJECTION CERTIFICATE, (NOC) DATED 30.4.2009 ISSU ED BY COMMISSIONER OF MUNICIPAL CORPORATION, GURGAON, HARYANA AND CONFIRM ED BY THE BUILDING PROJECT HEAD FOR AIRTEL CENTRE; THAT OCCUPATION CER TIFICATE DATED 11.11.2009 WAS ISSUED BY HSIIDC SUBSEQUENT TO COMPL ETION OF THE BUILDING AS PER SANCTIONED BUILDING PLAN; THAT THE ASSESSEE HAS COMMENCED ITS BUSINESS W.E.F. A.Y. 2007-08 AND CONS EQUENTLY BUSINESS INCOME WAS ALREADY THERE WHICH WAS SUBSEQUENTLY ASS ESSED BY AO AS PER STATEMENT OF ASSESSABLE INCOME AVAILABLE AT PAGE 152 TO 157 OF THE 4 ITA NO-1599/DEL/2015. M/S NILE TECH LTD., NEW DELHI. PAPER BOOK . 7. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCUMS TANCES OF THE CASE, ORDER PASSED BY THE LOWER REVENUE AUTHORITIES AND ARGUMENT ADDRESSED BY THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, THE SOLE QUESTION ARISES FOR DETERMINATION IN THE CASE IS:- AS TO WHETHER THE ASSESSEE HAS COMPLETED HIS BUILD ING CONSTRUCTION W.E.F. 1.5.2009 AND HAS EARNED ITS BU SINESS INCOME W.E.F.A.Y. 2007-08? 8 . WHEN WE EXAMINE NO OBJECTION CERTIFICATE DATED 30 .4.2009 ISSUED BY COMMISSIONER OF MUNICIPAL CORPORATION GURGAON, A ND COPY OF COMPLETION CERTIFICATE OF AIRTEL CENTRE, GURGAON, B OTH AVAILABLE AT PAGE 56 AND 57 OF THE PAPER BOOK, I T GOES TO PROVE, THAT THE SAID CERTIFICATES WERE ISSUED BY THE COMPETENT AUTHORITI ES ON THE BASIS OF SIGHT INSPECTION AND AT THAT POINT OF TIME BUILDING WAS R EADY FOR OCCUPATIONS FITTED WITH SPRINKLERS, RISERS, YARD HYDRANTS AND F IRE EXTINGUISHERS WHICH MERE CHECKED AND FOUND CORRECT AS PER THE N.B.C. 19 83 PART IV REVISED 2005. 9. FURTHERMORE, WHEN WE EXAMINE AFORESAID NOC FOR OCC UPATION AND COMPLETION CERTIFICATE IN THE LIGHT OF THE STATEMEN T OF ASSESSABLE INCOME ANNEXURE A AVAILABLE AT PAGE 152 OF THE PAPER BOO K, THE ASSESSABLE BUSINESS INCOME WAS ALREADY THERE, ASSESSED BY THE AO W.E.F. 1.5.2009. 5 ITA NO-1599/DEL/2015. M/S NILE TECH LTD., NEW DELHI. 10. MERELY BECAUSE OF THE OCCUPATION CERTIFICATE ISSUE D BY HSIIDC DATED 11.11.2009, IT CANNOT BE SAID THAT THE BUSINESS WAS COMMENCED FROM 11.11.2009 BECAUSE THE SAID CERTIFICATE WAS ISSUED IN DUE PROCESS WITHOUT GOING INTO THE FACTS OF THE CASE. RATHER OCCUPATIO N CERTIFICATE DATED 11.11.2009 APPEARS TO BE ISSUED BY HSIIDC ON THE BA SIS OF NOC ISSUED BY COMMISSIONER OF MUNICIPAL CORPORATION, GURGAON AND NO SIGHT INSPECTION WAS MADE BY THE OFFICER OF THE HSIIDC. SO, WHEN THE BUSINESS OF THE ASSESSEE WAS SET UP IN TERMS OF THE INCOME TAX ACT DURING THE A.Y. 2007- 08, PRE COMMENCEMENT EXPENSES CANNOT BE DISALLOWED ON THE BASIS OF THE OCCUPATION CERTIFICATE DATED 11.11.2009 ONLY, P ARTICULARLY FOR WHICH THE ASSESSEE COMPANY HAS APPLIED FOR VIDE LETTER DA TED 20.7.2009 ON THE BASIS OF NOC DATED 30.4.2009 ISSUED BY THE COMMISSI ONER OF MUNICIPAL CORPORATION, GURGAON. 11 . IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE LD. CIT(A) HAS RIGHTLY ALLOWED ALL THE REVENUES EXPENSES INCURRED AFTER S ETTING UP OF THE BUSINESS CLAIMED IN THE RETURN OF INCOME U/S 28 TO 44DB OF THE ACT. SO, WE FIND NO LEGALITY OR PERVERSITY IN THE IMPUGNED O RDER PASSED BY THE LD. CIT(A), HENCE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. 6 ITA NO-1599/DEL/2015. M/S NILE TECH LTD., NEW DELHI. ORDER PRONOUNCED IN THE OPEN COURT ON 22/6/2018 SD/- SD/- (N.K SAINI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 .06.2018 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NO-1599/DEL/2015. M/S NILE TECH LTD., NEW DELHI. DATE OF DICTATION 18/6/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20/6/2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 21/6/2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 22/6/2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 22/6/2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 8 ITA NO-1599/DEL/2015. M/S NILE TECH LTD., NEW DELHI.