ACIT, New Delhi V. M/s. New Hind Enterprises Pvt. Ltd., Delhi

ITA 172/DEL/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1368 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 08-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMITA M BISWAS
• Assessee Lawyers: RANO JAIN MS MANSI JAIN
• Keywords: Earning of tax free income; Additional evidence; Bad and doubtful debts; Rule 8D; Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.172/DEL./2014 (ASSESSMENT YEAR : 2011-12) ACIT, VS. M/S. NEW HIND ENTERPRISES PVT. LTD., CENTRAL CIRCLE 19, PARSVNATH METRO POWER, NEW DELHI. NEAR SHAHDARA METRO STATION, SHAHDARA, DELHI 110 032. (PAN : AABCN2536L) (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. RANO JAIN, ADVOCATE MS. MANSI JAIN, CA REVENUE BY : MS. PRAMITA M. BISWAS, CIT DR DATE OF HEARING : 21.08.2019 DATE OF ORDER : 11.09.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, ACIT, CENTRAL CIRCLE 19, NEW DELHI (H EREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 07.10.2013 PASSED BY THE COMMISSIONER OF INCOME - TAX (APPEALS)-XXXIII, NEW DELHI QUA TH E ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER ALIA THAT :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE O F ITA NO.172/DEL./2014 2 RS.8,33,42,123/- MADE BY THE AO ON ACCOUNT OF BAD DEBTS CLAIMED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EVIDEN CE WITHOUT FOLLOWING RULE 46A AS LAID DOWN BY THE HON' BLE DELHI HIGH COURT IN THE CASE OF MANISH BUILD WELL P VT. LTD. 204 TAXMAN 106. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE CIT(A) HAS ERRED NOT CONSIDERING THE FACTS OF T HE CASE THAT THE ASSESSEE HAS FILED WRIT PETITIONS AND THE MATTER IS SUBJUDICED BEFORE THE HON'BLE COURTS AND, HENCE, THE ADVANCES CANNOT BE TREATED AS BAD DEBTS OR CRYSTALLIZED LOSS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE O F RS. 33,400/- MADE BY THE AO UNDER SECTION 14A OF THE INCOME TAX ACT, 1961 READ WITH RULE 8D OF THE INCOM E TAX RULES, 1961 5. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUE AT HAND ARE : ASSESSEE COMPANY IS ENGAGED IN DEALING I N PROCUREMENT AND CONSTRUCTION OF PROPERTY. DURING THE YEAR UNDER AS SESSMENT, ASSESSEE CLAIMED BAD DEBT EXPENSES TO THE TUNE OF RS.8,33,42 ,123/- AND ASSESSING OFFICER (AO) HAS CALLED UPON THE ASSESSEE TO PROVID E THE LEDGER COPY OF BUSINESS TRANSACTION LEADING TO BAD DEBTS ALONG WIT H SUPPORT EVIDENCE. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE TH AT BAD DEBTS ARE ADVANCE GIVEN TO THE FARMERS/AGRICULTURISTS, AO PRO CEEDED TO MAKE ADDITION OF RS.8,33,42,123/- ON THE GROUND THAT THE FARMERS HAVE NOT FURNISHED THE DETAILS OF ADVANCE RECEIVED BY THEM F ROM THE ASSESSEE. ITA NO.172/DEL./2014 3 AO ALSO MADE ADDITION OF RS.33,400/- BY INVOKING TH E PROVISIONS CONTAINED UNDER SECTION 14A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) READ WITH RULE 8D ON ACCOUNT OF DISALLOWANCE OF EXPENSES. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL BY ALLOWING TH E APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UP ON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF TH E FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, ASSESSEE IS INTO THE BUSINESS OF R EAL ESTATE AND LAND DEVELOPMENT. IT IS ALSO NOT IN DISPUTE THAT THE AS SESSEE COMPANY HAD ADVANCED AN AMOUNT OF RS.39.50 CRORES FOR PURCHASE OF LAND AT SONEPAT FOR TOWNSHIP OUT OF WHICH THE LAND HAS BEEN REGISTE RED IN ITS NAME TO THE TUNE OF RS.27.33 CRORES. ASSESSEE COMPANY HAS CLAI MED BAD DEBTS TO THE TUNE OF RS.8,33,42,123/- WHICH HAS BEEN DISALLOWED BY THE AO. 6. IT IS THE CASE OF THE ASSESSEE THAT SINCE THE LA ND IN QUESTION HAS BEEN ACQUIRED BY THE GOVERNMENT, THE FARMERS DID NO T RETURN THE ADVANCE TAKEN FROM THE ASSESSEE COMPANY FOR WHICH H E HAS FILED A CASE IN THE HONBLE HIGH COURT. WE ARE OF THE CONSIDERE D VIEW THAT WHEN PAYMENT MADE TO THE FARMERS WHICH HAS BECOME SUBSEQ UENTLY BAD DEBT HAS NOT BEEN DISPUTED BY THE AO WHO HAS ACCEPTED TH E ACCOUNT BOOKS ITA NO.172/DEL./2014 4 AND QUA THE LAND IN QUESTION, THE LAND OWNERS ARE I N LITIGATION WITH THE GOVERNMENT FOR REQUISITION OF THE LAND AND OTHER CI VIL AND CRIMINAL LITIGATION IS ALSO PENDING, THE LOSS SUFFERED BY TH E ASSESSEE ON ACCOUNT OF FORFEITURE OF ADVANCES BY THE FARMERS IS A BUSINESS LOSS WHICH IS AN ALLOWABLE EXPENSES. 7. MOREOVER, IN CASE, DUE TO TERMINATION OF LITIGAT ION IN THE CASE OF ASSESSEE COMPANY, THE ADVANCES MADE TO THE FARMERS ARE RETURNED THEN AT THAT POINT OF TIME, THE AMOUNT SHALL BE CONSIDERED FOR TAX. LD. CIT(A) HAS THRASHED THE ISSUE AT LENGTH IN THE LIGHT OF TH E DECISION RENDERED BY HONBLE DELHI HIGH COURT AS WELL AS THE TRIBUNAL AN D REACHED THE LEGAL AND VALID CONCLUSION. 8. DURING THE COURSE OF ARGUMENT, THE LD. DR FOR TH E REVENUE HAS FAILED TO POINT OUT AS TO WHICH PIECE OF ADDITIONAL EVIDENCE HAS BEEN ENTERTAINED BY THE LD. CIT (A) WITHOUT AFFORDING OP PORTUNITY OF BEING HEARD TO THE AO RATHER ALL THE DOCUMENTS AS TO THE LITIGATION BETWEEN FARMERS & GOVERNMENT AND CIVIL & CRIMINAL LITIGATIO N BETWEEN ASSESSEE & FARMERS ARE ALREADY ON RECORD AND WERE ALSO IN TH E PUBLIC DOMAIN. SO, WE FIND NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) DELETING THE DISALLOWANCE OF RS.8,33,42 ,123/- MADE BY THE AO ON ACCOUNT OF BAD DEBTS CLAIMED BY TREATING THE SAME AS BUSINESS LOSS. 9. SO FAR AS QUESTION OF DELETION OF ADDITION OF RS .33,400/- MADE BY THE AO U/S 14A OF THE ACT IS CONCERNED, WHEN UNDISP UTEDLY THE ASSESSEE ITA NO.172/DEL./2014 5 HAS COME UP WITH SPECIFIC PLEA THAT NO EXPENDITURE HAS BEEN INCURRED FOR EARNING EXEMPT INCOME NOR THE ASSESSEE HAS EARNED A NY EXEMPT INCOME DURING THE YEAR UNDER ASSESSMENT, THERE IS NO QUEST ION OF MAKING DISALLOWANCE BY MECHANICALLY INVOKING THE PROVISION S CONTAINED U/S 14A READ WITH RULE 8D. SO, WHEN THERE IS NO EXEMPT INCOME, NO DISALLOWANCE CAN BE MADE AND AS SUCH, LD. CIT (A) H AS RIGHTLY DELETED THE ADDITION MADE U/S 14A READ WITH RULE 8D AND FIN DINGS RETURNED NEED NO INTERFERENCE. 7. RESULTANTLY, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 11 TH DAY OF SEPTEMBER , 2019. SD/- SD/- (PRASHANT MAHARISHI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 11 TH DAY OF SEPTEMBER, 2019/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXXIII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.