Universal Buildrise LLP, New Delhi V. ITO, Ward-27(1), New Delhi

ITA 172/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4572 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 10-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 143(3)

Judgement Text

1 , , IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI !' BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT $ / ITA NO.172/DEL/2019 % & & / ASSESSMENT YEAR 2012-13 UNIVERSAL BUILDRISE LLP, (FORMERLY KNOWN AS UNIVERSAL BUILDRISE PVT. LTD.,) 5, ANSARI ROAD, DARYA GANJ, NEW DELHI PAN-AAFFU7416D .......... '( /APPELLANT VS ITO, WARD-27(1), NEW DELHI . )*'( / RESPONDENT '(+,- / APPELLANT BY : MS. ADITI GUPTA, CA )*'(+,- / RESPONDENT BY : SH. PRADEEP SINGH GAUTAM, SR. D R +./ / DATE OF HEARING : 14.01.2020 01 +./ / DATE OF PRONOUNCEMENT: 21.02.2020 -2 / ORDER PER SUSHMA CHOWLA, VP THE PRESENT APPEAL FILED BY ASSESSEE IS AGAINST ORD ER OF CIT(A)-9, NEW DELHI DATED 25.10.2018 RELATING TO ASSESSMENT YEAR 2012-13 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE ACT. 2. THE FIRST ISSUE WHICH IS RAISED IS AGAINST THE D ISALLOWANCE OF THE BUSINESS LOSS AMOUNTING TO RS. 39,30,602/- ON THE G ROUND THAT NO BUSINESS ACTIVITY WAS CARRIED ON BY THE ASSESSEE. T HE ASSESSEE IS ALSO ITA NO.172/DEL/2019 2 AGGRIEVED BY THE NON ALLOWANCE OF MANAGERIAL REMUNE RATION OF RS. 36 LACS PAID TO THE MANAGING DIRECTOR. 3. THE PRESENT APPEAL IS FIXED BEFORE THE TRIBUNAL IN THE SECOND ROUND OF APPEAL. IN THE FIRST ROUND, THE TRIBUNAL, VIDE O RDER DATED 20.01.2017 HAD REMITTED THE ISSUE BACK TO THE FILE OF AO TO CO NSIDER THE ADDITIONAL EVIDENCES FILED. THE AO IN THE SECOND ROUND OF PROC EEDINGS HAS NOTED THAT AGAINST THE RENTAL INCOME OF RS. 54,57,708/-, THE A SSESSEE HAD ADJUSTED BUSINESS LOSS OF RS. 39,30,602/-, WHICH MAINLY CONS TITUTES OF REMUNERATION OF RS. 36 LACS PAID TO THE DIRECTOR SH RI. ANSHUL CHAWLA. THE AO NOTED THAT THERE WAS ONLY ONE TRANSACTION OF PURCHASE OF RS. 86067/- AND SALE OF ONLY RS. 110433/-. SINCE THERE WAS NO BUSINESS ACTIVITY, THE AO WAS OF THE VIEW THAT HIGH REMUNERA TION PAID TO THE DIRECTOR WAS NOT IN CONNECTION WITH THE BUSINESS AC TIVITY OF THE ASSESSEE BUT WAS AGAINST RENTAL INCOME OFFERED BY THE ASSESS EE. HENCE THE CLAIM OF THE ASSESSEE WAS DENIED AGAINST WHICH THE PRESENT A PPEAL. 4. ON THE PERUSAL OF RECORD AND AFTER HEARING BOTH THE AUTHORIZED REPRESENTATIVES, THE LIMITED ISSUE WHICH ARISES IS AGAINST THE DISALLOWANCE OF THE MANAGERIAL REMUNERATION PAID TO THE MANAGING DIRECTOR SH. ANSHUL CHAWLA OF RS. 36 LACS. 5. THE HONBLE BOMBAY HIGH COURT IN CIT VS. INDO SA UDI SERVICES (TRAVEL) (P.) LTD. (2008) 219 CTR 562 (BOM) HAD LAI D DOWN THE PROPOSITION THAT WHERE THE ASSESSEE AND ITS SUBSIDIARY WERE IN THE SAME TAX BRACKET AND PAID SAME RATE OF TAX, THERE WAS NO QUESTION OF DIVERSION OF FUNDS BY PAYING HIGHER RATE TO THE SUBSIDIARY COMPANY AND HE NCE NO DISALLOWANCE ITA NO.172/DEL/2019 3 UNDER SECTION 40(A)(2) OF THE ACT. APPLYING THE SAI D PROPOSITION TO THE FACTS OF THE CASE WHERE THE DIRECTOR SHRI. ANSHUL C HAWLA IS ASSESSED TO TAX AND HAS PAID TAXES ON THE SAID REMUNERATION REC EIVED BY HIM THEN IT CANNOT BE SAID THAT THERE WAS DIVERSION OF FUNDS B Y THE ASSESSEE TO ITS MANAGING DIRECTOR FOR TAX AVOIDANCE. HENCE THERE I S NO MERIT IN MAKING ANY DISALLOWANCE ON ACCOUNT OF THE SAID MANAGERIAL REMUNERATION PAID TO THE MANAGING DIRECTOR. ACCORDINGLY, WE DIRECT THE A O TO ALLOW EXPENDITURE OF RS. 36 LACS. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2020. SD/- (SUSHMA CHOWLA) !' / VICE PRESIDENT / DATED : 21 ST FEBRUARY, 2020 SH -2+)%.345-4.6 COPY OF THE ORDER IS FORWARDED TO : 1. '( / THE APPELLANT 2. )*'( / THE RESPONDENT 3. 7. 8 9 / THE CIT(A) 4. : 7. / THE PR. CIT 5. 6. 4;<)%.% / DR, ITAT, DELHI <=&>6 GUARD FILE. -2 / BY ORDER , *4.)%. // TRUE COPY // ? @ABC , ASSISTANT REGISTRAR, ITAT, DELHI