DCIT, Circle-1(1), Gurugram V. Abidi Yahiya Syed, Gurugram

ITA 1746/DEL/2019

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals)-2, Gurgaon, which had deleted several additions made by the AO for the Assessment Year 2014-15. The main issues in the appeal were related to the deletion of additions concerning travelling expenses, offsite/event expenses, and rental income. The Revenue contended that the CIT(A) erred in deleting these additions without proper examination of the applicability of TDS provisions and the justification for the expenses incurred. The Tribunal found that the CIT(A) and the AO did not adequately examine whether the TDS provisions were applicable to the travelling and offsite/event expenses, necessitating a re-examination by the AO. However, for the rental income issue, the Tribunal upheld the CIT(A)'s decision as the AO did not contest the CIT(A)'s findings.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113149 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 16-05-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 28-02-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; TDS; Set aside
• Section: 37; 40(a)(ia); 194C

Judgement Text

I.T.A. No. 1746/Del/2019 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” NEW DELHI BEFORE SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER आ .अ.स ं /.I.T.A No.1746/Del/2019 /Assessment Year:2014-15 DCIT Circle 1(1) Gurgaon, Haryana. ब म Vs. Abidi Yahiya Syed N-5/18, First Floor, DLF Phase- 2, Gurgaon, Haryana. PAN No. AAAPG2554K अ Appellant /Respondent Revenue by Shri Kanv Bali, Sr. DR Assessee by Shri C.S. Anand, Adv. स ु नवाईक तारीख/ Date of hearing: 17.05.2023 उ ोषणाक तारीख/Pronouncement on 31.05.2023 आदेश /O R D E R PER C.N. PRASAD, J.M. This appeal is filed by the Revenue against the order of Ld. Commissioner of Income Tax (Appeals)-2, Gurgaon dated 28.12.2018 for the AY 2014-15. The Revenue raised the following grounds: - 1. “Ld.CIT(A) has erred in deleting the addition of Rs.56,34,534/- made by the AO on account of travelling expenses since the Ld.CIT(A) has not considered the facts that the assessee has not explained how the air tickets were booked i.e. whether the booking was made through the travel agent or directly from the airlines or otherwise. I.T.A. No. 1746/Del/2019 2 2. Ld.CIT(A) has erred in deleting the addition of Rs.3,43,01,167/- made by the AO on account of expenses without discussing the applicability of TDS and corresponding disallowance u/s 40(a)(ia) of the I.T. Act, 1961. 3. Ld.CIT(A) has erred in deleting the addition of Rs.14,88,242/- made by the AO on account of rental income without justification for incurring expenses and vouchers. 4. That the appellant craves for the permission to add, delete or amend grounds of appeal before or at the time of hearing of appeal.” 2. Ground no. 1 of grounds of appeal is relating to deletion of addition made on account of travelling expenses. In the course of assessment proceedings the Assessing Officer noticed that assessee incurred travelling expenses of Rs.56,34,534/- on which assessee has not deducted TDS. Assessee was required to furnish details of expenses including travelling along with details of TDS, supporting bills/vouchers. It is the finding of the AO that the assessee has submitted only the breakup of travelling expenses without any supporting bills/vouchers. On examining the breakup of travelling expenses the AO noticed that assessee has not deducted TDS and no reason for not deducting TDS has been submitted by the assessee and accordingly disallowance was made u/s 40(a)(ia) of the Act. On appeal the Ld.CIT(A) deleted the disallowance. 3. The Ld. DR submits that in the appeal proceedings the remand report was called for from the AO and the AO submitted remand I.T.A. No. 1746/Del/2019 3 report stating that the expenses are not covered under the provisions of Section 194C of the Act. The Ld. DR submits that based on the remand report the Ld.CIT(A) deleted the addition/disallowance on the ground that the assessee has produced the proof of expenses before the AO. The Ld. DR submits that the question is whether the travelling expenses incurred by the assessee can be subject matter of TDS or not was not at all examined by the Ld.CIT(A) but the disallowance was deleted only based on the observations of the AO that the provisions of Section 194C of the Act are not attracted. Therefore, Ld. DR submits that the matter may be restored back to the AO for denovo verification. 4. Ld. Counsel for the assessee reiterating the submissions made before the lower authorities submits that the TDS provisions are not applicable to the travelling expenses incurred by the assessee. 5. On hearing both the sides and perusing the order of the authorities below, we observe that the assessee did not produce any bills/vouchers etc. during the course of assessment proceedings. In the remand report the AO has simply stated that the provisions of Section 194C are not attracted to these expenses. The Ld.CIT(A) also has not given any finding as to whether the TDS provisions are applicable to the travelling expenses or not. Therefore, we are of I.T.A. No. 1746/Del/2019 4 the considered view that the matter has to be reexamined by the AO in accordance with law. Thus, the same is set aside to the file of the AO for denovo examination in accordance with law after providing adequate opportunity of being heard to the assessee. 6. The second ground of appeal is relating to deletion of addition made on account of offsite/event expenses disallowed u/s 40(a)(ia) of the Act. The Ld. DR submits that in this case also the assessee has not furnished complete details before the AO and not explained as to why the TDS was not made. The AO also observed that there were also personal expenses incurred by the assessee which were not allowable u/s 37 of the Act. Therefore, the AO disallowed the same u/s 40(a)(ia) of the Act and also u/s 37 of the Act. Ld. DR submits that the Ld.CIT(A) deleted the disallowance observing that the AO verified the bills/vouchers in the remand proceedings and the nature of expenditure is payment to hotels, forex payments and other petty payments, payments made for purchases at the time of events abroad or in India. The Ld. DR submits that in the remand proceedings the AO only stated that he has test checked the bills and vouchers and he has not given any finding that these expenses are not liable for TDS. Ld. DR further submits that even the Ld.CIT(A) has not examined as to whether any TDS provisions are I.T.A. No. 1746/Del/2019 5 attracted for the expenses incurred by the assessee. Therefore, the Ld. DR submits that the matter may be restored to the file of the AO for denovo adjudication after thorough verification. 7. On hearing both the sides and perusing the orders of the authorities below, we find that the Ld.CIT(A) has neither examined nor given any finding as to whether the provision of Section 40(a)(ia) of the Act are applicable for the expenses incurred by the assessee or not. There is no finding that if there are any personal expenses incurred by the assessee which were not allowable u/s 37 of the Act. Therefore, considering all these aspects, we are of the view that the issue has to be reexamined by the AO in accordance with law. Thus, we set aside the issue to the file of the AO to examine the issue thoroughly in accordance with law after providing adequate opportunity of being heard to the assessee. Ground nos. 1 & 2 are allowed for statistical purposes. 8. The last ground of appeal is in respect of deletion of addition made on account of rental income. The Ld. DR submits that the AO observed that the assessee has earned income of Rs.14,88,242/- from the guest house during the FY 2012-13. However, the assessee has not shown any income from the guest house during the subject assessment year. Ld. DR submits that the AO also observed that the I.T.A. No. 1746/Del/2019 6 assessee also incurred guest house expenses of Rs.5,30,742/- and, therefore, he has concluded that the assessee has not reported the income from guest house and the expenses cannot be allowed. On appeal the Ld.CIT(A) deleted the addition based on the remand report submitted by the AO. 9. The Ld. Counsel for the assessee submits that during the assessment year under consideration the guest house of the assessee was vacant and no income was earned from it. Ld. Counsel further submits that the assessee has also given declaration certificate stating that the company was in the business of guest house providing accommodation facility for corporate staff till the FY 2012-13 and due to certain financial reasons the assessee closed the said business. Ld. Counsel also submits that expenses of Rs.5,30,742/- which was incurred during the year were against the event expenses for transit accommodation of guest. Ld. Counsel submits that considering all these submissions and since there was no adverse comments given by the Ld.AO the addition was rightly deleted by the Ld.CIT(A). 10. Heard rival submissions, perused the orders of the authorities below. The contentions of rival parties have been considered by the Ld.CIT(Appeals) and the AO in the remand proceedings I.T.A. No. 1746/Del/2019 7 examined the issue and there was no adverse comments given by the AO. Therefore, based on the remand report the Ld.CIT(A) deleted the addition which in our view there is no valid reason to interfere with the findings of the Ld.CIT(A). The ground raised by the Revenue is dismissed. 11. In the result, appeal of the Revenue is partly allowed for statistical purpose. Order pronounced in the open court on 31.05.2023 Sd/- Sd/- (NARENDRA KUMAR BILLAIYA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 31.05.2023 *Kavita Arora, Sr. P.S. Copy of order sent to- Assessee/AO/Pr. CIT/ CIT (A)/ ITAT (DR)/Guard file of ITAT. By order Assistant Registrar, ITAT: Delhi Benches-Delhi