DCIT, New Delhi V. M/s. DCM Ltd., New Delhi

ITA 1895/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7296 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 25-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMINDER KAUR
• Keywords: Bad and doubtful debts; Notional interest
• Section: 143(3); 14A

Judgement Text

ITA NO S . 1666 & 1895 / DEL/ 20 12 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B , NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI H.S. SIDHU , JUDICIAL MEMBER I.T.A. NO. 1666/DEL/2012 A.Y. : 200 7 - 0 8 DCM LIMITED, 6 TH FLOOR, VIKRANT TOWER, 4, RAJINDRA PLACE, NEW DELHI (PAN: AAACD1012E) VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 10(1), CENTRAL REVENUE BUILDING, NEW DELHI (APPELLANT) (RESPONDENT) AND I.T.A. NO. 1895/DEL/2012 (A.Y. 200 7 - 0 8 ) DCIT, CIRCLE 10(1), NEW DELHI DCM LIMITED, 6 TH FLOOR, VIKRANT TOWER, 4, RAJINDRA PLACE, NEW DELHI (PAN: AAACD1012E) ASSESSEE BY : SH. PRADEEP DINODIA, CA AND MR. VP GUPTA, ADV. DEPARTMENT BY : SMT. PARMINDER KAUR, SR. DR DATE OF HEARING : 10 . 9 .2014 DATE OF PRONOUNCEMENT: 26 .9 .2014 ITA NO S . 1666 & 1895 / DEL/ 20 12 2 ORDER PER H.S. SIDHU : J M TH ESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE EMANUATE OUT OF THE ORDER DATED 09.2.2012 PASSED BY THE LD. CIT(A) - V, NEW DELHI PERTAINING TO ASSESSMENT YEAR 200 7 - 0 8 . 2. THE GROUND RAISED IN THE ASSEESSE S APPEAL READ AS UNDER: - 1. THAT THE CIT(A) ERRED IN DISALLOWING ALTERNATE CLAIM MADE BY THE APPELLANT ON ACTUAL PAYMENT BASIS IN RESPECT OF FOLLOWING ITEMS OF EXPENSES INCURRED IN RELATION TO REAL ESTATE PROJEC T WITHOUT APPRECIATING THAT CLAIM HAD BEEN MADE BY THE APPELLANT FOR THE REASON THAT DEPARTMENT WAS NOT ACCEPTED ALLOWABILITY OF EXPENSES ON ACCRUAL BASIS AND APPEALS IN RESPECT OF THEREOF ARE PENDING FOR ADJUDICATION BEFORE THE DELHI HIGH COURT. A) PAYMENT ON ACCOUNT OF FLY OVER COST TO MCD RS. 605.00 LACS. B) PAYMENT ON ACCOUNT OF INTEREST ON FLY OVER COST TO MCD RS. 172.06 LACS. C) PAYMENT OF PRINCIPLE AMOUNT TO BUILDERS RS. 44.00 LACS. D) EXPENDITURE IN RESPECT OF APPROVALS AND PERMISSIONS RS. 60.09 LA CS. E) EXPENDITURE ON REMOVAL OF SQUATTERS RS. 37.25 LACS. 2. THAT THE ORDER PASSED BY THE ASSESSING OFFICER AND UPHELD BY THE CIT(A) IS BAD IN LAW. 3. THAT THE APPELLANT COMPANY CRAVES LEAVE TO ALTER, AMEND, VARY AND / OR ADD ANY OF THE GROUNDS OF APPEA L AT ANY TIME HEREINAFTER. ITA NO S . 1666 & 1895 / DEL/ 20 12 3 3. THE GROUND RAISED IN THE REVENUE S APPEAL READ AS UNDER: - 1. WHETHER THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IS CORRECT IN DELETING THE DEDUCTION OF RS. 110.08 LACS ON ACCOUNT OF INTEREST PAYAB LE ON ACCRUAL BASIS TO MCD. 2. WHETHER THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IS CORRECT IN DELETING THE DISALLOWANCE OF RS. 22.32 LACS MADE BY THE AO ON ACCOUNT OF INTEREST ON INTEREST FREE LOANS. 3. WHETHER THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IS CORRECT IN RESTRICTING THE DISALLOWANCE TO RS. 11,77,550/ - AS AGAINST RS. 23,66,795/ - MADE BY THE AO U/S. 14A OF THE I.T. ACT. 4. WHETHER THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW IS CORRECT IN DELETING THE DISALLOWANCE OF RS. 1,09,128/ - MADE BY THE AO ON ACCOUNT OF THE PRIOR PERIOD EXPENSES. 5. WHETHER THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IS CORRECT IN DELETING THE DISALLOWANCE OF RS. 9,46,196/ - MADE BY THE AO ON ACCOUNT OF GRATUITY AND LEAVE ENCASHMENT. 6. THE APPELLANT CRAVES LEAVE, TO ADD, ALTER OR AMEND ANY GR OUND OF APPEAL RAISED ABOVE AT THE TIME OF THE HEARING. ITA NO S . 1666 & 1895 / DEL/ 20 12 4 IT IS PRAYED THAT THE ORDER OF THE CIT(A), BEING CONTRARY TO THE FACTS ON RECORD AND THE SETTLED POSITION OF LAW, BET SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF YARN, IT INFRASTRUCTURE SERVICE AND SOFTWARE DEVELOPMENT AND REAL ESTATE. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT U/S. 143(3) AT NIL IN COME AS AGAINST RETURNED LOSS OF RS. 8,34,08,093/ - AFTER MAKING FOLLOWING ADDITIONS AS UNDER: - A) FLYOVER PRINCIPLE AND INTEREST RS. 7,77,06,000/ - B) BUILDER PAYMENT PRINCIPLE RS. 4,40,00,000/ - C) BUILDER PAYMENT INTEREST RS. 2,51,03,000/ - D) APPROVA L/PERMISSION AND REMOVAL OF SQUATTERS RS. 97,84,000/ - E) INTEREST ON INTEREST FREE ADVANCES RS. 22,32,000/ - . F) EXPENSES INCURRED FOR EARNING DIVIDEND INCOME RS. 23,66,795/ - . G) PRIOR PERIOD EXPENSES RS. 1,09,128/ - 5 . AGAINST THE ABOVE ORDER DATED 29.12.2009 OF THE ASSESSING OFFICER PASSED U/S. 143(3) OF THE I.T. ACT, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 9.2.2012 PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. ITA NO S . 1666 & 1895 / DEL/ 20 12 5 6 . AGAINST THE ABOVE ORDER THE ASSESSEE AND REVENUE ARE I N APPEAL BEFORE US. 7 . DURING THE HEARING LD. COUNSEL OF THE ASSESSEE HAS SUBMITTED A CHART CONTAINING WHICH SHOWS THAT THE GROUNDS/ISSUES FILED BY THE ASSESSEE ARE SQUARELY COVERED AGAINST THE ASSESEE COMPNAY IN VIEW OF THE ORDER OF ITAT FOR THE DIFFEREN T ASSESSMENT YEARS AS UNDER: - DISALLOWING THE ATERNATE CLAIM MADE BY THE COMPANY ON ACTUAL PAYMENT BASIS FOR THE REASON THAT DEPARTMENT IS DISPUTING THE ALLOWABILITY OF EXPENSES ON ACCRUAL BASIS IN RESPECT OF: - 7.1 AS REGARDS PAYMENT ON ACCOUNT OF FLY OVER COST TO MCD RS. 605.00 LACS IS CONCERNED, WE FIND THAT ITAT IN ASSESSEE S OWN CASE FOR THE ASSTT. YEAR 2004 - 05 IN ITA NO. 2799/DEL/2008 & ORS. HAS ADJUIDCIATED THE MATTER AS UNDER: - 5. WE HAVE CONSDIERED THE RIVAL SUBMISSIONS. IN REGARD TO THE ISSUE OF DISALLOWANCE OF RS. 12.21 CRORES BEING THE EXPENSES WHICH HAD BEEN DISALLOWED BY THE AO AS ALSO THE ISSUE OF DISALLOWANCE OF FLY OVER COST OF RS. 13.50 CROES AND THE ISSUE OF INTEREST P AYABLE TO MCD IN RESPECT OF OUTSTANDING FLYOVER COST, IT IS NOTICED THAT FOR THE ASSESSMENT YEAR 1993 - 94 TO 1996 - 97 THE REVENUE HAS INCLUDED THE INCOME ON THE SALE OF PROPERTY RIGHTS ON THE ENTERING INTO THE AGREEMENT WITH THE BUYERS AND THE EXPENSES ON A CCOUNT OF LAND AND DEVELPOMENT INCURRED ITA NO S . 1666 & 1895 / DEL/ 20 12 6 BY THE ASSESSEE HAS BEEN ALLOWED IN PROPORTION TO THE AREA SOLD BY APPLYING THE MATCHING PRINCIPLE. IT IS ALSO NOTICED THAT IN THE LATER YEARS, THE ASSESEE HAS ACCEPTED THE STAND OF THE REVENUE AND HAS ALSO BEEN F OLLOWING THE SAME PRACTICE. FOR THE RELEVANT ASSESSMENT YEAR, IT IS NOTICED THAT THE AO HAS CHANGED HIS STAND JUST BECAUSE THE ASSESSEE HAS TRANSFERRED THE COMPLETE RIGHTS IN THE PROJECT AS A WHOLE TO M/S PUREARTH INFRASTRUCTURE LTD. WHEN A PARTICULAR MET HOD OF COMPUATION OF INCOME OF THE ASSESSEE HAS BEEN FOLLOWED AND HAS BEEN ACCEPTED AND IS ALSO FOLLOWED BY THE REVENUE AND THE ASSESSEE, JUST BECAUSE THE TOTAL RIGHTS IN THE PROJECT HAS BEEN TRANSFERRED, SUCH METHOD CANNONT BE CHANGED AS BY THE CHANGE OF THE METHOD, THE EXPENSES OTHERWISWE ALLOWABLE TO THE ASSESSEE, IS NOW BEING DENIED WHICH IS NOT A PERMISSIBLE ACT. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ACTION OF THE LD. CIT(A) IN DIRECTING THE AO TO ALLOW THE DEDUCTION OF THE SAID EXPENS ES IS ON RIGHT FOOTING AND DO NOT CALL FOR ANY INTERFERENCE. 7.2 AS REGARDS PAYMENT ON ACCOUNT OF INTEREST ON FLY OVER COST TO MCD RS. 172.06 LACS IS CONCERNED , WE FIND THAT ITAT IN ASSESSEE S OWN CASE FOR THE ASSTT. YEAR 2006 - 07 IN ITA NO. 314/DEL/ 10 & ORS. . HAS ADJUIDCIATED THE MATTER AS UNDER: - ITA NO S . 1666 & 1895 / DEL/ 20 12 7 2.1 IT IS THE COMMON CASE OF BOTH THE PARTIES THAT THE GROUNDS STAND COVERED IN FAVOR OF THE ASSESSEE COMPANY BY THE ORDER OF THE TRIBUNAL IN ITA NO. 1983/DEL/09 FOR ASSESSMENT YEAR 2005 - 06 DATED 17.1 1.2009, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK ON PAGE NOS. C - 3 TO C - 10. IN THIS ORDER, RELIANCE HAS BEEN PLACED ON THE RODERS OF THE TRIBUNAL FOR EARLIER YEARS IN THE CASE OF THE ASSESSEE. THEREFORE, WE THINK IT FIT TO REPRODUCE THE PARAGRAPH FROM THAT ORDER, WHICH AS DISCUSSED THE ISSUE IN DETAIL. N REGARD TO GROUND NO. 2 REGARDING INTEREST OF RS. 67.20 LAC PAYABLE TO MCD FOR NON PAYMENT OF FLYOVER COST IN TIME, THE DECISION HAS BEEN AS UNDER: - WE HAVE CONSDIERED THE RIVAL SUBMISSIONS. IN REGARD TO THE ISSUE OF DISALLOWANCE OF RS. 12.21 CRORES BEING THE EXPENSES WHICH HAD BEEN DISALLOWED BY THE ASSESSING OFFICER AS ALSO THE ISSUE OF DISALLOWACNE OF FLY OVER COST OF RS. 13.50 CRORES AND THE ISSUE OF INTEEST PAYABLE TO MCD IN RESPECT OF OU TSTANDING FLYOVER COST, IT IS NOTICED THAT FOR THE ASSESSMENT YEAR 1993 - 94 TO 1996 - 97 THE REVENUE HAS INCLUDED THE INCOME ON THE SALE ITA NO S . 1666 & 1895 / DEL/ 20 12 8 OF PROPERTY RIGHTS ON THE ENTERING INTO AGREEMENT WITH THE BUYERS AND THE EXPENSES ON ACCOUNT OF LAND AND DEVELOPMENT INC URRED BY THE ASSESSEE HAS BEEN ALLOWED IN PROPORTION TO THE AREA SOLD BUT APPLYING THE MATCHING PRINCIPLE. IT IS ALSO NOTICED THAT IN THE LATER YEARS, THE ASSESSEE HAS ACCEPTED THE STAND OF THE REVENUE AND HAS ALSO BEEN FOLLOWING THE SAME PRACTICE. FOR TH E RELEVANT ASSESSMENT YEAR, IT IS NOTICED THAT THE ASSESISNG OFFICER HAS CHANGED HIS STAND JUST BECAUSE THE ASSESSEE HAS TRANSFERRED THE COMPLETE RIGHTS IN THE PROJECT AS A WHOLE TO M/S PUREARTH INFRRASTRUCTURE LTD. WHEN A PARTICULAR METHOD OF COMPUATION OF INCOME OF THE ASSESEE HAS BEEN FOLLOWED AND HAS BEEN ACCPETED AND IS ALSO FOLLOWED BY THE REVENUE AND THE ASSESSEE, JUST BECAUSE THE TOTAL RIGHTS IN THE PROJECT HAS BEEN TRANSFERRED, SUCH METHOD CANNOT BE CHANGED AS BY THE CHANGE OF THE METHOD, THE EX SPENSES OTHERWISE ALLOWABLE TO THE ASSESSEE, IS NOW BEING DENIED WHICH IS NOT A PERMISSIBLE ACT. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ACTION OF THE ITA NO S . 1666 & 1895 / DEL/ 20 12 9 CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEDUCTION OF THE SAID EXPENSES IS ON RIGHT FOOTING AND DO NOT CALL FOR ANY INTERFERENCE. 7.3 AS REGARDS PAYMENT OF PRINCIPLE AMOUNT TO BUILDERS RS. 44.00 LACS. IS CONCERNED , WE FIND THAT ITAT IN ASSESSEE S OWN CASE FOR THE ASSTT. YEAR 2005 - 06 IN ITA NO. 1983/DEL/2009& ORS. . HAS ADJ UIDCIATED THE MATTER AS UNDER: - 5.4 WITH REGARD TO CLAIM OF DEDUCTION OF RS. 29 LACS ACTUALLY PAID TO THE BUILDERS HAVE ALREADY BEEN ALLOWED BY THE TRIBUNAL ON ACCRUAL BASIS IN THE ASSESSMENT YEAR 2004 - 05, HENCE, ALTERNATE CLAIM FOR DEDUCTION ON ACTUAL PA YMENT BASIS IS NOT ALLOWABLE DURING THE YEAR UNDER CONSIDERATION. 7.4 EXPENDITURE IN RESPECT OF APPROVALS AND PERMISSIONS RS. 60.09 LACS. IS CONCERNED , WE FIND THAT ITAT IN ASSESSEE S OWN CASE FOR THE ASSTT. YEAR 2006 - 07 IN ITA NO. 314/DEL/10 & ORS. . HAS ADJUIDCIATED THE MATTER AS UNDER: - 3.1 IN REGARD TO EXPENDITRUE INCURRED ON APPROVALS AND PERMISSIONS, THE FINIDNG OF THE TRIBUNAL IS AS UNDER: - N RESPECT OF THE CLAIM OF DEDUCTION OF EXPENSES INCURRED FOR OBTAINING APPROVAL AND PERMISSION FOR REA L ESTATE PROJECT AS ALSO ITA NO S . 1666 & 1895 / DEL/ 20 12 10 THE EXPENSES CLAIEMD AS DEDUCTION AS AN ESTIMATED EXPENDTIURE FOR THE VACATION OF QUARTERS, REMOVAL OF SQUATTERS, IT IS NOTICED THAT THE LEARNED CIT(A) HAS RIGHLY LOOKED INTO THE MATTER AND HAS AFTER CONSIDERING THE EXPENSES WHI CH HAVE BEEN INCURRED SUBSEQUENT TO THE CLAIM, HAS GRANTED THE PROPORTIONATE RELIEF TO THE ASSESSEE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE PROPORTIONATE EXPENSES AS ALLOWED TO THE ASSESSEE, IS ON A SCIENTIFIC AND AN ACCEPTABLE PRINCIPLE AF TER CONSIDERING THE EXPENSES CLAIMED AND THE POSSIBLE FUTURE LIABLIITY AND CONSEQUENTLY NO INTERFERENCE IS CALLED FOR. IN THESE CIRCUMSTANCES, THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE ARE UPHELD. 7.5 EXPENDITURE ON REMOVAL OF SQUATTERS RS. 37.25 LACS. IS CONCERNED , WE FIND THAT ITAT IN ASSESSEE S OWN CASE FOR THE ASSTT. YEAR 2006 - 07 IN ITA NO. 314/DEL/10 & ORS. . HAS ADJUIDCIATED THE MATTER AS UNDER: - 3.2 IN REGARD TO EXPENDITURE INCURRED ON REMOVAL OF SQUATTERS, THE DECISION OF THE TRIBUNAL IS AS UNDER: - ITA NO S . 1666 & 1895 / DEL/ 20 12 11 WITH REGARD TO THE GROUND TAKEN FOR DEDUCTION OF RS. 26.50 LACS PAID FOR REMOVAL OF SQUATTERS ETC., TRIBUNAL IN THE IMMEDIATELY PRECEDING ASSESSMENT YEA R HAS ALREADY ALLOWED THE CLAIM ON ACCRUAL BASIS, HENCE, ALTERNATE CLAIM FOR DEDUCTION ON ACCRUAL PAYMENT BASIS DURING THE YEAR UNDER CONSIDERATION IS NOT ALLOWABLE. 7 . 1 FROM THE AFORESAID DISCUSSION, WE FIND THAT ALL THE ISSUES RASIED BY THE ASSESSEE IN ITS APPEAL ARE COVERED AGAINST THE ASSESSEE BY THE DIFFERENT ORDERS OF THE ITAT FOR THE SEPARATE ASSESSMENT YEARS, AS AFORESAID. HENCE, RESPECTFULLY FOLLOWING THE PRECEDENT, WE DISMISS ALL THE AFORESAID GROUNDS OF THE ASSESSEE. 8 . IN THE RESULT, T HE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. REVENUE S APPEAL 9 . WITH REGARD TO GROUND WHETHER THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IS CORRECT IN DELETING THE DEDUCTION OF RS. 110.08 LACS ON ACCOUNT OF INTEREST PAYA BLE ON ACCRUAL BASIS TO MCD LACS IS CONCERNED , WE FIND THAT ITAT IN ASSESSEE S OWN CASE FOR THE ASSTT. YEAR 2006 - 07 IN ITA NO. 314/DEL/10 & ORS. . HAS ADJUIDCIATED THE MATTER AS UNDER: - ITA NO S . 1666 & 1895 / DEL/ 20 12 12 2.1 IT IS THE COMMON CASE OF BOTH THE PARTIES THAT THE GROUNDS STAND COVERED IN FAVOR OF THE ASSESSEE COMPANY BY THE ORDER OF THE TRIBUNAL IN ITA NO. 1983/DEL/09 FOR ASSESSMENT YEAR 2005 - 06 DATED 17.11.2009, A COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK ON PAGE NOS. C - 3 TO C - 10. IN THIS ORDER, RELIANCE HAS BEEN PLACED ON THE RODERS OF THE TRIBUNAL FOR EARLIER YEARS IN THE CASE OF THE ASSESSEE. THEREFORE, WE THINK IT FIT TO REPRODUCE THE PARAGRAPH FROM THAT ORDER, WHICH AS DISCUSSED THE ISSUE IN DE TAIL. N REGARD TO GROUND NO. 2 REGARDING INTEREST OF RS. 67.20 LAC PAYABLE TO MCD FOR NON PAYMENT OF FLYOVER COST IN TIME, THE DECISION HAS BEEN AS UNDER: - WE HAVE CONSDIERED THE RIVAL SUBMISSIONS. IN REGARD TO THE ISSUE OF DISALLOWANCE OF RS. 12.21 C RORES BEING THE EXPENSES WHICH HAD BEEN DISALLOWED BY THE ASSESSING OFFICER AS ALSO THE ISSUE OF DISALLOWACNE OF FLY OVER COST OF RS. 13.50 CRORES AND THE ISSUE OF INTEEST PAYABLE TO MCD IN RESPECT OF OUTSTANDING FLYOVER COST, IT IS NOTICED THAT FOR THE AS SESSMENT YEAR 1993 - 94 TO 1996 - 97 THE REVENUE HAS INCLUDED THE INCOME ON THE SALE OF PROPERTY RIGHTS ON THE ENTERING INTO AGREEMENT WITH THE BUYERS AND THE EXPENSES ON ACCOUNT OF LAND AND DEVELOPMENT INCURRED BY THE ASSESSEE HAS BEEN ITA NO S . 1666 & 1895 / DEL/ 20 12 13 ALLOWED IN PROPORTION TO THE AREA SOLD BUT APPLYING THE MATCHING PRINCIPLE. IT IS ALSO NOTICED THAT IN THE LATER YEARS, THE ASSESSEE HAS ACCEPTED THE STAND OF THE REVENUE AND HAS ALSO BEEN FOLLOWING THE SAME PRACTICE. FOR THE RELEVANT ASSESSMENT YEAR, IT IS NOTICED THAT THE AS SESISNG OFFICER HAS CHANGED HIS STAND JUST BECAUSE THE ASSESSEE HAS TRANSFERRED THE COMPLETE RIGHTS IN THE PROJECT AS A WHOLE TO M/S PUREARTH INFRRASTRUCTURE LTD. WHEN A PARTICULAR METHOD OF COMPUATION OF INCOME OF THE ASSESEE HAS BEEN FOLLOWED AND HAS BE EN ACCPETED AND IS ALSO FOLLOWED BY THE REVENUE AND THE ASSESSEE, JUST BECAUSE THE TOTAL RIGHTS IN THE PROJECT HAS BEEN TRANSFERRED, SUCH METHOD CANNOT BE CHANGED AS BY THE CHANGE OF THE METHOD, THE EXSPENSES OTHERWISE ALLOWABLE TO THE ASSESSEE, IS NOW B EING DENIED WHICH IS NOT A PERMISSIBLE ACT. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ACTION OF THE CIT(A) IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEDUCTION OF THE SAID EXPENSES IS ON RIGHT FOOTING AND DO NOT CALL FOR ANY INTERFERENCE. 9 .1 WITH REGARD TO GROUND WHETHER THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IS CORRECT IN DELETING THE DISALLOWANCE OF RS. 22.32 LACS MADE BY THE AO ON ACCOUNT OF NOTIONAL INTEREST ON INTEREST FREE ADVANCES TO THE DCP EMPLOYE ES TRUST LACS IS CONCERNED , WE FIND THAT ITAT IN ASSESSEE S OWN CASE FOR THE ASSTT. YEAR 2006 - 07 IN ITA NO. 314/DEL/10 & ORS. . HAS ADJUIDCIATED THE MATTER AS UNDER: - ITA NO S . 1666 & 1895 / DEL/ 20 12 14 2.2 IN REGARD TO NOTIONAL INTEREST, THE FINDING OF THE TRIBUNAL HAS BEEN AS UNDER: - N REGARD TO THE ISSUE OF DISALLOWANCE OF INTEREST ON THE LOANS OUTSTANDING FROM M/S DCM EMPLOYEES WELFARE TRUST, IT IS NOTICED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2003 - 04 REFERRED TO SUPRA AND CONSEQUENTLY RESPECTUFLLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE ASSESMENT YEAR 2003 - 04, THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE STAND UPHELD. 9 .2 WITH REGARD TO GROUND WHETHER THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IS CORRECT IN RESTRICTING THE DISALLOWANCE TO RS. 11,77,550/ - AS AGAINST RS. 23,66,795/ - MADE BY THE AO U/S. 14A OF THE I.T. ACT I S CONCERNED WE FIND THAT HON BLE DELHI HIGH COURT DECISION IN THE CASE OF MAXOPP INVESTMENT LTD. VS. CIT ORDER DATED 18.11.2011 HAS HELD THAT DISALLOWANCE HAS TO BE ON A REASONABLE BASIS AND RULE 8D IS NOT APPLICABLE TO THE ASSESSMENT YEAR PRIOR TO ASSTT. YEAR 2008 - 09. ACCO RDINGLY, WE FIND THAT LD. CIT(A) WAS CORRECT TO DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO RS. 11,77,550/ - (RS. 9,77,550/) ON ITA NO S . 1666 & 1895 / DEL/ 20 12 15 ACCOUNT OF INTEREST PLUS RS. 2 LACS ON ACCOUNT OF ADMINSITRATIVE EXPENSES) AS AGAINST DISALLOWNCE OF RS. 2366,795/ - MADE BY TH E AO. AND ACCORDINGLY, GAVE A RELIEF OF RS. 11,89,245/ - TO THE ASSESSEE WHICH DOES NOT NEED ANY INTEREFERENCE, HENCE, THE SAME IS UPHELD. ACCORDINGLY, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED. 9 .3 WITH REGARD TO GROUND WHETHER THE LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IS CORRECT IN DELETING THE DISALLOWANCE OF RS. 1,09,128/ - MADE BY THE AO ON ACCOUNT OF THE PRIOR PERIOD EXPENSES , IS CONCERNED WE FIND THAT AO HAS MADE THE DISALLOWANCE ON THE BASIS OF TAX AUDIT REP ORT WITHOUT CONSIDERING THE DETAILS AND THE NATURE OF EXPENSES. WE FIND THAT LD. CIT(A) HAS OBSEVED THAT THE EXPENSES ARE OF ROUTINE NATURE. WE ALSO FIND THAT LD. CIT(A) HAS OBSERVED THAT ITAT, DELHI IN THE CASE OF SRF LIMITED VS. DCIT (2009) 34 SOT 1 HAS OPINED THAT IN COMPANIES AMONTS ARE DEBITED ONLY ON RECEIPT OF THE BILLS AND AUTHORIZATION OF THE SAME. WE ALSO FIND THAT LD. CIT(A) FURTHER OPINED THAT SINCE THE EXPENSES ARE OF ROUTINE NATURE AND SAME ARE DULY ALLOWABLE, CLAIM OF THE COMPANY DES ERVES TO BE ALLOWED. KEEPING IN VIEW OF THE ABVOE, WE FIND CONSDIERABLE FORCE IN THE ADJUDICATION GIVEN BY THE LD. CIT(A), HENCE, WE UPHOLD THE SAME. ACCORDINGLY, THIS GROUND RAISED BY THE REVENUE STANDS DISMISSED. 9 .4 WITH REGARD TO GROUND WHETHER TH E LD. CIT(A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IS CORRECT IN DELETING THE DISALLOWANCE OF RS. 9,46,196/ - MADE BY THE AO ON ACCOUNT OF GRATUITY AND LEAVE ENCASHMENT WE FIND THAT ITAT IN ASSESSEE S OWN CASE FOR THE ASSTT. YEAR ITA NO S . 1666 & 1895 / DEL/ 20 12 16 2006 - 07 IN ITA NO. 314/DEL/10 & ORS. . HAS ADJUIDCIATED THE MATTER AS UNDER: - 2.3 IN REGARD TO GROUND NO. 4 REGARDING PROVISION FOR GRAUITY AND LEAVE ENCASHMENT, THE FINDING OF THE TRIBUNAL IS AS UNDER: - IN REGARD TO THE ISSUE OF ADJUSTMENT MADE BY THE ASSESSIN G OFFICER IN RESPECT OF THE PROVISIONS FOR DOUBTFUL DEBTS AND ADVANCES, PROVISIONS FOR GRATUITY AND LEAVE ENCASHMENT AND ON ACCOUNT OF WELATH TAX PROVISION, IT IS NOTICED THAT THE ISSUE IS SQUARELY COVERED IN FAVOR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2003 - 04 REFERRED TO SUPRA AND CONSEQUENLTY, RESPECTUFLLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSEE S OWN CASE FOR THE ASSESSMENT YEA R 2003 - 04, THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE ARE UPHELD. IN THESE CIRCUMSTANCES, THE APPEAL OF ITA NO S . 1666 & 1895 / DEL/ 20 12 17 THE REVENUE AND / THE APPEAL OF THE ASSESSEE ARE DISMISSED. 10. KEEPIN G IN VIEW THE AFORESAID DISCUSISONS, THE DEPARTMENT AS WELL AS ASSESSEE APPEAL STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 26 - 9 - 2014. SD/ - SD/ - [ G.D. AGRAWAL ] [ H.S. SIDHU ] VICE PRESIDENT JUDICIAL MEMBER DATE 26 / 9 /201 4 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES ITA NO S . 1666 & 1895 / DEL/ 20 12 18