M/s. VLCC Health Care (P) Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 1960/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 4798 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 03-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RAKASH DUBEY SENIOR
• Keywords: Additional evidence; Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.1960/DEL./2017 (ASSESSMENT YEAR : 2010-11) M/S. VLCC HEALTH CARE (P) LTD., VS. ADDL.CIT, RANG E 17, M 14, COMMERCIAL COMPLEX, NEW DELHI. GREATER KAILASH PART II, NEW DELHI 110 048. (PAN : AAACC4808P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.K. BINDAL, CA MS. SWEETY KOTHARI, CA MS. RINKY SHARMA, CA REVENUE BY : SHRI PRAKASH DUBEY, SENIOR DR DATE OF HEARING : 03.02.2021 DATE OF ORDER : 10.02.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. VLCC HEALTH CARE (P) LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 25.01.2017 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-9, NEW DELHI QUA THE ASSESS MENT YEAR 2010-11 ON THE GROUND THAT :- ITA NO.1960/DEL./2017 2 THE CIT (A) ERRED IN LAW AND ON FACTS IN CONFIRMI NG THE DISALLOWANCE OF AN AMOUNT OFRS.6,73,933/- BEING 35% OF THE REMUNERATION PAID TO MS. PALLAVI LUTHRA, DAUGHTER O F THE DIRECTOR OF THE ASSESSEE, U/S 40A(2)(B) OF THE ACT MERELY ON SU RMISES IGNORING THE FACTS AND EVIDENCES PLACED ON RECORD REGARDING HER QUALIFICATION AND RESPONSIBILITIES UNDERTAKEN BY HER IN THE BUSINESS OF THE ASSESSEE. THUS THE DISALLOWANCE SO MADE SHOULD BE DELETED. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : THE ASSESSEE HAS CHALLENG ED THE CONFIRMATION OF DISALLOWANCE OF AN AMOUNT OF RS.6,7 3,933/- BEING 35% OF THE REMUNERATION PAID TO MS. PALLAVI LUTHURA, ON E OF THE DIRECTOR OF THE ASSESSEE, UNDER SECTION 40A(2)(B) OF THE INCOME -TAX ACT, 1961 (FOR SHORT THE ACT) ON THE GROUND THAT ASSESSING OFFI CER (AO) HAS IGNORED THE FACTS AND EVIDENCES BROUGHT ON RECORD BY THE AS SESSEE QUA QUALIFICATION AND RESPONSIBILITY UNDERTAKEN BY MS. PALLAVI LUTHURA IN THE BUSINESS OF THE ASSESSEE. 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS CONFIRMED THE ADDITION MA DE BY THE AO BY PARTLY ALLOWING THE APPEAL. FEELING AGGRIEVED BY T HE ORDER PASSED BY THE LD. CIT (A), THE ASSESSEE HAS COME UP BEFORE THE TR IBUNAL 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 R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, AO/CIT(A) WHILE DISALLOWING THE AM OUNT OF RS.6,73,933/- BEING 35% OF THE REMUNERATION PAID TO MS. PALLAVI ITA NO.1960/DEL./2017 3 LUTHURA HAVE NOT DISPUTED QUALIFICATIONS AND DUTIES /RESPONSIBILITIES ASSIGNED TO MS. PALLAVI LUTHURA BY THE ASSESSEE COM PANY. IT IS ALSO NOT IN DISPUTE THAT NO COMPARABLE CASE VIS--VIS ASSESS EE HAS BEEN TAKEN TO EXAMINE THE FUNCTIONAL PROFILE OF MS. PALLAVI LUTHU RA WHILE DISALLOWING 35% OF THE REMUNERATION PAID TO HER. 6. WHEN WE EXAMINE PARA 4.1 OF THE IMPUGNED ORDER P ASSED BY THE LD. CIT (A) WHICH IS THE SUBMISSIONS MADE BY THE AS SESSEE HIGHLIGHTING QUALIFICATIONS AND WORK ASSIGNED TO HER, IT IS SURP RISING TO NOTE THAT THE REVENUE HAS ACCEPTED WORKING OF MS. PALLAVI LUTHURA AS A DIRECTOR AND ALLOWED 65% OF THE AMOUNT PAID TO HER BUT IT IS BEY OND COMPREHENSION AS TO HOW THEY HAD REACHED THE CONCLUSION THAT OUT OF THE 100% OF THE WORK ASSIGNED TO MS. PALLAVI LUTHURA BY THE ASSESSE E COMPANY, 35% OF THE SAME WAS FOUND INGENUINE. THE ENTIRE DISALLOWA NCE IS ON THE BASIS OF CONJECTURES AND SURMISES. 7. AO ALSO BROUGHT ON RECORD THE FACT THAT MS. PALL AVI LUTHURA WAS DIRECTOR HAVING 50% OF THE SHAREHOLDING IN ANOTHER COMPANY CALLED CLOUD CUCKOO FARM DURING THE YEAR UNDER ASSESSMENT BUT ASSESSEE STATED THAT CLOUD CUCKOO FARMS PROFIT IS NIL AND B ROUGHT ON RECORD ITS BALANCE SHEET IN ADDITIONAL EVIDENCE. AGAIN, IT IS SURPRISING TO DISALLOW 35% OF THE REMUNERATION, PARTICULARLY WHEN GENUINEN ESS OF THE JOB PROFILE HAS NOT BEEN QUESTIONED, MERELY ON THE GROU ND THAT MS. PALLAVI LUTHURA WAS A DIRECTOR IN CLOUD CUCKOO FARM. IT IS ALSO A MATTER OF FACT ON RECORD THAT MS. PALLAVI LUTHURA WAS A WHOLE TIME DIRECTOR IN THE ITA NO.1960/DEL./2017 4 ASSESSEE COMPANY AND WAS PAID REMUNERATION FOR THE WORK ASSIGNED TO HER DURING THE YEAR UNDER ASSESSMENT. SO, WE ARE O F THE CONSIDERED VIEW THAT MERELY ON THE BASIS OF CONJECTURES AND SURMISE S, PROVISIONS CONTAINED U/S 40A(2)(B) CANNOT BE ALLOWED TO BE INV OKED PARTICULARLY WHEN GENUINENESS OF THE SERVICES RENDERED ARE NOT I N DISPUTE. SO, WE ARE OF THE CONSIDERED VIEW THAT AO AS WELL AS LD. C IT (A) HAVE ERRED IN DISALLOWING THE REMUNERATION TO THE TUNE OF 35% PAI D TO MS. PALLAVI LUTHURA BY THE ASSESSEE COMPANY, HENCE ORDERED TO B E DELETED. CONSEQUENTLY, THE APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 10 TH DAY OF FEBRUARY , 2021. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 10 TH DAY OF FEBRUARY, 2021 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-9, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.