JCIT (OSD), New Delhi V. M/s. T.G. Leisure & Resorts Pvt. Ltd., New Delhi

ITA 2024/DEL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7331 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Keywords: Earning of tax free income; Additional evidence; Question of law; Rule 8D; Set aside
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2024/DEL./2016 (ASSESSMENT YEAR : 2012-13) DCIT, CIRCLE 25 (1), VS. M/S. T.G. LEISURE & RESOR TS PVT. LTD., NEW DELHI. KHASRA NO.646 653, MAIN CHATTARPUR, MANDIR ROAD, CHATTARPUR, NEW DELHI 110 074. (PAN : AABCT2479E) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DEEPENDRA MOHAN, CA REVENUE BY : MS. ASHIMA NEB, SENIOR DR DATE OF HEARING : 16.07.2019 DATE OF ORDER : 25.07.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, DCIT, CIRCLE 25 (1), NEW DELHI (HEREINA FTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 29.01.2016 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-9, NEW DELHI Q UA THE ASSESSMENT YEAR 2012-13 ON THE GROUNDS INTER ALIA T HAT :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE ORDER PASSED BY LD. CIT(A) IS ERRONEOUS AND THE LEARNED CIT(A) HAS ERRED IN DELETING ADDITION OF RS.5,10,00 0/- MADE BY AO ON ACCOUNT OF ADVANCE FROM CUSTOMERS. ITA NO.2024/DEL./2016 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ORDER PASSED BY LD.CIT(A) IS ERRONEOUS AND THE LEARNED CIT(A): I) HAS ERRED IN DELETING THE ADDITION OF RS.L,62,16 ,020/- MADE BY AO ON ACCOUNT OF SECTION 14A OF THE I.T. AC T. II) HAS FAILED TO APPRECIATE THAT THE OBSERVATIONS IN THE PARA 23 OF CHEMINVEST REGARDING THE QUESTION OF LAW ARE IN THE CONTEXT OF FACTS AND NOT APPLICABLE TO THE PRESENT CASE. III) HAS ERRED IN IGNORING CIRCULAR NO.5/2014 DATE D 11.02.2014 ISSUED BY CBDT THAT DISALLOWANCE OF EXPE NSES U/S 14A IN CASES WHERE CORRESPONDING EXEMPT INCOME HAS NOT BEEN EARNED DURING THE FINANCIAL YEAR. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS INTO THE BUSI NESS OF RESORT HOSPITALITY SERVICES WHO HAS ALSO EARNED RENTAL INC OME FROM RELIANCE COMMUNICATION LTD. DURING THE YEAR UNDER A SSESSMENT. DURING THE ASSESSMENT PROCEEDINGS, ASSESSING OFFICE R (AO) CALLED FOR THE DETAILS OF ADVANCES TAKEN BY THE ASSESSEE F ROM THE CUSTOMERS AS ON 31.03.2012, WHICH WAS FILED BY THE ASSESSEE. ON FAILURE OF THE ASSESSEE TO SUBSTANTIATE THE AMOUNT OF FINANCE TAKEN FROM ANKUR AGGARWAL, N.R. OHRI, PAWAN SHARMA AND SA R INVESTMENTS, AO TREATED THE AMOUNT OF RS.1,00,000/- AS CONCEALMENT OF INCOME AND BALANCE AMOUNT OF RS.4,10 ,000/- SHOWN AS CESSATION OF LIABILITY AND THEREBY MADE AD DITION OF RS.5,10,000/- TO THE TOTAL INCOME OF THE ASSESSEE. AO ALSO MADE ADDITION OF RS.1,62,16,020/- ON ACCOUNT OF DISALLOW ANCE MADE U/S 14A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT ) ON THE ITA NO.2024/DEL./2016 3 GROUND THAT NO DISALLOWANCE HAS BEEN MADE BY THE AS SESSEE COMPANY QUA THE EXPENDITURE INCURRED IN RESPECT OF INCOME NOT FORMING PART OF THE TOTAL INCOME. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION BY ALLOWIN G THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE T HE TRIBUNAL 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. GROUND NO.1 5. LD. DR FOR THE REVENUE CONTENDED THAT SINCE NO D ATE OF FUNCTION FOR WHICH ALLEGED ADVANCE IS DISCLOSED BY THE ASSESSEE, ADDITION IS LIABLE TO BE SUSTAINED AND THAT LD. CIT (A) HAS ADMITTED THE ADDITIONAL EVIDENCE AT THE BACK OF THE AO. 6. HOWEVER, ON THE OTHER HAND, LD. AR FOR THE ASSES SEE TO REPEL THE ARGUMENTS ADDRESSED BY THE LD. DR FOR THE REVEN UE CONTENDED INTER ALIA THAT ADVANCE BOOKING FROM THE CUSTOMERS WAS ENTERTAINED BY THE ASSESSEE TO PROVIDE BANQUETING FACILITIES AN D THEY PROVIDED TENTATIVE DATE TO ORGANIZE THE FUNCTION; THAT THE E NTIRE DETAILS HAVE BEEN PROVIDED TO THE AO QUA THE AMOUNT OF ADVANCE O F ITA NO.2024/DEL./2016 4 RS.2,46,47,871/- AND REFERRED TO FINDINGS RETURNED BY THE LD. CIT (A) IN THE IMPUGNED ORDER. LD. AR FOR THE ASSESSEE FURTHER CONTENDED THAT EVIDENCE FOR TAKING ADVANCE IN THE S HAPE OF COPY OF BILLS AND LEDGER ACCOUNTS OF THE PARTIES IS AVAILAB LE AT PAGES 53 TO 57 OF THE PAPER BOOK. 7. WHEN WE EXAMINE THE IMPUGNED ORDER PASSED BY THE LD. CIT (A), IT IS APPARENTLY CLEAR THAT ADDITION HAS BEEN DELETED ON THE BASIS OF EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE WHEREIN IT IS PROVED THAT FUNCTION OF ANKUR AGGARWAL AND H.R. OHR I TOOK PLACE ON 27.06.2012 AND 28.10.2012 RESPECTIVELY, COPY OF BILLS ISSUED ARE AVAILABLE AT PAGES 54 & 55 OF THE PAPER BOOK. ASSE SSEE ALSO PROVED FROM THE LEDGER ACCOUNT, AVAILABLE AT PAGES 56 & 57 OF THE PAPER BOOK THAT UNCLAIMED BALANCE IN CASE OF PAWAN SHARMA AND SAR INVESTMENTS AMOUNTING TO RS.50,000/- AND RS.3,6 0,000/- RESPECTIVELY HAS BEEN WRITTEN OFF. SINCE THE AMOUN T IN QUESTION FIGURED IN THE AUDITED BALANCE SHEET AND PROFIT & L OSS ACCOUNT OF THE ASSESSEE IS MADE AVAILABLE AT PAGES 3 TO 86 OF THE PAPER BOOK AND BOOKS OF ACCOUNTS HAVE BEEN ACCEPTED BY THE AO, THE SAME CANNOT BE DISPUTED BY THE AO. 8. MOREOVER, WHEN ASSESSEE HAS DULY EXPLAINED THE A DVANCES RECEIVED BY WAY OF BILLS AND LEDGER ACCOUNTS, AVAIL ABLE AT PAGES 53 TO 57 OF THE PAPER BOOK, HAVING BEEN ADJUSTED IN TH E SUBSEQUENT ITA NO.2024/DEL./2016 5 YEARS WHICH HAVE BEEN OFFERED AS INCOME, THE SAME C ANNOT BE TREATED AS CESSATION OF LIABILITY. 9. SO FAR AS QUESTION OF ENTERTAINING ADDITIONAL EV IDENCE BY THE LD. CIT (A) UNDER RULE 46A IS CONCERNED, THE SAME H AS BEEN ADMITTED ONLY AFTER CALLING THE REMAND REPORT FROM THE AO. SO, THE LD. CIT (A) HAS RETURNED THE FACTUAL FINDINGS ON TH E BASIS OF EVIDENCE BROUGHT ON RECORD, WE FIND NO GROUND TO IN TERFERE INTO THE DELETION OF ADDITION MADE BY THE LD. CIT (A). CONS EQUENTLY, GROUND NO.1 IS DETERMINED AGAINST THE REVENUE. GROUND NO.2 10. LD. CIT (A) HAS DELETED THE ADDITION OF RS.1,62 ,16,020/- MADE BY THE AO U/S 14A OF THE ACT WHICH HAS BEEN CH ALLENGED BY THE REVENUE. LD. DR FOR THE REVENUE IN ORDER TO CH ALLENGE THE IMPUGNED ADDITION MADE BY THE LD. CIT (A) RELIED UP ON THE ORDER PASSED BY THE AO. HOWEVER, ON THE OTHER HAND, LD. AR FOR THE ASSESSEE IN ORDER TO REPEL THE ARGUMENTS ADDRESSED BY THE LD. DR FOR THE REVENUE CONTENDED THAT ASSESSEES CASE IS C OVERED BY THE ORDER PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2009- 10 & 2010-11 CONFIRMED BY THE HONBLE HIGH COURT VIDE ORDER DATED 03.07.2015 IN ITA 368/2015 . 11. UNDISPUTEDLY, THE ASSESSEE COMPANY HAS MADE INV ESTMENT OF RS.40,88,90,244/- ON 31.03.2012 OUT OF INTEREST FRE E FUNDS. IT IS ITA NO.2024/DEL./2016 6 ALSO NOT IN DISPUTE THAT ASSESSEE HAS NOT EARNED AN Y EXEMPT INCOME DURING THE YEAR UNDER ASSESSMENT. 12. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRC UMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT WHEN A SSESSEE HAS MADE ENTIRE INVESTMENT OUT OF HIS INTEREST FREE FUN DS AND HAS NOT EARNED ANY EXEMPT INCOME DURING THE YEAR UNDER ASSE SSMENT, SECTION 14A IS NOT ATTRACTED. AO PROCEEDED TO MAKE DISALLOWANCE OF RS.1,62,16,020/- MERELY ON THE BASIS OF CBDT CIR CULAR NO.5/2014 DATED 11.02.2014 WITHOUT LOOKING INTO THE FACT THAT THE ASSESSEE HAS MADE INVESTMENT OUT OF HIS INTEREST FR EE FUNDS AND MORE SO, NO EXEMPT INCOME HAS BEEN EARNED DURING TH E YEAR UNDER ASSESSMENT. 13. HONBLE DELHI HIGH COURT IN CASE OF THE PR. CIT VS. IL&FS ENERGY DEVELOPMENT COMPANY LTD. (2017) 399 ITR 48 3 (DELHI) DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESS EE AND THE RATIO OF THE JUDGMENT (SUPRA) FOR READY PERUSAL IS AS UNDER :- SECTION 14A OF THE INCOME-TAX ACT, 1961, READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 - EXPENDITURE INCURRED I N RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME (CBDT CIRCULA R V. RULE 8D) - ASSESSMENT YEAR 2011-12 - WHETHER CBDT CIRCUL AR NO.5/2014 DATED 11-2-2014 CANNOT OVERRIDE EXPRESS P ROVISIONS OF SECTION 14A, READ WITH RULE 8D - HELD, YES - WHETHE R WHERE NO EXEMPT INCOME WAS EARNED IN RELEVANT ASSESSMENT YEA R, MERELY BECAUSE TAX AUDITOR HAD SUGGESTED IN TAX AUDIT REPO RT THAT THERE OUGHT TO BE SUCH DISALLOWANCE, IT COULD NOT BE A GR OUND TO MAKE DISALLOWANCE IN TERMS OF SECTION 14A, READ WITH RUL E 8D - HELD, YES [PARA 23] [IN FAVOUR OF ASSESSEE] ITA NO.2024/DEL./2016 7 14. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE FI ND NO ILLEGALITY OR PERVERSITY IN THE DELETION MADE BY TH E LD. CIT (A), HENCE GROUND NO.2 IS ALSO DETERMINED AGAINST THE RE VENUE. 15. RESULTANTLY, THE APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF JULY, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 25 TH DAY OF JULY, 2019 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.