M/s. Trinity Insurance Brokers Pvt. Ltd., Jaipur V. ITO, New Delhi

ITA 2123/DEL/2016

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7364 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 19-04-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: UMESH KATIYAR
• Assessee Lawyers: KSHITIJ KHOSLA
• Keywords: Rule of consistency; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) (THROUGH VIDEO CONFERENCING) BEFORE SHRI R.K.PANDA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ITA NO. 2123/DEL./2016, A.Y. : 2011-12 M/S. TRINITY INSURANCE BROKERS PVT. LTD. VS. ITO S.L. PODDAR & CO. WARD-16(4) E-3A, KANTI CHANDRA ROAD, BANI PARK NEW DELHI JAIPUR (PAN: AABCT7656F) (APPELLANT) (RESPONDENT) ITA NO. 3396/DEL./2016, A.Y. : 2011-12 ITO VS. M/S. TRINITY INSURANCE BROKERS (P) LTD. CO. WARD-25(4) A-23, MANDAKIN I ENCLAVE NEW DELHI ALAKNANDA NEW DELHI-110019 (PAN : AABCT7656F) ASSESSEE BY : SRI KSHITIJ KHOSLA & SRI MANISH M ALIK, ADV. REVENUE BY : SHRI UMESH KATIYAR, SR. DR DATE OF HEARING : 17.08.2021 DATE OF ORDER : 19 .08.2021 O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THESE TWO CROSS APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE AND THE REVENUE AND IN REVENUE APPEAL FOLLOWING GRO UNDS HAVE BEEN TAKEN :- ITA NO.2123, 3396/DEL./2016 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY THE LD. CIT(A) ERRED IN DELETIN G THE ADDITION OF RS. 4,33,06,842/- MADE BY AO IN RESPECT OF THE S UPERVISORY AND RISK MANAGEMENT EXPENSES. 2. THE APPELLANT CRAVES, LEAVE FOR RESERVING THE R IGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AG AINST THE ORDER OF THE LD. CIT(A) NO. 392/2013-14 ORDER DATED 28 TH MARCH, 2016 ARISING OUT OF ASSESSMENT ORDER DATED 23 RD MARCH, 2014. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAG ED IN THE BUSINESS OF INSURANCE BROKER FOR LIFE AND NON-LIFE PRODUCTS OF ALL INSURANCE COMPANIES. THE INSURANCE BROKING ACTIVITY IS TO ASSIST CLIENTS TO HAVE THE BEST QUOTATION AND BEST PRODUCT S FROM ALL LIFE AND NON-LIFE INSURANCE COMPANIES AVAILABLE IN THE COUNT RY. THE ASSESSEE ON BEHALF OF THE CLIENTS: OBTAINS BEST QUOTATION: A ND ADVISES THE CLIENTS OF VARIOUS PRODUCTS OF LIFE AND NON-LIFE PR ODUCTS. 4. IN THE CURRENT ASSESSMENT YEAR, ASSESSEE COMPANY HAD EARNED GROSS BROKERAGE INCOME OF RS. 5,58,09,177/- AGAINST WHICH THE COMPANY HAD CLAIMED SUPERVISORY AND RISK MANAGEMENT CHARGES OF RS. 4,33,06,842/- AND SAME WERE PAID TO ITS SISTER CONCERN M/S. M.M.CARPET AND INDUSTRIES LTD. OF RS. 32,84,250/- AND TO M/S. TRINITY GLOBAL ENTERPRISES LTD. OF RS. 3,99,29,200/ -. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LD. AO ASKED TO T HE ASSESSEE TO JUSTIFY CLAIM OF THE SUPERVISORY AND RISK MANAGEMEN T CHARGES OF ITA NO.2123, 3396/DEL./2016 3 RS. 4,33,06,842/- BUT ASSESSEE COULD NOT SUBMIT THE SATISFACTORY REPLY BEFORE THE AO. THUS, AO MADE ADDITION HOLDING THAT EXPENSES HAVE NO LINKAGE OF EARNING THE BROKERAGE INCOME WHICH IS CONTRARY TO THE FACTS. 5. THEREAFTER ASSESSEE PREFERRED STATUTORY APPEAL B EFORE THE LD. CIT(A). LD. CIT(A) GRANTED RELIEF TO THE ASSESSEE HOLDING THAT SISTER CONCERN COMPANY IS ALSO PAYING THE TAX ON THE SAME RATE QUESTION OF GENUINENESS WERE DOUBTED IN THE CASE OF SISTER CONC ERN WHERE THE AO HAS MADE ADDITION ON ACCOUNT OF NON SUBMISSION O F DETAILS. THE SISTER CONCERN COULD NOT SUBMIT THE DETAILS IN REMA ND PROCEEDING. SO, LD. CIT(A) HOLDING THE ISSUE WILL BE DECIDED I N THE APPEAL OF SISTER CONCERN AND HELD THAT IN INSTANT CASE THE MA IN QUESTION WAS THAT EXPENDITURE SHOULD BE CAPITALIZED OR NOT AND F ROM THE FACT DISCUSSED, IT IS CLEAR THAT EXPENDITURE IS NOT REQU IRED TO BE CAPITALIZED AND HELD THAT FINDING OF AO THAT THE EXPENDITURE SH OULD BE CAPITALIZED CANNOT BE ACCEPTED AND GRANTED A RELIEF TO THE ASSESSEE. 6. THE LD. AR STATED THAT IN PRECEDING YEAR AND IN SUCCEEDING YEAR SAME EXPENSES WERE ALLOWED IN THE CASE OF THE ASSESSEE. ON THE OTHER HAND, LD. DR DID NOT HAVE ANYTHING TO CONTROV ERT THE ARGUMENTS OF THE ASSESSEE. IN OUR CONSIDERED OPINIO N PRINCIPLE OF CONSISTENCY APPLIES AND IN SUCH CASE ADDITION CANNO T BE MADE AND WE DO NOT FIND ANY MERIT IN THE APPEAL FILED BY THE REVENUE AND WE ITA NO.2123, 3396/DEL./2016 4 ARE OF THE OPINION THAT LD. CIT(A) HAS PASSED DETAI LED AND REASONED ORDER AND SAME DOES NOT REQUIRED ANY KIND OF INTERF ERENCE AT OUR END. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. NOW WE COME TO ASSESSEE APPEAL NO. 2123/DEL/2020, A .Y. 2011-12 7. IN THIS APPEAL ASSESSEE HAS TAKEN FOLLOWING G ROUNDS OF APPEAL :- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LEARNED CIT(A) HAS ERRED IN CONFIRMING THE FINDING OF THE LEARNED ASSESSING OFFICER FOR TREATING THE AMOUNT O F RS. 60,50,000/- RECEIVED ON TERMINATION OF LEASE AGREEM ENT UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF INCOME FR OM HOUSE PROPERTY. 8. ASSESSEE COMPANY HAD CLAIMED STANDARD DEDUCTION OF RS. 23,32,500/- U/S 24A AT THE RATE OF 30% ON RS. 77,7 5,000/- AS PER COMPUTATION OF INCOME WHILE RENT PORTION ACCORDING TO RENT DEEDS FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEED INGS IS ONLY 17,25,000/- ON WHICH STANDARD DEDUCTION @ 30% COMES TO RS. 5,17,500/- WHICH IS ALLOWABLE UNDER THE PROVISION O F THE ACT. THE LD. AO HELD THAT COMPANY HAD WRONGLY CLAIMED STANDA RD DEDUCTION ON COMPENSATION RECEIVED FROM M/S VISAGE LTD. OF RS . 60,50,000/- WHICH COMES TO RS. 18,15,000/- ADDED TO THE TOTAL I NCOME. 9. THEREAFTER ASSESSEE PREFERRED FIRST STATUTORY AP PEAL BEFORE LD. CIT(A) WHO CONFIRMED ACTION OF THE AO HOLDING THAT APPELLANT COULD NOT GIVE ANY JUSTIFICATION REGARDING CLAIM OF STANDARD DEDUCTION. WHEN THE RECEIPT IS CAPITAL RECEIPT THEN WHY THE APPELLANT HAD CLAIMED STANDARD DEDUCTION. IN THIS CASE APPELL ANT HAD SHOWN IT ITA NO.2123, 3396/DEL./2016 5 AS REVENUE RECEIPT UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND CLAIMED THE STANDARD DEDUCTION. THEREAFTER APPELLAN T HAS SUBMITTED THAT IT IS A CAPITAL RECEIPT BUT THE APPELLANT ITSE LF HAS SHOWN IT AS REVENUE RECEIPT AND CLAIMED STANDARD DEDUCTION. SO IN SUCH CIRCUMSTANCES, WE CONFIRM THE FINDING OF THE LOWER AUTHORITIES AND DO NOT WANT TO INTERFERE IN THE ORDER PASSED BY THE CIT(A). 10. IN OUR CONSIDERED OPINION, LOWER AUTHORITIES HA VE PASSED DETAILED AND REASONED ORDER SAME DOES NOT REQUIRE A NY KIND OF INTERFERENCE AT OUR END. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS DISMISSED. 11. IN THE COMBINED RESULT, APPEAL FILED BY BOTH TH E PARTIES ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 19 TH DAY OF AUGUST, 2021. SD/- SD/- (R.K.PANDA) (MAHA VIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 19 TH DAY OF AUGUST, 2021 *BINITA* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.