Appeal details
Counselvise Citation
[2019] 117 COUNSELVISE.COM (IT) 5125 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
4 year(s) 1 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
13-05-2019
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
B
Assessment Year
2010-2011
Appeal Filed On
13-04-2015
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.2180/DEL/2015 ASSESSMENT YEAR: 2010-11 DCIT, CIRCLE 7(1), NEW DELHI. VS DELHI STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LTD., N-36, BOMBAY LIFE BLDG., CONNAUGHT CIRCUS, N.DELHI. PAN: AAACD1257F ASSESSEE BY: SHRI YOGESH JAIN, CA REVENUE BY: MS ASHIMA NEB, SR. DR ORDER PER K. NARASIMHA CHARY, JM CHALLENGING THE ORDER DATED 22.1.2015 IN APPEAL NO. 514/14-15 PASSED BY THE LD. COMMISSIONER OF INCOME-TAX (APPEA LS)-14, NEW DELHI (FOR SHORT LD. CIT(A)}, REVENUE PREFERRED THIS APP EAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A STATE GOVERNMENT CORPORATION ENGAGED IN THE ACTIVITIES OF INDUSTRIAL DEVELOPMENT OF NATIONAL CAPITAL REGION OF DELHI AS A DEVELOPING AG ENCY. FOR THE ASSESSMENT YEAR 2010-11, THEY HAVE FILED THEIR RETU RN OF INCOME ON 24.3.2011 DECLARING A TOTAL INCOME OF RS.34,82,83,1 07/-. LEARNED AO BY DATE OF HEARING 01.05.2019 DATE OF PRONOUNCEMENT 13.05.2019 2 ORDER DATED 14.3.2013 ASSESSED THE INCOME AT RS.48, 03,00,500/- BY MAKING CERTAIN ADDITIONS WHICH INCLUDES FOR THE PUR POSE OF THIS APPEAL A SUM OF RS.1,10,21,002/- UNDER THE HEAD ADMINISTRAT ION AND SELLING EXPENSES AND A SUM OF RS.87,45,643/- IN RESPECT OF MAINTENANCE CHARGES. AGGRIEVED BY THESE ADDITIONS, ASSESSEE PR EFERRED APPEAL AND THE LEARNED CIT(A) BY WAY OF THE IMPUGNED ORDER DELETED THESE TWO ADDITIONS ALSO. HENCE, THE REVENUE PREFERRED THIS APPEAL STATING THAT THE LD. CIT(A) ERRED IN DELETING THESE TWO ADDITIONS. 3. IT IS THE ARGUMENT OF THE LD. DR THAT THERE WAS NO EVIDENCE AVAILABLE BEFORE THE LD. CIT(A) ALSO TO REACH A DIF FERENT CONCLUSION FROM THE ONE REACHED BY THE LD AO, WHO HAD RECORDED THAT THIS EXPENSE WAS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSIN ESS. SHE FURTHER SUBMITTED THAT IN RESPECT OF THE ADDITION OF RS.87, 45,643/- ALSO NO EVIDENCE WAS AVAILABLE ON RECORD AND, THEREFORE, LD . AO WAS JUSTIFIED IN MAKING SUCH ADDITIONS. 4. IT IS THE SUBMISSION ON BEHALF OF THE ASSESSEE T HAT THIS EXPENSE WAS INCURRED ON THE OCCASION OF DIWALI, HOLI ETC., WHIC H IS CUSTOMARY ON SUCH OCCASION TO GIVE GIFTS TO THE EMPLOYEES AND AS SOCIATES AS A MATTER OF CORDIALITY AND INCENTIVES FOR BETTER PERFORMANCE. HE SUBMITS THAT SINCE NO DOUBT HAS EVER BEEN RAISED AGAINST THE INCURRENC E OF THE EXPENSE IN ANY PRECEDING OR SUBSEQUENT YEAR, IT IS CLEAR BASIN G ON WHAT THE LD. AO CONCLUDED THAT IT IS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE. HE FURTHER SUBMITTED THA T SIMILAR EXPENSES HAVE BEEN INCURRED IN THE EARLIER YEARS AND SUBSEQU ENT YEARS ALSO AND THEY WERE ALLOWED BY THE LD. AO. LASTLY, HE SUBMIT S THAT THE EXPENSE INCURRED BY THE ASSESSEE IS LINKED WITH BUSINESS AN D IT HAS DIRECT NEXUS 3 WITH THEIR BUSINESS AND, THEREFORE, IT CANNOT BE SA ID THAT SUCH AN EXPENSE IS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF AS SESSEES BUSINESS. 5. RELIANCE IS PLACED BY THE ASSESSEE ON THE DECISI ON OF THE ITAT, CHANDIGARH BENCH IN THE CASE OF PUNJAB POWER PACKS LTD. VS DCIT (1999) 71 ITD 163 (CHD) WHERE IT IS HELD THAT THE D ISTRIBUTION OF GIFTS/SWEETS BY THE PSU TO EMPLOYEES AND ASSOCIATES IS AN ALLOWABLE EXPENSE. 6. IT COULD BE SEEN FROM THE RECORD THAT THE LD. AO DOES NOT DOUBT THE GENUINENESS OF THE EXPENSE. IT IS ALSO NOT IN DISP UTE THAT THIS IS A ROUTINE EXPENDITURE INCURRED BY THE ASSESSEE FOR THE YEARS PRIOR TO AND SUBSEQUENT TO THE ASSTT. YEAR 2010-11 AND IT IS ALS O NOT THE CASE OF THE REVENUE THAT SUCH AN EXPENSE WAS DISALLOWED BY THE LD. AO FOR ANY OF SUCH YEARS OTHER THAN THE YEAR UNDER CONSIDERATION. 7. LEARNED CIT(A) GAVE A FACTUAL FINDING THAT SIMIL AR EXPENSES WERE INCURRED BY THE ASSESSEE FOR THE YEARS PRIOR TO THE YEAR UNDER CONSIDERATION AND SUCH AN EXPENSE WAS INCURRED UNDE R THE SUB HEAD OF STAFF WELFARE AND BENEFIT. FURTHER, IT IS CUSTOMA RY TO MAKE THE SMALL GIFTS ON THE OCCASION OF CELEBRATIONS LIKE DIWALI, HOLI ETC., AS AN INCENTIVE FOR BETTER PERFORMANCE. 8. IN THE CASE OF THE PANJAB POWER PACKS LTD (SUPRA ), THE ASSESSEE WAS ALSO A PUBLIC SECTOR UNDERTAKING AND CLAIMED DE DUCTION OF A SUM OF RS. 2,16,394/- UNDER THE HEAD DIWALI EXPENSES INC URRED ON GIFTS/SWEETS PROVIDED TO THE EMPLOYEES AND OTHER BUSINESS ASSOC IATES, WHICH WAS ALMOST DISALLOWED BY THE LD. ASSESSING OFFICER. IT WAS HELD THAT 4 DISTRIBUTION OF SWEETS, GIFTS ON THE OCCASION OF DI WALI IS AN ALLOWABLE EXPENDITURE. 9. FURTHER, NOWHERE THE LD. AO HAD GIVEN THE FINDIN G THAT THE ASSESSEE DID NOT INCUR ANY SUCH EXPENSE OR THE REAS ONS FOR HIS CONCLUSION THAT SUCH AN EXPENSE IS NOT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE ASSESSEES BUSINESS. IN THESE CIRCUMSTANCES, WE AR E OF THE CONSIDERED OPINION THAT THERE IS NO ERROR IN THE REASONING OR THE CONCLUSION OF THE LD. CIT(A) ON THIS ASPECT. THIS GROUND OF APPEAL IS DI SMISSED. 10. IN RESPECT OF THE ADDITION RELATING TO THE MAIN TENANCE CHARGES OF RS.87,45,643/-, THE FACT IS THAT THE ASSESSEE HAD R ECEIVED THE SAME AS GROUND RENT AND MAINTENANCE CHARGES FROM ALLOTTEES UNDER LOW COST HOUSING SCHEME AND SAME WAS NOT OFFERED TO TAX ON T HE GROUND THAT THE SAME IS PART OF NARELA REVOLVING FUND AND BELONGING TO THE DELHI GOVERNMENT. LEARNED AO DID NOT AGREE WITH THE CONT ENTION OF THE ASSESSEE AND MADE THE ADDITION. LEARNED CIT(A) DEL ETED THE SAME BY PLACING RELIANCE ON THE ORDER OF THE TRIBUNAL FOR T HE ASSTT. YEAR 2005-06 AND 2009-10 TO GIVE RELIEF TO THE ASSESSEE. 11. IT IS THE ARGUMENT OF THE LD. DR THAT THERE IS NO BIFURCATION OF THIS FIGURE OF RS.87,45,643/- INTO GROUND RENT PART AND MAINTENANCE CHARGES AND IN VIEW OF THE DECISION OF THE HONBLE JURISDIC TIONAL HIGH COURT IN ASSESSEES OWN CASE IN ITA NO.375 OF 2015, MAINTENA NCE CHARGES HAVE TO BE TREATED AS INCOME OF THE ASSESSEE. 12. IT IS AN ADMITTED FACT THAT IN THE BALANCE SHEE T OF THE ASSESSEE THE COMPOSITE FIGUREOF RECEIPT OF GROUND RENT AND MAINT ENANCE CHARGES WAS SHOWN AND THERE WAS NO ENQUIRY AT ANY POINT OF TIME AS TO THE QUANTUM 5 OF MAINTENANCE CHARGES AND GROUND RENT. THE HONBL E HIGH COURT, IN THE ORDER DATED 17.8.2018 IN ITA NO.375 OF 2017 OBS ERVED AS UNDER: THE COURT FINDS THAT THIS ISSUE WAS NOT EXAMINED I N DEPTH WITH REFERENCE TO THE ACCOUNTS OF THE ASSESSEE EITH ER BY THE AO OR THE CIT(A) OR EVEN THE ITAT. THEY APPEAR TO HAVE TREATED BOTH THE MAINTENANCE CHARGES AND GROUND REN T ALIKE WHEREAS THE DECISIONS OF THE ITAT IN FAVOUR OF THE ASSESSEE, EVEN FOR THE EARLIER AYS, WERE SPECIFIC TO THE ISSU E OF MAINTENANCE CHARGES AND NOT GROUND RENT. CONSEQUEN TLY, THE IMPUGNED ORDERS OF THE ITAT, THE CIT(A) AS WELL AS THE AO ON THE ISSUE OF GROUND RENT FOR THIS AY 2008-09 IS HEREBY SET ASIDE AND THE SAID ISSUE IS REMANDED TO THE FILE OF THE AO FOR RE-DETERMINATION IN ACCORDANCE WITH LAW AFTER EXAMINING THE ACCOUNTS OF THE ASSESSEE AND ANY FURT HER EVIDENCE THAT MAY BE LED ON THIS ISSUE BY THE PARTI ES. 13. IN VIEW OF THE ABOVE DIRECTION OF THE HONBLE J URISDICTIONAL HIGH COURT, WE DEEM IT JUST AND NECESSARY TO SET ASIDE T HIS ISSUE TO THE FILE OF THE LD.AO FOR COMPLIANCE OF THE SAME. THIS GROUND IS, THEREFORE, ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED IN PART FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MAY, 2019. SD/- SD/- (G.D. AGARWAL) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 13 TH MAY, 2019/VJ 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 01.5.2019 DRAFT PLACED BEFORE AUTHOR 01.5.2019 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON DATE OF UPLOADING ORDER ON THE WEBSITE FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.
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