WALKER CHANDILOK & CO. LLP, NEW DELHI V. ACIT, CIRCLE- 61(1), New Delhi

ITA 2310/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 5940 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 03-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AGAINST DATED PASSED
• Keywords: Principle of natural justice; Revised return; TDS
• Section: 40(b)

Judgement Text

1 ITA NO. 2309 & 2310/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL M EMBER AND SHRI ANADEE NATH MISSHRA, ACC OUNTANT MEMBER I.T.A. NO. 2309/DEL/20 18 (A.Y 2012-13) & I.T.A. NO. 2310/DEL/20 18 (A.Y 2014-15) (THROUGH VIDEO C ONFERENCING) WALKER CHANDILOK & CO. LLP L-41, CONNAUGHT CIRCUS, CONNAUGHT PLACE, NEW DELHI AAAFW4298E (APPELLANT) VS ACIT CIRCLE-61(1) NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINS T THE ORDER DATED 31/01/2018 PASSED BY CIT(A)-20, NEW DELHI FOR ASSE SSMENT YEAR 2013-13 & 2014-15. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A. NO. 2309/DEL/2018 (A.Y 2012-13) 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRM ING THE DISALLOWANCE OF AN AMOUNT OF TDS PAYABLE OF RS. 30,03,217/- OUTSTANDIN G ON 31 MARCH 2012 THOUGH PAID WITHIN THE DUE DATE PRESCRIBED BY THE A CT BY HOLDING THAT THE APPELLANT BY MS. SWEETY KOTHARI, ADV RESPONDENT BY SH. JAGDISH SINGH, SR. DR DATE OF HEARING 02.09.2021 DATE OF PRONOUNCEMENT 16.09.2021 2 ITA NO. 2309 & 2310/DEL/2018 SAME IS NOT ALLOWABLE DEDUCTION AS THE SAME WAS NOT PAID DURING THE YEAR AS THE ASSESSEE FOLLOWED CASH SYSTEM OF ACCOUNTING IGN ORING THE FACTS AND SUBMISSIONS PLACED ON RECORD. THUS THE ADDITION SO MADE SHOULD BE DELETED. 2. THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMI NG THE DISALLOWANCE OF AN AMOUNT OF RS. 4,24,941/- BEING 4/5TH OF THE ELECTRI CITY EXPENSES OF L-41 OFFICE AVERRING THE SAID PREMISES ARE BEING USED BY M/S BH AKRU & ASSOCIATES, M/S UNRAVEL MERCANTILE (P) LTD., M/S GRANT THORNTON IND IA (P) LTD. AND M/S WALKER CHANDIOK & ASSOCIATES IGNORING THE SUBMISSIONS AND EVIDENCES PLACED ON RECORD. THUS THE DISALLOWANCE SO MADE SHOULD BE DEL ETED. 3. THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMI NG THE DISALLOWANCE OF INTEREST U/S 40(B) OF THE ACT OF RS. 1,53,887/- PAI D TO PARTNER OF THE FIRM IGNORING THE FACT THAT THE PARTNERSHIP DEED CLEARLY PROVIDES FOR ALLOWANCE OF SUCH INTEREST AND THE SAID ISSUE HAS BEEN EXAMINED IN EARLIER YEARS WHEREIN THE SAME HAS BEEN DULY ALLOWED TO THE ASSESSEE FIRM . THUS THE DISALLOWANCE SO MADE SHOULD BE DELETED I.T.A. NO. 2310/DEL/2018 (A.Y 2014-15) 1. THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF AN AMOUNT OF TDS PAYABLE OF RS. 43,82,629/- OUTSTAN DING ON 31 MARCH 2014 THOUGH PAID WITHIN THE DUE DATE PRESCRIBED BY THE ACT BY HOLDING THAT THE SAME IS NOT ALLOWABLE DEDUCTION AS THE SAME WAS NOT PAID DURING THE YEAR AS THE ASSESSEE FOLLOWED CASH SYSTEM OF ACCOUNTING IGN ORING THE FACTS AND SUBMISSION PLACED ON RECORD. THUS THE ADDITION SO M ADE SHOULD BE DELETED. 2. THE CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF AN AMOUNT OF RS.6,62,519/- BEING 4/5TH OF THE ELECT RICITY EXPENSES OF L-41 OFFICE AVERRING THE SAID PREMISES ARE BEING USED BY M/S GRANT THORNTON INDIA LLP, M/S UNRAVEL MERCANTILE (P) LTD., M/S GRANT THO RONTON ADVISORY PRIVATE LTD. AND M/S WALKER CHANDIOK & ASSOCIATES IGNORING THE SUBMISSIONS AND EVIDENCES PLACED ON RECORD. THUS THE DISALLOWANCE S O MADE SHOULD BE DELETED. 3 ITA NO. 2309 & 2310/DEL/2018 3. BOTH THE APPEALS ARE CONTESTED ON IDENTICAL ISSU ES, THEREFORE, WE ARE TAKING FACTS OF ASSESSMENT YEAR 2012-13. THE ASSES SEE IS A CHARTERED ACCOUNTANT FIRM BY PROFESSION DERIVED INCOME FROM B USINESS OR PROFESSION. RETURN OF INCOME DECLARED AT RS. 20,83,58,070-/- WA S FILED ON 29/09/2012 AND REVISED RETURN WAS FIELD ON 28/3/2014 DECLARING INCOME OF RS. 20,83,070/-. THE ASSESSING OFFICER PASSED ASSESSM ENT ORDER DATED 30/03/2015 THEREBY MAKING DISALLOWANCE OF EXPENSES WHICH HAVE NOT BEEN PAID IN THE RELEVANT FINANCIAL YEAR TO THE EXTENT O F RS. 11,86,074/- AS WELL AS DISALLOWANCE OF INTEREST PAID TO PARTNERS TO THE EX TENT OF RS. 38,34,686/-. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. AS REGARDS GROUND NO. 1, THE LD. AR SUBMITTED TH AT THE DISALLOWANCE OF AN AMOUNT OF TDS PAYABLE OF RS.30,0 3,217/- OUTSTANDING ON 31 ST MARCH, 2012 WAS PAID WITHIN THE DUE DATE PRESCRIBED BY THE ACT. BUT THE CIT(A) IGNORED THIS AND CONFIRMED THE ADDITION OF THE ASSESSING OFFICER OBSERVING THAT TH E SAME IS NOT ALLOWABLE DEDUCTION AS THE SAME WAS NOT PAID DURING THE YEAR AS THE ASSESSEE FOLLOWED CASH SYSTEM OF ACCOUNTING. THE LD. AR SUBMITTED THAT NO ADDITION ON THIS GROUND WAS MADE TILL ASSE SSMENT YEAR 2010-11 BY THE REVENUE AND THE ADDITIONS WERE FIRST TIME MA DE IN ASSESSMENT YEAR 2011-12, WHEREIN IT WAS DELETED BY THE CIT(A) FOR WHICH NO APPEAL WAS FILED BY THE REVENUE. THE LD. AR RELIED UPON T HE DECISION OF THE ITAT IN CASE OF DELOITTE, HASKINS AND SELLS VS. ACI T ITA NO. 3715/DEL/2017 ORDER DATED 15/1/2021 WHEREIN THE SAI D ADDITION WAS DELETED. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 4 ITA NO. 2309 & 2310/DEL/2018 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS CONSTANTLY FOLLOWING CAS H SYSTEM WHICH IS NOT DISPUTED BY THE REVENUE. IN THE PREVIOUS ASSESSMENT YEARS, NO ADDITIONS WERE MADE EXCEPT IN ASSESSMENT YEAR 2011- 12 WHICH WAS DELETED BY THE CIT(A). THUS, THE REVENUE IS CONTIN UOUSLY TAKING THE STAND THAT THE TDS PAYABLES OUTSTANDING ARE PROPER. THE DECISION IN CASE OF DELOITTE (SUPRA) IS APT IN THE PRESENT CASE AS THE ASSESSEE HAS PAID THE SAID AMOUNT WITHIN THE DUE DATE PRESCRIBED BY THE ACT. THUS, GROUND NO. 1 OF THE ASSESSEES APPEAL IS ALLOWED. 8. AS REGARDS GROUND NO. 2 IS RELATED TO DISALLOWAN CE OF AMOUNT OF RS. 4,24,941/- BEING 4/5 TH OF THE ELECTRICITY EXPENSES OF L-41 OFFICE AVERRING THE SAID PREMISES ARE BEING USED BY THE M/ S BHAKRU AND ASSOCIATES, M/S UNRAVEL MERCANTILE PVT. LTD., M/S G RANT THORNTON INDIA PVT. LTD. AND M/S WALKER CHANDIOK & ASSOCIATE. THE LD. AR SUBMITTED THAT THE EVIDENCES PLACED ON RECORD WAS TOTALLY IGN ORED BY THE ASSESSING OFFICER AS WELL AS THE CIT(A). THE LD. AR FURTHER SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSMENT YEAR 2010-11 A ND 2011-12 AND THE ADDITIONS WERE DELETED. 9. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RELEVANT MATERIALS AVAILABLE ON RECORD. AFTER GOING THROUGH THE EVIDEN CES PLACED BEFORE THE ASSESSING OFFICER, IT CAN BE SEEN THAT THE ASSESSEE HAS GIVEN A PLAUSIBLE EXPLANATION. THE ASSESSING OFFICER HAS MADE AN ESTI MATED DISALLOWANCE WHICH IS NOT SUPPORTED BY ANY EVIDENCE AT ALL. BESIDES TH IS, THE ISSUE CONTESTED HEREIN IS ALREADY DECIDED IN FAVOUR OF THE ASSESSEE IN PRE CEDING YEARS UPON WHICH THE CIT(A) HAS RELIED UPON IN THE ORDER. THERE IS NO DI STINGUISHING FACTS POINTED OUT 5 ITA NO. 2309 & 2310/DEL/2018 BY THE LD. DR. THEREFORE, GROUND NO. 2 IS ALLOWED. 11. AS REGARDS GROUND NO. 3, RELATING TO DISALLOWAN CE OF INTEREST U/S 40(B) OF THE ACT OF RS. 1,53,887/- PAID TO PARTNER OF THE FI RM, THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) IGNORE D THE FACT THAT THE PARTNERSHIP DEED CLEARLY PROVIDED FOR ALLOWANCE OF SUCH INTERES T AND THE SAID ISSUE WAS EXAMINED IN EARLIER YEARS WHEREIN THE SAME WAS ALLO WED TO THE ASSESSEE FIRM. 12. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE PARTNERSH IP DEED CLEARLY PROVIDED FOR ALLOWANCE OF SUCH INTEREST AND THE SAID ISSUE WAS E XAMINED IN EARLIER YEARS WHEREIN THE SAME WAS RESTORED TO THE FILE OF THE AS SESSING OFFICER. THE TRIBUNAL IN ITA NO. 97/DEL/2015 VIDE ORDER DATED 31.05.2018 HELD AS UNDER: 21. IN RESPECT OF GROUND NO. 10 REGARDING DISALLOWA NCE OF INTEREST U/S. 40(B) OF THE ACT OF RS.20,43,675/- PAID TO MR. VINOD CHAN DIOK, WE FIND THAT IT HAS BEEN CALCULATE AS PER THE TERMS OF PARTNERSHIP DEED CLAUSE (5), BUT THE IT ACT DOES NOT PERMIT TO ALLOW THE INTEREST PAID TO P ARTNERS AS PER THE PARTNERSHIP DEED. IN THIS REGARD, THE RELEVANT PROV ISIONS OF THE IT ACT IS AS UNDER : (IV) ANY PAYMENT OF INTEREST TO ANY PARTNER WHICH I S AUTHORISED BY, AND IS IN ACCORDANCE WITH, THE TERMS OF THE PARTNERSHIP DEED AND RELATES TO ANY PERIOD FALLING AFTER THE DATE OF SUCH PARTNERSHIP DEED IN SO FAR AS SUCH AMOUNT EXCEEDS THE AMOUNT CALCULATED AT THE RATE OF TWELVE PER CENT SIMPLE INTEREST PER ANNUM; OR IT IS CLEAR FROM THE ABOVE SECTION TH AT THE PAYMENT OF INTEREST TO THE PARTNERS WHO ARE AUTHORIZED IN THE PARTNERSHIP DEED, HAS TO BE CALCULATED IN VIEW OF THE PROVISIONS OF SECTION 40(B)(IV) OF T HE ACT AND AS PER THE METHOD GIVEN IN THE PARTNERSHIP DEED. THE ASSESSING OFFICE R APPEARS TO HAVE WRONGLY CALCULATED. THE CONTENTION OF THE ASSESSEE THAT THERE IS NO LOS S TO REVENUE BECAUSE THE PARTNER HAS SHOWN THIS AMOUNT AS HIS INCOME AND BOT H THE PARTNER AND THE PARTNERSHIP FIRM ARE ASSESSABLE IN THE SAME BRACKET OF 30%, IS NOT ACCEPTABLE FOR THE REASON THAT THE INTENTION OF THE IT ACT IS TO COLLECT TAX FROM THE RIGHT 6 ITA NO. 2309 & 2310/DEL/2018 PERSON AS PER LAW. THE ASSESSING OFFICER ALSO APPEA RS TO HAVE WRONGLY INTERPRETED CLAUSE (5) OF THE PARTNERSHIP DEED STAT ING THAT FIRST PARTY WAS NOT AUTHORIZED TO RECEIVE INTEREST. IN PRESENCE OF THES E FACTS, WE RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO CALCULATE T HE INTEREST PAYABLE TO PARTNER AS PER PROVISIONS OF SECTION 40(B)(IV) OF T HE IT ACT. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 22. IN VIEW OF THE ABOVE DISCUSSION, THE APPEAL OF THE ASSESSEE DESERVES TO BE PARTLY ALLOWED. THE FACTS ARE IDENTICAL IN THE PRESENT ASSESSMENT Y EAR AS WELL, HENCE, WE ARE RESTORING THE ISSUE TO THE FILE OF THE ASSESSING OF FICER TO CALCULATE THE INTEREST PAYABLE TO PARTNER AS PER PROVISIONS OF SECTION 40( B)(IV) OF THE INCOME TAX ACT. NEEDLESS TO SAY THE ASSESSEE BE GIVEN OPPORTUNITY O F HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. THUS, GROUND NO. 3 I S PARTLY ALLOWED FOR STATISTICAL PURPOSE. 14. AS REGARDS TO ITA NO. 2310/DEL/2018 FOR A.Y. 20 14-15, THE ISSUES ARE IDENTICAL IN RESPECT OF GROUND NO. 1 AND 2 AND NO C ONTRARY FACTS POINTED OUT BY THE LD. DR. THEREFORE, SAME OBSERVATIONS GIVEN BY US FOR A.Y. 2012-13 ARE APPLICABLE IN A.Y. 2014-15. THUS, GROUND NO. 1 AND 2 ARE ALLOWED. 15. IN RESULT, THE APPEAL OF THE ASSESSEE BEING ITA NO. 2309/DEL/2018 IS PARTLY ALLOWED FOR STATISTICAL PURPOSE AND ITA NO. 2310/DEL/2018 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 16TH DAY OF SEPTEMBER, 2021 SD/- SD/- (ANADEE NATH MISSHRA) (SUCHIT RA KAMBLE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 16/09/2021 R. NAHEED * 7 ITA NO. 2309 & 2310/DEL/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI