DCIT, New Delhi V. M/s Usha International Ltd., New Delhi

ITA 237/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3140 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 18-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Keywords: Business expenditure; Earning of tax free income
• Section: 43B; 143(3); 14A; 80G

Judgement Text

PAGE | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 237/DEL/2016 (ASSESSMENT YEAR: 2011 - 12 ) DCIT, CIRCLE - 27(1), NEW DELHI VS. USHA INTERNATIONAL LTD, 19, KASTURBA GANDHI MARG, NEW DELHI PAN:AAACT0066A (APPELLANT) (RESPONDENT) REVENUE BY : SHRI KAUSHLENDRA TIWARI, SR. DR ASSESSEE BY: SHRI VP GUPTA, ADV DATE OF HEARING 21 /09/2017 DATE OF PRONOUNCEMENT 1 3 / 1 2 /2017 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE REVENUE AGA INST THE ORDER OF THE LD CIT(A) - 9, NEW DELHI DATED 08.10.2015 FOR THE ASSESSMENT YEAR 2011 - 12. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY LD.CIT(A) IS ERRONEOUS AND THE LEARNED CIT(A) HAS ERRED IN REDUCING THE ADDITION OF RS. 3,49,94,000/ - TO RS . 5,93,000/ - MADE BY AO U/S 14A. 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY LD.CIT(A) IS ERRONEOUS AND THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,60,082/ - MADE BY AO ON ACCOUNT OF CLUB EXPENSES. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY LD.CIT(A) IS ERRONEOUS AND THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE ON ACCOUNT OF PF OF RS. 1,56,178/ - AND ESI OF RS. 2,95,294/ - TOTALING RS. 4,51,472/ - . 4. ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE AND IN LAW THE ORDER PASSED BY LD.CIT(A) IS ERRONEOUS AND THE LEARNED CIT(A) HAS ERRED IN ALLOWING DEDUCTION OF RS. 1,5 0,000/ - U/S 80G OF THE I.T. ACT. 3. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE IS ENGAGED IN MANUFACTURING AND TRADING OF ELECTRIC FANS, WATER COOLERS AND FUEL INJECTION EQUIPMENTS. FURTHER, IT IS ALSO MARKETING OTHER CONSUMER DURABLES. IT FILED ITS RETURN OF INCOME ON 27.09.2011 FOR RS. 498171 009/ - . THE ASSESSMENT U/S 143(3) WAS MADE ON 28.03.2014 FOR RS. 534774601/ - MAKING ADDITION/ DISALLOWANCE OF RS. 36603592/ - . THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO DCIT VS. USHA INTERNATIONAL LTD, ITA NO. 237/DEL/2016 (ASSESSMENT YEAR: 2011 - 12) PAGE | 2 ALLOWED THE APPEAL OF THE ASSESSEE PARTLY. THEREFORE, ON THE RELIEF GIVEN BY THE LD CIT(A), THE REVENUE IS CONTESTING THE PRESENT APPEAL. 4. THE FIRST GROUND OF APPEAL IS WITH RESPECT TO DISALLOWANCE U/S 14A OF THE INCOME TAX ACT MADE BY THE LD ASSESSING OFFICER OF RS. 34994000/ - WHICH WAS RESTRICTED TO RS. 593000/ - BY THE LD CIT(A). DURING THE YEAR ASSESSEE HAS RECEIVED DIVIDEND OF RS. 5.93 LACS WHICH IS EXEMPT. THE ASSESSEE HAS STATED THAT IT HAS NOT INCURRE D ANY EXPENDITURE, HOWEVER, THE LD ASSESSING OFFICER APPLIED RULE 8D AND MADE A DISALLOWANCE OF RS. 34996000/ - . ON APPEAL BEFORE THE LD CIT(A), HE RESTRICTED THE SAME TO RS. 593000/ - . 5. THE LD DR RELIED UPON THE ORDERS OF THE LD ASSESSING OFFICER, WHEREAS, THE LD AR RELIED UPON THE ORDER OF THE LD CIT(A) AND DECISION OF THE HON'BLE DELHI HIGH COURT IN JOINT INVESTMENT PVT. LTD. VS. CIT 372 ITR 694. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND ALSO PERUSED THE ORDERS THE ORDERS OF THE LOWER AUTHORI TIES. AS THE ASSESSEE HAS EARNED EXEMPT INCOME ONLY RS. 5.93 LACS DISALLOWANCE U/S 14A CANNOT EXCEED THE EXEMPT INCOME AS HELD BY HON'BLE DELHI HIGH COURT IN JOINT INVESTMENT PVT. LTD. (SUPRA). THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT WE CONFIRM THE FINDING OF THE LD CIT(A) AND HENCE, GROUND NO. 1 OF THE APPEAL OF REVENUE IS DISMISSED. 7. GROUND NO. 2 OF THE APPEAL IS WITH RESPECT TO THE ADDITION OF RS. 560082/ - ON ACCOUNT OF CLUB EXPENSES DELETED BY THE LD CIT(A). THE AS SESSEE HAS CLAIMED THESE EXPENSES AS IT IS PAID TO PANCHSHEEL CLUB FOR RENEWAL OF CORPORATE MEMBERSHIP FOR 10 YEARS. THE LD AO DISALLOWED THE SAME. THE LD CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN CASE OF UNITED GLASS MANUFACTURING CO. LTD IN CIVIL APPEAL NO. 6447/2012. 8. THE LD DR RELIED UPON THE ORDER OF THE LD ASSESSING OFFICER, WHEREAS THE LD AR RELIED ON THE DECISION CITED ABOVE AS WELL AS SUBMISSION BEFORE THE LD CIT(A). 9. WE HAVE CAREFULLY CONSIDER ED THE RIVAL CONTENTIONS. THE ABOVE DISALLOWANCE HAS BEEN DELETED BY THE LD CIT(A) RELYING UPON THE DECISION OF THE HON'BLE SUPREME COURT WHEREIN, IT IS HELD THAT CLUB MEMBERSHIP FEES INCURRED BY THE ASSESSEE IS A BUSINESS EXPENDITURE. WE FIND NO INFIRMIT Y IN THE ORDER OF THE LD CIT(A), HENCE, GROUND NO. 2 OF THE APPEAL IS DISMISSED. 10. GROUND NO. 3 OF THE APPEAL IS WITH RESPECT TO DISALLOWANCE DELETED BY THE LD CIT(A) ON ACCOUNT OF PROVIDENT FUND OF RS. 156178/ - AND ESI OF RS. 295294/ - WHICH WERE PAID BEFO RE THE DUE DATE OF FILING OF RETURN OF INCOME BUT DISALLOWED BY THE LD ASSESSING OFFICER FOR THE REASON THAT IT IS EMPLOYEES CONTRIBUTION AND DEPOSITED LATE . THE LD CIT(A) DELETED THE DCIT VS. USHA INTERNATIONAL LTD, ITA NO. 237/DEL/2016 (ASSESSMENT YEAR: 2011 - 12) PAGE | 3 DISALLOWANCE RELYING UPON THE DECISION OF HON'BLE DELHI HIGH COURT IN C ASE OF CIT VS. AIMIL LTD 321 ITR 508. 11. LD DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE LD ASSESSING OFFICER AND REASONS GIVEN THERE UNDER. 12. THE LD AR RELIED UPON THE ORDER OF THE LD CIT(A). 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. AIMIL LTD (SUPRA) AS WELL AS SERIES OF THE DECISION WHERE THE EMPLOYEES CONTRIBUTION DEPOSITED BELATEDLY BUT BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME CANNOT BE DISALLOWED U/S 43B OF THE ACT . THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH COURT WE CONFIRM THE FINDING OF THE LD CIT(A) AND DISMISS GROUND NO. 3 OF THE APPEAL OF THE REVENUE. 14. GROUND NO. 4 OF THE APPEAL IS WITH RESPECT TO DEDUCTION U/S 80G OF RS. 150000/ - WHICH HAS NOT BEEN GRANTED BY THE LD ASSESSING OFFICER, THOUGH CLAIMED IN THE RETURN OF INCOME. THE LD CIT(A) HAS DIRECTED AO TO VERIFY THE CLAIM OF THE ASSESSEE AND GRANT DEDUCTION IF FOUN D IN ACCORDANCE WITH THE LAW. WE DO NOT APPRECIATE HOW THE REVENUE IS AGGRIEVED WITH THE ABOVE DIRECTION. HENCE, THIS GROUND OF APPEAL IS DISMISSED. 15. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 3 / 1 2 /2017. - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 3 / 1 2 /2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI