M/s Janki Mahal Hotels (P) Ltd., Meerut V. CIT, Meerut

ITA 2372/DEL/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6604 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 03-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R MISHRA
• Assessee Lawyers: LALIT KUMAR
• Keywords: Capital expenditure
• Section: 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , DELHI BENCH SMC, NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT ITA NO. 2372/D EL./2015 ASSESSMENT YEAR : 2010-11 AL TABARAK FROZEN FOODS PVT. LTD. 258, KHAWESHGYAN, KHURJA BULANDSHAHR PAN : AAECA8288M VS DCIT BULANDSHAHR (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. LALIT KUMAR, ADV. REVENUE BY : SH. B.R.MISHRA, SR. DR DATE OF HEARING :19.06.2018 DATE OF PRONOUNCEMENT : 20.06.2018 ORDER PER R.S.SYAL, VICE PRESIDENT : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDE R PASSED BY THE LD. CIT(A) ON 23.02.2015 IN RELATION TO THE ASSESSMENT YEAR 2010-11. IT IS A RECALLED MATTER INASMUCH AS THE EARLIER EX PARTE ORDER PASSED BY THE ITA NO. 2372/DEL/2015 2 TRIBUNAL WAS SUBSEQUENTLY RECALLED VIDE ORDER DATED 15.09.2017 IN M.A NO. 376/DEL/2017. 2. THE FIRST GROUND IS AGAINST THE CONFIRMATION OF THE ADDITION OF RS.1,00,000/- OUT OF PROCESSING CHARGES. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF FREEZING OF MEAT. TURNOVER OF RS.3. 58 CRORE WAS DECLARED FOR THE YEAR UNDER CONSIDERATION. THE ASSESSING OFF ICER OBSERVED THAT PROFIT AT THE RATE OF 4.78% SHOWN BY THE ASSESSEE FOR THIS YEAR WAS LOWER THAN THAT OF THE PRECEDING YEARS PROFIT RATE OF 5% . HE FOUND THAT THE ASSESSEE CLAIMED PROCESSING CHARGES (LABOUR) AT RS. 28,40,590/-. SOME VOUCHERS WERE NOT PROPERLY MAINTAINED. HE, THEREFOR E, MADE AN AD HOC ADDITION OF RS.1,00,000/-. THE LD. CIT(A) SUSTAINED THE SAME, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPEAL BEFORE THE TRIBUNAL 4. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD, IT IS FOUND THAT THE RATIO OF PROCESSING CH ARGES TO TURNOVER FOR THE YEAR UNDER CONSIDERATION IS 7.93% AS AGAINST THE SI MILAR RATIO OF 10.79% FOR THE PRECEDING YEAR. THIS SHOWS THAT THE ASSESSE E RELATIVELY INCURRED LOWER AMOUNT OF PROCESSING CHARGES. IN THE GIVEN CI RCUMSTANCES, I AM ITA NO. 2372/DEL/2015 3 SATISFIED THAT THE AD HOC ADDITION SUSTAINED IN THE IMPUGNED ORDER DESERVES TO BE AND IS HEREBY DELETED. THIS GROUND IS ALLOWED . 5. THE SECOND GROUND IS AGAINST THE CONFIRMATION OF ADDITION OF RS.50,000/- OUT OF PACKING LABOUR CHARGES OF RS.10, 45,583/-. THE ASSESSING OFFICER DISALLOWED RS.50,000/- ON AD HOC BASIS, WHICH ADDITION STOOD CONFIRMED IN THE FIRST APPELLATE ORDER. 6. HAVING REGARD TO THE FACTS OF THE INSTANT GROUND , I AM SATISFIED THAT THE AD HOC ADDITION SO MADE AND SUSTAINED DESERVES TO BE DELE TED FOR A VERY INSIGNIFICANT INCREASE (0.60%) IN THE RATIO OF SUCH AN EXPENSE TO TURNOVER. THIS GROUND IS ALLOWED. 7. GROUND NO. 3 IS AGAINST CONFIRMATION OF ADDITION OF RS.97,685/-. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE DEC LARED WORK IN PROGRESS AMOUNTING TO RS.64,75,874/- IN ITS BALANCE SHEET. D URING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE STATED THAT A TERM LOAN OF RS. 46,00,000/- WAS ARRANGED WHICH WAS UTILIZED FOR CAP ITAL WORK IN PROGRESS, ON WHICH INTEREST OF RS.97,685/- WAS PAID. THE ASSE SSING OFFICER DISALLOWED SUCH EXPENDITURE BY TREATING IT AS A PAR T OF CAPITAL EXPENDITURE. NO RELIEF WAS ALLOWED IN THE FIRST AGAIN. ITA NO. 2372/DEL/2015 4 8. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD IT IS SEEN AS AN ADMITTED POSITION THAT INTE REST OF RS.97,685/- RELATES TO TERM LOAN SPECIFICALLY TAKEN FOR CAPITAL WORK IN PROGRESS REFLECTED IN THE BALANCE SHEET, WHICH ASSETS WERE NOT BEEN PUT TO US E DURING THE YEAR. PROVISO TO SECTION 36(1)(III) INSERTED WITH EFFECT FROM 01.04.2004 PROVIDES THAT NO DEDUCTION OF INTEREST FOR ANY PERIOD BEGINN ING WITH THE DATE OF BORROWING OF CAPITAL TILL THE ASSET IS FIRST PUT TO USE, CAN BE ALLOWED AS DEDUCTION. THE FACTS OF THE INSTANT GROUND ARE FULL Y COVERED BY THE PROVISO TO SECTION 36(1)(III). I, THEREFORE, UPHOLD THE SUS TENANCE OF ADDITION TO THE EXTENT. THIS GROUND FAILS. 9. THE LAST GROUND IS AGAINST THE ADDITION OF RS.22 ,00,000/- MADE BY THE ASSESSING OFFICER U/S. 68 OF THE ACT. FACTS OF THIS GROUND ARE THAT THE ASSESSEE DECLARED TO HAVE RECEIVED AN UNSECURED LOA N OF RS.22,00,000/- FROM ITS DIRECTOR, SHRI ALEEM AHMED. IT WAS RECEIVE D THROUGH TWO CHEQUES OF RS.12,00,000/- AND RS.10,00,000/- ON 27. 08.2009 AND 28.12.2009 RESPECTIVELY. ON PERUSAL OF THE NECESSAR Y DETAILS CALLED FOR BY THE ASSESSING OFFICER, HE NOTICED THAT SHRI ALEEM A HMED DEPOSITED CASH IN BANK ACCOUNT IMMEDIATELY BEFORE ISSUING CHEQUES IN FAVOUR OF THE ITA NO. 2372/DEL/2015 5 ASSESSEE COMPANY. IN THE ABSENCE OF THE ASSESSEE GI VING ANY JUSTIFIABLE REASON TO EXPLAIN THE SOURCE OF SUCH DEPOSIT IN THE BANK ACCOUNT BY SHRI ALEEM AHMED, THE ASSESSING OFFICER MADE AN ADDITION OF RS.22,00,000/-. THE LD. CIT(A) SUSTAINED SUCH AN ADDITION BY OBSERV ING THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS VERSION THAT SHRI ALEEM AHMED RECEIVED THE MONEY AGAINST THE SALE OF SOME PROPERTY ETC. AS NO CONFIRMATION WAS FILED. THE ASSESSEE IS AGGRIEVED AGAINST THE ADDITION. 10. HAVING HEARD BOTH THE SIDES AND PERUSED THE REL EVANT MATERIAL ON RECORD, IT IS SEEN THAT THE ASSESSEE HAS BEEN TAKIN G VACILLATING STANDS IN SUPPORT OF THE SOURCE OF MONEY IN THE HANDS OF SHRI ALEEM AHMED WHICH WAS DEPOSITED IN BANK ACCOUNT FROM WHICH CHEQUES WE RE ISSUED IN FAVOUR OF THE ASSESSEE. THE LD. AR EXPLAINED THAT PROCEEDI NGS U/S. 263 WERE TAKEN AGAINST SHRI ALEEM AHMED ON THE GROUND THAT A SUM OF RS.70,00,000/- AND ODD DEPOSITED IN HIS BANK ACCOUN T WAS HIS UNEXPLAINED INCOME. HE PLACED ON RECORD A COPY OF THE ASSESSMEN T ORDER PASSED IN THE HANDS OF SHRI ALEEM AHMED PURSUANT TO THE ORDER U/S . 263 OF THE ACT. IT WAS EXPLAINED THAT THE APPEAL OF SHRI ALEEM AHMED A GAINST THE ORDER PASSED U/S 263 IS PENDING BEFORE THE TRIBUNAL. IT W AS PUT FORTH THAT SHRI ITA NO. 2372/DEL/2015 6 ALEEM AHMED HAS SUFFICIENT EXPLANATION TO SUPPORT T HE CASH DEPOSITS MADE IN HIS BANK ACCOUNT INCLUDING THE AMOUNT OF RS .22,00,000/-, WHICH HAS BEEN ADDED IN THE HANDS OF THE ASSESSEE. IN TH E GIVEN CIRCUMSTANCES, I AM OF THE CONSIDERED OPINION THAT THE ENDS OF JUSTI CE WOULD MEET ADEQUATELY IF THE IMPUGNED ORDER ON THIS SCORE IS S ET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF AO. I ORDER ACCORDINGLY AND DIRECT HIM TO DECIDE THIS ISSUE AFRESH IN THE LIGHT OF THE EXPLANATION W HICH THE ASSESSEE PROPOSES TO TENDER. 11. IN THE RESULT THE APPEAL IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 20/0 6/2018) SD/- (R.S. SYAL) VICE PRESIDENT DATED: 20/06/2018 *BINITA* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO. 2372/DEL/2015 7 DATE OF DICTATION 1 9 .06.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED B EFORE THE DICTATING MEMBER 1 9 .06.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 1 9 .06.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 20 .06.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 20 .06.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 20 .06.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT .06.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .06.2018 DATE ON WHICH THE FIL E GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER **