Jubilant Capital Private Limited, New Delhi V. ITO Ward 17 (1), New Delhi

ITA 2436/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9766 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-08-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 02-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: NEHA KHEMKA; RUPESH KUMA R
• Keywords: Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI DEEPAK R. SHAH, ACCOUNTANT MEMBER I.T.A.NO.2436/DEL/2008 ASSESSMENT YEAR : 2002-03 JUBILANT CAPITAL PRIVATE LIMITED, INCOME-TAX OFF ICER, 1517, 15 TH FLOOR, VS. WARD 17(1), NEW DELHI. DEVIKA TOWER, 6, NEHRU PLACE, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RUPESH KUMA R, ADVOCATE & MS. NEHA KHEMKA, CA. RESPONDENT BY : SHRI B.K. GUPTA, S R. DR. O R D E R PER DEEPAK R. SHAH, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-XIX, NEW DELHI , DATED 22 ND JANUARY, 2008 IN AN APPEAL AGAINST THE ASSESSMENT F RAMED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS BE FORE US:- 1. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LA W IN CONFIRMING THE DISALLOWANCE OF RS.1,48,636/- OUT OF COMMISSION PAID ON THE GROUND THAT THE APPELLANT CO ULD NOT PROVE THE GENUINENESS OF THE EXPENDITURE. 2 1.1 THAT THE CIT (APPEALS) ERRED ON FACTS AND IN L AW IN OBSERVING THAT THE APPELLANT FILED NO EVIDENCE OTHE R THAN ITS BANK STATEMENT IN SUPPORT OF ITS CLAIM FOR THE COMM ISSION PAID. 2. THAT THE CIT (APPEALS) ERRED ON FACTS AND IN LAW IN CONFIRMING THE DISALLOWANCE OF RS.1,50,000/- BEING DEPRECIATION ON COMPUTER PURCHASED DURING THE YEAR GIVEN ON LEASE ON THE GROUND THAT THE APPELLANT COULD NOT PR OVE THE GENUINENESS OF THE PURCHASE MADE. 3. THE APPELLANT IS ENGAGED IN THE BUSINESS OF FINA NCE, LEASING ETC. THE ASSESSEE ALSO WAS WORKING AS A BROKER TO THE FIXED DEPOSIT SCHEME FOR ACCEPTANCE OF PUBLIC DEPOSIT ON BEHALF OF M/S. JUBI LANT ORGANOSYS LTD. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS D ISCLOSED NET COMMISSION INCOME OF RS.28,389/-. THE ASSESSEE EXP LAINED THAT IT HAS RECEIVED COMMISSION ON ACCOUNT OF PLACING PUBLIC DE POSIT AND AFTER PAYMENT OF PART OF SUCH COMMISSION TO THE RESPECTIVE DEPOSI TOR, NET INCOME IS DISCLOSED. THE ASSESSING OFFICER FOUND THAT THE PA YMENT OF COMMISSION IS TO THE TUNE OF RS.2,18,266/-. THE ASSESSEE WAS ASK ED TO FURNISH LIST OF PERSONS TO WHOM THE COMMISSION WAS PAID ALONG WITH THEIR CONFIRMATION. THE ASSESSEE FILED DETAILS OF COMMISSION PAID IN RE SPECT OF EACH FIXED DEPOSIT PLACED AND ALSO FILED DETAILS OF PAYMENT PE RSON-WISE. THE ASSESSING OFFICER HELD THAT CONFIRMATION FROM ONE PARTY I.E. MRS. SHOBHANA BHARTIYA WAS FILED TO WHOM THE COMMISSION OF RS.69,650/- WAS PAID. IN RESPECT OF 3 OTHER PARTIES, NO CONFIRMATION HAS BEEN FILED. ACC ORDINGLY, THE BALANCE AMOUNT OF RS.1,48,636/- WAS DISALLOWED. BEFORE THE LEARNED CIT(A) IT WAS CONTENDED THAT TH E ASSESSEE HAS PLACED COMPLETE DETAILS OF FIXED DEPOSIT PLACED BY EACH PERSON, HOW MUCH WAS THE COMMISSION PAID BACK TO EACH DEPOSITOR AND HOW THE PAYMENT WAS MADE. THERE WERE TOTAL 164 ENTRIES AND EXCEPT IN T WO CASES, THE COMMISSION AMOUNT NEVER EXCEEDED RS.5,000/-. IN RESPECT OF 12 5 PARTIES, THE COMMISSIONS PAID WERE LESS THAN RS.1,000/-. IN EAC H CASE THE AMOUNT WAS PAID BY ACCOUNT PAYEE CHEQUE AND THE COPY OF BANK S TATEMENTS EVIDENCING PAYMENT WERE FILED. IT IS USUAL TRADE PRACTICE TO PART WITH OR TO SHARE SOME PART OF THE SHARE RECEIVED FROM COMPANY WITH THE RE SPECTIVE DEPOSITOR. THUS THE CLAIM WAS GENUINE CLAIM AND HENCE ALLOWABLE AS SUCH. THE LEARNED CIT(A) HELD THAT THE ASSESSEE WAS PROVI DED ENOUGH OPPORTUNITY TO FURNISH EVIDENCE FOR PAYMENT OF COMM ISSION. EXCEPT FILING BANK STATEMENTS, NO OTHER DETAILS LIKE IDENTITY, PR OOF OF RECEIVER AND COMMISSION HAVE BEEN FILED. THE ONUS HAS NOT BEEN DISCHARGED. ACCORDINGLY THE DISALLOWANCE HAS TO BE SUSTAINED. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SHRI RUPESH JAIN REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. HE INVITED OUR ATTENTION TO THE DETAILS OF COMMISSION PAID PARTY-WISE WHICH ARE AT PAGES 18 TO 20 OF THE 4 PAPER BOOK. THERE ARE TOTAL 165 PARTIES TO WHOM CO MMISSION HAS BEEN PAID. EVEN THE DETAILS OF FIXED DEPOSIT PLACED BY EACH PE RSON ARE FILED WHICH SHOWS THE DETAILS OF FIXED DEPOSIT NO, NAME OF DEPO SITOR, AMOUNT OF DEPOSIT, TERM OF FIXED DEPOSIT AND AMOUNT PAID IN EACH CASE. THESE DETAILS ARE AT PAGE 21 TO 28 OF THE PAPER BOOK. THE PAYMENT IS MA DE BY ACCOUNT PAYEE CHEQUE. COPIES OF BANK STATEMENTS ARE AT PAGES 29 TO 34 OF THE PAPER BOOK. THE BANK STATEMENT REVEALS THE CHEQUE NO. AND THE N AME OF PERSON IN WHOSE FAVOUR THE CHEQUE IS ISSUED. IT IS ACCORDINGLY PLE ADED THAT THE GENUINENESS OF EXPENSES CAN BE EXAMINED NOT ONLY FROM THE CONFI RMATION FILED BUT FROM OTHER DOCUMENTARY EVIDENCE AS NARRATED ABOVE. THE PAYMENT BEING CUSTOMARY IN SUCH LINE OF BUSINESS IS ALLOWABLE AS SUCH. THE LEARNED DR SHRI B.K. GUPTA ON THE OTHER HAND, ADOPTED THE FINDING OF THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE AR E IN AGREEMENT WITH THE SUBMISSIONS ON BEHALF OF THE ASSESSEE. THE ASS ESSEE HAS PLACED ENOUGH MATERIAL TO PROVE THAT IN RESPECT OF COMMISSION REC EIVED FOR PLACEMENT OF FIXED DEPOSIT, THE ASSESSEE HAS SHARED SUCH COMMISS ION WITH THE RESPECTIVE DEPOSITOR. IN THIS LINE OF ACTIVITY NAMELY, INVEST MENT ADVISORY, IT IS USUAL PRACTICE TO SHARE THE COMMISSION RECEIVED BY THE BR OKER WITH THE RESPECTIVE INVESTOR. THIS IS EVIDENCED FROM THE DETAILS FILED DEPOSITOR-WISE AND BY CO- 5 RELATING THEM WITH THE CHEQUES ISSUED. THE CHEQUES ARE ISSUED IN THE NAME OF RESPECTIVE PERSON WHOSE NAME APPEARED IN THE BAN K STATEMENT ALSO. CONFIRMATION IS NOT THE ONLY EVIDENCE TO ESTABLISH GENUINENESS OF PAYMENT OR ALLWOABILITY OF EXPENSES. THE OTHER CORROBORATI VE MATERIAL ALSO SUPPORT THE CONTENTION THAT PART OF THE BROKERAGE RECEIVED WAS SHARED AND HENCE WHAT IS TAXABLE IS ONLY THE NET AMOUNT RETAINED BY THE A SSESSEE. WE, THEREFORE, DELETE THE DISALLOWANCE OF RS.1,48,636/-. 6. THE NEXT GROUND OF APPEAL IS AGAINST DISALLOWANC E OF DEPRECIATION ON COMPUTERS PURCHASED AND LEASED. 7. FROM THE ORDERS OF THE AUTHORITIES BELOW, IT IS SEEN THAT THE DISALLOWANCE IS CONFIRMED FOR THE REASON THAT THE P ARTIES FROM WHOM THE COMPUTERS WERE PURCHASED WERE NOT TRACEABLE AT THE ADDRESS MENTIONED. 8. WE HAVE CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL PLACED BEFORE US. WE FIND THAT THE ASSESS EE IS IN THE BUSINESS OF LEASING EQUIPMENTS. THE ASSESSEE HAS PURCHASED 2 C OMPUTERS, ONE FROM GRAFFITI INFOTECH LTD. AND OTHER FROM QUANTM NET TE CHNOLOGIES LTD. THE INVOICE ITSELF MENTIONED THAT THE COMPUTERS WERE SO LD TO THE ASSESSEE AND WERE SHIPPED TO VAM ORGANIC CHEMICALS LTD. TO WHOM THE SAID COMPUTERS WERE LEASED OUT. THE PAYMENTS IN BOTH THE CASES AR E MADE BY ACCOUNT PAYEE CHEQUES AND THE RESPECTIVE ENTRY IN THE BANK ACCOUN T APPEARS IN THEIR NAME. 6 THE ASSESSEE HAS RECEIVED LEASE RENT AND WHICH IS O FFERED FOR TAX ALSO. IN RESPECT OF INCOME OFFERED FOR TAX, NO QUESTION IS R AISED. THE COMPUTERS WERE PURCHASED FROM LIMITED COMPANIES WHICH CANNOT BE SA ID TO BE NON-EXISTENT. IF IN RESPECT OF TRANSACTION IN THE YEAR 2001, INQU IRY IS MADE 4 YEARS LATER, IT IS LIKELY THAT THEY MAY NOT BE EXISTING AT THE SAID ADDRESS. HOWEVER, BY THAT ITSELF, IT CANNOT BE CONCLUDED THAT THE COMPUTERS W ERE NEVER PURCHASED OR LEASED. THE LEASE AGREEMENT AND RECEIPT OF LEASE R ENT IS TESTIMONY TO THE SAME. WE, THEREFORE, HOLD THAT THE ASSESSEE WAS OW NER OF TWO COMPUTERS WHICH WERE LEASED DURING THE YEAR AND HENCE ENTITLE TO DEPRECIATION AS PER LAW. ACCORDINGLY, THE DISALLOWANCE OF DEPRECIATION IS DELETED. 9. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2009. SD/- SD/- (A.D. JAIN) (DEEPAK R. SHAH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH SEPTEMBER, 2009. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.