M/s. DLF Projects Limited, Gurgaon V. Addl.CIT, Gurgaon

ITA 2458/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5175 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANSHUL PRAKASH
• Assessee Lawyers: SATYAJEET GOEL CAS
• Keywords: Capital asset
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.2458/DEL/2014 ASSESSMENT YEAR : 2008-09 DLF PROJECTS LIMITED, (FORMERLY KNOWN AS DT PROJECTS LIMITED), 3 RD FLOOR, SHOPPING MALL, ARJUN MARG, DLF CITY PHASE-1, GURGAON. PAN: AACCD3093R VS. ADDL. CIT, RANGE-I, GURGAON. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.S. SINGHVI & SHRI SATYAJEET GOEL, CAS DEPARTMENT BY : SHRI ANSHUL PRAKASH, SR. DR DATE OF HEARING : 17.08.2017 DATE OF PRONOUNCEMENT : 18.08.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF TH E ORDER PASSED BY THE CIT(A) ON 14.02.2014 IN RELATION TO THE ASSESSM ENT YEAR 2008-09. ITA NO.2458/DEL/2014 2 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.1,57,180/- ON ACCOUNT OF SHORT I NSURANCE CLAIM. THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSEE CLAI MED DEDUCTION OF RS.1.57 LAC ON ACCOUNT OF LOSS OF INSURANCE CLAIM. THE ASSESSING OFFICER DID NOT ALLOW THE SAME. THE LD. CIT(A) SUS TAINED THE DISALLOWANCE. NOW THE ASSESSEE IS BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE RELEVANT MATERIAL ON RECORD. THE HON'BLE SUPREME COURT IN CIT VS. WOODWARD GOVERNOR INDIA (P) LTD. (2009) 312 ITR 254 (SC) HAS HELD THAT ADDITIONAL LIABILITY DUE TO EXCHANGE RATE FLUCTUATI ON ON ACCOUNT OF TRADING TRANSACTIONS IS IN THE NATURE OF LOSS AND, HENCE, D EDUCTIBLE. THE PRINCIPLE WHICH EMERGES FROM THIS JUDGMENT IS THAT ANY LOSS S UFFERED BY THE ASSESSEE ON ACCOUNT OF TRADING TRANSACTIONS IS DEDU CTIBLE AND PER CONTRA, ANY LOSS INCURRED BY THE ASSESSEE ON ACCOUNT OF NON -TRADING TRANSACTIONS DOES NOT QUALIFY FOR DEDUCTION. IF THE LOSS HAS AR ISEN ON ACCOUNT OF SOME CAPITAL ASSET, THE SAME CANNOT BE ALLOWED AS DEDUCT ION. APPLYING THIS PRINCIPLE TO THE FACTS OF THE INSTANT CASE, WE HOLD THAT LOSS ARISING TO THE ITA NO.2458/DEL/2014 3 ASSESSEE DUE TO SHORT RECEIPT OF INSURANCE CLAIM ON ACCOUNT OF STOCK ETC. HAS TO BE ALLOWED AS DEDUCTION AND ANY LOSS ARISING DUE TO SHORT CLAIM OF INSURANCE ON ACCOUNT OF CAPITAL ASSETS ETC., WHICH HAS NO RELATION WITH THE TRADING TRANSACTIONS, CANNOT BE ENTERTAINED FOR DEDUCTION. SINCE NECESSARY DETAILS OF THE SHORT INSURANCE CLAIM ARE NOT AVAILABLE ON RECORD, WE SET ASIDE THE IMPUGNED ORDER AND REMIT T HE MATTER TO THE FILE OF ASSESSING OFFICER FOR DECIDING THIS ISSUE AFRESH IN THE LIGHT OF OUR ABOVE OBSERVATIONS. 4. THE ONLY OTHER GROUND IS AGAINST THE CONFIRMATIO N OF DISALLOWANCE OF RS.1,02,75,926/-. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT `PROVISIO N FOR LEAVE ENCASHMENT WAS NOT PAID BEFORE THE DATE OF FILING OF RETURN IN TERMS OF SECTION 43B(F). ON BEING CALLED UPON TO EXPLAIN AS TO WHY DISALLOWANCE BE NOT MADE, THE ASSESSEE SUBMITTED THAT THE DEDUCT ION IS ALLOWABLE IN VIEW OF THE JUDGMENT OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. VS. UNION OF INDIA , WHEREIN IT HAS BEEN HELD THAT THE AMENDMENT MADE FOR INSERTION OF CLAUSE (F) TO S ECTION 43B IS ULTRA ITA NO.2458/DEL/2014 4 VIRES . RELYING ON THE MANDATE OF SUB-SECTION (F) TO SEC TION 43B, THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.1.02 CROR E. THE LD. CIT(A) SUSTAINED THE DISALLOWANCE. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND P ERUSING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE HON'BLE SUPREME COURT IN BHARAT EARTH MOVERS VS. CIT (2000) 245 ITR 428 (SC) HELD THAT DEDUCTION ON ACCOUNT OF PROVISION OF LEAVE SALARY I S AVAILABLE. THE LEGISLATURE, IN ITS WISDOM, NULLIFIED THE EFFECT OF THIS JUDGMENT BY WAY OF INSERTION OF CLAUSE (F) TO SECTION 43B BY THE FINAN CE ACT 2001 W.E.F. 1.04.2002. THE EFFECT OF THIS INSERTION IS THAT ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER IN LIEU OF ANY LEAVE AT THE CREDIT OF HIS EMPLOYEE IS DEDUCTIBLE ONLY ON ACTUAL PAYMENT. PER CONTRA, A MERE PROVISION WITHOUT ACTUAL PAYMENT IS NOT ELIGIBLE FOR DEDUCTIO N. SINCE WE ARE DEALING WITH THE A.Y. 2008-09, THE AMENDMENT BY WAY OF INSERTION OF CLAUSE (F) W.E.F. A.Y. 2002-03 WOULD SQUARELY APPLY TO THE POSITION OBTAINING BEFORE US. ITA NO.2458/DEL/2014 5 6. THE LD. AR CONTENDED THAT THIS AMENDMENT IS UNCONSTITUTIONAL AND HENCE SHOULD NOT BE ACTED UPON. IN SUPPORT OF THIS SUBMISSION, HE RELIED ON THE JUDGMENT OF THE HON'BLE CALCUTTA HIGH COURT IN EXIDE INDUSTRIES LTD. AND ANOTHER VS. UNION OF INDIA . IN THIS JUDGMENT, THE HON'BLE CALCUTTA HIGH COURT HAS HELD THE AMENDMENT TO SECTI ON 43B BY WAY OF INSERTION OF CLAUSE (F), AS UNCONSTITUTIONAL. HOWEV ER, IT IS IMPORTANT TO NOTE THAT THE HON'BLE SUPREME COURT VIDE ITS JUDGME NT DATED 8.5.2009 IN CIT VS. EXIDE INDUSTRIES LTD. AND ANOTHER HAS STAYED THE OPERATION UNTIL FURTHER ORDERS. IT HAS FURTHER BEEN HELD BY THE HON 'BLE SUPREME COURT THAT : `THE ASSESSEE WOULD, DURING THE PENDENCY OF THIS CIVIL APPEAL, PAY TAX AS IF SECTION 43B(F) IS ON THE STATUTE BOOK BUT AT THE SAME TIME IT WOULD BE ENTITLED TO MAKE A CLAIM IN ITS RETURNS.' IN VIEW OF THE CLEAR ENUNCIATION OF LAW BY THE HON'BLE SUPREME COURT, WE ARE OF THE CONSIDERED OPINION THAT DEDUCTION U/S 43B (F) CANNO T BE ALLOWED ON THE MAKING OF A MERE PROVISION UNLESS THE AMOUNT IS ACT UALLY PAID. AS THE ASSESSEE HAS ADMITTEDLY NOT MADE THE PAYMENT OF THE AMOUNT IN QUESTION AND CLAIMED DEDUCTION ON THE BASIS OF PROVISION, WE ARE OF THE CONSIDERED OPINION THAT THE VIEW OF THE LD. CIT(A) CANNOT BE TINKERED ITA NO.2458/DEL/2014 6 WITH. OUR VIEW IS FORTIFIED BY THE ORDER DATED 31. 10.2013 PASSED BY THE DELHI BENCH OF THE TRIBUNAL IN DLF HOME DEVELOPERS LTD. VS. ACIT IN ITA NO.2559/DEL/2013 FOR ASSESSMENT YEAR 2008-09. WE THEREFORE, UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. 7. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.08.201 7. SD/- SD/- [K. NARASIMHA CHARY] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 18 TH AUGUST, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.