Shankar Trading Co.P.Ltd, New Delhi V. DCIT, Circle-23(1), New Delhi

ITA 2540/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9087 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 12-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation

Judgement Text

ITA NO.- 2540/DEL/2018 SHANKAR TRADING CO. P. LTD. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: B: NEW DELHI) BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 2540/DEL/2018 ( ASSESSMENT YEAR: 2013-14) SHANKAR TRADING CO. P. LTD, NEW DELHI. VS. DCIT, CIRCLE-23(1), NEW DELHI. PAN NO: AAACS9302A APPELLANT RESPONDENT ASSESSEE BY : SHRI K. SAMPATH, ADV. SHRI V. RAJA KUMAR, ADV. REVENUE BY : SHRI MAHESH THAKUR, SR. DR PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY ASSESSEE IS FILED AGAINST THE IMPUGNED ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-8, NEW DELHI, [LD. CIT(A), FOR SHORT], DATED 12.02.2018 FOR ASSESSMENT YEAR 2013-14. GROUNDS TAKEN IN THIS APPEAL OF ASSESSEE ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN DISALLOWING LEASE RENT IN A SUM OF RS. 53,80,423/-. THE ORDER BEING ARBITRARY, ERRONEOUS AND UNLAWFUL MUST BE QUASHED WITH DIRECTIONS FOR APPROPRIATE RELIEF. ITA NO.- 2540/DEL/2018 SHANKAR TRADING CO. P. LTD. PAGE 2 OF 5 (B) ASSESSEE FILED RETURN OF INCOME ON 30.09.2013 SHOWING TOTAL INCOME OF RS. 2,70,06,570/-. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING KATHA & CUTCH. THE ASSESSEE CLAIMED EXPENDITURE ON ACCOUNT OF FIXED LEASE RENT AMOUNTING TO RS. 1,00,000/- AND ENHANCED LEASE RENT AMOUNTING TO RS. 1,02,86,544/-; PAID TO M/S MEHTA CHARITABLE PRAJNALAYA TRUST. THE ALLOWABILITY OF SIMILAR PAYMENTS ON ACCOUNT OF FIXED LEASE RENT AND ENHANCED LEASE RENT HAS BEEN DISPUTED ISSUE SINCE ASSESSMENT YEAR 1992-93 ONWARDS. THIS ISSUE TRAVELED UP TO THE HONBLE DELHI HIGH COURT. VIDE ORDER DATED 09.05.2012 FOR ASSESSMENT YEARS 1992-93 TO 2007-08, HONBLE DELHI HIGH COURT DECIDED THE ISSUES IN DISPUTE AND GAVE CURTAIN DIRECTIONS. THESE DIRECTIONS WERE TAKEN INTO ACCOUNT BY THE COORDINATE BENCH OF INCOME TAX APPELLATE TRIBUNAL (ITAT, FOR SHORT) DELHI, AND A CONSOLIDATED ORDER DATED 24.10.2018 WAS PASSED FOR ASSESSMENT YEARS 1992-93 TO 2010-11 IN ITA NOS. 2244, 2245 & 5126 TO 5141/DEL/2014; WHEREIN THE FOLLOWING DIRECTIONS WERE GIVEN TO THE ASSESSING OFFICER (AO, FOR SHORT); FOR WORKING OUT THE NET DISALLOWABLE EXPENDITURE IN THE CASE OF THE ASSESSEE, FOR VARIOUS ASSESSMENTS YEARS: I. PART OF THE ENHANCED LEASE RENT PAID FOR SURRENDERING THE RISE TO PURCHASE THE KHAIR WOOD SHOULD BE TAKEN @15% OF THE AVERAGE PURCHASES PRICE. II. THE NORMAL ESCALATION ON FIXED RENT SHOULD BE TAKEN @10% OF THE LEASE CHARGES PER YEAR. III. THE RENT ATTRIBUTABLE TO MODERNIZATION AND IMPROVEMENT PLANT AND MACHINERY SHOULD BE TAKEN @18%. IV. THE ASSESSING OFFICER SHOULD ALLOW DEPRECIATION W.E.F. 01.04.1998 ON THE PORTION OF THE RENT WHICH IS HELD TO BE CAPITAL IN NATURE IN ACCORDANCE WITH LAW AND ALSO EXAMINE THE ASSESSEES CONTENTION THAT WHETHER THE NON COMPETE FEE CAN BE ALLOWED AS AN EXPENDITURE IN TERMS OF AMENDMENT IN THE STATUTE W.E.F. 01.04.2003. ITA NO.- 2540/DEL/2018 SHANKAR TRADING CO. P. LTD. PAGE 3 OF 5 (B.1) SIMILAR DIRECTIONS WERE GIVEN BY COORDINATE BENCHES OF INCOME TAX APPELLATE TRIBUNAL, DELHI IN ASSESSEES OWN CASE VIDE ORDER DATED 31.01.2019 FOR ASSESSMENT YEAR 2011-12 IN ITA NO. 5510/DEL/2014 AND ORDER DATED 11.08.2020 FOR ASSESSMENT YEAR 2012-13 IN ITA NO. 651/DEL/2017. (C) AT THE TIME OF HEARING BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE IN THE PRESENT APPEAL, REGARDING ALLOWABILITY OF LEASE RENT IS SQUARELY COVERED BY THE AFORESAID ORDERS DATED 24.10.2018, 31.01.2019 AND 11.08.2020 OF COORDINATE BENCHES OF ITAT, DELHI IN ASSESSEES OWN CASE. THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE (LD. SR. DR, FOR SHORT) OF REVENUE AGREED WITH THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE AFORESAID ORDERS DATED 24.10.2018, 31.01.2019 AND 11.08.2020 OF COORDINATE BENCHES OF ITAT, DELHI IN ASSESSEES OWN CASE. NEITHER SIDE HAS BROUGHT ANY MATERIALS FOR OUR CONSIDERATION TO PERSUADE US TO TAKE A VIEW DIFFERENT FROM THE VIEW ALREADY TAKEN BY CO-ORDINATE BENCHES OF ITAT, DELHI IN ASSESSEES OWN CASE BY AFORESAID ORDERS DATED 24.10.2018, 31.01.2019 AND 11.08.2020 OF CO-ORDINATE BENCHES OF ITAT, DELHI. NEITHER SIDE HAS BROUGHT TO OUR ATTENTION ANY DISTINGUISHING FACTS AND CIRCUMSTANCES FOR ASSESSMENT YEAR 2013-14 (TO WHICH THE PRESENT APPEAL PERTAINS) FROM FACTS AND CIRCUMSTANCES OF THE AFORESAID ORDERS DATED 24.10.2018, 31.01.2019 AND 11.08.2020 OF COORDINATE BENCHES OF ITAT, DELHI. MOREOVER, BOTH SIDES ARE IN AGREEMENT THAT THE ISSUE IN DISPUTE IN THE PRESENT APPEAL BEFORE US IS SQUARELY COVERED BY AFORESAID ORDERS DATED 24.10.2018, 31.01.2019 AND 11.08.2020 OF CO-ORDINATE BENCHES OF ITAT, DELHI. IN VIEW OF THE FOREGOING; AND RESPECTFULLY FOLLOWING THE ITA NO.- 2540/DEL/2018 SHANKAR TRADING CO. P. LTD. PAGE 4 OF 5 AFORESAID ORDERS DATED 24.10.2018, 31.01.2019 AND 11.08.2020 OF COORDINATE BENCHES OF ITAT, DELHI WE DIRECT THE AO TO COMPUTE THE DISALLOWABLE EXPENDITURE ON THE BASIS OF DIRECTIONS GIVEN BY THE COORDINATE BENCHES OF ITAT, DELHI, FOR ASSESSMENT YEARS 1992- 93 TO 2012-13; VIDE AFORESAID ORDERS DATED 24.10.2018, 31.01.2019 AND 11.08.2020. (D) IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/08/2021. SD/- SD/- (KUL BHARAT) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12/08/2021 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.- 2540/DEL/2018 SHANKAR TRADING CO. P. LTD. PAGE 5 OF 5 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE 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