Indo Hongkong Industries Pvt. Ltd, New Delhi V. DCIT, New Delhi

ITA 2612/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0744 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2011-2012
• Appeal Filed On: 01-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: ASHISH CHADHA
• Keywords: Earning of tax free income; Revenue expenditure
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER ITA NOS.2611 & 2612/DEL/2015 ASSESSMENT YEARS : 2006-07 & 2011-12 INDO HONGKONG INDUSTRIES PVT. LTD., B-56, SHIVALIK, MALVIYA NAGAR, NEW DELHI. POAN: AAACI10265N VS. DCIT, WARD-11(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, CA & SHRI ASHISH CHADHA, ADVOCATE DEPARTMENT BY : SHRI F.R. MEENA, SR. DR DATE OF HEARING : 17.09.2018 DATE OF PRONOUNCEMENT : 18.09.2018 ORDER PER R.S. SYAL, VP: THESE TWO APPEALS FILED BY THE ASSESSEE RELATE TO THE ASSESSMENT YEARS 2006-07 AND 2011-12. SINCE COMMON ISSUES ARE INVOL VED IN THESE APPEALS, ITA NOS.2611 & 2612/DEL/2015 2 WE ARE, THEREFORE, DISPOSING THEM OFF BY THIS CONSO LIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEAR 2006-07 2. THE FIRST ISSUE RAISED IN THESE APPEAL THROUGH G ROUND NO.2 IS AGAINST THE CONFIRMATION OF ACTION OF THE ASSESSING OFFICER IN DISALLOWING RS.1,00,43,676/- CLAIMED BY THE ASSESSEE AS DEFERRE D REVENUE EXPENDITURE. 3. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD, IT IS OBSERVED THAT SIMILAR ISSUE CAME UP F OR CONSIDERATION BEFORE THE TRIBUNAL IN ITS ORDER FOR THE ASSESSMENT YEARS 2005 -06, 2008-09 AND 2010- 11. A COPY OF SUCH ORDER HAS BEEN PLACED ON RECORD . THE LD. AR CANDIDLY ADMITTED THAT THIS ISSUE HAS BEEN DECIDED AGAINST T HE ASSESSEE BY THE TRIBUNAL IN SUCH AN ORDER. IN THE ABSENCE OF ANY D ISTINGUISHING FEATURE BROUGHT TO OUR NOTICE BY THE LD. AR ON THIS ISSUE, WE UPHOLD THE IMPUGNED ORDER. THIS GROUND IS NOT ALLOWED. 4. THE NEXT GROUND IS AGAINST THE ALTERNATIVE SUBMI SSION OF THE ASSESSEE VIS--VIS THE DEFERRED REVENUE EXPENDITURE. HERE AGAIN, THE LD. AR SUBMITTED THAT THIS ISSUE HAS BEEN DECIDED BY THE T RIBUNAL AGAINST THE ITA NOS.2611 & 2612/DEL/2015 3 ASSESSEE IN THE AFORENOTED ORDER. RESPECTFULLY FOL LOWING THE PRECEDENT, WE UPHOLD THE IMPUGNED ORDER ON THIS SCORE. THIS GROUN D FAILS. 5. THE NEXT GROUND IS AGAINST DISALLOWANCE OF DEPRE CIATION ON WATER PUMP, ELECTRICAL FITTINGS, WATER TREATMENT PLANT, E TC. THE LD. AR SUBMITTED THAT EXCEPT FOR HOLDING THAT WATER PUMPS AND ELECTR ICAL FITTINGS ARE PART OF BUILDING COST, THE TRIBUNAL TREATED WATER TREATMENT PLANT ETC. AS NOT FORMING PART OF `BUILDING COST IN ITS ORDER FOR THE PRECED ING YEAR. THE LD. AR CANDIDLY ADMITTED THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE MUTATIS MUTANDIS SIMILAR TO THE PRECEDING YEAR. RESPECTFULLY FOLLO WING THE PRECEDENT, WE ADOPT THE FINDINGS RECORDED BY THE TR IBUNAL IN ITS ORDER IN PARAS 15 AND 15.1. ACCORDINGLY, IT IS HELD THAT WA TER PUMP AND ELECTRICAL FITTINGS ARE PART OF `BUILDING COST, WHEREAS THE WATER TREATMENT PLANT, ETC. ARE NOT PART OF `BUILDING COST. 6. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ASSESSMENT YEAR 2011-12 7. GROUND NO.2 RAISED BY THE ASSESSEE IS AGAINST TH E SUSTENANCE OF DISALLOWANCE OF RS.59,66,807/- ON ACCOUNT OF DEFERR ED REVENUE EXPENDITURE. ITA NOS.2611 & 2612/DEL/2015 4 BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THIS GROUND ARE MUTATIS MUTANDIS SIMILAR TO GROUND NO.2 OF ASSESSMENT YEAR 2006-07. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE DISMISS THIS GROUND. 8. SIMILAR IS THE POSITION FOR GROUND NO.3 WHICH IS STATED TO BE SIMILAR TO GROUND NO.3 FOR THE ASSESSMENT YEAR 2006-07. FOLLO WING THE VIEW TAKEN FOR THE ASSESSMENT YEAR 2006-07, WE DISMISS THIS GR OUND OF APPEAL. 9. GROUND NO.4 IS AGAINST CONFIRMATION OF ADDITION OF RS.75,857/- MADE BY THE ASSESSING OFFICER U/S 14A OF THE ACT. 10. BRIEFLY STATED, THE FACTS OF THIS GROUND ARE TH AT THE ASSESSEE RECEIVED EXEMPT DIVIDEND INCOME OF RS.15,245/-. THE ASSESSI NG OFFICER COMPUTED DISALLOWANCE U/S 14A READ WITH RULE 8D AT RS.8,47,0 34/-. THE LD. CIT(A) REDUCED THE DISALLOWANCE TO RS.75,857/-. THE ASSES SEE IS AGGRIEVED AGAINST THE SUSTENANCE OF ADDITION TO THIS EXTENT. 11. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE RE LEVANT MATERIAL ON RECORD. IT IS FOUND THAT THE ASSESSEE EARNED DIVIDE ND INCOME OF RS.15,245/-, WHICH WAS CLAIMED AS EXEMPT. T HE HON'BLE DELHI HIGH COURT IN THE CASE CHEMINVEST LTD. VS. CIT (2015) 378 ITR 33 (DEL) HAS HELD THAT IF THERE IS ITA NOS.2611 & 2612/DEL/2015 5 NO EXEMPT INCOME, THERE CAN BE NO QUESTION OF MAKIN G ANY DISALLOWANCE U/S 14A OF THE ACT. SIMILAR VIEW HAS BEEN TAKEN BY THE HON'BLE DELHI HIGH COURT IN CIT VS. HOLCIM INDIA P. LTD. (2014) 90CCH 081-DEL- HC . THE NET EFFECT OF THESE DECISIONS IS THAT THE DISAL LOWANCE U/S 14A GETS RESTRICTED TO THE EXTENT OF EXEMPT INCOME, EVEN IF THE PROVISIONS OF THE SECTION ARE ATTRACTED. IN VIEW OF THE ABOVE PRECEDE NTS, WHICH ARE SQUARELY APPLICABLE TO THE FACTS OF THE INSTANT CASE, WE LIM IT THE DISALLOWANCE TO THE EXTENT OF EXEMPT INCOME OF RS.15,245/-. THE IMPUGNE D ORDER IS MODIFIED PRO TANTO. 12. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.09.201 8. SD/- SD/- [BEENA A. PILLAI] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 18 TH SEPTEMBER, 2018. DK ITA NOS.2611 & 2612/DEL/2015 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.