ITO, New Delhi V. M/s. Hotel Devgiri Pvt. Ltd., New Delhi

ITA 2613/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7541 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 09-08-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 30-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-I : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.2613/DEL/2014 ASSESSMENT YEAR : 2007-08 ITO, WARD-12(4), CR BUILDING, NEW DELHI. VS. HOTEL DEVGIRI PVT. LTD., C/O SHIVAJI M. JADHAV, 166, SUPREME ENCLAVE, MAYUR VIHAR PHASE-I, DELHI. PAN: AABCH2438R (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI ANIL KUMAR SHARMA, SR. DR DATE OF HEARING : 09.08.2016 DATE OF PRONOUNCEMENT : 09.08.2016 ORDER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE CIT(A) ON 20.02.2014 IN RELATION TO THE ASSE SSMENT YEAR 2007-08. ITA NO.2613/DEL/2014 2 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAIN ST THE DELETION OF ADDITION OF RS.1,62,77,577/- MADE BY THE ASSESSING OFFICER ( AO) U/S 28(IV) OF THE INCOME-TAX ACT, 1961. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE AO INITIATED RE- ASSESSMENT PROCEEDINGS BY OBSERVING THAT THE ASSESS EE COMPANY TOOK OVER THE BUSINESS OF ERSTWHILE HOTEL AURANGABAD ASHOKA I N TERMS OF DEMERGER ORDER OF THE COMPANY LAW BOARD AND ALL THE ASSETS A ND LIABILITIES WERE TAKEN OVER IN LIEU OF WHICH 1283594 SHARES OF RS.10 EACH WERE ISSUED TO THE SHAREHOLDERS OF THE ITDC. THE EXCESS OF VALUE OF NET ASSETS TAKEN OVER OF RS.1,62,77,577/- OVER THE SHARE CAPITAL ALLOTTED WAS CREDITED TO THE CAPITAL RESERVE ACCOUNT AND NOT OFFERED FOR TAXATIO N. AFTER CONSIDERING THE CONTENTIONS RAISED ON BEHALF OF THE ASSESSEE, T HE AO MADE ADDITION OF RS.1.62 CRORE BEING THE EXCESS VALUE OF NET ASSETS OVER THE SHARE CAPITAL ALLOTTED. THE LD. CIT(A) DELETED THE ADDITION BY O BSERVING THAT THE CAPITAL RESERVE OF RS.1.62 CRORE WAS CREATED IN FINANCIAL Y EAR 2002-03 RELEVANT TO ASSESSMENT YEAR 2003-04 AND, HENCE, IT HAS NO RELAT ION WITH THE ASSESSMENT FOR THE CURRENT YEAR, NAMELY, AY 2007-08. ITA NO.2613/DEL/2014 3 4. I HAVE HEARD THE LD. DR AND PERUSED THE RELEVANT MATERIAL ON RECORD. NOTICES HAVE BEEN SENT TO THE ASSESSEE ON SEVERAL O CCASIONS STARTING FROM 26.10.2015 AND, THEREAFTER, ON 29.12.2015, 10.12.20 16, 23.3.2016, 25.4.2016 AND 8.6.2016. THE ASSESSEE HAS CHOSEN TO REMAIN ABSENT. IN THIS VIEW OF THE MATTER, I AM PROCEEDING TO DISPOSE OF T HE REVENUES APPEAL EX PARTE QUA THE ASSESSEE. 5. IT IS NOTICED THAT THE AO MADE ADDITION OF RS.1. 62 CRORE TOWARDS THE CAPITAL RESERVE CREATED BY THE ASSESSEE ON ACCOUNT OF EXCESS VALUE OF NET ASSETS TAKEN OVER OF RS.1.62 CRORE OVER THE SHARE C APITAL ALLOTTED. THE LD. CIT(A) HAS DELETED THE ADDITION BY OBSERVING THAT S UCH CAPITAL RESERVE WAS CREATED IN ACCOUNTS FOR THE ASSESSMENT YEAR 200 3-04. I AM UNABLE TO FIND ANY SUCH FINDING IN THE ASSESSMENT ORDER RELAT ING TO THE CREATION OF RESERVE IN THE ACCOUNTS FOR THE FINANCIAL YEAR 2002 -03 RELEVANT TO THE AY 2003-04. IF THE POSITION AS NOTED BY THE LD. CIT(A ) IS CORRECT, THEN, OF COURSE, NO ADDITION CAN BE MADE FOR THE ASSESSMENT YEAR 2007-08 UNDER CONSIDERATION. HOWEVER, THE FACT AS TAKEN NOTE OF BY THE LD. CIT(A) ABOUT THE CREATION OF RESERVE IN AN EARLIER YEAR IS NOT S UBSTANTIATED EITHER FROM THE ASSESSMENT ORDER OR FROM OTHER MATERIAL AVAILAB LE ON RECORD. THE ITA NO.2613/DEL/2014 4 ASSESSEE HAS ALSO CHOSEN TO REMAIN ABSENT AND, AS S UCH, THE CORRECTNESS OF THE FINDING RECORDED BY THE LD. CIT(A) CANNOT BE VE RIFIED. UNDER THESE CIRCUMSTANCES, I SET ASIDE THE IMPUGNED ORDER AND R EMIT THE MATTER TO THE FILE OF AO FOR DECIDING THIS ISSUE AFRESH AS PER LA W IN THE LIGHT OF THE ABOVE GUIDELINE. 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.08.2 016. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED, 09 TH AUGUST, 2016. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.