DCIT, New Delhi V. M/s. I.P. Support Services (India) Pvt. Ltd., Delhi

ITA 2644/DEL/2012

• Counselvise Citation: 264420114 RSA 2012
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 31-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R GANESHAN

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C : NEW DELHI SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI A.N. PAHUJA, ACCOUNTANT MEMBER ITA NO. 2644/DEL/2012 ASSESSMENT YEAR: 2008- 2009 DCIT VS. I.P. SUPPORT SERVICES (INDIA) PVT. LTD. CIRCLE 11(1) 202, KIRTIDEEP BUILDING, ROOM NO. 312 2, NANGAL RA YA BUSINESS CENTRE, C.R. BUILDING, DELHI 110 046 NEW DELHI. PAN - AAACI3062R (APPELLANT) (RES PONDENT) APPELLANT BY : SH RI NEERAJ KUMAR, SR. RESPONDENT BY : MR. R. GANESHAN ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS IMPUGNED FIRST APPELLATE ORDER ON THE GROUND THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS. 50,29,506/- MADE ON ACCOUNT OF DISALLOWANCE OF REPAIR AND MAINTENANC E EXPENSES. 2. AT THE OUTSET OF HEARING LD. AR POINTED O UT THAT FIRST APPELLATE ORDER FOR THE ASSESSMENT YEAR 2006-07 ON THE ISSUE FOLLOW ING WHICH THE LD. CIT(A) HAD DELETED THE ADDITION OF RS. 50,29,506/- MADE ON ACCOUNT OF DISALLOWANCE OF REPAIR AND MAINTENANCE EXPENSES HAS BEEN APPROVED BY THE ITA NO. 2644/DEL/2012 2 TRIBUNAL VIDE ITS ORDER DATED 31 ST JANUARY, , 2012 IN ITA NO. 1173/D/2011 (ASSTT. YEAR 2006-07), A COPY THEREOF HAS BEEN MADE AVAILABLE FOR PERUSAL OF THE BENCH. 3. LD. DR DID NOT DISPUTE THE ABOVE SUBMISSI ON OF THE AR. 4. THE RELEVANT FACTS ARE THAT THE ASSESSEE COMP ANY VIDE LICENCE AGREEMENT DATED 16.3.2007 WITH REMFRY & SAGAR (PAR TNERSHIP FIRM) WAS ALLOWED THE USE OF THE OFFICE PREMISES OWNED BY THE COMPANY AT MILLENNIUM PLAZA, GURGAON AT 6 TH , 7 TH , 8 TH AND 9 TH FLOOR. THE TAXABLE RENTAL INCOME OF RS. 2,81,21,300/- WAS DECLARED BY THE ASSESSEE AFTER CO NSIDERING 30% STATUTORY DEDUCTION FOR REPAIRS UNDER SECTION 24 OF THE INCOM E TAX ACT, 1961. THE AO HOWEVER DISALLOWED THE SUM OF RS. 50,29,506/- OUT O F THE TOTAL REPAIRS AND MAINTENANCE EXPENSES ON BUILDING, FURNITURE AND OTH ERS DEBITED TO THE PROFIT & LOSS ACCOUNT AT RS. 50,94,609/-. THE AO MA DE THE SAID DISALLOWANCE ON THE BASIS THAT SINCE THE ASSESSEE H AS CLAIMED 30% OF THE LICENCE FEES UNDER THE INCOME FROM HOUSE PROPERTY A S DEDUCTION U/S 24 OF THE IT ACT, THEREFORE FURTHER DEDUCTION OF EXPENSES FOR REPAIRS AND MAINTENANCE OF BUILDING, FURNITURE AND OTHERS IS NO T ALLOWABLE. THE AO ACCORDINGLY MADE PROPORTIONATE DISALLOWANCE OF THE EXPENDITURE PERTAINING TO THE PORTION LET OUT. BEFORE LD. CIT(A) THE ASSES SEE REFERRED DIFFERENT CLAUSES OF THE AGREEMENT TO SUPPORT ITS ARGUMENT TH AT APART FROM THE LICENSE FEES (RENT) PAYABLE BY THE PARTNERSHIP ON M ONTH TO MONTH BASIS SUBJECT TO DEDUCTION OF TAX AT SOURCE, THE PARTNERS HIP SHALL REIMBURSE TO THE ITA NO. 2644/DEL/2012 3 ASSESSEE COMPANY THE ANNUAL CHARGES PAID BY THE ASS ESSEE PER MONTH IN RESPECT OF (I) THE MAINTENANCE OF THE LICENSED PREM ISES AND (II) POWER AND WATER CONSUMPTION BY THE PARTNERSHIP IN THE LICENSE D PREMISES. IT WAS ALSO AGREED UPON THAT ANY FRESH TAXES, LEVIES OR CHARGES OR INCREASE IN ANY TAXES, LEVIES OR CHARGES REFERRED TO CLAUSE 4(A) TO THE AGREEMENT GOING OVER THE RATES PRESENTLY LEVIABLE WILL BE PAID BY THE SA ID PARTNERSHIP IN ADDITION. THEREFORE THE NORMAL MAINTENANCE AS WELL AS THE CON SUMABLES IN RESPECT OF THE PREMISES WHICH WERE ON RENT WAS TO BE BORNE BY THE TENANT WHO WAS OCCUPYING THE SAID PREMISES AND USING IT FOR ITS OW N PURPOSES. THE DETAILS OF EXPENSES ON REPAIRS AND MAINTENANCE OF THE BUILD ING OTHERS REPAIR AND MAINTENANCE AGGREGATING TO RS. 50,94,609/- AS REFLE CTED IN SCHEDULE 9 OF THE PROFIT AND LOSS ACCOUNT, WAS FURNISHED. IT WAS ALSO SUBMITTED THAT THESE EXPENSES CONSIST OF AMOUNTS SPENT FOR THE COMPANY A S WELL AS AMOUNTS SPENT FOR THE FIRM. THE ASSESSEE ALSO FURNISHED THE EXPENSES SHOWN IN SCHEDULE 9 BIFURCATED AS AMOUNT SPENT FOR THE COMPA NY AND AMOUNT SPENT FOR THE FIRM. IT WAS SUBMITTED THAT THE AMOUNT IS S PENT FOR THE FIRM WAS RECOVERED AS CONSULTANCY FEES ALONGWITH 25% MARK UP , WHICH WAS SHOWN IN THE PROFIT AND LOSS ACCOUNT AS SERVICE FEE. THE ASS ESSEE THUS SUBMITTED THAT THERE WAS NO CASE OF ANY DISALLOWANCE OF EXPENDITUR E BECAUSE THE EXPENDITURE STOOD REIMBURSED AS PER THE AGREEMENT H AVING NO EFFECT ON THE PROFIT OF THE COMPANY. BEING CONVINCED WITH THESE S UBMISSIONS AND ITA NO. 2644/DEL/2012 4 FOLLOWING THE FIRST APPELLATE ORDER ON IDENTICAL IS SUE FOR THE ASSESSMENT YEAR 2006-07, LD. CIT(A) HAS DELETED THE ADDITION. 5. HAVING GONE THROUGH THE ORDER DATED 31 ST JANUARY,2012 OF THE TRIBUNAL (SUPRA) FOR THE ASSESSMENT YEAR 2006-07 IN THE CASE OF ASSESSEE, RELIED UPON BY THE LD. AR, WE FIND THAT AN IDENTICA L ISSUE UNDER SIMILAR FACTS HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE A SSESSEE. IN OTHER WORDS THE FIRST APPELLATE ORDER FOR THE ASSESSMENT YEAR 2 006-07 ON AN IDENTICAL ISSUE FOLLOWING WHICH THE FIRST APPELLATE AUTHORITY HAS ALLOWED THE APPEAL ON THE ISSUE IN FAVOUR OF THE ASSESSEE, HAS BEEN APPRO VED BY THE TRIBUNAL VIDE SAID ORDER DATED 31.1.2012. UNDER THESE CIRCUMSTANC ES WE DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER. THE SAME IS UPHELD. IN THE RESULT GROUND RAISED IS REJECTED. 6. CONSEQUENTLY APPEAL IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2012. SD/- SD/- (A.N. PAHUJA) ( I.C. SUD HIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 26.10.2012 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT