Glaze Infra Developers Pvt Ltd, New Delhi V. DCIT Circle-10(1), New Delhi

ITA 2651/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1966 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 27-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 22

Judgement Text

1 ITA NO. 2651/DEL/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: I(2 ) + SMC NEW DELHI BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEM BER, AND SHRI B. R. R. KUMAR, ACCOUNTA NT MEMBER ITA NO. 2651/DEL/2019 ( A.Y 2015-16) GLAZE INFRA DEVELOPES PVT. LTD. U-2, 3 RD FLOOR, GREEN PARK, NEW DELHI AADCG4102B (APPELLANT) VS DCIT CIRCLE-10(1) C.R. BUILDING, NEW DELHI (RESPONDENT) APPELLANT BY SH. T. R. TALWAR, ADV RESPONDENT BY SH. PRADEEP SINGH GAUTAM, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 15/01/2019 PASSED BY CIT(A)- 22 FOR ASSESSMENT YEAR 2015-16. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED:- 1. IN DISALLOWING THE EXPENDITURE OF RS. 14,82,863/ - REPRESENTING RENT EXPENSES (RS. 5,25,000/-) SALARY AND WAGES RS. 7,61 ,144/- AND TRANSACTION CHARGES (RS. 1,35,020/-) CLAIMED BY THE APPELLANT C OMPANY WHEN THE BUSINESS HAS BEEN SET UP. 2. IN NOT ALLOWING THE ABOVE EXPENSES WHEN THE SAME HAVE BEEN INCURRED IN PURSUIT OF THE BUSINESS SET UP BY THE ASSESSEE. DATE OF HEARING 27.02.2020 DATE OF PRONOUNCEMENT 08.05.2020 2 ITA NO. 2651/DEL/2019 3. THE ASSESSEE COMPANY IS ENGAGED IN THE B USINESS OF CONTRACTORS AND BUILDERS. THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING LOSS OF RS.6,85,038/- ON 26/09/2015. THE ASSESSING OFFICER MADE DISALLOWANCE OF RS.14,82,863/- IN RESPECT OF EXPENSES CLAIMED BY TH E ASSESSEE. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL O F THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE BUSINESS WAS NOT A T ALL CLOSED DOWN BY THE ASSESSEE AND VERY MUCH OPERATIONAL DURING THE R ELEVANT ASSESSMENT YEAR. MERELY INCURRING LOSS CANNOT MAKE THE ASSUMPTION TH AT THE EXPENSES HAVE NOT BEEN INCURRED DURING THE CURRENT YEAR. THE RENT EX PENSES OF OFFICE PURPOSE AND SALARY AND WAGES FOR THE WORK TO BE DONE IS A NECES SITY AND IS REQUIREMENT FOR RUNNING THE BUSINESS. THEREFORE, THE ASSESSING OFF ICER AS WELL AS THE CIT(A) WAS NOT CORRECT IN DISALLOWING THE SAME. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AS W ELL AS ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE SUBMISSION OF THE ASSESSEE BEFORE THE REVENUE AUTHORITIES WAS THAT THE ASSESSEE HAS NOT EARNED ANY OPERATIONAL IN COME BUT THE BUSINESS WAS OPERATIONAL DURING THE YEAR. THE ASSESSEE EARNED ON LY OTHER INCOME AND AGAINST THE SAID INCOME THE ASSESSEE CLAIMED THE OT HER EXPENSES ONLY WHICH ARE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF TRADE AND BUSINESS OF THE ASSESSEE. THIS ASPECT WAS NEVER DISPUTED BY THE REV ENUE AT ANY POINT OF TIME. THUS, THE BUSINESS OF THE ASSESSEE WAS VERY MUCH OP ERATIONAL IN THIS PARTICULAR YEAR AS WELL. THEREFORE, RENT CHARGES A ND SALARY WAGES AND EXPENSES CANNOT BE DISALLOWED AS THE BUSINESS OF THE ASSESSE E WAS OPERATIONAL. HENCE, THE CIT(A) AS WELL AS THE ASSESSING OFFICER WAS NOT RIGHT IN DISALLOWING THE SAID 3 ITA NO. 2651/DEL/2019 EXPENSES. THEREFORE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 08 TH DAY OF MAY, 2020. SD/- SD/- (B. R. R. KUMAR) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 08/05/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 4 ITA NO. 2651/DEL/2019 DATE OF DICTATION 27.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 28.02.2020 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 1 3 . 0 5 . 2 0 2 0 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