M/s. Uttranchal India, Delhi V. Addl. CIT, New Delhi

ITA 2717/DEL/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6578 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 04-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V R SONBHADRA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH H NEW DELHI BEFORE : SHRI H.S. SIDHU , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 2717/DEL./2013 ASSTT. YEAR : 2009 - 10 UTTARANCHAL INDIA, VS. ADDL. CIT, RANGE - 39, 1826, BHAGIRATH PALACE, NEW DELHI. DELHI[PAN: AABFU8676 K] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. DEEPAK MALIK, ADV. & SH. M.P. RASTOGI, ADV. RESPONDENT BY : SH. V.R. SONBHADRA, SR. DR DATE OF HEA RING : 04.02.2016 DATE OF PRONOUNCEMENT : 01 .03.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS APPEAL AT THE INSTANCE OF ASSESSEE ARISES OUT OF THE ORDER DATED 15.01.2013 OF LD. CIT(A) - XXVIII, NEW DELHI FOR THE ASSESSMENT YEAR 2009 - 10 ON THE FOLLOWING GROUNDS: 1. THAT THE LEARNED AO HAS ERRED IN LAW AND FACTS OF THE CASE WHILE DISMISSING GROUND OF APPEAL DISALLOWING AND ADDING BACK EXPENDITURES INCURRED QUITE INCIDENTAL TO BUSINESS UNDER THE FOLLOWING HEADS : - I. INTEREST PAID AGAINST PROPE RTY RS.5,89,793/ - II. RENT PAID FOR GUEST HOUSE RS.2,16,000/ - III. REMUNERATION RS.3,60,000/ - 2. THAT THE CONFIRMATION OF DISALLOWANCES OF EXPENDITURES AND ADDITION BACK TO INCOME IS QUITE UN - WANTED AND UNJUSTIFIED. ITA NO. 2717/DEL./2013 2 2. THE LD. COUNSEL FOR THE ASS ESSEE HAS ALSO RAISED AN ADDITIONAL GROUND WHICH READS AS UNDER : THAT THE DEDUCTION AS ALLOWED BY THE ASSESSING OFFICER UNDER SECTION 80 - IC OF THE ACT IS VERY MUCH INADEQUATE AND OUGHT TO HAVE BEEN ALLOWED AT A HIGHER FIGURE TAKING INTO ACCOUNT THE TOTAL INCOME ASSESSED WHICH INCLUDES THE DISALLOWANCES MADE BY THE AO UNDER VARIOUS HEADS . 3. A PERUSAL OF THE ABOVE ADDITIONAL GROUND SHOW S THAT IT DOES NOT REQUIRE ANY INVESTIGATION OF NEW FACTS BUT THE ONLY QUESTION TO BE DECIDED FOR ADJUDICATING THIS GROUND IS WHETHER THE DISALLOWANCES OF VARIOUS EXPENSES MADE BY THE AO AND SUSTAINED BY CIT(A) FORM PART OF TOTAL INCOME ASSESSED, WHICH IS EXEMPT FROM TAX U/S. 80IC OF THE ACT. WE, THEREFORE, ADMIT THIS GROUND FOR CONSIDERATION ON RECO RD AS THE QUESTION WHICH AROSE OUT OF THIS GROUND IS A PURE LEGAL QUESTION AND DOES NOT REQUIRE ANY INVESTIGATION OF NEW FACTS. THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) WHILE CONFIRMING THE DISALLOWANCE OF ABOVE EXPENSES HAS NOT GIVEN ANY REASON FOR ITS SUSTENANCE, BUT SIMPLY UPHELD THE ACTION OF THE AO. THE LD. DR , ON THE OTHER HAND , RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. HAVING CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE BEFORE US, W E FIND SUBSTANCE IN THE CONTENTION ITA NO. 2717/DEL./2013 3 OF THE LD. AR THAT THE LD. CIT(A) HAS NOT PASSED SPEAKING ORDER WHILE SUSTAINING THE DISALLOWANCES MADE BY AO. AS REGARDS THE DISALLOWANCE OF INTEREST OF RS.5,89,793/ - CLAIMED AGAINST INCOME FROM HOUSE PROPERTY IN REVISED COMPUTATION OF INCOME , THE LD. CIT(A) HAS FAILED TO EXAMINE AS TO WHAT WOULD BE THE IMPACT ON TAXABLE INCOME IF SUCH INTEREST EXPENDITURE IS NOT CLAIMED BY ASSESSEE FROM PROPERTY INCOME, BUT ADDED IN TH E PROFITS AND GAINS OF BUSINESS. COMING TO THE DISALL OWANCE OF RS.2,16,000/ - CLAIMED AS RENT PAYMENT, THE LD. CIT(A) HAS NOT ADDRESSED THE BASIC FACTS AS TO WHO WAS THE ACTIVE USER OF THE PROPERTY . WE ALSO FIND LACK OF ENQUIRY ON THE PART OF AUTHORITIES BELOW TO EXAMINE THE FACT WHETHER THESE EXPENDITURE INC URRED BY ASSESSEE ARE INCIDENTAL TO THE BUSINESS OF THE ASSESSEE OR NOT. AS FAR AS DISALLOWANCE OF RS.3,60,000/ - CLAIMED AS REMUNERATION PAID TO PARTNERS, THE SAME HAS BEEN DISALLOWED FOR WANT OF ANY CLAUSE IN THE PARTNERSHIP DEED REGARDING QUANTUM AND MET HOD OF COMPUTATION OF REMUNERATION TO BE PAID TO THE PARTNERS. THE LD. CIT(A) HAS RELIED UPON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SOOD BRIJ & ASSOCIATES VS. CIT (ITA NO. 1154 OF 2011) DATED 04.11.2011 WHEREIN IT HAS BEEN HELD T HAT IF THE QUANTUM OF REMUNERATION OR THE METHOD OF COMPUTING THE REMUNERATION IS NOT SPECIFIED IN THE PARTNERSHIP DEED, DEDUCTION OF REMUNERATION CANNOT BE ALLOWED TO THE FIRM, AS THE REQUIREMENTS OF SECTION 40(B)(V) OF THE ACT ARE NOT SATISFIED. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT PLACE BEFORE US ANY CASE LAW TO CONTRADICT THE ITA NO. 2717/DEL./2013 4 FINDING REACHED BY THE LD. CIT(A) AFTER FOLLOWING THE DICTA GIVEN BY HON BLE JURISDICTIONAL HIGH COURT. HOWEVER, THE QUESTION S PUT FORTH BY THE ASSESSEE BY WAY OF ADDITIONAL GROUND FOR THE FIRST TIME BEFORE US - WHETHER THE QUANTUM OF DISALLOWANCE OF VARIOUS EXPENSES FORM S PART OF ASSESSED INCOME EXEMPT U/S. 80IC AND WHETHER THE ASSESSEE IS ENTITLED TO EXEMPTION U/S. 80IC ON SUCH DISALLOWANCES OF EXPENSES ALSO , NEEDS TO BE AD JUDICATED AND DECIDED BY THE LD. CIT(A) BEFORE FASTENING TAX LIABILITY AGAINST THE ASSESSEE. SINCE THIS ISSUE HAS BEEN RAISED BY THE ASSESSEE FOR THE FIRST TIME BEFORE US BY WAY OF ADDITIONAL GROUND, WE SET ASIDE THE IMPUGNED ORDER AND RESTORE THE MATTER T O THE FILE OF LD. CIT(A) FOR DECIDING THE APPEAL AFRESH IN THE LIGHT OF OBSERVATIONS MADE IN THE BODY OF THIS ORDER ABOVE . NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01.03.2016. SD/ - SD/ - ( H.S. SIDHU ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 01.03.2016 *AKS / -