ACIT, New Delhi V. M/s. Resolve Estates Pvt. Ltd., Noida

ITA 2771/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8884 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 04-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUSHMA SINGH
• Assessee Lawyers: HIMANSHU SHARMA
• Keywords: Revenue expenditure; Capital expenditure; Set aside
• Section: 143(3); 40(a)(ia); 72; 13

Judgement Text

ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 1 OF 29 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: F: NEW DELHI) BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA NO:- 2771/DEL/2017 ( ASSESSMENT YEAR: 2012-13) ACIT, CIRCLE- 21(1), NEW DELHI. VS. M/S RESOLVE ESTATES PVT. LTD., B-24, SECTOR-3, NOIDA-201301. PAN NO: AADCR5093C APPELLANT RESPONDENT REVENUE BY : SMT. SUSHMA SINGH, CIT(DR) ASSESSEE BY : SHRI HIMANSHU SHARMA. CA ORDER PER ANADEE NATH MISSHRA, AM (A) THIS APPEAL BY REVENUE IS FILED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-36, NEW DELHI, [LD. CIT(A), FOR SHORT] DATED 27.02.2017 FOR ASSESSMENT YEAR 2012-13. THE GROUNDS OF APPEAL AR E AS UNDER: 1. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE DISALLOWANCE OF RS . 57,75,20,560/- ON ACCOUNT OF LAND DEVELOPMENT COST WITHOUT DOING PROPER ENQUI RY AND DETAILED SCRUTINY OF THE MATERIALS AVAILABLE AS PER DELHI HIGH COURT JUDGMENT IN THE CASE OF M/S JANSAMPARK ADVERTISING AND MARKETING (P) LTD., ITA NO. 525/2014 DT: 11/03/2015. ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 2 OF 29 2. ON THE FACT AND UNDER THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE DISALLOWANCE OF RS. 72 ,38,028/- ON ACCOUNT OF BANK GUARANTEE COMMISSION, AS THE CBDT NOTIFICATION NO. 56/2012 DT: 31/12/2012 COME W.E.F. 01.01.2013 WITHOUT RETROSPEC TIVE EFFECT. 3. THE APPELLANT CRAVES TO BE ALLOWED TO ADD ANY FR ESH GROUNDS OF APPEAL AND/ OR DELETE OR MEND ANY OF THE GROUNDS OF APPEAL. (B) ASSESSMENT ORDER DATED 30.03.2015 PASSED UNDER SEC TION 143(3) OF INCOME TAX ACT, 1961 (I.T. ACT, FOR SHORT) BY THE ASSESSING OFFICER (AO, FOR SHORT) WHEREIN TOTAL INCOME WAS DETERMINED OF RS. 59,12,61,710/- AS AGAI NST THE RETURNED INCOME OF RS. 65,03,122/-. THE RELEVANT PORTION OF THE ASSESSMEN T ORDER DATED 30.03.2015 IS REPRODUCED AS UNDER: ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 3 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 4 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 5 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 6 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 7 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 8 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 9 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 10 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 11 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 12 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 13 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 14 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 15 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 16 OF 29 (C) THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). VIDE IMPUGNED APPELLATE ORDER DATED 27.02.2017, THE LD. CIT(A) ALLOWED THE ASSESS EES APPEAL AND DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLO WANCES OF DEVELOPMENT COST (RS. ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 17 OF 29 57,75,20,560/-) AS WELL AS BANK GUARANTEE COMMISSIO N (RS. 72,38,028/-). THE RELEVANT PORTION OF THE AFORESAID IMPUGNED APPELLATE ORDER D ATED 27.02.2017 OF LD. CIT(A) IS REPRODUCED AS UNDER: ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 18 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 19 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 20 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 21 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 22 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 23 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 24 OF 29 ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 25 OF 29 (C.1) THIS PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAI NST THE AFORESAID IMPUGNED APPELLATE ORDER DATED 27.02.2017 OF LD. CIT(A). AT THE TIME OF HEARING BEFORE US, THE LEARNED COMMISSIONER OF INCOME TAX (DEPARTMENTAL RE PRESENTATIVE) [LD. CIT(DR), FOR SHORT] STRONGLY DEFENDED THE ORDER OF THE ASSESSING OFFICER AND READ OUT RELEVANT PORTIONS OF THE ASSESSMENT ORDER TO SUPPORT OF THE ADDITION MADE BY THE ASSESSING OFFICER. ON THE OTHER HAND, THE LEANED AUTHORIZED REPRESENTATIVE ( LD. AR, FOR SHORT) FOR THE ASSESSEE RELIED ON THE AFORESAID IMPUGNED APPELLATE ORDER DA TED 27.02.2017 OF THE LD. CIT(A). (D) WE HAVE HEARD BOTH SIDES AND PERUSED THE MATERIALS AVAILABLE ON RECORDS. AS FAR AS FIRST GROUND OF APPEAL, RELATING TO DISALLOWANCE OF RS. 57,75,20,560/- ON ACCOUNT OF LAND DEVELOPMENT COST IS CONCERNED, WE FIND THAT TH E LD. CIT(A) HAS DELETED THIS ADDITION HOLDING THAT THE AMOUNT WAS REFLECTED IN THE INCOME OF THE PAYEE, M/S ERA INFRA ENGINEERING LTD. (EIEL, FOR SHORT) AND CONCLUDED TH AT THERE WAS NO LOSS OF REVENUE TO THE DEPARTMENT. THE LD. CIT(A) HAS FURTHER OBSERVE D THAT THE AMOUNT DOES NOT PERTAIN ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 26 OF 29 TO THIS YEAR. HOWEVER, ON PERUSAL OF THE IMPUGNED APPELLATE ORDER DATED 27.02.2017 OF THE LD. CIT(A), WE FIND THAT IT IS SILENT ON HOW TH E TREATMENT OF THE AMOUNT BY THE PAYEE EIEL IN THE BOOKS OF ACCOUNT OF EIEL BECOMES A MATERIA L CONSIDERATION IN DECIDING THE ALLOWABILITY OF THE EXPENDITURE IN THE HANDS OF THE ASSESSEE. REGARDLESS OF HOW THE AMOUNT IS TREATED BY THE PAYEE IN THEIR BOOKS OF AC COUNTS, WHAT IS DETERMINATIVE OF ALLOWABILITY OF THE EXPENDITURE IN THE HANDS OF THE PAYER IS WHETHER THE PAYMENT QUALIFIES AS A DEDUCTION IN THE HANDS OF THE ASSESSEE AS PER LAW. THE IMPUGNED APPELLATE ORDER DATED 27.02.2017 OF THE LD. CIT(A) IS NON-SPEAKING ON THIS CRUCIAL ASPECT. SECONDLY, THE IMPUGNED APPELLATE ORDER DATED 27.02.2017 OF LD. CI T(A) IS A NON-SPEAKING ORDER AS FAR AS HOW THE LD. CIT(A) CONCLUDED THAT THE AMOUNT DOE S NOT PERTAIN TO THIS YEAR. THE DETAILED FACTS AND CIRCUMSTANCES NARRATED BY THE AS SESSING OFFICER IN THE ASSESSMENT ORDER, AND THE ELABORATE DISCUSSION IN THE ASSESSME NT ORDER ON IS NON-ALLOWABILITY AS PER LAW, HAS NOT BEEN REBUTTED BY LD. CIT(A) SATISFACTO RILY. THUS, WE FIND THAT THE ORDER OF THE LD. CIT(A) IS A NON-SPEAKING ORDER ON HER CRUCI AL OBSERVATION THAT THE AMOUNT DOES NOT PERTAIN TO THIS YEAR. THOUGH LD. CIT(A) HAS STA TED THAT THE MATTER WAS EXAMINED IN THE ASSESSMENT YEAR 2011-12, SHE HAS FAILED TO PASS A SPEAKING ORDER ON HOW, THE FACT THAT IT WAS EXAMINED IN THE ASSESSMENT YEAR 2011-12 , PRECLUDES THE ASSESSING OFFICER FROM EXAMINING THE MATTER IN ASSESSMENT YEAR 2012-1 3 AND FROM MAKING THE DISALLOWANCE IN ASSESSMENT 2012-13. THE DETAILED D ISCUSSION IN THE ASSESSMENT ORDER ONCE AGAIN NOT BEEN ADEQUATELY DEALT WITH AND REBUT TED BY THE LD. CIT(A) AND THE IMPUGNED APPELLATE ORDER DATED 27.02.2017 OF LD. CI T(A) IS A NON-SPEAKING ORDER IN THIS REGARD. ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 27 OF 29 (D.1) IN VIEW OF THE FOREGOING, WE ARE OF THE VIEW THAT THE LD. CIT(A) SHOULD DECIDE THIS ISSUE AFRESH AND PASS A FRESH APPELLATE ORDER, WHIC H SHOULD BE A SPEAKING ORDER IN ALL MATERIALS RESPECTS. ACCORDINGLY, WE SET ASIDE THIS ISSUE TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTION TO DECIDE THE ISSUE AFRESH THROUGH A SPEAKING ORDER IN ACCORDANCE WITH LAW. (E) THE SECOND GROUND OF APPEAL PERTAINS TO DISALLOWAN CE OF RS. 72,38,028/- ON ACCOUNT OF BANK GUARANTEE COMMISSION. THE AMOUNT W AS DISALLOWED BY THE ASSESSING OFFICER ON THE GROUND THAT THIS AMOUNT WAS REQUIRED TO BE CAPITALIZED AND COULD NOT HAVE BEEN ALLOWED AS REVENUE EXPENDITURE. THIS GROUND O F DISALLOWANCE AND THE RESULTING ADDITION HAS NOT BEEN DEALT WITH BY THE LD. CIT(A) IN HER IMPUGNED APPELLATE ORDER DATED 27.02.2017. THE LD. CIT(A) HAS DELETED THIS ADDIT ION ON THE GROUND THAT DISALLOWANCE UNDER SECTION 40(A)(IA) OF I.T. ACT WAS NOT WARRANT ED. THE LD. CIT(A) TOOK NOTICE OF CBDT CIRCULAR NO. 56/2012 DATED 31.12.2012 ON THIS ISSUE. HOWEVER, THE FACT REMAINS THAT THE DISALLOWANCE WAS NOT MADE BY THE ASSESSING OFFICER BY TAKING RECOURSE TO SECTION 40(A)(IA) OF I.T. ACT; AND INSTEAD, THE ADDITION WA S MADE ON THE GROUND THAT IT WAS CAPITAL EXPENDITURE. THE IMPUGNED APPELLATE ORDER DATED 27 .02.2017 OF LD. CIT(A) IS SILENT OF THIS ASPECT AND IS A NON-SPEAKING ORDER ON THE ISSU E WHETHER THE AMOUNT IN QUESTION WAS A REVENUE EXPENDITURE OR A CAPITAL EXPENDITURE. TH US, EVEN IN RESPECT OF THE AFORESAID DISALLOWANCE OF RS. 72,38,028/-; WE FIND THAT IMPU GNED APPELLATE ORDER DATED 27.02.2017 OF LD. CIT(A) IS SILENT ON CRUCIAL ASPECT OF THE MA TTER. THEREFORE, WE SET ASIDE THIS ISSUE ALSO TO THE FILE OF THE LD. CIT(A) WITH THE DIRECTI ON TO DECIDE THE ISSUE AFRESH THROUGH A SPEAKING ORDER IN ACCORDANCE WITH LAW. ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 28 OF 29 (F) IN THE RESULT, BOTH THE ISSUES RAISED IN THE TWO G ROUNDS OF APPEAL ARE RESTORED TO THE FILE OF THE LD. CIT(A) TO DECIDE THIS ISSUE AFR ESH IN ACCORDANCE WITH LAW THROUGH A FRESH ORDER WHICH SHOULD BE A SPEAKING ORDER IN ALL MATERIALS RESPECTS. FOR STATISTICAL PURPOSES, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.01.20. SD/- SD/- (H.S. SIDHU) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 16.01.20 POOJA/- COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO.- 2771/DEL/2017. M/S RESOLVE ESTATES PVT. LTD. PAGE 29 OF 29 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 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 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