M/s. DLF Commercial Projects Corporation, New Delhi V. ACIT, New Delhi

ITA 2966/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5057 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Wrong claim
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SHRI R. S. SYAL, VICE PRESIDENT AND SHRI K.N.CHARY, JUDICIAL MEMBER ITA NO. 2 965, 2966/DEL./2014 ASSTT. YEARS : 2009-10 AND 2010-11 DLF COMMERCIAL PROJECTS CORPORATION 9 TH FLOOR, DLF CENTRE, SANSAD MARG NEW DELHI PAN : AAAFD2181R VS. A CIT CIRCLE-31(1) NEW DELHI APPELLANT RESPONDENT ITA NO. 3046, 3047/DEL/2014 ASSTT. YEAR : 2009-10, 2010 -11 ACIT CIRCLE-31(1) NEW DELHI VS. DLF COMMERCIAL PROJECTS CORPORATION 9 TH FLOOR, DLF CENTRE, SANSAD MARG NEW DELHI PAN : AAAFD2181R APPELLANT RESPONDENT ASSESSEE BY : SH .R.S.SINGHVI , CA RE VENUE BY : MS. RACHNA SINGH, CIT.DR, SH. ANSHU PRAKASH, SR. D.R. DATE OF HEARING: 0 9 0 8 2017 DATE OF PRONOUNCEMENT: 10 0 8 2017 ITA NO.2965, 2966, 3046, 3047/DEL/2014 2 O R D E R PER R.S.SYAL, VICE PRESIDENT: THIS BATCH OF FOUR APPEALS TWO EACH BY THE ASSE SSEE AND THE REVENUE RESPECTIVELY RELATES TO THE ASSESSMENT YE ARS 2009-10 AND 2010-11. SINCE SOME OF THE ISSUES RAISED IN THESE APPEALS AR E COMMON, WE ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OFF BY THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSMENT YEAR 2009-10 2. FIRST GROUND OF THE REVENUES APPEAL IS AGA INST THE DELETION OF DISALLOWANCE OF RS. 25,11,78,222/- OUT OF TOTAL DIS ALLOWANCE OF RS. 25,40,68,602/- MADE BY THE AO ON ACCOUNT OF NON-DED UCTION OF TAX AT SOURCE ON RE-IMBURSEMENT OF EXPENSES AND SERVICE CHARGES A ND NON-JUSTIFICATION OF REASONABLENESS OF EXPENDITURE PAID TO M/S DLF LANDS LTD., WHICH IS A SISTER CONCERN OF THE ASSESSEE. THE ASSESSEE IS ALSO AGGRI EVED AGAINST THE SUSTENANCE OF ADDITION TO THE TUNE OF RS. 28,90,380/- OUT OF T HE TOTAL DISALLOWANCE TOWARDS REIMBURSEMENT OF EXPENSES. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE TH AT THE ASSESSEE CLAIMED DEDUCTION OF RS. 54.24 CRORE AND ODD AS AGGREGATE E XPENSES WHICH INCLUDED A SUM OF RS. 25,40,68,602/- PAID TO DLF LANDS LTD. AS REIMBURSEMENT OF EXPENSES AND SERVICE CHARGES. THE ASSESSING OFF ICER OPINED THAT THE ASSESSEE OUGHT TO HAVE DEDUCTED TAX AT SOURCE FROM SUCH PAYMENT MADE TO ITS SISTER CONCERN. SINCE ASSESSEE HAD NOT DEDUCTED ANY TAX AT SOURCE, THE AO MADE DISALLOWANCE. THE LD. CIT(A) DELETED THE ADDIT ION TO THE EXTENT OF RS. 25,11,78,222/- BY FOLLOWING THE TRIBUNAL ORDER FOR THE IMMEDIATELY PRECEDING ITA NO.2965, 2966, 3046, 3047/DEL/2014 3 YEAR. THE REMAINING AMOUNT OF RS. 28,90,380/- PAID TO M/S. DLF LANDS LTD. TOWARDS LOSS ON DISPOSAL OF FIXED ASSETS, FBT AND I NTEREST ON INCOME TAX WAS HELD TO BE NOT ALLOWABLE. THAT IS HOW, BOTH THE S IDES ARE IN APPEAL ON THEIR RESPECTIVE STANDS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT YEAR ON RECORD. A COPY OF THE TRIBUNAL ORDER FOR THE IMMEDI ATELY PRECEDING ASSESSMENT YEAR 2008-09, DEALING WITH SIMILAR DISALLOWANCE, HA S BEEN PLACED ON RECORD. AFTER CONSIDERING THE NECESSARY DETAILS, THE TRIBUN AL CAME TO HOLD THAT NO DISALLOWANCE WAS CALLED FOR ON ACCOUNT OF REIMBURSE MENT OF EXPENSES. THE ORDER PASSED BY THE TRIBUNAL HAS BEEN AFFIRMED BY T HE HONBLE HIGH COURT, WHOSE COPY HAS ALSO BEEN PLACED ON RECORD. IN OUR C ONSIDERED OPINION, THE LD. CIT(A) WAS RIGHT TO IN FOLLOWING THE ORDER OF THE T RIBUNAL FOR DELETING THE ADDITION OF RS. 25.11 CRORE AND ODD. THE REVENUES CLAIM FAILS. 5. AS REGARDS THE ASSESSEES GROUND FOR CONFIRMATI ON OF ADDITION OF RS. 28.90 LAKH, WE FIND FROM THE IMPUGNED ORDER THAT SUCH AN AMOUNT DEBITED BY THE ASSESSEE IS TOWARDS LOSS ON DISPOSAL OF FIXED ASSET S, FBT AND INTEREST ON INCOME TAX. SUCH ITEMS ARE NOT DEDUCTIBLE EXPENSES, WHETHER INCURRED BY THE ASSESSEE DIRECTLY OR REIMBURSED THROUGH ANOTHER ENT ITY. SINCE THESE AMOUNTS ARE NOT OTHERWISE ELIGIBLE FOR DEDUCTION, THE SAME CANNOT BE ALLOWED. FURTHER, THERE IS NO MERIT IN THE ARGUMENT OF THE LD. AR THA T THE ADDITION BE DELETED HERE BECAUSE THIS AMOUNT WAS OFFERED FOR TAX BY THE OTHER COMPANY. THE ONLY ISSUE BEFORE US IS THE DEDUCTIBILITY OR OTHERWISE O F THE AMOUNT IN QUESTION, WHICH WAS CLAIMED AS DEDUCTION BY THE ASSESSEE. WE HAVE NOTED ABOVE THAT SUCH AN AMOUNT IS NOT DEDUCTIBLE IN COMPUTING THE B USINESS INCOME. ONCE AN AMOUNT IS FOUND TO HAVE BEEN WRONGLY CLAIMED AS DED UCTION, THE SAME HAS TO ITA NO.2965, 2966, 3046, 3047/DEL/2014 4 BE DISALLOWED IN THE COMPUTATION OF INCOME IN WHOSE HANDS A WRONG CLAIM WAS MADE. IF SOME OTHER COMPANY HAS WRONGLY OFFERED THE SAME AMOUNT BY SUO MOTU DISALLOWANCE, THEN IT IS FOR THAT ASSESSEE TO TAKE REMEDIAL ACTION. THE ASSESSEES GROUND FAILS. 6. SECOND GROUND OF THE REVENUES APPEAL IS AGAINS T THE DELETION OF DISALLOWANCE OF RS. 47,73,55,572/- MADE BY THE AO O N ACCOUNT OF UNEXPLAINED SUPPLIERS / SUNDRY CREDITORS. ON PERUSAL OF THE BOO KS OF ACCOUNTS, THE ASSESSING OFFICER FOUND THE FOLLOWING POSITION : - ACCOUNT CODE ACCOUNT DESCRIPTION DEBIT CREDIT NET AMOUNT A601001 ADVANCES TO SUPPLIERS OF GOODS/SERVICES RS. 14,53,24,739.00 RS. 14,53,24,739.00 NIL L502014 SUNDRY CREDITOR (THIRD PARTY) - SUPPLIER RS. 31,17,77,152.17 RS. 33,20,30,833.28 RS. 2,02,53 ,681.11 TOTAL RS. 45,71,01,891.17 RS. 47,73,55,572.28 RS. 2,02,53,681.11 7. ON BEING CALLED UPON TO EXPLAIN THE NATURE OF ABOVE ACCOUNTS, THE ASSESSEE SUBMITTED THAT THESE WERE TOWARDS ADVANCES TO SUPPLIERS AND SUNDRY CREDITORS. THE ASSESSING OFFICER MADE ADDITION FOR A SUM OF RS. 47.73 CRORE, BEING THE TOTAL OF CREDIT SIDE OF THE ABOVE TWO BR OADER ACCOUNT HEADS, BY OBSERVING THAT ONLY GENERAL LEDGER WAS AVAILABLE WH ICH MERELY GAVE NARRATION OF TRANSACTIONS AND NOTHING MORE THAN THAT. THE LD. CIT(A) DELETED THE ADDITION. ITA NO.2965, 2966, 3046, 3047/DEL/2014 5 8. HAVING HEARD BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE AMOUNT OF RS. 47.73 CRORE ADDED BY THE AO INCLUDES `REIMBURSEMENT OF EXPENSES AMOUNTING TO RS. 24.19 CRORE WHICH HAS BEEN ALLOWED WHILE DEALING WITH THE EARLIER GROUND OF TH E APPEAL. DETAIL OF SUCH EXPENSES REIMBURSED IS AVAILABLE ON PAGE 8 OF THE I MPUGNED ORDER. SINCE SUCH EXPENSES WERE ORIGINALLY INCURRED BY A SISTER CON CERN OF THE ASSESSEE AND LATER ON BOOKED BY THE ASSESSEE IN ITS ACCOUNTS BY REIMBU RSING THE SAME, IT CANNOT BE TREATED AS UNEXPLAINED. THE OVERALL POSITION OF THE ADVANCE OF SUPPLIERS AND SUNDRY CREDITORS HAS BEEN CAPTURED BY THE LD. CIT(A ) ON PAGE 14 OF THE IMPUGNED ORDER WHICH IS AS UNDER : - S.N. PARTICULARS AMOUNT(RS.) 1. TOTAL AGGREGATE OF CREDIT SIDE OF 47,73,55,5 72 ADVANCE TO SUPPLIERS AND SUNDRY CREDITORS CONSIDERED BY A.O. (TWO SEPARATE ACCOUNTS). 2. LESS : (I) OPENING BALANCE (SUNDRY CREDITORS) 13,24,739 (II)AMOUNT PAID TO M/S DLF LAND LIMITED / 8,87,36 ,000 CONTRA ENTRIES/CREDIT NOTES ETC DEBITED IN (SUNDRY CREDITORS ACCOUNT). (III) ADVANCE PAID ADJUSTED AGAINST BILLS DEBITED 14,53,24,739 23,53,85,478 IN (SUNDRY CREDITORS ACCOUNT) 3. REIMBURSEMENT OF EXPENSES FOR THE YEAR 24,19,70,094 DEBITED TO P&L A/C WITH CORRESPONDING CREDIT TO SUNDRY CREDITORS DLF LAND LTD. (1-2) ITA NO.2965, 2966, 3046, 3047/DEL/2014 6 9. IT CAN BE SEEN FROM THE ABOVE EXTRACTION THAT A PART FROM `REIMBURSEMENT OF EXPENSES, THE OTHER TWO ENTRIES ARE RS. 8.87 CRORE AND RS. 14.53 CRORE REPRESENTING SUNDRY CREDITORS AND ADVAN CE PAID ADJUSTED AGAINST BILLS. WE FAIL TO FIND ANY FLAW IN THE IMPUGNED ORD ER IN DELETING THIS ADDITION BECAUSE THE AO HAS SIMPLY ADDED CREDIT ENTRIES OF R S. 47.73 CRORE WITHOUT NOTICING THAT THERE WERE CORRESPONDING DEBIT ENTRIE S AS WELL AND THESE CREDIT ENTRIES WERE GENERATED BECAUSE OF GENUINE TRANSACTI ONS OF EXPENSES/ADVANCES/ SUNDRY CREDITORS. WE, THEREFORE, APPROVE THE ACTION OF THE LD. CIT(A) IN DELETING THIS ADDITION. 10. THE LAST GROUND OF THE REVENUES APPEAL IS AG AINST THE DELETION OF ADDITION OF RS. 1,74,50,000/- MADE BY THE AO U/S 68 OF THE A CT. FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE ACCEPTED PUBLIC DEPOSI TS FROM 22 PERSONS DURING THE YEAR, WHOSE DETAIL HAS BEEN INCORPORATED ON PAG E 23 OF THE ASSESSMENT ORDER. ON BEING CALLED UPON TO PROVE THE GENUINENES S OF THESE CREDITS, THE ASSESSEE TABULATED ITS DETAILS, WHICH HAVE BEEN INC LUDED ON PAGE 24 OF THE ORDER. OUT OF TOTAL DEPOSIT OF RS. 174.50 LAKH RECE IVED DURING THE YEAR, A SUM OF RS. 111.50 LAKH WAS OUTSTANDING AT THE END OF THE Y EAR AND THE REMAINING AMOUNT WAS REPAID. THE ASSESSEE FURNISHED DETAILS O F CHEQUE/DRAFT NO. ETC. OF THE DEPOSITS RECEIVED FROM THESE PERSONS ALONG WITH THE DATES OF CLEARANCE. THE ASSESSING OFFICER ADDED RS. 174.50 LAKH U/S 68 OF THE ACT AS IN HIS OPINION THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TRANSACTIONS. THE LD. CIT(A) DELETED THE ADDITION. 11. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PE RUSING RELEVANT MATERIAL ON RECORD, IT IS NOTICED THAT THE ASSESSEE CAME OUT WI TH A PUBLIC DEPOSITS SCHEME ITA NO.2965, 2966, 3046, 3047/DEL/2014 7 DURING THE YEAR UNDER WHICH THE DEPOSITS WERE RECEI VED FROM THE PERSONS, WHOSE DETAILS IS AVAILABLE AT PAGES 52 TO 54 OF THE PAPER BOOK. PAGE NO. 55 OF THE PAPER BOOK IS A COPY OF APPLICATION FORM FOR AC CEPTANCE / RENEWAL OF DEPOSITS. PAGE 56 IS A COPY OF A CHEQUE RECEIVED BY THE ASSESSEE FROM SUCH DEPOSITOR UNDER THE PUBLIC DEPOSITS SCHEME. PAGE N O. 57 IS A COPY OF DEPOSIT RECEIPT ISSUED BY THE ASSESSEE. WHEN ALL SUCH DETAI LS ARE CONSIDERED, THE INEVITABLE CONCLUSION WHICH FOLLOWS IS THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN TREATING THESE DEPOSITS AS GENUINE. IT IS FURTHER A MATTER OF RECORD THAT THE ASSESSEE PAID INTEREST ON SUCH DEPOSITS @ 14% AFTER DEDUCTION OF TAX AT SOURCE. THE ASSESSING OFFICER HAS ALLOWED DEDUCTION OF INTEREST ON SUCH PUBLIC DEPOSITS. CONSIDERING THE TOTALITY OF FACTS AND CIR CUMSTANCES AS PREVAILING ON THESE ISSUES, WE HAVE NO HESITATION IN COUNTENANCIN G THE IMPUGNED ORDER ON THIS SCORE. THIS GROUND IS NOT ALLOWED. 12. GROUND NOS. 1 AND 2 OF THE ASSESSES APPEAL WERE NOT PRESSED. THE SAME, THEREFORE, STAND DISMISSED. 13. IN THE RESULT, BOTH THE APPEALS ARE DISMIS SED. ASSESSMENT YEAR 2010-11 : 14. THE ONLY ISSUE RAISED BY THE REVENUE IN THIS APPEAL IS AGAINST THE DELETION OF DISALLOWANCE OF RS. 7,74,93,972/- OUT OF TOTAL D ISALLOWANCE OF RS. 7,78,74,987/- MADE BY THE AO ON ACCOUNT OF NON-DEDU CTION TAX AT SOURCE ON `REIMBURSEMENT OF EXPENSES AND `SERVICE CHARGES A ND NON-JUSTIFICATION OF REASONABLENESS OF EXPENDITURE PAID TO DLF LAND LTD. , WHICH IS A SISTER CONCERN OF THE ASSESSEE. ITA NO.2965, 2966, 3046, 3047/DEL/2014 8 15. THE ASSESSEE IS ALSO AGGRIEVED AGAINST SUSTEN ANCE OF DISALLOWANCE OUT OF `REIMBURSEMENT OF EXPENSES TO THE TUNE OF RS. 3,81 ,015/- OUT OF TOTAL DISALLOWANCE MADE BY THE AO AT RS. 7.78 CRORE. 16. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THESE GROUNDS ARE MUTATIS MUTANDIS SIMILAR TO THOSE FOR THE ASSESSMENT YEAR 2009- 10. FOLLOWING THE VIEW TAKEN HEREINABOVE, WE UPHOLD THE IMPUGNED ORDER AND DISMISS BOTH THE GROUNDS. 17. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 10. 08.2017.) SD/- SD/ - ( K . N .CHARY ) ( R. S . SYAL ) JUDICIAL MEMBER VICE PRESIDENT DATED: 10.08.2017 *BINITA* COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO.2965, 2966, 3046, 3047/DEL/2014 9 DATE INITIAL 1. DRAFT DICTATED ON 09 /0 8 /2017 2. DRAFT PLACED BEFORE AUTHOR 09 /0 8 /2017 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 10/08/2017 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 10/ 0 8 /2017 5. APPROVED DRAFT COMES TO THE SR.PS/PS 10 /0 8 /2017 6. KEPT FOR PRONOUNCEMENT ON 10 /0 8 /2017 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. *