Onkar International Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 310/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7516 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 05-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SEKHON
• Keywords: Depreciation
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-3, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 310/DEL/2015 A.Y. : 2009-10 ONKAR INTERNATIONAL PVT. LTD. H-32, CONNAUGHT CIRCUS, NEW DELHI 110 001 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 13(1), CR BUILDING, I.P. ESTATE, NEW DELHI 110 002 (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. M.S. SEKHON, CA DEPARTMENT BY : NONE DATE OF HEARING : 14-07-2016 DATE OF ORDER : 02-08-2016 ORDER PER H.S. SIDHU : JM ASSESSEE HAS FILED THIS APPEAL AGAINST THE IMPUGNED ORDER DATED 27.10.2014 PASSED BY THE LD. CIT(A)-XVI, DELHI RELEVANT TO ASSESSMENT YEAR 2009-10 ON THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 3,71,335/- ON ACCOUNT OF INTEREST EXPENDITURE. ITA NO.310/DEL/2015 2 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ALLOWANCE OF RS. 2,44,414/- ON ACCOUNT OF DEPRECIATION. 3. THAT THE ORDER OF THE LD. CIT(A) IS BAD IN LAW AND ON THE FACTS OF THE CASE; AND 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR WITHDRAW ANY OF THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF THE HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME ON 14.10.2010 DECLARING TOTAL INCOME OF RS . 27,99,371/-. THE RETURN WAS PROCESSED U/S. 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) AND NOTICE U/S. 143(2 ) OF THE ACT WAS ISSUED TO THE ASSESSEE ON 5.9.2011, WHICH WAS DU LY SERVED UPON THE ASSESSEE COMPANY. THEREAFTER, FURTHER NOTIC ES U/S. 142(1) OF THE I.T. ACT, DATED 5.10.2011 AND 4.11.2011 WERE IS SUED AND DULY SERVED UPON THE ASSESSEE. IN COMPLIANCE TO VARI OUS NOTICES, THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARE D FROM TIME TO TIME AND FILED REPLIES/ DETAILS. THE ASSESSEE WAS IN THE BUSINESS OF TRAVEL AND TOUR OPERATION. AFTER CONSIDERING ALL THE DOCUMENTS, REPLIES AND THE DETAILS FILED BY THE ASSESSEE, THE AO MADE THE ITA NO.310/DEL/2015 3 VARIOUS ADDITIONS AND ASSESSED THE INCOME OF THE ASS ESSEE AT RS. 34,77,690/- U/S. 143(3) OF THE ACT ON 23.12.2011. 3. AGAINST THE ORDER OF THE LD. AO, ASSESSEE APPEAL ED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 27.10.2014 HAS DISMISSED THE APPEAL OF THE ASSESSEE. 4. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL OF THE ASSESSEE WITH REGARD TO DISALLO WANCE RS. 3,71,335/- ON ACCOUNT OF INTEREST EXPENDITURE HA S STATED THAT ASSESSEE HAS GIVEN INTEREST FREE TEMPORARY ADVANCE, WITHDRAWALS FROM THEIR CAPITAL ACCOUNTS TO TWO PARTIES NAMELY MR . KARANVEER SINGH BAHIA RS. 10,94,000/- AND MRS. KANWALJEET KAUR BAHIA RS. 20,00,000/-. HE FURTHER STATED THAT ASSESSEE HAS NOT B ORROWED ANY FUNDS TO ADVANCE THESE AMOUNTS. HE STATED THAT THE NOTI ONAL INTEREST CANNOT BE ADDED BECAUSE THE SAME HAS NOT BEEN INCURRED BY THE ASSESSEE. TO SUPPORT HIS CONTENTION, HE RELIE D UPON THE FOLLOWING CASE LAWS OF THE HONBLE DELHI HIGH COUR T. - SHIVANANDAN BUILDCON PVT. LTD. - DLF UNIVERSAL LTD. HENCE, HE REQUESTED THAT THE ADDITION IN DISPUTE MAY BE DELETED. ITA NO.310/DEL/2015 4 5.1 AS REGARDS DISALLOWANCE OF RS. 2,44,414/- ON AC COUNT OF DEPRECIATION IS CONCERNED, IT WAS STATED BY THE LD . COUNSEL OF THE ASSESSEE THAT THE REASON FOR DISALLOWANCE CITED BY T HE AO WAS THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE BILLS AND VOUC HERS AS THEY PERISHED IN FIRE DUE TO SHORT CIRCUIT IN THE OFFICE OF THE ASSESSEE AT H-32, CONNUGHT PLACE, NEW DELHI ON 5.8.2009. TO SU PPORT HIS CONTENTION, HE RELIED UPON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF JAY ENGINEERING PVT. LTD. REPORT ED IN 113 ITR 389 AND REQUESTED THAT THE ADDITION IN DISPUTE MAY BE DELETED. 6. IN THIS CASE, NOTICE OF HEARING FOR 14.7.2016 W AS SENT TO BOTH THE PARTIES AND IN RESPONSE TO THE SAME, ASSESSEES AUT HORISED REPRESENTATIVE APPEARED, BUT NONE APPEARED ON BEHAL F OF THE DEPARTMENT, NOR FILED ANY APPLICATION FOR ADJOURNME NT FROM THE DEPARTMENT SIDE. KEEPING IN VIEW THE FACTS AND CI RCUMSTANCES OF THE PRESENT CASE AND THE ISSUE INVOLVED IN THE PRESENT APPEAL, I AM OF THE VIEW THAT NO USEFUL PURPOSE WOULD BE SERVED TO ISSU E NOTICE AGAIN, THEREFORE, I AM DECIDING THE PRESENT APPEAL EXPART E QUA REVENUE, AFTER HEARING THE LD. A.R. OF THE ASSESSEE AND PERUSING T HE RECORDS. 7. I HAVE HEARD THE LD. AR OF THE ASSESSEE AND PERU SED THE RECORDS AVAILABLE WITH ME. WITH REGARD TO ADDITION OF RS. 3,71,335/- ON ACCOUNT OF INTEREST EXPENDITURE IS CON CERNED, I FIND THAT ASSESSEE HAS GIVEN INTEREST FREE TEMPORARY ADVANCE TO THE ITA NO.310/DEL/2015 5 FOLLOWING PERSON WHO ARE COVERED UNDER SECTION 40A( 2)(B) OF THE ACT. S.NO. NAME STATION THE ASSESSEE COMPANY AMOUNT OF TEMPORARY ADVANCE 1. MR. KARANVEER SINGH BAHIA DIRECTOR & SHAREHOLDER RS. 10,94,000/ - 2. MRS. KANWALJEET KAUR BAHIA - DO - RS. 20,00,000/ - FROM THE RECORDS, IT REVEALS THAT THESE ADVANCES WERE TEMPORARY WITHDRAWALS FROM THEIR CAPITAL ACCOUNTS AND A SSESSEE HAS NOT BORROWED ANY FUNDS TO ADVANCE THESE AMOUNTS. THEREFORE, IN MY CONSIDERED OPINION, SUCH INTEREST CANNOT BE ADDE D IN THE HANDS OF THE ASSESSEE, BECAUSE THE SAME HAS NOT BEEN INCURRED BY THE ASSESSEE ITSELF. IN THE BACKGROUND OF THE AFORESA ID DISCUSSIONS, I DELETE THE ADDITION IN DISPUTE AND ALLOW THE GROUND R AISED BY THE ASSESSEE. 7.2 WITH REGARD TO DISALLOWANCE OF RS. 2,44,414/ - ON ACCOUNT OF DEPRECIATION IS CONCERNED, I FIND THAT THE REASON FOR DISALLOWANCE CITED BY THE AO WAS THAT THE ASSESSEE WAS UNABLE TO PRODUCE THE BILLS AND VOUCHERS AS THEY WERE DESTROYED IN THE FIRE INCIDENT OCCURRED DUE TO SHORT CIRCUIT IN THE OFFICE OF THE ASSE SSEE AT H-32, CONNAUGHT CIRCUS, NEW DELHI ON 5.8.2010. I FIND CON SIDERABLE COGENCY IN THE ASSESSEES COUNSEL CONTENTION THAT THIS ISSUE IS ITA NO.310/DEL/2015 6 SQUARELY COVERED BY THE DECISION OF THE HONBLE DEL HI HIGH COURT IN THE CASE OF JAY ENGINEERING PVT. LTD. REPORTED IN 113 ITR 389 WHEREIN IT HAS BEEN HELD THAT SUCH DISALLOWANCE CANN OT BE UPHELD. ACCORDINGLY, RESPECTFULLY FOLLOW THE PRECEDENT IN THE CASE OF JAY ENGINEERING (SUPRA), I DELETE THE DISALLOWANCE IN DI SPUTE AND ALLOW THE GROUND RAISED BY THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/08/2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 02/08/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT ASSISTANT REGISTRAR, ITAT, DELHI BENCHES