Spank Hotels Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 3306/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65707 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 04-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR PRABHA KANT
• Assessee Lawyers: V K JAIN
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI R.K.GUPTA, JUDICIAL MEMBER AND SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER I.T.A .NO.-3306/DEL/2010 ASSESSMENT YEAR-2007-08 SPANK HOTELS PVT. LTD., VS. ACIT, B-6/17, SAFDURJUNG ENCLAVE, CIRCLE-9(1), NEW DELHI-29 C.R.BUILDING, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. V.K.JAIN, CA RESPONDENT BY: DR. PRABHA KANT, SR. DR DATE OF HEARING:-04.10.2012 DATE OF PRONOUNCEMENT:- 10.10.2012 ORDER PER R.K.GUPTA, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-XII, NEW DELHI DATED 17.03.2010 RELATING ASSESSMENT YEA R 2007-08. GROUND NO-2 WHICH IS IN RESPECT TO DISALLOWANCE OF EXPENSES U/S 40A(2)(B) WAS NOT PRESSED. THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 2. THE MAIN ISSUE IS AGAINST CONFIRMATION OF RS. 20 LACS U/S 40(A)(2)(B) OF THE ACT. 3. LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT ON SI MILAR FACTS, THE DISALLOWANCE WAS MADE FOR IMMEDIATELY SUCCEEDING YE AR I.E AY 2008-09 WHICH WAS DELETED BY LD. CIT(A) AND ORDER OF THE LD. CIT( A) HAS BEEN CONFIRMED BY I.T.A .NO.-3306/DEL/2010 2 THE TRIBUNAL WHILE DECIDING APPEAL IN ITA NO. 4631/ DEL/2011 VIDE ORDER DATED 22.06.2012. COPY OF THE SAME WAS ALSO FILED. 4. ON THE OTHER HAND, LD. DR STRONGLY OBJECTED THE CONTENTION OF LD. AR. THERE IS NO DUE INCOME OF EXCEPT INCOME FROM INTERE ST AND DIVIDEND. DIVIDEND IS CONSIDERED U/S 14A AND DRAWING INTEREST I.E FROM FD R, NO SERVICE COULD BE ATTRIBUTED FOR EARNING THE INTEREST. THE ASSESSING OFFICER HAS ALREADY GIVEN A REASONABLE DEDUCTION ON ACCOUNT OF SALARY I.E RS. 5 LACS OUT OF RS. 30 LACS CLAIMED BY ASSESSEE. LD. CIT(A) AGAIN HAS GIVEN FURTHER RE LIEF OF RS. 5 LACS. IT WAS, FURTHER SUBMITTED THAT SALARY IS TO BE PROPORTIONAT E TO THE SERVICES PROVIDED AND REASONABLE SALARY HAS ALREADY BEEN ALLOWED, THEREFO RE, THE ASSESSEE SHOULD NOT BE ALLOWED FOR FURTHER RELIEF. 5. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING T HE MATERIAL ON RECORD, WE FIND THAT ASSESSEE DESERVES TO SUCCEED ON THE ISSUE INVOLVED. IT IS SEEN THAT A.O HAS DISALLOWED SALARY U/S 40(A)(2)(B) FOR SUCCE EDING YEAR I.E AY 2008-09 ALSO. THE SALARY WAS DISALLOWED U/S 40(A)(2)(B) WH ICH WAS DELETED BY LD. CIT(A) AND TRIBUNAL HAS CONFIRMED THE ORDER OF THE LD. CIT(A) FOR AY 2008-09. THERE IS NO CHANGE IN FACTS AND CIRCUMSTANCES. IN SUBSEQUENT YEAR, THE SALARY PAID TO THE SAME DIRECTOR, HAS BEEN HELD AS REASONA BLE BY THE TRIBUNAL. THEREFORE, IN OUR CONSIDERED VIEW IN PRECEDING YEAR , IT CANNOT BE SAID THAT THE SALARY AMOUNT IS NOT JUSTIFIED. SAME ACTIVITIES AR E INVOLVED I.E EARNING OF DIVIDEND AND AS EARNING OF INTEREST IN SUBSEQUENT Y EAR. NOW LD. DR WANTS THAT SALARY SHOULD BE ALLOWED ONLY OF THE PROPORTIONATE AMOUNT OF THE SERVICES I.T.A .NO.-3306/DEL/2010 3 RENDERED. IT IS VERY DIFFICULT TO ATTRIBUTE THE PA RT OF SERVICES PROVIDED BY THE DIRECTOR THAT HOW MUCH PROPORTIONATE IS CORRECT OR HOW MUCH IS NOT CORRECT. THIS HAS TO BE SEEN IN VIEW OF THE SECTION 40(A)(2)(B) I N WHICH BASIS THE ASSESSING OFFICER HAS DISALLOWED. 6. AS STATED ABOVE, THE ORDER OF ASSESSING OFFICER WAS NOT APPROVED EITHER BY LD. CIT(A) OR BY TRIBUNAL FOR IMMEDIATELY SUCCEEDIN G YEAR. RESPECTFULLY FOLLOWING THE TRIBUNAL, WE DIRECT TO ALLOW HIS CLAI M FOR THE YEAR UNDER CONSIDERATION ALSO. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.10.2012. SD/- SD/- (S.V.MEHROTRA) (R.K.GUPTA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10/10/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI