ACIT, Meerut V. M/s. IHDP Global Pvt. Ltd., Meerut

ITA 3606/DEL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1698 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 10-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ EEV RANKA
• Assessee Lawyers: O P SAPRA; SANJEEV SAPRA F
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH C NEW DELHI BEFORE : SHRI I.C. SUDHIR, JUDICIAL MEMBER & SHRI L.P. SAHU , ACCOUNTANT MEMBER ITA NO. 3606/DEL/2012 ASSTT. YEAR : 2009 - 10 ADDL. CIT, RANGE - I, VS. M/S. IHDP, GLOBAL PVT. LTD., MEERUT. 219, RAILWAY ROAD, MEERUT. [PAN: AADCS4945E] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAJEEV RANKA, SR. D.R. RESPONDENT BY : SH. O.P. SAPRA, ADVOCATE & SH. SANJEEV SAPRA, F.C.A. DATE OF HEARING : 02.09.2015 DATE OF PRONOUNCEMENT : 09. 10. 2015 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 23.04.2012 OF LD. CIT(A), MEERUT FOR THE ASSESSMENT YEAR 2009 - 10 ON THE FOLLOWING GROUNDS : 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS.2,72,74,672/ - IGNORING THE FACTS THAT THE RELEVANT CLAUSE IN LEASE AGREEMENT ENTERED INTO BETWEEN THE ASSE S SEE COMPANY AND ITS TENANT WAS A COLOURABLE DEVISE TO DIVERT RECEIPTS/INCOME OF RS.2,72,74,672/ - TO THE OTHER COMPANY TO AVOID TAX LIABILITY IN ITS HANDS AND WITHOUT INCURRING ANY TAX LIABILITY IN THE HANDS OF OTHER COMPANY IGNORING THE JUDICIAL PRONOUNCEMENT S OF THE HON BLE APEX COURT RELIED UPON BY THE AO AS FOLLOWS : (I). CIT VS. MCDOWEL (SC) (II). CIT VS. DURGA PRASAD MORE, 82 ITR 540 (SC) ITA NO. 3606/DEL./2012 2 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) HAS ERRED IN LAW IN DELETING THE ADD ITION OF RS.2,72,74,672/ - MADE BY THE AO WITH HER CONFIRMED OBSERVATIONS THAT RECEIPTS OF ABOVE AMOUNT BY SISTER CONCERNS OF THE ASSESSEE AS MAINTENANCE CHARGES IN FACT EMANATED FROM AGREEMENT BETWEEN ASSESSEE AND ITS TENANTS AND THUS WAS A PART AND PARCEL OF RECEIPTS IN THE HANDS OF THE ASSESSEE. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS A HOLDING COMPANY OF M/S. IHDP HOME INTERIOR EXPORT PARKS PRIVATE LIMITED AND 100% SHARE CAPITAL OF SUBSIDIARY COMPANY/SISTER CONCERN IS HELD BY TH E ASSESSEE COMPANY AND BOTH THE DIRECTORS ARE COMMON. THE ASSESSEE COMPANY ENJOYED RENTAL INCOME OF RS. 17,11,94,528/ - FROM ITS SELF OCCUPIED PROPERTY SITUATED AT PLOT NO. 7, SECTOR 127, TAJ EXPRESS WAY, NEW OKHLA INDUSTRIAL DEVELOPMENT AREA, DISTT. GAUT AM BUDH NAGAR (U.P.), BEING THE OWNER OF THE LAND AND CIVIL CONSTRUCTION OF THE PROPERTY. COPY OF AGREEMENT IN THIS REGARD ENTERED INTO BETWEEN THE ASSESSEE AND M/S. BELL WOVEN COMPANY INDIA PVT. LTD.(LICE NSEE)(TENANT) DATED 25 TH AUGUST, 2008 WAS PLACED B EFORE THE AUTHORITIES BELOW. THE SUBSIDIARY COMPANY OF ASSESSEE, I.E., M/S. IHDP HOME INTERIOR EXPORT PARKS PRIVATE LIMITED PROVIDED VARIOUS SERVICES AND MAINTENANCES TO THE TENANT AND RECEIVED A SUM OF RS.2,72,74,672/ - FOR THE SERVICES RENDERED AS PER ANOTHER AGREEMENT DATED 25.08.2008 ENTERED INTO BETWEEN M/S. IHDP HOME INTERIOR EXPORT PARKS PRIVATE LIMITED AND THE USER OF PROPERTY, M/S. BELL WOVEN COMPANY INDIA PVT. LTD. THE TENANTS PAID RE NT TO THE ASSESSEE COMPANY AND SEPARATELY PAID MAINTENANCE CHARGES TO SUBSIDIARY COMPANY ITA NO. 3606/DEL./2012 3 M/S. IHDP HOME INTERIORS EXPORTS PARKS PVT. LTD. THE AO COMPLETED THE ASSESSMENT OF ASSESSEE BY ADDING A SUM OF RS.2,72,74,672/ - RECEIVED AS MAINTENANCE CHARGES BY ASS ESSEE S SUBSIDIARY COMPANY M/S. IHDP HOME INTERIORS EXPORTS PARKS PVT. LTD, TO THE INCOME OF ASSESSEE OBSERVING THAT THE AGREEMENT ENTERED INTO FOR PROVIDING SERVICES IS A COLLUSIVE AGREEMENT, ENTERED ONLY WITH A VIEW TO DIVERT RENTAL INCOME OF THE ASSESSE E COMPANY BECAUSE THE MAINTENANCE CHARGES ARE THE INTEGRAL PART OF LICENSE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE - COMPANY AND THE TENANTS OF THE PREMISES. HE THEREFORE, CONSIDERING THE LAW LAID DOWN IN THE CASES OF DURGA PRASAD MORE, 82 ITR 540(SC) AN D CIT VS. MCDOWELL, MADE THE IMPUGNED ADDITION TO THE INCOME OF THE ASSESSEE. AGGRIEVED ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A), WHO DELETED THE IMPUGNED ADDITION OBSERVING AS UNDER : I HAVE GONE THROUGH THE ASSESSMENT ORDER AND SU BMISSIONS OF AR AND THE PAPERS AND DOCUMENTS PLACED DURING THE ASSESSMENT PROCEEDINGS, THE COPIES OF WHICH WERE ALSO PLACED BEFORE ME IN APPELLATE PROCEEDINGS. AFTER CAREFULLY CONSIDERING THE SAME AND THE ARGUMENTS RAISED BEFORE ME BY THE AR, I FIND THAT T HE APPELLANT COMPANY, - IHDP GLOBALS PRIVATE LTD. AND THE ANOTHER COMPANY , HOME INTERIORS EXPORTS PARKS PVT. LTD AND THE ANOTHER COMPANY NAMELY IHDP HOME INTERIOR EXPORT PARKS PRIVATE LTD. ARE TWO SEPARATE ASSESSEES. I ALSO FIND FROM THE COPIES OF THE BALA NCE SHEETS OF BOTH THE COMPANIES PLACED ON RECORD THAT THE APPELLANT COMPANY PURCHASED THE LAND AND CONSTRUCTED THE BARE BUILDING AT PLOT NO. 7 SECTOR 127, TAJ EXPRESS WAY, NOIDA AND CHARGED RENT FOR THE LAND AND BARE CONSTRUCTION OF THE BUILDING THROUGH A GREEMENTS ENTERED INTO BETWEEN THE APPELLANT COMPANY AND THE TENANTS. THE APPELLANT COMPANY WAS NOT IN A POSITION TO GIVE ANY MAINTENANCE SERVICES TO ITS TENANTS AS THE NECESSARY ASSETS AND EQUIPMENTS, SUCH AS LIFTS, GENERATOR ETC. WERE NOT OWNED BY THE AP PELLANT ITA NO. 3606/DEL./2012 4 COMPANY AND THAT ALL THE NECESSARY ASSETS AND EQUIPMENTS SUCH AS LIFTS, GENERATORS, AIR CONDITIONING PLANTS, CHILLING PLANT, FIRE FIGHTING EQUIPMENTS ETC. WERE OWNED BY NAMELY IHDP HOME INTERIOR EXPORT PARKS PRIVATE LTD. AND THAT THE SAID ANOTHER C OMPANY PROVIDES THE MAINTENANCE AND OTHER SERVICES TO THE TENANTS AS PER SEPARATE AGREEMENTS ENTERED INTO BETWEEN THE SAID NAMELY IHDP HOME INTERIOR EXPORT PARKS PRIVATE LTD. AND THE TENANTS. IT IS, THEREFORE, SEEN THAT THERE IS NO QUESTION OF DIVERTING TH E RENTAL INCOME. THE AO WAS ALSO EXPECTED TO CONSIDER THE AUDITED ANNUAL ACCOUNTS OF IHDP HOME INTERIOR EXPORT PARKS PRIVATE LTD. AS WELL AS THE STATEMENT OF INCOME AND INCOME TAX RETURN FILED BY NAMELY IHDP HOME INTERIOR EXPORT PARKS PRIVATE LTD. FOR A.Y . 2009 - 10 AND THE ASSESSMENT ORDER PASSED U/S. 143(3) FOR A.Y. 2008 - 09 WHILE PASSING THE ASSESSMENT ORDER OF THE APPELLANT COMPANY. IT APPEARS THAT IT HAS NOT BEEN DONE BY AO. CONSIDERING THE LEGAL AND FACTUAL POSITION, I AM OF THE CONSIDERED OPINION THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS NO REASON TO INCLUDE THE INCOME OF MAINTENANCE CHARGES OF RS.2,72,74,672/ - EARNED BY NAMELY IHDP HOME INTERIOR EXPORT PARKS PRIVATE LTD., WHICH IS A SEPARATE ASSESSEE, IN THE HANDS OF THE APPELLANT COMPA NY, - IHDP GLOBAL PRIVATE LTD. I ACCORDINGLY DELETE THIS ADDITION OF RS.2,72,74,672/ - . 3. DURING THE COURSE OF HEARING, THE LD. DR RELYING UPON THE ASSESSMENT ORDER SUBMITTED THAT THE AGREEMENT BETWEEN THE SUBSIDIARY COMPANY OF ASSESSEE AND THE TENANT WA S A COLLUSIVE AGREEMENT TO DIVERT THE RENTAL INCOME OF THE ASSESSEE. IT WAS SUBMITTED THAT THE LD. CIT(A) WHILE DELETING THE ADDITION, DID NOT CONSIDER THIS ASPECT OF THE CASE AND DELETED THE ADDITION WITHOUT ANY GOOD REASON. THE LEARNED COUNSEL FOR THE AS SESSEE, ON THE OTHER HAND , RELIED ON THE ORDER OF THE FIRST APPELLATE AUTHORITY AND URGED FOR DISMISSAL OF REVENUE S APPEAL. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION S , PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT BOTH ITA NO. 3606/DEL./2012 5 THE ASSESSEE COMPANY AND ITS SUBSIDIARY COMPANY , PROVIDING MAINTENANCE SERVICES TO THE TENANT OF THE ASSESSEE S PROPERTY, ARE TWO SEPARATE ENTITIES AND INCOME - TAX ASSESSEES. THE LEARNED FIRST APPELLATE AUTHORITY AFTER CONSIDERI NG THE BALANCE SHEETS OF BOTH THE COMPANIES HAS ARRIVED AT A FINDING THAT THE ASSESSEE COMPANY PURCHASED THE LAND AND CONSTRUCTED THE BARE BUILDING AT PLOT NO. 7 SECTOR 127, TAJ EXPRESS WAY, NOIDA AND CHARGED RENT FOR THE LAND AND BARE CONSTRUCTION OF BUIL DING UNDER AN AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE COMPANY AND THE TENANTS. IT IS ALSO BORN OUT ON RECORD THAT MAINTENANCE CHARGES, WHATSOEVER, WERE PAID BY THE TENANT TO ANOTHER COMPANY NAMELY, M/S. IHDP HOME INTERIORS EXPORTS PARKS PVT. LTD. UNDER A SEPARATE AGREEMENT. IT IS ALSO NOT IN DISPUTE THAT THE LIFTS, GENERATOR , FIRE EQUIPMENTS ETC. INSTALLED IN THE PREMISES WERE NOT OWNED BY ASSESSEE COMPANY, BUT BY THE OTHER COMPANY WHO RENDERED MAINTENANCE SERVICES AND RECEIVED THE MAINTENANCE CHARGES. IT IS ALSO WORTHWHILE TO NOTE THAT THE INCOME RETURNED BY THE ASSESSEE - COMPANY IN THE SAME FASHION IN THE ASSESSMENT YEAR 2010 - 11 AND 2011 - 12 HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER VIDE ASSESSMENT ORDERS U/S. 143(3) DATED 08.02.2013 AND 06.01.2014 (COPY PLACED BEFORE US) AND THE NATURE OF BUSINESS OF ASSESSEE S SUBSIDIARY COMPANY STANDS DEPICTED FROM THEIR ASSESSMENT ORDER DATED 27.02.2015 U/S. 143(3) FOR A.Y. 2012 - 13 (COPY PLACED BEFORE US) . THE LD. CIT(A) HAS ALSO CONSIDERED THE STATEMENT OF INCO ME AND INCOME TAX RETURN FILED BY M/S. IHDP HOME INTERIORS EXPORTS PARKS PVT. LTD FOR THE YEAR UNDER CONSIDERATION. THE LEARNED DR COULD NOT BE ABLE TO SHOW ANY SUCH SURROUNDING ITA NO. 3606/DEL./2012 6 CIRCUMSTANCES TO SUGGEST THAT THE AGREEMENTS IN QUESTION WERE COLLUSIVE AGREEM ENTS. HE ALSO COULD NOT DENY THAT THE SERVICE EQUIPMENTS INSTALLED IN THE PREMISES WERE OWNED BY THE SERVICE PROVIDER. THEREFORE, THE DECISIONS RELIED UPON BY THE ASSESSING OFFICER IN THE CASE OF CIT VS. MCDOWELL AND CIT VS. DURGA PRASAD MORE (SUPRA) DO NO T RENDER ANY HELP TO THE REVENUE IN THE PRESENT CASE. IN PRESENCE OF ALL THESE FACTS, IN OUR CONSIDERED OPINION, THE LD. CIT(A) APPEARS TO HAVE COMMITTED NO ERROR WHILE HOLDING THAT THERE IS NO REASON TO INCLUDE THE INCOME OF MAINTENANCE CHARGES OF RS. 2,72 ,74,672/ - EARNED BY M/S. IHDP HOME INTERIORS EXPORTS PARKS PVT. LTD WHO IS A SEPARATE ASSESSEE, IN THE HANDS OF THE ASSESSEE - COMPANY. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). 5. IN THE RESULT, THE APPEAL OF THE REVEN UE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.10.2015. SD/ - SD/ - ( I.C. SUDHIR ) ( L.P. SAHU ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 09.10.2015 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES , NEW DELHI