ITO, New Delhi V. M/s. Organizing Committee Hero Honda FIH World Cup, New Delhi

ITA 3739/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4597 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 13-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 26-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER & SHRI K.N. CHARRY, JUDICIAL MEMBER ITA NO.-3739/DEL/2014 ( ASSESSMENT YEAR: 2010-11) ITO WARD-24(3) NEW DELHI. VS ORGANIZING COMMITTEE HERO HONDA FIH WORLD CUP C/O M/S RRA TAX INDIA D-28, SOUTH EXTENSION, PART-1, NEW DELHI. AAAAO1767H ASSESSEE BY SH. ASHWANI TANEJA, ADV. SH.SHAANTANU JAIN, ADV. REVENUE BY SH. PRADEEP KUMAR, SR. DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER THIS IS AN APPEAL CHALLENGING THE ORDER DATED 14.03 .2014 IN APPEAL NO. 91/13-14 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XXIII, NEW DELHI (HEREINAFTER FOR SHO RT CALLED AS LD. CIT (A)). 2. BRIEF FACTS ARE THAT DURING THE AY 2010-11 THE A SSESSEE ORGANIZED AND CONDUCTED THE MENS HOCKEY WORLD CUP, 2010 AND DATE OF HEARING 05.09.2017 DATE OF PRONOUNCEMENT 19.09.2017 2 ITA NO.3739/DEL/2014 FOR THAT PURPOSE CREATED AN AOP. ON 13.10.2010 THE ASSESSEE FILED THE RETURN OF INCOME DECLARING AN INCOME OF R S. 15,07,970/-. THE TOTAL RECEIPTS WERE SHOWN AT RS. 8,38,46,493/- AS AGAINST THE EXPENDITURE OF RS. 10,46,70,522/- RESULTING IN A NE T LOSS OF RS. 2,08,24,030/-. HOWEVER, AFTER ADJUSTING THE GRANT OF RS. 2,23,32,000/- RECEIVED FROM OCCWG, 2010 AND FIH, TH E ASSESSEE HAD SHOWN THE INCOME OF RS. 15,07,970/-. DURING TH E SCRUTINY, AO MADE AN ADDITION ON SEVERAL COUNTS AND REACHED T HE TAXABLE INCOME OF THE ASSESSEE AT RS. 5,30,04,790/-. 3. IN APPEAL THE LD. CIT (A) DELETED THE ADDITION O F RS. 5,50,000/- ON ACCOUNT OF THE INCOME RECEIVED FROM M /S SAIL, A SUM OF RS. 8,09,545/- AND RS. 4,17,63,525/- U/S 40( A)(IA), RS. 66,50,763/- MADE ON ACCOUNT OF BOGUS CREDITORS, RS. 63,635/- ADDITION MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES A ND RS. 15,04,848/- BEING 10% OF THE TOTAL EXPENSES. CHAL LENGING THE DELETION OF THE ADDITIONS UNDER THESE COUNTS, THE R EVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE THE LD.CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 5,50,000/ - MADE BY THE AO BEING THE INCOME RECEIVED FROM M/S SAIL, WHICH WAS NOT DECLARED TO THE DEPARTMENT BY THE ASSESSEE. 3 ITA NO.3739/DEL/2014 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE W HETHER THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 8 ,09,545/- AND RS. 4,17,63,525/- MADE BY THE AO U/S 40(A)(IA) FOR NOT DEDUCTING TDS ON THESE PAYMENTS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE W HETHER THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 6 6,50,763/- MADE BY THE AO ON ACCOUNT OF BOGUS CREDITORS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE W HETHER THE LD.CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS . 63,635/- MADE BY THE AO ON ACCOUNT OF PRIOR PERIOD EXPENSES DEBIT ED TO P&L ACCOUNT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE W HETHER THE LD. CIT (A) HAS ERRED IN DELETING THE AD-HOC DISALLOWAN CE OF RS. 15,04,848/- MADE BY THE AO BEING 10% OF THE TOTAL E XPENSES CLAIMED OF RS. 1,50,48,488/- IN ABSENCE OF PRODUCTI ON OF BILLS & VOUCHERS. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE I MPUGNED ORDER PASSED BY THE LD. CIT (A) IS PERVERSE BOTH IN FACTS AND LAW. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE W HETHER THE LD. CIT (A) HAS ERRED IN ADMITTING ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1961. 8. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND A NY OF THE GROUND OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 4. GROUND NOS. 6 & 8 ARE GENERAL IN NATURE AND DO N OT REQUIRE ANY SPECIAL ADJUDICATION. IN SO FAR AS THE ADDITION OF RS. 5,50,000/- IS CONCERNED, VIDE PARAGRAPH NO. 5 OF TH E ASSESSMENT ORDER AO OBSERVED THAT THE ASSESSEE HAD CLAIMED CRE DIT OF TDS OF RS. 11,000/- IN THE BOOKS OF ACCOUNTS AGAINST THE R ECEIPT OF RS. 5,50,000/- FROM SAIL BUT SUCH RECEIPT WAS NOT DISCL OSED IN THE BOOKS OF ACCOUNTS. IT IS FURTHER RECORDED BY THE A O THAT ON THE SHOW CAUSE NOTICE ISSUED TO THE ASSESSEE, THE ASSES SEE DENIED TO HAVE RECEIVED SUCH SUM OF RS. 5,50,000/- FROM SAIL. AO REJECTED 4 ITA NO.3739/DEL/2014 THE SAID CONTENTION OF THE ASSESSEE BUT MADE AN ADD ITION OF RS. 5,50,000/-. ON THIS ASPECT, LD. CIT (A) FOUND THAT THOUGH INITIALLY THE ASSESSEE CLAIMED THE CREDIT OF TDS AS PER 26AS STATEMENT, LATER ON THE ASSESSEE BROUGHT TO THE NOTICE OF THE AO THAT SUCH CLAIM WAS BY MISTAKE AND SINCE THEY DID NOT PROVIDE ANY SERVICE TO SAIL NOR DID THEY RECEIVE RS. 5,50,000/- THEY RECON CILED THEIR BOOKS OF ACCOUNTS. LD. CIT (A) BASING ON CIT VS. D INESH KUMAR GOEL (2010) 331 ITR 10 (HC) HELD THAT THE REVENUE I S RECOGNIZED ONLY WHEN THE SERVICES ARE ACTUALLY RENDERED AND SI NCE NO SERVICE WAS RENDERED AND NO PAYMENT WAS RECEIVED THE ADDITI ON OF RS. 5,50,000/- CANNOT BE SUSTAINED. 5. ON THIS ASPECT, IT IS THE SUBMISSION OF THE LD. AR THAT LD. CIT (A) IS RIGHT IN DELETING THE ADDITION, WHEREAS LD. DR SUBMITS THAT IT IS A VERIFIABLE FACT AS TO WHETHER THERE IS ANY SER VICE RENDERED AND WHETHER ANY AMOUNT WAS RECEIVED. WE, THEREFORE, HO LD THAT THIS IS A VERIFIABLE FACT AT THE END OF THE AO AND SET ASID E THIS GROUND TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY WHETH ER ANY SERVICE WAS RENDERED AND ANY AMOUNT WAS RECEIVED. 5 ITA NO.3739/DEL/2014 6. NOW TURNING TO THE DELETION OF 8,09,545/- & 4,17 ,63,525/-, AOS OBSERVATION WAS THAT THE ASSESSEE HAD ACCOUNTE D FOR COMMISSION OF RS. 1,17,97,206/-, WHEREAS THE ASSESS EE HAS PAID COMMISSION OF SPONSORSHIP RS. 1,26,06,751/- TO M/S COMMUNE MARKET & EVENTS PVT. LTD. SPONSORSHIP IN ITS BOOKS OF ACCOUNT, AND DEDUCTED TDS ONLY ON RS. 1,17,97,206/- AS AGAINST 1 ,26,06,751/-, AS SUCH, AO ADDED RS. 8,09,545/- TO THE INCOME OF T HE ASSESSEE. SO ALSO AO FURTHER HELD THAT DURING THE YEAR A SUM OF RS. 4,17,63,525/- WAS CREDITED IN THE ACCOUNT OF FIH BY THE ASSESSEE BUT NO TDS WAS DEDUCTED AS SUCH THIS AMOUNT OF RS. 4,17,63,525/- WAS ALSO ADDED. 7. ON THIS ASPECT, IT IS THE OBSERVATION OF THE LD. CIT (A) THAT IN RESPECT OF 8,09,545/-, THE SAID AMOUNT WAS PAID TO M/S COMMUNE MARKET & EVENTS PVT. LTD. DIRECTLY BY M/S FIH ON BE HALF OF THE ASSESSEE AND LATER ON AT THE REQUEST OF M/S FIH THE ASSESSEE REIMBURSED THE SAME TO FIH, AS SUCH, SINCE THE ASSE SSEE DID NOT MAKE ANY PAYMENT TO M/S COMMUNE MARKET & EVENTS PVT . LTD. AND TRANSACTION TOOK PLACE OUTSIDE INDIA AND THE AM OUNT WAS PAID BY M/S FIH ON BEHALF OF THE ASSESSEE TO THE SAID CO MPANY WAS 6 ITA NO.3739/DEL/2014 MERELY REIMBURSED BY THE ASSESSEE, IT DOES NOT COME WITHIN THE PURVIEW OF SECTION 40(A)(IA) OF THE ACT. IN THE SA ME WAY, THE LD. CIT (A) HELD THAT THE FIH MADE SEVERAL TRANSACTIONS ON BEHALF OF THE ASSESSEE AND RAISED CREDIT NOTE, WHICH THE ASSE SSEE BOOKED IN THEIR BOOKS OF ACCOUNTS AND DEBIT THE VARIOUS HEADS OF EXPENDITURE, THESE EXPENSES WERE MADE OUT OF INDIA. LD. CIT (A) HELD THAT SINCE THE AO HAS ACCEPTED THE FACT THAT T HE EXPENSES WERE INCURRED BY M/S FIH ON BEHALF OF THE ASSESSEE AND THE ASSESSEE REIMBURSED THESE EXPENSES TO M/S FIH DURIN G THE COURSE OF YEAR, THE QUESTION OF THESE AMOUNTS OF RS. 8,09, 545/- AND 4,17,63,525/- PARTAKING THE NATURE OF INCOME IN THE HANDS OF M/S FIH DOES NOT ARISE AND CONSEQUENTLY THE DISALLOWANC E MADE BY THE AO IS WRONG. FOR THIS PRINCIPLE LD. CIT (A) RELIED UPON THE DECISIONS REPORTED IN GE INDIA TECHNOLOGY CENTRE PV T. LTD. VS. CIT (2010) 327 ITR 446 (SC), ITO VS. DR. WILLMAR SCHWAB E INDIA LTD. (2005) 95 TTJ 53 (DEL) AND ALSO M/S C U INSPECTIONS INDIA PVT. LTD. VS. DCIT (2013) 142 ITD 761 (MUM)(TRIB). THER E IS NO DENIAL OF FACT FROM THE REVENUE AS TO THE NATURE OF THE PA YMENTS BY THE ASSESSEE TO M/S COMMUNE MARKET & EVENTS PVT. LTD. A ND M/S FIH. M/S FIH MADE THE PAYMENT OF RS. 8,09,545/- DI RECTLY TO M/S 7 ITA NO.3739/DEL/2014 COMMUNE MARKET & EVENTS PVT. LTD. OUTSIDE INDIA AND FOR THAT MATTER M/S FIH INCURRED SO MUCH OF EXPENDITURE WHIC H THE ASSESSEE REIMBURSED TO THEM. IN THE CIRCUMSTANCES, WE FIND IT DIFFICULT TO AGREE WITH THE LD. DR THAT THESE PAYME NTS PARTAKE THE NATURE OF INCOME IN THE HANDS OF M/S FIH AND CONSEQ UENTLY, WE HOLD THAT THE ASSESSEE WAS NOT OBLIGED TO DEDUCT TD S ON THE SAME. WE, THEREFORE, UPHOLD THE FINDINGS OF THE LD. CIT ( A) TO DELETE THE ADDITION OF THESE TWO AMOUNTS U/S 40(A)(IA) OF THE ACT. HENCE, THE GROUND NO. 2 IS DISMISSED. 8. NOW TURNING TO GROUND NO. 3, THE AO MADE THESE A DDITIONS ON THE GROUND THAT THE ASSESSEE HAD NOT FURNISHED THE CONFIRMATIONS IN RESPECT OF M/S CLEA PUBLIC RELATIONS INDIA PVT. LTD. TOTALING RS. 66,50,763/-. LD.AR ARGUED THAT THE TOTAL PAYMENTS MADE DURING THE YEAR ARE ACCEPTED BY THE AO AND ONLY SUCH OUTST ANDING BALANCE AT THE END OF THE FINANCIAL YEAR WAS SUSPEC TED AND ADDED BACK. LD. CIT (A) ALSO NOTICED THE SAME AND OBSERV ED THAT THE ADDITION WAS PURELY BECAUSE THREE PARTIES DID NOT R ESPOND TO NOTICE U/S 133(6)OF THE ACT AND THE PAYMENTS WERE P ARTLY IN THE PREVIOUS YEAR AND PARTLY IN THE SUCCEEDING YEAR. H AVING 8 ITA NO.3739/DEL/2014 CONSIDERED THE COPY OF THE BANK ACCOUNTS AND THE CH EQUE NUMBERS WITH AMOUNTS AND DATES PLACED ON RECORD BY THE ASSE SSEE, THE LD. CIT (A) DELETED THIS ADDITION. WHEN THERE IS NO DE NIAL OF THE FACTUAL POSITION, THE FINDINGS OF THE LD. CIT (A) D O NOT SEEM TO BE PERVASIVE REQUIRING ANY INTERFERENCE. THE OBSERVAT IONS OF THE LD. CIT (A) ARE BASED ON SOLID FACTS. HENCE, WE DO NOT PROPOSE TO DISTURB THE SAME. WE UPHOLD THE FINDINGS OF THE LD . CIT (A) ON THIS ASPECT AND DISMISS GROUND NO. 3. 9. NOW ADVERTING TO GROUND NO. 4 THE SO CALLED PRIO R PERIOD EXPENSES, LD. CIT (A) FOUND MERIT IN THE ARGUMENT O F THE ASSESSEE THAT AN AMOUNT OF RS. 63,635/- WAS PAID ON ACCOUNT OF TECHNICAL TABLE EXPENSES, AND SINCE THE AOP WAS FORMED ONLY D URING THE ASSESSMENT YEAR 2010-11, THERE WERE NO PRIOR PERIOD EXPENSES SINCE ALL THE EXPENSES ARE SUBSEQUENT TO 01.04.2009 . WE CONFIRM THIS FINDING OF LD. CIT (A) AND DISMISSED THE GROUN D NO. 4. 10. NOW COMING TO THE ADHOC DISALLOWANCE OF RS. 1,50,48,488/- MADE BY THE AO TOWARDS 10% OF THE TOTAL EXPENSES OF RS. 1,50,48,488/- ON THE GROUND THAT THE BILLS AND VOUC HERS WERE NOT PRODUCED BY THE ASSESSEE, LD. CIT (A) RECORDED THAT THE ASSESSEE 9 ITA NO.3739/DEL/2014 HAD PLACED ON RECORD THE COPIES OF BILLS OF ALL THE FOUR PARTIES ALONG WITH COPIES OF THEIR LEDGER ACCOUNTS. LD. DR SERIO USLY DISPUTED THIS STATING THAT THE ASSESSING OFFICER SHOULD HAVE BEEN GIVEN AN OPPORTUNITY ON THIS ASPECT TO VERIFY THE VERACITY A ND GENUINENESS OF THE MATERIAL PRODUCED BY THE ASSESSEE. WE ARE I N AGREEMENT WITH THE SUBMISSION OF THE LD. DR AND FIND THAT THE MATERIAL PRODUCED BY THE ASSESSEE HAS TO BE VERIFIED BY THE AO. WE, THEREFORE, SET ASIDE THIS GROUND ALSO TO THE FILE O F THE AO. GROUND NO. 5 AND 7 ARE ANSWERED ACCORDINGLY. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19.09.2017 SD/- SD/- (N.K. SAINI) (K.N. CHA RY) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 19.09.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 10 ITA NO.3739/DEL/2014 DRAFT DICTATED ON 13.09.2017 DRAFT PLACED BEFORE AUTHOR 13.09.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 19.09.2017 APPROVED DRAFT COMES TO THE SR.PS/PS 19.09.2017 KEPT FOR PRONOUNCEMENT ON 19.09.2017 FILE SENT TO THE BENCH CLERK 19.09.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.