G.M. CONSTRUCTION, MUMBAI V. DCIT CEN CIR 22, MUMBAI

ITA 3794/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 2099 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 28-09-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2013
• Court: TRIBUNAL
• Department Lawyers: H M WANARE
• Assessee Lawyers: VIJAY KOTHARI

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G BE NCH, MUMBAI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER / I .T.A. NO.3794/MUM/2013 ( / ASSESSMENT YEAR:2010-11 G.M. CONSTRUCTION, 10, MITHILA SHOPPING CENTRE, V.M. ROAD, JUHU SCHEME, VILE PARLE(W), MUMBAI-400 049 / VS. THE DCIT-CENT. CIR.22, ROOM NO. 465, AAYAKAR BHAVAN, MUMBAI-400 020 ./ ./ PAN/GIR NO. : AAAAG 4641C ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY: SHRI VIJAY KOTHARI / RESPONDENT BY: SHRI H.M. WANARE / DATE OF HEARING : 29.09.2015 ! / DATE OF PRONOUNCEMENT : 07.10.2015 '# / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE LD. CIT(A)-39, MUMBAI DATED 15.3.2013 PERTAININ G TO ASSESSMENT YEAR 2010-11. 2. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT HE IS NOT PRESSING GROUND NO. 1, THEREFORE GROUND N O. 1 IS DISMISSED AS NOT PRESSED. ITA. NO.3794/M/2013 2 3. GROUND NO. 2 RELATES TO THE DISALLOWANCE OF RS. 12,29,230/- BEING EXPENSES MADE TO SRA AUTHORITY FOR REGULARIZA TION OF CONSTRUCTION WORK. 4. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT THE IMPUGNED ISSUE HAS BEEN DECIDED BY THE HIGH COU RT OF DELHI IN THE CASE OF CIT VS LOKE NATH & CO. 147 ITR 624 IN F AVOUR OF THE ASSESSEE AND AGAINST THE REVENUE WHICH HAS BEEN FOL LOWED BY THE TRIBUNAL IN THE CASE OF M/S. DARSHAN PROPERTIES IN ITA NO. 3098/M/2010. IT IS THE SAY OF THE LD. COUNSEL THAT IN THE LIGHT OF THESE DECISIONS, THE ADDITION SHOULD BE DELETED. 5. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 6. WE HAVE CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS OF THE HONBLE HIGH COURT AND THE TRIBUNA L BROUGHT TO OUR NOTICE AND REFERRED TO HEREINABOVE. THE FACTS ARE THAT WHILE SCRUTINIZING THE RETURN OF INCOME, THE AO FOUND THA T PAYMENT OF RS. 12,29,230/- HAS BEEN MADE TOWARDS PENALTY FOR REGUL ARIZATION OF REHAB NO. 1. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM. IT WAS EXPLAINED THAT THE AMOUNT IS PAID TOWARDS REGULARIZ ATION OF CONSTRUCTION WORK CARRIED OUT FOR CONSTRUCTION OF P LINTH AREA FOR WHICH COMMENCEMENT CERTIFICATE WAS OBTAINED SUBSEQU ENTLY BY PAYING THE REGULARIZATION CHARGE. HOWEVER, INADVER TENTLY, THE WORD PENALTY HAS BEEN USED. THE AO WAS NOT CONVINCED W ITH THIS EXPLANATION OF THE ASSESSEE AND ADDED RS. 12,29,230 /- TO THE TOTAL INCOME OF THE ASSESSEE. 7. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) BUT WITHOUT ANY SUCCESS. ITA. NO.3794/M/2013 3 8. AGGRIEVED, THE ASSESSEE IS BEFORE US. STRONG RE LIANCE WAS PLACED ON THE DECISION OF THE HONBLE HIGH COURT OF DELHI AND THE DECISION OF THE CO-ORDINATE BENCH, WHICH ARE REFERR ED ELSEWHERE. WE FIND FORCE IN THE CONTENTION OF THE LD. COUNSEL. A SIMILAR ISSUE HAS BEEN DECIDED BY THE HONBLE HIGH COURT OF DELHI IN THE CASE OF LOKE NATH & CO (SUPRA) WHICH HAS BEEN FOLLOWED BY THE TR IBUNAL IN THE CASE OF M/S. DARSHAN PROPERTIES (SUPRA). THE RELE VANT PORTION OF THE FINDINGS OF THE TRIBUNAL IS AS UNDER: THE EXPENDITURE OF PAYMENT OF COMPENSATION INCURRED BY THE ASSESSEES HAS TO BE REGARDED AS AN INTEGRAL PAR T OF THE PROFIT- EARNING PROCESS OF THE ASSESSEES. THE PORTION OF TH E BUILDINGS THUS SAVED FROM ALTERATION OR DEMOLITION REMAINED AS A B USINESS STOCK AVAILABLE FOR SALE FLAT-WISE. THE ASSESSEES BY THIS OUTGOING OF RS. 4 LAKHS PROCURED THE PORTION OF THE BUILDING BY WHICH THE ASSESSEES MADE PROFIT. THE PAYMENT IS NOT IN THE NATURE OF PE NALTY FOR INFRACTION OF LAW AND IS A PERMISSIBLE DEDUCTION IN ARRIVING AT THE BUSINESS PROFIT. THEREFORE WE ALLOW THIS GROUND RAI SED BY THE ASSESSEE. 9. WHILE DECIDING THIS ISSUE TRIBUNAL AT PARA-10 OF ITS ORDER HAS CONSIDERED THE DECISION OF THE HONBLE HIGH COURT O F DELHI IN THE CASE OF LOKE NATH & CO (SUPRA). RESPECTFULLY FOLLOWING THESE DECISIONS, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT TH E AO TO DELETE THE ADDITION OF RS. 12,29,230/-. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH OCTOBER, 2015 SD/- SD/- (SANJAY GARG ) (N.K. BILLAIYA) $% ' /JUDICIAL MEMBER ' / ACCOUNTANT MEMBER & ' MUMBAI; (' DATED :07 TH OCTOBER, 2015 . % . ./ RJ , SR. PS ITA. NO.3794/M/2013 4 !' #' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ) ( ) / THE CIT(A)- 4. ) / CIT 5. *+, %%-. , -.! , & ' / DR, ITAT, MUMBAI 6. ,/0 1 / GUARD FILE. $ / BY ORDER, * % //TRUE COPY// % / $& ' (DY./ASSTT. REGISTRAR) , & ' / ITAT, MUMBAI