ITO, New Delhi V. M/s. Anshil Estates Pvt. Ltd., New Delhi

ITA 3797/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66045 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANURADHA MISHRA
• Keywords: Depreciation

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.3797/DEL/2011 ASSESSMENT YEAR : 2007-08 ITO, WARD 1 (4), ROOM NO.380B, CR BUILDING, IP ESTATE, NEW DELHI. VS. ANSHIL ESTATES PVT. LTD., C-41, MAYFAIR GARDEN, NEW DELHI. PAN : AAFCA6740D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GAUTAM JAIN, CA REVENUE BY : SMT. ANURADHA MISHRA, CIT, DR ORDER PER A.D. JAIN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE DEPARTMENT FOR ASSESSMEN T YEAR 2007-08 AGAINST THE ORDER DATED 02.06.2011 PASSED BY T HE CIT (A)-IV, DELHI, RAISING THE FOLLOWING GROUNDS:- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITIONS OF RS.14,79,841/- AND RS.1,24,429/- ON ACCOUNT OF DISAL LOWANCE OF DEPRECIATION CLAIMED ON CAR AND RUNNING & MAINTENANC E (ACTUALLY ACCESSORY PURCHASED), RESPECTIVELY, IGNORIN G THAT THE SAID CAR WAS NOT PUT TO USE FOR BUSINESS PURPOSES. T HE TWO CASE LAWS RELIED UPON BY THE LD. CIT (A) ARE DISTINGUISHA BLE FROM THE PRESENT CASE AS THESE CASE LAWS ARE WITH RESPECT TO THE A SSETS BEING READY FOR USE OR FORMING PART OF THE BLOCK O F ASSETS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. C IT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING ADDITION OF RS.5,67,05,480/- ON ACCOUNT OF DISALLOWANCE U/S 36 ( 1) (III) IGNORING THAT INTEREST BEARING FUNDS WERE FORWARDED BY THE ASSESSEE AS INTEREST FREE ADVANCES TO UNRELATED PARTIES . HENCE, THIS INTEREST EXPENDITURE WAS NOT INCURRED FOR BUSINES S PURPOSE. ITA NO.3797/DEL/2011 2 2. APROPOS GROUND NO.1, THE ASSESSING OFFICER MADE ADDIT ION OF ` 14,79,841/- ON DEPRECIATION OF CAR AND ` 1,24,429/- OUT OF RUNNING AND MAINTENANCE EXPENSES OF CAR. THE ASSESSEE COMPANY HAD P URCHASED ONE BENTLEY CAR FOR ` 1,97,31,214/- ON 09.03.2007. DEPRECIATION OF ` 14,79,841/- WAS CLAIMED. THIS PURCHASE WAS FROM ONE SH RI SANJAY CHANDRA, THE EARLIER OWNER OF THE CAR. AN AMOUNT O F ` 1,24,429/- WAS SHOWN TO HAVE BEEN INCURRED ON THE RUNNING AND MAINT ENANCE OF THE SAID CAR DURING THE YEAR. THE ASSESSING OFFICER DISALL OWED THE DEPRECIATION AS WELL AS THE EXPENSES CLAIMED, BEING OF THE OPINION THAT THE CAR HAD NOT BEEN USED DURING THE YEAR. 3. THE LD. CIT (A), BY VIRTUE OF THE IMPUGNED ORDER , HELD BOTH THE CLAIMS OF THE ASSESSEE TO BE ALLOWABLE. 4. THE LD. DR HAS CONTENDED THAT THE LD. CIT (A) HA S WRONGLY DELETED BOTH THE ADDITIONS IN QUESTION, IGNORING THE FACT THAT THE CAR WAS NOT PUT TO USE FOR BUSINESS PURPOSES BY THE ASSESSEE DURIN G THE YEAR. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER, CONTENDING TH AT THE CAR WAS READY FOR USE AND WAS ACTUALLY USED DURING THE YEAR FO R THE ASSESSEES BUSINESS PURPOSES. HE FURTHER PLACED RELIANCE ON CAPIT AL BUS SERVICE (P) LTD. VS. CIT, 123 ITR 404 (DEL) [RELIED ON BY T HE CIT (A)] WHEREIN IT HAS BEEN HELD THAT EVEN IF THE ASSET IS KEPT READY FOR USE, EVEN THOUGH NOT ACTUALLY USED, IT PASSES FOR GRANT OF DEPRECIATION AND EXPENDITURE INCURRED. ATTENTION HAS ALSO BEEN BROUGHT TO THE FAC T THAT IN THE SUCCEEDING YEAR, UNDER SCRUTINY ASSESSMENT, DEPRECIATION STANDS ALLOWED ON THE SAME FACTS TO THE ASSESSEE BY THE ASSESSING OF FICER HIMSELF. ITA NO.3797/DEL/2011 3 6. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE AND HAVE P ERUSED THE MATERIAL ON RECORD WITH REGARD THERETO. WE FIN D THAT IT REMAINS UNDISPUTED THAT THE CAR IN QUESTION, DURING THE YEAR , WAS KEPT READY FOR USE. THAT BEING SO, THE LD. CIT (A) WAS RIGHT IN ALLOWING THE ASSESSEES CLAIM OF DEPRECIATION AND EXPENDITURE THEREON , IN KEEPING WITH CAPITAL BUS SERVICE (SUPRA). IT STANDS WELL SETT LED THAT IF AN ASSET IS KEPT READY FOR USE FOR THE BUSINESS PURPOSES OF THE ASSESSE E DURING THE YEAR, BOTH, DEPRECIATION AS WELL AS EXPENDITURE INCURRED THEREON ARE ALLOWABLE. THUS, FINDING NO MERIT THEREIN, GROU ND NO.1 RAISED BY THE DEPARTMENT IS REJECTED. 7. SO FAR AS REGARDS GROUND NO.2, THE ASSESSING OFFICER MADE A DISALLOWANCE OF ` 5,67,05,480/- U/S 36(1) (III) OF THE IT ACT. IT WAS SEEN THAT THE ASSESSEE HAD OBTAINED A SECURED LOAN OF ` 1.50 CRORE FROM M/S HDFC LTD. THE LOAN WAS FOUND TO HAVE BEEN GIVEN FOR THE PURPOSE OF INVESTMENT IN REAL OR COMMENCED ESTATES BUSINESS. THE ASSE SSEE WAS FOUND TO HAVE GIVEN LOAN TO DEVENDRA GUPTA & SONS AN D SMT. JATINDER JOHAR, AMOUNTING TO ` 1,50,00,000/- AND ` 50,00,000/- RESPECTIVELY AT AN INTEREST FREE RATE. THE ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE DID NOT HAVE ANY RELATIONSHIP WITH THE SAID TWO PERSON S AND THAT THE ASSESSEE DID NOT CARRY ON ANY REAL ESTATE BUSINESS DURING T HE YEAR. THE ASSESSEE WAS ALSO FOUND TO HAVE ADVANCED, ON THE OTHE R HAND, AN AMOUNT OF ` 45 CRORE TO M/S UNITECH LTD. ON INTEREST @ 12.50%. THE ASSESSEE CONTENDED THAT IT HAD GIVEN ADVANCES TO DEVENDR A GUPTA & SONS AND SMT. JATINDER JOHAR IN THE NORMAL COURSE OF ITS BUSINESS, TO PURSUE ITS BUSINESS. HOWEVER, FINDING THAT THE BANK STA TEMENT OF CANARA BANK SUGGESTED THAT THE MONEY HAD BEEN GIVEN A S LOAN, THE ASSESSING OFFICER REJECTED THE EXPLANATION OF THE ASSESSEE. 8. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT (A) DELETED THE ADDITION, GIVING RISE TO GROUND NO.2 BEFORE US. TH E LD. DR HAS ITA NO.3797/DEL/2011 4 CONTENDED THAT THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION CORRECTLY MADE BY THE ASSESSING OFFICER ON ACCOUNT OF D ISALLOWANCE U/S 36 (1)(III) OF THE ACT; THAT WHILE DOING SO, THE LD. CIT (A) HAS ILLEGALLY IGNORED THE FACT THAT THE ASSESSEE HAD FORWARDED INTERE ST BEARING FUNDS AS INTEREST FREE ADVANCES TO THE TWO UNRELATED PA RTIES AND THAT SO, THE INTEREST EXPENDITURE IN QUESTION WAS NOT INCURR ED FOR ANY BUSINESS PURPOSE OF THE ASSESSEE. 9. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS RELIED ON THE IMPUGNED ORDER WITH REGARD TO THIS ISSUE ALSO. IT HAS BEEN CONTENDED THAT SO FAR AS REGARDS THE AMOUNT ADVANCED T O DEVENDRA GUPTA & SONS, SHRI DEVENDRA GUPTA HAD FILED HIS CONFI RMATION ALONG WITH PAN, ITR, ETC.; THAT HE HAD ALSO DEPOSED BEFORE THE ASSESSING OFFICER THAT HE HAD TAKEN LOAN FROM THE ASSESSEE TO BUY PLOTS IN M/S UNITECH LTD., ON ITS BEHALF; THAT LIKEWISE, SMT. JAT INDER JOHAR HAD ALSO CONFIRMED ON AFFIDAVIT ALONG WITH OTHER RELEVANT DO CUMENTS, HAVING TAKEN THE ADVANCE, THOUGH SHE WAS NOT ABLE TO APPEAR BEFORE THE ASSESSING OFFICER PERSONALLY; THAT THE MONEY HAD BEEN GI VEN THROUGH ACCOUNT PAYEE CHEQUES, AS ALSO CONFIRMED BY THE ASSESSING OFFICER; THAT IN THE SUCCEEDING YEAR, I.E., ASSESSMENT YEAR 2008- 09, VIDE ORDER DATED 30.12.2010, PASSED U/S 143 (3) OF THE ACT, THE A SSESSING OFFICER HAD ACCEPTED THE LOSS RETURNED BY THE ASSESSEE; THAT THE LD. CIT (A), WHILE CORRECTLY HOLDING THE ADDITION WRONGLY MADE, HAS TAKEN ALL THESE FACTS INTO CONSIDERATION. 10. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL ON RECORD WITH REGARD TO THIS ISSUE, WE DO NOT FIND ANY E RROR IN THE ORDER OF THE LD. CIT (A) QUA THIS ISSUE ALSO. BOTH THE RECIPIENTS OF THE MONEY HAVE CONFIRMED SUCH FACT. FOR DEVENDRA GUPTA & SONS, HUF, SHRI DEVENDRA GUPTA, IN HIS DEPOSITION BEFORE THE ASSESSING OF FICER, CATEGORICALLY ADMITTED HAVING TAKEN THE ADVANCE AND THAT SUCH LOAN ITA NO.3797/DEL/2011 5 WAS FOR THE PURPOSE OF BUYING PLOT OF LAND IN M/S UNI TECH LTD., ON ITS BEHALF. HE FILED HIS CONFIRMATION ALONG WITH PAN, I TR, ETC. SMT. JATINDER JOHAR ALSO CONFIRMED THE LOAN, BY WAY OF H ER AFFIDAVIT, EVEN THOUGH SHE DID NOT COME PRESENT BEFORE THE ASSESSING OFFI CER. THE PAYMENT, UNDISPUTEDLY, WAS THROUGH ACCOUNT PAYEE CHE QUES. THE ASSESSING OFFICER DID NOT BRING ON RECORD ANYTHING TO D ISPROVE THE CONFIRMATIONS OF THE TWO CREDITORS OF THE ASSESSEE. AS CO RRECTLY OBSERVED BY THE LD. CIT (A), MERELY BECAUSE SMT. JATI NDER JOHAR DID NOT APPEAR BEFORE THE ASSESSING OFFICER IN PERSON, IN THE AB SENCE OF ANYTHING ADVERSE TO HER CONFIRMATION, THE ASSESSING OFFI CER WAS WRONG IN THROWING HER CONFIRMATION OUT. FURTHER, AGAIN, UNDISPUTEDLY, IN THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR, I.E., ASSESSMENT YEA R 2008- 08, VIDE ORDER DATED 30.12.2010 PASSED U/S 143 (3) OF THE ACT, THE ASSESSING OFFICER HIMSELF ACCEPTED THE LOSS RETURN FILED B Y THE ASSESSEE, THEREBY ACCEPTING LOAN TRANSACTIONS. THE LD. C IT (A) DULY TOOK NOTE OF THIS FACT. 11. THEREFORE, FINDING NO ERROR IN THE ORDER OF THE LD. CIT (A) REGARDING THIS ISSUE ALSO, HIS FINDINGS THEREON ARE CON FIRMED. THE GROUND NO.2 IS ALSO REJECTED. 12. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.12.20 12. SD/- SD/- [T.S. KAPOOR] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 14.12.2012. DK ITA NO.3797/DEL/2011 6 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES