M/s Housing Board Haryana, Chandigarh V. DCIT, Panchkula

ITA 382/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9159 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARISH NAYYAR
• Section: 37(1); 194C; 69; 139

Judgement Text

INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 382 /CHD/ 2016 ASSESSMENT YEAR: 2012 - 13 HOUSING BOARD HARYANA, SECTOR - 17/B, CHANDIGARH VS. DEPUTY COMMISSIONER OF INCOME TAX, PANCHKULA CIRCLE, PANCHKULA (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. HARISH NAYYAR, CA REVENUE BY: NONE DATE OF HEARING 03 /0 8 /2016 DATE OF PRONOUNCEMENT 11 /0 8 /2016 O R D E R PER PRASHANT MAHARISHI, A. M. 1 . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - 2, GURGAON DATED 16.02.2016 FOR THE ASSESSMENT YEAR 2012 - 13 , WHEREIN DISALLOWANCE OF RS. 2132900/ - WAS DISALLOWED UNDER THE RELIEF OF PROFIT/ ADMINISTRATIVE CHARGES GRANTED TO THE EMPLOYEES WAS CONFIRMED. 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THAT THE ORDER PASSED BY THE LD COMMISSIONER OF INCOME TAX (APPEALS) GURGAON IS ERRONEOUS, DEVOID OF MERITS, HAS BEEN PASSED IN HASTE WITHOUT TAKING INTO PAGE 2 OF 5 HOUSING BOARD HARYANA V DCIT ITA NO 382/CHD/2016 A Y 201 2 - 13 CONSIDERATION THE FACTS OF THE CASE AND DESERVES TO BE QUASHED. 2. THAT THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAD ERRED BOTH ON FACTS AND LAW IN CONFIRMING ADDITION OF RS. 2132900/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE CLAIMED BY THE APPELLANT UNDER THE HEAD RELIEF OF PROFIT/ ADMI NISTRATIVE CHARGES GRANTED TO THE EMPLOYEES. THE ADDITION HAS BEEN CONFIRMED BY THE LD CIT ( APPEALS) BY NOT CONSIDERING THE FACT OF THE CASE CORRECTLY. 3 . THE SOLITARY ISSUE IN THIS APPEAL IS REGARDING CLAIM OF DEDUCTION OF RELIEF OF PROFIT/ ADMINISTRATIVE CHARGES GRANTED TO THE EMPLOYEES OF THE ASSESSEE COMPANY IN THE HANDS OF THE ASSESSEE . THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE HAS INCURRED EXPENDITURE ON ACCOUNT OF RELIEF OF PROFIT/ ADMINISTRATIVE CHARGES PAID TO THE STAFF WHICH REPRESENTED THE AMOUNT OF CONCESSION GIVEN TO ITS EMPLOYEE IN ALLOTMENT OF HOUSES. THE LD AO WAS OF THE VIEW THAT IT REPRESENTED THE NOTIONAL LOSS TO THE APPELLANT AND FURTHER NO TAX HAS BEEN DEDUCTED , HENCE, IT WAS DISALLOWED. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT (A) WHO CONFIRMED THE DISALLOWING HOLDING THAT THIS IS THE PERSONAL EXPENDITURE ON BEHALF OF THE RESIDENTIAL ACCOMMODATION OF THE EMPLOYEES. THEREFORE, ASSESSEE IS IN APPEAL BEFORE US. 4 . T HE LD AR RELIED ON HIS SUBMISSION MADE BEFORE THE LOWER AUTHOR ITIES AND SUBMITTED THAT THIS IS A N ACTUAL LOSS INCURRED BY THE ASSESSEE AND FURTHER IT IS NOT DISALLOWABLE U/S 40A ( IA ) AS SALARY IS NOT INCLUDED IN THAT CATEGORY FOR THE IMPUGNED ASSESSMENT YEAR. HE FURTHER SUBMITTED THAT IT IS NOT PERSONAL EXPENDITURE O F THE COMPANY BUT IT IS STAFF COST PAGE 3 OF 5 HOUSING BOARD HARYANA V DCIT ITA NO 382/CHD/2016 A Y 201 2 - 13 OF THE ASSESSEE . HENCE, HE SUBMITTED THAT IT IS ALLOWABLE TO THE ASSESSEE. 5 . O N BEHALF OF THE REVENUE; HOWEVER, AN ADJOURNMENT APPLICATION WAS MOVED STATING THAT DUE TO PAUCITY OF TIME THE MATTER COULD NOT BE PREPARED BY LD DR. FURTHER LOOKING INTO THE NATURE OF THE ISSUE INVOLVED WE DO NOT ACCEDE TO THE REQUEST OF THE REVENUE BUT DIRECTED THE REVENUE THAT IF THERE IS ANY SUBMISSION TO BE MADE ON THE MERITS OF THE CASE SAME MAY BE SUBMITTED TO US ON THE NEXT DAY, WHICH THE BENCH WOULD CONSIDER APPROPRIATELY AND THEN DECIDED THE ISSUE ON MERIT ACCORDINGLY . HOWEVER, T ILL TO DATE WE HAVE NOT RECEIVED ANY OBJECTION SUBMITTED BEFORE US. THEREFORE, WE PROCEED TO DECIDE THE ISSUE ON MERIT. 6 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. ASSESSEE IS A HOUSING BOARD, WHICH IS ENGAGED IN THE BUSINESS OF CONSTRUCTION OF RESIDENTIAL HOUSES. THE IMPUGNED EXPENDITURE IS INCURRED BY THE ASSESSEE IN THE FORM OF CONCESSION GIVEN TO ITS EMPLOYEES ON ALLOTMENT OF HOUSES . T HEREFORE , ON ALLOTMENT OF THESE HOUSES , ASSESSEE HAS INCURRED ACTUAL LOSS AND NOT NOTIONAL LOSS. FURTHER, THIS BENEFIT IF ANY HAS ACCORDED TO THE EMPLOYEES AND NO TAX HAS BEEN DEDUCTED THEREON AND THEREFORE THE EXPENDITURE BEING IN THE NATURE OF PERQUISITES IS N OT ALLOWABLE APPLYING THE PROVISIONS OF SECTION 40A(IA) OF THE ACT . THE PROVISION OF SECTION 40A (IA) FOR RELEVANT YEAR ARE AS UNDER AMOUNTS NOT DEDUCTIBLE. 40. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN SECTIONS 30 TO 64 [ 38 ], THE FOLLOWING AMOUNTS SHALL NOT BE DEDUCTED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', PAGE 4 OF 5 HOUSING BOARD HARYANA V DCIT ITA NO 382/CHD/2016 A Y 201 2 - 13 65 ( A ) IN THE CASE OF ANY ASSESSEE ( IA ) ANY INTEREST, COMMISSION OR BROKERAGE, 67 [RENT, ROYALTY,] FEES FOR PROFESSIONAL SERVICES OR FEES FOR TECHNICAL SERVICES PAYABLE TO A RESIDENT, OR AMOUNTS PAYABLE TO A CONTRACTOR OR SUB - CONTRACTOR , BEING RESIDENT, FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WOR K), ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XVII - B AND SUCH TAX HAS NOT BEEN DEDUCTED OR, AFTER DEDUCTION, 68 [HAS NOT BEEN PAID ON OR BEFORE THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 :] 69 [ PROVIDE D THAT WHERE IN RESPECT OF ANY SUCH SUM, TAX HAS BEEN DEDUCTED IN ANY SUBSEQUENT YEAR, OR HAS BEEN DEDUCTED DURING THE PREVIOUS YEAR BUT PAID AFTER THE DUE DATE SPECIFIED IN SUB - SECTION (1) OF SECTION 139 , SUCH SUM SHALL BE ALLOWED AS A DEDUCTION IN COMPUTING THE INCOME OF THE PREVIOUS YEA R IN WHICH SUCH TAX HAS BEEN PAID :] 70 [ PROVIDED FURTHER THAT WHERE AN ASSESSEE FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVII - B ON ANY SUCH SUM BUT IS NOT DEEMED TO BE A N ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB - SECTION (1) OF SECTION 201 , THEN, FOR THE PURPOSE OF THIS SUB - CLAUSE, IT SHALL BE DEEMED THAT THE ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESIDENT PAYEE REFERRED TO IN THE S AID PROVISO. ] EXPLANATION. FOR THE PURPOSES OF THIS SUB - CLAUSE, ( I ) 'COMMISSION OR BROKERAGE' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( I ) OF THE EXPLANATION TO SECTION 194H ; ( II ) 'FEES FOR TECHN ICAL SERVICES' SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE ( VII ) OF SUB - SECTION (1) OF SECTION 9 ; ( III ) 'PROFESSIONAL SERVICES' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( A ) OF THE EXPLANATION TO SECTION 194J ; ( IV ) 'WORK' SHALL HAVE THE SAME MEANING AS IN EXPLANATION III TO SECTION 194C ; 71 [( V ) 'RENT' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( I ) TO THE EXPLANATION TO SECTION 194 - I ; ( VI ) 'ROYALTY' SHALL HAVE THE SAME MEANING AS IN EXPLANATION 2 TO CLAUSE ( VI ) OF SUB - SECTION (1) OF SECTION 9 ;] (EXTRACTED F ROM TAXMANN UNDERLINED BY US) 7 . ON READING OF ABOVE PROVISIONS, WE DO NOT FIND THE PROVISION, WHICH DISALLOWED THE SALARY FOR NON - DEDUCTION OF TAX. FURTHER, THE ASSESSEE IS AS A LOCAL AUTHORITY AND THE BENEFIT GIVEN TO THE EMPLOYEES IS IN NATURE OF EMPLOYEE COST AND THEREFORE CANNOT BE A PERSONAL EXPENDITURE OF THE ASSESSEE. THE ABOVE EXPENDITURE IS CLE ARLY ALLOWABLE U/S 37(1) OF THE ACT AND THEREFORE WE REVERSE THE FINDING OF THE LD PAGE 5 OF 5 HOUSING BOARD HARYANA V DCIT ITA NO 382/CHD/2016 A Y 201 2 - 13 CIT(A) AND DISALLOWANCE THE ABOVE CLAIM OF EXPENDITURE IS DELETED . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED ACCORDINGLY. ORDER PRONOUNCED IN THE OPEN COURT ON 1 1 / 08 /2016. - S D / - - S D / - ( SANJAY GARG ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 1 / 08 /2016 A K KEOT COPY FORWARDED TO 1 . APPLICANT 2 . RESPONDENT 3 . CIT 4 . CIT (A) 5 . DR:ITAT ASSISTANT REGISTRAR ITAT, CHANDIGARH