DCIT, New Delhi V. M/s. Asian Hotels Ltd., New Delhi

ITA 3820/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0698 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-12-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 09-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Assessee Lawyers: M P RUSTOGI
• Keywords: Business expenditure; TDS
• Section: 271(1)(c); 143(3); 191

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER I.T.A NO. 3820/DEL/10 ASSTT. YEAR 2003-04 DCIT CIRCLE 2(1), ROOM NO.398D, C.R. BUILDING, NEW DELHI. VS. ASIAN HOTELS LTD.. BHIKAJI CAMA PLACE, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI A.K. MONGA, SR. DR RESPONDENT BY: SHRI M.P. RUSTOGI, ADVOCATE ORDER PER RAJPAL YADAV, JM: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 25 TH MAY, 2010 PASSED FOR ASTTT. YEAR 2003-04. THE SOL ITARY GRIEVANCE OF THE REVENUE IS THAT LD. CIT(A) HAS ERR ED IN DELETING THE PENALTY OF ` 3,93,355/- IMPOSED U/S 271(1)(C) OF THE INCOME TAX ACT. ITA NO. 3820/DEL/10 ASSTT. YEAR 2003-04 2 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA S FILED ITS RETURN OF INCOME ON 22 ND DECEMBER, 2003 DECLARING AN INCOME OF ` 6,32,22,470/-. AN ASSESSMENT WAS PASSED U/S 143(3) ON 30 TH MARCH, 2006 WHEREBY TOTAL INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT ` 11,53,36,450/-. DURING THE COURSE OF ASSESSMENT PROCEEDING LD. AO F OUND THAT ASSESSEE HAD MADE THE PROVISIONS IN RESPECT OF CERT AIN FOREIGN PAYMENTS AND CLAIMED THEM. THE DETAILS HAVE BEEN NO TICED BY THE AO IN PARAGRAPH NO. 7.1 WHICH READ AS UNDER :- PARTICULARS AMOUNT REMARKS PROVISION FOR TRAINING EXPENSES TO HYATT INTERNATIONAL ASIA-PACIFIC LTD. HONGKONG RS. 707294 PAID IN F.Y.2003-04 PROVISION FOR FBFR SOFTWARE MAINTENANCE TO INFORMATION SERVICES LTD. RS. 23865 WRITTEN BACK IN F.Y. 2003-04 PROVISION FOR COGNOS SOFTWARE MAINTENANCE TO INFORMATION SERVICES LTD. RS. 23865 WRITTEN BACK IN F.Y. 2003-04 PROVISION FOR MAXIAL SOFTWARE MAINTENANCE TO INFORMATION SERVICES LTD. RS. 315329 PART PAID IN F.Y. 2004-05 AND PART WRITTEN BACK IN F.Y. 2003-04 TOTAL RS. 1070353 3. LD. AO DISALLOWED THIS CLAIM OF ASSESSEE BY MAKI NG THE FOLLOWING OBSERVATION IN PARAGRAPH NO. 7.2. 7.2 SINCE THE ABOVE EXPENSES HAVE BEEN CLAIMED AS P ROVISIONS AND THE TAX HAS NOT BEEN DEDUCTED AS PER THE RELEVANT PROVI SIONS OF THE I.T. ACT, 1961, THE SAME ARE DISALLOWED AND THE AMOUNT O F RS. 1070353/- IS ADDED BACK TO THE INCOME OF THE ASSESSEE. 4. ON PERUSAL OF THE ABOVE FINDING IT REVEALS THAT CLAIM OF THE ASSESSEE HAS BEEN DISALLOWED ONLY ON THE GROUND THA T IT FAILED TO DEDUCT ITA NO. 3820/DEL/10 ASSTT. YEAR 2003-04 3 THE TAX OR IF TAX HAS BEEN DEDUCTED THEN THAT HAS N OT BEEN PAID TO THE GOVT. TREASURY. HE INITIATED PENALTY PROCEEDING AGA INST THE ASSESSEE AND ULTIMATELY IMPOSED THE PENALTY OF RS. 393355/-. 5. LD. CIT(A) HAS DELETED THE PENALTY BY FOLLOWING DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROCHEM REP ORTED IN 322 ITR PAGE 158. ACCORDING TO THE LD. CIT(A) THE ASSESSEE HAS DISCLOSED ALL THE PARTICULARS FULLY AND TRULY. THERE IS NO INACCU RACY. IT CANNOT BE CHARGED WITH THE ALLEGATION THAT ASSESSEE FURNISHED INACCURATE PARTICULARS WHICH CAN BE USED FOR VISITING THE ASSE SSEE WITH THE PENALTY. 6. LD. DR WHILE IMPUGNING THE ORDER OF LD. CIT(A) C ONTENDED THAT ASSESSEE IS AN ORGANIZED COMPANY. IT IS FULLY AWARE ABOUT ITS TAX OBLIGATION, IN RESPECT OF PAYMENTS MADE TO THE FORE IGN COMPANIES UPTO AND UNLESS IT HAS DEDUCTED THE TAX AND PAID TO THE GOVT. IT CANNOT CLAIM DEDUCTION OF SUCH PAYMENTS. THE EXPENSES FOR WHICH IT HAS MADE PROVISION AND CLAIMED AS DEDUCTION MAY BE BUSINESS EXPENSES BUT IF THE BUSINESS EXPENSES ARE PAYABLE TO A FOREIGNER THEN A SSESSEE IS BOUND TO DEDUCT THE TAX IN ORDER TO CLAIM THE DEDUCTION. THU S ASSESSEE HAS FURNISHED INACCURATE PARTICULARS AND IT DESERVES TO BE VISITED WITH PENALTY. LD. DR FOR BUTTRESSING HIS ARGUMENT RELIED UPON THE DECISION OF ITA NO. 3820/DEL/10 ASSTT. YEAR 2003-04 4 HONBLE DELHI HIGH COURT IN THE CASE ZOOM COMMUNICA TION REPORTED IN 191 TAXMAN 179. 7. LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND R ELIED UPON THE ORDER OF LD. CIT(A). HE SUBMITTED THAT AS FAR AS AM OUNT OF RS. 7,07,294/- PAID IN F.Y. 2003-04 IS CONCERNED THE TAX WAS DEDU CTED IN THE NEXT YEAR. IT WAS DULY PAID IN THE GOVT. ACCOUNT. THE DE DUCTION COULD BE ALLOWED TO THE ASSESSEE IN THE NEXT YEAR BUT IT HA S NOT BEEN ALLOWED EITHER THIS YEAR OR IN THE NEXT YEAR. THUS ASSESSEE HAS PAID THE TAX ON THIS AMOUNT AS WELL AS ITS DEDUCTION HAS ALSO BEEN DENIED IN BOTH YEARS. THERE IS NO DISPUTE THAT THESE EXPENSES ARE OF BUSI NESS NATURE. THE ONLY DISPUTE BETWEEN THE ASSESSEE AND THE REVENUE I S THAT WHETHER THEY CAN BE ALLOWED TO THE ASSESSEE OR NOT. LD. AO DISAL LOWED THE CLAIM OF ASSESSEE BECAUSE IT FAILED TO DEDUCT THE TDS AND PA ID IT TO THE GOVT. EXCHEQUER. THE LAPSE AT THE PART OF ASSESSEE IS A B ONAFIDE LAPSE. IT HAS FILED A RETURN DECLARING INCOME OF MORE THAN ` 6 CRORE. THERE CANNOT BE ANY INTENTIONAL ATTEMPT AT THE END OF ASSESSEE. 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. THERE IS NO DOUBT THAT THE CL AIM MADE BY THE ASSESSEE IS IN RESPECT OF BUSINESS EXPENSES. HAD TH E ASSESSEE ITA NO. 3820/DEL/10 ASSTT. YEAR 2003-04 5 DEDUCTED THE TDS AND PAID IT TO THE GOVT. ACCOUNT THEN ITS DEDUCTION COULD BE ALLOWED. ACCORDING TO THE ASSESSEE IT HAS PAID THE TAX ALSO IN THE NEXT YEAR FOR THE SUM OF ` 7,07,294/- AND EVEN THEREAFTER DEDUCTION WAS NOT GRANTED TO IT. LD. FIRST APPELLATE AUTHORI TY HAS ACCEPTED THE PLEA OF ASSESSEE THAT IT WAS A BONAFIDE ERROR. OTHERWISE ASSESSEE HAS DISCLOSED ALL MATERIAL FACTS TRULY IN THE RETURN. L D. CIT(A) HAS PLACED ITS RELIANCE ON THE LATEST DECISION OF HONBLE SUPREME COURT IN THE CASE OF RELIANCE PETROCHEM. 9. ON PERUSAL OF THE ASSTT. ORDER IT REVEALS THAT A O HAS MADE DISALLOWANCE OF ` 74,79,510/- U/S 40 (A)(I) OF THE INCOME TAX ACT ON THE GROUND THAT ASSESSEE HAS DEDUCTED THE TAX IN RESPEC T OF FIVE PROJECTS BUT DEPOSITED THE SAME SUBSEQUENT TO THE RELEVANT FINAN CIAL YEAR. HE DISALLOWED THE CLAIM OF ASSESSEE. IT APPEARS THAT T HIS DISALLOWANCE HAS BEEN DELETED IN FURTHER APPEAL BECAUSE NO PENALTY H AS BEEN INITIATED AGAINST THE ASSESSEE WHICH IS AN IDENTICAL ASPECT A S FAR AS THE DISALLOWANCE OF ` 10,70,353/- IS CONCERNED FOR WHICH PENALTY HAS BEE N LEVIED. IT COMES OUT FROM THE PENALTY ORDER THAT TH IS AMOUNT WAS NOT DISPUTED BY THE ASSESSEE IN THE APPEAL. THUS TAKING INTO CONSIDERATION THE OVERALL FACTS AND CIRCUMSTANCES PARTICULARLY TH E AMOUNT OF DISALLOWANCE VIS A VIS THE RETURNED INCOME, WE ARE OF THE VIEW THAT IT IS A ITA NO. 3820/DEL/10 ASSTT. YEAR 2003-04 6 BONAFIDE LAPSE AT THE END OF THE ASSESSEE. THERE IS NO DELIBERATED ATTEMPT TO CONCEAL THE PARTICULARS OF INCOME. LD. C IT(A) HAS RIGHTLY APPRECIATED THE FACTS AND CIRCUMSTANCES WE DO NOT S EE ANY REASON TO INTERFERE IN HIS ORDER. 10. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 7.1.2011. SD/- [K.D. RANJAN] [RAJPAL YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7.1.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT