Sh. Shiv Pujan Singh, New Delhi V. ACIT, Faridabad

ITA 3891/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3137 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 03-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Retrospective amendment

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G : NEW DELHI BEFORE SHRI H.S.SIDHU , JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 3891 & 3892/DEL/2014 (ASSESSMENT YEAR: 2008 - 09 & 2009 - 10 ) SHIV PUJAN SINGH, RRA TAXINDIA, D - 28, SOUTH EXTENSION, PART - I, NEW DELHI PAN:ABOPS3203N VS. ITO, WARD - 11(3), FARIDABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAKESH GUPTA, ADV SH. TARUN KUMAR, ADV REVENUE BY: SH. NK BANSAL, SR. DR DATE OF HEARING 11/05/ 2017 DATE OF PRONOUNCEMENT 16 / 05 / 2017 O R D E R PER PRASHANT MAHARISHI, A. M. 1. TH ESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD CIT(A) - 2, FARIDABAD DATED 16.05.2014 FOR THE ASSESSMENT YEAR 2008 - 09 AND DATED 09.06.2014 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR THE ASSESSMENT YEAR 2008 - 09: - 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF THE LD. A.O. IN MAKING DISALLOWANCE OF RS. 13,91,283/ - U/S 40(A)(IA) BEING INTEREST EXPENSES. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF THE LD. A.O. IN MAKING AN ADDITION OF RS. 98,250/ - U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961 BEING FREIGHT CHARGES PAID. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CTT(A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF THE LD. A.O. IN MAKI NG AN ADHOC DISALLOWANCE OF RS, 42,847/ - BEING L/8 LH OF THE REPAIR AND MAINTENANCE EXPENSES. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. C1T(A) HAS ERRED IN LAW AND ON FACTS IN MAKING AN ADHOC DISALLOWANCE OF RS. 92,464/ - BEING L/2TH OF TOTAL DISALLOWANCE MADE BY LD. A.O. OF RS. 1,84,928/ - ON DEPRECIATION ON CAR AND TELEPHONE EXPENSES. PAGE 2 OF 5 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN PASSING THE IMPUGNED ASSESSMENT ORDER WITHOUT GIVING ADEQUATE OPPORTUNITY OF BEING HEARD 6. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD, CIT(A) IN CONFIRMING THE ACTION OF LD. A.O IN MAKING THE IMPUGNED ADDITIONS ARE - BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL FOR THE ASSESSMENT YEAR 2009 - 10: - 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN U PHOLDING THE ACTION OF THE LD. A.O. IN MAKING DISALLOWANCE OF RS. 16,72,812/ - U/S 40(A)(IA) BEING INTEREST EXPENSES. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE DISALLOWANCE U/S 40(A)(IA) IS BAD IN LAW AND AGA INST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING 50% OF THE DISALLOWANCE MADE BY LD. A.O. OUT OF REPAIR AND MAINTENANCE, INTEREST, INS URANCE AND DEPRECIATION ON CAR AND TELEPHONE EXPENSES. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. A.O. IN PASSING THE IMPUGNED ASSESSMENT ORDER WITHOUT GIVI NG ADEQUATE OPPORTUNITY OF BEING HEARD. 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. A.O IN MAKING THE IMPUGNED ADDITIONS ARE BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. NOW WE FIRST COME TO THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2008 - 09. 5. THE FIRST GROUND OF APPEAL IS WITH RESPECT TO DISALLOWANCE U/S 40A (IA) OF THE ACT OF RS. 1391283/ - ON ACCOUNT OF INTEREST EXPENDITURE. THE ASSESSEE HAS PAID INTEREST TO VARIOUS NON - BANKING COMPANIES ADMITTEDLY ON SUM OF RS. 1391283/ - TAX HAS NOT BEEN DEDUCTED THEREFORE , SAME IS DISALLOWED. ON APPEAL BEFORE THE LD CIT(A) THE ABOVE DISALLOWANCE IS CONFIRMED. 6. THE LD AR SUBMITTED THAT IT HAS BEEN HELD BY SEVERAL JUDICIAL PRONOUNCEMENTS THAT PROVISO INSERTED TO THE ABOVE PROVISIONS IS RETROSPECTIVE IN OPERATION AND THEREFORE ASSESSEE SHOULD GET BENEFIT OF THE ABOVE PROVISO. HE FURTHER SUBMITTED THAT ALL THESE COMPANIES ARE WELL KNOWN NON - BANKING FINANCIAL COMPANIES AND THEREFORE IT IS NATURAL THAT ALL OF THEM HAVE SHOWN THIS INCOME IN THEIR INCOME TAX RECORDS. HE FURTHER SUBMITTED THAT IN VIEW OF THIS THE ASSESSEE MAY BE GRANTED AN OPPORTUNITY TO ESTABLISH THE SAME. 7. THE LD DR VEHEMENTLY OPPOSED THE ARGUMENTS OF THE ASSESSEE RELYING UPON THE ORDER OF THE LOWER AUTHORITIES. PAGE 3 OF 5 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE HON'BLE DELHI HIGH COURT IN CASE OF CIT - 1 VS. ANSAL LANDMARK TOWNSHIP PVT LTD 377 ITR 635 (DEL) HAS HELD THAT SECOND PROVISO TO THE ABOVE SECTION IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 01.04.2005 . IN VIEW OF THIS , WE SET ASIDE THIS GROUND OF THE APPEAL BACK TO THE FILE OF THE LD AO WITH A DIRECTION TO GRANT THE ASSESSEE AN OPPORTUNITY TO SUBSTANTIATE ITS CLAIM OF ALLOWABILITY WITH RESPECT TO THE ABOVE PROVISO. IN THE RESULT, THE GROUND NO . 1 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. GROUN D NO. 2 OF THE APPEAL IS ALSO WITH RESPECT TO ADDITION OF RS. 98250/ - ON ACCOUNT OF FREIGHT CHARGES ON WHICH TAX HAS NOT BEEN DEDUCTED. IN VIEW OF OUR ABOVE DIRECTION IN GROUND NO. 1 OF THE APPEAL WE ALSO GIVE SIMILAR DIRECTION TO THE LD AO AND SET ASIDE T HE ISSUE BACK TO THE FILE OF LD AO. IN THE RESULT, GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE IS ALLOWED ACCORDINGLY. 10. GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE IS WITH RESPECT TO DISALLOWANCE OF RS. 42847/ - BEING 1/8 TH OF REPAIR AND MAINTENANCE EXPENSES. THE LD ASSESSING OFFICER HAS DISALLOWED THE ABOVE EXPENDITURE FOR THE REASON THAT PERSONAL USE OF CAR AND TELEPHONE CANNOT BE RULED OUT AND FURTHER ASSESSEE COULD NOT PROVE THAT ENTIRE EXPENSES WERE INCURRED FOR BUSINES S PURPOSE ONLY. THE LD CIT(A) REDUCED THE ABOVE DISALLOWANCE ON ACCOUNT OF CAR AND TELEPHONE BY 50%. THE ASSESSEE IS AGGRIEVED AND CONTESTED THE ABOVE DISALLOWANCE. 11. BEFORE US THE LD AR SUBMITTED THAT NONE OF THE REPAIR AND MAINTENANCE EXPENDITURE IS ON AC COUNT OF PERSONAL USE. HE SUBMITTED COPY OF REPAIRS AND MAINTENANCE EXPENDITURE AT PAGE NO. 70 TO 72 OF THE PAPERBOOK. 12. LD DR VEHEMENTLY RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 13. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND WE ARE THE OP INION THAT THE ASSESSEE HAS SUBMITTED THE DETAILS OF THIS EXPENDITURE, WHICH ARE BACKED BY THE PROPER EVIDENCES. THE LD ASSESSING OFFICER COULD NOT POINT OUT ANY EXPENDITURE NOT INCURRED FOR THE PURPOSES OF THE BUSINESS. IN VIEW OF THIS, WE ARE OF THE OPINION THAT THIS DISALLOWANCE CANNOT BE SUSTAINED AND HENCE, DELETED. IN THE RESULT GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 14. GROUND NO. 4 OF THE APPEAL OF THE ASSESSEE IS WITH RESPECT TO DISALLOWANCE OF RS. 92464/ - ON DEPRECI ATION ON CAR AND TELEPHONE EXPENSES. THE LD AO DISALLOWED THE SAME HOLDING THAT THE ASSESSEE MIGHT HAVE INCURRED SOME EXPENDITURE FOR PERSONAL NATURE. THE LD CIT(A) HAS REDUCED THE DISALLOWANCE BY 50%. 15. THE LD AR SUBMITTED THAT THERE CANNOT BE ANY DISALLOW ANCE ON ACCOUNT OF DEPRECIATION AS CAR IS USED FOR THE BUSINESS PURPOSES. FURTHER, HE SUBMITTED THAT PAGE 4 OF 5 EVEN IF THERE IS PERSONAL USE GRANTING OF STATUTORY DISALLOWANCE OF DEPRECIATION CANNOT BE MADE. 16. THE LD DR VEHEMENTLY RELIED UPON THE ORDERS OF THE LOWER AUTHORITIES. 17. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND WE ARE OF THE OPINION THAT PERSONAL USE OF CAR CANNOT FETTER THE GRANTING OF STATUTORY ALLOWANCE OF DEPRECIATION ON CAR USED BY THE ASSESSEE FOR THE PURPOSE OF HIS BUSINESS IN VIEW OF THE DECISION OF THE COORDINATE BENCH CITED BEFORE US OF MUKESH K. SAH VS. ITO 92 ITD 349. IN VIEW OF THIS , WE DIRECT THE LD ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF DEPRECIATION. WITH RESPECT TO DISALLOWANCE OF DEPRECIATION WE DO NOT FIND MUCH FORCE IN THE CONTENTION OF THE ASSESSEE THEREFORE THOSE DISALLOWANCES ARE CONFIRMED. IN THE RESULT GROUND NO. 4 OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 18. GROUND NO. 5 TO 7 ARE GENERAL IN NATURE AND THEREFORE SAME ARE DISMISSED. 19. IN THE RESULT APPEAL OF THE ASSESSEE FOR AY 2008 - 09 IS PARTLY ALLOWED. 20. NOW WE COME TO THE APPEAL OF THE ASSESSEE FOR THE AY. 2009 - 10. 21. THE FIRST GROUND OF APPEAL OF THE ASSESSEE IS AGAINST DISALLOWANCE RS. 1672812/ - U/S 40A (IA) ON ACCOUNT OF INTEREST EXPENDITURE. THE ASSESSEE HAS PAID INTEREST TO VARIOUS NON - BANKING COMPANIES ON WHICH ADMITTEDLY ON SUM OF RS. 1672812 / - TAX HAS NOT BEEN DEDUCTED THEREFORE, SAME IS DISALLOWED. ON APPEAL BEFORE THE LD CIT(A) THE ABOVE DISALLOWANCE I S CONFIRMED. 22. THE LD AR SUBMITTED THAT IT HAS BEEN HELD BY SEVERAL JUDICIAL PRONOUNCEMENTS THAT PROVISO INSERTED TO THE ABOVE PROVISIONS ARE RETROSPECTIVE IN OPERATION AND THEREFORE ASSESSEE SHOULD GET BENEFIT OF THE ABOVE PROVISO. HE FURTHER SUBMITTED THA T ALL THESE COMPANIES ARE WELL KNOWN NON - BANKING FINANCIAL COMPANIES AND THEREFORE IT IS NATURAL THAT ALL OF THEM HAVE SHOWN THIS INCOME IN THEIR INCOME TAX RECORDS. HE FURTHER SUBMITTED THAT IN VIEW OF THIS THE ASSESSEE MAY BE GRANTED AN OPPORTUNITY TO ES TABLISH THE SAME. 23. THE LD DR VEHEMENTLY OPPOSED THE ARGUMENTS OF THE ASSESSEE RELYING UPON THE ORDER OF THE LOWER AUTHORITIES. 24. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. THE HON'BLE DELHI HIGH COURT IN CASE OF CIT - 1 VS. ANSAL LANDMARK TOWNSHIP PV T LTD 377 ITR 635 (DEL) HAS HELD THAT SECOND PROVISO TO THE ABOVE SECTION IS DECLARATORY AND CURATIVE IN NATURE AND IT HAS RETROSPECTIVE EFFECT FROM 01.04.2005. WE HAVE ALSO DEICED GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE FOR AY 2008 - 09 ON IDENTICAL GROU NDS. IN VIEW OF THIS, WE SET ASIDE THIS GROUND OF THE APPEAL BACK TO THE FILE OF THE LD AO WITH A DIRECTION TO GRANT THE ASSESSEE AN OPPORTUNITY TO SUBSTANTIATE ITS CLAIM OF ALLOWABILITY WITH RESPECT TO PAGE 5 OF 5 THE ABOVE PROVISO. IN THE RESULT THE GROUND NO. 1 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 25. GROUND NO. 2 OF THE APPEAL OF THE ASSESSEE IS GENERAL IN NATURE AND THEREFORE SAME IS DISMISSED 26. GROUND NO. 3 OF THE APPEAL IS WITH RESPECT TO 50% DISALLOWANCE MADE BY LD ASSESSING OFFICER SUSTAINED BY LD CIT(A) ON AC COUNT OF REPAIRS AND MAINTENANCE INTEREST, INSURANCE, DEPRECIATION ON CAR AND TELEPHONE EXPENSES. IDENTICAL GROUNDS HAVE BEEN DECIDED IN THE APPEAL OF THE ASSESSEE FOR EARLIER YEARS. THEREFORE, SIMILARLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE OF DEPRECIATION ON CAR AS WELL AS REPAIRS EXPENDITURE AND WE DO NOT FIND ANY MERIT IN THE ARGUMENT OF THE ASSESSEE FOR DISALLOWANCE WITH RESPECT TO OTHER EXPENDITURE. IN VIEW OF THIS, WE PARTLY AL LOW THIS GROUND OF APPEAL DIRECTING THE ASSESSING OFFICER TO DELETE DISALLOWANCES OF REPAIR AS WELL AS OF DEPRECIATION ON MOTOR CAR AND CONFIRM THE DISALLOWANCE OF OTHER EXPENDITURE. IN THE RESULT GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWE D. 27. GROUND NO. 4 TO 6 OF THE APPEAL ARE GENERAL IN NATURE AND THEREFORE SAME ARE DISMISSED. 28. IN THE RESULT APPEAL OF THE ASSESSEE FOR AY 2009 - 10 IS PARTLY ALLOWED. ORDER PR ONOUNCED IN THE OPEN COURT ON 1 6 / 05 / 2017 . - S D / - - S D / - ( H.S.SIDHU ) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 6 / 05 / 2017 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI