ACIT, Circle- 5(2), New Delhi V. Central Park Infrastructure Development Pvt. Ltd., New Delhi

ITA 3905/DEL/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2094 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 15-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Section: 5(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER & DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 3905/DEL./2017 ASSTT. YEAR: 2013-14 ACIT CIRCLE 5(2) NEW DELHI. VS CENTRAL PARK INFRASTRUCTURE DEVELOPMENT PVT. LTD. 3 RD FLOOR, TOWER D, GLOBAL BUSINESS PARK, M.G. ROAD, GURGAON, HARYANA. (APPELLANT) (RESPONDENT) PAN NO. AADCC4067B REVENUE BY : MS. ASHIMA NEB, SR. D R ASSESSEE BY : NONE ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE A GAINST THE ORDER OF THE LD. CIT(APPEALS)-2, NEW DELHI DATE D 31.03.2017 PERTAINING TO ASSESSMENT YEAR 2013-14. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENU E: A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE ADDITIONAL GROUND THAT EXPENDITURE AS WELL AS INCOM E DATE OF HEARING 0 9 .12.2019 DATE OF PRONOUNCEMENT 09 .12.2019 ITA NO. 33905/DEL/2017 CENTRAL PARK INFRASTRUCTURE DEVELOPMENT P. LTD. 2 DURING PRE COMMENCEMENT PERIOD SHOULD BE NETTED OUT AND ONLY THE RESULTANT EXPENDITURE SHOULD BE CAPITALIZED INSTEAD OF ENTIRE EXPENDITURE INCURRED DURING PRE COMMENCEMENT PERIOD AS THE CONTENTION OF THE ASSESSED, IN THIS REGARD, WAS DULY CONSIDERED B Y THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. B) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ORDER OF THE LD. CIT(A) ALLOWING ADDITI ONAL GROUND IS VAGUE AND NOT SPECIFIC AS THE ORDER DOES NOT MENTION AS TO WHICH AMOUNT OF INCOME SHOULD BE NETT ED OUT WITH WHICH AMOUNT OF EXPENSES. C) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING ADDITI ONAL GROUND WITHOUT GIVING DUE OPPORTUNITY TO THE ASSESS ING OFFICER. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A L IMITED COMPANY ENGAGED IN THE BUSINESS OF CONSTRUCTION OF HOTEL NEAR NEW DELHI AIRPORT ON THE LAND TAKEN ON LEASE F ROM DIAL. DURING THE YEAR THE ASSESSING OFFICER OBSERV ED THAT THE ASSESSEE DEBITED RS. 7,70,14,078/- UNDER THE HE AD OTHER EXPENSES. IT WAS SUBMITTED THAT THE ASSESS EE HAS ENTERED INTO AN AGREEMENT WITH THE DIAL FOR A PERIO D OF 26 YEARS AND 4 MONTHS FOR LEASING OF THE PROPERTY FOR WHICH THE ASSESSEE WOULD PAY A LICENSE FEE OF RS. 1,92,35,07, 853/-. THE PAYMENT OF THIS AMOUNT IS IN STAGGERING AND INC REASING ORDER FROM 3.46 CRORES IN F.Y. 2010-11 TO 13.20 CRO RES IN ITA NO. 33905/DEL/2017 CENTRAL PARK INFRASTRUCTURE DEVELOPMENT P. LTD. 3 F.Y. 2035-36. THESE INCREASING AMOUNTS HAVE BEEN W ORKED OUT TAKING INTO CONSIDERATION THE PROJECTED BUSINES S GROWTH OF THE ASSESSEE WHICH ENTITLES THEM TO PAY INCREASI NGLY HIGHER LEASE RENTALS FROM YEAR TO YEAR TOTALING TO RS. 192.35 CRORES. THE ASSESSING OFFICER HAS DISALLOWED THE A MOUNT OF RENTAL PAYMENTS ON THE GROUNDS THAT THE ACCOUNTING OF RENT EQUALIZATION RESERVE IS FAULTY. BEFORE THE LD. CIT (A), THE ASSESSEE PLEADED THAT THE LEASE RENTALS RECEIVED FR OM ORIENTAL STRUCTURAL ENGINEERING LTD. MAY BE ALLOWED TO BE SET OF AGAINST THE LEASE RENTALS PAID TO DIAL. THE ASSET OF THE LAND ON WHICH THE LEASE RENTAL RECEIVED FROM OR IENTAL STRUCTURAL ENGINEERING PVT. LTD. AND PAID TO THE DI AL IS THE SAME. THE LD. CIT(A) HAS ALSO ALLOWED THE EXCESS EXPENDITURE TO BE CAPITALIZED AS THE PROJECT OF CON STRUCTION OF HOTEL HAS NOT COMMENCED BUSINESS OPERATIONS. TH US, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN ALLOWING THE NETTING OFF OF LEASED RENTAL RECEIVED AND PAID. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09/12/2019 SD/- SD/- (H.S. SIDHU) (D R. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 09.12.2019 *KAVITA ARORA, SR. PS ITA NO. 33905/DEL/2017 CENTRAL PARK INFRASTRUCTURE DEVELOPMENT P. LTD. 4 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR DATE OF DICTATION 09.12.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 09.12.2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 09.12.2019 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS 09.12.2019 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 09.12.2019 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 09.12.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 09.12.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 09.1 2.2019 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER