M/s. JBM Auto Ltd., New Delhi V. DCIT, New Delhi

ITA 3922/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5480 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 08-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R SANTHAN AM
• Keywords: Revenue expenditure; Capital expenditure
• Section: 14A; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI J.S.REDDY, ACCOUNTANT MEMBER AND SHRI KULBHARAT, JUDICIAL MEMBER ITA NO. 3922/DEL/2014 (ASSESSMENT YEAR : 2010-11) JBM AUTO LTD., 601, HEMKUNT CHAMBERS, 89, NEHRU PLACE, NEW DELHI-110019. PAN-AAACJ9630N VS DCIT, CIRCLE-4(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY SH. R.SANTHANAM, ADV. RESPONDENT BY SH. AMIT JAIN, SR.DR DATE OF HEARING 04.04.2018 DATE OF PRONOUNCEMENT 04.04.2018 ORDER PER J.S.REDDY, ACCOUNTANT MEMBER THIS APPEAL FILED BY THE ASSESSEE AGAINST THE ORDE R OF LD.CIT(A)-VIII, NEW DELHI DATED 20.06.2014 FOR AY 2010-11 ON THE FOLLOW ING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW, IN CONFIRMING DISAL LOWANCE OF AN IMAGINARY, ARBITRARY AND UNTENABLE ADDITION OF RS.2 1,07,057/- U/S 14A READ WITH RULE 8D OF THE INCOME TAX RULES AND THE I LLEGAL ADDITION IS LIABLE TO BE DELETED AS UNSUSTAINABLE IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAD ERRED IN CONFIRMING DISALLOWANCE OF RS.9,80,090/- I N RESPECT OF EXPENDITURE ON AMORTIZATION OF LEASEHOLD LAND BY HOLDING IT TO BE A CAPITAL EXPENDITURE WHEREAS THE AMOUNT IS CLEARLY ADMISSIBLE AS REVENUE EXPENDITURE U/S 37(1) OF THE INCOME TAX ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT(A) HAS FURTHER ERRED IN CONFIRMING THE ILLEGAL DEMAND OF T AX AND INTEREST ITA NO. 3922/DEL/2014 PAGE | 2 ATTRIBUTABLE TO THE IMAGINARY AND ARBITRARY ADDITIO NS AND THE APPEAL OF THE APPELLANT DESERVES TO BE ALLOWED IN ALL RESPECTS. 2. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT TH E ASSESSEE HAS NOT EARNED ANY DIVIDEND INCOME DURING THE YEAR. AS THE ASSESS EE HAS NOT EARNED INCOME WHICH IS EXEMPT FROM TAX DURING THE YEAR, NO DISALL OWANCE CAN BE MADE U/S 14A OF THE INCOME TAX ACT, 1961 (IN SHORT ACT) AS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CHEMINVEST LTD. V. CIT [2015] 378 ITR 33 (DEL) . T HEREFORE, GROUND NO.1 IS ALLOWED. 3. GROUND NO.2 OF THE ASSESSEE IS COVERED BY THE DE CISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE ASSESSEES OWN CASE IN ITA NO. 3805/DEL/2011 AND ITA NO.1641 & 1779/DEL/2013 VIDE ORDER DATED 13 .04.2017 WHEREIN THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE AO FOR DENOVO ADJUDICATION. PARA 13 OF THE ORDER IS EXTRACTED FOR READY-REFERENCE:- 13. LD. COUNSEL HAS TRIED TO IMPRESS UPON THIS BEN CH THAT PAYMENTS MADE TO LESSOR ARE IN NATURE OF ADVANCE RENTS. HOWEVER, THERE IS NO MATERIAL ON RECORD TO SHOW THAT ASSESSEE HAS MADE THESE PAYMENT S AS ADVANCE RENT FOR FUTURE YEARS TO SECURE ANY REDUCTION IN RENT PA YABLE FOR FUTURE YEARS OR FOR ANY OTHER BUSINESS CONSIDERATION. WE ARE, THERE FORE, UNABLE TO APPRECIATE ARGUMENTS ADVANCED BY LD. COUNSEL THAT T HESE ADVANCES PAID ARE TOWARDS ADVANCE RENT. EVEN FROM THE TERMS OF AG REEMENTS, IT IS NOT CLEAR AS TO WHETHER ADVANCES PAID HAS BEEN ADJUSTED AGAINST FUTURE RENT OR WHETHER THESE ARE IN THE NATURE OF SECURITY DEPO SITS WHICH ARE REFUNDABLE IN NATURE ON TERMINATION OF AGREEMENTS. BOTH PARTIES BEFORE US HAVE EXPRESSED THEIR INTENTION REGARDING ISSUE BEIN G RE-ADJUDICATED BY ASSESSING OFFICER DE NOVO. ACCORDINGLY, WE ARE INCL INED TO SET ASIDE THIS ISSUE TO LD. AO FOR FRESH ADJUDICATION. LD. AO SHAL L INVESTIGATE UPON AND TAKE ALL NECESSARY STEPS TO ASCERTAIN TRUE NATURE O F ALLEGED LEASE PREMIUM ITA NO. 3922/DEL/2014 PAGE | 3 PAID BY ASSESSEE IN THE THREE AGREEMENT MADE AS PER LAW. NEEDLESS TO SAY THAT ASSESSEE WOULD COOPERATE WITH ASSESSING OFFICE R AND PROVIDE WITH ALL NECESSARY RELEVANT DOCUMENTS AS CALLED FOR BY HIM. LD. AO IS HEREBY DIRECTED TO DECIDE ISSUE AS PER LAW. IN THE RESULT THE GROUNDS RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 4. RESPECTFULLY FOLLOWING THE AFORESAID DECISIONS A ND THE PROPOSITION OF LAW LAID DOWN THEREIN, WE SET ASIDE THIS ISSUE TO THE F ILE OF THE AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. GROUND NO.3 I S GENERAL IN NATURE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART. PRONOUNCED IN THE OPEN COURT ON 04.04.2018. SD/- SD/- (KULBHARAT) (J.S.REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:- 04 TH APRIL, 2018 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI