ACIT, New Delhi V. M/s DLF Ltd., New Delhi

ITA 4205/DEL/2013

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6991 (ITAT-DELHI)
• Duration Of Justice: 7 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-07-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 10-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Keywords: Charitable institution; Difference of opinion; Revenue expenditure; Capital expenditure; TDS; Set aside
• Section: 43B; 274; 64; 43; 48; 73; 72; 13

Judgement Text

4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER AND SHRI K. NARSIMHA CHARY, JUDICIAL MEMBER ITA NO. 4205/DEL/2013 (ASSESSMENT YEAR: 2006 07) THE ASST COMMISSIONER OF INCOME TAX CIRCLE 10 (1) NEW DELHI VS. DLF LTD (FORMERLY KNOWN AS DLF UNIVERSAL LTD) DLF CENTRE, SANSAD MARG NEW DELHI PAN AAACD3494N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R S S I NGHVI, CA SHRI SATYAJEET GOEL , CA REVENUE BY: MS NIDHI SRIVASTAVA CIT DR DATE OF HEARING 14/08/2020 DATE OF PRONOUNCEMENT 1 0 /09/2020 O R D E R PER PRASHANT MAHARISHI, A. M. 01. THIS APPEAL IS FILED BY THE ASS ISTANT COMMISSIONER OF INCOME TAX, CIRCLE 10 (1), NEW DELHI (THE LEARNED AO) AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS ) XIII, NEW DELHI (THE LEARNED CIT A) DATED 3 APRIL 2013 FOR ASSESSMENT YEAR 2006 07 RAISING THE SOLITARY GROUND OF APPEAL THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) , U NDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , WAS NOT JUSTIFIED IN DELETING THE PENALTY AMOUNTING TO 554,621,230/ IMPOSED BY THE ASSESSING OFFICER U/S 271 (1) ( C ) OF THE INCOME TAX ACT 1961 (THE ACT). 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 2 02. BRIEF FACTS SHOWS THAT APPELLANT IS ENGAGED IN REAL ESTATE DEVELOPMENT THE RETURN OF INCOME FOR ASSESSMENT YEAR 2006 077 WAS FILED DECLARING INCOME OF RS 3,406,422,522/ . THE ASSESSMENT U/S 143 (3) OF THE ACT WAS PASSED ON 6 MAY 2009 DETERMINING TOTAL I NCOME AT RS 13 56,63,90,103/ MAKING AN ADDITION OF RS 1,159,967,581. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX APPEALS WHO PASSED AN ORDER ON 25 TH OF MARCH 2011 ALLOWING THE RELIEF OF ADDITION OF 8,51,22,52,583/ . TH E LEARNED COMMISSIONER OF INCOME TAX (A) CONFIRMED THE DISALLOWANCE OF 1,647,716,066/ CONSISTING OF 12 DIFFERENT NATURE OF DISALLOWANCES. 03. AS THE LEARNED ASSESSING OFFICER INITIATED P ENALTY PROCEEDINGS U/S 271 (1 ) ( C ) ON PASSING OF ORDER BY THE LEARNE D COMMISSIONER OF I NCOME TAX (APPEALS), ISSUED SHOW CAUSE NOTICE DATED 15 TH OF MARCH 2012 FOR IMPOSING THE PENALTY . 04. BEFORE THE LEARNED ASSESSING OFFICER , ASSESSEE SUBMITTED THAT LEARNED COMMISSIONER OF INCOME TAX A HAS DELETED SUBSTANTIAL ADDITION AND FOR BALANCE ADDITION/DISALLOWANCE , APPEAL OF ASSESSEE IS PENDING BEFORE ITAT. ASSESSEE ALSO SUBMITTED THAT IT IS HOPEFUL TO GET A SUBSTANTIAL RELIEF .I T WAS ALSO SUBMITTED THAT AT THE TIME OF CONFIRMATION OF THE ADDITION BY THE LEARNED COMMISSIONER OF INCOME TAX A , NO COMMENTS HAVE BEEN GIVEN AGAINST THE ASSESSEE COMPANY NOR HAS HE MADE ANY ADVERSE COMMENTS ON THE INCOME SHOWN BY THE ASSESSEE. IT WAS FURTHER SUBMITTED THAT MOST OF THE ADDITION IS CONFIRMED BY THE LEARNED COMMISSIONER OF INCOME TAX A ARE ALSO REVENUE NEUTRAL OR HAVING A TIME GAP ONLY. IT WAS ALSO SUBMITTED THAT MERE THIS ALLOWANCE OF EXPENDITURE CANNOT RESULT INTO PENALTY AUTOMATICALLY. ASSESSEE ALSO CLAIMED THAT IT IS BONA FIDE CLAIM ARE REJECTED. IT HAS NEITHER CONCEALED ANY INCOM E NOR FURNISHED INACCURATE PARTICULARS OF ITS INCOME. 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 3 THEREFORE , IT WAS SUBMITTED THAT THERE IS A MERELY DIFFERENCE OF OPINION AND NOT THE CONCEALMENT OF INCOME AND THEREFORE THE PENALTY U/S 271 ( 1 ) (C) CANNOT BE IMPOSED. ASSESSEE ALSO SUBMITTED THAT IT HAS SUBMITTED COMPLETE DETAILS BEFORE THE LOWER AUTHORITIES AND THERE IS NO CONCEALMENT OF INCOME AT ANY STAGE. ASSESSEE FURTHER RELIED UPON THE SEVERAL JUDICIAL PRECEDENTS SUBMITTING THE PENALTY SHOULD NOT BE LEVIED. 05. HOWEVER , THE LEARNED ASSESSING OFFIC ER CONSIDERED THE EXPLANATION OF THE ASSESSEE. HE HELD THAT IN THE PRESENT CASE THE VARIOUS ADDITIONS/DISALLOWANCES ARE SUSTAINED BY THE LEARNED CIT A WERE DETECTED BY THE DEPARTMENT AFTER CONDUCTING AN ELABORATE ENQUIRY IN AS MUCH AS SPECIAL AUDIT WAS CON DUCTED U/S 142 (2A) OF THE ACT . ADDITIONS SO MADE ARE VIRTUALLY THE OUTCOME OF DETAILED INVESTIGATION . O N THE PLEA OF THE ASSESSEE THAT IT HAD DISCLOSED EVERYTHING IN THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT, DO NOT STAND TO REASON. THEREFORE , IT WAS HELD THAT THE ASSESSEE HAS THE FURNISHED INACCURATE PARTICULARS OF THE INCOME WITH THE INTENTION TO EVADE TAXES. SUBSEQUENTLY THE PENALTY OF 554,621,230/ WAS LEVIED BY THE LEARNED ASSESSING OFFICER AS PER ORDER PASSED U/S 271 (1) (C ) OF THE ACT BY THE ORDER DATED 29 TH OF MARCH 2012. 06. THE ASSESSEE CHALLENGED THE SAME BEFORE THE LEARNED CIT A . HE PASSED AN ORDER ON 3 RD APRIL 2013 , ALLOWING THE APPEAL OF THE ASSESSEE DELETING THE ABOVE LEVY OF PENALTY. HE CONSIDERED EVERY DISALLOWANCE MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT A AND THEREAFTER HELD THAT IN NONE OF THE DISALLOWANCES THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND THEREFORE THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER WAS CANCELLED. 07. THE LEARNED ASSESSING OFFICER AGGRIEVED WITH THE ORDER OF THE LEARNED CIT A HAS PREFERRED THIS APPEAL BEFORE US. THE LEARNED DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED ASSESSING 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 4 OFFICER AND SUBMITTED THAT AD DITIONS/ DISALLOWANCES HAVE BEEN MADE BY THE LEARNED ASSESSING OFFICER AND DISCUSSED THE ISSUE IN DETAIL THAT WHY THE ABOVE ADDITION HAS BEEN MADE. THESE ADDITIONS HAVE ALSO BEEN CONFIRMED BY THE LEARNED CIT A THEREFORE THERE IS NO REASON THAT THE PENALT Y SHALL NOT BE LEVIED ON SUCH ADDITIONS AND DISALLOWANCES. 08. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT NOW THE ORDER OF THE COORDINATE BENCH HAS BEEN RECEIVED , ON THE APPEAL FILED BY THE ASSESSEE AND BASED ON THE ABOVE ORDER, THE LEARNED ASSESSI NG OFFICER HAS ALSO PASSED AN ORDER GIVING APPEAL EFFECT TO THE ABOVE ORDER ON 30 DECEMBER 2017 , WHERE THE SUBSTANTIAL PART OF THE ADDITION HAS BEEN DELETED BY COORDINATE BENCH. THEREFORE , IT WAS SUBMITTED THAT ON THE ISSUES ON WHICH ADDITION HAS BEEN DELETED THE PENALTY COULDNT BE LEVIED. HE ALSO REFERRED TO THE ORDER OF THE COORDINATE BENCH WHEREIN VARIOUS ADDITIONS MADE HAVE BEEN DELETED. 09. THE LEARNED AUTHORISED REPRESENTATIVE ALSO REFERRE D TO THE NOTICE DATED 6 TH M AY 2009 , ISSUED BY THE LEARNED ASSESSING OFFICER U/S 274 READ WITH SECTION 271 OF THE INCOME TAX ACT FOR INITIATING THE PENALTY PROCEEDINGS U/S 271 (1) ( C ) OF THE ACT FOR ASSESSMENT YEAR 2006 07. 10. IT WAS SUBMITTED THAT THE LEARNED ASSESSING OFFICER HAS NOT STRUCK O F F ANY OF THE TWIN CHARGES , WITH RESPECT TO THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME IN TERMS OF EXPLANATION 1,2,3,4 AND 5 OF THE ABOVE SECTION. HE THEREFORE SUBMITTED THAT EVEN OTHERWISE THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER DOES NOT SURVIVE. HE RELIED UP ON DECISION OF HONOURABLE JURISDICTIONAL HIGH COURT IN CASE OF PCT V SAHARA INDIA LIFE INSURANCE COMPANY LIMITED DATED 2 - 8 - 2019. HE SUBMITTED THAT THIS ISS UE HAS BEEN DECIDED AGAINST THE ASSESSEE AS PER GROUND NUMBER 1 OF THE APPEAL 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 5 BEFORE THE LEARNED COMMISSIONER A WHERE THE JURISDICTIONAL FACTS WERE CONTESTED. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTION AND PERUSED THE ORDERS OF THE LOWER AUTHORIT IES . IN THE PRESENT CASE THE LEARNED ASSESSING OFFICER HAS LEVIED THE PENALTY WITH RESPECT TO THE FOLLOWING ADDITIONS/DISALLOWANCE CONFIRMED BY THE LEARNED CIT A. ASSESSEE AND THE AO BOTH CARRIED MATTER BEFORE THE COORDINATE BENCH . FURTHER, ASSESSEE PREF ERRED APPEAL BEFORE THE COORDINATE BENCH AND COORDINATE BENCH HAS ALSO DELETED THE CERTAIN ADDITION , SET ASIDE CERTAIN ADDITIONS TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR FURTHER VERIFICATION AS PER ORDER DATED 11 TH OF MARCH 2016 IN ITA NUMBER 2677/ DEL/2011 AND 3061/DEL/2011. ASSESSEE ALSO REFERRED ITS MISCELLANEOUS APPLICATION WHEREIN COORDINATE BENCH AS PER ORDER DATED 1/8/2017 ALSO ALLOWED CERTAIN FURTHER RELIEF TO THE ASSESSEE . SUBSEQUENT TO THAT, THE LEARNED ASSESSING OFFICER , ON VERIFICATION , P ASSED AN ORDER ON 30 DECEMBER 2017 , WHEREIN, AS PER PARAGRAPH NUMBER 6 OF THAT ORDER , AFTER VERIFICATION OF RECORDS , CERTAIN ADDITIONS WERE DELETED. 12. AFTER THE ABOVE JUDICIAL ORDERS THE RELEVANT ADDITIONS ON WHICH THE AO HAS LEVIED THE PENALTY A DETAILED AS UNDER: - SERIAL NUMBE R NATURE OF ADDITION/DISALLOW ANCES AMOUNT OF ADDITION/DISAL LOWANCE OF BY THE LEARNED COMMISSIONE R OF INCOME TAX (A) ON WHICH PENALTY U/S 271 (1) (C) WAS LEVIED PRESENT STATUS AFTER THE ORDER OF THE COORDINATE BENCH IN ITA NUMBER 2677/DEL/2011 AND 3061/DEL/2011 DATED 11 TH OF MARCH 2016 1 STALE CHEQUE AMOUNT 3,67,27,062 THIS ADDITION IS DELETED BY THE COORDINATE BENCH AS PER PARAGRAPH NUMBER 18 27 OF ITS ORDER 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 6 2 REVENUE RECOGNITION METHOD 5,41,75,304 ADDITION IS DELETED BY THE COORDINATE BENCH AT PAGE NUMBER 48 AT PARA NUMBER 28 34, THE MATTER IS PENDING BEFORE THE HONOURABLE DELHI HIGH COURT 3 ADDITION IN RESPECT OF MAGNOLIA AND SUMMIT PROJECTS 78,77,80,921 THE COORDINATE BENCH HAS SET ASIDE THE ISSUE AND DIRECTED THE LEARNED ASSESSING OFFICER TO DECIDE AGAIN AFTER VERIFICATION OF THE FACTS AS PER PARAGRAPH NUMBER 35 42 AT PAGE NUMBER 58 63 OF THE ORDER, WHICH IS PENDING BEFORE THE HONOURABLE DELHI HIGH C OURT . SUBSEQUENTLY AFTER VERIFICATION OF FACTS, THE AO HAS PASSED AN APPEAL EFFECT ORDER DATED 30 DECEMBER 2017 DELETING THE ABOVE ADDITION. 4 CAPITALIZATION OF INTEREST EXPENDITURE AS PER AS - 16 27,45,00,000 ADDITION DELETED BY THE COORDINATE BENCH AS PER PARAGRAPH NUMBER 43 50 AT PAGE NUMBER 63 70 AND THE MATTER IS PENDING BEFORE THE HONOURABLE DELHI HIGH COURT 5 BROKERAGE PAID FOR AMEX BUILDING 64,39,262 APPEAL OF THE ASSESSEE IS DISMISSED BY THE COORDINATE BENCH 6 ADDITION ON ACCOUNT OF ENHANC EMENT OF THE REVENUE FROM CONSTRUCTED PROPERTIES 42,86,06,986 COORDINATE BENCH HAS SET ASIDE THE ISSUE AND DIRECTED THE AO TO DECIDE AGAIN AFTER VERIFICATION OF FACTS AS PER PARAGRAPH NUMBER 58 62 AND PAGE NUMBER 72 73 OF THE ORDER . SUBSEQUENTLY THE AO AS PER APPEAL EFFECT ORDER DATED 30 DECEMBER 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 7 2017 HAS DELETED THE ABOVE ADDITION. 7 WITHDRAWAL OF CLAIM OF DEDUCTION U/S 24 OF 30% DEDUCTION 35,09,870 THIS ISSUE IS NOT PRESSED BY THE ASSESSEE AND ASSESSEES APPEAL IS DISMISSED BY CO ORDINATE BENCH HOLDING THAT INCOME IS NOT ASSESSABLE UNDER THE HEAD HOUSE PROPERTY AS PER PARAGRAPH NUMBER 63 64 AT PAGE NUMBER 73 OF THE ORDER 8 DISALLOWANCE OF PROVISION OF GRATUITY U/S 40 A (7) 14,49,123 THIS ISSUE IS NOT PRESSED BY THE ASSESSEE BEFO RE THE COORDINATE BENCH AND APPEAL OF THE ASSESSEE IS DISMISSED BY COORDINATE BENCH AT PARAGRAPH NUMBER 65 66 AT PAGE NUMBER 73 OF THE ORDER 9 CAPITALIZATION OF REVENUE EXPENDITURE I.E. DISALLOWANCE OF REVENUE EXPENDITURE 84,12,762 THE COORDINATE BENCH HAS DELETED THE PART ADDITION OF 8,262,762 AND CONFIRMED THE ADDITION OF 150,000 AS PER PARAGRAPH NUMBER 67 86 AT PAGE NUMBER 73 77 OF THE ORDER 10 ADDITION ON ACCOUNT OF CLOSING CREDIT BALANCE OF REFUNDABLE SECURITY DEPOSITS 3,12,41,768 THIS ADDITION IS DELETED BY THE COORDINATE BENCH AS PER PARAGRAPH NUMBER 87 91 AT PAGE NUMBER 77 79 OF ITS ORDER 11 EXPENSES DISALLOWED NOT RELATED TO THE BUSINESS 1,47,70,222 THIS ADDITION IS DELETED BY THE COORDINATE BENCH WIDE PARAGRAPH NUMBER 92 96 AT PAGE NUMBER 79 80 OF ITS ORDER 12 DISALLOWANCE OF EXPENDITURE U/S 40 A (3) 1,02,786 THE ITA T HAS SET ASIDE THE ISSUE TO THE FILE OF THE LEARNED ASSESSING OFFICER FOR FRESH DECISION AT PARAGRAPH NUMBER 97 101 AT PAGE NUMBER 80 81 OF THE ORDER . 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 8 SUBSEQUENTLY THE ASSESSING OFFICER AS PER APPEAL EFFECT ORDER DATED 30 DECEMBER 2017 ALLOWED RELIEF TO THE ASSESSEE AND DELETED THE DISALLOWANCE. 13. AFTER THE ABOVE ANALYSIS, IT IS HELD THAT WHERE THE ADDITIONS HAVE ALREADY BEEN DELETED BY THE COORDINATE BENCH, AND BY THE LEARNED ASSESSING OFFICER ON VERIFICATION, THOSE DO NOT SURVIVE FOR LEVY OF THE PENALTY. BOTH THE PARTIES AGREED TO THE ABOVE PROPOSITION. 14. FURTHER, ASSESSEE HAS ALSO INVOKE D THE PROVISIONS OF RULE 27 OF THE ITAT RULES STATIN G THAT GROUND NUMBER 1 DECIDED AGAINST THE ASSESSEE HOLDING IT TO BE GENERAL IN NATURE WHERE IN THE NOTICE OF PENALTY ISSUED U/S 274 READ WITH SECTION 271 OF THE INCOME TAX ACT FOR LEVY OF PENALTY U/S 271 (1) ( C ) OF THE ACT, THE ASSESSING OFFICER HAS NO T STRUCK OFF ANY OF THE TWIN CHARGES OF THE CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THEREFORE, AS HELD BY THE HONOURABLE DELHI HIGH COURT IN ITA NUMBER 475/2019 PRINCIPAL COMMISSIONER OF INCOME TAX VERSUS SAHARA INDIA LIFE INSURANCE CO LTD DATED 2 AUGUST 2019 IN PARAGRAPH NUMBER 21, RELYING UPON THE DECISION OF THE HONOURABLE KARNATAKA HIGH COURT IN 359 ITR 565 AND 73 TAXMAN.COM 241 HAS HELD THAT THE NOTICE ISSUED BY THE AO WOULD BE BAD IN LAW , IF IT DID NOT SPECIFY WHICH L IMB OF SECTION 271 (1) (C ) THE PENALTY PROCEEDINGS HAD BEEN INITIATED U NDER I.E. WHETHER FOR CONCEALMENT OF PARTICULARS OF INCOME OR FOR FURNISHING OF INACCURATE PARTICULARS OF INCOME, THE PENALTY ORDER CANNOT BE SUSTAINED. 15. THEREFORE , NOW ONLY FOLLOWING ADDITIONS /DISALLOWANCES REMAIN ON WHICH PENALTY LEVIED SURVIVED, WHICH HAS BEEN DELETED BY THE LEARNED CIT A . A. DISALLOWANCE OF BROKERAGE PAID FOR AMEX BUILDING OF 6,439,262/ 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 9 B. WITHDRAWAL OF DEDUCTION U/S 24 OF 30% OF STANDARD DEDUCTION OF RS. 3,509,870/ C. DISALLOWANCE OF PROVISIONS FOR GRATUITY U/S 40 A (7) OF 14,49,123/ - . 16. NOW WE FIRST COME TO ISSUE WITH RESPECT TO THE ALLOWANCE OF BROKERAGE PAID FOR AMEX BUILDING OF 6,439,262/ . ASSESSEE HAS SUBMITTED THAT IT HAS TWO AMEX BUILDINGS ONE IS AMEX TOWER - I AND ANOTHER IS AMEX TOWER II . TOWER 1 WAS COMPLETED IN EARLIER YEARS HOWEVER, TOWER 2 WAS STILL UNDER CONSTRUCTION D URING THE YEAR UNDER ASSESSMENT . IT IS COMPLETED IN SUBSEQUENT YEARS. ASSESSEE HAS SUBMITTED THAT DURI NG THE YEAR UNDER CONSIDERATION AN AGREEMENT WAS EXECUTIVE WITH M/S C B ELLISS RICHARDS SOUTH ASIA PRIVATE LIMITED ON 28 TH OF APRIL 2005. IN TERMS OF THE ABOVE AGREEMENT SERVICES WERE RENDERED BY THAT COMPANY AND 50% OF THE TOTAL AMOUNT PAYABLE TO THAT PA RTY AS PER THE BILL WAS PAID DURING THE YEAR AND BALANCE AMOUNT HAS BEEN PAID IN SUBSEQUENT YEARS , WHEN INCOME FROM THAT BUILDING HAS STARTED. L EARNED ASSESSING OFFICER DISALLOWED ABOVE AMOUNT FOR THE REASON THAT THESE ARE CAPITAL EXPENDITURE IN NATURE AND ARE NOT PERTAINING TO THE YEAR UNDER CONSIDERATION. THE LEARNED COMMISSIONER OF INCOME TAX APPEAL ALSO CONFIRMED THE ABOVE DISALLOWANCES HOLDIN G THAT THE EXPENSES ARE IN RESPECT OF RENTING OF THE BUILDING, WHICH ARE NOT ALLOWABLE DEDUCTION U/S 24 OF THE ACT. THE CLAIM OF THE ASSESSEE IS THAT THE BROKERAGE EXPENDITURE ARE RELATED TO TOWER NUMBER TWO WHEREAS IN THE ASSESSMENT ORDER FOR ASSESSMENT Y EAR 2005 06, THE LEARNED ASSESSING OFFICER MADE ENTIRE DISCUSSION WITH REGARD TO TOWER NUMBER ONE. ASSESSEE HAS SUBMITTED THAT THESE TWO BUILDINGS ARE QUITE DISTINCT BUILDINGS THOUGH THE NAME IS SOMEWHAT SIMILAR. ASSESSEE JUSTIF IED THE CLAIM FOR DEDUCTI ON ON THE GROUND THAT SERVICES RELATING TO RENTING OF TOWER NUMBER TWO HAD BEEN PARTLY PROVIDED BY THE BROKER IN THE YEAR U NDER CONSIDERATION AND THEREFORE ONLY HALF OF THE BROKERAGE PAYABLE WAS PAID DURING THE YEAR AND CLAIMED AS DEDUCTION. ASSESSEE FURTH ER SUBMITTED 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 10 THAT EARNING OF RENTAL INCOME FROM TOWER TWO ACCRUE D TO THE APPELLANT FROM NEXT YEAR AND NO INCOME WAS EARNED FROM THE ABOVE BUILDING DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. THEREFORE, ON THIS BASIS THE ASSESSEE MADE CLAIM ON ACTUAL P AYMENT BASIS SINCE THERE WAS NO RENTAL OR ANY OTHER INCOME FROM THE SAID BUILDING. THE CLAIM OF THE ASSESSEE IS THAT THE DEDUCTION CLAIMED BY THE ASSESSEE IS BONA FIDE AND GENUINE AND BELIEVE D TO BE AN ALLOWABLE EXPENDITURE ON ACTUAL PAYMENT BASIS. THE LEA RNED COMMISSIONER OF INCOME TAX APPEAL HAS DELETED THE PENALTY STATING THAT ASSESSEE HAS NEITHER CONCEALED ANY INCOME OR FURNISHED ANY INACCURATE PARTICULARS OF INCOME ON THE FOLLOWING FACTS EMERGING FOR THE DISALLOWANCE: - A. FULL DISCLOSURE IN RESPECT OF BR OKERAGE EXPENSES WAS MADE BY THE APPELLANT AND THE SAME HAS BEEN SHOWN IN SCHEDULE 19 UNDER THE HEAD COMMISSION AND BROKERAGE AND THERE IS NO ELEMENT OF CONCEALMENT B. SINCE ALL THE DETAILS ARE AVAILABLE ON RECORD THERE IS NO CASE OF SUBMISSION OF INACCURATE PARTICULARS OF INCOME EITHER IN THE RETURN OF INCOME OR IN THE RETURN SUBMISSION FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS C. NO DETAILS OR PARTICULARS HAVE BEEN WITHHELD BY THE APPELLANT D. ALL THE RELEVANT FACTS HAVE BEEN BROUGHT TO THE NOTICE OF THE ASSES SING OFFICER AS WELL AS SPECIAL AUDITORS BY THE ASSESSEE. THE ASSESSEE FILED RETURN OF INCOME A COMPANY IN THE BALANCE SHEET AND PRODUCED ALL THE ACCOUNT BOOKS AND THE SUPPORTING VOUCHERS ALONG WITH RELEVANT DOCUMENTS BEFORE THE ASSESSING OFFICER THE REVEN UE COULD NOT DISCOVER ANY FACTS TO HOLD THAT THE APPELLANT HAD SUPPRESSED ANYTHING, WHICH THEY FOUND OUT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER THE BONA FIDE BELIEF TO ITS ALLOWABILITY AND MERELY BECAUSE IN EX PENDITURE IS BEEN DISALLOWED IT DOES NOT RESULT INTO THE PENALTY FOR CONCEALMENT OF INCOME AUTOMATICALLY. 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 11 17. THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT THE ABOVE FINDING OF THE LEARNED COMMISSIONER OF INCOME TAX APPEALS. FURTHER, THE FIRST GROUND OF APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TAX APPEAL WHICH WAS DISMISSED CONSIDERING THE SAME IS GENERAL IN NATURE. BEFORE US THE ASSESSEE HAS PRODUCED THE NOTICE DATED SIXTH MAY 2009 ISSUED U/S 274 READ WITH SECTION 271 OF THE INCOME TAX ACT WHEREIN NONE OF THE TWIN CHARGES WAS CANCELLED BY THE ASSESSING OFFICER. IN VIEW OF THIS, PENALTY HAS RIGHTLY BEEN DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX APPEALS ON THIS DISALLOWANCE. 18. WITH RESPECT TO THE WITHDRAWAL OF 30% DEDUCTION U/S 24 O F 3,509,87 0, THE FACTS EMERGED THAT RENT OF RS 160,99,500 WAS RECEIVED FROM SRIRAM SCHOOL IN TERMS OF AGREEMENT DATED 27 DECEMBER 2000 FOR OPERATIONS AND RUNNING SRIRAM SCHOOL, ARAWALI. THE ABOVE BUILDING WAS PREVIOUSLY OWNED BY THE APPELLANT BUT IN ARBI TRATION AWARD, IT WAS REVERTED TO DLF ENCLAVE COMPLEX EDUCATIONAL CHARITABLE TRUST WITH EFFECT FROM 1 APRIL 1994 AND THE TENANT SRIRAM SCHOOL CONTINUED TO PAY RENT TO THE ASSESSEE COMPANY IN TERMS OF LEASE DEED ENTERED INTO WITH THEM. THE ASSESSEE IN TURN USED TO PAY THE ENTIRE RENTAL RECEIPTS TO THE ABOUT TRUST. THE ASSESSEE CONTINUED TO SHOW THE RENTAL INCOME RECEIVED FROM THE SCHOOL AS ITS INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY ON ACTUAL RECEIPT BASIS AND BECAUSE OF THE FACT THAT TAX DEDUCTI ON AT SOURCE WAS DULY DEDUCTED BY THE TENANT IN THE TDS CERTIFICATES WERE ALSO ISSUED IN THE NAME OF THE COMPANY. IN FACT, THE TRUST WAS THE ULTIMATE RECEIVER OF THE RENTAL INCOME. THE ASSESSEE COMPANY DECLARED RENTAL INCOME IN ITS HANDS, PAID TAX THEREON BUT IT ALSO CLAIMED THE DEDUCTION/EXPENSES OF THE AMOUNT TRANSMITTED TO THE TRUST. IT ALSO THE BENEFIT OF THE AMOUNT OF TAX DEDUCTED AT SOURCE ON ITS RENTAL RECEIPTS. THE CLAIM OF THE ASSESSEE IS THAT ONCE THE INCOME HAS BEEN SHOWN UNDER THE HEAD INCOME FR OM HOUSE PROPERTY AND IT HAS BEEN DULY TAXED BY THE ASSESSING 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 12 OFFICER IN ITS HANDS, THE APPLICABLE STATUTORY DEDUCTION U/S 24 (A) SHOULD BE ALLOWED TO THE APPELLANT COMPANY. THEREFORE, SUCH DEDUCTION WAS CLAIMED. THE LEARNED COMMISSIONER OF THE ALSO ALLOWE D THE APPELLANTS CLAIM OF TAX DEDUCTION AT SOURCE AND THE AMOUNT TRANSMITTED TO THE ABOUT TRUST. HOWEVER DEDUCTION U/S 24 (A) WAS DISALLOWED. THE LEARNED CIT A DELETED THE PENALTY ON THE ABOVE SUM FOR THE REASON THAT THE RENTAL INCOME IS SHOWN BY THE AS SESSEE, THE TAX DEDUCTION AT SOURCE IS ALLOWED TO THE ASSESSEE, THE REMITTANCE OF THE SUM TO THE CHARITABLE TRUST IS ALSO DEMONSTRATED, THEREFORE, THE DISALLOWANCE OF THE STATUTORY DEDUCTION U/S 24 (A) IS A SIMPLE DISALLOWANCE AND DOES NOT INVOLVE ANY ELEM ENT OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS. THEREFORE, THE PENALTY WAS DELETED. THOUGH LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT THE REASON THAT MERE DISALLOWANCE OF THE STATUTORY CLAIM WHEN THE ASSESSEE HAS BEEN TAX ED UNDER THE HEAD INCOME FROM HOUSE PROPERTY WILL RESULT INTO PENALTY U/S 271 (1) (C) OF THE ACT. HOWEVER, FOR THE REASON THAT THE PENALTY NOTICE DOES NOT SHOW ANY OF THE TWIN CHARGES , ON WHICH THE PENALTY HAS BEEN LEVIED BY THE LEARNED ASSESSING OFFICER , AS NONE OF THEM HAS BEEN STRUCK OFF, ON THIS GROUND, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER OF IS IN DELETING THE PENALTY ON ABO VE DISALLOWANCE. 19. WITH RESPECT TO THE DISALLOWANCE OF PROVISIONS FOR GRATUITY OF 1,449,123/ , THE FACTS NOTED THAT THE LEARNED ASSESSING OFFICER HAS MADE THE DISALLOWANCE OF 4,981,625/ ON ACCOUNT OF DISALLOWANCE ON THE BASIS OF THE REPORT OF SPECIAL AUDITORS WHEREAS THE LEARNED COMMISSIONER OF INCOME TAX A CONFIRMED THE DISALLOWA NCE TO THE EXTENT OF 14,49,123/ . THE ASSESSEE SUBMITTED THAT THE PROVISION FOR GRATUITY DEBITED IN HEAD OFFICE BOOKS IN THE PROFIT AND LOSS ACCOUNT HAS ALREADY BEEN ADDED BACK TO THE INCOME OF THE ASSESSEE BY APPLYING THE PROVISIONS OF SECTION 43B. HOWE VER, RS 29,81,625 IS A PROVISION FOR 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 13 GRATUITY LIABILITY IN THE BOOKS OF ACCOUNT IN THE CONSTRUCTION DIVISION. OUT OF THE ABOVE SUM RS. 3,532,502/ HAS BEEN RECOVERED BY THE CONSTRUCTION DIVISION FROM OTHER COMPANIES AND THIS AMOUNT IS CREDITED IN GRATUITY EXPENSES ACCOUNT. THIS LEAVES A NET BALANCE OF 1,449,123/ WHICH WAS BOOKED IN CONSTRUCTION WORK IN PROGRESS ACCOUNT. THE ABOVE SUM HAS NEITHER BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT IS EXPENSES AND HAS ALSO NOT BEEN CLAIMED IN THE INCOME TAX RETURN AS A DEDUCTION BUT IT WAS SIMPLY INCLUDED IN THE BALANCE - SHEET HAS WORK IN PROGRESS ITEM ONLY. THEREFORE, THE CLAIM OF THE ASSESSEE IS THAT THE DISALLOWANCE U/S 43B IS NOT APPLICABLE EVEN TO THE AMOUNT OF RS 4,049,123/ AS IT HAS NOT BEEN CLAIMED AS DEDUC TION IN THE PROFIT AND LOSS ACCOUNT OR IN THE COMPUTATION OF TOTAL INCOME. THE LEARNED COMMISSIONER A DELETED THE PENALTY ON THE ABOVE SUM HOLDING THAT THE ASSESSEE HAS FURNISHED THE DETAILS IN THE INCOME TAX RETURN, IN THE BOOKS OF ACCOUNT, IN THE WORK IN PROGRESS AND THE DISALLOWANCE HAS BEEN MADE ONLY ON ACCOUNT OF DIFFERENCE OF OPINION, SINCE THE APPELLANT HOLDS A GENUINE BELIEF THAT THE AMOUNT OF GRATUITY SHOWN IN THE WORK IN PROGRESS BUT NOT DEBITED TO THE PROFIT AND LOSS ACCOUNT AND NOT CLAIMED AS A DEDUCTION CANNOT BE DISALLOWED. THEREFORE, THE PENALTY ON THIS SUM WAS DELETED. LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT SHOW US ANY REASON THAT PENALTY ON THE ABOVE SUM IS LEVIABLE. FURTHER, IT IS ALSO NOT FREE FROM DOUBT WHETHER SUCH DISALLOWANCE CAN BE MADE U/S 43B OF THE INCOME TAX ACT OR NOT WHEN THE ASSESSEE ITSELF IS NOT CLAIM THE ABOVE DEDUCTION IN THE COMPUTATION OF TOTAL INCOME. MERELY BECAUSE THE DISALLOWANCE HAS BEEN CONFIRMED BY THE HIGHER FORUM, IT CANNOT AUTOMATICALLY RESULT INTO PENAL TY. FURTHER FOR THE REASONS GIVEN BY US, RELYING UPON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VERSUS SAHARA INDIA LIFE INSURANCE CO LTD (SUPRA) , WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED SOME IS CIT A IN DELETING THE PENALTY ON THE ABOVE DISALLOWANCE. 4205 DEL 2013 ASSESSMENT YEAR 2006 07 THE DEPUTY COMMISSIONER OF INCOME TAX VERSUS DLF LTD 14 20. IN VIEW OF THE ABOVE FACTS, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT A IN CANCELLING THE PENALTY LEVIED BY THE LEARNED ASSESSING OFFICER U/S 271 (1) (C) OF THE ACT. 21. ACCORDINGLY SOLITARY GROUND OF APPEAL AND APPEAL OF THE LEARNED ASSESSING OFFICER IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 09 2020 . - SD/ - - SD/ - (K N CHARY) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 10 /09/2020 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI