ACIT, New Delhi V. M/s. IIGM Pvt. Ltd., New Delhi

ITA 4278/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7805 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 03-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SEKHON
• Keywords: Rule of consistency; Tax effect
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES C: DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA.NO.4278/DEL./2016 ASSESSMENT YEAR 2012-2013 THE ACIT, CIRCLE-12(1), ROOM NO.405, C.R. BUILDING, NEW DELHI. VS., M/S. IIGM PVT. LTD., B-112, OKHLA INDUSTRIAL AREA, PHASE-1, NEW DELHI. PIN 110 020. PAN AAACI0110N (APPELLANT) (RESPONDENT) FOR REVENUE : MS. RAKHI VIMAL, SR. D.R. FOR ASSESSEE : SHRI M.S. SEKHON, C.A. DATE OF HEARING : 1 0 . 1 0.2019 DATE OF PRONOUNCEMENT : 14 . 1 0.2019 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-4, NEW DELHI, DATED 18.05.2016 FOR THE A.Y. 2012-2013, CHALLENGING THE ORDER OF LD. CIT(A) IN DELETING THE DISALLOWANCE MADE UNDER SECTION 40A(2)(B) OF THE I.T. ACT, 1961, AMOUNTING TO RS.2.38 CRORES. 2 ITA.NO.4278/DEL./2016 M/S. IIGM PVT. LTD., NEW DELHI. 2. THE LD. CIT(A) NOTED THAT THE ONLY ISSUE ARISE ON ACCOUNT OF EX-GRATIA PAYMENT TO THE DIRECTORS. THE LD. CIT(A) HAS GONE THROUGH THE RECORD AND FOUND THAT THEY HAVE BEEN FOLLOWING THE PRACTICE RIGHT FROM THE INCEPTION OF THE COMPANY AND IN THE EARLIER YEAR ASSESSMENTS UNDER SECTION 143(3) HAVE BEEN PASSED AND SIMILAR CLAIM OF ASSESSEE HAVE BEEN ACCEPTED IN A.YS. 2003-204, 2004-05, 2006-07 AND 2009-10. THE A.O. HAS DISTINGUISHED THIS CASE FROM THE CASE OF SHAHZADA NAND & SONS VS. COMMISSIONER OF INCOME TAX [1977] 108 ITR 358 (SC) AND HAS ARGUED THAT SINCE THE ASSESSEE HAS HUGE RESERVE AND SURPLUS, IT SHOULD HAVE USED THE RESERVES TO DECLARE THE DIVIDEND. BY NOT DOING SO, IT HAS DIVERTED THE MONEY IN THE HANDS OF THE DIRECTORS TO AVOID PAYMENT OF DIVIDEND DISTRIBUTION TAX. ON THE OTHER HAND, THE ASSESSEE HAS GIVEN THE BIFURCATION OF SALES, COMMISSION AND SERVICE CHARGES FROM THE A.Y. 2007-08 TO 2012-2013 AND HAS CLAIMED THAT IT IS THEIR PREROGATIVE UNDER WHICH HEAD THEY WANT TO PAY TO THE DIRECTORS. THE LD. CIT(A) DID NOT FIND ANY INFIRMITY IN THE STAND OF THE 3 ITA.NO.4278/DEL./2016 M/S. IIGM PVT. LTD., NEW DELHI. ASSESSEE. THE LD. CIT(A) FOLLOWING THE EARLIER YEARS ORDER, DELETED THE ENTIRE ADDITION. 3. THE LD. D.R. RELIED UPON ORDER OF THE A.O. 4. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN EARLIER YEAR SIMILAR CLAIM HAVE BEEN ALLOWED IN THE REGULAR ASSESSMENTS UNDER SECTION 143(3). HE HAS SUBMITTED THAT IN A.Y. 2013-2014 ALSO SIMILAR CLAIM HAVE BEEN ALLOWED BY THE LD. CIT(A) AND DEPARTMENTAL APPEAL HAVE BEN DISMISSED FOR LOW TAX EFFECT VIDE ORDER DATED 02.09.2019 IN ITA.NO.4279/DEL./2016. HE HAS FURTHER SUBMITTED THAT IN A.Y. 2014-2015 ALSO, THE LD. CIT(A) SIMILARLY ALLOWED THE CLAIM OF ASSESSEE FOLLOWING THE EARLIER YEARS ORDER. COPIES OF THE ORDERS ARE PLACED ON RECORD. 5. IN VIEW OF THE ABOVE, IT IS CLEAR THAT IN EARLIER YEAR AS WELL AS IN SUBSEQUENT YEAR, THE AUTHORITIES BELOW HAVE ALLOWED THE SIMILAR CLAIM OF ASSESSEE. THEREFORE, FOLLOWING THE RULE OF CONSISTENCY THERE WERE NO REASON TO TAKE A DIFFERENT VIEW OR TO MAKE ANY ADDITION AGAINST THE ASSESSEE. 4 ITA.NO.4278/DEL./2016 M/S. IIGM PVT. LTD., NEW DELHI. FURTHER, NOTHING HAS BEEN BROUGHT ON RECORD TO SATISFY THE CONDITIONS OF SECTION 40A(2)(B) OF THE I.T. ACT. THEREFORE, IN THE ABSENCE OF ANY ADVERSE MATERIAL AGAINST THE ASSESSEE, NO INTERFERENCE IS CALLED FOR. THE DEPARTMENTAL APPEAL STANDS DISMISSED. 6. IN THE RESULT, APPEAL OF REVENUE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (PRASHANT MAHARISHI) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 14 TH OCTOBER, 2019 VBP/- COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT C BENCH 6. GUARD FILE // BY ORDER // ASST. REGISTRAR : ITAT DELHI BENCHES : DELHI.