M/s. Nehru Place Hotels Ltd., New Delhi V. DCIT, New Delhi

ITA 4334/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65744 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 09-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AROOP KR SINGH
• Assessee Lawyers: RK KAPOOR FCAS
• Keywords: Gift; Onus to prove; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: E NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ITA NO: 4334/DEL/2012 ASSESSMENT YEAR : - 2009-10 M/S NEHRU PLACE HOTELS LTD. VS. THE DY.CIT, C.C. 6 S-1, AMERICAN PLAZA NEW DELHI INTERNATIONAL TRADE TOWER NEHRU PLACE NEW DELHI PAN: : AAACN 3230C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRADEEP DINODIA & SH. RK KAPOOR, FCAS RESPONDENT BY : SHRI AROOP KR.SINGH, SR.D.R. O R D E R PER J.SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE DIRECTED AGA INST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-I, NEW DELHI DT. 28.6.2012 PERTAINING TO THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE IS A COMPANY AND IS ENGAGED IN THE BUSINESS OF HOTELS, REAL ESTATE AND FINANCING. THE ISSUES THAT ARISE FOR ADJ UDICATION ARE BROUGHT OUT AS GROUNDS OF APPEAL AS FOLLOWS:- 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE IN SUSTAINING THE ADDITION OF RS.32,284/- BEING 50% DISALLOWANCE OF B USINESS PROMOTION EXPENSES INCURRED IN THE CORPORATE OFFICE UNIT OF T HE COMPANY. 1.1. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT THESE EXPENSES WERE INCURRED DURING THE COURSE OF BUSINESS OF THE ASSESSEE AND WERE MADE WHOLLY AND EXCLUSIVELY FOR T HE PURPOSE OF BUSINESS OF THE COMPANY. 2 1.2. THE COMPANY HAS PAID FRINGE BENEFIT TAX ON THE 20% OF THE SALES PROMOTION EXPENSES, WHICH HAS NOT BEEN CONSID ERED BY THE ASSESSING OFFICER/COMMISSIONER OF INCOME TAX (APPEA LS). 1.3. AS PER LAW AND ON THE FACTS OF THE CASE THE LD.AO/COMMISSIONER OF INCOME TAX (APPEALS) BE DIREC TED TO DELETE THE ABOVE MENTIONED ADDITION. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE IN SUSTAINING THE ADDITION OF RS.8,37,823/- BEING THE DISALLOWANCE OF SALES PROMOTION EXPENSES INCURRED IN THE HOTEL INTERCONTINENTAL ERO S UNIT OF COMPANY. 2.1. THE ASSESSING OFFICER/COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT THE EXPENSES WERE INCURRE D DURING THE COURSE OF BUSINESS. THESE GIFTS WERE GIVEN TO VARIOUS HIG H PROFILE PEOPLE AND TRAVELS AGENTS FOR THE BUSINESS OF THE HOTEL. SOME GIFTS ITEMS WERE GIVEN AS INCENTIVES TO THE SALES AND MARKETING TEAM TO INCREASE THE SALE OF THE HOTEL. HENCE THESE EXPENSES WERE INCURRED W HOLLY AND EXCLUSIVELY FOR PURPOSE OF BUSINESS OF THE COMPANY. 2.2. THE COMPANY HAS PAID FRINGE BENEFIT TAX ON TH E 50% OF THE SALES PROMOTION EXPENSES WHICH AHS NOT BEEN CONSIDERED BY THE ASSESSING OFFICER/COMMISSIONER OF INCOME TAX (APPEALS). 2.3. AS PER LAW AND ON THE FACTS OF THE CASE THE L D.AO/COMMISSIONER OF INCOME TAX (APPEALS) BE DIRECTED TO DELETE THE ABOV E MENTIONED ADDITION. 3.0. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS AND IN THE CIRCUMSTANCES OF THE CASE I N NOT CONSIDERING THE CLAIM OF THE ASSESSEE OF ALLOWANCE OF PRIOR PERIOD EXPENSE OF RS.4,88,123/- INCURRED IN RELATION ON PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2009-10. 3.1. THE ASSESSING OFFICER/COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT THE ASSESSEE HAS DISALLOW ED PY EXPENSES OF RS.4,88,123/- IN ASSESSMENT YEAR 2010-11. 3.2. AS PER LAW AND ON FACTS OF THE CASE THE LD.AO /COMMISSIONER OF INCOME TAX (APPEALS) BE DIRECTED TO ALLOW THE ABOVE EXPENSES AS CLAIMED IN THE REVISED RETURN OF INCOME. 4. THAT EACH GROUND IS INDEPENDENT OF AND WITHOUT PREJUDICE TO THE OTHER GROUNDS RAISED HEREIN. 3 3. WE HAVE HEARD MR.PRADEEP DINODIA, LD.COUNSEL FOR THE ASSESSE AND MR.AROOP KR.SINGH, LD.SR.D.R. ON A CAREFUL CONSI DERATION OF FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSAL OF THE M ATERIAL AVAILABLE ON RECORD, EXAMINING OF VARIOUS CASE LAWS CITED, WE HOLD AS FO LLOWS. 4. GROUND NO.1 IS NOT PRESSED FOR THE REASON THE AM OUNTS INVOLVED ARE SMALL. THE LD. COUNSEL EMPHASIZED THAT THIS SHOULD NOT BECOME A PRECEDENT. WE AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL T HAT THE DECISION ON THIS GROUND SHOULD NOT BE A PRECEDENT, AS IT IS DISMISS ED AS NOT PRESSED FOR THE REASON THAT THE AMOUNTS INVOLVED ARE SMALL. IN THE RESULT GROUND NO.1 IS DISMISSED. 5. GROUND NO 2 IS ON THE ISSUE OF 50% DISALLOWANCE OF BUSINESS PROMOTION EXPENSES. SIMILAR ISSUE HAS COME UP BEFORE THE F BENCH OF THE TRIBUNAL IN ITA NO.4153/DEL/2011, ASSESSMENT YEAR 2008-09 IN TH E CASE OF R.C.SOOD & CO. DEVELOPMENT PVT. LTD. VIDE ORDER DATED 20.09.20 11 AND THE TRIBUNAL REDUCED THE DISALLOWANCE TO 20% WHILE HOLDING THAT THE ONUS ALWAYS LIES ON THE CLAIMANT TO ESTABLISH THE GENUINENESS OF HIS C LAIM. RELIANCE WAS PLACED ON THIS DECISION BY THE LD. COUNSEL. ON A PERUSAL OF T HE ASSESSMENT ORDER, WE FIND THAT THE ASSESSEE CLAIMS TO HAVE PURCHASED AND PRES ENTED COSTLY ITEMS SUCH AS COLOUR TVS/ MUSIC SYSTEMS/ DVD PLAYERS/ MONT BLANK PENS, ETC. TO VARIOUS PERSONS, THE DETAILS OF WHICH ARE NOT BEING FURNISH ED. WHEN SOME OF THE GIFTS WERE GIVEN TO SALES AND MARKETING TEAM, THE DETAILS WITH EVIDENCES HAVE TO BE FILED. IT IS NOT A CASE WHERE SUCH RECORD CANNOT B E PRODUCED. WHEN GIFTS ARE 4 GIVEN TO TRAVEL AGENTS AND OTHER PERSONS. DETAILS HAVE TO BE KEPT AND FURNISHED. THE BURDEN IS ON THE ASSESSEE. GIFTS A RE NOT GIVEN TO STRANGERS. THE ASSESSEE HAS NOT DISCHARGED THE ONUS THAT LAY ON IT. UNDER THE CIRCUMSTANCES WE UPHOLD THE ORDER OF THE FIST APPEL LATE AUTHORITY. COMING TO THE RELIANCE PLACED BY THE ASSESSEE ON THE DECISION OF R.C.SOOD & CO. DEVELOPMENT PVT. LTD. (SUPRA), WE HOLD THAT ALLOWAN CE OR OTHERWISE OF AN EXPENDITURE AND DISCHARGE OF A BURDEN OF PROOF ETC. ARE FACTUAL MATTERS AND CANNOT BE TREATED AS COVERED MATTERS. HENCE WE A LLOW THIS GROUND OF APPEAL. 6. COMING TO GROUND NO.3 THE ASSESSEE FILED REVISED RETURN AND CLAIMED CERTAIN EXPENSES, ON THE GROUND THAT THE AUDITOR IN THE SUBSEQUENT YEAR HAS TREATED THESE EXPENSES AS PRIOR PERIOD EXPENSES. HE PLEADS THAT THE EXPENDITURE IN QUESTION CANNOT BE DISALLOWED IN BOT H THE YEARS. AS THE AO HAS NOT EXAMINED THIS ISSUE AND AS WE FIND JUSTIFICATIO N IN THE CLAIM OF THE ASSESSEE THAT THE EXPENDITURE HAS TO BE ALLOWED IN ONE OF THE YEARS WE SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFIC ER FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW. WE ALLOW THIS GROUND OF APPEA L OF THE ASSESSEE. 7. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER,2012. SD/- SD/- (RAJPAL YADAV) (J .SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 30 TH OCTOBER, 2012 5 *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :