Appeal details
Counselvise Citation
[2020] 110 COUNSELVISE.COM (IT) 9672 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 year(s) 10 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
06-07-2020
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
D
Assessment Year
2012-2013
Appeal Filed On
29-08-2016
Judgement Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI D BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 4582/DEL/2016 [ASSESSMENT YEAR: 2012-13] THE DY.C.I.T VS. JONES LANG LASALLE MEGHRAJ CIRCLE 13(2) BUILDING OPERATIONS PVT LTD. NEW DELHI 1109-1110, ASHOKA ESTATE, BARAKHAMBA ROAD, CONNAUGHT PLACE, NEW DELHI PAN: AAACW 4495 Q [APPELLANT] [RESPONDENT] DATE OF HEARING : 02.07.2020 DATE OF PRONOUNCEMENT : 06.07.20 20 ASSESSEE BY : SHRI NAGESHWAR RAO, ADV MS. SHERRY GOEL, REVENUE BY : SHRI SARAS KUMAR, DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A) - 5, DELHI DATED 30.06.2016 PERTAINING TO A. Y 2012-13. 2 2. THE GRIEVANCE OF THE REVENUE IS TWO-FOLD FIRST LY, THE REVENUE IS AGGRIEVED BY THE DELETION OF ADDITION OF RS. 3,92,1 67/- MADE BY THE ASSESSING OFFICER U/S 14A OF THE INCOME TAX ACT, 19 61 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT] AND SECONDLY, T HE REVENUE IS AGGRIEVED BY THE DELETION OF ADDITION OF RS. 9,86,7 6,489/- BEING SALARY WAGES AND OTHER BENEFITS WHICH IS GROSSLY DISPROPOR TIONATE TO THE REVENUE OF THE ASSESSEE. 3. REPRESENTATIVES OF BOTH THE SIDES HAVE BEEN HEAR D AT LENGTH. CASE RECORDS CAREFULLY PERUSED. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING FAC ILITY MANAGEMENT AND PROPERTY MANAGEMENT SERVICES. RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 5,69,78,430/- WAS FILED ON 29.09.2012 . RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT UNDER CASS AND ACC ORDINGLY, STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE. 5. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS, THE ASSESSEE WAS ASKED TO SUBMIT DETAILED NOTE ON APPLI CABILITY OF SECTION 14A OF THE ACT. THE ASSESSEE FILED DETAILED REPLY AND AFTER CONSIDERING 3 THE SAME, THE ASSESSING OFFICER COMPUTED THE DISALL OWANCE AT RS. 3,92,167/-. 6. BEFORE THE LD. CIT(A), IT WAS STRONGLY CONTENDED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME, THEREFORE, DISALLOWANCE U/S 14A OF THE ACT IS UNWARRANTED. 7. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, THE LD. CIT(A) DELETED THE ADDITION. 8. BEFORE US, THE LD. DR STRONGLY RELIED UPON THE F INDINGS OF THE LD. CIT(A). 9. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REI TERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 10. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT THE ASSESSEE DID NOT EARN ANY EXEMPT INCOME DURING THE YEAR UNDER CONSID ERATION. SINCE THERE IS NO EXEMPT INCOME EARNED BY THE ASSESSEE DU RING THE YEAR, 4 THERE CANNOT BE ANY DISALLOWANCE U/S 14A OF THE ACT . THIS ISSUE IS BY NOW WELL SETTLED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL I N THE CASE OF M/S CHEMINVEST LTD 121 ITD 318 WHICH WAS AFFIRMED BY TH E HON'BLE HIGH COURT OF DELHI. SAME VIEW IS TAKEN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CORRTECH ENERGY (P) LTD 372 ITR 97. IN VIEW OF THE ABOVE, WE DECLINE TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). RESPECTFULLY FOLLOWING THE ABOVE MENTIONED JUDICIAL DECISIONS, GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 11. FACTS RELATING TO GROUND NO. 2 SHOW THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FILE DETAILS OF EXPENSE HEADS. ACCORDING TO THE ASSESSING OFFICER, EXPENSES HAVE G ONE UP SHARPLY AND THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM OF EXPE NSES AND REASON FOR INCREASE IN EXPENSES AS COMPARED TO F.Y. 2010-11. 12. THE ASSESSEE FILED DETAILED REPLY AND AFTER GOI NG THROUGH THE REPLY OF THE ASSESSEE, THE ASSESSING OFFICER MADE H IS OWN RATIO ANALYSIS AND CAME TO THE CONCLUSION THAT AN INCREASE OF 10% IS ONLY ALLOWABLE 5 AND ACCORDINGLY, COMPUTED THE DISALLOWANCE OF SALAR Y WAGES AND OTHER BENEFITS AT RS. 19,95,68,175/-. 13. BEFORE THE LD. CIT(A), IT WAS STRONGLY CONTENDE D THAT THE ASSESSING OFFICER HAS GROSSLY ERRED IN MAKING DISAL LOWANCE MERELY ON ACCOUNT OF INCREASE IN SALARY EXPENSES. IT WAS BRO UGHT TO THE NOTICE OF THE LD. CIT(A) THAT THOUGH THERE IS NO DISPUTE THAT THERE WAS JUMP IN SALARY WAGES, BUT THE ASSESSING OFFICER DID NOT CAL L FOR ANY FURTHER CLARIFICATION FROM THE ASSESSEE IF HE WAS NOT SATI SFIED WITH THE REPLY OF THE ASSESSEE DATED 24.02.2015. 14. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, TH E LD. CIT(A) OBSERVED THAT THE ASSESSING OFFICERS CALCULATION O F THE AVERAGE SALARY PER EMPLOYEE IS FOUND RATHER SIMPLISTIC AND CANNOT BE APPLIED ACROSS THE BOARD. THE LD. CIT(A) FURTHER OBSERVED THAT TH E APPELLANT HAS FILED LIST OF NEW EMPLOYEES AND DURING THE APPELLATE PROC EEDINGS, THE DESIGNATION AND AMOUNT PAID TO NEW EMPLOYEES WERE A LSO FURNISHED AT THE BEHEST OF THE LD. CIT(A). AFTER CAREFULLY PERU SING THE ENTIRE DETAILS FILED BY THE ASSESSEE, THE LD. CIT(A) FOUND THAT TH E RETURN FOR A.Y 2013- 14 WAS ALSO SCRUTINISED AND ALTHOUGH THIS ISSUE WAS EXAMINED, NO SUCH 6 DISALLOWANCE HAS BEEN MADE. THE LD. CIT(A) FINALLY DELETED THE ENTIRE DISALLOWANCE OF RS. 9.86 CRORES. 15. BEFORE US, THE LD. DR STRONGLY SUPPORTED THE F INDINGS OF THE ASSESSING OFFICER. 16. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE RE ITERATED WHAT HAS BEEN STATED BEFORE THE LOWER AUTHORITIES. 17. WE HAVE GIVEN THOUGHTFUL CONSIDERATION TO THE O RDERS OF THE AUTHORITIES BELOW. THE UNDISPUTED FACT IS THAT THE ASSESSING OFFICER DID ENQUIRE ABOUT THE INCREASE IN SALARY WAGES AND THE ASSESSEE DID FILE A DETAILED REPLY. IN OUR CONSIDERED OPINION, IF THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY OF THE ASSESSEE, THEN NOTHING PREVENTED HIM TO FURTHER SEEK CLARIFICATION FROM THE ASSESSEE IN RESPECT OF JUMP IN SALARY. WE FIND THAT THE FIRST APPELLATE AUTHOR ITY DID MAKE ENQUIRIES AND FOUND THAT SOME NEW EMPLOYEES WERE EMPLOYED BY THE ASSESSEE WITH DESIGNATION AND AMOUNT OF SALARY PAID TO THEM. 7 18. WE FIND THAT THE FIRST APPELLATE AUTHORITY HAS CONSIDERED THE EVIDENCES IN DETAIL AND FINALLY CAME TO THE CONCLUS ION THAT NO DISALLOWANCE NEEDS TO BE MADE. WE ARE FURTHER OF T HE OPINION THAT THE ASSESSING OFFICER CANNOT DECIDE HOW MUCH SALARY A B USINESS MAN SHOULD PAY TO HIS EMPLOYEES. CONSIDERING THE FACTS OF THE CASE IN TOTALITY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDIN GS OF THE LD. CIT(A). GROUND NO. 2 IS DISMISSED. 19. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 4582/DEL/2016 IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 06.07. 2020. SD/- SD/- (BHAVNESH SAINI) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 06 TH JULY, 2020. VL/ 8 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ASST. REGISTRAR 4. CIT(A) ITAT, NEW DELHI 5. DR DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER
