ITO, New Delhi V. M/s Jones Lang LaSalle Property Consultants (India) Pvt. Ltd., New Delhi

ITA 4598/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8145 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 04-02-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 04-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GARIMA BHAGAT
• Keywords: Depreciation; Opportunity of being heard; Additional evidence; Corroborative evidences; Competent authority
• Section: 115JB

Judgement Text

ITA NO.4598/DEL/09 A.Y. 2004-05 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 4598/DEL/2009 A.Y. : 2004-05 INCOME TAX OFFICER, VS. M/S JONES LANG LASALL E PROPERTY CO. WARD 4(1), CONSULTANTS (INDIA) PVT. LTD., ROOM NO. 418, CR BUILDING, LEVEL-7, WORLD TRADE TOWER, IP ESTATES, NEW DELHI BARAKHAMBA LANE, NEW DELHI 110 001 [PAN : AAACL 2089B] (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : MS. GARIMA BHAGAT, SR. DR O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDERS OF THE LD. CIT(A) DATED 16.9.2009 AND PERTAINS TO ASSE SSMENT YEAR 2004-05. 2. THE FIRST ISSUE RAISED IS THAT THE LD. CIT(A) E RRED IN DIRECTING THE AO NOT TO INCLUDE DISALLOWANCE OF GRATUITY FO R CALCULATING TAX UNDER SECTION 115JB OF THE IT ACT. ITA NO.4598/DEL/09 A.Y. 2004-05 2 3. ON THIS ISSUE AO NOTED THAT ASSESSEE COMPANY HAS MADE A PROVISION OF GRATUITY OF RS. 15,23,120/-. AO OBSER VED THAT GRATUITY FUND HAS NOT BEEN APPROVED BY THE PRESCRIBED AUTHO RITY. AO WAS OF THE OPINION THAT PROVISION FOR GRATUITY IS NOT A SCERTAINED LIABILITY, THOUGH HE AGREED THAT IT IS KNOWN LIABILITY. HE PR OCEEDED TO INCREASE THE BOOK PROFIT BY THE PROVISION OF GRATUI TY CREATED DURING THE YEAR. 4. UPON ASSESSEES APPEAL LD. CIT(A) IN THIS REGARD REFERRED THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. BECHTEL INDIA PVT LTD. (DEL) 2 DTR 145 AND HELD THAT THE P ROVISION OF GRATUITY IRRESPECTIVE OF THE FACT THAT THERE WAS N O APPROVAL BY THE COMPETENT AUTHORITY CANNOT BE TREATED AS UNASCERTAI NED LIABILITY WHICH CAN BE ADDED BACK TO THE BOOK PROFIT. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 6. WE HAVE HEARD LD. DR AND PERUSED THE RECORDS. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE FIND THAT A NALOGICAL QUESTION OF PROVISION OF GRATUITY HAS BEEN CONSIDER ED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE CITED ABOVE. THE HONBLE COURT HAS REFERRED THE DECISION OF THE HONBLE SUPR EME COURT OF INDIA IN THE CASE OF BHARAT EARTH MOVERS VS. CIT 24 5 ITR 428, WHEREIN THE APEX COURT HAS HELD THAT IF A BUSINESS LIABILITY HAS DEFINITELY ARISEN IN THE ACCOUNTING YEAR, THE DEDUC TION SHOULD BE ALLOWED ALTHOUGH THE LIABILITY MAY HAVE TO BE QUANT IFIED AND DISCHARGED ON A FUTURE DATE. ITA NO.4598/DEL/09 A.Y. 2004-05 3 7. RESPECTFULLY FOLLOWING THE ABOVE PRECEDENT, WE U PHOLD THE ORDER OF THE LD. CIT(A) AND DECIDED THE ISSUE IN F AVOUR OF THE ASSESSEE. 8. THE NEXT ISSUE RAISED IS THAT THE LD. CIT(A) ERR ED IN DIRECTING THE ADDITION OF RS. 5,99,349/- MADE BY THE AO BY DI SALLOWING DEPRECIATION CLAIM ON ADDITION TO FIXED ASSETS. 9. ON THIS ISSUE AO NOTED THAT ASSESSEE HAS NOT PRODUCED BILLS OF CERTAIN FIXED ASSETS. ACCORDINGLY, HE DISALLOW ED THE DEPRECIATION OF RS. 5,99,349/- ON THIS ACCOUNT. 10. BEFORE THE LD. CIT(A) THE ASSESSEE PRODUCED CER TAIN EVIDENCES IN SUPPORT OF ACQUISITION OF FIXED ASSETS. THE SA ME WERE CONSIDERED AS ADDITIONAL EVIDENCE AND REPORT WAS CALLED FOR F ROM THE AO IN TERMS OF RULE 46A(3). CONSIDERING THE SAME LD. CIT (A) HELD THAT THE AO HAS NOT MADE OUT A CASE THAT THE ASSETS WERE NOT USED FOR THE PURPOSE OF BUSINESS. HE NOTED THAT ASSESSEE HAS PR ODUCED THE EVIDENCE TO SUBSTANTIATE ITS OWNERSHIP OVER THE ASS ETS IN THE FORM OF COPY OF LEDGER ACCOUNTS, STATEMENT OF BANK ACCOUNTS . HE ALSO NOTED THAT THERE WAS NO ADVERSE REMARKS IN THE TAX AUDIT REPORT. HE ALSO NOTED THAT AO IN HIS REPORT HAD ADMITTED THAT COPIES OF PURCHASE INVOICES PERTAINING TO 10 COMPUTERS AMOUNT ING TO RS. 4,06,330/- WERE SUBMITTED BEFORE THE AO. LD. CIT( A) CONCLUDED AS UNDER:- CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, IT IS HELD THAT THE CLAIM OF THE APPELLANT IN REGARD TO ITA NO.4598/DEL/09 A.Y. 2004-05 4 DEPRECIATION CANNOT BE REJECTED MERELY ON THE GROUN D THAT SOME OF THE BILLS OF PURCHASE PERTAINING TO THE ACQ UISITION OF FIXED ASSETS WERE NOT MADE AVAILABLE TO THE ASSE SSING OFFICER AND THE OTHER SUPPORTING EVIDENCES FURNISHE D BY THE APPELLANT CANNOT BE COMPLETELY IGNORED. SUB JECT TO THE ABOVE REMARKS, THE ASSESSING OFFICER IS DIRECT ED TO ALLOW DEPRECIATION ON THE FIXED ASSETS PURCHASED DU RING THE YEAR AMOUNTING TO RS. 10,30,727/- IN ACCORDANCE WITH THE ADMISSIBILITY THEREOF. IT IS ALSO RELEVANT TO MENTION HERE THAT THE APPELLANTS AR(S) HAVE THEMSELVES ADM ITTED THAT THE ASSETS WERE PUT TO USE FOR LESS THAN 180 D AYS WHICH MAY BE CONSIDERED BY THE ASSESSING OFFICER WH ILE ALLOWING DEPRECIATION ON THE SAID FIXED ASSETS AFTE R NECESSARY VERIFICATION. 11. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 12. WE HAVE HEARD LD. DR AND PERUSED THE RECORDS. WE FIND THAT ASSESSEE HAS NOT PRODUCED THE NECESSARY EVIDENCES P ERTAINING TO ACQUISITION OF THE ASSETS BEFORE THE AO. FROM THE ORDER OF THE LD. CIT(A) IT IS APPEARING THAT COMPLETE DETAILS PERTAI NING TO THE ADDITIONS WERE NOT PRODUCED BEFORE THE CIT(A). CIT(A) HAS RELIED UPON SOME INDIRECT EVIDENCES IN FORMS OTHER THAN BI LLS FOR PURCHASE. THE ASSESSEES COUNSEL BEFORE LD. CIT(A) HAS HIMSELF SUBMITTED THAT SOME OF THE ASSETS WERE USED FOR LES S THAN 180 DAYS. UNDER THE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, IT WILL BE APPROPRIATE TO REMIT THIS ISSUE TO THE FILES OF THE AO, TO ENABLE HIM ITA NO.4598/DEL/09 A.Y. 2004-05 5 TO CONSIDER THE SAME AFRESH IN LIGHT OF THE FRESH S UBMISSIONS MADE BY THE ASSESSEE. ACCORDINGLY, THIS ISSUE IS REMITT ED TO THE FILES OF THE AO. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. 13. IN THE RESULT, THE REVENUES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04/02/2010 UPON CONCLUSION OF THE HEARING. SD/- SD/- (C.L. SETHI) [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 04/02/ 2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES