ACIT, New Delhi V. M/s. Dalmia (Bros.) Pvt. Ltd., New Delhi

ITA 4759/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86899 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 06-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: POONAM KHAIRA SIDHU
• Assessee Lawyers: M L DUJARI
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH B BB B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA BEFORE SHRI G.C. GUPTA, VICE , VICE , VICE , VICE PRESIDENT AND PRESIDENT AND PRESIDENT AND PRESIDENT AND SHRI SHRI SHRI SHRI T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR, , , , ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT MEMBER MEMBER MEMBER MEMBER ITA NO ITA NO ITA NO ITA NO . .. . 4723/DEL/2012 4723/DEL/2012 4723/DEL/2012 4723/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2009 2009 2009 2009 - -- - 10 1010 10 M/S DALMIA (BROS.) PVT.LTD., M/S DALMIA (BROS.) PVT.LTD., M/S DALMIA (BROS.) PVT.LTD., M/S DALMIA (BROS.) PVT.LTD., 2 22 2 ND NDND ND FLOOR, FLOOR, FLOOR, FLOOR, INDRAPRASTHA BUILD INDRAPRASTHA BUILD INDRAPRASTHA BUILD INDRAPRASTHA BUILDING, ING, ING, ING, 21, BARAKHAMBA ROAD, 21, BARAKHAMBA ROAD, 21, BARAKHAMBA ROAD, 21, BARAKHAMBA ROAD, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAACD3525G. PAN : AAACD3525G. PAN : AAACD3525G. PAN : AAACD3525G. VS. VS. VS. VS. DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -10(1), 10(1), 10(1), 10(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO ITA NO ITA NO ITA NO .4759/DEL/2012 .4759/DEL/2012 .4759/DEL/2012 .4759/DEL/2012 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2009 2009 2009 2009 - -- - 10 1010 10 DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF DEPUTY COMMISSIONER OF INCOME T INCOME T INCOME T INCOME TAX, AX, AX, AX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -10(1), 10(1), 10(1), 10(1), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S DALMIA (BROS.) PVT.LTD., M/S DALMIA (BROS.) PVT.LTD., M/S DALMIA (BROS.) PVT.LTD., M/S DALMIA (BROS.) PVT.LTD., 2 22 2 ND NDND ND FLOOR, FLOOR, FLOOR, FLOOR, INDRAPRASTHA BUILDING, INDRAPRASTHA BUILDING, INDRAPRASTHA BUILDING, INDRAPRASTHA BUILDING, 21, BARAKHAMBA ROAD, 21, BARAKHAMBA ROAD, 21, BARAKHAMBA ROAD, 21, BARAKHAMBA ROAD, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 001. 110 001. 110 001. 110 001. PAN : AAACD3525G. PAN : AAACD3525G. PAN : AAACD3525G. PAN : AAACD3525G. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M.L. DUJARI, CA. REVENUE BY : SMT. POO NAM KHAIRA SIDHU, CIT - DR. DATE OF HEARING : 19.02.2015 19.02.2015 19.02.2015 19.02.2015 DATE OF PRONOUNCEMENT : 04.03.2015 04.03.2015 04.03.2015 04.03.2015 ORDER ORDER ORDER ORDER PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA PER G.C. GUPTA, VP , VP , VP , VP : :: : THESE CROSS APPEALS BY THE ASSESSEE AND THE REVENU E FOR THE ASSESSMENT YEAR 2009-10 ARE DIRECTED AGAINST THE OR DER OF LEARNED CIT(A)-XIII, NEW DELHI DATED 18 TH JUNE, 2012. THESE ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. ITA-4723 & 4759/D/2012 2 ITA NO.4723/DEL/2012 ITA NO.4723/DEL/2012 ITA NO.4723/DEL/2012 ITA NO.4723/DEL/2012 ASSESSEES APPEAL : ASSESSEES APPEAL : ASSESSEES APPEAL : ASSESSEES APPEAL :- -- - 2. THE ONLY GROUND OF APPEAL RAISED BY THE ASSESSEE IS AS UNDER:- THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RENT AMOUNTING TO RS.36,69,920/-. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ISSUE IN THIS GROUND OF APPEAL IS COVERED IN FAVOUR OF THE A SSESSEE AS SIMILAR ADDITION OF DISALLOWANCE OF 50% OF PAYMENT OF RENT WAS MADE IN THE EARLIER ASSESSMENT YEARS 2002-03, 2003-04, 2004-05, 2005-06, 2006- 07, 2007-08 AND 2008-09. THE CIT(A) PARTLY ALLOWED THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE DISALLOWANCE WAS RESTRICTED TO THE AMOUNT OF `5 LAKHS IN EACH ASSESSMENT YEAR. AGAINST THE SAID ORDER OF THE CIT(A), THE REVENUE AS WELL AS ASSESSEE FILED SECOND APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL FOR THE AY 2002-03 HAS SE T ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER VIDE ITS ORDER DA TED 17 TH OCTOBER, 2008 WITH CERTAIN DIRECTIONS. HE SUBMITTED THAT SIMILAR LY, THE ISSUE OF DISALLOWANCE OF RENT WAS RESTORED TO THE FILE OF TH E ASSESSING OFFICER IN THE AY 2004-05. HE SUBMITTED THAT THE ASSESSING OF FICER, VIDE ORDER DATED 26 TH JUNE, 2013, HAS ACCEPTED THE CLAIM OF THE ASSESSEE AND, FOLLOWING THE DIRECTIONS OF THE TRIBUNAL, HAS ALLOW ED THE EXPENDITURE OF RENT IN FULL AND HAS FILED THE COPY OF THE ORDER OF THE ASSESSING OFFICER DATED 26 TH JUNE, 2013 PASSED UNDER SECTION 254 OF THE INCOME- TAX ACT, 1961 BEFORE THE TRIBUNAL. 4. LEARNED DR SUBMITTED THAT THE FACTS OF THE CASE OF THE ASSESSEE FOR THE EARLIER ASSESSMENT YEARS 2002-03 TO 2008-09 WERE SLIGHTLY DIFFERENT WITH THE FACTS OF THE ASSESSEE FOR THE RE LEVANT ASSESSMENT YEAR 2009-10. SHE SUBMITTED THAT IN THE EARLIER YE ARS, THE ITA-4723 & 4759/D/2012 3 DISALLOWANCE WAS RESTRICTED TO ONLY `5 LAKHS PER YE AR. SHE RELIED ON THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A) AND ALSO TH E ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 254 OF THE ACT DATED 26 TH JUNE, 2013 FOR EARLIER ASSESSMENT YEARS 2002-03 AND 2004- 05. WE FIND THAT THE ASSESSING OFFICER HAS ALLOWED THE ENTIRE CLAIM OF THE ASSESSEE WITH REGARD TO THE DEDUCTION OF RENT CLAIMED BY THE ASSE SSEE VIDE ITS ORDER DATED 26 TH JUNE, 2013 PASSED UNDER SECTION 254 OF THE ACT FOR THE EARLIER ASSESSMENT YEARS 2002-03 AND 2004-05. THE ASSESSING OFFICER HAS RECORDED THAT KEEPING IN VIEW THESE FACTS AND D ETAILS OF THE SPACE OCCUPIED ETC., THE PAST HISTORY AND IN ACCORDANCE W ITH THE DIRECTIONS OF THE ITAT, THE ENTIRE RENT PAID IS ALLOWABLE. IN TH ESE FACTS, WE ARE OF THE VIEW THAT THERE BEING NO MATERIAL DIFFERENCE IN THE FACTS OF THE CASE OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR 2009- 10 AS COMPARED TO THE FACTS OF THE CASE IN THE EARLIER ASSESSMENT YEARS, THE ENTIRE CLAIM OF RENT PAID IS ALLOWABLE AND, ACCORDINGLY, T HE GROUND OF APPEAL NO.1 OF THE ASSESSEE IS ALLOWED. ITA NO.4759/DEL/201 ITA NO.4759/DEL/201 ITA NO.4759/DEL/201 ITA NO.4759/DEL/2012 2 2 2 REVENUES APPEAL : REVENUES APPEAL : REVENUES APPEAL : REVENUES APPEAL :- -- - 6. THE GROUND OF APPEAL NOS.1, 2 & 3 OF THE REVENUE S APPEAL ARE AS UNDER:- 1. WHETHER LD. CIT(A) WAS CORRECT IN LAW TO DELETE THE ADDITION OF RS.1,56,66,615/- MADE BY THE AO IN RESP ECT OF SALARY EXPENSES? 2. WHETHER THE AMOUNT OF RS.1,56,66,615/- CLAIMED BY THE ASSESSEE AS SALARY EXPENSES WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS SO AS TO BE ELIGIBLE FOR DEDUCTION U/S 37(1) OF THE ACT? ITA-4723 & 4759/D/2012 4 3. WHETHER LD.CIT(A) WAS CORRECT IN LAW IN ALLOWING ENTIRE SALARY EXPENSES, ACCEPTING UNSUBSTANTIATED EXPLANATION OF THE ASSESSEE? 7. LEARNED DR SUBMITTED THAT THE DISALLOWANCE WAS M ADE OUT OF SALARY EXPENSES FOR THE DETAILED REASONS AS RECORDE D BY THE ASSESSING OFFICER IN PARAGRAPH 4 OF THE ASSESSMENT ORDER. SH E REFERRED TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVENUE. SHE RELIED ON THE ORDER OF THE ASSESSING OFFICER. 8. LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED THE SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF DELHI TRIBUNAL IN A SSESSEES OWN CASE FOR THE EARLIER AY 2002-03, 2004-05, 2005-06 & 2006 -07 DATED 17 TH OCTOBER, 2008 WHEREIN THE TRIBUNAL HAS UPHELD THE O RDER OF THE CIT(A) AND REVENUES APPEAL ON THIS ISSUE WAS DISMISSED. HE SUBMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTIC AL FOR THE RELEVANT ASSESSMENT YEAR AS THEY WERE FOR THE EARLIER ASSESS MENT YEARS 2002- 03, 2004-05, 2005-06 & 2006-07. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND T HAT THE CIT(A) HAS RECORDED IN HIS APPELLATE ORDER THAT SIMILAR ADDITI ONS WERE MADE IN THE AY 2002-03, 2004-05, 2005-06 & 2006-07 AND THE TRIB UNAL, VIDE ORDER DATED 17 TH OCTOBER, 2008, HAS UPHELD THE ORDER OF THE CIT(A) IN THESE ASSESSMENT YEARS WHO HAS DECIDED THE ISSUE IN FAVOU R OF THE ASSESSEE. THE CIT(A) HAS FURTHER RECORDED THAT THE FACTS OF T HE CASE OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR AND THE E ARLIER ASSESSMENT YEARS ARE THE SAME. THE CIT(A) HAS RECORDED THAT S INCE THE ISSUE HAS BEEN DECIDED BY BOTH THE CIT(A) AND BY THE JURISDIC TIONAL TRIBUNAL IN FAVOUR OF THE ASSESSEE FOR THE AY 2002-03, 2004-05, 2005-06 & 2006- ITA-4723 & 4759/D/2012 5 07 AND, THE FACTS AND CIRCUMSTANCES REMAIN THE SAME IN THIS ASSESSMENT YEAR ALSO, THE ISSUE IS DECIDED IN FAVOU R OF THE ASSESSEE AND THE DISALLOWANCE MADE IS DELETED. THERE BEING NO MISTAKE IN THE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND THE ISSUE BEING COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE TRI BUNAL IN ASSESSEES OWN CASE FOR EARLIER ASSESSMENT YEARS DETAILED ABOV E, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE AND THE GROUNDS OF APPEAL 1 TO 3 OF THE REVENUES APPEAL ARE DISMISSED. 10. GROUND OF APPEAL NO.4 RAISED BY THE REVENUE IS AS UNDER:- WHETHER LD.CIT(A) WAS CORRECT IN LAW TO DELETE THE ADDITION OF RS.28,97,213/- MADE BY THE AO ON ACCOUN T OF INTEREST ON INTER-CORPORATE BORROWINGS? 11. LEARNED DR SUBMITTED THAT THE DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST ON INTER-C ORPORATE BORROWINGS AND THE DETAILED REASONS THEREOF HAVE BEEN GIVEN IN PARAGRAPH 6 OF THE ASSESSMENT ORDER. SHE HAS REFERRED TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER IN SUPPORT OF THE CASE OF THE REVE NUE. 12. LEARNED COUNSEL FOR THE ASSESSEE HAS OPPOSED TH E SUBMISSIONS OF THE LEARNED DR. HE SUBMITTED THAT THE ISSUE OF DISALLOWANCE OF INTEREST ON INTER-CORPORATE BORROWINGS IS COVERED I N FAVOUR OF THE ASSESSEE WITH THE DECISION OF THE DELHI TRIBUNAL IN ASSESSEES OWN CASE FOR THE AY 1999-2000 AND IN SUBSEQUENT ASSESSMENT Y EARS INCLUDING AY 2005-06 & 2006-07. HE SUBMITTED THAT THE FACTS OF THE CASE OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR WERE IDEN TICAL WITH THE FACTS OF THE CASE OF THE ASSESSEE IN EARLIER ASSESSMENT Y EARS. HE SUBMITTED THAT THE DEPARTMENTS APPEAL FOR THE AY 1999-2000 B EFORE THE HON'BLE DELHI HIGH COURT WAS ALSO DISMISSED BY THE HONBLE HIGH COURT. ITA-4723 & 4759/D/2012 6 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND T HAT THE CIT(A) IN HIS APPELLATE ORDER HAS RECORDED THAT IDENTICAL DISALLO WANCE OF INTEREST WAS MADE IN THE EARLIER AY 1999-2000 AND ALSO IN SUBSEQ UENT ASSESSMENT YEARS INCLUDING AY 2005-06 AND 2006-07 AND THE SAME WAS DELETED BY THE CIT(A) AND DEPARTMENTS APPEALS AGAINST THE SAI D ORDER OF THE CIT(A) WERE DISMISSED BY THE ITAT. HE HAS FURTHER GIVEN A FINDING THAT THE ASSESSING OFFICER HAS NOT BROUGHT ANY ADVERSE M ATERIAL ON RECORD TO SUGGEST THAT THE INTEREST WAS NOT PAID FOR THE P URPOSE OF BUSINESS. THE REVENUES APPEAL BEFORE THE HON'BLE DELHI HIGH COURT FOR AY 1999- 2000 WAS DISMISSED BY THE HONBLE HIGH COURT. THE CIT(A) HAS CONCLUDED THAT SINCE THE FACTS AND CIRCUMSTANCES OF THE CASE DURING THIS YEAR WERE SIMILAR TO THOSE OF AY 1999-2000, 20 01-02, 2004-05, 2005-06 & 2006-07, THERE WAS NO SCOPE TO DEVIATE FR OM THE FINDING OF THE JURISDICTIONAL TRIBUNAL AND THE HONBLE HIGH CO URT. ACCORDINGLY, WE HOLD THAT THERE IS MERIT IN GROUND OF APPEAL NO.4 O F THE REVENUE, WHICH IS ACCORDINGLY DISMISSED. 14. GROUND NO.5 OF THE REVENUES APPEAL READS AS UN DER:- WHETHER LD.CIT(A) WAS CORRECT IN LAW TO DELETE THE ADDITION OF RS.3,62,976/- MADE BY THE ASSESSING OFF ICER ON A/C OF DISALLOWANCE OF LOSS DEBITED SUFFERED BY M/S DBFL, PF TRUST? 15. LEARNED DR HAS RELIED ON THE ORDER OF THE ASSES SING OFFICER. 16. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS BOUND BY CLAUSE 48 OF THE TRUST DEED WHEREBY IT HAS TO PAY THE INTEREST ON THE EMPLOYEES CONTRIBUTION TO EMPLOYEE S PROVIDENT FUND AND, THEREFORE, NO DISALLOWANCE OF THE INTEREST PAI D ON EMPLOYEES PROVIDENT FUND COULD BE MADE. ITA-4723 & 4759/D/2012 7 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE ORDER OF THE ASSESSING OFFICER AND THE CIT(A). WE FIND T HAT THE BASIC FACTS OF THE CASE ARE NOT IN DISPUTE. THE ASSESSEE, AS PER CLAUSE 48 OF THE RELEVANT RULES, WAS OBLIGED TO PAY INTEREST AT THE RATE OF 8.5% AS PRESCRIBED BY THE CENTRAL GOVERNMENT ON THE AMOUNT OF EMPLOYEES CONTRIBUTION TOWARDS THE PF. THUS, THE INTEREST PA ID BY THE ASSESSEE WAS WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE OF THE ASSESSEE COMPANY AND AS PER LAW APPLICABLE AND, THEREFORE, T HE SAME WAS AN ALLOWABLE EXPENDITURE AND WAS RIGHTLY ALLOWED BY TH E CIT(A). ACCORDINGLY, THE ORDER OF LEARNED CIT(A) ON THIS IS SUE IS CONFIRMED AND GROUND NO.5 OF THE REVENUES APPEAL IS DISMISSED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2015. SD/- SD/- ( (( ( T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR T.S. KAPOOR ) )) ) (G. (G. (G. (G. C. GUPTA C. GUPTA C. GUPTA C. GUPTA ) )) ) ACCOUNTANT ACCOUNTANT ACCOUNTANT ACCOUNTANT M MM M EMBER EMBER EMBER EMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. ASSESSEE : M/S DALMIA (BROS.) PVT.LTD., M/S DALMIA (BROS.) PVT.LTD., M/S DALMIA (BROS.) PVT.LTD., M/S DALMIA (BROS.) PVT.LTD., 2 22 2 ND NDND ND FLOOR, INDRAPRASTHA BUILDING, FLOOR, INDRAPRASTHA BUILDING, FLOOR, INDRAPRASTHA BUILDING, FLOOR, INDRAPRASTHA BUILDING, 21, BARAKHAMBA ROAD, NEW DELHI 21, BARAKHAMBA ROAD, NEW DELHI 21, BARAKHAMBA ROAD, NEW DELHI 21, BARAKHAMBA ROAD, NEW DELHI 110 001. 110 001. 110 001. 110 001. 2. REVENUE : DEPUTY COMMISSIONER OF INCOME TAX , DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE CIRCLE CIRCLE CIRCLE- -- -10(1), NEW D 10(1), NEW D 10(1), NEW D 10(1), NEW DELHI. ELHI. ELHI. ELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR