DCIT, New Delhi V. M/s. Interarch Building Products Pvt. Ltd., New Delhi

ITA 4986/DEL/2014

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 5778 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 11-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VANITA R SHARMA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Maximum Marginal Rate; Tangible material; Fair market value; Revenue expenditure; Capital Gains
• Section: 50C; 80IC; 80IC; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SH. BHAVNESH SAINI, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 3259/DEL/2013 : ASSTT. YEAR : 2009-10 ITA NO. 4986/DEL/2014 : ASSTT. YEAR : 2010-11 DCIT, CIRCLE-11(1), NEW DELHI VS M/S INTERARCH BUILDING PRODUCTS (P) LTD., FARM NO. 8, KHASRA NO. 56/2, DERA MANDI ROAD, MANDI VILLAGE, MEHRAULI, NEW DELHI-110047 (APPELLANT) (RESPONDENT) PAN NO. AAACI0106J ASSESSEE BY : SH. M. P. RASTOGI, ADV. REVENUE BY : MS. VANITA R. SHARMA, CIT DR DATE OF HEAR ING: 16 . 0 3 .20 2 1 DATE OF PRONOUNCEMENT: 26 .04 .20 2 1 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST THE ORDERS OF THE LD. CIT(A)-XV, NEW DELHI DATED 18.03.2013 AND 19.06.2014. 2. THE GROUNDS IN ITA NOS. 3259/DEL/2013 & 4986/DEL /2014 DEALS WITH THE ISSUE OF DESIGN CHARGES. THE AMOUNT OF TAX INVOLVED IN THE APPEAL OF THE REVENUE IS LESS THAN THE PRESCRIBED LIMIT OF THE CBDT, THE APPEAL OF THE REVENUE FOR TH E ASSESSMENT YEAR 2010-11 IS HEREBY DISMISSED. ITA NO. 3259/DEL/2013 ITA NO. 4986/DEL/2014 INTERARCH BUILDING PRODUCTS (P) LTD. 2 ITA NOS. 3259/DEL/2013: 3. DURING THE YEAR, THE ASSESSEE PAID RS.10.02 CR. ON ACCOUNT OF DESIGN CHARGES FOR T3 AIRPORT CONSTRUCTION. THE AO TREATED THE AMOUNT AS CAPITAL IN NATURE WHEREAS THE ASSESSE E CLAIMED IT UNDER THE REVENUE EXPENDITURE. THE AMOUNT HAS BEEN PAID BY THE ASSESSEE TO AN ENTITY NAMELY, M/S CORUS BUILDIN G SYSTEM LTD. FOR AVAILING THE SERVICES OF STRUCTURAL DESIGN & DRAWINGS. 4. THE LD. CIT (A) DELETED THE ADDITION HOLDING THA T THE EXPENDITURE ON ACCOUNT OF DRAWINGS DO NOT GIVE ANY ENDURING BENEFIT TO THE ASSESSEE. 5. BEFORE US, THE COUNSELS RELIED ON THE RESPECTIVE SUPPORTIVE ORDERS. 6. FROM THE RECORDS, WE FIND THAT THE AMOUNT HAS BE EN PAID BY THE ASSESSEE TO M/S CORUS TO PREPARE A DETAIL LA Y OUT, DRAWING OF THE CEILING FOR WHICH THE ASSESSEE WAS T HE EXECUTOR. THE PAYMENT WAS MADE FOR DESIGNING AND DETAILING SE RVICES FOR ROOFING SYSTEM IN RESPECT OF T3 TERMINAL AT IGAI, D ELHI FOR WHICH DIAL IS THE CONCESSIONAIRE. THE AMOUNT HAS BEEN PAI D FOR OBTAINING TECHNICAL SUPPORT, DRAWINGS & DESIGNS. TH E DESIGNS ARE SPECIFIC TO THE AIRPORT AND CANNOT BE REPLICATE D FOR ANY OTHER STRUCTURE OR INDUSTRIAL ESTABLISHMENT OTHER T HAN THE RGAI. THE ASSESSEE HAS NOT OBTAINED ANY CAPITAL ASSET BY THE WAY OF PAYMENT MADE TO M/S CORUS FOR DESIGNS. ITA NO. 3259/DEL/2013 ITA NO. 4986/DEL/2014 INTERARCH BUILDING PRODUCTS (P) LTD. 3 7. THE TESTS FOR DETERMINATION: (A) THE TEST OF ENDURING BENEFIT AS LAID DOWN IN BRITISH INSULATED AND HELSBY CABLES LTD. V. ATHERTON, 10 TA X CASES 155. EVEN THIS TEST MUST YIELD WERE THERE ARE SPECI AL CIRCUMSTANCES LEADING TO A CONTRARY DECISION. THERE MAY BE CASES WHERE EXPENDITURE, EVEN IF INCURRED FOR OBTAI NING ADVANTAGE OF ENDURING BENEFIT, MAY, NONE-THE-LESS, BE ON REVENUE ACCOUNT AND THE TEST ONE DURING BENEFIT MA Y BREAK DOWN. IT IS NOT EVERY ADVANTAGE OF ENDURING NATURE ACQUIRED BY AN ASSESSEE THAT BRINGS THE CASE WITHIN THE PRINCIP LE LAID DOWN IN THIS TEST. WHAT IS MATERIAL TO CONSIDER IS THE N ATURE OF THE ADVANTAGE IN A COMMERCIAL SENSE. THAT IT IS ONLY WH ERE THE ADVANTAGE IS IN THE CAPITAL FIELD THAT THE EXPENDIT URE WOULD BE DISALLOWABLE ON AN APPLICATION OF THIS TEST. IF THE ADVANTAGE CONSISTS MERELY IN FACILITATING THE ASSESSES'S TRA DING OPERATIONS OR ENABLING THE MANAGEMENT AND CONDU CT OF THE ASSESSES'S BUSINESS TO BE CARRIED ON MO RE EFFICIENTLY OR MORE PROFITABLY WHILE LEAVING THE FILED CAPITA L UNTOUCHED. THE EXPENDITURE WOULD BE ON REVENUE ACCOUNT, EVEN T HOUGH THE ADVANTAGE MAY ENDURE FOR AN INDEFINITE FUTURE. THE TEST OF ENDURING BENEFIT IN THEREFORE NOT A CERTAIN OR CONC LUSIVE TEST AND IT CANNOT BE APPLIED BLINDLY AND MECHANICALLY W ITHOUT REGARD TO THE PARTICULAR FACTS AND CIRCUMSTANCES OF F A GIVEN CASE. CIT VS. NCHANGA CONSOLIDATED COPPER MINES LTD . 58 ITR 241. (B) THE TEST BASED ON DISTINCTION BETWEEN FIXED AND CIRCULATING CAPITAL AS APPLIED IN JOHN SMITH AND SONS VS. MOORE , 12 TAX CASES, 266. SO LONG AS THE EXPENDITURE IN QUESTION CAN BE ITA NO. 3259/DEL/2013 ITA NO. 4986/DEL/2014 INTERARCH BUILDING PRODUCTS (P) LTD. 4 CLEARLY REFERRED TO THE ACQUISITION OF AN ASSET WHI CH FALLS WITHIN ONE OR THE OTHER OF THESE TWO CATEGORIES SUCH A TES T WOULD BE A CRITICAL ONE. BUT THIS TEST ALSO SOMETIMES BREAKS D OWN BECAUSE THERE ARE MANY FORMS OF EXPENDITURE WHICH DO NOT FA LL EASILY WITHIN THESE TWO CATEGORIES AND NOT INFREQUENTLY, T HE LINE OF DEMARCATION IS DIFFICULT TO DRAW AND LEADS TO SUBTL E DISTINCTIONS BETWEEN PROFIT THAT IS MADE 'OUT OF' ASSETS AND PRO FIT THAT IS MADE 'UPON' ASSETS OR 'WITH' ASSETS. MOREOVER, THERE MAY BE CASES WHERE EXPENDITURE THOU GH REFERABLE TO OR IN CONNECTION WITH FIXED CAPITAL IS NEVERTHELESS ALLOWABLE AS REVENUE EXPENDITURE E.G. EXPENDITURE I NCURRED IN PRESERVING OR MAINTAINING CAPITAL ASSETS. THIS TE ST IS THEREFORE CLEARLY NOT ONE OF UNIVERSAL APPLICATION. IT IS TRU E THAT IF DISBURSEMENT IS MADE FOR ACQUISITION OF A SOURCE OF PROFIT OR INCOME, IT WOULD ORDINARILY BE IN THE NATURE OF CAP ITAL EXPENDITURE. THE SOURCE OF PROFIT OR INCOME WAS THE PROFIT MAKING APPARATUS AND THIS REMAINED UNTOUCHED AND UN ALTERED. THERE WAS NO ENLARGEMENT OF THE PERMANENT STRUCTURE OF WHICH THE INCOME WOULD BE THE PRODUCE OR FRUIT. WHEN DEA LING WITH CASES WHERE THE QUESTION IS WHETHER EXPENDITURE INCURRED BY AN ASSESSES IS CAPITAL OR REVENUE EXPENDITURE, THE QUESTION MUST BE VIEWED IN THE LARGER CONTEXT O F BUSINESS NECESSITY OR EXPEDIENCY. IF THE OUTGOING EXPENDITUR E IS SO RELATED TO THE CARRYING ON OR THE CONDUCT OF THE B USINESS THAT IT MAY BE REGARDED AS AN INTERNAL PART OF THE PROFIT- EARNING PROCESS AND NOT FOR ACQUISITION OF AN AS SET OR A RIGHT OF A PERMANENT CHARACTER. THE POSSESSION OF WHICH I S A CONDITION OF THE CARRYING ON OF THE BUSINESS, THE E XPENDITURE MAY BE REGARDED AS REVENUE EXPENDITURE. ITA NO. 3259/DEL/2013 ITA NO. 4986/DEL/2014 INTERARCH BUILDING PRODUCTS (P) LTD. 5 8. RELYING ON THE ABOVE PROPOSITIONS CONSIDERED BY THE HONBLE SUPREME COURT IN THE CASE OF M/S EMPIRE JUT E COMPANY LTD. 124 ITR 1, WE HOLD THAT THE LD. CIT (A) HAS RI GHTLY ALLOWED THE DEDUCTION. LONG TERM CAPITAL GAINS: 9. IN THE INSTANT CASE, THE AO DOUBTED THE SALE VAL UE OF THE FLAT SOLD BY THE ASSESSEE AND REFERRED THE MATTER T O THE DVO TO DETERMINE THE SHARE MARKET VALUE. THE DVO DETERMINE D THE VALUE OF RS.2,06,46,000/- AGAINST THE SALE VALUE SH OWN BY THE ASSESSEE OF RS.1,05,00,000/-. 10. BEFORE THE LD. CIT (A), IT WAS SUBMITTED THAT T HE VALUE AS PER THE STAMP DUTY ON THE DATE OF SALE WAS RS.73,00 ,000/- WHILE THE ASSESSEE HAS SOLD THE PROPERTY FOR RS.1,0 5,00,000/-. THE LD. CIT (A) DELETED THE ADDITION. 11. WE HAVE PERUSED THE PROVISIONS OF SECTION 50C W HICH IS A SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION I N CERTAIN CASES. THE SAID SECTION READS AS UNDER: [ SPECIAL PROVISION FOR FULL VALUE OF CONSIDERATION IN CERTAIN CASES. 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER I N THIS SECTION REFERRED TO AS THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUT Y IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED O R ASSESSED [OR ASSESSABLE] SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF TH E ITA NO. 3259/DEL/2013 ITA NO. 4986/DEL/2014 INTERARCH BUILDING PRODUCTS (P) LTD. 6 CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF S UCH TRANSFER : [ PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATION FOR SUCH TRANSFER: PROVIDED FURTHER THAT THE FIRST PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION, O R A PART THEREOF, HAS BEEN RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT [OR THROUGH SUCH OTHER ELECTRONIC MODE AS MAY BE PRESCRIBED], ON OR BEFORE THE DATE OF THE AGREEMENT FOR TRANSFER:] [ PROVIDED ALSO THAT WHERE THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY DOES NOT EXCEED ONE HUNDRED AND [ FIVE ] PER CENT OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER, THE CONSIDERATION SO RECEIV ED OR ACCRUING AS A RESULT OF THE TRANSFER SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION.] (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB- SECTION (1), WHERE (A) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; (B) THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT BEEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MADE BEFORE ANY ITA NO. 3259/DEL/2013 ITA NO. 4986/DEL/2014 INTERARCH BUILDING PRODUCTS (P) LTD. 7 OTHER AUTHORITY, COURT OR THE HIGH COURT, THE ASSESSING OFFICER MAY REFER THE VALUATION OF TH E CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS MADE, THE PROVISIONS OF SUB- SECTIONS (2), (3), (4), (5) AND (6) OF SECTION 16A, CLAUSE (I) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A, SUB-SECTION (5) OF SECTION 24, SECTION 34AA, SECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957), SHALL, WI TH NECESSARY MODIFICATIONS, APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESSING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. [EXPLANATION 1].FOR THE PURPOSES OF THIS SECTION, 'VALUATION OFFICER' SHALL HAVE THE SAME MEANING AS IN CLAUSE (R) OF SECTION 2 OF THE WEALTH-TAX ACT, 1957 (27 OF 1957). [EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, T HE EXPRESSION 'ASSESSABLE' MEANS THE PRICE WHICH THE STAMP VALUATION AUTHORITY WOULD HAVE, NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN ANY OTHER LAW FOR THE TIME BEING IN FORCE, ADOPTED OR ASSESSED, IF IT WERE REFERRED TO SUCH AUTHORITY FOR THE PURPOSES OF THE PAYMENT OF STAMP DUTY.] (3) SUBJECT TO THE PROVISIONS CONTAINED IN SUB- SECTION (2), WHERE THE VALUE ASCERTAINED UNDER SUB- SECTION (2) EXCEEDS THE VALUE ADOPTED OR ASSESSED [ OR ASSESSABLE] BY THE STAMP VALUATION AUTHORITY REFERR ED TO IN SUB-SECTION (1), THE VALUE SO ADOPTED OR ASSESSED [OR ASSESSABLE] BY SUCH AUTHORITY SHALL BE TAKEN AS THE FULL VALUE OF THE CONSIDERATION RECEIV ED OR ACCRUING AS A RESULT OF THE TRANSFER.] 12. ON GOING THROUGH THE PROVISION, WE HEREBY HOLD THAT THE VALUE DETERMINED BY THE STAMP DUTY AUTHORITIES OR C ONSIDERATION SO RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER TO THE ASSESSEE WHICHEVER IS MORE, SHALL BE THE VALUE OF T HE PROPERTY. HENCE, THE AUTHORITIES ARE HEREBY DIRECTED TO COMPU TE THE ITA NO. 3259/DEL/2013 ITA NO. 4986/DEL/2014 INTERARCH BUILDING PRODUCTS (P) LTD. 8 CAPITAL GAINS TAKEN INTO CONSIDERATION, THE SALE VA LUE OF RS.1,05,00,000/-. THE AO MAY RE-VERIFY THE VALUE OF THE PROPERTY FROM THE REGISTRATION AUTHORITIES TO CONFI RM THE VALUE AS SUBMITTED BY THE ASSESSEE OF RS.73,00,000/- AND TAKE ACTION ONLY IF FOUND CONTRA. 13. THE APPEAL OF THE ASSESSEE ON THIS GROUND IS AL LOWED. DEDUCTION U/S 40A(2)(B): 14. WE HAVE GONE THROUGH THE ORDER OF THE ASSESSING OFFICER AND THAT OF THE LD. CIT (A) WITH REGARD TO THE DISA LLOWANCE U/S 40A(2)(B). THE RELEVANT PART OF THE ORDER OF THE LD . CIT (A) ON THIS ISSUE PERTAINING TO PAYMENTS MADE TO MR. ARVIN D NANDA, WITH REGARD TO THE VEHICLE PURCHASE, PAYMENT MADE T O M/S INTERTEC ON ACCOUNT OF JOB WORK AND THE RENTAL PAYM ENTS HAS BEEN EXAMINED. FOR THE SAKE OF READY REFERENCE, THE RELEVANT PART OF THE ORDER IS REPRODUCED AS UNDER: 6.4 REGARDING GROUND NO.3 OF THE APPEAL RELATING T O DISALLOWANCE UNDER SECTION 40 A(2)(B), I FIND THAT THE LD. AO HAS IDENTIFIED CERTAIN PAYMENTS AGGREGATING TO RS.2 .29 CRORES IN RESPECT OF CERTAIN 'RELATED PERSONS' AND OUT OF WHI CH HAD DISALLOWED CERTAIN PAYMENTS AGGREGATING TO RS.13.86 LAKHS. REGARDING THE DISALLOWANCE IN RESPECT OF PURCHASE P RICE FOR VEHICLE OF RS.1,66,673/-, TO MR. ARVIND NANDA THE L D. AO HAS OBSERVED THAT 'IT APPEARS THAT BOTH THE VEHICLES WO ULD NOT HAVE BEEN IN GOOD CONDITION WHICH PROMPTED MR. NANDA TO TRANSFER THOSE VEHICLES TO THE ASSESSES COMPANY AT THE SAME COST AND IN THE SAME YEAR THEREBY SHIFTING THE LOSS IF ANY, IS TO BE ARISEN ON ACCOUNT OF BAD CONDITION OF THE VEHICLE'. THE SUBMI SSIONS OF THE APPELLANT WAS THAT IN VIEW OF THE RESTRICTION ON RE GISTRATION OF 6 SEATER VEHICLES IN THE NAME OF A COMPANY OTHER THAN THE ONE ENGAGED IN TRANSPORT BUSINESS, DUE TO THE PROVISION S OF THE ITA NO. 3259/DEL/2013 ITA NO. 4986/DEL/2014 INTERARCH BUILDING PRODUCTS (P) LTD. 9 MOTOR VEHICLE ACT, THE APPELLANT WAS COMPELLED TO P URCHASE THE VEHICLES IN THE NAME OF THE DIRECTOR, WHICH WAS SOL D TO THE APPELLANT ON THE SECOND DAY BY HIM. I FIND THAT THE OBSERVATIONS OF THE LD. AO ARE VAGUE AND PRESUMPTUOUS IN THE ABS ENCE OF ANY EVIDENCE IN SUPPORT OF HIS ARGUMENT. BOTH MR. A RVIND NANDA AND APPELLANT COMPANY ARE CHARGEABLE TO TAX AT THE MAXIMUM MARGINAL RATE. HENCE, THERE WAS NO QUESTION OF ANY TAX AVOIDANCE IN THIS REGARD. THUS, IT IS HELD THAT THE PAYMENT MADE WAS NEITHER UNREASONABLE NOR EXCESSIVE, CALLING FOR DISALLOWANCE UNDER SECTION 40A(2)(B). 6.4.2 REGARDING DISALLOWANCE OUT OF PURCHASE PRICE PAID TO M/S INTERTEC, A RELATED FIRM, THE APPELLANT HAD FURNISH ED DETAILED SUBMISSIONS WHICH SHOWS THAT SUCH PAYMENTS WERE AT ARM'S LENGTH. THERE WAS NO EVIDENCE FURNISHED BY THE LD. AO AS TO WHY SUCH PURCHASE PRICE WAS HIGHER THAN THE PREVAIL ING MARKET PRICE AND NO EXAMPLES OF COMPARATIVE PRICES WERE CI TED. IN VIEW OF THE SAME, THE ADDITION BASED ON DISALLOWANCE MAD E BY THE LD. AO IS LIABLE TO BE DELETED. 6.4.3 REGARDING THE DISALLOWANCE IN RESPECT OF RENT PAID TO M/S INTERTEC (FIRM), THE LD. AO HAS DISALLOWED AN AMOUN T OF RS.80,000/- ON THE GROUND THAT THE APPELLANT HAD NO T SUBMITTED COMPARATIVE RATES IN THE SAME LOCATION, WHERE THE P REMISES ARE SITUATED. THE DETAILED SUBMISSION OF THE APPELLANT SHOW THAT THE APPELLANT HAD TO HIRE THE FACTORY PREMISES TO REDUC E ITS COST OF MANUFACTURING AND TO CATER TO THE WORKLOAD. THE FAC TORY OWNED BY M/S INTERTEC (FIRM) WAS ADJOINING THE FACTORY PR EMISE OF THE APPELLANT AND THEREFORE, HIRING OF SUCH PREMISES WA S IN THE ADMINISTRATIVE AND FUNCTIONAL PRUDENCE OF THE APPEL LANT COMPANY. MOREOVER, M/S INTERTEC (FIRM) AND THE APPE LLANT COMPANY BOTH ARE ENTITLED FOR DEDUCTION UNDER SECTI ON 80IC AND THEREFORE, THERE IS NO TAX AVOIDANCE ANGLE. THE APP ELLANT HAS ALSO EXPLAINED ABOUT THE JOB WORK PAYMENT TO M/S IN TERTEC (FIRM). THE LD. AO COULD NOT FURNISH ANY EVIDENCE A S TO HOW SUCH CHARGES WERE HIGHER COMPARED TO THE FAIR MARKE T VALUE OR WHETHER ANY UNDUE BENEFIT WAS PASSED ON TO THE RELA TED PERSON FOR SUCH PAYMENT. ITA NO. 3259/DEL/2013 ITA NO. 4986/DEL/2014 INTERARCH BUILDING PRODUCTS (P) LTD. 10 6.4.4 REGARDING THE DISALLOWANCE OF RENTAL PAYMENT FOR PROVIDING ACCOMMODATION TO THE TWO DIRECTORS, IT WA S INFORMED THAT THE VALUE OF THE RENT FREE ACCOMMODATION HAS B EEN OFFERED AS PERSEQUITE FOR TAXATION BY THE TWO DIRECTORS. FU RTHER, THE AMOUNTS OF RS.3.60 LAKHS AND RS.3.00 LAKHS PER ANNU M RESPECTIVELY, KEEPING IN VIEW THE HIGH LEVEL OF REM UNERATION PAID TO THE DIRECTORS CANNOT BE HELD AS EXCESSIVE O R UNREASONABLE. IN VIEW OF THIS, THE ADDITION MADE ON THIS GROUND IS ALSO DELETED. 15. ON GOING THROUGH THE ENTIRE FACTUM OF THE CASE, WE FIND THAT THE DISALLOWANCES ARE PURELY HYPOTHETICAL WITH OUT BRINING ANY TANGIBLE MATERIAL TO PROVE THAT THE PAYMENTS AR E OVER AND ABOVE THE MARKET RATES. HENCE, WE HEREBY DECLINE TO INTERFERE WITH THE ORDER OF THE LD. CIT (A). 16. AS A RESULT, BOTH THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/04/2021. SD/- SD/- (BHAVNESH SAINI) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACC OUNTANT MEMBER DATED: 26/04/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR