DCIT, New Delhi V. M/s Sahara India Financial Corporation Ltd., Lucknow

ITA 5001/DEL/2010

• Counselvise Citation: 500120114 RSA 2010
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 11-04-2013
• Assessment Year: 1995-1996
• Appeal Filed On: 12-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: A K MISHRA
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.5001/DEL/2010 ASSESSMENT YEAR : 1995-96 DCIT, M/S SAHARA INDIA FINANCIAL CENTRAL CIRCLE-6, CORPORATION LTD., NEW DELHI. V. 1-KAPOORTHALA COMPLEX, ALIGANJ, LUCKNOW. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY VOHRA, ADVOCATE. RESPONDENT BY : SHRI A.K. MISHRA, CIT-DR ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) DATED 31.8.2010. THE GROUNDS RAISED BY THE RE VENUE ARE AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN:- 1. THE ORDER OF THE LD CIT(A) IS NOT CORRECT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT( A) HAS ERRED IN ALLOWING RELIEF OF ` .34,69,78,545/- BY REDUCING IT FROM THE TAXABLE INCOME AFTER GIVING APPEAL EFFECT TO THE OR DER OF LD CIT(A) U/S 251 OF THE INCOME TAX ACT, 1961 . ITA NO5001/DEL/2010 2 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND AN Y/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT RETURN OF INC OME WAS FILED BY THE ASSESSEE SHOWING LOSS OF ` .26,81,4,643/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING ASSESSMENT PROCEEDINGS, T HE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD CLAIMED SERVICE CHARGES @ 2% OF TOTAL DEPOSITS MOBILIZED AMOUNTING TO ` .10,17,21,116/- AND FURTHER REIMBURSEMENT OF EXPENSES AMOUNTING TO ` .69,19,57,090/- TOTALING ` .79,36,78,206/-. THE ASSESSING OFFICER FURTHER OBSERVED THAT ENTIRE SERVICE CHARGES OF ` .10,17,21,116/- WERE CHARGED BY THE ASSESSEE TO ITS P&L ACCOUNT WHEREAS OUT OF TOTAL REIMBUR SEMENT OF ` .69,19,57,090/-, THE ASSESSEE HAD DEBITED 50% OF SAME AM OUNTING TO ` .34,59,75,545/- IN P&L A/C AND BALANCE 50% WAS SHOWN IN THE BALANCE SHEET UNDER THE HEAD UNEXPIRED BENEFIT ACCRUAL ACCOU NT. WHILE PREPARING COMPUTATION OF INCOME, THE ASSESSEE HAD CLAIM ED AMOUNT OF ` .34,59,78,545/- ALSO WHICH WAS SHOWN IN THE BALANCE SH EET UNDER THE UNEXPIRED BENEFIT ACCRUAL ACCOUNT. THE ASSESSING OFFICE R COMPLETED THE ASSESSMENT U/S 143(3) AND ALLOWED EXPENDITURE OF ONL ` .15,25,81,673/- BEING 3% OF TOTAL AMOUNT MOBILIZED BY THE ASSESSEE AND THEREFORE COMPUTED DISALLOWANCE OF ` .64,10,96,533/-. THE ASSESSING OFFICER, HOWEVER, WHILE COMPUTING THE ASSESSED IN COME OF THE ASSESSEE STARTED WITH THE NET PROFIT AS PER P&L A/C I N WHICH A SUM OF ` .34,59,78,545/- WAS DEBITED AND THEREFORE RESTRICTED THE DISALLOWANCE TO ` .29,51,17,988/- INSTEAD OF ` . 64,10,96,533/- AS REMAINING AMOUNT OF ` .34,59,78,545/- WAS NOT DEBITED IN P&L ACCOUNT. 3. ON APPEAL, THE LD CIT(A) ALLOWED RELIEF OF ` .29,51,17,988/-. THE ASSESSING OFFICER GAVE APPEAL EFFECT AND ALLOWED DEDUCT ION OF ITA NO5001/DEL/2010 3 ` .29,51,17,988/- THEREFORE AS PER ASSESSEE, THE ASSESSING OFF ICER, DID NOT CONSIDER CLAIM OF ` .34,59,78,545/- WHICH WAS CLAIMED BY THE ASSESSEE IN THE COMPUTATION OF INCOME. THE ASSESSEE FILED A PPLICATION BEFORE LD CIT(A) U/S 154 OF THE ACT TO SEEK CLARIFICA TION AS TO WHETHER THE RELIEF GRANTED BY THE LD CIT(A) WAS FOR FULL AMO UNT OF ` .79,36,78,206/- OR FOR ` .29,51,17,988/-. THE LD CIT(A) DISPOSED OFF THE ABOVE RECTIFICATION APPLICATION STATING THEREIN THAT VIDE ORDER DATED 15.3.1999 RELIEF OF THE ENTIRE AMOUNT OF ` .79,36,78,206/- WAS GRANTED TO THE ASSESSEE & THERE WAS NO MISTAKE APPARENT FROM RECO RD AND CONCLUDED AS UNDER:- IN VIEW OF THE ABOVE, IT IS CLEAR THAT THE TOTAL CL AIM MADE BY YOU HAVE ALREADY BEEN ALLOWED BY ME AND THERE IS NO QUEST ION OF FURTHER RELIEF. AS THE ASSESSING OFFICER HAS NOT CONSIDERE D THE PART OF YOUR CLAIM WHICH WAS NOT DEBITED BY YOU TO T HE P&L ACCOUNT, THE ADDITION MADE IN THE COMPUTATION OF IN COME WAS DIFFERENT. BUT THIS DOES NOT MEAN THAT THERE IS A MISTA KE IN THE ORDER PASSED BY ME WHICH IS TO BE RECTIFIED BY THE UND ERSIGNED. IN CASE THE ASSESSING OFFICER DOES NOT GIVE THE PROPER AP PEAL EFFECT TO THE ORDER PASSED BY, YOU MAY APPROACH THE A DD. CIT(CENTRAL), LUCKNOW OR CIT (CENTRAL), KANPUR FOR ISSUE OF NECESSARY DIRECTIONS TO THE CONCERNED ASSESSING OFFICER. THEREFORE, THE ASSESSEE FILED APPLICATION BEFORE ASSESSING OFFICER US/ 154 OF THE ACT SEEKING RECTIFICATION OF APPEAL EFFEC T ORDER DATED 30.3.1999. THE ASSESSING OFFICER PASSED THE IMPUGNED ORD ER U/S 154 OF THE ACT REJECTING THE ABOVE RECTIFICATION APPLICATI ON FILED BY THE ASSESSEE. ON APPEAL AGAINST THE SAID ORDER U/S 154, THE L D CIT(A) PASSED ORDER THEREBY GIVING CERTAIN DIRECTIONS TO THE ASSESSING OFFICER TO MODIFY THE APPEAL EFFECT ORDER DATED 30.3.1999. AGAINST THE ORDER OF ITA NO5001/DEL/2010 4 LD CIT(A) THE DEPARTMENT FILED APPEAL BEFORE ITAT A ND THE MATTER WAS SET ASIDE TO THE FILE OF ASSESSING OFFICER WITH THE DIREC TION TO PASS SPEAKING ORDER AND THEREFORE FINALLY THE LD CIT(A) B Y WAY OF A SPEAKING ORDER DIRECTED THE ASSESSING OFFICER TO ALLOW DEDUCTION OF ` .34,59,78,545/-. 4. AT THE OUTSET, THE LD DR NARRATED THE FACTS OF THE CASE AND TOOK US TO PARA 64 PLACED AT PAGE 135 OF PAPER BOOK AND I NVITED OUR ATTENTION TO THE FACT THAT LD CIT(A)S ORDER DATED 1 5.3.99 CLEARLY STATED THAT ADDITION OF ` .29,,51,17,98/- STANDS DELETED AND THEREFORE THE ASSESSING OFFICER GAVE APPEAL EFFECT OF THE SAME AMOUNT. CONTINUING HIS ARGUMENTS THAT AGAINST THE SAID ORDER OF ASSESSING OFFI CER, THE ASSESSEE FILED APPLICATION U/S 154 WITH LD CIT(A) TO SEEK CLARIFICATION AS TO WHETHER THE RELIEF WAS FOR FULL AMOUNT OF ` .79,36,78,206/- OR FOR ` .29,51,17,98/- AND THE SAME WAS REJECTED BY THE LD CI T(A) HOLDING THAT THERE WAS NO MISTAKE IN THE ORDER AND IN THIS RESP ECT OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 135 WHEREIN RELIEF OF ` .29.51 CRORES WAS MENTIONED INSTEAD OF ` .64.10 CRORES. HE FURTHER STATED THAT LD CIT(A) AFTER GETTING CASE BACK FROM ITAT ADJUDICATED AGAIN AND ALLOWED THE REMAINING AMOUNT OUT OF ` .34,69,78,545/- WHICH WAS WRONG AS THERE WAS NO MISTAKE APPARENT FROM RECORD. RELIANCE I N THIS RESPECT WAS PLACED ON THE FOLLOWING CASE LAWS:- 1. BALARAM (T.S.), ITO V. VOLKART BROTHERS 82 ITR 50 (SC) 2. M.M.N.D. MUTHIAH RAJASABAI V. CONTROLLER OF EST ATE DUTY (KERALA HIGH COURT). 240 ITR 650 (MAD.). 5. THE LD AR, ON THE OTHER HAND, FILED A CHART SHOWI NG CHRONOLOGICAL EVENTS. PARA 59 & 60 OF PAGE 132 OF APPELLATE ORDER DATED 15.3.1999 WERE READ AND SIMILARLY PARA 63 AT PAGE 133 WAS READ. SIMILARLY OUR ATTENTION WAS INVITED TO COMPUTATION OF INCOME PLACE D AT PAPER BOOK ITA NO5001/DEL/2010 5 PAGE 2 & 3 AND IT WAS BROUGHT TO OUR NOTICE THAT THE ASSESSEE HAD CLAIMED AN AMOUNT OF ` .34,59,78,545/- ONLY IN THE COMPUTATION OF INCOME WHICH WAS NOT CONSIDERED BY THE ASSESSING OFFICER WHILE GIVING APPEAL EFFECT TO THE ORIGINAL APPELLATE ORDER. 6. THE LD DR IN HIS REJOINDER SUBMITTED THAT LD CIT(A ) CLEARLY STATES THAT THERE IS NO MISTAKE IN THE ORDER AND THEREFORE L D CIT(A) HAS WRONGLY GIVEN THE RELIEF. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT DISPUTE AROSE BETWEEN THE PARTIES BECAUSE OF THE FACT T HAT ASSESSEE HAD CLAIMED 50% OF REIMBURSEMENT EXPENSES IN THE P&L A CCOUNT AND 50% AMOUNTING TO ` .34,59,78,545/- WERE CLAIMED IN THE COMPUTATION OF INCOME. WHILE COMPLETING ASSESSMENT U/S 143(3), THE ASSESSIN G OFFICER COMPUTED THE DISALLOWANCE AT `.29,51,17,988/-. THE D ISALLOWANCE WAS CALCULATED AFTER CONSIDERING THE FACT THAT ASSESSEE HAD NOT CLAIMED ENTIRE EXPENDITURE IN THE P&L ACCOUNT. THE FINDINGS OF ASSESSING OFFICER ARE CONTAINED IN PARA 4.8. OF ASSESSMENT ORDER WHICH READS AS UNDER:- MOREOVER REIMBURSEMENT OF EXPENSES TO AGENT FIRM FALL U/S 40A(2) AS WELL AS SEC.37(1) OF THE INCOME TAX ACT, 19 61. TOTAL DEPOSITS COLLECTED DURING THE YEAR FOR ASSESSEE COMPANY A RE OF ` .508,60,55,784/-. IN ORGANIZATION LIKE POST OFFICE, LIC, UTI, ETC. THE EXTENT OF EXPENSES INCURRED FOR MOBILIZING DEPOSIT IS ABOUT 1%. WHILE IN OTHER CASES OF ASSESSEES LINE OF BUSINESS SUCH EXPENSES REMAIN UP TO 2% OF DEPOSITS COLLECTED. SO, IN ALL FAIRNESS EXPENSES @ 3% OF DEPOSITS COLLECTED IS CONSIDERED MOST REASONABLE AND ALLOWED. SO ALLOWABLE EXPENSES @ 3% WOR K OUT TO ` .15,25,81,675/- AS AGAINST ` .79.98,76,204/- CLAIMED BY THE ASSESSEE. THUS BALANCE EXPENSES TO THE TUNE OF ` .64,10,96,533/- ITA NO5001/DEL/2010 6 ARE DISALLOWED. HOWEVER, SINCE TOTAL AMOUNT DEBITED T O P&L ACCOUNT IS ` .44,76,99,661/- ( ` .34,59,78,545/- + ` .10,17,81,116/-, ADDITION IN COMPUTATION OF INCOME WILL BE MADE AT ` .29,51,17,988/- ( ` .44,,76,99,661/- - ` .15,25,81,875/-. FROM THE ABOVE FINDINGS OF ASSESSING OFFICER, WE FIND TH AT THE ASSESSING OFFICER DID NOT DISALLOW THE FULL DISALLOWANCE OF ` .64,10,96,533/- BUT INSTEAD DISALLOWED ONLY ` .29,51,17,988/- I.E. AFTER EXCLUDING ` .34,59,75,545/.- BEING THE AMOUNT CLAIMED IN THE COMPUTATION OF INCOME. ON APPEAL, THE LD CIT(A) ALL OWED THE APPEAL OF ASSESSEE AND DELETED THE DISALLOWANCE OF ` .29,51,17,988/-. THEREFORE, IN ASSESSMENT ORDER WHATEVER AMOUNT WAS DISALLOWED WAS ALL OWED BY LD CIT(A) BUT SINCE THE ASSESSING OFFICER STARTED HIS COM PUTATION IN THE ASSESSMENT ORDER FROM THE PROFIT AS PER P&L ACCOUNT, THE REFORE, THE CLAIM OF THE ASSESSEE MADE IN THE COMPUTATION OF INCOME AMOUNTING TO ` .34,59,78,545/- REMAINED UNADJUSTED. THE ASSESSING OFFIC ER IN THE ORIGINAL ASSESSMENT ORDER DID NOT GIVE CREDIT FOR CLAI M OF THIS AMOUNT AS HE STARTED FOR MAKING COMPUTATION OF INCOME BY TAK ING FIRST FIGURE AS PER P&L ACCOUNT. HAD ASSESSEE CLAIMED FULL CLAIM IN P &L ACCOUNT, THE ASSESSED INCOME OF THE ASSESSEE WOULD HAVE BEEN LOWER B Y THE SAME AMOUNT. THE LD CIT(A) AFTER CAREFULLY ANALYZING THE FACTS OF THE CASE HAD RIGHTLY ALLOWED THE APPEAL OF ASSESSEE AND WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A). 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 9. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH DAY O F OCTOBER, 2013. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 11.10.2013. HMS ITA NO5001/DEL/2010 7 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). DATE OF HEARING 01.10.2013 DATE OF DICTATION 3.10..2013 DATE OF TYPING 3.10.2013 DATE OF ORDER SIGNED BY 11.10.2013 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.