ACIT CC-3, V. A.B. Hotels Ltd,

ITA 5016/DEL/2007

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 6253 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 27-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BATINA KAUSHIK
• Keywords: Depreciation; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA : VICE PRESIDENT AN D SHRI D.R. SINGH : JUDICIAL MEMBER ITA NO. 4804/DEL/07 A.Y. 2003-04 A.B. HOTELS LTD., VS. DCIT, CIRCLE 1(1), (RADISSON HOTEL) NEW DELHI. NATIONAL HIGHWAY-8, NEW DELHI-110001. AND ITA NO. 5016/DEL/07 A.Y. 2003-04 DCIT, CIRCLE 1(1), VS. A.B. HOTELS LTD., NEW DELHI. (RADISSON HOTEL) NATIONAL HIGHWAY-8, NEW DELHI-110001. PAN/ GIR NO. AAACA 2729B (APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI RAJESH MALHOTRA CA REVENUE BY : MS. BATINA KAUSHIK SR. DR O R D E R PER G.E. VEERABHADRAPPA, V.P : THESE CROSS APPEALS ARISE OUT OF THE ORDER DATED 24 -9-2007 OF THE CIT(A) FOR A.Y. 2003-04. BOTH THE APPEALS WERE HEAR D TOGETHER AND ARE BEING DISPOSED OFF BY A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. GROUNDS TAKEN BY THE ASSESSEE IN ITS APPEAL ARE AS UNDER: 2 1. THE LEARNED CIT(APPEALS)-IV, NEW DELHI HAS ERRE D IN FACT IN CONFIRMING THE ADDITION OF RS. 62,32,273/- MADE BY DCIT, CIRCLE 1(1), NEW DELHI BY APPLYING THE PROVISIONS OF SECTI ON 40(A)(I) OF THE INCOME-TAX ACT ON COMMISSION PAID TO PARTIES OU TSIDE INDIA, WHICH IS BAD IN LAW. 2. THE LEARNED CIT(APPEALS)-IV, NEW DELHI HAS ERRED IN FACT IN CONFIRMING THE ACTION OF ACIT, CIRCLE 1(1), NEW DEL HI WITH REGARD TO TREATMENT OF RENTAL INCOME OF RS. 4,14,59,186/- AS INCOME FROM OTHER SOURCES, WHICH IS BAD IN LAW. THE LEARNED CIT (APPEALS)-IV, NEW DELHI IS ALSO NOT JUSTIFIED ON DISALLOWING THE ASSESSEES CLAIM ON DEPRECIATION ON THE AFORESAID PROPERTY ON THE GR OUND THAT SAME WAS NOT CLAIMED IN THE RETURN OF INCOME. 3. THE ONLY EFFECTIVE GROUND TAKEN BY THE REVENUE IN ITS APPEAL IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW D EPRECIATION ON THAT PART OF BUILDING WHICH WAS LET OUT EVEN THOUGH THE ASSES SEE IS NOT THE OWNER OF THE BUILDING AND INCOME FROM RENT HAS BEEN ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES 4. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VER Y OUT SET CONTENDED THAT THE ISSUES INVOLVED IN THESE APPEALS ARE SQUARELY C OVERED BY THE EARLIER ORDER OF THE ITAT IN ASSESSEES OWN CASE FOR A.Y. 1999-20 00 TO 2002-03. IN SUPPORT, A COPY OF TRIBUNALS CONSOLIDATED ORDER DA TED 22-8-2008 IN ITA NOS. 491/DEL/03 & 778/DEL/06 FOR AY 1999-2000 AND 2 002-03; AND ITA NOS. 2397/DEL/04 & 130/DEL/05 FOR A.Y. 2000-01 & 20 01-02. HAS BEEN PLACED ON RECORD. THE LEARNED COUNSEL SUBMITTED THA T FACTS AND CIRCUMSTANCES OF THE CASE REMAINING THE SAME, THE V ERY SAME VIEW BE TAKEN FOR THE ASSESSMENT YEAR IN QUESTION ALSO. 5. THE LEARNED DR, COULD NOT CONTROVERT THE AFORESA ID FACTUAL POSITION. HE HOWEVER, SUBMITTED THAT THE DEPARTMENT HAS NOT G IVEN UP ITS STAND. 3 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE ENTIRE MATERIAL ON RECORD. 7. AS REGARDS GROUND NO. 1, IN ASSESSEES APPEAL, DURING ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT ASSESSEE HAD DEBIT ED RS. 62,32,273/- IN ITS P&L A/C ON ACCOUNT OF COMMISSION PAID TO FOREIG N COLLABORATORS/ FOREIGN TRAVEL AGENTS. HE ALSO OBSERVED THAT ASSESSEE HAD N OT DEDUCTED TDS NOR OBTAINED CERTIFICATE FOR NON-DEDUCTION OF TDS FROM APPROPRIATE AUTHORITIES. HE, THEREFORE, INVOKING THE PROVISIONS OF SEC. 40(A )(I), ADDED THE AMOUNT OF COMMISSION OF RS. 62,32,273/- PAID TO FOREIGN AGENT S AND FOREIGN COLLABORATORS TO THE TOTAL INCOME OF THE ASSESSEE. IN APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE AO. AGGRIEVED, THE ASSE SSEE IS IN APPEAL BEFORE US. 8. WE FIND THAT IDENTICAL ISSUE CAME UP FOR CONSIDE RATION BEFORE THE ITAT FOR A.Y. 1999-2000, WHEREIN THE ITAT VIDE ITS ORDER DATED 22-8-08 (SUPRA) HAS OBSERVED IN PARA 17 THAT THE SCOPE OF C HARGING OF TAX UNDER THE ACT IS ONLY IN RESPECT OF INCOME RECEIVED ACCRUED O R DEEMED TO ACCRUE IN INDIA. THE TRIBUNAL THEREIN OBSERVED THAT IN THE CA SE OF ASSESSEE NO SERVICES WERE PERFORMED OR RENDERED IN INDIA BY THE NON-RESI DENT COMMISSION AGENTS TO WHOM COMMISSION HAVE BEEN PAID IN INDIA, THOUGH THE BENEFIT OF SUCH BOOKING MAY BE OBTAINED IN INDIA BY THE ASSESSEES CUSTOMERS OR CLIENT AND THEREFORE NO INCOME ACCRUED OR AROSE OR DEEMED TO H AVE ACCRUED OR AROSE TO THE NON-RESIDENT AGENTS IN INDIA. ACCORDINGLY, THE ITAT DELETED THE DISALLOWANCE MADE BY THE REVENUE AUTHORITIES. AS STATED ABOVE, FACTS OF THE CASE FOR THE PRESENT YEAR ARE IDENTICAL TO THOSE FO UND IN AY 1999-2000. THEREFORE, FOR THE VERY SAME REASONS AS IN A.Y. 199 9-2000 WE ALLOW THE GROUND TAKEN BY THE ASSESSEE AND DELETE THE ADDITI ON OF RS. 62,32,273/-. 4 9. AS REGARDS GROUND NO. 2 RAISED BY THE ASSESSEE I S CONCERNED, WE FIND THAT IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFO RE THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 1999-2000 & 2002-03 (S UPRA), WHEREIN THE ITAT HAS CONCLUDED THAT THE RENTAL INCOME DERIVED BY THE ASSESSEE FROM COMMERCIAL COMPLEX CONSTRUCTED BY THE ASSESSEE ON L EASEHOLD LAND IS TO BE ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND DIRECTED THE AO TO ALLOW NECESSARY DEDUCTIONS OR ALLOWANCE AS MAY B E ADMISSIBLE UNDER THE LAW, ON ASSESSMENT UNDER THE HEAD INCOME FROM HOUS E PROPERTY. FACTS AND CIRCUMSTANCES OF THE CASE FOR THE ASSESSMENT YEAR N QUESTION REMAINING THE SAME, AS IN THOSE YEARS, WE DIRECT THE AO TO GIVE S AME TREATMENT AS DIRECTED TO BE GIVEN FOR A.Y.1999-2000 TO 2002-03 IN ASSESSE ES OWN CASE ON THIS ISSUE. WE DIRECT ACCORDINGLY. 10. SO FAR AS SOLE GROUND TAKEN BY THE REVENUE IN ITS APPEAL IS CONCERNED, IN VIEW OF OUR CONCLUSION ON GROUND NO. 2 IN ASSESS EES APPEAL, THE GROUND TAKEN BY THE REVENUE HAS BECOME INFRUCTUOUS AND IS DISMISSED ACCORDINGLY. 11. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED AND THE REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 19-2-2009. (D.R. SINGH) ( G.E. VEERABHADRAPPA ) JUDICIAL MEMBER VICE PRESIDENT DATED: 19-2-2009. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 5