ITO, New Delhi V. M/s Quatro Mortgage Solution Pvt. Ltd., New Delhi

ITA 5044/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5184 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 07-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LALITHA KRISHNAMURTHY
• Keywords: Capital expenditure
• Section: 194C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI R.S. SYAL, HONBLE VICE PRESID ENT & SHRI K.N. CHARRY, JUDICIAL MEMBER ITA NO.-5044/DEL/2015 ( ASSESSMENT YEAR: 2011-12) ITO WARD 20(3) NEW DELHI. VS QUATRO MORTGAGE SOLUTION PVT. LTD. 24-C, BLOCK BASEMENT, COMMUNITY CENTRE, JANAKPURI, NEW DELHI. AAACQ1451E & CO NO.-44/DEL/2016 ( ASSESSMENT YEAR: 2011-12) QUATRO MORTGAGE SOLUTION PVT. LTD. 24-C, BLOCK BASEMENT, COMMUNITY CENTRE, JANAKPURI, NEW DELHI. AAACQ1451E VS ITO WARD 20(3) NEW DELHI. ASSESSEE BY SMT. LALITHA KRISHNAMURTHY, CA REVENUE BY SH. ANSHU PRAKASH, SR. DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER BOTH THESE MATTERS EMANATE FROM THE ORDER DATED 25. 05.2015 IN APPEAL NO. 34/2014-15 ON THE FILE OF THE LD. COM MISSIONER OF DATE OF HEARING 17.08.2017 DATE OF PRONOUNCEMENT 18.08.2017 2 ITA NO.5044/DEL/2015 & CO NO. 44/DEL/2016 INCOME TAX (APPEALS)-VII, NEW DELHI (HEREINAFTER CA LLED AS THE LD. CIT(A)), WHERE UNDER THE LD. COMMISSIONER OF INCOM E TAX DELETED AN ADDITION OF RS. 92,46,742/- MADE BY THE AO U/S 4 0(A)(IA) OF THE INCOME TAX ACT, 1961 (FOR SHORT HEREINAFTER CALLED THE ACT). 2. BRIEFLY STATED FACTS ARE THAT DURING THE SCRUTIN Y ASSESSMENT OF THE RETURN OF INCOME FILED BY THE ASSESSEE FOR THE AY 2011-12, AO FOUND THAT THE ASSESSEE CLAIMED A SUM OF RS. 1,15,5 8,428/- AS ALLOCABLE CAPEX COST WHICH MEANS THE COST OF SEAT S BLOCKED BY EACH BUSINESS UNIT AND AO OPINED THAT WHATEVER MAY BE THE NOMENCLATURE, SUCH AMOUNT WAS PAYABLE BY THE ASSESS EE FOR UTILIZATION OF SEATS/WORKSTATION, AS SUCH, THE ASSE SSEE HAD TO DEDUCT TDS AT 10% U/S 194I OF THE ACT, WHEREAS, AS A MATTER OF FACT ASSESSEE DEDUCTED ONLY 2% U/S 194C OF THE ACT. ON THIS PREMISE, AO ADDED THE DIFFERENCE WHICH COMES TO RS. 92,46,742/- TO THE INCOME OF THE ASSESSEE. IN APPEAL THE LD. C IT (A) HELD THAT THE AMOUNT IN QUESTION WAS PAYMENT FOR USE OF LAND/ BUILDING, AND, THEREFORE, TAX @ 10% WAS REQUIRED TO BE DEDUCT ED. HOWEVER, LD. CIT (A) FURTHER OBSERVED THAT TO THE FACTS OF T HE CASE SECTION 3 ITA NO.5044/DEL/2015 & CO NO. 44/DEL/2016 40(A)(IA) WAS NOT APPLICABLE AND ON THAT PREMISE HE DELETED THE SAME. 3. CHALLENGING THE DELETION OF THE AMOUNT THE REVEN UE IS IN APPEAL BEFORE US, WHEREAS CHALLENGING THE FINDING O F THE LD. CIT (A) THAT THE AMOUNT IN QUESTION WAS PAYMENT FOR USE OF LAND/BUILDING REQUIRING THE DEDUCTION OF TAX AT 10%, THE ASSESSEE FILED THE CROSS OBJECTIONS. 4. IT IS THE ARGUMENT OF THE LD. DR THAT AO WAS RIG HT IN HIS OBSERVATIONS THAT WHATEVER MAY BE THE NOMENCLATURE OF THE PAYMENT, ULTIMATELY THE ISSUE BOILS DOWN TO THE PAY MENT FOR UTILIZATION OF SEATS/WORKSTATIONS WHICH CANNOT BE S EPARATED FROM THE PREMISES IN WHICH THE WORKSTATION IS LOCATED, A S SUCH, DEDUCTION OF TAX AT 10% U/S 194I OF THE ACT IS PROP ER AND ON THAT GROUND HE JUSTIFIED THE ADDITION; WHEREAS IT IS THE ARGUMENT OF THE LD. AR THAT SHORT DEDUCTION CANNOT BE A GROUND TO I NVOKE SECTION 40(A)(IA) OF THE ACT AND ADDITION MADE BY THE AO WA S RIGHTLY DELETED BY THE LD. CIT (A). 5. WE HAVE CAREFULLY GONE THROUGH THE RECORD. BASI NG ON THE DECISIONS OF CALCUTTA HIGH COURT IN CIT VS. S.K. TE KRIWAL (CALCUTTA) 4 ITA NO.5044/DEL/2015 & CO NO. 44/DEL/2016 HIGH COURT 361 ITR 432 (CAL.) AND A DECISION OF A C OORDINATE BENCH OF THIS TRIBUNAL IN M/S SOLUTIONS INFOSYSTEMS (P) L TD. VS. ITO IN ITA NO. 2429/DEL/2011 FOR AY 2008-09 ORDER DATED 12 .12.2013, LD. CIT (A) HELD THAT SECTION 40(A)(IA) HAS NO APPL ICATION IN RESPECT OF SHORT DEDUCTION OF TAX. THE FINDING OF THE LD. CIT (A) IS BASED ON BINDING PRECEDENTS, UNASSAILABLE AND, THEREFORE, WE CONFIRM THE SAME. INSOFAR AS THE OBSERVATIONS OF THE LD. CIT ( A) AS TO THE DEDUCTIBILITY OF TAX AT 10%, THE ASSESSEE IS AT LIB ERTY TO PUT FORTH THEIR CONTENTIONS BEFORE THE AO (TDS) IN APPROPRIAT E PROCEEDINGS. WITH THIS VIEW OF THE MATTER, WE DISMISSED THE APPE AL AND CROSS OBJECTION. 6. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS O BJECTION BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.08.2017 SD/- SD/- (R.S. SYAL) (K.N. CHARY) VICE PRESIDENT JUDICIAL MEMBE R DATED: 18.08.2017 *KAVITA ARORA 5 ITA NO.5044/DEL/2015 & CO NO. 44/DEL/2016 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 17.08.2017 DRAFT PLACED BEFORE AUTHOR 18.08.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 18.8.17 APPROVED DRAFT COMES TO THE SR.PS/PS 18.8.17 KEPT FOR PRONOUNCEMENT ON 18.8.17 FILE SENT TO THE BENCH CLERK 18.8.17 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.