M/s SPPL Property Management Pvt. Ltd., Kolkata V. ACIT, Cir. 3(1), Kolkata

ITA 520/KOL/2021

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 5874 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Appeal Filed On: 21-11-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Opportunity of being heard; Bad and doubtful debts; Revenue expenditure; Capital expenditure; TDS; Set aside
• Section: 263; 143(3); 142(1); 14A; 139(1)

Judgement Text

1. ITA No.520/Kol/2022 AY 2017-18 Sppl Property Management (P) Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL BENCH “B” KOLKATA Before Shri Manish Borad, Accountant Member and Shri Sonjoy Sarma, Judicial Member ITA No.520/Kol/2021 Assessment Year: 2017-18 M/s. Sppl Property Management Pvt. Ltd. C/o M/s. Salarpuria Jajodia & Co., 3 rd Fl.,7 Chittaranjan Avenue, Kolkata-72. बनाम V/s. A.C.I.T,Cir-3(1), Aaykar Bhawan,P-7 Chowringhee Square, Kolkata-700 069. PAN:AAIC57168Q अपीलाथ /Appellant .. यथ /Respondent अपीलाथ क ओर से/ By Appellant/Assessee Shri S.Jhajharia, Ld.AR यथ क ओर से/By Respondent/Department Smt. Suchetra Chattopadhyay Roy, Ld.CIT/Ld. DR स ु नवाई क तार ख/Date of Hearing 23-05-2022 घोषणा क तार ख/ Date of Pronouncement 19 -07 -2022 आदेश /O R D E R PER MANISH BORAD, AM. This appeal of the assessee for the assessment years 2017-18 is directed against the order dt. 08-11-2021 passed u/s. 263 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act) by the ld. Principal Commissioner of Income-tax [ in short, hereafter referred to as ‘ PCIT’], Kolkata-1, which is arising out of the assessment order 2. ITA No.520/Kol/2022 AY 2017-18 Sppl Property Management (P) Ltd. dt. 19-11-2019 passed u/s. 143(3) of the Act by the ACIT,Cir-3(1), Kolkata. 2. The assessee has raised the following grounds:- 1. For that in view of the facts and in the circumstances, the Ld. Pr. CIT is wholly unjustified in setting aside the order so passed by AO u/s 143(3) dt. 19.11.2019 and in view of the facts and in the circumstances the Ld. Pr. CIT's action in setting aside the impugned order is bad and illegal and as such the order so passed by Ld. Pr. CIT is liable to be quashed / cancelled set aside and it may be held accordingly. 2. For that in view of the facts and in the circumstances, the order so passed by Ld. Pr. CIT u/s 263 of the Act is bad on both in the eyes of law and on facts and it may be held accordingly. 3. For that in view of the facts and in the circumstances, the Ld. Pr. CIT has erred in assuming the jurisdiction u/s. 263 in absence of twin conditions, the order passed by AO being "erroneous" as well as "prejudicial to the interest of the revenue", being satisfied and hence it may be held accordingly. 4. For that in view of the facts and in the circumstances, the order so passed by Ld. Pr. CIT u/s 263 is unsustainable as power to revise can be invoked only in the case of lack of enquiry, and not in the case of inadequate enquiry and which was also not proved by the Ld. Pr. CIT and in view of the facts and in the circumstances it may be held accordingly. 5. For that in view of the facts and in the circumstances, the order so passed by Ld. Pr. ClT erred both on facts and in law in setting aside the matter to the file of AO without giving any finding as to the "error and prejudice caused to the revenue by the impugned assessment order" and as such the order u/s 263 so passed is bad in law and is liable to be quashed and it may be held accordingly. 6. For that in view of the facts and in the circumstances, the Ld. Pr. ClT failed to conduct any enquiry of his own and as such the order u/s 263 so passed by the Ld. Pr. CIT is bad in law and it may be held accordingly. 7. For that in view of the facts and in the circumstances, the Ld. Pr. CIT failed to take cognizance of the fact that the sum of Rs. 1,05,24,671/- being the provision for doubtful debts (as alleged by Ld. Pr. CIT) was "bad debt written off in books of account" and as such the impugned amount was allowable within the meaning of sec. 36(1)(vi) read with sec. 36(1)(vii) and in view of the facts and in the circumstances the AO has rightly allowed the said sum and in view of the facts and in the circumstances the Ld. Pr. CIT's action in such respect in setting aside the order u1s 143(3) is bad in law and it may be held accordingly. 8. For that in view of the facts and in the circumstances, the Ld. Pr. CIT erred both on facts and in law and setting aside the issue of addition of Rs. 9,16,893/- (being the Employees Contribution to PF/ESI) without appreciating the explanation of the appellant and in view of the facts and in the 3. ITA No.520/Kol/2022 AY 2017-18 Sppl Property Management (P) Ltd. circumstances the impugned sum is allowable and as such the Ld. Pr.CIT's action in setting aside the order is bad in law and it may be held accordingly. 9. For that in view of the facts and in the circumstances, the amount of Rs. 1,54,66,615/-as "capital expenditure" without even appreciating the explanation and the evidences so placed before the Ld. Pr. CIT and as such the Ld. Pr.ClT's action in setting aside the issue to AO without even conducting any enquiry or without even giving his finding in such the Pr. CIT's action is bad in law and it may be held accordingly. 10. For that you petitioner craves the right to put additional grounds and 1 or to alter / amend / modify the present grounds at the time of hearing. 3. Brief facts of the case are that the assessee is a private limited company and engaged in the real estate business. Income at Rs. 38,01,91,108/- declared in the return for the AY 2017-18 e-filed on 31-10-2017. The case was selected for complete scrutiny under CASS. Assessment u/s. 143(3) of the I.T Act, 1961 dt. 20-12-2019 was completed assessing income at Rs.65,47,74,284/- after making various additions/disallowances made u/s. 80IA(4)(iii) and section 14A of the I.T Act, 1961 and difference in 26AS receipts/statement. 4. After completion of assessment Ld. PCIT called for assessment records under revisionary powers held by him u/s. 263 of the Act and observed that the ld. AO has not examined the provision for doubtful debts amounting to Rs. 1,05,24,671/-, delayed payment of employees’ contribution to PF of Rs. 9,16,893/-, which deserves to be disallowed u/s. 36(1)(va) of the Act and the air conditioner expenses of Rs. 1,54,66,615/-, which are capital in nature. Based on this observation, the ld. PCIT issued show cause notice u/s. 263 of the Act dt. 8-9-2021 mentioning the above stated three issues. 5. During the course of revisionary proceedings carried out u/s. 263 of the Act by the ld.PCIT, Ld. A/R of the assessee stated that ld. AO duly examined all the three issues mentioned/refered in the said 4. ITA No.520/Kol/2022 AY 2017-18 Sppl Property Management (P) Ltd. show cause notice and specific reply has been submitted. However, the ld. PCIT was not satisfied and set aside the assessment order dt. 19-11-1990 directing the AO to pass fresh assessment order after considering all the issues which are referred in the said show cause notice. 6. Aggrieved, the assessee is in appeal before this Tribunal. 7. Ld. Counsel for the assessee referring to paper book running from 1 to 234 pages submitted that all the issues raised in the show cause notice have been examined by the ld. AO during the assessment proceedings. It is also stated that provisions for doubtful debt of Rs. 1,05,24,671/- is actually bad debts and are an allowable expenditure and this sum has been shown as revenue in the preceding year. Secondly with regard to employees’ contribution of Rs. 9,16,890/- the same stands deposited before the due date of filing of return of income u/s. 139(1) of the Act and in view of ratio laid down by the Hon’ble Jurisdictional High Court, Kolkata in the case of Vijay Shree Ltd, ITA No. 245 of 2011(G.A No.2607 of 2011) dt. 12.8.2015 the said sum is allowable as an expenditure for the year under consideration. . As regards the third issue of air conditioner expenditure of Rs.1,54,66,615/-, Ld. Counsel for the assessee stated by him that it is not a capital expenditure and are lift maintenance charges, for which supporting bills placed on record and these are revenue expenditure in nature. He also submitted that the ld. AO has examined all these issues raised in the said show cause notice and it is not the case of ‘NO ENQUIRY’. 5. ITA No.520/Kol/2022 AY 2017-18 Sppl Property Management (P) Ltd. 8. Per contra the Ld. Departmental Representative vehemently argued supporting the order of Ld. PCIT and opposed the contentions of Ld. Counsel for the assessee. 9. We have heard the rival contentions and perused the records placed before us. We find that the assessee has raised nine grounds of appeal before us, but the sole grievance is that the ld. PCIT erred in invoking revisionary jurisdiction u/s. 263 of the Act and erred in setting aside the assessment order dt. 19-11-2019 framed u/s. 143(3) of the Act. Section 263 of the Act has a direct bearing on the issue. Sub-section (1) of this section contemplates that ld. PPCIT/PCIT/CIT may call for and examine the records of any proceeding under the Act, and if he considers that any order passed therein by the ld.AO is erroneous in so far as it is prejudicial to the interest of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify. 10. Now the first condition is that the order of the ld. AO should be erroneous as well as prejudicial to the interest of the revenue. In the instant case, the ld. PCIT has observed that the ld. AO has not examined the following three issues:- a. Provisions for doubtful debt of Rs. 1,0,524,671/- b. Employees’ contribution of PF Rs.9,16,893/- c. Air conditioner expenses of Rs.1,54,66,615/- 6. ITA No.520/Kol/2022 AY 2017-18 Sppl Property Management (P) Ltd. 11. As regards the first and third issues are concerned, we find that notice u/s. 142(1) of the Act was issued by the ld. AO on 01-05-2019. In the questionnaire Q. No. 15 calling following details:- “As per Profit & Loss account under the heard ‘Other Expenses’ you have claimed of Rs.37.51 crores. Kindly furnish the ledger copy and bills of the expenses i.e clearing charges, repair on building, professional and consultancy charges, water charges, other repairs and lift maintenance, STP maintenance and expenses, bad debts written off etc” . 12. Further, in Q No.16, the assessee was asked to furnish the details of expenses head wise where assessee has deducted the TDS thereon. We find that the assessee gave reply on 31/8/19 ( paper book pages-162-226 of the P/B) providing all the details of other expenses. Further, in response to notice dt. 04-12-2019 the assessee gave another reply on 12/12/19 ( pages 227-232 of the P.B) about details of bad debts written off of Rs.1,05,24,671/-. 13. From going through the questionnaire details of other expenses appearing in the audited P & L account and various replies filed by the assessee, we find that the ld. AO has specifically carried out the enquiry regarding provisions for doubtful debts of Rs. 1,05,24,671/- and air conditioner expenses of Rs.1,54,66,615/- and specific reply has been given by the assessee. In the audited P & L account the assessee has also shown bad debts written off. The ld. PCIT has mentioned provisions for doubtful debts. The assessee during the regular course of business has claimed to have shown sales in the preceding years of which some sales turned bad and the same has been written off in the books of account as bad debt, which the 7. ITA No.520/Kol/2022 AY 2017-18 Sppl Property Management (P) Ltd. assessee is entitled for and therefore, the claim is admissible. Similarly for air conditioner charges, the assessee filed complete details along with tax deducted on the charges paid and the bills enclosed in the paper book justify the claim of assessee of air conditioner charges. Actually these are maintenance charges and other lift related expenditure, which are revenue in nature. Therefore, both the issues have been examined by the ld. AO and detailed inquiry has been made and thus in our view Ld. PCIT erred in invoking the revisionary jurisdiction u/s. 263 of the Act directing to make further enquiry on the issues which stands already examined by the ld. AO and a legally permissible view has been taken under the Law/Act. 14. So far as second issue i.e employees contribution to PF is concerned, it is not in dispute that there is a delay in depositing the said sum of Rs.9,16,893/- before the due date prescribed under the PF Act. It is also not in dispute that alleged sum (Rs.9,16,893/-) stands deposited before the due date of filing of return of income u/s. 139(1) of the Act. In view of in view of the ratio laid down by the Hon’ble Jurisdictional High Court, Kolkata in the case of Vijay Shree Ltd, ITA No. 245 of 2011(G.A No.2607 of 2011) dt. 12.8.2015, the said sum is an allowable expenditure for the year under consideration as it has been deposited before the due date of filing of return u/s. 139(1) of the Act and do not call for disallowance u/s.36(1)(va) r.w.s 2(24)(x) of the Act. Ld. PCIT ought to have appreciated the settled legal judicial precedence should not have restore the said issue of PF/ESI contribution issues to ld. AO for further examination when all 8. ITA No.520/Kol/2022 AY 2017-18 Sppl Property Management (P) Ltd. the facts were available on record. Provisions of section 263 of the Act itself provides that ld. PCIT ought to make or cause to make such enquiry as he deems necessary before passing the impugned order. Therefore, in our considered view, ld. PCIT erred in invoking revisionary jurisdiction u/s. 263 of the Act on this issue also. 15. We, therefore, under the given facts and circumstances of the case and in view of discussions made hereinabove, quash the impugned proceeding u/s. 263 of the Act and restore the assessment order passed u/s. 143(3) of the Act dt. 19-11-2019. All the grounds raised by the assessee are allowed. 16. In the result, the appeal of assessee is allowed. Order pronounced on 19/7/22 Sd/- Sd/- ( SANJAY SARMA) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated :19-07-2022 **PP/SPS आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1.अपीलाथ /Appellant/Assessee: M/s. Sppl Propert y Management Pvt. Ltd.C/o M/s. Salarpuria Jajodia & Co.,3 r d Fl.,7 Chittaranjan Avenue, Kolkata-72. 2. यथ /Respondent/Department: A.C.I.T,Cir-3(1), Aaykar Bhawan,P-7 Chowringhee Square, Kolkata-700 069. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त- अपील / CIT (A) 5. वभागीय त न ध, आयकर अपील य अ धकरण कोलकाता / DR, ITAT, Kolkata 6.गाड फाइल/Guardfile. By order/आदेश से, /True Copy/ Assistant Registrar ITAT, Kolkata