ACIT, New Delhi V. M/s. True Developers Pvt. Ltd., Chennai

ITA 5318/DEL/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 8295 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 27-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: GAURAV GOEL
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.5318/DEL./2015 (ASSESSMENT YEAR : 2010-11) ACIT, CENTRAL CIRCLE 26, VS. M/S. TRUE DEVELOPERS P VT. LTD., NEW DELHI. 1 ST FLOOR, PINNACLE BUILDING, INTERNATIONAL TECH PARK, TARA MANI ROAD, CHENNAI (TAMIL NADU). (PAN : AACCT4871F) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GAURAV GOEL, CA REVENUE BY : SHRI S.S. RANA, CIT DR DATE OF HEARING : 24.09.2018 DATE OF ORDER : 03.10.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, ASSISTANT COMMISSIONER OF INCOME-TAX , CENTRAL CIRCLE 26, NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILING THE PRESENT APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 05.06.2015 PASSED BY LD. CIT ( APPEALS)-29, NEW DELHI QUA THE ASSESSMENT YEAR 2010-11 ON THE GR OUNDS INTER ALIA THAT :- ITA NO.5318/DEL./2015 2 1. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE BEING 50% OF THE 'GENERAL MANAGEMENT FEES' AMOUNTING TO RS.70,65,000/- PAID TO M/S. ASCENDAS SERVICES (INDIA) PVT. LTD BY THE ASSESSEE COMPANY. 2 ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE AB OVE ADDITION WITHOUT APPRECIATING THE FACT THAT THE ONU S IS ON THE ASSESSEE TO ESTABLISH THE GENUINENESS OF BUS INESS EXPENSES U/S 37(1) AND IN THIS CASE THE ASSESSEE WA S NOT ABLE TO JUSTIFY THE HUGE PAYMENTS MADE TO M/S ASCEN DAS SERVICES (INDIA) PVT. LTD. 3 THAT THE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE TO EACH OTHER. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICA TION OF THE CONTROVERSY AT HAND ARE : ASSESSING OFFICER NOTICED THAT DURING THE YEAR UNDER ASSESSMENT, THE ASSESSEE HAS DEBITED AN AMOUNT OF RS.1,41,29,993/- ON ACCOUNT OF GENERAL MANAGEMENT F EES PAID TO ASCENDAS SERVICES (INDIA) PVT. LTD.. IT IS THE CAS E OF THE ASSESSEE THAT SINCE IT HAS NO SKILLED AND MANAGEMENT PERSONN EL OF HIGH CALIBER, IT TOOK THE MANAGEMENT SERVICES FROM ASCEN DAS SERVICES (INDIA) PVT. LTD. FOR PROVIDING OVERALL MANAGEMENT LEADERSHIP AND ADVICE TO THE OWNER, SUPERVISING OPERATIONS AND OTH ER COMPANY MATTERS. AO, DECLINING THE CONTENTIONS RAISED BY T HE ASSESSEE, PROCEEDED TO CONCLUDE THAT SINCE NO BUSINESS ACTIVI TIES HAVE BEEN CARRIED OUT BY THE ASSESSEE AS PER PROFIT & LOSS AC COUNT, DURING THE YEAR UNDER ASSESSMENT, AND WAS HAVING ONLY INTEREST INCOME THERE ITA NO.5318/DEL./2015 3 WAS NO NEED FOR ANY SKILLED MANPOWER AND THEREBY DI SALLOWED 50% OF THE GENERAL MANAGEMENT FEES AMOUNTING TO RS.70,6 5,000/- AND ADDED THE SAME BACK TO THE INCOME OF THE ASSESSEE. 3. ASSESSEE CARRIED THE MATTER BY WAY OF APPEAL BEF ORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION MADE BY THE AO BY ALLOWING THE APPEAL. FEELING AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTEDLY, THE ASSESSEE IS DEVELOPING A SPECI AL ECONOMIC ZONE (SEZ) PROJECT AT COIMBATORE FOR WHICH IT HAS C LAIMED TO HAVE AVAILED THE SERVICES OF ASCENDAS SERVICES (INDIA) P VT. LTD.. IT IS ALSO NOT IN DISPUTE THAT ASCENDAS SERVICES (INDIA) PVT. LTD. IS A SINGAPORE GOVERNMENT COMPANY HAVING SPECIALIZED IN ERECTING IT PARKS, INDUSTRIAL AND LOGISTIC PARKS, ETC. 6. FROM THE PERUSAL OF IMPUGNED ORDER PASSED BY THE LD. CIT (A), IT GOES TO PROVE THAT THE EVIDENCE WAS THERE O N RECORD TO PROVE THAT 8 SKILLED PERSONNEL WERE AT THE DISPOSAL OF TH E ASSESSEE TO LOOK AFTER THE WORK OF THE ASSESSEES COMPANY FOR SEZ IN COIMBATORE. FURTHERMORE, FROM THE EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE, ITA NO.5318/DEL./2015 4 CIT (A) NOTICED THAT ASCENDAS SERVICES (INDIA) PVT. LTD. TEAM INVITED TENDERS FILED BY M/S. AHLUWALIA CONTRACTORS INDIA P. LTD. AND L & W CONSTRUCTION PRIVATE LIMITED TO DEVELOP T OTAL AREA OF 893,447.99 SQ.FT. AND 872,005.84 SQ.FIT RESPECTIVEL Y. THE ENTIRE TENDER RECORD HAS BEEN PERUSED AND SCRUTINIZED BY T HE LD. CIT (A) HAVING CONTRACT OF RS.185 CRORES. 7. MOREOVER, AO HAS NOT DISPUTED THE FUNCTIONS PERF ORMED BY THE SKILLED PERSONNEL HIRED BY THE ASSESSEE NOR HAS DISPUTED DOCUMENTS RELIED UPON BY THE ASSESSEE AS WELL AS BO OKS OF ACCOUNTS RATHER PROCEEDED TO DISALLOW 50% OF THE EXPENSES ME RELY ON CONJECTURES AND SURMISES. MOREOVER, REVENUE AUTHOR ITIES ARE NOT PERMITTED TO COMPLETE THE ASSESSMENT BY SITTING ON THE ARM CHAIR OF BUSINESSMAN/ASSESSEE AND IT IS FOR THE ASSESSEE TO DECIDE WHICH OF THE SERVICES ARE NECESSARY FOR CARRYING OUT ITS BUS INESS ACTIVITIES. 8. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, FINDIN G NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER PASS ED BY THE LD. CIT (A), PRESENT APPEAL FILED BY THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 3 RD DAY OF OCTOBER, 2018. SD/- SD/- (PRASHANT MAHARISHI) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 3 RD DAY OF OCTOBER, 2018 TS ITA NO.5318/DEL./2015 5 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-29, NEW DELHI 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.