Uppal Motors (P) Ltd., New Delhi V. DCIT, New Delhi

ITA 5338/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7197 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 20-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 01-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : SMC-I : NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER ITA NO.5338/DEL/2014 ASSESSMENT YEAR : 2007-08 UPPAL MOTORS (P) LTD., C/O MONU MONGA, ADVOCATE, #133 LAWYERS CHAMBERS, DELHI HIGH COURT, SHER SHAH ROAD, NEW DELHI. PAN: AAACU5520E VS. DCIT, CIRCLE-18(1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MANU MONGA, ADVOCATE DEPARTMENT BY : SHRI DEEPAK GARG, SR. DR DATE OF HEARING : 20.06.2016 DATE OF PRONOUNCEMENT : 21.06.2016 ORDER THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE CIT(A) PASSED ON 23.7.2014 IN RELATION TO THE ASSES SMENT YEAR 2007-08 UPHOLDING PENALTY OF RS.1,64,061/- IMPOSED BY THE A O U/S 271(1)(C) OF THE ACT. ITA NO.5338/DEL/2014 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A COMPANY, AN AUTHORIZED DEALER OF HERO HONDA MOTORCY CLES. IT RAISED A HOUSING LOAN FROM ICICI BANK DURING THE YEAR WHOSE OUTSTANDING BALANCE STOOD AT THE END OF THE YEAR AT RS.90,46,57 4/-. WITH THIS LOAN, THE COMPANY PURCHASED A RESIDENTIAL FLAT WORTH RS.1 ,11,16,696/-. ON A PERUSAL OF THE BUYERS AGREEMENT OF THIS FLAT, THE AO OBSERVED THAT THE ASSESSEE PURCHASED A RESIDENTIAL FLAT WHICH COULD N OT BE USED FOR COMMERCIAL PURPOSE. HE, THEREFORE, REFUSED TO TREA T SUCH FLAT AS `FIXED ASSET AND ALSO MADE DISALLOWANCE OF INTEREST ON LO AN AMOUNTING TO RS.4,87,410/-. PURSUANT TO THIS DISALLOWANCE, PENA LTY WAS IMPOSED U/S 271(1)(C), WHICH CAME TO BE AFFIRMED IN THE FIRST A PPEAL. 3. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL AVAILABLE ON RECORD. THE DISALLOWANCE OF INTEREST, LEADING TO IMPOSITION OF PENALTY, IS ON ACCOUNT OF PURCHASE OF FLAT BY THE ASSESSEE COMPANY. A COPY OF RESOLUTION PASSED BY THE BOARD OF DIRECTORS IS AVAILABLE ON PAGE 56 OF THE PAPER BOOK AS PER WHICH THE FLAT WAS PURCHASED FOR COMPANYS STAFF. A COPY OF THE BUYER S AGREEMENT IS ITA NO.5338/DEL/2014 3 AVAILABLE ON PAGE 46 OF THE PAPER BOOK WHICH EVIDEN CES THAT IT WAS THE COMPANY WHO PURCHASED THE SAID FLAT. I AM UNABLE T O COMPREHEND AS TO HOW ANY PENALTY CAN BE IMPOSED OR CONFIRMED U/S 271 (1)(C) IN THE GIVEN CIRCUMSTANCES, WHEN THE ASSESSEE COMPANY PURCHASED A FLAT FOR ITS STAFF, WHOSE INVESTMENT WAS DULY REFLECTED IN THE BOOKS OF ACCOUNT. THERE IS NO BAR ON A COMPANY PROVIDING RESIDENTIAL ACCOMMODA TION TO ITS EMPLOYEES. WHEN THE BUYERS AGREEMENT DISCLOSED TH E ASSESSEE AS PURCHASER OF FLAT WHICH WAS DULY REFLECTED IN THE B OOKS OF ACCOUNT OF THE ASSESSEE, IN MY CONSIDERED OPINION, NO PENALTY COUL D HAVE BEEN IMPOSED U/S 271(1)(C) TOWARDS DISALLOWANCE OF INTEREST PAID BY THE ASSESSEE COMPANY ON LOAN TAKEN FOR PURCHASING THE FLAT. I O RDER FOR THE DELETION OF THE PENALTY. 4. IN THE RESULT, THE APPEAL IS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.06.201 6. SD/- [R.S. SYAL] ACCOUNTANT MEMBER DATED, 21 ST JUNE, 2016. ITA NO.5338/DEL/2014 4 DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.