DCIT, New Delhi V. M/s. Shahi Exports Pvt. Ltd., New Delhi

ITA 5437/DEL/2012

• Counselvise Citation: 543720114 RSA 2012
• Duration Of Justice: 2 year(s) 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 09-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 26-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Keywords: Business expenditure
• Section: 143(3); 154

Judgement Text

ITA NO. 5437/ DEL/ 2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI J.S. REDDY, ACCOUNTANT MEMBER I.T.A.NO.5437/DEL/2012 A.Y. : 2008 - 09 DCIT, CIRCLE - 8(1), ROOM NO. 163, CR BUILDING, NEW DELHI VS. M/S SHAHI EXPORTS PVT. LTD. 3262, RANJEET NAGAR, NEW DELHI (PAN:AAJCS1175L) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. B.R.R. KUMAR, SR. DR ASSESSEE BY : SH. DEEPAK MALIK, ADV. DATE OF HEARING : 11 - 02 - 2015 DATE OF ORDER : 1 6 - 02 - 2015 ORDER PER H.S. SIDHU : JM THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 16 / 7 /201 2 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - X I , NEW DELHI ON THE FOLLOWING GROUNDS: - 1. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS. 9,55,587/ - MADE BY THE AO ON ACCOUNT OF SUBSCRIPTION CHARGES. 2. THE LD. CIT(A) ERRED ON FACTS AND IN LAW IN DELETING THE ADDITION OF RS. 11,23,923/ - MADE BY THE AO ON ACCOUNT OF REPAIR AND MAINTE NANCE OF FLATS. ITA NO. 5437/ DEL/ 2012 2 3. THE APPELLANT CRAVES LEAVE OR RESERVING THE RIGHT TO AMEND MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. THE FACTS OF THE CASE IN BRIEF ARE THAT THE RETURN OF INCOME IN THIS CASE WAS FILED ON 30.9.2008 DECLARING TOTAL INCOME OF RS. 5,05,88564/ - WHICH WAS PROCESSED U/S. 143(1). SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE FIGURE OF NET PROFIT WAS REVISED TO RS. 3,5 4,08,654/ - AS PER REVISED COMPUTATION OF TAXABLE INCOME ANNEXED WITH LETTER DATED 13.7.2010 DUE TO OVERSIGHT TO DEDUCT LEAVE ENCASHMENT ACTUALLY PAID OF RS. 1,51,79,911/ - AGAINST PROVISION MADE OF RS. 1,00,00,000/ - ADDED BACK TO INCOME. THE SUBMISSION OF THE ASSESSEE WAS CONSI DERED BY THE AO. THE AO STATED THAT IT IS FELT THAT THE ASSESSEE COULD HAVE GONE FOR RECTIFICATION U/S. 154 OF THE I.T. ACT, 1961 AND ACCORDINGLY THE SAME IS NOT BEING ENTERTAINED IN THE PRESENT SCRUTINY ASSESSMENT PROCEEDING. AO PASSED THE ASSESS MENT ORDER U/S. 143(3) OF THE I.T. ACT ON 20.12.2010 AND MADE VARIOUS ADDITIONS. 3. BEING AGGRIEVED WITH THE ASSESSMENT ORDER DATED 20 . 12 .20 10 , ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 1 2 . 7 .201 2 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 4. NOW THE REVENUE IS AGGRIEVED AGAINST THE IMPUGNED ORDER AND FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 5. LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A). ON THE OTHER HAND, LD. SR. DR RELIED ORDER OF THE AO. ITA NO. 5437/ DEL/ 2012 3 6 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED AND CONSIDERED THE RELEVANT RECORD AVAILABLE WITH US SPECIALLY THE IMPUGNED ORDERS PASSED BY THE REVENUE AUTHORITIES . WE FIND THAT LD. FIRST APPELLATE AUTHORITY HAS ELABORATELY DISCUSSED THE ISSUES IN DI SPUTE BY CONSIDERING THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE AND ADJUDICATED THE ISSUES NO. (1) & (2) AS MENTIONED IN GROUNDS OF APPEAL AS UNDER: - GROUND NO. (1) REGARDING ADDITION OF RS. 955587/ - ON ACCOUNT OF SUBSCRIPTION CHARGES I H AVE PERUSED ALL THE DETAILS FILED BY THE APPELLANT ALONGWITH THE NECESSARY EVIDENCE. THE BREAKUP OF THE EXPENSES ARE AS BELOW: - DETAILS OF CLUB MEMBERSHIP FEES PAID FROM 1.4.2007 TO 31.3.2008 PARTY AMOUNT ARMY POLO CLUB 23226 DELI GYMKHANA CLUB LTD. 4953 THE OBEROI, NEW DELHI 33708 CLUB HYATT 5750 OTHERS 7414 TOTAL (A) 75051 DETAILS OF SUBSCRIPTION CHARGES PAID FROM 1.4.2007 TO 31.3.2008 PARTY AMOUNT SOFTWARE DEVELOPMENT CHARGES 183139 UNITED NATION GENEVA 77269 SUBSCRIPTION RENEWAL FEES 501667 TOWARDS MAGAZINES, NEWSPAPERS & PERIODICALS 193512 TOTAL (B) 955587 TOTAL EXPENSES (A+B) 1030638 ITA NO. 5437/ DEL/ 2012 4 THE AMOUNT OF RS. 75061/ - CLEARLY DOES NOT RELATE TO THE BUSINESS OF THE APPELLANT. AS FAR AS THE OTHER EXPENSES ARE CONCERNED THE APPELLANT HAS EXPLAINED THAT THESE WERE RELATED TO ITS BUSINESS. I AM INCLINED TO BELIEVE THE ASSERTIONS OF THE APPELLANT. THE ADDITION OF RS. 75051/ - IS SUSTAINED. THE BALANCE AMOUNT IS DELETED. AS A RESULT, THE GROUNDS OF APPEAL IS RULED PARTLY IN FAVOR OF THE APPELLANT. GROUND NO. (2) REGARDING ADDITION OF RS. 11,23,923/ - ON ACCOUNT OF REPAIR AND MAINTENANCE OF FLATS. I HAVE PERUSED THE DETAILS PROVIDED BY THE APPELLANT. THE EXPENDITURE HAS BEEN INCURRED ON RESIDENTIAL FLAT S OWNED BY THE APPELLANT AND PROVIDED TO THE EMPLOYEES. THE EXPENDITURE IS CLEARLY A BUSINESS EXPENDITURE AND ALLOWABLE U/S. 37. THE ADDITION ON THIS ACCOUNT IS THEREFORE DELETED. THE GROUNDS OF APPEAL IS RULED IN FAVOR OF THE APPELLANT. 7 . WITH REGA RD TO DELETION OF ADDITION OF RS. 9,55587/ - MADE BY THE AO ON ACCOUNT OF SUBSCRIPTION CHARGES IS CONCERNED, WE FIND THAT THE LD. CIT(A) HAS HELD THAT THESE EXPENSES HAVE BEEN PROPERLY EXPLAINED BY THE ASSESSEE THAT THESE WERE RELATED TO ITS BUSINESS. HENCE, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION OF RS.9,55,587/ - . I N VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT(A), HENCE, WE UPHOLD THE SAME . 7 . 1 W ITH REGARD TO DELETION OF ADDITION OF RS. 11,23,923/ - MADE BY THE AO ON ACCOUNT OF REPAIR AND MAINTENANCE OF FLATS IS ITA NO. 5437/ DEL/ 2012 5 CONCERNED, WE FIND THAT THE LD. CIT(A) HAS RIGHTLY HELD THAT T HE EXPENDITURE HAS BEEN INCURRED ON RESIDENTIAL FLATS OWNED BY THE ASSESSE E AND PROVIDED TO THE EMPLOYEES. THE EXPENDITURE IS CLEARLY A BUSINESS EXPENDITURE AND ALLOWABLE U/S. 37. THEREFORE, WE FIND THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION ON THIS ACCOUNT. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT NO INTERFERENCE I S CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. CIT(A), HENCE, UPHOLD THE SAME BY DISMISSING THE APPEAL FILED BY THE REVEN UE. 8 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 6 /0 2 /2015. SD / - S D / - [J.S. REDDY] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 1 6 /0 2 /2015 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DEL HI BENCHES