M/s Trinetra Buildcon Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 5568/DEL/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3374 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 24-04-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 28-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BEDOBANI CHAUDHURI
• Assessee Lawyers: PARDEEP DAYAL MATHUR
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER ITAS NO.5568/DEL/2016 ASSESSMENT YEAR 2012-13 M/S. TRINETRA BUILDCON PVT. LTD., NEW DELHI PAN: AACCT 6942M VS. ITO, WARD-25(4), NEW DELHI. (APPELLANT) (RESPONDENT) REVENUE BY : MS. BEDOBANI CHAUDHURI, SR.D.R. ASSESSEE(S) BY : SHRI PARDEEP DAYAL MATHUR, CA. / DATE OF HEARING : 24/04/2017 / DATE OF PRONOUNCEMENT: 27/04/2017 ORDER THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER O F LEARNED CIT(A)-X, NEW DELHI, VIDE ORDER DATED 17.04.2015 FO R THE ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS RAISED THE GROUNDS O F APPEAL AS UNDER: 1) THAT ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) IS NOT JUSTIFIED IN SUSTAINING DISALLOWANCE OF CAPITAL REC EIPT OF RS.24,84,655/- BY TREATING IT AS COMMISSION DESPITE THE FACT THAT THIS AMOUNT WAS SH ARED BY THE BROKER WITH THE APPELLANT TO REDUCE COST OF INVESTMENT. ALSO SECTIO N 43(1) OF THE INCOME TAX ACT CLEARLY MANDATES THAT COST MET BY OTHER PERSON BE REDUCED FROM COST OF ASSET AS HAS ACTUALLY BEEN DONE BY THE APPELLANT. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE HA D FILED RETURN DECLARING TOTAL LOSS OF RS.16,0,71/- ON 28.09.2012, WHICH WAS PROCESSED U/S.143(1) AND SUBSEQUENTLY SELECTED FOR SCRUTINY U NDER CASS. ACCORDINGLY, AO ISSUED STATUTORY NOTICES U/S.143(2) AND 142(1) OF THE ACT, WHICH WERE COMPLIED WITH. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT CAME TO THE NOTICE OF THE AO THAT A SSESSEE IS IN RECEIPT OF COMMISSION OF RS.24,84,655/- FROM M/S INNOVEST A DVISORY SERVICES ITAS NO.5568/DEL/2016 2 PVT. LTD. ON WHICH TDS WAS DEDUCTED AT RS.2,48,466/ - AND THE SAME WAS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME . ON PERUSAL OF P&L A/C, IT WAS GRANTED BY THE ASSESSING OFFICER TH AT THOUGH TDS WAS CLAIMED , BUT NO CORRESPOND I NG COMMISSION I NCOME WAS DECLARED IN THE P&L A/C. IT WAS FURTHER NOTI C ED BY THE AO THAT M/S INNOVEST ADV I SOR SERVICES PVT . LTD . CREDITED THE COMM I SSION I N ITS BOOKS OF A/C ON 31 . 03 . 2012 AS THE SAME WAS SHOWN UNDER THE HEAD ' LIAB I LIT Y P A Y ABL E ' , AO HAS FURTHER OBSERVED IN THE ASSESSMENT ORDER THA T ASSESSEE WAS AWARE OF THIS FACT WHILE F I LING THE RETURN OF INCOME AS I T CLAIMED THE TDS , WHICH WAS DEDUCTED BY M/S INNOVEST ADVISORY SERVICE S PVT . LTD . BEFORE THE AO DURING ASSESSMENT STAGE , IT WA S CLAIMED BY THE ASSESSEE THAT IT IS MAINTAINING ITS BOOKS OF A/C ON MERCANTILE SYSTEM ACCORDING TO WHICH IT HAS NOT RECEIVED THE COMMISSION AO FURTHER OBSERVED THAT AS PER PROVIS I ONS OF SECTION 9 THE INCOME HAS ARISEN TO THE ASSES SEE DURING THE PERIOD RELEVANT TO A . Y . 2012-13 AND FURTHER AS PER SECTIO N 5 OF THE ACT THE INCOME WHICH IS ACCRUED OR ARISEN IN THE PR EVIOUS YEAR RELEVANT TO AY UNDER CONSIDERATION , IS TAXABLE WHETHER IT IS RECEIVED OR NOT . BEFORE THE AO IN HIS REPLY DT . 23.02.2015 , FOLLOWING SUBM I SS I ONS WERE MADE : ' THERE WAS MUTUAL UNDERSTANDING BETWEEN M/S INNOVEST ADVISORY SERVICES PVT. LTD . AND THE ASSESSEE , THAT THE M/S INNOVEST ADVISORY SERVICES PVT . LTD . HELPED US TO REDUCE OUR COST BY RETURNING SOME OF O UR I NVESTMENT WITH M3M. FU R THE R AS PER MUTUAL UNDERSTANDING , THE M/S INNOVEST ADVISORY SERVICES PVT . LTD . RETUR NED US THE SAID AMOUNT TO REDUCE OUR COST AND WE DEDUCT TH I S AMOUNT FROM O U R TOTAL INVESTMENT WITH M3M . ' AO CONSIDERED THE ABOVE REPLY OF THE ASSESSE E AN D H ELD ITAS NO.5568/DEL/2016 3 THAT ASSESSEE THOUGH ADMITTED TO HAVE RECEIVED THE COMMISSION INCOME , BUT INTENDED TO SET OFF THE SAME WITH COST I N A FUTURE DATE, WHICH IS NOTHING BUT AN ACT OF DIVERSION OF REVENUE RECEIVED TOWARDS CAPITA L COST . THOUGH THE BENEFIT OF THE TDS HAS BEEN CLAIMED IN T HE RETURN OF INCOME FILED FOR THE AY UNDER CONSIDERATION , BUT THE CORRESPONDING INCOME HAS NOT BEEN DISCLOSED FOR THE PURPOSE OF TA XA T ION . ACCO R DINGLY , AO RE J ECTED THE SUBMISSIONS OF THE ASSESSEE AND MA D E A D DI TION O F RS . 2 4 , 84, 655 / - TO T H E I NC OM E D E CLAR E D BY TH E AS SES SEE FOR THE A Y UNDER CONSIDERATION. 3. LEARNED CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 4. I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED T HE FACTS OF THE CASE. IT WAS ARGUED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE M/S. INNOVEST ADVISORY SERVICES PVT. LTD. HAS CONFIRMED THE TRANSACTION DATED 27.01.2015 AVAILABLE AT PAPER BOOK 36. COPY O F THE BOOKS OF ACCOUNT OF THE ASSESSEE OF M3M INDIA LTD. GOLF ESTA TE FAIRWAY EAST IS AVAILABLE AT PAPER BOOK 50, WHERE THE ACCOUNTING TR EATMENT IS VERY CLEAR. THE FINDING GIVEN BY THE LD. CIT(A) ARE QUIT E REASONED ONE THAT THE ASSESSEEE IS CLAIMING THAT AMOUNT OF RS . 24,84,655/- BEING COMMISSION IS CAPITAL IN NATURE AS IT HAS NOT RECEI VED THE COMMISSION AND IT HAS RESULTED IN DEDUCTION IN THE COST OF PRO PERTY. HOWEVER , THE FACTS OF THE CASE MAKES IT CLEAR THAT M/S . INNOVEST ADVISORY SERVICES P. LTD . CREDITED COMMISSION OF RS . 24 , 84,655/- TO THE ASSESSEE DULY DEDUCTING TDS OF RS.2 , 48 , 466/-. THE TDS DEDUCTED HAS BEEN CLAIMED BY THE ASSESSEE IN THE RETURN FILED FOR THE ASSESSMENT YEAR UNDER CONSIDERATION , BUT CORRESPONDING COMMISSION INCOME HAS NOT ITAS NO.5568/DEL/2016 4 B E EN S H OWN I N TH E RETURN ON THE GROUND THAT IT HAS NOT RECEIVED THE COMMISSION . HOWEVER , THE UNDISPUTED FACT IS THAT M/S . INNOVEST ADVISORY SERV I CES P . LTD . CRED I TED THE APPELLANT WITH THE ABOVE AMOUNT IN ITS BOOKS OF ACCOUNTS AS ON 31 . 03 . 2012. 4.1 ALSO IT IS PERT INE N T TO MENTION H ERE THA T I N T HE INSTANT CASE , THOUGH A SS E SSEE HA S CLA IMED THE BEN EF IT O F T DS BUT CORRESPONDING COMMISSION INCOME HAS NOT BEEN OF F ERED FOR TAXA T ION ON THE PLEA THAT THE NATURE OF COMMISSION RECE I VED FROM M/S . INNOVEST ADVISORY SE R VICES P . LTD . I S C APITAL IN NA T URE AS I T H A S RECE I VE D T H E SAME FOR PURCHASE OF ITS OWN PROPERTY . HOWEVER , THE ABOVE CLAIM OF THE APPELLANT IS ALSO NOT ACCEPTABLE CONSIDERING THE FACT THAT ABOVE COMPANY HAS TREATED THE SAME AS ITS L I ABIL I TY AND ACCO R D I NG TO WHICH IT IS ENTITLED TO CLAIM THE SAME AS AN EXPENSE . FROM THIS ANGLE , IT IS CLEAR THAT BOT H THE DEDUCTOR AND THE DEDUCTEE ARE FULLY ENJOYING THEIR RESPECTIV E CLAIM , BUT THE REVENUE IS AT RECEIVING END . THE AMOUNT ON WHICH TDS HAS BEEN DEDUCTED AND BENEFIT THERE O F HAS BEEN TAKEN WHI L E FI LIN G THE ITR , IS NOT BEING OFFERED FOR TAXATION ON THE BASIS O F MOU WH I CH IS MUTUALLY SUITABLE TO THE ASSESSEE A ND THE DEDUC T OR C OMPANY. CONSIDERING THE PROV I SIONS OF INCOME TAX ACT , I T IS HELD THAT THE ABOVE MOU IS SELF SERVING DOCUMENT DEVOID OF ANY MERIT AND NOTHING BU T JUST A TOOL TO MITIGATE THE TAX LIABILITY. THUS , FROM THE FACTUAL MATRIX OF THE CASE , RATIO OF JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE , AND CLEAR CUT PROVISIONS OF SECTION 198 AND 199 R . W . R . 37BA(3)(I) OF THE ACT , REPRODUCED ABOVE, IT IS EVIDENT THAT APPELLANT HAS FAILED TO COMPLY WITH THESE PROVISIONS OF LAW. THEREFORE , IT I S HELD THAT AO HAS RIGHTLY MADE THE ADDITION OF ITAS NO.5568/DEL/2016 5 RS . 24 , 84 , 655/ - AS APPELLANT CLAIMED THE BENEFIT OF TDS DEDUCTED OF RS . 2 , 48 , 466/- IN RESPECT OF ABOVE COMMISSION INCOME BUT THE CORRESPONDING INCOME HAS NOT BEEN OFFERED FOR TAXAT ION . HENCE , THE ADDITION MADE BY THE AO IS UPHELD. ACCORDINGLY , THIS GROUND OF APPEAL HAS RIGHTLY BEEN DISMISSED BY LD. CIT(A) AND I FIND NO INFIRMITY IN HIS ORDER. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY 27 TH APRIL, 2017 SD/- (B.P. JAIN) ACCOUNTANT MEMBER DATED: 27/04/2017 PRABHAT KUMAR KESARWANI, SR.P.S. COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSTT. REGISTRAR, ITAT, NEW DELHI