ITO, New Delhi V. M/s. Hemant Goyal Motors Pvt. Ltd., New Delhi

ITA 6151/DEL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0245 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 5 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 11-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GAURAV DUDEJA
• Assessee Lawyers: GAURAV MITTAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : C , NEW DELHI BEFORE SHRI G.C. GUPTA, HON BLE VICE PRESIDENT AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER I.T.A.NO. 615 1 /DEL/2012 A.Y. 200 9 - 10 ITO, WARD 12(3) NEW DELHI VS. HEMANT GOYAL MOTORS P.LTD. F 60, BALI NAGAR NEW DELHI 110 001 PAN: AA BCH 7012 D (APPELLANT) (RESPONDENT) A PPELLANT BY : SH. GAURAV DUDEJA, SR.D.R. RESPONDENT BY : SH. GURPREET SINGH, CA AND SHRI GAURAV MITTAL, ADV. DATE OF PRONOUNCEMENT: ORDER PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LD.CIT(A) - XV, NEW DELHI DATED 30.10.2012 PERTAINING TO THE ASSESSMENT YEAR (AY) 200 9 - 10 . 2. FACTS IN BRIEF: - THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1856. IT IS ENGAGED IN THE BUSINESS OF DEALER OF TATA MOTORS LTD. THE RETURN OF INCOME FOR THE AY 2009 - 10 WAS FILED ON 28 TH SEPTEMBER, 2010 DECLARING AN INCOME OF RS.8,05,185/ - , SUBSEQUENT LY REVISED ON 29 TH SEPTEMBER, 2010. AFTER PROCESSING THE RETURN OF INCOME U/S 143(1) OF THE ITA NO. 6151/DEL/2012 A.Y. 2009 - 10 HEMANT GOYAL MOTORS PVT.LTD., NEW DELHI 2 ACT , THE AO COMPLETED THE ASSESSMENT VIDE ORDER DT. 30.12.2011 AT TOTAL INCOME OF ASSESSEE AT RS.37,69,850/ - . WHILE DOING SO THE AO MADE THE FOLLOWING DISALLOWANCES. (A) INTEREST U/S 36(1)( III ) OF THE ACT BY HOLDING THAT THE ASSESSEE COMPANY HAD DIVERTED ITS INTEREST BEARING FUNDS TO ITS SISTER CONC ERNS OF RS.25,28,351/ - . (B) INSURANCE EXPENDITURE OF RS.1,61,596/ - ON THE GROUND THAT THE EXPENDITURE DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATION. (C ) LEGAL AND PROFESSIONAL EXPENSES OF RS.1,57,794/ - ON THE GROUND THAT THE TDS PAYABLE CANNOT BE ALLOW ED AS A DEDUCTION. 2.1. AGGRIEVED BY THE ABOVE ADDITIONS, THE ASSESSEE CARRIED THE MATTER IN APPEAL B EFORE THE FIRST APPELLATE AUTHORITY . THE LD.CIT(A) - XV VIDE HIS ORDER DT. 30 TH OCTOBER, 2012 DELETED THE ADDITION MADE U/S 36(1)( III ) AT PARA 5.3 OF HIS ORDER BY HOLDING AS UNDER. 5.3 REGARDING THE DISALLOWANCE MADE BY THE A O I N RESPECT OF RS.25,28,351/ - OUT OF INTEREST PAID ON BORROWED FUNDS BY ESTIMATING INTEREST RECEIVABLE ON THE INTEREST FREE LOANS AND ADVANCES TO THE PARTIES IN WHICH DIRECTORS ARE INTERESTED, WE FIND THAT THE LD. A O DID NOT APPRECIATE THAT THE APPELLANT HAD ALREADY RECEIVED INTEREST INCOME OF RS. 4587659 FROM THE 5 RELATED CONCERNS AT THE RATE OF 12%, WHICH WAS EMBEDDED IN THE TOTAL INTEREST INCOME OF RS 77 LAKHS RECEIVED BY THE A PPELLANT FROM VARIOUS PARTIES. THE LD. A O MADE DISALLOWANCE OF RS. 25,28,351/ - BY CHARGING INTEREST AT PRO RATA BASIS ON THE LOANS AND ADVANCES OF RS. 3,42,17,150/ - TO THE ASSOCIATE CONCERNS, AS WORKED OUT BY HIM AT PAGE 5 OF THE IMPUGNED INTEREST OF RS. 42,67,659/ - FROM THE RELATED CONCERNS. THIS AMOUNT WAS PART OF RS. 77,75,909/ - HAS BEEN CREDITED TO THE INTEREST ACCOUNT AND NET INTEREST PAID RS 1,58,20,192/ - ALONE HAS BEEN CHARGED TO PROFIT & LOSS ACCOUNT. ACCORDINGLY THE LD. AO WAS NOT ABLE TO FIND TH E AMOUNT OF INTEREST RECEIVED BY THE APPELLANT (WHICH INCLUDED THE INTEREST RECEIVED FROM THE RELATED CONCERNS) IN THE P&L ACCOUNT. IN VIEW OF THE ABOVE, SINCE THE APPELLANT HAD ALREADY PAID TAX ON A MUCH HIGHER AMOUNT OF INTEREST INCOME ITA NO. 6151/DEL/2012 A.Y. 2009 - 10 HEMANT GOYAL MOTORS PVT.LTD., NEW DELHI 3 COMPARED TO WHAT H AS BEEN ESTIMATED BY THE LD. AO, THERE IS NO GROUND FOR MAKING AN ESTIMATED DISALLOWANCE. BY INVOKING THE PROVISIONS OF SECTION 40A(2) (B). ACCORDINGLY, THIS GROUND IS ALSO DECIDED IN FAVOUR OF THE APPELLANT. 2.2. REGARDING ADDITION OF LEGAL AND PROFESSIONAL CHARGES THE LD.CIT(A) HAD DELETED THE ADDITION VIDE PARA 5.5 OF HIS ORDER HOLDING AS UNDER. 5.5. ON THE LAST GROUND OF APPEAL, THE LD.AO HAS MADE DISALLOWANCE ON THE BASIS OF MISCONCEPTION OF COMMONLY FOLLOWED ACCOUNTING PRACTICE. IT WAS NOT A CASE WHERE THE APPELLANT HAD CLAIMED ALLOWANCE FOR TDS PAYABLE FOR APPELLANT. IT WAS AN INSTANCE WHERE CERT AIN PAYMENTS WERE TO BE MADE TO ONE MR.RAJEVEER SINGH ON A REGULAR MONTHLY BASIS. THE APPELLANT WAS LIABLE TO DEDUCT TDS WHILE MAKING SUCH PAYMENT. THE TDS IS TO BE DEPOSITED WITHIN THE FIRST 7 DAYS OF NEXT MONTH. THEREFORE AT THE TIME OF PAYMENT, THE A PPELLANT HAS TO CREDIT THE PAYEE WITH THE AMOUNT NET OF TAX, WHILE THE TDS AMOUNT WILL BE SHOWN AS PAYABLE, AT THAT POINT OF TIME. THE APPELLANT HAS SUBSEQUENTLY PAID ALL SUCH AMOUNTS OF TDS WITHIN DUE DATE, WHICH WAS VERIFIED BY ME. THEREFORE, THERE IS NO REASON FOR SUSTAINING SUCH A DISALLOWANCE. THIS ADDITION IS ALSO BEING DELETED. 2.3. AGGRIEVED , THE REVENUE HA D COME UP IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS. 1. WHETHER ON FACTS AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.25,28,351/ - ON ACCOUNT OF INTEREST DISALLOWED U/S 36(1)(III) EVEN AS REQUISITE DETAILS WERE NOT FILED BY THE ASSESSEE. 2. WHETHER ON FACTS AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,57,794/ - ON ACCOUNT OF LEGAL AND PROFESSIONAL EX PENSES AS SUCH EXPENSES INCLUDE TDS PAYABLE AT RS.1,57,794/ - WHICH BEING A DIRECT TAX IS NOT AN ALLOWABLE EXPENSE. 3. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURI NG THE HEARING OF THIS APPEAL. 3 . HEARD SHRI GURPREET SINGH, THE LD.COUNSEL FOR THE ASSESSEE AND SHRI GAURAV DUDEJA, THE LD.SR. D.R. ON BEHALF OF THE REVENUE . ITA NO. 6151/DEL/2012 A.Y. 2009 - 10 HEMANT GOYAL MOTORS PVT.LTD., NEW DELHI 4 3.1. THE LD.SR.D.R. VEHEMENTLY CONTENDED THAT THE LD.CIT(A) HAD GRANTED RELIEF TO THE ASSESSEE EVEN WITHOUT GOING INTO DETAILS PLACED ON RECORD. HE PRAYED THAT THE MATTER SHOULD BE RESTORED TO THE FILE OF THE A.O. FOR FRESH VERIFICATION. 3.2. ON THE OTHER HAND THE LD.COUNSEL FOR THE ASSESSEE HEAVILY PLACED RELIANCE ON THE ORDER OF THE LD. CIT(A). 4. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE, ON PERUSAL OF MATERIAL ON RECORD, ORDERS OF THE AUTHORITIES BELOW, WE HOLD AS FOLLOWS. THE ALLEGATION OF THE REVENUE THAT THE LD.CIT(A) GRANTED RELIEF TO THE ASSESSEE WITHOUT REQUISITE MATERIAL, IS BASELESS. IN THE PAPER BOOK FILED BEFORE US THE ASSESSEE HAS FILED COPIES OF SUBMISSIONS MADE BEFORE THE LD.CIT(A) VIDE PAGE NOS. 98 TO 118 OF THE PAPER BOOK. FROM PERUSAL OF THE ABOVE, IT IS VERY CLEAR THAT THE ASSESSEE COMPANY HAD CLEARLY DEMONSTRATED BEFORE THE LD.CIT(A) HIS CLAIM WITH EVIDENCE SUCH AS COPIES OF LEDGER ACCOUNTS ETC. , W HICH CLEARLY SHOW THAT THE ASSESSEE COMPANY HAD ACCOUNTED FOR THE INTEREST AMOUNT RECEIVED FROM THE ADVANCE MADE TO THE RELATED PARTIES. FURTHER IN RESPECT OF LEGAL AND PROFESSIONAL CHARGES, THE ASSESSEE COMPANY FILED COPIES OF LEDGER ACCOUNTS WHICH CLEARLY EXPLAIN THE METHOD OF ACCOUNT ING ADOPTED BY THE ASSESSEE COMPANY WHILE ACCOUNTING FOR THE LEGAL AND PROFESSIONAL EXPENSES FROM WHICH IT IS CLEAR THAT IT IS NOT THE TAX PAYABLE BUT THE EXPENDITURE IS IN THE NATURE OF LEGAL AND PROFESSIONAL CHARGES. THE LD.CIT(A) AFTER APPRECIATING THE FACTS OF THE CASE HAD GRANTED RELIEF IN RESPECT OF THESE TWO ITEMS AFTER PASSING A VERY SPEAKING AND A WELL REASONE D ORDER. THEREFORE WE DO NOT INTEND TO INTERFERE WITH THE ORDER PASSED BY THE LD.CIT(A). WE UPHOLD THE ORDER OF THE LD.CIT(A) AND DISMISS THIS APPEAL FILED BY THE REVENUE. ITA NO. 6151/DEL/2012 A.Y. 2009 - 10 HEMANT GOYAL MOTORS PVT.LTD., NEW DELHI 5 6 . IN THE RESULT THE REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JUNE, 2015. SD/ - SD/ - [ G.C.GUPTA ] [ INTURI RAMARAO ] VICE PRESIDENT ACCOUNTANT MEMBER DT. THE . 10 TH JUNE, 2015 MANGA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES