DCIT, Jaipur V. SHIVANI ENCLOAVE PVT. LTD., Jaipur

ITA 729/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5590 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 30-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: G G MUNDRA
• Keywords: Depreciation; Relationship of principal and agent
• Section: 143(3); 32

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 729/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2011-12 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. CUKE VS. M/S SHIVANI ENCLAVE PVT. LTD., 24, GOYAL HOUSE, AJMER ROAD, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AADCS 1951 L VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJ MEHRA (JCIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI G.G. MUNDRA (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 27/11/2015 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 13/01/2016 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 06/08/2014 PASSED BY THE LEARNED CIT(A)-I, JAIPUR F OR A.Y. 2011-12. THE RESPECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1 WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, LD CIT(A), HAS ERRED IN ALLOWING DEPRECIATION AT THE RATE OF 80% ON THE COMPLETE WIND MILL AS CLAIMED BY THE ASSESSEE WITHOUT ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 2 SEGREGATING THE INVESTMENT ON BUILDING AND OTHER ITEMS, NOR FORMING PART OF THE WIND MILL PLANT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A), HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 194H ARE NOT APPLICABLE O N PAYMENT OF COMMISSION MADE BY ASSESSEE TO BANKS ON TRANSACTIONS MADE THROUGH CREDIT CARDS AND THEREBY DELETING THE ADDITION OF RS. 6,84,198/- MAD E U/S 40(A)(IA) OF THE ACT. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A), HAS ERRED IN DELETING THE DISALLOWANCES OF STAFF WELFARE AND MISC. EXPENSES OF RS. 10,68,985/-. 2. THE FIRST GROUND OF THE REVENUE APPEAL IS AGAINST ALLOWING THE DEPRECIATION @ 80% ON THE COMPLETE WIND MILL. THE ASSE SSEE COMPANY IS RUNNING HOTELS, RESTAURANTS, BAR, SHOPPING COMPL EX AND WIND MILLS. IT FILED RETURN OF INCOME ON 23/09/2011 DECLARING TOTA L INCOME OF RS. 2,92,31,950/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS INSTALLED TWO WIND MILLS AT VILLAGE SAADIYA, DISTRICT JAISALMER, RAJASTHAN OF RS. 3,66,33,382/- IN F.Y. 2007-08 AND SECOND AT VILLAGE KOTARA, DISTRICT- BARMER, RAJASTHAN OF RS. 3,54,50,852/- IN F.Y. 2009-10. THE LD ASSESSING OFFICER CALLED THE DETAILS FROM THE ASSES SEE AND VERIFIED THE DEPRECIATION CLAIMED BY IT. THE ASSESSEE HAS CLAIMED DEPRECIATION @ 80% ON RS. 3,66,33,282/- AND 3,54,50,852/-. THE LD ASSESSING OFFICER OBSERVED THAT ANCILLARY ITEMS CONNECTED WITH INSTALL ATION OF THE WIND ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 3 MILL. AS PER ACT, 80% DEPRECIATION IS PROVIDED ON E NERGY SAVING DEVICES AND DOES NOT INCLUDE ANY OTHER ACCESSORIES & EXPEND ITURE CONNECTED WITH THE SYSTEM. THE ANCILLARY ITEM SHOULD HAVE BEEN PROVIDED DEPRECIATION EITHER UNDER THE HEAD BUILDING @ 10% OR AS PLANT AND MACHINERY @ 15%. THE LD ASSESSING OFFICER GAVE REASO NABLE OPPORTUNITY OF BEING HEAD, WHICH WAS REPLIED VIDE LET TER DATED 22/10/2013, WHICH HAS BEEN REPRODUCED ON PAGE NO. 3 AND 4 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER REFERRED SECTION 32 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) AS WELL AS SCHEDULE AS PER APPENDIX 1 , RULE 5 OF THE ACT AND HELD THAT ALL THE ASSETS SHOULD BE EITHER COVER ED UNDER FOUR HEADS PROVIDED UNDER THIS APPENDIX, WHICH IS (I) LAND, (II ) BUILDING, (III) PLANT AND MACHINERY & (IV) FURNITURE, FOR WHICH DIFFERENT RATES OF DEPRECIATION HAVE BEEN PROVIDED BY THE LAW. AS PER APPENDIX-I, RU LE 5 OF THE ACT, THE DEPRECIATION ON WIND MILLS IS AS UNDER:- CLAUSE III: MACHINERY & PLANT (XIII) RENEWAL ENERGY SAVING DEVICES BEING: (I) WIND MILLS AND ANY SPECIALLY DESIGNED DEVICES WHICH RUN ON WIND MILLS. (M) ANY SPECIAL DEVICE INCLUDING ELECTRIC GENERATO RS AND PUMPS RUNNING ON WIND ENERGY. ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 4 THE CATEGORIZATION MADE IN THE APPENDIX SHOWS THAT TH ERE IS NO INTENTION TO INCLUDE INTERNAL APPROACH ROADS, FOUND ATION WORK AND CRANE PLATFORM FOR WIND MILL, SUPPLY OF ELECTRIC ITEMS LIK E RSJ POLES DISC INSULATOR, CONDUCTOR ETC. IN THE ABOVE BLOCK OF ASS ETS. FURTHER THE EXPENDITURE ON ACCOUNT OF LABOUR FOR CIVIL WORK OR E LECTRICAL WORK CARRIED OUT IN CONNECTION WITH THE INSTALLATION OF WIND MILL ALSO CANNOT BE INCLUDED IN THE DEFINITION OF WIND MILL BY ANY MEAN S BECAUSE THEY ARE NOT DEVICES IN ANY SENSE ARE MENTIONED IN (XIII)(L) AND (M). THE LD ASSESSING OFFICER RECATEGORIZED THE ASSETS SHOWN BY THE ASSESSEE IN THE BALANCE SHEET UNDER THE FOLLOWING HEADS: 1] EXPENDITURE INCURRED FOR CIVIL WORK CARRIED OUT AT SITE, CHARGES FOR CREATION OF FOUNDATION/PLATFORM. 2] EXPENDITURE INCURRED ON ACCESSORIES & ELECTRICA L ITEMS TO RENEWABLE ENERGY DEVICE AND THEIR COMPONENTS AND LAB OUR CHARGES FOR INSTALLATION OF ELECTRICAL LIE FOR TRANSMISSION AND METERING. 3] CONSIDERATION IN CONNECTION WITH TRANSFER OF LE ASE LAND. 4] POWER EVACUATION CHARGES. 5] INTEREST ON BANK LOAN. THEREAFTER HE CONSIDERED ALL THE CATEGORIZATION OF A SSETS PARTICULARLY EXPENDITURE INCURRED FOR CIVIL WORK CARRIED OUT AT S ITE, CHARGES FOR CREATION OF FOUNDATION/PLATFORM, EXPENDITURE INCURR ED ON ACCESSORIES & ELECTRICAL ITEMS TO RENEWABLE ENERGY DEVICE AND THEI R COMPONENTS AND ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 5 LABOUR CHARGES FOR INSTALLATION OF ELECTRICAL LINE FOR TRANSMISSION AND METERING, LAND LEASE RELATED EXPENDITURE, POWER EVAC UATION CHARGES & INTEREST CAPITALIZATION AND RECALCULATED THE DEPREC IATION AS PER ABOVE CATEGORIZATION BY THE ASSESSING OFFICER, WHICH IS A S UNDER:- WIND MILL F.Y. 2007-08 ITEM AMOUNT INITIALLY INCURRED DURING F.Y. 2007-08 DEPRECIATION ALLOWED IN A.Y. 2010-11 WDV AS ON 01/4/2010 AFTER CONSIDERING ASSESSMENT ORDER U/S 143(3) FOR A.Y. 2010- 11 ALLOWABLE RATE OF DEPRECIATION DEPRECIATION ALLOWED FOR A.Y. 2011-12 (UNDER CONSIDERATION) WIND MILL PLANT 27420696 2632387 658097 80% 526477 BUILDING 2661554 227563 2048066 10% 204807 PLANT & MACHINERY 6451132 760830 4311373 15% 646706 LEASE AND HOLD LAND 100000 NIL NIL NIL NIL TOTAL ALLOWABLE DEPRECIATION 1377990 WIND MILL F.Y. 2009-10 ITEM AMOUNT INITIALLY INCURRED DURING F.Y. 2009-10 DEPRECIATION ALLOWED IN A.Y. 2010-11 WDV AS ON 01/4/2010 AFTER CONSIDERING ASSESSMENT ORDER U/S 143(3) FOR A.Y. 2010- 11 ALLOWABLE RATE OF DEPRECIATION DEPRECIATION ALLOWED FOR A.Y. 2011-12 (UNDER CONSIDERATION) WIND MILL PLANT 25645000 10258000 15387000 80% 12309600 BUILDING 2964501 148225 2816276 10% 281628 PLANT & MACHINERY 4216636 445601 3771035 15% 565655 ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 6 LEASE AND HOLD LAND 900000 NIL NIL NIL NIL TOTAL ALLOWABLE DEPRECIATION 13156883 FINALLY HE DISALLOWED DEPRECIATION OF RS. 31,84,897 AND THE SAME WAS ADDED IN THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED BY THE ORDER OF THE LEARNED ASSE SSING OFFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD ALLOWED THE APPEAL BY OBSERVING AS UNDER:- 4. I HAVE CONSIDERED THE FACTS OF THE CASE. IT IS NOTED THAT THE A.O. HAS DISALLOWED THE CLAIM OF DEPRECIATION PARTLY . THE APPELLANT HAD CLAIMED DEPRECIATION OF RS. 1,77,19,7 70/- AGAINST WHICH THE CLAIM OF ONLY RS. 1,45,34,873/- WAS ALLOWED ON THE GROUND THAT CRANE PLATFORM, LAND LEAS E EXPENSES, BUILDING AND MACHINERY MEANT FOR WIND MILL ETC. WAS NOT ELIGIBLE FOR DEPRECIATION @ 80% 4.1 IT IS, HOWEVER, NOTED THAT SIMILAR DISALLOWANCE S MADE BY THE A.O. IN THE EARLIER YEARS WERE DELETED BY MY PREDECESSOR, RELYING ON THE DECISION OF THE HONBL E ITAT, JAIPUR BENCH IN THE CASE OF M/S CHIRASH ASSOCIATES PVT. LTD. (ITA NO. 1632/JP/08). THE HONBLE ITAT HAD HELD IN T HAT CASE THAT THE APPELLANT WAS ENTITLED TO CLAIM DEPREC IATION @ 80% ON TOTAL EXPENDITURE INCURRED ON FOUNDATION, E RECTION, INSTALLATION, OTHER CIVIL WORK ETC. ALONGWITH THE WIND MILL. IN VIEW OF THESE FACTS, THE DISALLOWANCE MADE BY THE ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 7 ASSESSING OFFICER APPEARS TO BE UNJUSTIFIED AND IS, ACCORDINGLY, DELETED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. ASSESSING OFFICER. A T THE OUTSET, THE LD AR OF THE ASSESSEE HAS SUPPORTED THE ORDER OF THE LD C IT(A) AND FURTHER SUBMITTED THAT THIS ISSUE HAS ALREADY BEEN CONSIDER ED BY THE HONBLE ITAT IN ASSESSEES OWN CASE FOR A.Y. 2008-09 IN ITA N O. 840/JP/2011 ORDER DATED 25/7/2014. HE ALSO RELIED ON THE DECISI ON OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. KK ENTERPRISES (2014) 227 TAXMAN 181 (RAJ.) AND PRAYED TO CONFIRM THE ORDE R OF THE LD CIT(A). 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THIS B ENCH HAS ALREADY CONSIDERED THE ASSESSEES OWN CASE IN ITA NO. 840/JP /2011 FOR A.Y. 2008-09 ON IDENTICAL FACTS. THE OPERATIVE PORTION OF THE ORDER IS REPRODUCED AS UNDER:- 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE VARIOUS HIGH CO URTS AS WELL AS COORDINATE BENCH OF ITAT, JAIPUR IN CASE OF DCIT VS. VIPPY SOLVEX PRODUCTS LTD. AND DCIT VS. M/S CHIRAG ASSOCI ATES (P) LTD. RESPECTIVELY, HELD THAT FOUNDATION OF PLATFORM , ERECTION, INSTALLATION OF PLANT AND MACHINERY, PREPARATION OF CRANE ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 8 PLATFORM FOR WIND MILL AND OTHER CIVIL WORK CARRIED OUT FOR INSTALLATION ARE INTERNAL PART OF WIND MILL, WHICH HAVE NOT INDEPENDENT USE. THUS, WE ARE OF THE CONSIDERED VIE W THAT THE ASSESSEE IS ENTITLED FOR 80% OF DEPRECIATION ON COM POSITE WIND MILL PROJECT INCLUDING OTHER EXPENDITURE FOR PUT TO USE FOR WIND MILL. THUS, WE CONFIRM THE ORDER OF LEARNED CIT(A). ACCORDINGLY, ON THIS GROUND, THE APPEAL OF THE REVE NUE IS DISMISSED. 6. THE SECOND GROUND OF REVENUES APPEAL IS AGAINST HOLDING THAT THE PROVISIONS OF SECTION 194H ARE NOT APPLICATION ON PAYMENT OF COMMISSION MADE BY ASSESSEE TO BANKS ON TRANSACTION S MADE THROUGH CREDIT CARDS AND THEREBY DELETING THE ADDITION OF R S. 6,84,198/- U/S 40(A)(IA) OF THE ACT. THE LD ASSESSING OFFICER OBSER VED THAT THE ASSESSEE HAD DEBITED CREDIT CARD COMMISSION OF RS. 10,53,031/-. THE ASSESSEE HAS NOT DEDUCTED TDS ON PAYMENT OF CREDIT CARD SERVICE CHARGES. EACH CHARGE APPEARED TO BE COMMISSION IN R ESPECT OF CREDIT CARD. SECTION 40(A)(IA) OF THE ACT IS SQUARELY APPL ICABLE ON IT. THE ASSESSEE WAS GIVEN REASONABLE OPPORTUNITY OF BEING H EARD. THE ASSESSEES REPLY WAS REPRODUCED BY THE ASSESSING OFF ICER ON PAGE 12 TO 14 OF THE ASSESSMENT ORDER. AFTER CONSIDERING THE A SSESSEES REPLY, THE LD ASSESSING OFFICER HELD THAT ACTUALLY CREDIT CARD COMMISSION PAYMENT IS SERVICES CHARGES. THE LD ASSESSING OFFICER ALSO A NALYSED THE CREDIT CARD FACILITY SERVICES ON PAGE 14 TO 16 OF THE ASSE SSMENT ORDER AND ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 9 FINALLY HELD THAT SERVICE CHARGES/CREDIT CARD COMMI SSION IS NOTHING BUT COMMISSION IS DEFINED IN SECTION 194H, WHICH HAS ALS O REPRODUCED BY THE ASSESSING OFFICER ON PAGE 16 AND 17 OF THE ASSE SSMENT ORDER. ACCORDINGLY, THE ASSESSEE IS LIABLE TO DEDUCT TDS U /S 194H OF THE ACT. HE FURTHER REFERRED CBDT CIRCULAR NO. 619 ON TDS DAT ED 04/12/1991 ON PAGE NO. 17 OF THE ASSESSMENT ORDER. HE FURTHER REL IED ON THE DECISION IN THE CASE OF CIT VS. SINGAPORE AIRLINES LTD. & OTH ER AIRLINES, 213 TAXMAN 441, AHMADABAD TRIBUNAL ORDER IN THE CASE OF C ANARA BANK VS. ITO 305 ITR (AT) 189, MUMBAI ITATS DECISION IN THE CA SE OF ULTRA ENTERTAINMENT SOLUTIONS LTD. VS. ITO 17 SOT 249. AC CORDINGLY, HE DISALLOWED THE COMMISSION PAYMENT RELATED TO THESE B ANKS AT RS. 6,84,198/- IN RESPECT OF CITI BANK AND AXIX BANK LT D. 7. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD ALLOWED THE APPEAL BY OBSERVING AS UNDER:- 6. I HAVE CONSIDERED SUBMISSIONS MADE BY THE APPEL LANT AND HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER. IT IS NOTED THAT THE DISALLOWANCE HAD BEEN MADE BY THE A.O. ON T HE GROUND THAT THE APPELLANT HAD NOT DEDUCTED ANY TAX FROM THE PAYMENTS OF CREDIT CARD SERVICES CHARGES. IT IS , ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 10 HOWEVER, NOTED THAT THE DISALLOWANCE OF SIMILAR NATUR E HAS BEEN DELETED IN THE ASSESSMENT YEAR 2010-11 FOLLOWIN G THE ORDER OF THE HONBLE ITAT IN THE CASE OF M/S GEMS PA RADISE FOR THE ASSESSMENT YEAR 2008-09 (ITA NO. 746/JP/201 1). IT HAS BEEN HELD BY THE HONBLE ITAT THAT THE PROVISIO NS OF SECTION 194H WERE NOT APPLICABLE WHERE THERE WAS NO RELATIONSHIP OF PRINCIPAL AND AGENT. FOLLOWING THE D ECISION OF MY PREDECESSOR AND THE HONBLE ITAT, THE DISALLO WANCE IS DELETED IN THIS YEAR AS WELL. THE APPEAL ON THIS GROUND IS, ACCORDINGLY, ALLOWED. 8. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. AT TH E OUTSET, THE LD AR OF THE ASSESSEE HAS RELIED ON THE ORDER OF THE LD CIT(A ) AND REITERATED THE ARGUMENTS MADE BEFORE HIM AND FURTHER ARGUED THAT THE ISSUE IN QUESTION IS COVERD IN FAVOUR OF ASSESSEE FROM APPEA L ORDER OF THE HONBLE BENCH IN ASSESSEES OWN CASE FOR A.Y. 2008-0 9 IN C.O. NO. 26/JP/2012 ORDER DATED 25/7/2014. THEREFORE, HE PRAY ED TO CONFIRM THE ORDER OF THE LD CIT(A). 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THIS B ENCH HAS ALREADY CONSIDERED THE ASSESSEES OWN CASE IN ITA NO. 840/J P/2011 & C.O. ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 11 26/JP/2012 FOR A.Y. 2008-09 ON IDENTICAL FACTS. THE OPERATIVE PORTION OF THE ORDER IS REPRODUCED AS UNDER:- 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. TH E ASSESSEE IS IN THE BUSINESS OF HOTEL AND RESTAURANT . DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE PROVIDED SERVICE TO FOREIGN AS WELL AS INDIAN TOURIS TS BY WAY OF HIRE CHARGES AS WELL AS SUPPLY OF FOOD AND BEVERAGES. THE CUSTOMERS PAID THIS SERVICE THROUGH CREDIT CARDS, WHICH IS CREDITED BY THE BANK OF CREDI T CARD HOLDERS. THE CONCERNED BANK TRANSFERS THIS MONEY AFT ER CHARGING OF FEES. IT IS FACT THAT THESE SERVICES WE RE RENDERED BY THE BANK OF CREDIT CARD HOLDERS NOT BY THE BANK OF ASSESSEE. THE APPELLANT GETS REMAINING AMOU NT AFTER DEDUCTING THE FEES. THE COORDINATE A BENCH O F THE ITAT, JAIPUR IN THE CASE OF GEMS PARADISE VS. ACIT H ELD SIMILAR IDENTICAL ISSUES AS UNDER:- 27. AFTER CONSIDERING THE ORDERS OF THE AO AND LD. CIT (A), WE FIND THAT ASSESSEE DESERVES TO SUCCEED IN THIS REGA RD. SECTION 194H IS APPLICABLE WHERE ANY COMMISSION HAS BEEN PAID BY THE PRINCIPAL TO THE COMMISSION AGENT. THIS IS NOT A CASE OF COMMISSION AGENT AS ASSESSEE SOLD ITS GOODS THROUGH CREDIT CARD AND ON PRESENTATION OF BI LL ISSUED AGAINST CREDIT CARD, THE BANK MAKES PAYMENT TO THE ASSESSEE AFTER DEDUCTING AGREED FEES AS PER TER MS AND CONDITIONS IN CASE OF CREDIT CARD. THIS IS NOT A COMMISSION PAYMENT BUT A FEES DEDUCTED BY THE BANK. IF THERE IS AN AGREEMENT, THAT IS AGREEMENT BETWEEN TH E CREDIT CARDHOLDER AND THE BANK. BANK IS A PRINCIPA L AND TO ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 12 SPREAD OVER ITS BUSINESS, A SCHEME IS FLOATED BY BA NK I.E. ISSUANCE OF CREDIT CARDS. BANK ISSUES CREDIT CARD TO THE VARIOUS CUSTOMERS WHO PURCHASE THE VARIOUS CREDIT C ARDS ON THE AGREED TERMS AND CONDITIONS. ONE OF THE MAJO R CONDITION IS THAT IF CREDIT CARD HOLDER DOES NOT MA KE PAYMENT WITHIN THE PRESCRIBED TIME LIMIT THEN THEY CHARGE 2% PENAL AMOUNT OF BILL WHICH IS RAISED BY THE SHOP KEEPER AGAINST SALE OF ITS ITEMS THROUGH CREDIT CAR D. BANK CANNOT REFUSE THE PAYMENT TO THE SHOP KEEPER WHO SA LE THEIR GOODS THROUGH CREDIT CARD. ONLY IN THOSE CAS ES WHERE GOODS ARE FOUND DAMAGED AND CREDIT CARD HOLDE R INFORM THE BANK THAT THE MATERIAL PURCHASED BY THEM IS DAMAGED OR DEFECTIVE AND REQUEST THE BANK NOT TO MA KE THE PAYMENT, IN SUCH CASES ONLY BANK CAN WITHHOLD T HE PAYMENT, OTHERWISE THE BANK HAS TO MAKE THE PAYMENT TO THE SHOP KEEPER. THEREFORE, IN OUR CONSIDERED V IEW, THERE IS NO SUCH RELATION BETWEEN THE BANK AND THE SHOP KEEPER WHICH ESTABLISHES THE RELATIONSHIP OF A PRIN CIPAL AND COMMISSION AGENT. TECHNICALLY IT MAY BE WRITTE N THAT BANK WILL CHARGE CERTAIN PERCENTAGE OF COMMISS ION BUT THIS IS NOT A COMMISSION BECAUSE ASSESSEE SELLS ITS GOODS AGAINST CREDIT CARDS, AND ON PRESENTATION OF BILLS, THE BANK HAS TO MAKE THE PAYMENT. IT IS NOT THE CAS E THAT BANK HAS ADVISED THE ASSESSEE TO SELL THEIR GOODS T O ITS CUSTOMERS THEN HE WILL PAY THE COMMISSION. IT IS RE VERSED IN A SITUATION AS BANK ISSUED CREDIT CARDS TO THE C REDIT CARD HOLDERS ON CERTAIN FEES OR WHATEVER THE CASE M AY BE AND THE CARD HOLDER PURCHASES MATERIAL FROM THE MAR KET THROUGH HIS CREDIT CARD WITHOUT MAKING ANY PAYMENT AND THAT SHOP KEEPER PRESENTS THE BILL TO THE BANK AGAI NST WHOSE CREDIT CARD THE GOODS WERE SOLD AND ON PRESENTATION OF BILL AS STATED ABOVE THE BANK MAKES THE PAYMENT. THEREFORE, IN OUR CONSIDERED VIEW, PROVIS IONS OF SECTION 194H ARE NOT ATTRACTED IN THIS TYPE OF TRANSACTION. THEREFORE, WE HOLD THAT ADDITION MADE AND CONFIRMED BY LD. CIT (A) WAS NOT JUSTIFIED. ACCORDI NGLY, ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 13 THE ADDITION MADE AND CONFIRMED BY LD. CIT (A) IS DELETED. 28. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D IN PART AND APPEAL OF THE DEPARTMENT IS DISMISSED. BY RESPECTFULLY FOLLOWING THE DECISION OF THE C OORDINATE A BENCH OF ITAT JAIPUR, WE ALLOW THE ASSESSEES C.O. ON THIS ISSUE. ACCORDINGLY, WE DISMISS THE REVENUES APPEAL ON THIS GROUND. 10. THE 3 RD GROUND OF THE REVENUES APPEAL IS AGAINST DELETING THE DISALLOWANCES OF STAFF WELFARE AND MISC. EXPENSES OF RS. 10,68,985/-. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS CLAIMED RS, 53,44,924/- ON ACCOUNT OF STAFF WELFARE AND MISCELLA NEOUS EXPENSES. HE ASKED THE ASSESSEE TO FURNISH THE DETAILS OF THESE EXPENSES DURING THE ASSESSMENT PROCEEDINGS. THE LD ASSESSING OFFICER ON VERIFICATION, WAS FOUND THAT THESE EXPENSES WERE INCURRED MOSTLY IN CA SH AND WERE NOT SUPPORTED BY BILLS. THE ASSESSEE HAD MADE SELF MADE VOUCHERS WHICH ARE NOT VERIFIABLE. THE LD ASSESSING OFFICER HELD T HAT IT CANNOT BE SAID THAT THESE EXPENSES WERE WHOLLY AND EXCLUSIVELY WERE INCURRED FOR BUSINESS PURPOSES, THEREFORE, HE DISALLOWED 20% OUT OF THESE EXPENSES, WHICH COMES TO RS. 10,68,985/-. ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 14 11. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING O FFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD DELETED THE ADDITION BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE. IT IS NOT ED THAT THE DISALLOWANCE HAS BEEN MADE BY THE ASSESSING OFFICER ON THE GROUND THAT ONLY SELF MADE VOUCHERS WERE AVAILABLE AND THE EXPENDITURE WAS MAINLY INCURRED IN CASH. THE A.O. HAS DISALLOWED 20% OF THE EXPENSES ONLY ON THE BASIS OF CONJECTURE AND SURMISES. THERE IS NOTHING TO SHOW THAT THE EXPE NSES WERE EITHER BOGUS OR NOT RELATED TO THE APPELLANTS BUSI NESS. MOREOVER, THE ISSUE IS COVERED IN FAVOUR OF THE APP ELLANT VIDE ORDER OF CIT APPEAL-III, JAIPUR IN APPEAL NO. 660/JP R/08-09 DATED 28/09/2010. IN VIEW OF THESE FACTS, THE DISALL OWANCE APPEARS TO BE UNJUSTIFIED AND IS, ACCORDINGLY, DELE TED. 12. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE AS SESSEE COMPANY RUNS A FIVE STAR HOTEL. THE LD. A.O. ALLEGED THAT TH ESE EXPENDITURES ARE INCURRED MAINLY IN CASH PAYMENTS & ARE NOT SUPPORTE D BY BILLS. ONLY SELF MADE VOUCHERS ARE AVAILABLE. MOREOVER IN THESE CIRC UMSTANCES IT CANNOT BE SAID THAT THESE EXPENDITURE WAS WHOLLY AND EXCLUS IVELY FOR BUSINESS PURPOSES. IN THIS CONNECTION ASSESSEE COMPANY SUBMI TS THAT THESE ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 15 EXPENSES ARE INCURRED ON VARIOUS HEADS DETAILS OF WH ICH ARE SUBMITTED HEREWITH WHICH SHOWS THAT OUT OF TOTAL EXPENSES OF RS . 53,44,924/- TOTAL PAYMENT IN CASH ARE ONLY RS. 5,82,346/-. THE HEAD WIS E DETAIL OF THESE EXPENSES IN CASH WAS SUBMITTED BEFORE CIT (A). IN GE NERAL ALL THE EXPENSES ARE INCURRED THROUGH CHEQUES AND SUPPORTED WITH REGULAR BILLS OF REPUTED SUPPLIERS/SERVICE PROVIDERS AND ONLY SOM E VERY SMALL PAYMENTS ARE IN CASH. THE COMPANY IS PROFESSIONALLY MANAGED AND IS HAVING REVENUE SHARE AGREEMENT WITH MULTINATIONAL GR OUP. IT PROCURES BILLS FOR ALL MAJOR EXPENSES AND MOSTLY PAYMENTS AR E THROUGH CHEQUES. THE CASH PAYMENTS ARE TO TEMPORARY LOW PAID EMPLOYEE S FOR WHICH DULY SIGNED VOUCHER OF RECIPIENT AND WORK SHEET DULY SIGN ED BY HEAD OF DEPARTMENT IS MAINTAINED. THE SHORT COLLECTION OF SE RVICE TAX, LUXURY TAX ETC, PAID IN CASH FOR WHICH RECEIPTS ARE THERE. THE P ETTY REPAIR EXPENSES ARE SUPPORTED WITH CASH PAYMENT BILLS AND VARIOUS OT HER EXPENSES ARE SUPPORTED WITH CASH BILLS. INTERNAL VOUCHERS ARE PRE PARED ONLY FOR SUCH PETTY EXPENSES FOR WHICH EXTERNAL VOUCHERS ARE NOT A VAILABLE AND SUCH VOUCHER ARE ALSO SIGNED BY STORE KEEPER AND COUNTER SIGNED BY SENIOR MANAGEMENT STAFF BUT FOR ALL EXPENSES A PROPER VOUC HER IS MAINTAINED WHICH ARE SERIALLY NUMBERED. A1 RECEIPTS AND ISSUES OF MATERIAL ARE FULLY ACCOUNTED IN BOOKS OF ACCOUNTS AND STOCK RECORD. THE COMPANY HAS ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 16 INTERNAL AUDIT SYSTEM AS WELL AS THERE IS STATUTORY AUDIT AND IN AUDIT REPORTS NOTHING ADVERSE HAS BEEN POINTED THAT EXPEN SES RECORDED ARE FOR OTHER THAN BUSINESS PURPOSES. IN VIEW OF THESE F ACTS AND DETAILS OF EXPENSES SUBMITTED HEREWITH SUCH ADHOC DISALLOWANCE I S ABSOLUTELY WRONG AND BAD IN LAW. RELIANCE IS PLACED ON THE CASE FRIENDS CLEARING AGENCY P. LTD. VS. CIT (2011) 237 CTR 464 (DEL). THE A.O. HAS ALSO NOT POINTED ANY SPECIFIC CASE AND HAS MADE DISALLOWANCE IN ROUTINE MANNER. IN 2010-11, A.Y. 2008-09, 2006-07 & IN A.Y. 2005-06 ALSO DISALLOWANCE OUT OF SOME EXPENSES WERE MADE BY LD. A.O. IN SIMILA R MANNER WHICH HAS BEEN DELETED IN TOTO IN APPEAL BY CIT (A) AND SU CH ORDERS BECAME FINAL. THE SIMILAR DISALLOWANCE DELETED IN A.Y. 2008- 09 & A.Y. 2010-11 IN APPEAL BY CIT (A). THE DEPARTMENT CAME IN APPEAL AGA INST THAT APPEAL ORDER OF CIT (A) ON OTHER GROUND BUT RAISED NO GROUN D ON ISSUE OF SIMILAR DELETION OF DISALLOWANCE FROM MISC. SUPPLY E XPENSES AND THEREFORE THIS GROUND RAISED IN APPEAL FOR A.Y. 201 1-12 IS UNWARRANTED. THE ORDER OF CIT (A) IS REASONED ONE AND IS AFTER VER IFICATION OF FACTS OF ISSUE WHICH DESERVES TO BE CONFIRMED AND GROUND RAIS ED BY DEPARTMENT HAS NO MERIT WHICH DESERVES TO BE DISMISSED. 13. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE IS A FIVE ITA 729/JP/2014_ DCIT VS. M/S SHIVANI ENCLAVE P LTD. 17 STAR HOTEL MANAGED PROFESSIONALLY. THERE IS AN AGREE MENT WITH MULTINATIONAL COMPANY IN SHARING RECEIPTS. THE LD AS SESSING OFFICER MADE ADDITION BY MAKING GENERAL OBSERVATION. HE IS NOT DETECTED ANY SPECIFIC BILL VOUCHERS THAT THE ASSESSEE HAS MADE C ASH PAYMENTS FOR EXPENSES OR MADE SELF MADE VOUCHERS. THE LD DR HAD N OT CONTROVERTED THE FINDINGS GIVEN BY THE LD CIT(A), THEREFORE, WE UP HOLD THE ORDER OF THE LD CIT(A). 14. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 13/01/2016. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 13 TH JANUARY, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S SHIVANI ENCLAVE PVT. LTD., JAIPU R. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 729/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR