ACIT, Central Circle- 3, New Delhi V. Satender Kumar Jain, New Delhi

ITA 7358/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 0168 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2014-2015
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect; Revenue expenditure; Rule 8D
• Section: 14A; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. ANIL CHATURVEDI, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCING) ITA NO.7538/DEL/2017 (FOR ASSESSMENT YEAR : 2013-14) ACIT CIRCLE 19(2), NEW DELHI PAN NO. AADCP 8140 Q VS. PEOPLE STRONG HR SERVICES PVT. LTD., 216(72B), LANE 12, EAST AZAD NAGAR, KRISHNA NAGAR NEW DELHI-110051 (APPELLANT) (RESPONDENT) A SSESSEE BY -- NONE -- RE VENUE BY SHRI SOHAIL MALIK, SR. D.R. DATE OF HEARING: 16 / 0 3 /202 1 DATE OF PRONOUNCEMENT: 16 / 0 3 /202 1 ORDER PER ANIL CHATURVEDI, AM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 13.09.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-38, DELHI RELATING TO ASSESSMENT YEAR 2013-14. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEALS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION RS.1,44,78,880/- ON ACCOUNT OF DISALLOWANCE OF ESOP EXPENSES BY HOLDING THE NOTIONAL DISCOUNT ITA NO.7538/DEL/2017 ACIT VS. PEOPLE STRONG HR SERVICES PVT. LTD. A.Y. 2013-14 2 ON SHARES ISSUES UNDER ESOP SCHEME AS REVENUE EXPENDITURE ALLOWABLE U/S 37(1) OF THE I.T. ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.1,44,78,880/- ON ACCOUNT OF DISALLOWANCE OF ESOP EXPENSES IGNORING THE FACT THAT ALLOWABILITY OF EXPENDITURE U/S 37(1) OF THE ACT CANNOT BE DETERMINED ON THE BASIS OF SEBI GUIDELINES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) ERRED IN LAW BY DELETING THE ADDITION/ DISALLOWANCE OF RS.5,17,950/- MADE BY THE AO U/S 2(24)(X) R.W.S. 36(1)(VA) ON ACCOUNT OF DELAYED PAYMENT OF EPF AND ESIC, IGNORING THE CLARIFICATION ISSUED BY THE BINDING CIRCULAR NO.22/2015 OF CBDT. 4. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, LD CIT(A) HAS ERRED IN LAW IN DELETING THE DISALLOWANCE OF RS.15,738/- U/S 14A OF I.T. ACT IGNORING THE MANDATORY NATURE OF RULE 8D AND THE BINDING CBDT CIRCULAR NO.5/2014 DATED 11.02.2014. 5. THE APPELLANT CRAVES TO BE ALLOWED TO ADD AND ALTER ANY FRESH GROUNDS(S) OF APPEAL AND /OR DELETE OR AMEND ANY OF THE GROUND(S) OF APPEAL. 3. AT THE TIME OF HEARING, WE INQUIRED FROM THE LD. DR AS TO WHETHER THE TAX EFFECT OF THE GROUNDS RAISED BY REVENUE IS LESS THAN THE MONETARY LIMIT PRESCRIBED BY CBDT FOR FILING THE APPEALS TO WHICH HE FAIRLY ADMITTED THAT THE TAX EFFECT IS LESS THAN THE MONETARY LIMIT PRESCRIBED BY CBDT FOR FILING THE APPEALS. 4. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIAL ON RECORD. ON PERUSING THE GROUNDS OF APPEAL RAISED BY THE REVENUE, WE FIND THAT REVENUE IS AGGRIEVED BY THE ORDER OF LEARNED CIT(A) IN RESPECT OF THE RELIEF GIVEN BY HIM. WE FIND THAT CBDT VIDE CIRCULAR NO. 3/2018 DATED 11.07.2018 HAD INCREASED THE LIMIT FOR FILING APPEAL BEFORE ITAT AT RS. 20 LAKHS. THE LIMIT FOR FILING APPEALS BEFORE ITAT AND OTHER AUTHORITIES WERE ENHANCED BY CBDT VIDE CIRCULAR NO.17 OF 2019 DATED 08.08.2019. AS PER THE AFORESAID CBDT CIRCULAR DATED 08.08.2019, NO DEPARTMENT ITA NO.7538/DEL/2017 ACIT VS. PEOPLE STRONG HR SERVICES PVT. LTD. A.Y. 2013-14 3 APPEALS ARE TO BE FILED AGAINST RELIEF GIVEN BY THE LEARNED CIT(A) BEFORE THE INCOME TAX APPELLATE TRIBUNAL UNLESS THE TAX EFFECT, EXCLUDING INTEREST, EXCEEDS RS.50 LAKHS. WE FIND THAT IN THE PRESENT CASE, THE TAX EFFECT INVOLVED IS LESS THAN RS.50 LAKHS. IN THE ABSENCE OF ANY MATERIAL PLACED ON RECORD BY THE REVENUE TO DEMONSTRATE THAT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY EXCEPTIONS PROVIDED IN PARA 10 OF THE AFORESAID CBDT CIRCULAR OF 11.07.2018, WE ARE OF THE VIEW THAT THE MONETARY LIMIT PRESCRIBED BY THE INSTRUCTIONS OF THE CDBT CIRCULAR DATED 08.08.2019 WOULD BE APPLICABLE TO THE PRESENT APPEAL OF THE DEPARTMENT. WE THEREFORE HOLD THE PRESENT APPEAL OF REVENUE TO BE NOT MAINTAINABLE ON ACCOUNT OF LOW TAX EFFECT. HOWEVER, IN CASE THERE IS ANY ERROR IN THE COMPUTATION OF THE TAX EFFECT INVOLVED OR IF FOR ANY REASON, THE AFORESAID CBDT CIRCULAR IS NOT APPLICABLE, IT WOULD BE OPEN TO THE REVENUE TO SEEK REVIVAL OF THE APPEAL. THUS THE APPEAL OF THE REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.03.2021, IMMEDIATELY AFTER CONCLUSION OF THE HEARING OF THE MATTER IN VIRTUAL MODE. SD/- SD/- (SUCHITRA KAMBLE) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:- 16.03.2021 ITA NO.7538/DEL/2017 ACIT VS. PEOPLE STRONG HR SERVICES PVT. LTD. A.Y. 2013-14 4 PY* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI