DCIT CIR 3(3), MUMBAI V. TULIP HOTELS P.LTD, MUMBAI

ITA 7540/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2895 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 24-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Non-deduction of tax

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 7540/MUM/2013 (ASSESSMENT YEAR:2010-11) DY. COMMISSIONER OF INCOME TAX, CIRCLE-3(3), MUMBAI 400 020 APPELLANT VS. M/S. TULIP HOTELS PVT. LTD., CHANDRAMUKHI BUILDING BASEMENT, NARIMAN POINT, MUMBAI 400 021 RESPONDENT PAN: AAACT9446Q /BY APPELLANT : SHRI VINOD KUMAR, D.R. /BY RESPONDENT : SHRI VIJAY MEHTA, A.R. /DATE OF HEARING : 16.06.2016 /DATE OF PRONOUNCEMENT : 24.06.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-7, MUMBAI, DATED 08.10.2013 FOR A.Y. 2010-11 ON FOLLOWING GROUNDS: ITA NO.7540/MUM/13 A.Y. 2010-11 [DCIT VS. M/S. TULIP HOTELS PVT. LTD.] PAGE 2 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DELETING TH E ADDITION MADE OF RS.2,82,01,220/- ON ACCOUNT OF EXPENDITURE AS INTEREST COST TO M/S. COX & KING LTD . WITHOUT APPRECIATING THE FACT THAT THE SAME WAS DISALLOWED AS NON BUSINESS EXPENDITURE BY CONSIDERING THE FACTS AS PER THE PROVISIONS OF THE ACT. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN SETTING ASI DE THE ISSUE OF DISALLOWANCE OF CLAIM OF DEDUCTION OF RS.2,69,22,835/- U/S.40(A)(IA) FOR VERIFICATION BY THE AO WITHOUT APPRECIATING THE FACT THAT THE SAME WAS DISALLOWED AS NON BUSINESS EXPENDITURE AS PER THE PROVISION OF THE ACT. 2. FIRST ISSUE IS WITH REGARDS TO PAYMENT OF INTERE ST TO M/S. COX & KINGS LTD. IN THE ACCOUNT, ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS.2,82,01,220/- ON ACCOUNT OF IN TERST COST TO M/S. COX & KINGS LTD. SIMILAR ISSUE AROSE IN A.Y. 2004-05 TO A.Y. 2009-10. IN VIEW OF ABOVE, ASSESSI NG OFFICER TREATED THE CLAIM OF EXPENDITURE OF RS.2,82,01,220/ - AS NOT A BUSINESS EXPENDITURE AND HENCE, SAME WAS DISALLOWED . 3. IN APPEAL, CIT(A) OBSERVED THAT ITAT E BENCH, MUMBAI IN CASE OF ASSESSEE FOR A.Y. 2004-05 AND 2005-06 IN ITA NO.6490 & 6491/MUM/2008 HAS DECIDED THE ISSUE IN FA VOUR OF ASSESSEE. NOTHING CONTRARY WAS BROUGHT TO OUR K NOWLEDGE ON BEHALF OF REVENUE. FACTS BEING SIMILAR, SO FOLLO WING SAME REASONING, WE ARE NOT INCLINED TO INTERFERE WITH TH E ORDER OF CIT(A) WHO HAS GRANTED RELIEF BY FOLLOWING ITAT DEC ISION. SAME IS UPHELD. ITA NO.7540/MUM/13 A.Y. 2010-11 [DCIT VS. M/S. TULIP HOTELS PVT. LTD.] PAGE 3 4. NEXT ISSUE IS WITH REGARD TO DEDUCTION U/S.40(A) (IA) OF THE ACT. IN COMPUTATION OF INCOME, ASSESSEE CLAIME D DEDUCTION OF RS.2,69,22,835/- BEING THE AMOUNT DISA LLOWED U/S.40(A)(IA) OF THE ACT IN A.Y. 2006-07 IN RESPECT OF PAYMENT MADE TO M/S. COX & KINGS INDIA PVT. LTD. THE SAID CLAIM WAS MADE IN CURRENT YEAR AS ASSESSEE HAS DEDUCTED TDS T HIS YEAR ON THE AFORESAID AMOUNT. ASSESSING OFFICER FO UND THAT IN A.Y. 2006-07 THE CLAIM ON THE ABOVE AMOUNT WAS R EJECTED ON THE GROUND THAT THE SAME IS NOT FOR BUSINESS PUR POSES. SINCE, EXPENDITURE IS NOT ALLOWABLE AS BUSINESS EXP ENDITURE IN THAT YEAR, DEDUCTION CLAIMED BY ASSESSEE IN THE YEAR UNDER CONSIDERATION U/S.40(A)(IA) OF THE ACT ON PAYMENT O F TDS WAS ALSO NOT ALLOWABLE AND THEREFORE, SAME WAS DISALLOW ED. 4.1 IN APPEAL, CIT(A) OBSERVED THAT ASSESSEE CLAIME D DEDUCTION OF RS.2,69,22,835/- BEING THE AMOUNT DISA LLOWED U/S.40(A)(IA) OF THE ACT IN A.Y. 2006-07 IN RESPECT OF PAYMENT MADE TO M/S. COX & KINGS LTD. AS STATED ABOVE, SAI D CLAIM WAS MADE IN F.Y. 2009-10 RELEVANT TO A.Y. 2010-11 A S ASSESSEE HAS DEDUCTED TDS IN THE CURRENT YEAR ON TH E AFORESAID AMOUNT. IN A.Y. 2006-07, ASSESSEE HAD MA DE SUO MOTO DISALLOWANCE OF THE ABOVE SUM U/S.40(A)(IA) OF THE ACT. AS PER THE PROVISIONS OF SECTION 40(A)(IA) OF THE A CT, IF ANY EXPENDITURE HAS BEEN DISALLOWED IN ANY EARLIER YEAR ON ACCOUNT OF NON-DEDUCTION OF TAX AT SOURCE, THE SAME WOULD BE ALLOWED AS DEDUCTION IN THE YEAR IN WHICH TAX IS DEDUCTED AND PAID BY THE ASSESSEE. ITA NO.7540/MUM/13 A.Y. 2010-11 [DCIT VS. M/S. TULIP HOTELS PVT. LTD.] PAGE 4 4.2 IN THIS BACKGROUND, ASSESSING OFFICER WAS RIGHT LY DIRECTED TO VERIFY THE CHALLANS EVIDENCING PAYMENT OF TDS AND IF IT WAS FOUND CORRECT THEN HE WAS DIRECTED TO ALLOW THE SAID CLAIM OF RS.2,69,22,835/- UNDER THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. THIS REASONED FACTUA L AND LEGAL FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SI DE. WE UPHOLD THE SAME. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS THE 24 TH DAY OF JUNE, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 24/06/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. %&%'( ) / CONCERNED CIT 4. )- / CIT (A) 5.-./00'(, '( , %& / DR, ITAT, MUMBAI 6./4567 / GUARD FILE. BY ORDER / , / % , '( , %&