RHC Holding Pvt. Ltd., New Delhi V. DCIT, Circle- 20(2), New Delhi

ITA 898/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2442 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 05-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ATIQ AHMED SENIOR
• Keywords: Principle of natural justice; Rule of consistency; Set aside
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA NO.898/DEL./2018 (ASSESSMENT YEAR : 2013-14) M/S. RHC HOLDING PVT. LTD., VS. DCIT, CIRCLE 20 (2 ), PRIUS PLATINUM, GROUND FLOOR, NEW DELHI, D-3, DISTRICT CENTRE, SAKET, NEW DELHI 110 017. (PAN : AAKCS7686P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI TARANDEEP SINGH, CA REVENUE BY : SHRI ATIQ AHMED, SENIOR DR DATE OF HEARING : 28.10.2021 DATE OF ORDER : 28.10.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. RHC HOLDING PVT. LTD. (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 21.12.2017 PASSED BY THE C OMMISSIONER OF INCOME-TAX (APPEALS)-7, NEW DELHI QUA THE ASSESS MENT YEAR 2013-14 ON THE GROUNDS INTER ALIA THAT :- THAT ON FACTS AND IN LAW, THE LD. CIT (APPEALS)-7 [CIT(A)] ERRED IN UPHOLDING THE DISALLOWANCE OF EXPENDITURE OF ITA NO.898/DEL./2018 2 RS.40,51,577/- MADE BY THE AO (OUT OF SUBSCRIPTION & MEMBERSHIP FEE) U/S 37(1) OF THE ACT, BEING ANNUAL PARTICIPATION FEE PAID TO THE WORLD ECONOMIC FORUM SWITZERLAND FOR THE DIRECTOR OF THE APPELLANT DURIN G THE YEAR, BY HOLDING THAT THE SAID EXPENDITURE WAS NOT INCURR ED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE APPELLANT. 2. ASSESSEE COMPANY IS A NON-BANKING FINANCIAL COMP ANY (NBFC) REGISTERED WITH RESERVE BANK OF INDIA. DURI NG THE SCRUTINY PROCEEDINGS, AO NOTICED FROM THE BALANCE S HEET AND PROFIT & LOSS ACCOUNT THAT ASSESSEE HAS CLAIMED VARIOUS EX PENSES INCLUDING EXPENSES OF RS.40,51,577/- ON ACCOUNT OF SUBSCRIPTION AND MEMBERSHIP FEE PAID TO THE WORLD ECONOMIC FORU M. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE TH AT DIRECTOR OF THE ASSESSEE COMPANY HAS BEEN REGULARLY ATTENDING A NNUAL MEETING OF WORLD ECONOMIC FORUM IN ORDER TO HAVE UPDATED IN THE BUSINESS STRATEGY AND BUSINESS MODEL IN THE RAPIDLY CHANGING ENVIRONMENT, AO TREATED THE SAME AS INDIVIDUAL VISIT AND THEREBY DISALLOWED EXPENDITURE OF RS.40,51,577 AND FRAMED ASSESSMENT U /S 143 (3) OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AT T HE TOTAL INCOME OF RS.135,46,29,280/-. 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) BY WAY OF FILING THE APPEAL WHO HAS UPHELD THE ADDITION BY DI SMISSING THE APPEAL. FEELING AGGRIEVED BY THE ORDER PASSED BY T HE LD. CIT(A), THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. ITA NO.898/DEL./2018 3 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. AT THE VERY OUTSET, LD. AR FOR THE ASSESSEE CONT ENDED THAT THE IDENTICAL ISSUE IN CASE OF THE ASSESSEE FOR AY 2011 -12 WAS REMITTED TO THE AO TO DECIDE AFRESH BY COORDINATE BENCH OF THE TRIBUNAL VIDE ORDER DATED 05.03.2020 IN ITA NO.4269/DEL/2016 , ON THE BASIS OF WHICH AO HAS ALSO GIVEN THE APPEAL EFFECT BY HOLDING THAT, NO ADVERSE INFERENCE IS DRAWN ON THE ISSUE OF EXPE NDITURE AMOUNTING TO RS.78,52,446/- BEING PARTICIPATING FEE S FOR WORLD ECONOMIC FORUM. THIS FACTUAL POSITION HAS NOT BEEN CONTROVERTED BY THE LD. DR FOR THE REVENUE. 6. BARE PERUSAL OF THE ORDER PASSED BY THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2011-12 (SUPRA) SHOWS THAT IDENTICAL ISSUE HAS BEEN REMITTED BACK T O THE AO TO DECIDE AFRESH BY TAKING INTO ACCOUNT SCHEDULE 18 AT TACHED TO THE PROFIT & LOSS ACCOUNT BY RETURNING FOLLOWING FINDIN GS :- 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT I N THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT TAKEN INTO ACC OUNT THAT THE ASSESSEE HAS SHOWN THE SUBSCRIPTION AND MEMBERSHIP FEES IN SCHEDULE 18 ATTACHED TO THE PROFIT AND LOSS ACCOUNT . BESIDES THAT THERE IS NO SEPARATE FINDING GIVEN BY THE ASSESSING OFFICER AS WELL AS BY THE CIT(A) AS TO ON WHAT BASIS THIS EXPENDITU RE HAS NOT BEEN INCURRED FOR BUSINESS PURPOSE. THEREFORE, IT W ILL BE ITA NO.898/DEL./2018 4 APPROPRIATE TO REMAND BACK THIS ISSUE TO THE FILE O F THE ASSESSING OFFICER FOR FRESH ADJUDICATION. NEEDLESS TO SAY, TH E ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLE S OF NATURAL JUSTICE. 7. SO, IN VIEW OF THE MATTER, PRESENT ISSUE FOR THE YEAR UNDER CONSIDERATION IS ALSO REMITTED BACK TO THE AO TO DE CIDE AFRESH IN ACCORDANCE WITH THE FINDINGS GIVEN BY THE COORDINATE BENCH OF THE TRIBUNAL IN AY 2011-12 (SUPRA) AND ASSESSMENT ORDER FRAMED U/S 143(3) R.W.S. SECTION 254/144B OF THE ACT FOR A Y 2011-12 BY FOLLOWING THE RULE OF CONSISTENCY. RESULTANTLY, TH E APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS 28 TH DAY OF OCTOBER, 2021 AFTER THE CONCLUSION OF THE VIRTUAL HEARING. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 28 TH DAY OF OCTOBER, 2021/TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-7, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.