BMO Advisors Private Limited, New Delhi V. ACIT Circle-5(1), New Delhi

ITA 9626/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4730 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 18-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: L.N. PANT
• Keywords: TDS

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA ACCOUNTANT MEMBER ITA NO. 9626/DEL/2019 [A.Y 2015-16] BMO ADVISORS PVT. LTD VS. THE A.C.I.T. 13, ABDUL FAZAL ROAD CIRCLE 5 (1) BENGALI MARKET NEW DELHI NEW DELHI PAN : AAMCS 4136 Q [APPELLANT] [RESPONDENT] DATE OF HEARING : 24.02.2020 DATE OF PRONOUNCEMENT : 25.02.2020 ASSESSEE BY : SHRI L.N. PANT, ADV SHRI DILIP SUTAR, CA REVENUE BY : SHRI S.N. PANDEY, S R. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A) - 2, NEW DELHI DATED 15.10.2019 PERTAINING TO A.Y 2015-16. 2 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 9,26,66,708/- PA ID TO SHRI ASHUTOSH SHARMA AS BONUS. 3. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS, THE ASSESSEE COMPANY WAS ASKED TO EXPLAIN AS TO WHY HIG HER BONUS IS PAID TO SHRI ASHUTOSH SHARMA. 4. IN ITS REPLY DATED 15.07.2017, THE ASSESSEE EXPL AINED IN DETAIL THE BONUS PAID TO SHRI ASHUTOSH SHARMA. 5. EXPLANATION OF THE ASSESSEE DID NOT FIND ANY FAV OUR WITH THE ASSESSING OFFICER WHO DISALLOWED THE BONUS U/S 36(I )(II) OF THE INCOME- TAX ACT, 1961. 6. THE ASSESSEE CARRIED THE MATTER BEFORE HT LD. CI T(A) BUT WITHOUT ANY SUCCESS. 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STAT ED THAT SIMILAR DISALLOWANCES WERE MADE IN ASSESSMENT YEAR 2013-14 AND 2014-15. IT IS THE SAY OF THE LD. COUNSEL FOR THE ASSESSEE THAT IN ASSESSMENT YEAR 3 2013-14, THE DRP GAVE FAVOURABLE DIRECTIONS TO THE ASSESSING OFFICER HOLDING THAT BONUS PAID TO SHRI ASHUTOSH SHARMA SHO ULD BE ALLOWED. IN ASSESSMENT YEAR 2014-15, THE LD. CIT(A) FOLLOWED TH E DIRECTIONS GIVEN BY THE DRP IN ASSESSMENT YEAR 2013-14 AND DELETED T HE DISALLOWANCE OF BONUS. 8. PER CONTRA, THE LD. DR STATED THAT THE FACTS OF THE CASE IN HAND ARE DISTINGUISHABLE FROM THE FATS OF ASSESSMENT YEA R 2013-14 AND 2014- 15. THE LD. DR READ THE RELEVANT PORTION OF THE AS SESSMENT ORDER. 9. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE A UTHORITIES BELOW. WE HAVE ALSO PERUSED THE DIRECTIONS OF THE DRP IN A SSESSMENT YEAR 2013-14 AND ORDER OF THE FIRST APPELLATE AUTHORITY IN ASSESSMENT YEAR 2014-15. WE FIND THAT FOR SIMILAR REASONS, DISALLO WANCES WERE MADE IN THOSE YEARS BUT WERE DIRECTED TO BE DELETED. THE R ELEVANT FINDINGS OF THE DRP IN ASSESSMENT YEAR 2013-14 READ AS UNDER: HAVING CONSIDERED THE FACT OF THE CASE AND MATERIA L ON RECORD, AS WELL AS THE JUDICIAL PRONOUNCEMENT THE DRP FINDS THAT THERE IS NO MERIT IN THE AOS CONTENTION, EVEN IF THE ASSESSE E ARGUMENTS OF DOUBLE TAXATION AND THE FACT OF TDS IS NEGATED. ANY EXPENDITURE CANNOT BE DISALLOWED UNLESS IT IS FOUND TO BE NOT 4 WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSES OF BUSINESS. THE ASSESSING OFFICER, IS, THEREFORE, DIRECTED DELE TE THE DISALLOWANCE ON THIS ACCOUNT. 10. THE RELEVANT FINDINGS OF THE LD. CIT(A) IN ASSE SSMENT YEAR 2014- 15 READ AS UNDER: 7.4 I HAVE CAREFULLY CONSIDERED THE OBSERVATION OF THE ASSESSING OFFICER AND SUBMISSION OF THE APPELLANT. I FIND FOR CE IN THE SUBMISSION OF THE ) APPELLANT. THERE IS NO LAW, WHI CH REQUIRED THAT TERMS OF EMPLOYMENT MUST BE SPECIFIED IN LETTE R OF APPOINTMENT. EVEN OTHERWISE MR. ASHUTOSH SHARMA, TH E RECIPIENT OF THE BONUS MUST HAVE PAID INCOME TAX ON THE RECEIPT, THEREFORE, THE DISALLOWANCE OF THEBONUS PAID BY THE ASSESSEE COMPANY TO MR. ASHUTOSH SHARMA WILL AMOUNT TO TAXAT ION OF THE SAME BOTH IN THE HANDS OF THE ASSESSEE COMPANY (BY VIRTUE OF NOT ALLOWING THE DEDUCTION) AND THE RECIPIENT. 7.5 IN THIS CASE, THE SIMILAR PAYMENT HAS BEEN ALLOWED BY THE DRP, WHICH COMPRISES OF THREE COMMISSIONERS. VIDE P ARA 4.3 OF THE ORDER OF THE DRP-1, NEW DELHI IN THE CASE OF TH E APPELLANT FOR AY 2013-14, ORDER DATED 31.08.2017, THE ISSUE H AS BEEN DECIDED AS UNDER : 5 'HAVING CONSIDERED THE FACT OF THE CASE AND MATERIA L ON RECORD, AS WELL AS THE JUDICIAL PRONOUNCEMENT THE D RP FINDS THAT THERE IS NO MERIT IN THE AOS CONTENTION, EVEN IF THE ASSESSEE ARGUMENTS OF DOUBLE TAXATION AND THE F ACT OF TDS IS NEGATED, ANY EXPENDITURE CANNOT BE DISALL OWED UNLESS IT IS FOUND TO BE NOT WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSES OF BUSINESS. THE AO IS THEREFORE DIRECTED DELETE THE DISALLOWANCE ON THIS ACCOUNT. 11. AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT TO OUR NOTICE, RESPECTFULLY FOLLOWING THE STAND TAKEN IN EARLIER Y EARS, WE DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED DISALLOWAN CE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 9626/DEL/2019 IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 25.02. 2020. SD/- SD/- [H.S. SIDHU] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25 TH FEBRUARY, 2020. VL/ 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER