Income Tax Appellate Tribunal - Delhi
Acit, New Delhi vs Ms. Dlf Commercial Projects ... on 10 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'B', NEW DELHI
BEFORE SHRI R. S. SYAL, VICE PRESIDENT
AND SHRI K.N.CHARY, JUDICIAL MEMBER
ITA No. 2965, 2966/Del./2014
Asstt. Years : 2009-10 and 2010-11
DLF Commercial Projects Vs. ACIT
Corporation Circle-31(1)
9th Floor, DLF Centre, Sansad Marg New Delhi
New Delhi
PAN : AAAFD2181R
Appellant Respondent
ITA NO. 3046, 3047/Del/2014
Asstt. Year : 2009-10, 2010-11
ACIT Vs. DLF Commercial Projects
Circle-31(1) Corporation
New Delhi 9th Floor, DLF Centre, Sansad Marg
New Delhi
PAN : AAAFD2181R
Appellant Respondent
Assessee by : Sh.R.S.Singhvi, CA
Revenue by : Ms. Rachna Singh, CIT.DR, Sh. Anshu
prakash, Sr. D.R.
Date of Hearing: 09 08 2017
Date of Pronouncement: 10 08 2017
ITA No.2965, 2966, 3046, 3047/Del/2014 2
ORDER
PER R.S.SYAL, VICE PRESIDENT:
This batch of four appeals - two each by the assessee and the Revenue respectively - relates to the assessment years 2009-10 and 2010-11. Since some of the issues raised in these appeals are common, we are, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.
Assessment year 2009-10
2. First ground of the Revenue's appeal is against the deletion of disallowance of Rs. 25,11,78,222/- out of total disallowance of Rs. 25,40,68,602/- made by the AO on account of non-deduction of tax at source on re-imbursement of expenses and service charges and non-justification of reasonableness of expenditure paid to M/s DLF Lands Ltd., which is a sister concern of the assessee. The assessee is also aggrieved against the sustenance of addition to the tune of Rs. 28,90,380/- out of the total disallowance towards reimbursement of expenses.
3. Briefly stated the facts of the case are that the assessee claimed deduction of Rs. 54.24 crore and odd as aggregate expenses which included a sum of Rs. 25,40,68,602/- paid to DLF Lands Ltd. as 'Reimbursement of expenses' and 'service charges'. The Assessing Officer opined that the assessee ought to have deducted tax at source from such payment made to its sister concern. Since assessee had not deducted any tax at source, the AO made disallowance. The Ld. CIT(A) deleted the addition to the extent of Rs. 25,11,78,222/- by following the Tribunal order for the immediately preceding ITA No.2965, 2966, 3046, 3047/Del/2014 3 year. The remaining amount of Rs. 28,90,380/- paid to M/s. DLF Lands Ltd. towards Loss on disposal of Fixed assets, FBT and Interest on income tax was held to be not allowable. That is how, both the sides are in appeal on their respective stands.
4. We have heard the rival submissions and perused the relevant year on record. A copy of the Tribunal order for the immediately preceding assessment year 2008-09, dealing with similar disallowance, has been placed on record. After considering the necessary details, the Tribunal came to hold that no disallowance was called for on account of reimbursement of expenses. The order passed by the tribunal has been affirmed by the Hon'ble High Court, whose copy has also been placed on record. In our considered opinion, the ld. CIT(A) was right to in following the order of the tribunal for deleting the addition of Rs. 25.11 crore and odd. The Revenue's claim fails.
5. As regards the assessee's ground for confirmation of addition of Rs. 28.90 lakh, we find from the impugned order that such an amount debited by the assessee is towards Loss on disposal of Fixed assets, FBT and Interest on income tax. Such items are not deductible expenses, whether incurred by the assessee directly or reimbursed through another entity. Since these amounts are not otherwise eligible for deduction, the same cannot be allowed. Further, there is no merit in the argument of the ld. AR that the addition be deleted here because this amount was offered for tax by the other company. The only issue before us is the deductibility or otherwise of the amount in question, which was claimed as deduction by the assessee. We have noted above that such an amount is not deductible in computing the business income. Once an amount is found to have been wrongly claimed as deduction, the same has to ITA No.2965, 2966, 3046, 3047/Del/2014 4 be disallowed in the computation of income in whose hands a wrong claim was made. If some other company has wrongly offered the same amount by suo motu disallowance, then it is for that assessee to take remedial action. The assessee's ground fails.
6. Second ground of the Revenue's appeal is against the deletion of disallowance of Rs. 47,73,55,572/- made by the AO on account of unexplained suppliers / sundry creditors. On perusal of the books of accounts, the Assessing Officer found the following position : -
Account Code Account description Debit Credit Net amount A601001 Advances to suppliers of Rs. 14,53,24,739.00 Rs. 14,53,24,739.00 Nil goods/services L502014 Sundry creditor (third Rs. 31,17,77,152.17 Rs. 33,20,30,833.28 Rs. 2,02,53,681.11 party) - Supplier Total Rs. 45,71,01,891.17 Rs. 47,73,55,572.28 Rs. 2,02,53,681.11
7. On being called upon to explain the nature of above accounts, the assessee submitted that these were towards advances to suppliers and sundry creditors. The Assessing Officer made addition for a sum of Rs. 47.73 crore, being the total of credit side of the above two broader account heads, by observing that only general ledger was available which merely gave narration of transactions and nothing more than that. The ld. CIT(A) deleted the addition.
ITA No.2965, 2966, 3046, 3047/Del/2014 5
8. Having heard both the sides and perused the relevant material on record, we find that the amount of Rs. 47.73 crore added by the AO includes `Reimbursement of expenses' amounting to Rs. 24.19 crore which has been allowed while dealing with the earlier ground of the appeal. Detail of such expenses reimbursed is available on page 8 of the impugned order. Since such expenses were originally incurred by a sister concern of the assessee and later on booked by the assessee in its accounts by reimbursing the same, it cannot be treated as unexplained. The overall position of the advance of suppliers and sundry creditors has been captured by the ld. CIT(A) on page 14 of the impugned order which is as under : -
"S.N. Particulars Amount(Rs.)
1. Total aggregate of credit side of 47,73,55,572 Advance to Suppliers and Sundry Creditors considered by A.O. (Two Separate Accounts).
2. Less :
(i) Opening Balance (Sundry Creditors) 13,24,739
(ii)Amount paid to M/s DLF Land Limited / 8,87,36,000 Contra Entries/Credit Notes etc debited in (Sundry Creditors account).
(iii) Advance Paid adjusted against bills debited 14,53,24,739 23,53,85,478 In (Sundry Creditors account)
3. Reimbursement of expenses for the year 24,19,70,094 Debited to P&L A/c with corresponding credit To Sundry Creditors DLF Land Ltd. (1-2)"
ITA No.2965, 2966, 3046, 3047/Del/2014 6
9. It can be seen from the above extraction that apart from `Reimbursement of expenses', the other two entries are Rs. 8.87 crore and Rs. 14.53 crore representing Sundry creditors and Advance paid adjusted against bills. We fail to find any flaw in the impugned order in deleting this addition because the AO has simply added credit entries of Rs. 47.73 crore without noticing that there were corresponding debit entries as well and these credit entries were generated because of genuine transactions of expenses/advances/ sundry creditors. We, therefore, approve the action of the ld. CIT(A) in deleting this addition.
10. The last ground of the Revenue's appeal is against the deletion of addition of Rs. 1,74,50,000/- made by the AO u/s 68 of the Act. Facts apropos this ground are that the assessee accepted Public Deposits from 22 persons during the year, whose detail has been incorporated on page 23 of the assessment order. On being called upon to prove the genuineness of these credits, the assessee tabulated its details, which have been included on page 24 of the order. Out of total deposit of Rs. 174.50 lakh received during the year, a sum of Rs. 111.50 lakh was outstanding at the end of the year and the remaining amount was repaid. The assessee furnished details of cheque/draft no. etc. of the deposits received from these persons along with the dates of clearance. The Assessing Officer added Rs. 174.50 lakh u/s 68 of the Act as in his opinion the assessee could not prove the genuineness of the transactions. The Ld. CIT(A) deleted the addition.
11. After considering the rival submissions and perusing relevant material on record, it is noticed that the assessee came out with a Public Deposits Scheme ITA No.2965, 2966, 3046, 3047/Del/2014 7 during the year under which the deposits were received from the persons, whose details is available at pages 52 to 54 of the paper book. Page no. 55 of the paper book is a copy of Application form for acceptance / renewal of deposits. Page 56 is a copy of a cheque received by the assessee from such depositor under the Public Deposits Scheme. Page no. 57 is a copy of Deposit Receipt issued by the assessee. When all such details are considered, the inevitable conclusion which follows is that the ld. CIT(A) was fully justified in treating these deposits as genuine. It is further a matter of record that the assessee paid interest on such deposits @ 14% after deduction of tax at source. The Assessing Officer has allowed deduction of interest on such Public Deposits. Considering the totality of facts and circumstances as prevailing on these issues, we have no hesitation in countenancing the impugned order on this score. This ground is not allowed.
12. Ground nos. 1 and 2 of the assesse's appeal were not pressed. The same, therefore, stand dismissed.
13. In the result, both the appeals are dismissed.
Assessment year 2010-11 :
14. The only issue raised by the Revenue in this appeal is against the deletion of disallowance of Rs. 7,74,93,972/- out of total disallowance of Rs. 7,78,74,987/- made by the AO on account of non-deduction tax at source on `Reimbursement of expenses' and `service charges' and non-justification of reasonableness of expenditure paid to DLF Land Ltd., which is a sister concern of the assessee.
ITA No.2965, 2966, 3046, 3047/Del/2014 8
15. The assessee is also aggrieved against sustenance of disallowance out of `Reimbursement of expenses' to the tune of Rs. 3,81,015/- out of total disallowance made by the AO at Rs. 7.78 crore.
16. Both the sides are in agreement that the facts and circumstances of these grounds are mutatis mutandis similar to those for the assessment year 2009-
10. Following the view taken hereinabove, we uphold the impugned order and dismiss both the grounds.
17. In the result, both the appeals are dismissed.
(Order pronounced in the open court on 10. 08.2017.) Sd/-
Sd/-
(K.N.CHARY) (R.S. SYAL)
Judicial Member Vice President
DATED: 10.08.2017
*Binita*
Copy forwarded to:-
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
Assistant Registrar
ITA No.2965, 2966, 3046, 3047/Del/2014 9
Date Initial
1. Draft dictated on 09/08/2017
2. Draft placed before author 09/08/2017
3. Draft proposed & placed before
the second member 10/08/2017
4. Draft discussed/approved by 10/08/2017
Second Member.
5. Approved Draft comes to the 10/08/2017
Sr.PS/PS
6. Kept for pronouncement on 10/08/2017
7. File sent to the Bench Clerk
8. Date on which file goes to the AR
9. Date on which file goes to the
Head Clerk.
10. Date of dispatch of Order.
*