Income Tax Appellate Tribunal - Delhi
Asian Hotels Ltd., New Delhi vs Department Of Income Tax on 25 May, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'A' NEW DELHI
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND
SHRI K.D. RANJAN, ACCOUNTANT MEMBER
I.T.A No. 3820/Del/10
Asstt. Year - 2003-04
DCIT Vs. Asian Hotels Ltd..
Circle 2(1), Room No.398D, Bhikaji Cama Place,
C.R. Building, New Delhi.
New Delhi.
(Appellant) (Respondent)
Appellant by: Shri A.K. Monga, Sr. DR
Respondent by: Shri M.P. Rustogi, Advocate
ORDER
PER RAJPAL YADAV, JM:
The revenue is in appeal before us against the order of Ld. CIT(A) dated 25th May, 2010 passed for asttt. year 2003-04. The solitary grievance of the revenue is that Ld. CIT(A) has erred in deleting the penalty of ` 3,93,355/- imposed u/s 271(1)(c) of the Income Tax Act. 2 ITA No. 3820/Del/10
Asstt. year 2003-04
2. The brief facts of the case are that assessee has filed its return of income on 22nd December, 2003 declaring an income of ` 6,32,22,470/-. An assessment was passed u/s 143(3) on 30th March, 2006 whereby total income of the assessee has been determined at ` 11,53,36,450/-. During the course of assessment proceeding Ld. AO found that assessee had made the provisions in respect of certain foreign payments and claimed them. The details have been noticed by the AO in paragraph No. 7.1 which read as under :-
Particulars Amount Remarks
Provision for training expenses to Hyatt Rs. 707294 Paid in F.Y.2003-04
International Asia-Pacific Ltd. Hongkong
Provision for FBFR Software Maintenance to Rs. 23865 Written back in F.Y. 2003-04
Information Services Ltd.
Provision for Cognos Software Maintenance Rs. 23865 Written back in F.Y. 2003-04
to Information Services Ltd.
Provision for Maxial Software Maintenance to Rs. 315329 Part paid in F.Y. 2004-05 and part
Information Services Ltd. written back in F.Y. 2003-04
TOTAL Rs. 1070353
3. Ld. AO disallowed this claim of assessee by making the following observation in paragraph No. 7.2.
7.2 Since the above expenses have been claimed as provisions and the tax has not been deducted as per the relevant provisions of the I.T. Act, 1961, the same are disallowed and the amount of Rs. 1070353/- is added back to the income of the assessee.
4. On perusal of the above finding it reveals that claim of the assessee has been disallowed only on the ground that it failed to deduct 3 ITA No. 3820/Del/10 Asstt. year 2003-04 the tax or if tax has been deducted then that has not been paid to the Govt. treasury. He initiated penalty proceeding against the assessee and ultimately imposed the penalty of Rs. 393355/-.
5. Ld. CIT(A) has deleted the penalty by following decision of Hon'ble Supreme Court in the case of Reliance Petrochem reported in 322 ITR page 158. According to the Ld. CIT(A) the assessee has disclosed all the particulars fully and truly. There is no inaccuracy. It cannot be charged with the allegation that assessee furnished inaccurate particulars which can be used for visiting the assessee with the penalty.
6. Ld. DR while impugning the order of Ld. CIT(A) contended that assessee is an organized company. It is fully aware about its tax obligation, in respect of payments made to the foreign companies upto and unless it has deducted the tax and paid to the Govt. it cannot claim deduction of such payments. The expenses for which it has made provision and claimed as deduction may be business expenses but if the business expenses are payable to a foreigner then assessee is bound to deduct the tax in order to claim the deduction. Thus assessee has furnished inaccurate particulars and it deserves to be visited with penalty. Ld. DR for buttressing his argument relied upon the decision of 4 ITA No. 3820/Del/10 Asstt. year 2003-04 Hon'ble Delhi High Court in the case Zoom Communication reported in 191 Taxman 179.
7. Ld. Counsel for the assessee on the other hand relied upon the order of Ld. CIT(A). He submitted that as far as amount of Rs. 7,07,294/- paid in F.Y. 2003-04 is concerned the tax was deducted in the next year. It was duly paid in the Govt. account. The deduction could be allowed to the assessee in the next year but it has not been allowed either this year or in the next year. Thus assessee has paid the tax on this amount as well as its deduction has also been denied in both years. There is no dispute that these expenses are of business nature. The only dispute between the assessee and the revenue is that whether they can be allowed to the assessee or not. Ld. AO disallowed the claim of assessee because it failed to deduct the TDS and paid it to the Govt. Exchequer. The lapse at the part of assessee is a bonafide lapse. It has filed a return declaring income of more than ` 6 crore. There cannot be any intentional attempt at the end of assessee.
8. We have duly considered the rival contention and gone through the record carefully. There is no doubt that the claim made by the assessee is in respect of business expenses. Had the assessee 5 ITA No. 3820/Del/10 Asstt. year 2003-04 deducted the TDS and paid it to the Govt. account then its deduction could be allowed. According to the assessee it has paid the tax also in the next year for the sum of ` 7,07,294/- and even thereafter deduction was not granted to it. Ld. First Appellate Authority has accepted the plea of assessee that it was a bonafide error. Otherwise assessee has disclosed all material facts truly in the return. Ld. CIT(A) has placed its reliance on the latest decision of Hon'ble Supreme Court in the case of Reliance Petrochem.
9. On perusal of the asstt. order it reveals that AO has made disallowance of ` 74,79,510/- u/s 40 (a)(i) of the Income Tax Act on the ground that assessee has deducted the tax in respect of five projects but deposited the same subsequent to the relevant financial year. He disallowed the claim of assessee. It appears that this disallowance has been deleted in further appeal because no penalty has been initiated against the assessee which is an identical aspect as far as the disallowance of ` 10,70,353/- is concerned for which penalty has been levied. It comes out from the penalty order that this amount was not disputed by the assessee in the appeal. Thus taking into consideration the overall facts and circumstances particularly the amount of disallowance vis a vis the returned income, we are of the view that it is a 6 ITA No. 3820/Del/10 Asstt. year 2003-04 bonafide lapse at the end of the assessee. There is no deliberated attempt to conceal the particulars of income. Ld. CIT(A) has rightly appreciated the facts and circumstances we do not see any reason to interfere in his order.
10. In the result appeal of the revenue is dismissed.
Order pronounced in the open court on 7.1.2011.
Sd/-
[K.D. RANJAN] [RAJPAL YADAV]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 7.1.2011
Veena
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT TRUE COPY By Order,
Deputy Registrar,
ITAT