Income Tax Appellate Tribunal - Delhi
Dcit, New Delhi vs M/S. Jones Lang Lasalle Meghraj ... on 6 July, 2020
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IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI 'D' BENCH,
NEW DELHI [THROUGH VIDEO CONFERENCE]
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER, AND
SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER
ITA No. 4582/DEL/2016
[Assessment Year: 2012-13]
The Dy.C.I.T Vs. Jones Lang Lasalle Meghraj
Circle - 13(2) Building Operations Pvt Ltd.
New Delhi 1109-1110, Ashoka Estate,
Barakhamba Road,
Connaught Place, New Delhi
PAN: AAACW 4495 Q
[Appellant] [Respondent]
Date of Hearing : 02.07.2020
Date of Pronouncement : 06.07.2020
Assessee by : Shri Nageshwar Rao, Adv
Ms. Sherry Goel,
Revenue by : Shri Saras Kumar, DR
ORDER
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the Revenue is preferred against the order of the CIT(A) - 5, Delhi dated 30.06.2016 pertaining to A.Y 2012-13. 2
2. The grievance of the Revenue is two-fold - firstly, the Revenue is aggrieved by the deletion of addition of Rs. 3,92,167/- made by the Assessing Officer u/s 14A of the Income tax Act, 1961 [hereinafter referred to as 'The Act' for short] and secondly, the Revenue is aggrieved by the deletion of addition of Rs. 9,86,76,489/- being salary wages and other benefits which is grossly disproportionate to the revenue of the assessee.
3. Representatives of both the sides have been heard at length. Case records carefully perused.
4. Briefly stated, the facts of the case are that the assessee company is engaged in the business of providing facility management and property management services. Return of income declaring total income of Rs. 5,69,78,430/- was filed on 29.09.2012. Return was selected for scrutiny assessment under CASS and accordingly, statutory notices were issued and served upon the assessee.
5. During the course of scrutiny assessment proceedings, the assessee was asked to submit detailed note on applicability of section 14A of the Act. The assessee filed detailed reply and after considering 3 the same, the Assessing Officer computed the disallowance at Rs. 3,92,167/-.
6. Before the ld. CIT(A), it was strongly contended that during the year under consideration, the assessee did not earn any exempt income, therefore, disallowance u/s 14A of the Act is unwarranted.
7. After considering the facts and submissions, the ld. CIT(A) deleted the addition.
8. Before us, the ld. DR strongly relied upon the findings of the ld. CIT(A).
9. Per contra, the ld. counsel for the assessee reiterated what has been stated before the lower authorities.
10. We have given thoughtful consideration to the orders of the authorities below. The undisputed fact is that the assessee did not earn any exempt income during the year under consideration. Since there is no exempt income earned by the assessee during the year, 4 there cannot be any disallowance u/s 14A of the Act. This issue is by now well settled in favour of the assessee and against the revenue by the decision of the Special Bench of the Tribunal in the case of M/s Cheminvest Ltd 121 ITD 318 which was affirmed by the Hon'ble High Court of Delhi. Same view is taken by the Hon'ble Gujarat High Court in the case of Corrtech Energy (P) Ltd 372 ITR 97. In view of the above, we decline to interfere with the findings of the ld. CIT(A). Respectfully following the above mentioned judicial decisions, Ground No. 1 raised by the Revenue is dismissed.
11. Facts relating to Ground No. 2 show that during the assessment proceedings, the assessee was asked to file details of expense heads. According to the Assessing Officer, expenses have gone up sharply and the assessee was asked to justify the claim of expenses and reason for increase in expenses as compared to F.Y. 2010-11.
12. The assessee filed detailed reply and after going through the reply of the assessee, the Assessing Officer made his own ratio analysis and came to the conclusion that an increase of 10% is only allowable 5 and accordingly, computed the disallowance of salary wages and other benefits at Rs. 19,95,68,175/-.
13. Before the ld. CIT(A), it was strongly contended that the Assessing Officer has grossly erred in making disallowance merely on account of increase in salary expenses. It was brought to the notice of the ld. CIT(A) that though there is no dispute that there was jump in salary wages, but the Assessing Officer did not call for any further clarification from the assessee if he was not satisfied with the reply of the assessee dated 24.02.2015.
14. After considering the facts and submissions, the ld. CIT(A) observed that the Assessing Officer's calculation of the average salary per employee is found rather simplistic and cannot be applied across the board. The ld. CIT(A) further observed that the appellant has filed list of new employees and during the appellate proceedings, the designation and amount paid to new employees were also furnished at the behest of the ld. CIT(A). After carefully perusing the entire details filed by the assessee, the ld. CIT(A) found that the return for A.Y 2013- 14 was also scrutinised and although this issue was examined, no such 6 disallowance has been made. The ld. CIT(A) finally deleted the entire disallowance of Rs. 9.86 crores.
15. Before us, the ld. DR strongly supported the findings of the Assessing Officer.
16. Per contra, the ld. counsel for the assessee reiterated what has been stated before the lower authorities.
17. We have given thoughtful consideration to the orders of the authorities below. The undisputed fact is that the Assessing Officer did enquire about the increase in salary wages and the assessee did file a detailed reply. In our considered opinion, if the Assessing Officer was not satisfied with the reply of the assessee, then nothing prevented him to further seek clarification from the assessee in respect of jump in salary. We find that the first appellate authority did make enquiries and found that some new employees were employed by the assessee with designation and amount of salary paid to them. 7
18. We find that the first appellate authority has considered the evidences in detail and finally came to the conclusion that no disallowance needs to be made. We are further of the opinion that the Assessing Officer cannot decide how much salary a business man should pay to his employees. Considering the facts of the case in totality, we do not find any reason to interfere with the findings of the ld. CIT(A). Ground No. 2 is dismissed.
19. In the result, the appeal of the revenue in ITA No. 4582/DEL/2016 is dismissed.
The order is pronounced in the open court on 06.07.2020.
Sd/- Sd/-
(BHAVNESH SAINI) (N. K. BILLAIYA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 06th July, 2020.
VL/
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Copy forwarded to:
1. Appellant
2. Respondent
3. CIT Asst. Registrar
4. CIT(A) ITAT, New Delhi
5. DR
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.PS/PS Date on which the final order is uploaded on the website 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 Registrar for signature on the order Date of dispatch of the Order