TaxTMI 
TaxTMI 
2023 (9) TMI 776
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....ITA No. 5920/Del/2019 and ITA No. 4737/Del/2019 filed by the Revenue against the order of the CIT(A) dated 25/04/2019, 16/11/2018, 31/01/2019, 19/04/2019 and 18/03/2019 respectively. 2. The grounds of Appeal taken by the Assessee and the Revenue are as under:- ITA No.5167/Del/2019 for AY 2015-16 (Assessee) "1. Ld. CIT(A) has erred in confirming the addition made by Ld. AO of Rs. 8,02,16,000/- out of amount under Capital Reserve on 31st March, 2015 and failed to appreciate that: 1.1 Out of Rs. 8,02,16,000/-, only Rs. 1,69,78,655 relates to AY 2015-16. 1.2 Rs. 8,51,62,091/- has been added by Ld. AO in AY 2014- 15 on this account for periods upto that date, and that addition was accepted by the appellant. 1.3 Addition already accepted in AY 2014-15 had resulted in double taxation. 2. Ld. CIT(A) has erred in disallowing the expenses of Rs. 12,00,000/- being contingent liability booked for Rent to be paid to DISDC. ITA No.4737/Del/2019 for AY 2015-16 (Revenue) "1. Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of advance excise deposited u/s 43B....
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....case. and in law, the Ld.CIT(A) has erred by restricting the disallowance of Rs. 6,96,68,015/- to Rs. 3,07,11,517/- on account of claim of Exemption/Deduction of income u/s 80IA of the IT Act made by the Assessing Officer. 7. The appellant craves, leave to add, amend or forego any ground(s) of appeal at any time before or during the hearing of this appeal." ITA No.5509/Del/2019 for AY 2011-12 (Assessee) "1. Ld. CIT(A) has erred both in law and facts of the case in confirming the disallowance made by Ld. AO u/s 40A(3) on account of reimbursements made by the assessee to its employees towards LTC and Children's Tuition fees as per statutory entitlements amounting to Rs. 11,37,541/-. 2. Ld. CIT(A) erred in confirming the rejection of claim of deduction u/s 80-IA to the extent of Rs. 3,07,11,517/- being interest earned on mobilization advance given to sub-contractors and treating it as "Income from Other Sources" not eligible for deduction u/s 80-IA. 3. Ld. CIT(A) erred in remitting to Ld. AO to verify the claim of TDS credit of Rs. 6,85,312/- deducted by Oriental Bank of Commerce and Form 16A provided to assessee. ITA No.4100/Del/2....
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....raves, leave, modify, add or forego in any ground(s) of appeal at any time before or during the hearing of this appeal. ITA No.5922/Del/2019 for AY 2016-17 (Revenue) "1. Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance of Net loss of DITTM of Rs. 42,08,388/- made by the Assessing Officer. 2. Whether on facts and in circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the disallowance on account of unspent revenue grants of Rs. 5,52,60,490/- made by the Assessing Officer. 3. Whether on facts and in circumstances of the case and in law, the CIT(A) has erred in deleting the disallowance on account of prior period expenses claim of Rs. 43,96,415/- made by the Assessing Officer. 4. The appellant craves, leave, modify, add or forego in any ground(s) of appeal at any time before or during the hearing of this appeal." 3. The above seven appeals pertaining to single assessee for the assessment years 2011-12, 2013-14, 2014-15, 2015-16 and 2016-17, since the issues are identical, all the Appeals are clubbed and also heard together. For the sake of convenienc....
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....,337/-, deleted disallowance of net loss of DTTM of Rs. 49,34,358/- made by the A.O., remanded the issue of business expenses to rental receipts/income at Dilli Haat, INA of Rs. 1,21,90,214/- and deleted the disallowance on account of prior period expenses claim of Rs. 43,96,415/- made by the Assessing Officer. Aggrieved by the above deletions, the Department of Revenue has preferred the appeal in ITA No.4737/Del/2019. 5. Learned counsel for the assessee filed separate Chart and also the written submission in all the Appeals by dealing with thirteen issues involved in the instant appeals. The LD. DR has also made submissions on the issues involved in the present Appeal. Advance Excise Duty - Section 80B of the Act: 6. In Ground No.1 of ITA No.5920/Del/2019, ITA No.184/Del/2019 and ITA No.4737/Del/2019, for the A.Y 2011-12, 2014-15 and 2015-16 respectively, the department of Revenue contended that the learned CIT (Appeals) erred in deleting the disallowance of advance excise and deposit under Section 43B of the Act on liquor trade made by the Assessing Officer. 7. Learned counsel for the assessee submitted that on the issue involved in the above grounds for the above A.Y....
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....nment by debit to such account current before removal of the goods. The revenue's contention that the amounts in credit also relate to goods not manufactured, and therefore, not relatable to any "liability incurred" is, in the opinion of this Court, without any basis. The excess credit is likewise adjusted for the next day's clearances. The point to be underlined is that there is no choice, and the amounts relate to the assessee's duty liability, falling within the description u/s 43B; ++section 43B in clear terms provides that the deduction claimed by the assessee in respect of any sum paid by way of tax, duty, cess or fee, shall be allowed only in computing the income I.T.A. 6 No.2814- 4756/Del/2012 referred to in section 28 of that previous year in which it was actually paid, irrespective of the previous year in which the liability was incurred for the payment of such sum as per the method of accounting regularly employed by the assessee. For the purpose of claiming benefit of deduction of the sum paid against the liability of tax, duty, cess, fee, etc., the year of payment is relevant and is only to be taken into account. The year in which the assessee incurred the lia....
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....el for the assessee has placed reliance on the Judgment of Hon'ble jurisdictional High Court in CIT vs. Jagjit Industries Ltd. (2010) 194 Taxmann 195 and also the Judgment of Hon'ble Gujarat High Court in the case of Saurastra Cement & Chemicals Industries Ltd. vs. CIT (1995) 80 Taxman 61 (Guj.). Thus, submitted that the findings and the conclusions of the CIT(A) in deleting the disallowances deserves to be confirmed. 13. We have heard the parties and perused the material. The issue of allowability of prior period expenses involved in the above ground of appeals of the Revenue is no more Res-integra, the jurisdictional High Court in the case of CIT vs. Jagjit Industries Ltd. (2010) 194, Taxmann 158 held as under: "The assessee had been debiting the expenditure spill over to the subsequent years and the Assessing Officer had been allowing the same. The said accounting practice had been consistently followed by the assessee and accepted by the department. If a particular accounting system has been followed and accepted and there is no acceptable reason to differ with the same, the doctrine of consistency would come into play. In the instant case, the said accounting s....
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...., the Tribunal was not justified in holding that the impugned expenditure was not allowable in the relevant previous year on the ground that the liability had arisen in the earlier years." 15. Considering the facts of the present case and finding the parity, we find no error or infirmity in the order of the learned CIT (Appeals) in deleting the disallowance of prior period expenses, accordingly, we dismiss Ground No.2, 4, 6, 5 and 3 of Departmental Appeals in ITA Nos. 5920/Del/2019, 4100/Del/2019, 184/Del/2019, 4737/Del/2019 and 3922/Del/2019 respectively. Dilii Haat Rental Income: 16. The Department's Ground No.3 in ITA No.5920/Del/2019, Ground No.1 in ITA No.4100/Del/2019, Ground No.5 in ITA No.184/Del/2019, Ground No.4 in ITA No.4737/Del/2019 are regarding disallowance of proportionate disallowance of business expenses to rental receipts/income at Dilii Haat. 17. Learned counsel for the assessee submitted that the Co-ordinate Bench of the Tribunal for assessment years 2004-05 to 2009-10, 2010-11 and 2012- 13 held that the rental income from temporary structure as income from business and rental income from permanent structure as income from house property. Further su....
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.... the provisions including the ownership or otherwise of property. To say that if tax is required to be deducted at source u/s 194-I and, hence, the income necessarily becomes chargeable under the head 'Income from house property', in our considered opinion, is not a universal proposition. 21. In view of our above decision in holding rental income from craftsmen as `Business income' on the first principles, we do not consider it expedient to discuss other issues raised by both the sides in support of their respective claims as to whether or not the assessee was owner of 'Dilli Haat', which is a mandatory condition for computing income under the head 'Income from house property' and rule of consistency etc. 22. Turning to the remaining amount of Rs. 54.00 lac, we find that the same consists of Rs. 41.00 lac, being, income from space rented on regular basis and Rs. 12.99 lac, being, licence fee for allowing activities of food court, souvenir shops, bank and PCO. This amount of Rs. 54 lac has been earned by the assessee from the letting out of its permanent structures. The same cannot be equated with income of Rs. 1.82 crore discussed above, being, licence fee for use....
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....erein the Tribunal has remanded the issue to the file of the A.O. in following manners:- "64. The only other ground which survives in the Revenue's appeal is against the deletion of addition of Rs. 46,21,175/- made by the AO on account of income from IITM, Delhi. During the course of assessment proceedings, the Assessing Officer noticed that the management of the ITA Nos. 3457/Del/2007, 1505/Del/2009, 4877/Del/2009, 1903/Del/2011, 1634/Del/2011, 2687/Del/2012 & 4910/Del/2012 Delhi Chapter of the Institute of Tourism and Travel Management (affiliated to IITTM- Gwalior) was given to the assessee on 1.1.1993 initially for a period of five years. On perusal of the Tax Audit Report, it was noticed that the excess of income over expenditure of IITTM-D for the year was Rs. 18,33,132/- and accumulated profit carried over was Rs. 27,88,043/- , both totaling Rs. 46,21,175/-. Since the income of this entity was not included by the assessee in its total income, the Assessing Officer made this addition. The learned CIT(A) deleted the addition. 65. Having heard both the sides and perused the relevant material on record, it is observed that the assessee has claimed that inco....
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....ation to the expenses which were sought in the questionnaire. In the absence of the evidence supporting the claim of the Assessee, the Assessing Officer has rightly deleted 50% of the expenses which has been erroneously deleted by the CIT(A). 26. The Ld. Counsel for the assessee submitted that during the course of appellate proceedings, the Assessee filed copy of the ledger account along with supporting bills and vouchers on sample basis and all the payment were made through the cheques, therefore, the CIT(A) has rightly deleted the addition. 27. We have heard both the parties and perused the material available on record. It is the specific contention of the assessee that during the assessment proceedings the A.O. has not provided reasonable opportunity of being heard to the assessee and the A.O. had not asked documentary evidence in support of the expenses and disallowed 50% of the expenditure on ad-hoc basis. Before the CIT(A), the assessee had filed copy of the ledger account of the expenses along with supporting bills and vouchers on sample basis. The expenses claimed by the assessee has been made through cheques and the assessee had incurred the expenses on tourism promo....
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....resh claim with following facts:- That assessee Corporation has been executing the development of following infrastructure Delhi/New Delhi assigned under the authority of State Govt. of NCT, facilities in & around Delhi under MOUs:- 1. Development of Signature Bridge at Wazirabad Yamuna River - refer MOU dt. 27th August, 2004 between DTTDC Ltd. vs Govt. of NCT, Delhi with letter no.F.8(189)/2001- 02/PWD-III/6063-6075 dt. 26.2.2010. 2. Development of Road under and Road over Bridge (RUB & ROB) at Nand MOU dt. 19.12.2008 with No.F4(3)/49/2005/PWD-III/48 vide letter No.68 (Refer issued by Deptt. of PWD of State Govt. of NCT of Delhi). 3. That out of the margin/gross income in the form of 5% development charges allowed to the assessee on value work done, there shall be met out the consultancy and establishment cost as per terms. 4. That during the year under assessment, the net income earned by assessee Corporation as per audited accounts was Rs. 5,52,84,970/- for signature bridge and Rs. 1,53,57,300/- towards RUB & ROB at Nand Nagri, Road No.68. That both these income were included in the net audit profit of Rs. 16,30,33,565/- show....
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....fter the date of filing return. The audit as required u/s subsection (7) has been got done in Feb., 2014 as per the facts on record and as per audit documents submitted during assessment proceedings. Considering this above stated technical defect and legal infirmity in compliance of procedure are of the considered firm view that assessee is not eligible for this deduction being not made in returned income and also with prescribed audit report has not been filed with return of income. In fact compliance in prescribed form audit report has been done after a gap of around 2¼ years of the due date of filing return. Moreover, for this claim, the assessee could have revised the return in time as per provision u/s 139(5) of ITA. The assessee on being asked the reason why this claim could not be filed earlier by revising the return within the prescribed time period, could not furnish any bonafide satisfactory reply. Viewing these facts, this fresh claim of assessee is rejected due to infirmity in timely compliance of legal requirements and procedure of tax laws u/s 80IA of ITA." 32. During the appellate proceedings, the CIT(A) restricted the disallowance of Rs. ....
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....ojects separately alongwith the agreement entered with the Govt. The appellant is a corporation established under the State Act and has developed the infrastructure facility. For this purpose it has entered into an agreement with the Govt. of Delhi for the development of the bridges and after the completion of infrastructure facility it has transferred the bridge to the Govt. of Delhi. The appellant fulfils the conditions as stipulated in section 80IA(4)(i). The relevant provision of section 80IA is reproduced as under:- "(1) Where the gross total income of an assessee includes any profits and gains derived by an undertaking or an enterprise from any business referred to in sub-section (4) (such business being hereinafter referred to as the eligible business), there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of an amount equal to hundred per cent of the profits and gains derived from such business for ten consecutive assessment years. (2) The deduction specified in sub-section (1) may, at the option of the assessee, be claimed by him for any ten consecutive assessm....
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....enterprise to which this clause applies and the deduction from profits and gains would be available to such transferee enterprise for the unexpired period during which the transferor enterprise would have been entitled to the deduction, if the transfer had not taken place. Explanation. For the purposes of this clause, "Infrastructure facility" means- (a) a road including toll road, a bridge or a rail system; (b) a highway project including housing or other activities being an integral part of the highway project; (c) a water supply project, water treatment system, irrigation project, sanitation and sewerage system or solid waste management system; (d) a port, airport, inland waterway, inland port or navigational channel in the sea. .................... ................... (7) The deduction under sub-section (1) from profits and gains derived from an undertaking shall not be admissible unless the accounts of the undertaking for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant, as defined in the Explanation below sub- section (2) of section 288, and th....
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....on was not applicable." 15.8 Hon'ble ITAT Pune in the case of MSEB Employees Cooperative Credit Society Ltd. VS ITO (2014) 50 taxmann.com 210 held that, "In view of above discussion, the CIT(A) was justified in holding that the assessee is entitled for deduction u/s 80P(2)(a)(i) of the Act though the same has not been claimed by the assessee in return of income. It is settled law that correct income of the assessee is to be assessed as per provisions of Income Tax Act, 1961 in spite of higher income incorrectly declared by the assessee in the return of income. This view was fortified by the decision of Hon'ble Bombay High Court in the case of CIT v. Smt. Archana R. Dhanwatey [1981] 136 ITR 355/[1981] 7 Taxman 121, wherein it was held that "under the I.T. Act, 1961, the authorities are obliged to act in accordance with law. Tax has to be collected as per the provision of the Act. If an assessee, under a mistake, misconceptions or on being not properly instructed is over assessed, the concerned authority under the Act is obliged, required to assist such an assessee by ensuring that only legitimate taxes are determined as collectible. If particular levy is not permiss....
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.... before he completes the assessment u/s 143(3) of the Act, therefore, we are of the view that the A.O. ought to have considered the said Audit Report filed by the assessee and allow the deduction claimed by the Assessee u/s 80IA of the Act. This view of ours is fortified by the judgment of Hon'ble Supreme Court in the case of CIT Vs. M/S G. M. Knitting Industries Ltd. 376 ITR 456 (S.C.), wherein held that even though necessary certificate in Form No. 10CCB along with the return of income had not been filed but the same was made available to the A.O. before passing of final assessment order, the assessee is entitled to claim the deduction u/s 80IA of the Act, in view of the above ratio, we do not find any infirmity in granting 80IA deduction by the CIT(A), accordingly, Ground No. 6 of the Revenue in ITA No. 5920/Del/2019 is dismissed. 34. The assessee in Ground No. 2 in ITA No. 5509/Del/2019 has challenged the rejection of claim of deduction in 80IA to the extent of Rs. 3,07,11,517/- being interest earned on mobilization advance given to sub contractor and treating the same as income from other sources not allowable for deduction u/s 80IA of the Act. 35. Originally the ass....
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....hy this expense should not be disallowed. The assessee during the course of hearing explained based on facts that this expense is actual not covered u/s 40A(3) of IT Act, and has been reported by tax auditor incorrectly. It was submitted that it relates to reimbursement of tuition fees of children of employees as per VI Pay Commission entitlement norms to Govt. Employees i.e. monthly tuition fees of two children with a maximum limit not exceeding Rs. One thousand per child per month per payment receipt. Further, there has been reimbursement-facility to every employee towards medical expenses @Rs.800 p.m. which even does not qualify for addition u/s 17(2)(VI) of ITA upto payment of Rs. Fifteen thousand from the taxable perquisite of salary; a statement showing employee-wise reimbursement of tuition fees and medical expenses was also furnished by assessee. The claim of assessee was examined but not found tenable when even tax auditor has covered for disallowance. Accordingly, relying upon the Tax Audit Report, a sum of Rs. 11,37,541/- is disallowed and added to the income of the assessee. Since the assessee furnished inaccurate particulars, penalty proceeding u/s 271(1)(c) of the Act....
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....eds to Rs. 20,000/- made to a person in a day and appellant is not entitled to claim deduction on account of such expenditure. Considering the above facts, AO is justified in making addition of Rs. 11,37,541/- u/s 40A(3) and addition made by the AO is hereby confirmed." 41. It is found that the assessee had claimed to have paid a total sum of Rs. 11,37,541/- by way of cash as reimbursement to the employees towards tuition fee, medical expenses and children educational allowances which exceeding the limit of Rs. 20,000/-. It is the case of the assessee that the reimbursement of expenses does not exceed Rs. 20,000/- and the case of the assessee falls within the exemptions of Rule 6DD(j) of I.T. Rules read with Section 40A(3) of the Act. The CIT(A) found that the reimbursed tuition fees Rs. 1,000/- per month for two children on aggregate basis and also reimbursement medical expenses at Rs. 800/- per month at aggregate basis, thus, cash payment of each employees exceeds Rs. 20,000/-. The assessee has not brought on record any evidence which proves that the case of the assessee is covered as per the proviso of Rule 6DD (j) of the Rules, apart from the same, in the auditor report, the....
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....nce of terms and conditions of agreement as well as making regular payment of license fee, it is the case of the assessee before the A.O. is that the said Revenue has not been received till passing of the Assessment order. The entire revenue booked for damage charges for F.Y 2011-12 and 2012-13 has been reversed in the Annual Accounts for the F.Y 2013-14 being found contrary to the AS-9 applicable to Assessee Corporation. The Company has been following mercantile system of accounting with compliance of mandatory AS as announced by ICAI from time to time. The AS-9 titled 'revenue recognization' does not warrant he accounting of this abnormal revenue reorganization. But it was accounted for inadvertently due to mistake of conception of accounting standards. Furthermore, there has been litigation is also pending in the High Court, Delhi wherein in the interim order passed by Court on dated 23/09/2013 directs the licensee i.e. M/s ITE India (P) Ltd. to continue to pay license fees and other dues regularly. 49. The CIT(A) while deleting the addition held as under:- " 9.4. I have considered facts of the case, finding of the AO. and submission of the Appellant. The A.O. has....
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....ould not written back in the previous year. As per the audited accounts, this liability has ceased to exist in this year. As such it was required to be added to the income in the previous year, rather than postponing it to the subsequent years. In case, the assessee does not challenge may follow the due course of procedure for remedy in law under the income tax act, 1961 for claim in the subsequent assessment year when it was offered to income (Addition of Rs. 6,56,661/-)" 52. The CIT(A) has deleted the addition in following manners:- "8.1 The brief facts are that the AO observed that the appellant has shown a sundry creditor of Rs. 6,56,661/- by name M/s Utopia Consultancy Services Pvt. Ltd. The AO observed that the appellant has written back this liability in the subsequent financial year. The AO has made the addition in this year by observing that the said party had ceased to exist during the year under consideration. In appeal, the AR has submitted that this liability was written back by the appellant only on 31.03.2015 and the corresponding amount has been shown as income in AY 2015-16. As the appellant has written back by the appellant only on 31.03.2015 ....
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....has observed as under:- "The reply filed by the assessee has been considered but is not acceptable. In the absence of any substantial documentary evidence in confirmation from the related grant sanctioning governments Authorities allowing the revival of unspent grants the amount of Rs 1.82,90,631/- is purely of the revenue nature based on the self-acceptance given by the assessee and therefore liable to be treated as income of the current year. Since, revenue grants are to be treated as income as per the generally accepted accounting principles and relating approved accounting standards, an addition of Rs. 1,82,90.631/- is hereby made to the income of the assessee." 56. The said addition of the A.O. has been deleted by the CIT(A) in following manners:- "9.3. I have considered the facts of the case and the submission made by the Assessee's Representative. It has been submitted that the appellant receives various grants for promotion of tourism related activities every year. Immediately after completion of work, the appellant is required to submit utilization certificate to the Delhi Government and the funds are utilized for the prescribed purpose only. In ca....
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....37/Del/2019 (A.Y. 2015-16) and Ground No. 2 in ITA No. 5922/Del/2019 (A.Y 2016-17) of the Revenue are dismissed. Capital Reserve-Advance Rent received from Ministry of External Affairs and Ministry of Tourism. 58. The Assessee's Ground No. 1 in ITA No. 5167/Del/2019 (A.Y 2015- 16) is regarding capital reserve confirming the addition made by the A.O. of Rs. 8,02,16,000/- out of amount capital reserve as on 31st March, 2015. The Ld. Counsel for the assessee vehemently submitted that the authorities have failed to appreciate that out of Rs. 8,02,16,000/- only Rs. 1,69,78,655/- related to Assessment Year 2015-16, Rs. 8,51,62,091/- has been added by the Ld. A.O. in Assessment Year 2014- 15 on this account for periods up to date and that addition was accepted by the assessee, therefore, the addition already accepted in Assessment Year 2014-15 had resulted in double taxation. 59. Per contra, the Ld. Departmental Representative submitted that the contention of the assessee is not acceptable as the independent auditor have qualified the amount for the year under consideration at Rs. 8,02,16,000/- on the basis of financial statements of the assessee and the A.O, has correctly made a....