TMI Blog2022 (2) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... following Rule of Consistency. The Revenue is under legal obligation to be consistent in its approach regarding taxability of any item. It cannot be purely on the whims and fancies of the Assessing Officer. The Ground No.1 of Revenue s appeal is dismissed. Disallowance of compensation paid to allottees - HELD THAT:- We find that the similar issue was decided by the Hon ble High Court of Delhi in assessee s own case [ 2019 (3) TMI 1272 - DELHI HIGH COURT] answered question of law in favour of the Assessee and against the Revenue by holding that the conclusion recorded by the ITAT that the compensation was paid by the Assessee for 'extraneous consideration' is perverse and contrary to the record - Decided against revenue. Addition of bank guarantee commission paid to Bank - HELD THAT:- Issue decided in own case that the expenditure incurred subsequent to the completion of the project cannot be attributed to work and had to be allowed only as revenue expenditure. Consequently, the question is answered in the affirmative in favour of the Assessee and against the Revenue.. Addition u/s 14A r.w. Rule 8D - HELD THAT:- We find that Ld.CIT(A) gave a finding on fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ainst the orders of the Ld.CIT(A)-4 dated 25.03.2015 and 02.02.2017 respectively. Since the similar grounds have been raised, all appeals of the assessee and the Revenue were taken up for hearing together and are being decided by way of this consolidated order for the sake of brevity. ITA No.2576/Del/2015 [Assessment Year : 2011-12] 2. First we take up the assessee s appeal in ITA No. 2576/Del/2015 pertaining to Assessment Year 2011-12. The assessee has raised following grounds of appeal: 1. That on the facts in the Circumstances of the case in Law CIT (A) has erred in upholding the A.L.V of 10th floor of property Gopal Das Bhawan, 28 Barakhamba Road, New Delhi, at ₹ 1,64,53,100/- as determined by Assessing Offices U/s 23 of Income Tax Act, on the basis of provisional Rateable value fixed by NDMC, as against the actual Rent of ₹ 88,92,600/- received by the appellant from tenant M/S ING Vysya Life Insurance Company Pvt. Ltd. in terms of Lease Agreement dt.31.08.2004 Which was always accepted in the past as the A.L.V of the Space. 2. That on the facts in the Circumstances of the case in law CIT(A) has erred in not dealing with Ground of Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er further made disallowance qua the compensation paid for office space in Gopal Das Bhawan of ₹ 37,98,932/-; bank guarantee commission paid to the bank of ₹ 5,06,577/-; disallowance of expenses by invoking section 14A of the Act read with Rule 8D of the Income Tax Rules, 1962 of ₹ 24,67,387/-; additions on account of cessation/remission of liability of ₹ 77,24,546/-; difference in income as per Form No. 26AS and profit and loss account of ₹ 1,35,37,730/- and advances received of ₹ 59,87,33,920/- in respect of Ardee City Project Phase-1. Hence, the Assessing Officer computed income of the assessee company at ₹ 75,50,35,298/- against the income declared in the return income at ₹ 6,60,76,260/-. 4. Aggrieved against this, the assessee preferred appeal before the Ld.CIT(A) who partly allowed appeal of the assessee. Thereby, the Ld.CIT(A) deleted the addition made in respect of the advances received of ₹ 59,87,33,920/- and found no merit in the addition made by the A.O by disregarding the account of the assessee company and more particularly without rejecting the books of accounts u/s 145(3) of the Act. He further deleted the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of Ld.CIT(A) is in accordance with law. The assessee has not pointed out any infirmity into the order of Ld.CIT(A). 9. We have heard the rival contentions and perused the material available on record and gone through the orders of the authorities below. We find that Ld.CIT(A) has decided the issue by observing as under:- 13.8. On careful consideration of the above facts, in my view the provision of section 23, clause (a) and clause (b) when read together, clearly provide for taking as the annual lettable value, higher of the two figures, namely the actual rent received by the assessee and the value at which the property may be reasonably expected to let out. The Ld. A.O. has relied upon the valuation made by the NDMC, which was found to be higher than the actual rent received by the Appellant. On the other hand, the appellant pleads that it had long term agreement with the tenants, who are not related to it in any manner, and therefore, the actual rent received by the appellant alone may assessed as 'income from house property' in respect of such let out property. Since the valuation by NDMC is for levy of property tax and not for determining the value at which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... garding all the cases quoted before him in defiance of the ratio of Hon ble Supreme Court s decision in the case of Union of India vs Kamalakshmi Finance Co.Ltd. SLP No.7717 of 1990 dated 24.09.1991 and committing a judicial impropriety in terms of the ratio of the said decision, a copy which was filed in the proceedings before him? 14. We find merit into the contention of the Ld. Counsel for the assessee that Ground No.9 was not decided by Ld.CIT(A). We therefore, restore this Ground to Ld.CIT(A) and direct him to decide on merit. This ground of assessee s appeal is allowed for statistical purposes only. 15. In the result, the appeal of the assessee is partly allowed for statistical purposes. ITA No.3899/Del/2015 [Assessment Year : 2011-12] 16. Now, we take up the Revenue s appeal in ITA No. 3899/Del/2015 pertaining to Assessment Year 2011-12. The Revenue has raised following grounds of appeal:- 1. Whether on the facts and circumstances of the case in law, the ld. CIT(A) erred in deleting the disallowance of ₹ 1,28,15,025/- made on a/c of expenses not allowable under the head Income form House Property . 2. Whether on the facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observations contained in page 52 of his order granted relief. It is submitted that no similar disallowance had been made from the year of the establishment of the company in FY 1995-96 to the AY 2010-11. It is further submitted that no similar disallowance has ever been made in any assessments after AY 2010-11. The Ld. CIT(Appeals) has correctly decided this issue following the decision of the Tribunal at Bombay in the case of Damos Trading Co. Pvt. Ltd. in ITA. No. 1684/Mum/2010. It needs to be emphasized that there is no requirement in law for segment-wise segregation of business expenses source-wise. It is also a principle in law as postulated in by the Apex Court in CIT Vs. Chugandas Co. (1965) 55 ITR 17 (SC) that even if a property is let out in business by an entity, the income from the property will have to be computed in terms of the principles applicable to the computation of income from house property Under Chapter IV-C of the Act. Being so the objection raised by the Assessing Officer that the deduction as claimed u/s 24(a) would be a duplication of the expenses is erroneous and unsustainable in law. It is only for this reason that in every year since FY 1995-96 to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Bank Ltd. [1966] 62 ITR 638 (ill the Assessee bank had settled the claims of those who had pledged their jewellery with the Bank which was stolen by dacoits. The question was whether such payments could be allowed as business expenditure under Section 10(2)(xv) of the Indian Income Tax Act, 1922? It was acknowledged that: In choosing to compensate its constituents for the loss of their jewellery and maintain its business connections and goodwill, the bank laid out expenditure for the purpose of its business. 32. It was further explained that: The sole question is whether the bank in incurring the expenditure acted in the interest of and for the purpose of its business. The bank is carrying on banking business and advances loans on the security of jewellery. The credit of a banking business is very sensitive: it largely thrives upon the confidence which its constituents have in its management. To maintain that confidence the management has often to make concessions and thereby to preserve the goodwill of the business and its relations with the clientele. The bank could have, if so advised, taken its stand strictly on its legal obligations, and could have rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of earning income. The former would include within its scope expenditure incurred on grounds of commercial expediency. 35. In the present case, the Assessee has a plausible explanation for making such payment of compensation to protect its 'business interests.' While it is true that there was no 'contractual obligation' to make the payment, it is plain that the Assessee was also looking to build its own reputation in the real estate market. 36. Further the mere fact that the recipients treated the said payment as 'capital gains' in their hands in their returns would not be relevant in deciding the issue whether the payment by the Assessee should be treated as 'business expenditure.' As explained by the Madras High Court in CIT v. Sarada Binding Works (lm] 102 ITR 187, it is the point of view of the payer which is relevant. 37. The decision in err v. Mangal Tirth Estates Ltd. [2008] 303 ITR 366/171 Taxman 435 (Mad) was a case where the Assessee therein had also followed the CCM. It was engaged in the business of construction and sale of a multi-storeyed office cum shopping complex. The Assessee had under the development agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record and gone through the orders of the authorities below. We find that this issue is also decided in favour of the assessee by the Hon ble High Court of Delhi in assessee s own case wherein Hon ble High Court of Delhi has held as under:- 70. The Assessee's case appears to be supported by the decisions in SA Builders v. CIT [2007] 288 ITR 1/158 Taxman 74 (SC) which has been followed in Hero Cycles v. CIT [2015] 63 taxrnann.com 308/(2016) 236 Taxman 447/379 ITR 347 (SC). The ratio of the decision of the Bombay High Court in CIT v. Lokhandwala Constructions Industries Ltd. [2003] 260 ITR 579/131 Taxman 810 (Bom) was rightly relied upon by the ITAT to allow the plea of the Assessee and treat the said interest payments as revenue expenditure. As explained in CIT v. Bombay Samacltar Ltd. [1969] 74 ITR 723 (Bom) and this Court in Regal Theatre v. CIT [1997] 225 ITR 205/(1998] 100 Taxman 116 (Delhi) and CIT v. Gautam Motors [2011] 334 ITR 326/[2010] 194 Taxman 21 (Delhi) merely because the Assessee was a cash rich company, the payment of interest cannot be disallowed as business expenditure. 71. Further as rightly pointed out, AS 2 would apply in terms of which, with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (2011) 336 ITR 434 (P H); Godrej Boyce Mfg. Co. Ltd. vs. DClT (2010) 328 lTR 81 (Bom); CIT vs. Walfort Share Stock Brokers (P) Ltd. (2010) 326 ITR 1 (SC); CIT vs. Delite Enterprises P. Ltd. ITA No. 110 of 2009 (Mum) ClT vs. Shivam Motors P. Ltd. (2015) 230 Taxman 63 (All) In the circumstances the view taken by the learned ClT (Appeals) is unexceptional and beyond reproach and merits to be confirmed. 34. We have heard the rival contentions and perused the material available on record and gone through the orders of the authorities below. We find that Ld.CIT(A) gave a finding on fact that the assessee had not earned any exempt income. Therefore, in the light of the judgement of Hon ble High Court of Delhi in the case of CIT vs Holcim India Pvt.Ltd. [2014] 272 ITR 282 (Del.), we hereby dismiss the ground raised by the Revenue. Thus, Ground No.4 raised by the Revenue is dismissed. 35. Ground No.5 of Revenue s appeal is against the deleting the addition of ₹ 77,24,546/- made u/s 41(1) on account of cessation of liability. 36. Ld. Sr. DR supported the assessment order and submitted that Ld.CIT(A) was not justified in deleti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h liabilities from its books. Further, being a listed company, such liabilities are acknowledged in favour of creditors, within the meaning of section 18 of the limitation act, 1963. On careful consideration of the above facts, in my view, the appellant s case is covered by the decision of Hon'ble Delhi High Court in the case of CIT Vs Shree Vardman Overseas Limited 343 ITR 408, in which following the decision of Hon'ble Supreme Court in the case for CIT Vs Sugauli Sugar Works Pvt. Ltd 236 ITR 518, the Hon'ble High Court has held that as the assessee had not unilaterally written off the accounts of sundry creditors in its books and such liabilities were shown in the balance sheet, such liabilities in respect of the creditors cannot be held to have ceased to exist nor was it remitted by the creditors. The facts of the above cases are no different from the appellant's case and the finding of the A.O. that the facts of the case are different and distinguishable is not supported by any of the reasoned arguments. Keeping in view the above and following the aforesaid decisions, this ground is also allowed in favour of the appellant. 39. We do not see any reason to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntions and perused the material available on record and gone through the orders of the authorities below. We find that Ld.CIT(A) has given finding on fact by observing as under:- 19.2. On careful consideration of the above facts, in my view, income cannot be assessed only on the basis of one source of information, i.e., 26AS statement. The A.O, being a quasi judicial authority, is required to ascertain all relevant facts in order to arrive at a quasi-judicial decision. It is evident that the main reason for the difference between 26AS statement and the income disclosed in P L Account is on account of the credit shown in TDS statement filed by one M/s Reliance Hyper Realty Limited, which is not even a tenant in any of the properties of the appellant. On perusal of the rent agreement of the appellant with other 2 parties, it is seen that the appellant has offered to tax, rental income as per agreement, for a period of 12 months falling in the current year, however, these parties have shown in their respective TDS Statements, payment for 13 months as rent. Under the circumstances, the A.O. could have made direct enquiries with the tenant or with the TDS Authorities and could have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Year 2011-12]. 49. We have decided this issue in para 10 of this order by holding as under:- 10. We find that contention of the assessee was that the issue related to rateable value adopted by NDMC was under consideration for review before the Competent Authority at NDMC. This aspect is not addressed by Ld. CIT(A) therefore, we modify the order of Ld.CIT(A) and direct the Assessing Officer to consider the decision of NDMC in respect of the rateable value revised in the subsequent year and adopt the same for this year as well. This ground of assessee s appeal is allowed in terms stated herein above. 50. We, therefore taking the consistent view, allow the ground raised by the assessee in this appeal. Therefore, our finding on the identical ground raised in ITA No.2576/Del/2015 shall apply mutatis mutandi on the ground raised in ITA No.2523/Del/2017 pertaining to Assessment Year 2012-13. 51. In the result, the appeal of the assessee is partly allowed for statistical purposes. 52. In the final result, both appeals of the assessee in ITA Nos. 2576/Del/2015 [Assessment Year 2011-12] and 2523/Del/2017 [Assessment Year 2012-13] are partly allowed for statistical purpo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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