TMI Blog2019 (9) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... of Business or Profession and Income from other sources is to be determined regardless of whether tax was deducted at source in respect of amounts received or accrued to the assessee. What is relevant is the system of accounting regularly employed by the assessee - whether it is cash system or mercantile system. The assessee is not permitted to use mixed or hybrid system of accounting under which some items of income / expenditure are accounted for under cash system and the remaining items of income / expenditure are accounted for under mercantile. Assessee is a public sector undertaking is irrelevant. It is also immaterial whether the assessee was facing liquidity crunch. When the income has to be assessed during the year and when tax is to be paid in accordance with law on such income, the assessee cannot postpone the year in which the income will be offered to tax merely because the assessee has a liquidity crunch. Requirement of liquid funds by an assessee, howsoever genuine the requirement may be, cannot be accepted as a legitimate justification for postponement of the year in which income will be offered by the assessee. Therefore, in the facts of the case before us, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order after necessary verification of the claim. The Ld. AR of the assessee agreed that the issue may be remanded back to the AO for fresh order. Disallowance being 50% of the expenses claimed by assessee towards Tourism promotion expense and Hiring of tent purpose thereof - HELD THAT:- Assessee submitted that the issue may be remanded back to the file of the AO for verification and fresh order on this issue. In reply, the Ld. DR did not express any objection to remanding of the issue back to the file of the AO for verification and fresh order. In the fitness of things, and as both sides agree, we remand this issue to the file of the AO for necessary verification and fresh order. The AO is directed, before he passes fresh order, to provide opportunity to the assessee to produce / submit relevant details and documentary evidences. - ITA No:- 716/Del/2016, ITA No:- 2489/Del/2015, ITA No:- 570/Del/2016 And ITA Nos:- 2792/Del/2015 - - - Dated:- 20-3-2019 - SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER For The Revenue : Ms. Ashima Neb, Sr. DR For The Assessee : Shri H.P. Agrawal, FCA and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional claims in the revised return are based on adhoc estimates. 3.2 failing to appreciate that the return is revised in pursuance to the order of Hon ble Delhi High Court in AY 1990-91, 1991-92, 1992-93, 1994-95 and 1996-97 holding that 3.2.1 the expenditure incurred on construction of flyovers, etc. was revenue expense, and 3.2.2 amount standing to credit of TIUF account was to be included in taxable income 3.3 failing to allow the claim of brought forward losses amounting to ₹ 5,61,25,314/- in the revised return. 4. Ld. CIT(A) erred in law and on facts of the case by confirming the rejection of claim of 4.1 Provision for Doubtful Debts amounting to ₹ 6,11,675/-. 4.2 Provision for Doubtful Loans amounting to ₹ 1,14,901/-. 5. Ld. CIT(A) erred in confirming the action of the AO in 5.1 making a net addition of ₹ 1,01,03,121/- to the income on account of income from Dilli Haat . 5.2 treating a part of income from Dilli Haat as rental income as against the claim of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction claimed u/s 43B of ₹ 7,50,48,000/- being advance excise duty payment / deposit? 2. Whether the CIT(A) was correct in allowing deduction of advance excise duty paid u/s 43B of the Act. Even though the liability to pay the sum had not crystallized during the year and the claim was also not debited to P L account of this year? 3. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting disallowance of the provisions for the Leave Encashment of ₹ 1,80,75,136/-? 4. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting the disallowance of the payment to CRRI u/s 35(I)(iia) of ₹ 11,03,000/- as made by the AO.? 5. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deleting the disallowance of the net loss claim of the unit of ₹ 32,79,998/- related to the Delhi Institute of Tourism and Travel Management (DITTM) as made by the AO? 6. Whether on the facts and in the circumstances of the case and in law, Ld. CIT(A) has erred in deletin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee s case in AY 2013-14. 17. Re. Ground No. 5 (Deptt): MOU issued in 1993 by Ministry of Tourism, GOI and renewal letter dt. 08.09.2005. 18. Re. Ground No. 5 (Deptt) : Abstract of DOD minutes held in Sept. 2007 related to taken over of DITTM by DTTDC. 19. Re. Ground No. 6(Deptt): Invoices for tourism promotion expenses 20. Re. General Ground: submission to Ld. CIT(A) Dt. 20.06.2014 21. Re. Ground 1 2: Original and revised computation 22. Re. Ground NO. 2 3 : Copy of memorandum of association and licence deed. 23. Re. Ground No. 2 3 : Balance sheet and profit loss a/c of Dilli Haat for FY 2011- 12 24. Re. Ground NO. 2 3: Incoem from Dilli Haat as per alternate contention 25. Re. Ground No. 4: Copy of ledgers relating to provision for bad doubtful debt 26. Re. Ground No. 4: Ledger of ITE India Pvt. Ltd. along with note on reversal of recovery relating to damage charges. 27. Re. General ground: Submission to Ld. CIT(A) ( 1.2) We have considered all m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. Turning to the remaining amount of ₹ 54.00 lac, we find that the same consists of ₹ 41.00 lac, being, income from space rented on regular basis and ₹ 12.99 lac, being, licence fee for allowing activities of food court, souvenir shops, bank and PCO. This amount of ₹ 54 lac has been earned by the assessee from the letting out of its permanent structures. The same cannot be equated with income of ₹ 1.82 crore discussed above, being, licence fee for use of craft stalls on 15 day basis. The Id. AR was fair enough not to contest the taxability of ₹ 54.00 lac as income held by the lower authorities to be falling under the head 'Income from house property. The AR of the Assessee submitted that same view may be taken for A.Y. 2010-11 and A.Y. 2012-13 also. ( 2.2) The Ld. Departmental Representative ( DR , for short) fairly conceded that the issues in dispute are covered by the aforesaid order dated 28.03.2018 of Co-ordinate Bench of ITAT, Delhi in Assessee s own case for A. Y. 2004-05 to 2009-10 on identical facts and circumstances. However, she relied on the orders of the AO. Thus, both sides agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Stall Festival Income 12,92,802 b License fees allowing activities of food court, souvenir shops, 3,38,54,654 Bank and PCO Total (A) 3,51,47,456 c. Other receipts (brand exhibition stage) 78,82,381 d Entry Ticket Charges 1,60,16,025 e Misc. Receipts 7,71,526 Total (B) 2,46,69,932 Total Gross receipts (C ) 5,98,17,388 As against the total receipts at Dilli Haat amounting to aforesaid ₹ 5,98,17,388/- the total expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Total Gross Receipts ( C) 7,94,29,047 The total receipt at Dilli Haat was ₹ 7,94,29,047/- and the total expense incurred by the assessee at Dilli Haat is ₹ 4,25,52,448 thereby the net income of ₹ 3,68,76,599/- has been shown by the assessee as business income from Dilli Haat . The AO at Page No. 6 of his order held that out of the total receipts of ₹ 7,94,29,047/- from Dilli Haat , ₹ 4,76,56,682/- has been earned on account of rental income being the aggregate of following: Income from space rented on regular basis 1,98,51,494/- Craft stall 2,78,05,188/- Total 4,76,56,682/- While computing Income under the head House Property, the AO allowed expenses @ 30 % of the rental income, i.e. he allowed only ₹ 1,42,97,005/- as expenses against rental income of ₹ 4,76,56,682/, disallowed the balance expenses of ₹ 1,38,88,879 (i.e. ₹ 5,07,65,477 - 3,68,76,599) cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see submitted that this amount refers to interest accruing to the assessee during the year on fixed deposits in the bank. He further stated that although this interest income has not been offered to tax during the year by the assessee, credit for TDS made by the bank was claimed by the assessee because the assessee was facing liquidity crunch. He further submitted that the assessee being a public sector undertaking, lenient view may be taken specially because of the liquidity crunch faced by the Assessee. He further also submitted that claim for TDS may be disallowed to the extent it pertains to corresponding income not offered to tax by the assessee during the year; but the addition to income may be deleted. Further, in this regard, he also submitted that the AO failed to appreciate that interest income due on the fixed deposits kept with the banks accrued to the customers on 31st March each year although the same had not become due for payment; but the TDS entries are booked on the closing date of the Financial Year i.e. on 31st March each year on provisional basis to comply with the provisions of the Accounting Standards. He also submitted that the interest income on Fixed Depos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ( 3) .. It is obvious from the perusal of the aforesaid Provisions U/s 145(1) of I.T. Act that it is not open for the Assessee to follow cash system of accounting for some of the items and mercantile system of accounting for the remaining items. Mixed or hybrid system of accounting has lost statutory mandate w.e.f. 01.04.1997, pursuant to amendment of Section 145 of I.T. Act by the Finance Act, 1995. Income of an Assessee under the head of Profits and Gains of Business or Profession and under the head of Income from Other Sources is to be computed in accordance either with cash system of accounting regularly employed by the assessee or with mercantile system of accounting regularly employed by the assessee. Undisputedly, the regular system of accounting employed by the assessee is Mercantile System. Under Mercantile System of accounting items of income and expenditure are accounted for on accrual basis; and the actual dates of payments / receipts for various items of income and expenditure, are irrelevant. On the other hand, under cash system of accounting, various items of income and expenditure are accounted for on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10-11. ( 4) Grounds 4.1 and 4.2 in assessee s appeal for A.Y. 2012-13 were not pressed by the assessee; therefore, these grounds are dismissed being not pressed. ( 5) Now we come to the appeals filed by Revenue vide ITA No. 2792/Del/2015 for A.Y. 2010-11 and ITA No. 716/Del/2016 for A.Y. 2012-13. Grounds 1 and 2 in Revenue s appeal for A.Y. 2010-11 and Ground 1 in Revenue s appeal for A.Y. 2012-13 pertain to disallowance made by the Assessing Officer U/s 43B of I.T. Act in respect of payments made by the Assessee on account of advance excise duty. The disallowances were made by the AO on the ground that payment of advance excise duty pertains to the next year s expenses and are not allowable in the year(s) in which it has been claimed. According to the assessee, as per the excise rules regulations specifically regulating the liquor industry, the assessee is bound to pay the excise duty in advance in order to secure the release of transport permit for supply of liquor at various liquor shops for immediate ensuing period. It was submitted, that as the assessee is engaged in the retail business of Indian Made Foreign Liquor, the assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 pertains to disallowance of the payment made by the assessee to Central Road Research Institute ( CRRI , for short) for undertaking research regarding the concrete strength in bridges and had claimed weighted deduction @ 125% of the sum so paid U/s 35(1)(iia) of I.T. Act. The AO disallowed this claim on the ground that the documentary evidence did not contain the name of the assessee. The Ld. CIT(A) allowed the claim of the assessee observing as under: Having gone through the submission and the order of assessment, it emerges that the Central Road Research institute is a unit of Council for scientific and industrial Research and the income of which is exempt u/s 10(23C) (vi) if the Act. The Assessing Officer is directed to allow the deduction of ₹ 8,82,40/- with the weighted deduction rebate u/s 35(1)(iia) of the Act. The disallowance of ₹ 11,03,000/- made by the assessing officer is therefore, deleted. ( 7.1) At the time of hearing before us, the Ld. DR relied on the order of the AO. The Ld. AR of the assessee relied on the order of the Ld. CIT(A). The Ld. AR further submitted that CSIR has been approved, through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Tourism and Travel Management was given to the corporation of 1st January, 1993 initially for a period of 5 years. As per the decision of Ministry of Tourism, Govt. of India in the meeting held on 4th November, 1992 its stand renewed for another 5 years upto 2004, and thereafter upto 2009. Since the owing the propriety of the institute is still not yet decided, the accounts have been prepared and annexed as per practice consistently followed since its setup on 1993. On the basis of above loss claimed in respect to Delhi Institute of Tourism and Travel Management stands added back to the income of the assessee. In A.Y. 2012-13, the disallowance was made by AO, holding as under: 6.10 It has also been noticed that in the AY 2007-08 where net profit of the same institute was added by AO, the assessee has claimed that the ownership of institute belongs to IITM- Gwalior and not to DTTDC. Whereas in the previous year under assessment, the net loss has been claimed in returned income as net business loss. This results to the contrary stand of the assessee without any reasonable cause explanation for these two situations ..... X X X X Extracts X X X X X X X X Extracts X X X X
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