DCIT, New Delhi v. M/s. Eden Parks Hotels Ltd.,, New Delhi

ITA 1252/DEL/2010 | 2006-2007
Pronouncement Date: 07-01-2011 | Result: Dismissed

Appeal Details

RSA Number 125220114 RSA 2010
Assessee PAN AAACE9508L
Bench Delhi
Appeal Number ITA 1252/DEL/2010
Duration Of Justice 9 month(s) 19 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Eden Parks Hotels Ltd.,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 07-01-2011
Date Of Final Hearing 24-11-2010
Next Hearing Date 24-11-2010
Assessment Year 2006-2007
Appeal Filed On 19-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `B: NEW DELHI BEFORE SHRI C.L.SETHI JUDICIAL MEMBER AND SHRI K.G. BANSAL ACCOUNTANT MEMBER I.T. A. NOS.1252/DEL/2010 ASSESSMENT YEAR: 2005-06 DY. COMMISSIONER OF INCOME-TAX M/S. EDEN PARKS HO TELS LIMITED CIRCLE 11(1) NEW DELHI. VS. THE QUTUB HOTEL SHAHEED JEET SINGH MARG NEW DELHI. PAN: AAACE9508L (APPELLANT) (RESPONDENT) APPELLANT BY: MS. BANITA DEVI NAOREM SR. DR. RESPONDENT BY: SHRI M.P. RASTOGI ADVOCATE. O R D E R PER C.L. SETHI JUDICIAL MEMBER: THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 4. 01.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) DE LETING THE PENALTY LEVIED UNDER SEC. 271(1)(C) OF THE INCOME-TAX ACT 1961 (THE ACT) BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2005-06. IN THE MEMORANDUM OF APPEAL I.E. FORM NO.36 FILED BY THE ASSESSEE THE A SSESSMENT YEAR IS WRONGLY MENTIONED AS 2006-07. 2. THE ONLY GROUND RAISED IN THIS APPEAL IS AS UNDE R:- 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE PENALTY LEVIED BY THE A.O. OF RS.52 38 031/- U/S 271(1)(C) OF THE ACT. 3. THE FACTS RELATING TO THE ISSUE IN HAND MAY BE STATED IN BRIEF AS UNDER DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS SHOWN DEFER RED REVENUE EXPENDITURE OF RS.3 42 44 610/- DURING THE YEAR THAT WAS WRITT EN OFF IN THE BOOKS OF ACCOUNT OVER A PERIOD OF FIVE YEARS AS PER THE ACCO UNTING POLICY. THESE EXPENSES WERE IN THE NATURE OF VRS PAYMENT RENOVAT ION EXPENSES AND PRELIMINARY EXPENSES. HOWEVER IN THE RETURN OF IN COME THE ASSESSEE CLAIMED THE DEDUCTION IN FULL. THE AO WAS OF THE V IEW THAT THESE EXPENSES WERE ALLOWABLE ONLY TO THE EXTENT OF 1/5 TH AS SO SHOWN BY THE ASSESSEE IN THE BOOKS OF ACCOUNT. THE AO FURTHER OBSERVED THAT THE ASSESSEE ITSELF HAS WRITTEN OFF IN ITS BOOKS OVER A PERIOD OF 5 YEARS AS AGAINST WHICH THE ASSESSEE HAS CLAIMED THE ENTIRE AMOUNT OF RS.3 42 4 4 610/- AS REVENUE EXPENDITURE IN THE RETURN OF INCOME. THE AO THEREF ORE ALLOWED ONLY THE EXPENSES TO THE EXTENT OF 1/5 TH AND REST WAS DISALLOWED. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS DEBITED PRIOR PERIOD EXPENSES OF RS.50 267/- WHICH WAS DISALLOWED AND ADDED BACK TO THE INCOME O F THE ASSESSEE WHILE COMPLETING THE ASSESSMENT. THE AO FURTHER FOUND TH AT THE ASSESSEE DEPOSITED THE CONTRIBUTION OF ESI DEPOSIT BEYOND TH E DUE DATE AND HENCE THE 3 SAME WAS NOT ALLOWABLE AS A DEDUCTION BEING NOT PAI D WITHIN DUE DATE. IN RESPECT OF THESE ADDITIONS THE AO INITIATED PENALT Y PROCEEDINGS UNDER SEC. 271(1)(C) OF THE ACT. AFTER HEARING THE ASSESSEE A ND CONSIDERING THE ASSESSEES SUBMISSIONS THE AO LEVIED THE PENALTY U NDER SEC. 271(1)(C) OF THE ACT. 4. IN THE PENALTY ORDER THE AO HAS STATED THAT IDE NTICAL ADDITIONS WERE ALSO MADE IN THE ASSESSMENT YEAR 2004-05 AND PENALT Y UNDER SEC. 271(1)(C) WAS LEVIED. HE FURTHER OBSERVED THAT PENALTY LEVIE D IN ASSESSMENT YEAR 2004-05 HAS BEEN DELETED BY THE LEARNED CIT(A) BUT THE DEPARTMENT HAS FILED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE CIT(A)S ORDER BY NOT ACCEPTING THE CIT(A)S ORDER DELETING THE PENALTY. THE AO TH EREFORE LEVIED PENALTY UNDER SEC. 271(1)(C) OF THE ACT. 5. ON APPEAL THE CIT(A) DELETED THE PENALTY AFTER FOLLOWING THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE PERTAINING TO TH E ASSESSMENT YEAR 2004- 05. THE LEARNED CIT(A) HAS DISCUSSED AND DECIDED T HIS ISSUE BY OBSERVING AS UNDER:- 3. THE APPELLANT BEFORE ME SUBMITTED AS BELOW:- THE APPELLANT COMPANY HAS NEITHER CONCEALED THE PARTICULARS OF INCOME NOR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME AS IS CLEAR FROM THE FOLLOWING FACTS: 4 A) STATEMENT OF COMPUTATION OF INCOME SHOWING EXPENSES CLAIMED WAS FILED WITH THE RETURN OF INCOME SUBMITTED BY THE APPELLANT. B) AUDITED ACCOUNTS INCLUDING NOTES RELATING TO ACCOUNTING POLICIES FOLLOWED REGARDING DEFERRED REVENUE EXPENDITURE WERE SUBMITTED ALONG WITH THE RETURN OF INCOME. C) TAX AUDIT REPORT (FORM 3CD) ALONG WITH ANNEXURE RELATING DEFERRED REVENUE EXPENDITURE FOR THE RELEVANT FINANCIAL YEARS WAS ALSO FILED ALONG WITH THE RETURN OF INCOME. D) THE APPELLANT HAS CLAIMED THE REVENUE EXPENSES IN THE INCOME TAX RETURN FILED AS PER THE PROVISIONS OF THE INCOME TAX ACT 1961. E) THE A.O. HAS MERELY DISALLOWED THE REVENUE EXPENDITURE AND AGREED TO ALLOW THE DISALLOWED PROPORTIONATE AMOUNT IN FUTURE YEARS BASED ON THE ABOVE DOCUMENTS FILED. THUS HE HAS NOT REJECTED THE CLAIM OF THE APPELLANT COMPANY BUT HAS AGREED TO ALLOW THE SAME AS PER THE AMOUNTS WRITTEN OFF IN THE BOOKS OF ACCOUNTS. SUCH ACTION OF A.O. IS NOT AS PER THE PROVISIONS OF INCOME TAX ACT 1961. IN VIEW OF THE ABOVE SUBMISSION AND THE RECENT ITATS ORDER DATED 23 RD MARCH 2009 FOR A.Y. 2004-05 IN FAVOUR OF THE APPELLANT WE REQUEST YOUR GOODSELF TO DELETE THE PENALTY AS LEVIED BY TH E A.O. IN CONNECTION WITH A.Y. 2005-06. 4. THE APPELLANT BEFORE ME SUBMITTED COPY OF ITATS ORDER IN HIS OWN CASE FOR A.Y. 2004-05 (ITA NO.25/(DEL)/ 08) WHEREIN IT IS OBSERVED BY ITAT ON THIS ISSUE AS BELOW:- THEREAFTER IT IS OBSERVED BY CIT(A) THAT IN THE PRESENT CASE THE CLAIM OF THE ASSESSEE THAT ENTIRE EXPENSES INCURRED UNDER THIS HEAD IN THIS YEAR IS ALLOWABLE AS REVENUE EXPENDITURE IN THIS YEAR IS A LEGAL CLAIM AND SIMPLY BECAUSE THE LEGAL CLAIM HAS NOT BEEN ACCEPTED IT CANNOT BE SAID THAT 5 THE ASSESSEE HAS CONCEALED ANY INCOME OR THAT HE HAS FURNISHED INACCURATE PARTICULARS OF INCOME. CONSIDERING THE FACTS OF THE PRESENT CASE WE ARE I N AGREEMENT WITH THE LD. CIT(A) ON THIS ISSUE THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME IN THE PRESENT CASE AND HENCE THE PENALTY U/S 271(1)(C ) IS NOT JUSTIFIED. WE UPHOLD THE ORDER OF CIT(A). IN VIEW OF THE ABOVE FACTS IN MY OPINION THIS MATTE R IS FULLY COVERED BY ITATS ORDER IN APPELLANTS OWN CA SE AND U/S 271(1)(C ) IS NOT JUSTIFIED SO IS TO BE DELETED AND APPEAL IS ALLOWED. 6. HENCE THE DEPARTMENT IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WITH REGARD TO THE DISALLOWANCE OF THE EXPENSES WRITTEN OFF IN THE BOOKS OF ACCOUNT OVER A PERIOD OF 5 YEAR S BUT CLAIMED IN FULL AS REVENUE EXPENDITURE IN THE RETURN OF INCOME WE FIN D THAT THE IDENTICAL ISSUE HAS ARISEN IN THE ASSESSEES OWN CASE FOR ASSESSMEN T YEAR 2004-05 WHERE THE PENALTY LEVIED BY THE ASSESSING OFFICER WAS DELETED BY THE LEARNED CIT(A) AND THE ORDER OF THE CIT(A) HAS BEEN CONFIRMED BY T HE TRIBUNAL VIDE ORDER DATED 23 RD MARCH 2009 IN ITA NO.25/(DEL)/08 BY OBSERVING A ND HOLDING AS UNDER:- 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS PERUS ED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDGMENTS CITED BY LD. AR OF THE ASSESSEE. WE FIND THAT AS PER THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE COMPANY AS APPEARING ON PAGE 5 OF THE PAPE R BOOK 6 THE ASSESSEE HAS DEDUCTED RS.229.19 LACS ON ACCOUNT OF DEFERRED REVENUE EXPENSES. THE DETAILS THEREOF ARE AVAILABLE IN SCHEDULE 13 TO THE P & L ACCOUNT AS APPEARING ON PA GE NO.17 OF THE PAPER BOOK. AS PER THE DETAILS AS APPEARING ON PAGE NO.17 OF THE PAPER BOOK IT IS SEEN THAT DURING THI S YEAR THE ASSESSEE HAS INCURRED RENOVATION EXPENDITURE OF RS.65 91 682.54 AND THE ASSESSEE HAS CLAIMED DEDUCT ION AGAINST THE SAME TO THE EXTENT OF RS.13 18 336.51 I N THE PROFIT AND LOSS ACCOUNT. THE COMPUTATION OF TOTAL INCOME FILED BY THE ASSESSEE ALONG WITH RETURN OF INCOME IS ALSO APPEAR ING ON PAGE NO.3 OF THE PAPER BOOK. AS PER THE SAME THE ASSES SEE HAS ADDED BACK THE ENTIRE AMOUNT OF DEFERRED REVENUE EX PENDITURE WRITTEN OFF AND DEBITED TO THE P & L ACCOUNT TO THE EXTENT OF RS.229.19 LACS AND DEDUCTED THE EXPENDITURE INCURRE D DURING THIS YEAR ON ACCOUNT OF RENOVATION EXPENDITURE RS.6 5 91 683/-. FROM THIS IT IS CLEAR THAT FULL FACTS REGARDING TH IS CLAIM OF THE ASSESSEE WAS DISCLOSED BY THE ASSESSEE IN THE RETUR N OF INCOME AND AUDITED ACCOUNTS. IT IS A DIFFERENT MATTER THA T THE CLAIM OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO AND HE HAS ALLOWED DEDUCTION ONLY TO THE EXTENT OF 1/5 TH OF EXPENDITURE INCURRED AND DEBITED BY THE ASSESSEE IN P & L ACCOUNT BUT ON THE BASIS OF THIS IT CANNOT BE HELD THAT THERE WAS CONCEALMENT OF INCOME BY THE ASSESSEE OR THERE WAS FURNISHING OF INACCURATE PARTICULARS OF INCOME BY THE ASSESSEE. THIS IS A LEGAL CLAIM O F THE ASSESSEE THAT ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE ON RENOVATION IS ALLOWABLE IN THE YEAR IN WHICH IT IS INCURRED IR RESPECTIVE OF ITS TREATMENT GIVEN BY THE ASSESSEE IN ITS BOOKS OF ACC OUNT. IT IS NOTED BY LD. CIT(A) ON PAGE NO.6 OF HIS ORDER THAT AS PER THE TRIBUNAL DECISION RENDERED IN THE CASE OF SALORA TR ADING CO. LTD. (SUPRA) IT IS OBSERVED BY THE TRIBUNAL THAT I T IS WELL SETTLED PRINCIPLE OF LAW THAT PENALTY FOR CONCEALMENT CANNO T BE LEVIED MERELY BECAUSE CERTAIN DEDUCTION RELIEF OR BENEFIT HAS BEEN DENIED TO THE ASSESSEE. IT IS ALSO OBSERVED THAT T HE FACTS AND CIRCUMSTANCES OF THE CASE MUST LEAD TO THE CONCLUSI ON THAT THE ASSESSEE HAS CONCEALED PARTICULARS OF INCOME AND/OR FURNISHED INACCURATE PARTICULARS OF INCOME. THEREAFTER IT I S OBSERVED BY LD. CIT(A) THAT IN THE PRESENT CASE THE CLAIM OF T HE ASSESSEE THAT ENTIRE EXPENSES INCURRED UNDER THIS HEAD IN TH IS YEAR IS ALLOWABLE AS REVENUE EXPENDITURE IN THIS YEAR IS A LEGAL CLAIM AND SIMPLY BECAUSE THE LEGAL CLAIM HAS NOT BEEN ACC EPTED IT 7 CANNOT BE SAID THAT THE ASSESSEE HAS CONCEALED ANY INCOME OR THAT HE HAS FURNISHED INACCURATE PARTICULARS OF INC OME. CONSIDERING THE FACTS OF THE PRESENT CASE WE ARE I N AGREEMENT WITH THE LD. CIT(A) ON THIS ISSUE THAT THERE IS NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME IN THE PRESENT CASE AND HENCE THE PENALTY U/S 271(1)(C) I S NOT JUSTIFIED. WE UPHOLD THE ORDER OF LD. CIT(A). 8. WITH REGARD TO ITEM OF PRIOR PERIOD EXPENSES OF RS.50 267/- WE FIND THAT ALL THE DETAILS RELATING THERETO WERE FURNISHE D BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND NO FACT HAS BEEN CONCEALED BY THE ASSESSEE. THE ADDITION HAS BEEN MADE BECAUSE OF DIFFERENCE OF OPI NION. THE AO HAS NOT GIVEN ANY FINDING THAT THE CLAIM MADE BY THE ASSESS EE WAS NOT BONA FIDE. IT IS MERE A REJECTION OF THE ASSESSEES CLAIM UNDER T HE PROVISIONS OF LAW AND THEREFORE PENALTY LEVIED UNDER SEC. 271(1)(C) IS N OT CALLED FOR. 9. THE NEXT ITEM IS WITH REGARD TO THE DISALLOWANCE OF PAYMENT OF ESI CONTRIBUTION WHICH WAS PAID BY THE ASSESSEE BEYOND DUE DATE. THIS IS A DISALLOWANCE OF THE PAYMENT OF ESI CONTRIBUTION BEC AUSE OF THE REASONS THAT THE SAME WAS NOT PAID WITHIN DUE DATE SPECIFIED UND ER THE RESPECTIVE ACT. HOWEVER FACT THAT THE PAYMENT WAS MADE BY THE ASSE SSEE IS NOT IN DISPUTE. DISALLOWANCE IS MERELY A TECHNICAL ONE APPLYING THE PROVISION OF SEC. 43B OF THE ACT. MOREOVER NOW THE POSITION IS WELL SETTLE D THAT EVEN IF THE PAYMENT IS MADE BEYOND THE DUE DATE BUT PAID WITHIN THE DUE DATE OF FILING OF THE RETURN OF INCOME APPLICABLE TO THE ASSESSEES CASE UNDER SEC. 139(1) OF THE 8 ACT THE PAYMENT SO MADE IS TO BE ALLOWED AS DEDUCT ION UNDER SEC. 43B OF THE ACT. THEREFORE THIS DISALLOWANCE OF ESI PAYME NT IS NOT AN ITEM IN RESPECT OF WHICH PENALTY UNDER SEC. 271(1)(C) CAN B E LEVIED. 10. IN THE LIGHT OF THE DISCUSSION MADE ABOVE THE ORDER OF THE LEARNED CIT(A) IN DELETING THE PENALTY IS UPHELD. 11. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. 12. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 7 TH JANUARY 2011. SD/- SD/- (K.G. BANSAL) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH JANUARY 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR ITAT.