Daisuke Ito, New Delhi v. ACIT, New Delhi

ITA 3863/DEL/2010 | 2005-2006
Pronouncement Date: 30-09-2011 | Result: Allowed

Appeal Details

RSA Number 386320114 RSA 2010
Assessee PAN AOOPK4383E
Bench Delhi
Appeal Number ITA 3863/DEL/2010
Duration Of Justice 1 year(s) 1 month(s) 17 day(s)
Appellant Daisuke Ito, New Delhi
Respondent ACIT, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-09-2011
Date Of Final Hearing 19-09-2011
Next Hearing Date 19-09-2011
Assessment Year 2005-2006
Appeal Filed On 13-08-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.D. RANJAN ITA NO. 3863/DEL/2010 A.Y. 2005-06 ITA NO. 3864/DEL/2010 A.Y. 2006-07 DAISUKE ITO C/O DENSO SALES INDIA PVT. LTD. VS. A SSISTANT CIT 3 RD FLOOR LEFT WING THE CAPITAL COURT CIRCLE 46(1 ) OLD PALME MARG MUNIKA NEW DELHI. NEW DELHI. (PAN: AAMP17382P) (APPELLANT) (RESPONDENT) ITA NO. 3862/DEL/2010 A.Y. 2002-03 SHUNSUKE ISOGAI VS. ASSISTANT CIT C/O DENSO SALES INDIA PVT. LTD. CIRCLE 46(1) 3 RD FLOOR LEFT WING THE CAPITAL COURT NEW DELHI. OLD PALME MARG MUNIKA NEW DELHI. (PAN: AAGP16720F) (APPELLANT) (RESPONDENT) ITA NO. 3865/DEL/2010 A.Y. 2005-06 SHIGEKAZU KUMANO VS. ASSISTANT CIT C/O DENSO SALES INDIA PVT. LTD. CIRCLE 46(1) 3 RD FLOOR LEFT WING THE CAPITAL COURT NEW DELHI. OLD PALME MARG MUNIKA NEW DELHI. (PAN: AOOPK4383E) (APPELLANT) (RESPONDENT) ITA NO. 3866/DEL/2010 A.Y. 2005-06 MR. TOMOYUKI WATANABE VS. ASSISTANT CIT C/O DENSO SALES INDIA PVT. LTD. CIRCLE 46(1) 3 RD FLOOR LEFT WING THE CAPITAL COURT NEW DELHI. OLD PALME MARG MUNIKA NEW DELHI. (PAN AALPW0630P) (APPELLANT) (RESPONDENT) 2 ITA NO. 3867/DEL/2010 A.Y. 2006-07 MIKITERU TAKAGAWA VS. ASSISTANT CIT C/O DENSO SALES INDIA PVT. LTD. CIRCLE 46(1) 3 RD FLOOR LEFT WING THE CAPITAL COURT NEW DELHI. OLD PALME MARG MUNIKA NEW DELHI. (PAN AALPW0630P) (APPELLANT) (RESPONDENT) ITA NO. 3868/DEL/2010 A.Y. 2006-07 HIDEFUMI KAMITANI VS. ASSISTANT CIT C/O DENSO SALES INDIA PVT. LTD. CIRCLE 46(1) 3 RD FLOOR LEFT WING THE CAPITAL COURT NEW DELHI. OLD PALME MARG MUNIKA NEW DELHI. (PAN AMTPK9286F) (APPELLANT) (RESPONDENT) APPELLANT BY: MS. PREETI GO EL ADV. RESPONDENT BY: SHRI ROHIT GARG SR. DR ORDER PER BENCH: THE PRESENT SEVEN APPEALS ARE DIRECTED AT THE INST ANCE OF ASSESSEES AGAINST THE SEPARATE ORDERS OF LEARNED CIT(APPEALS) . WE DEEM IT CONVENIENT TO NOTE THE FOLLOWING DETAILS IN A TABULAR FORM FOR THE FACILITY OF REFERENCE: ITA A.Y. APPELLANT DATE OF CIT(A)ORDERS SECTIONS DATE OF ORDERS 3863/DEL/2010 05-06 ASSESSEE 1.6.2010 143(3) & 147 29.6.2009 3 3864/DEL/2010 06-07 ASSESSEE 4.6.2010 143(3) /147 30.6.2009 3862/DEL/2010 02-03 ASSESSEE -DO- 144/147 29.6.2009 3865/DEL/2010 05-06 ASSESSEE 28.5.2010 143(3)/147 -DO- 3866/DEL/2010 05-06 ASSESSEE 3.6.2010 -DO- -DO- 3867/DEL/2010 06-07 ASSESSEE 28.5.2010 -DO- 30.6.2009 3868/DEL/2010 06-07 ASSESSEE 03.5.2010 -DO- -DO- 2. THE COMMON ISSUE INVOLVED IN ALL THESE APPEALS R ELATES TO WHETHER PERQUISITE VALUE OF RENT FREE ACCOMMODATION TO THE EXTENT OF 1/3 RD OF THE AREA DESERVES TO BE EXCLUDED FROM THE TAXABLE INCOME OF THE ASSESSEE ON THE GROUND THAT SUCH PART OF ACCOMMODATION WAS USED FOR THE PURPOSE OF THE BUSINESS AND NOT FOR THE RESIDENTIAL PURPOSE OF THE ASSESSEES. 3. THE ASSESSEES ARE INDIVIDUALS. THEY HAVE FILED T HEIR RETURNS OF INCOME WITHIN THE DUE DATE. THEY ARE SALARIED EMPLOYEES. A S PER THEIR TERM OF APPOINTMENTS THEY WERE PROVIDED RENT FREE ACCOMMODA TION. THEY HAVE EXCLUDED 1/3 RD VALUE OF THE PERQUISITE RELATABLE TO SUCH RENT FRE E ACCOMMODATION ON THE GROUND THAT THIS MUCH SPACE WA S USED FOR THE PURPOSE 4 OF THE BUSINESS. THUS ACCORDING TO THE ASSESSEE T HE 1/3 RD AREA OF THE RESIDENTIAL ACCOMMODATION WAS NOT USED BY THE RESPE CTIVE EMPLOYEES FOR THE PURPOSE OF THEIR RESIDENCE. ASSESSING OFFICER HAS N OT RECORDED ANY FINDING IN DETAIL IN THIS RESPECT. HE HAS MADE A REFERENCE TO THE CERTIFICATE ISSUED BY THE COMPANY EXHIBITING THE RENT FREE ACCOMMODATION PROV IDED TO THE EMPLOYEES. 4. DISSATISFIED WITH THE DISALLOWANCE ASSESSEES CA RRIED THE ISSUE IN APPEAL BEFORE THE LEARNED CIT(APPEALS). THOUGH LEAR NED FIRST APPELLATE AUTHORITY HAS DECIDED THE APPEALS BY SEPARATE ORDER S BUT HER FINDING IS ALMOST VERBATIM SAME IN ALL THE CASES. FOR THE FACI LITY OF REFERENCE WE ARE TAKING NOTE OF ASSESSEES SUBMISSION AS WELL AS FIN DINGS OF THE LEARNED CIT(APPEALS) FROM THE APPEALS OF M/S. DAISUKE ITO IT READS AS UNDER: 4. THE ASSESSEE HAS FILED THE FOLLOWING WRITTEN SU BMISSIONS BEFORE ME REGARDING THE MAIN GROUND OF APPEAL:- THE COMPANY WAS PROVIDING THE RENT FREE ACCOMMODATI ON (RFA) TO THE EXPATRIATES WORKING IN INDIA. MOST OF THE EXPAT RIATES WERE PROVIDED RFA FACILITY BY THE EMPLOYER ON SHARING BA SIS WITH OTHER EXPATRIATES. HOWEVER ONLY FOLLOWING 7 EXPATRIATES WHO WERE 5 MANAGING EXECUTIVES WERE PROVIDED INDEPENDENT HOUSE S BUT THEY WERE USING I/3 RD OF THE ACCOMMODATION FACILITY FOR OFFICIAL PURPOSE S. S.NO. NAME OF THE APPELLANT ASST. YR. DESIGNATION HELD IN DSIN ROLE 1. SHUNSUKE ISOGAI 2002-03 GENERAL MANAGER FUNCTIONING AS HEAD OF THE DEPPT. FOR ORIGINAL EQUIPMENT MANUFACTURE-2 DEPARTMENT. HE WAS RESPONSIBLE FOR THE MARKETING AND COMMERCIAL FUNCTIONS. 2. SHIGEKAZU KUMANO 2005-06 -DO- FUNCTIONING AS HEAD OF DEPT. FOR ORIGINAL EQUIPMENT MANUFACTURE-2. HE WAS RESPONSIBLE FOR THE MARKETING AND COMMERCIAL FUNCTIONS. 3. TOMOYUKI WATANABE 2005-06 -DO- FUNCTIONING AS HEAD OF DEPT. FOR ORIGINAL EQUIPMENT MANUFACTURE-2. HE WAS RESPONSIBLE FOR THE MARKETING 6 AND COMMERCIAL FUNCTIONS. 4. DAISUKE ITO -DO- DY. GENERAL MANAGER OVERALL RESPONSIBLE FOR TOYOTA IN ORIGINAL EQUIPMENT MANUFACTURE DEPTT. 5. -DO- 2006-07 -DO- -DO- 6. HIDEFUMI KAMITANI -DO- DIRECTOR WAS OVERALL RESPONSIBLE FOR BANGALORE OPERATION. 7. MIKITERU TAKAGAWA -DO- GENERAL MANAGER HE WAS HEAD OF THE DEPTT. FOR ACCOUNTS/FINANCE & HR DEPARTMENTS. AS PER RESPECTIVE EMPLOYMENT CONTRACTS THE APPELLA NT WAS PROVIDED WITH RENT FREE ACCOMMODATION (RFA) BY THE EMPLOYER COMPANY FOR USE OF ACCOMMODATION FOR PERSONAL AS WELL AS FOR OF FICIAL PURPOSES. 2/3 RD OF THE ACCOMMODATION WAS USED BY THE APPELLANT FOR PERSONAL PURPOSES AND BALANCE 1/3RD WAS USED FOR OFFICIAL PU RPOSES. A PART OF ACCOMMODATION WAS PROVIDED BY THE EMPLOYER FOR OFFI CIAL PURPOSE KEEPING IN VIEW THE POSITION AND NATURE OF WORK OF THE APPELLANT. THE PERQUISITE VALUE OF THE RFA WAS DULY DECLARED DURIN G THE RELEVANT YEAR IN FORM O.12BA ANNEXED WITH FORM NO.1 6 GIVEN BY THE EMPLOYER. THE SAME VALUE WAS ADOPTED BY THE APPELLA NT IN THE COMPUTATION OF TOTAL INCOME FOR RELEVANT ASSESSMENT YEAR IN HIS RETURN. 7 THE LD. AO HOWEVER CONSIDERED THE TOTAL RENT PAID FOR THE RESPECTIVE ACCOMMODATION WHILE COMPUTING THE PERQUISITE VALUE. THUS THE RFA WAS INCORRECTLY VALUED TO THAT EXTENT. THE APPELLANT HAS ALSO PRODUCED BEFORE ME A CERTIFI CATE FROM THE COMPANY AS EVIDENCE FOR USAGE OF ACCOMMODATION FOR RESIDENTIAL (2/3RD) AND FOR OFFICIAL (L/3RD) PURPOSES. 5. I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE A PPELLANT AS WELL AS THE EVIDENCE FILED BY HIM. THE OILY GROUND IN APPEAL IS FOR CONSIDERING ONLY 2/3RD OF THE ACCOMMODATION FOR CAL CULATING PERQUISITE VALUE OF RENT FREE ACCOMMODATION BECAUSE 1/3 RD OF THE ACCOMMODATION PROVIDED TO THE ASSESSEE WAS USED FOR OFFICIAL PURPOSE BUT IT APPEARS THAT THIS GROUND WAS NOT RAISED BEFO RE THE AO DURING THE ASSESSMENT AND THIS ISSUE HAS BEEN RAISED BEFORE ME FOR THE FIRST TIME. MOREOVER THE ASSESSEE HAS ONLY SUBMITTED A CERTIFI CATE FROM THE COMPANY THAT 1/3RD OF THE ACCOMMODATION WAS USED BY THE ASSESSEE AS OFFICE BUT THERE IS NOT OTHER EVIDENCE TO BACK THIS CLAIM. THE CLAIM MADE AT THIS STAGE APPEARS TO BE AN AFTER THOUGHT AND THE CERTIFICATE ISSUED BY THE COMPANY IS A SELF SER VING DOCUMENT. I AM OF THE VIEW THAT THE CLAIM IS NEITHER JUSTIFIED NOR BACKED BY SUFFICIENT EVIDENCE THEREFORE REJECTED. 8 5. OUT OF THE PRESENT SEVEN APPEALS TWO APPEALS I. E. ITA NOS. 3863 & 3864/DEL/2010 WERE LISTED ON 19 TH SEPTEMBER 2011. THE LEARNED COUNSEL FOR THE ASSESSEE SOUGHT ADJOURNMENT. WE HAVE ADJOURNED THE HEARING FOR 24 TH SEPTEMBER 2011. ON 28 TH SEPTEMBER 2011 THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE ARE FIVE MORE APPEALS INVOLVING COMMON ISSUE AND HE HAS APPLIED TO THE HOBLE VP FOR CONSOLIDATI ON OF ALL THESE APPEALS. WE HAVE ADJOURNED THE HEARING TO 29.9.2011. ON 29.9 .2011 WE HEARD SHRI SALIL KAPOOR ON THE MERIT AND ADJOURNED THE HEARING TO 30 TH SEPTEMBER 2011 FOR THE PURPOSE OF CONSOLIDATION. TODAY I.E. 20.9.2 011 WE HAVE HEARD MS. PREETI GOEL IN ADDITION TO THE SUBMISSIONS MADE BY SHRI SALIL KAPOOR AS WELL AS ROHIT GARG SR.DR. THE MAIN THRUST OF THE ARGUME NTS ADVANCED BY SHRI SALIL KAPOOR WAS THAT ASSESSEE HAS FILED A LETTER B EFORE THE ASSESSING OFFICER ON 9.6.2009 WHEREIN WITH REGARD TO THE QUERY OF AS SESSING OFFICER IT WAS SUBMITTED THAT IN ORDER TO BUTTRESS THE USER OF RES IDENTIAL ACCOMMODATION PARTLY FOR THE PURPOSE OF THE BUSINESS ASSESSEE SH RI DAISUKE ITO HAS FILED A CERTIFICATE ISSUED BY THE COMPANY. ASSESSING OFFICE R THEREAFTER DID NOT CALL FOR ANY OTHER EVIDENCE. THE ASSESSEES WERE UNDER TH E IMPRESSION THAT THIS CERTIFICATE IS SUFFICIENT FOR DEMONSTRATING THE FAC T THAT PREMISES WAS PARTLY USED FOR THE PURPOSE OF THE BUSINESS OF THE COMPANY . HE TOOK US THROUGH THE LETTER DATED 19.6.2009 AVAILABLE ON PAGE 1 AS WELL AS THE COPY OF THE 9 CERTIFICATE AVAILABLE ON PAGE 36 OF THE PAPER BOOK. HE FURTHER POINTED OUT THAT LEARNED FIRST APPELLATE AUTHORITY WHILE REJECT ING THE CLAIM OF ASSESSEE HAS OBSERVED THAT THIS ISSUE WAS NOT RAISED BEFORE THE ASSESSING OFFICER. IT WAS RAISED FOR THE FIRST TIME BEFORE HER. HE SUBMIT TED THAT IT IS FACTUALLY INCORRECT. THE ASSESSEE HAS SUBMITTED THE CERTIFICA TE AS WELL AS THE EXPLANATION. IT IS THE LEARNED ASSESSING OFFICER WH O DID NOT CALLED FOR FURTHER EVIDENCE. HE SUBMITTED THAT THE LEARNED FIRST APPEL LATE AUTHORITY FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES IN RIGHT PER SPECTIVE. LEARNED DR ON THE OTHER HAND SUBMITTED THAT ALL THE ASSESSEES ARE SALARIED EMPLOYEES. IT IS THE MODUS OPERANDI OF THE COMPANY I.E. EMPLOYER TO CLAIM 1/3 RD PERQUISITE VALUE ASSESSABLE IN THE HANDS OF PRESENT ASSESSEES AS A BUSINESS EXPENDITURE. THERE IS NO EVIDENCE ON THE RECORD WHICH CAN DEMONS TRATE THAT ACCOMMODATION WAS PARTLY USED FOR THE PURPOSE OF TH E BUSINESS. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. ACCORDING TO THE ASSESSEE THE RE SIDENTIAL ACCOMMODATIONS WERE PROVIDED TO THEM BY THE EMPLOYER WHICH WERE PA RTLY USED FOR THE PURPOSE OF THE COMPANYS BUSINESS AND THEREFORE 1 /3 RD OF THE PERQUISITE VALUE SHOULD BE EXCLUDED FROM THEIR HANDS. WE HAVE CONFRONTED THE LEARNED COUNSEL FOR THE ASSESSEE TO SHOW ANY DEMONSTRATIVE EVIDENCE WHICH CAN 10 ESTABLISH BEYOND DOUBT THE USER OF RESIDENTIAL ACCO MMODATION FOR THE PURPOSE OF THE BUSINESS. IN ORDER TO SUBSTANTIATE THE CLAIM OF ASSESSEES LEARNED COUNSEL FOR THE ASSESSEE ONLY REFERRED THE ALLEGED CERTIFICATE ISSUED BY THE COMPANY. THIS DOCUMENT DOES NOT INSPIRE CONF IDENCE TO US TO HOLD THAT RESIDENCE WAS PARTLY USED FOR THE PURPOSE OF T HE BUSINESS. IT IS A SELF SERVING DOCUMENT. WE HAVE ENQUIRED WHETHER IT WAS MENTIONED IN THE OFFER OF APPOINTMENT LETTER THAT OFFICIAL ACCOMMODATION P ROVIDED BY THE COMPANY WILL BE USED PARTLY FOR OFFICE PURPOSE. LEARNED COU NSEL COULD NOT GIVE ANY REPLY FOR WANT OF DETAILS. IN OUR OPINION THERE S HOULD BE MORE CORROBORATIVE EVIDENCE EITHER AVAILABLE DIRECTLY OR BASED ON CIRC UMSTANCE NAMELY EXPENSES RELATED TO THE STAFF IF ANY ELECTRICITY TELEPHONE ANY EVIDENCE OF MEETING OR ANY OTHER EVIDENCE AVAILABLE IN THIS CON NECTION. ASSESSING OFFICER NEITHER EXAMINED THIS ISSUE DEEPLY NOR CONF RONTED THE ASSESSEE SPECIFICALLY. LEARNED FIRST APPELLATE AUTHORITY HAS OBSERVED THAT THIS ISSUE WAS NOT AT ALL RAISED BEFORE THE ASSESSING OFFICER. THUS IT INDICATES THAT BEFORE MAKING DISALLOWANCE THE ISSUE WAS NOT EXAMI NED WITH SPECIFIC ANGLE AND SERIOUSNESS. THE LEARNED ASSESSING OFFICER WITH OUT CONFRONTING THE ASSESSEE AND CALLING UPON OTHER MATERIAL MADE THE D ISALLOWANCE. THEREFORE WE DEEM IT APPROPRIATE TO SET ASIDE THE IMPUGNED OR DERS AND RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER IN THE C ASE OF ALL THE ASSESSEES. IT IS 11 NEEDLESS TO SAY THAT THE OBSERVATIONS MADE BY US WI LL NOT IMPAIR OR INJURE THE CASE OF A.O. OR WOULD CAUSE ANY PREJUDICE TO THE DE FENCE/EXPLANATION OF THE ASSESSEE. ASSESSING OFFICER SHALL GRANT DUE OPPORTU NITY OF HEARING BEFORE ADJUDICATING THIS ISSUE IN THE CASE OF ALL THE APPE LLANTS. 7. IN THE RESULT ALL THE APPEALS OF THE ASSESSEES ARE ALLOWED FOR STATISTICAL PURPOSES. DECISION PRONOUNCED IN THE OPEN COURT ON 30.09.201 1 SD/- SD/- ( K.D. RANJAN ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/09/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR