DCIT, New Delhi v. M/s. I.P. Support Services India Pvt. Ltd., New Delhi

ITA 3915/DEL/2011 | 2007-2008
Pronouncement Date: 30-03-2012 | Result: Dismissed

Appeal Details

RSA Number 391520114 RSA 2011
Bench Delhi
Appeal Number ITA 3915/DEL/2011
Duration Of Justice 7 month(s) 5 day(s)
Appellant DCIT, New Delhi
Respondent M/s. I.P. Support Services India Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 30-03-2012
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 30-03-2012
Date Of Final Hearing 26-03-2012
Next Hearing Date 26-03-2012
Assessment Year 2007-2008
Appeal Filed On 24-08-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C DELHI) BEFORE SHRI G.D. AGRAWAL HONBLE VICE PRESIDENT AND SHRI A.D. JAIN JUDICIAL MEMBER ITA NO. 3915(DEL)2011 ASSESSMENT YEAR: 2007-08 DY.COMMISSIONER OF INCOME TAX M/S. I.P. SUPPORT S ERVICES INDIA PVT.LTD. CIRCLE 11(1) NEW DELHI. V. 202 KIRT IDEEP BLDG. 2 NANGAL RAYA BUSINESS CENTRE NEW DELHI. (APPELLANT) (RESPONDEN T) APPELLANT BY: SHRI ALOK SINGH SR. DR RESPONDENT BY: SHRI K.V. S.R. KRISHNA CA ORDER PER A.D. JAIN J.M . THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2007-08 TAKING THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LD. CIT(A) IS WRONG PERVERSE ILLEGAL AND AGAINST THE PROVISIONS OF LAW LIABLE TO BE SET ASI DE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 56 57 120/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF REPAI R AND MAINTENANCE EXPENSES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 18 09 618/- ITA NO. 3915(DEL)2011 2 MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEPRE CIATION ON FURNITURE FIXTURE AND PLANT AND MACHINERY. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 23 14 444/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE I.T. ACT READ WITH RULE 8D OF THE I.T. ACT. 2. GROUND NO. 1 IS GENERAL. 3. APROPOS GROUND NOS. 2&3 THE DEPARTMENT HAS CONT ENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 56 57 120/- ON ACCOUNT OF DISALLOWANCE OF REPAIR AND MAINTENANCE EXPENSES AND ADDITION OF ` 18 09 618/- ON ACCOUNT OF DISALLOWANCE OF DEPRECIAT ION ON FURNITURE FIXTURE AND PLANT AND MACHINERY. THIS MATTER IT IS SEEN IS COVERED IN FAVOUR OF THE ASSESSEE BY OUR ORDER DATED 31.1.2012 PASSED IN IT A NO. 1173(DEL)2011 FOR THE ASSESSMENT YEAR 2006-07 IN THE ASSESSEES OWN CASE (COPY PLACED ON RECORD). THEREIN IT WAS INTER ALIA OBSERVED AS FOLLOWS:- 8. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT THE ASSESSEE HAD ENTERED INTO A LICENCE AGREEMENT WITH REMFRY & SAGAR FOR U SE OF OFFICE SPACE BY THEM AT THE 6 TH TO 9 TH FLOORS IN MILLENNIUM PLAZA GURGAON BELONGING TO THE ASSESSEE. ON THIS LET OUT THE ASSESSEE HAD RECEIVED ` 2 39 49 416/- AS RENT (CALLED ITA NO. 3915(DEL)2011 3 LICENCE FEE BY THE ASSESSEE). THE QUESTION IS A S TO WHETHER THE SAID INCOME IS INCOME FROM HOUSE PROPER TY AS CLAIMED BY THE ASSESSEE OR BUSINESS INCOME AS TAKE N BY THE AO. THE ASSESSEE HAD ALSO RECEIVED CONSULTANCY FE E OF ` 1 53 91 486/- FROM REMFRY & SAGAR. THIS WAS UNDER A SEPARATE AGREEMENT WHICH PROVIDED FOR RECEIPT OF CONSULTANCY FEE BY THE ASSESSEE FROM REMFRY & SAGAR FOR THE LEGAL AND SECRETARIAL SERVICES PROVIDED BY THE ASSE SSEE. REMFRY & SAGAR HAD ALSO ISSUED A CONFIRMATORY LETTE R DATED 24.8.06 IN THIS REGARD STATING THAT THE ASSESSEE H AD BEEN COMPENSATED FOR THE SERVICES PROVIDED. THEREIN I T WAS CONFIRMED THAT A SERVICE FEE REPRESENTING 25% MARK UP OVER CERTAIN EXPENSES AGREED UPON BETWEEN THE PARTIES/PA RTNERS WAS TO BE PAID BY REMFRY & SAGAR TO THE ASSESSEE. THE ASSESSEE GAVE DETAILS OF THE TOTAL EXPENSES OF ` 1 22 41 728/- WHICH AMOUNT HAD BEEN DEBITED IN THE PROFIT AND LOS S ACCOUNT. THE ASSESSEES EXPENSES WERE OF ` 25 61 586/- AND THOSE CONCERNING CONSULTANCY FEE WERE OF ` 96 80 142/- INCLUDING LEGAL AND PROFESSIONAL AND CONSULTANCY CH ARGES REMUNERATION AND BENEFITS TRAVELLING (FOREIGN AS W ELL AS DOMESTIC TRAVEL) COMMUNICATION ELECTRICITY CHARGE S VEHICLE EXPENSES AND REPAIRS AND MAINTENANCE OF BUILDING LE T OUT AND EXPENSES ON FURNITURE AND FIXTURES REPAIR ON C OMPUTERS ELECTRIC ITEMS ETC. ALL THE SAID ITEMS HAVING BEE N PROVIDED TO REMFRY & SAGAR BY THE ASSESSEE FOR USE IN THE RE NTED ITA NO. 3915(DEL)2011 4 PREMISES. DETAILS OF DEPRECIATION CALCULATED AS P ER THE INCOME TAX ACT ON FURNITURE AND FIXTURES VEHICLES AND OFFICE EQUIPMENT AMOUNTING TO ` 26 33 046/- WERE ALSO PROVIDED. TAKING NOTICE OF THESE FACTS THE LD. CIT(A) OBSERV ED THAT THE EXPENSES CONSIDERED FOR CALCULATING THE CONSULTANCY FEE ACCOMMODATED TO REMFRY & SAGAR ALONG WITH DEPRECIATION CAME TO ` 1 23 13 188/-. THE REIMBURSEMENT OF EXPENSES MADE TO THE ASSESSEE WAS ON THIS AMOUNT AFTER ADDING A MARK UP OF 25% AMOUNTING TO ` 30 78 298/-. THE TOTAL CONSULTANCY FEE AFTER MARK UP WAS THUS FOUND TO BE ` 1 53 91 486/-. UNDISPUTEDLY IT IS THIS AMOUNT WHI CH WAS OFFERED FOR TAXATION AS CONSULTANCY FEE IN THE PROF IT AND LOSS ACCOUNT BY THE ASSESSEE. THE DETAILS OF REPAIR AN D MAINTENANCE OF BUILDING INCLUDED MONTHLY MAINTENANC E CHARGES OF ` 48 77 596/- PAID TO MILLENNIUM PLAZA BESIDES EXPENSES OF ` 6 748/- ON SANITATION/PLUMBING REPAIR. IT WAS IN TERMS OF THE AGREEMENT THAT THE REIMBURSEMENT OF ALL EXPENSES HAVE BEEN MADE TO THE ASSESSEE AND THE ASS ESSEE HAS SHOWN IT AS INCOME. 9. IN THESE FACTS THE LD. CIT(A) RIGHTLY OBSERVED THAT THE REIMBURSEMENT AND 25% MARK UP WERE DIFFERENT FROM T HE RENTAL INCOME SEPARATELY SHOWN BY THE ASSESSEE AT ` ITA NO. 3915(DEL)2011 5 2 39 49 416/- ON WHICH STATUTORY DEDUCTION OF 30% HAD BEEN CLAIMED U/S 24(A) OF THE ACT. 10. FROM THE ABOVE IT IS EVIDENT THAT THERE IS NO ERROR WHATSOEVER IN THE ORDER OF THE LD. CIT(A). IT HAS RIGHTLY BEEN OBSERVED THAT THERE WAS NO SEPARATE CLAIM OF R EPAIR AND MAINTENANCE AND DEPRECIATION BY THE ASSESSEE. THE REIMBURSEMENT AND 25% MARK UP HAD ALREADY BEEN OFFE RED BY THE ASSESSEE TO TAX. THE REIMBURSEMENTS HAVE B EEN FOUND ON DEDUCTIONS CLAIMED IN THE PROFIT AND LOSS ACCOUNT ON ACCOUNT OF REPAIR AND MAINTENANCE OF BUILDING F URNITURE AND DEPRECIATION CLAIMED ON COMPUTERS FURNITURE AN D FIXTURES VEHICLES AND OFFICE EQUIPMENT PROVIDED TO REMFRY & SAGAR FOR USE. THE AO WAS AS SUCH IN ERROR TO H OLD THAT IT WAS A CASE OF DOUBLE DEDUCTION. THE LD. CIT(A) AL SO TOOK SPECIFIC NOTE OF THE FACT THAT AS PER CLAUSE (6)(B) OF THE RENT AGREEMENT THE REIMBURSEMENT FOR REPAIR AND MAINTEN ANCE AS WELL AS ELECTRICITY POWER EXPENSES ETC. HAD TO BE MADE TO THE ASSESSEE COMPANY. 11. IN VIEW OF THE ABOVE DISCUSSION WE CONCUR WITH THE FINDINGS OF FACT RECORDED BY THE LD. CIT(A). THE ORDER UNDER APPEAL IS ACCORDINGLY UPHELD REJECTING THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT. 4. THE FACTS FOR THE YEAR UNDER CONSIDERATION REMAI N MUCH THE SAME AS THOSE FOR THE ASSESSMENT YEAR 2006-07. HENCE FOLL OWING OUR ORDER (SUPRA) ITA NO. 3915(DEL)2011 6 FOR THE ASSESSMENT YEAR 2006-07 IN THE ASSESSEES O WN CASE GROUND NOS. 2&3 FILED BY THE DEPARTMENT ARE REJECTED. 5. SO FAR AS REGARDS GROUND NO. 4 THE DEPARTMENT S UBMITS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` 23 14 444/- MADE ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE I.T. ACT READ WITH R ULE 8D OF THE I.T. RULES. 6. HERE AGAIN WE DO NOT FIND ANY FAULT WITH THE F INDINGS RECORDED BY THE CIT(A) WHILE DELETING THE ADDITION MADE. UNDISPUTE DLY AS PER THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE ASSESSEE THERE WERE RESOURCES AND SURPLUS OF ` 47.52 CRORES. THERE WERE SHARE CAPITAL OF ` 12.56 CRORES. THE INVESTMENT OF ` 50.96 CRORES THEREFORE STOOD FULLY COVERED. NO I NTEREST COSTS HAVE BEEN INCURRED BY THE ASSESSEE ON ANY BOR ROWINGS FOR THE PURPOSE OF INVESTMENT. BESIDES THERE WAS NO OTHER EXPEND ITURE INCURRED TO EARN THE INCOME. NO INTEREST EXPENDITURE STOOD DEBITED IN T HE PROFIT AND LOSS ACCOUNT. ON THE OTHER HAND THE ASSESSEE HAD ITSEL F ADDED PORT-FOLIO MANAGER EXPENDITURE OF ` 29 66 938/- INCURRED FOR MONITORING THE PORT-FOLIO OF THE ASSESSEE. IT HAS BEEN STATED ON BEHALF OF T HE ASSESSEE THAT ALL THE SHARES OF THE ASSESSEE ARE THROUGH THIS PORT-FOLIO AND THERE IS NO DIRECT DEALING. IN THE STATEMENT OF ASSESSABLE INCOME A COPY WHEREOF HAS BEEN ITA NO. 3915(DEL)2011 7 FILED BEFORE US THE ASSESSEE HAS ADDED EXPENDITUR E ON PMS CONSIDERED SEPARATELY 29 66 938. IT HAS ALSO BEEN STATED THAT NO SEPARATE CLAIM IN THIS REGARD HAS BEEN MADE. 7. THE LD. DR HAS CONTENDED THAT THE MATTER BE REMI TTED TO THE FILE OF THE AO FOR ASCERTAINING THE EXPENDITURE. HOWEVER IN V IEW OF THE FACTS DISCUSSED IN THE PRECEDING PARAGRAPHS WE DO NOT FI ND ANY NECESSITY OF SENDING BACK THE MATTER TO THE AO THE ASSESSEE HAV ING ITSELF MADE THE DISALLOWANCE IN THE COMPUTATION OF INCOME AS ABOVE AND THE FINDINGS OF THE LD. CIT(A) AS DISCUSSED REMAINING UNCHALLENGED. 8. AS SUCH GROUND NO. 4 IS ALSO REJECTED. 9. IN THE RESULT THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.2012 . SD/- SD/- (G.D. AGRAWAL) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 30.03.2012 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT ITA NO. 3915(DEL)2011 8 4. CIT(A) 5. DR TRUE COPY BY ORDER ASSISTANT REGISTRAR