Dalmia (Bros.) Pvt. Ltd., New Delhi vs Assessee

Deputy Commissioner of Vs. M/s Dalmia (Bros.) Pvt.Ltd., Income Tax, Tax, 2nd Floor, Circle- Circle-10(1), Indraprastha Building, New Delhi. 21, Barakhamba Road, New Delhi - 110 001. PAN : AAACD3525G. (Appellant) (Respondent)

Assessee by : Shri M.L. Dujari, CA. Revenue by : Smt. Poonam Khaira Sidhu, CIT-DR.

Date of hearing : 19.02.2015 Date of pronouncement : 04.03.2015

ORDER

PER G.C. GUPTA, GUPTA, VP :

These cross appeals by the assessee and the Revenue for the assessment year 2009-10 are directed against the order of learned CIT(A)-XIII, New Delhi dated 18th June, 2012. These are being disposed of by this consolidated order.

2 ITA-4723 & 4759/D/2012

ITA No.4723/Del/2012 - Assessee's appeal :- :-

2. The only ground of appeal raised by the assessee is as under:-

"That the learned Commissioner of Income Tax (Appeals) has erred in confirming the disallowance of rent amounting to Rs.36,69,920/-."

3. The learned counsel for the assessee submitted that the issue in this ground of appeal is covered in favour of the assessee as similar addition of disallowance of 50% of payment of rent was made in the earlier assessment years 2002-03, 2003-04, 2004-05, 2005-06, 2006- 07, 2007-08 and 2008-09. The CIT(A) partly allowed the issue in favour of the assessee and the disallowance was restricted to the amount of `5 lakhs in each assessment year. Against the said order of the CIT(A), the Revenue as well as assessee filed second appeal before the Tribunal and the Tribunal for the AY 2002-03 has set aside the issue to the file of the Assessing Officer vide its order dated 17th October, 2008 with certain directions. He submitted that similarly, the issue of disallowance of rent was restored to the file of the Assessing Officer in the AY 2004-05. He submitted that the Assessing Officer, vide order dated 26th June, 2013, has accepted the claim of the assessee and, following the directions of the Tribunal, has allowed the expenditure of rent in full and has filed the copy of the order of the Assessing Officer dated 26th June, 2013 passed under Section 254 of the Income-tax Act, 1961 before the Tribunal.

4. Learned DR submitted that the facts of the case of the assessee for the earlier assessment years 2002-03 to 2008-09 were slightly different with the facts of the assessee for the relevant assessment year 2009-10. She submitted that in the earlier years, the 3 ITA-4723 & 4759/D/2012

disallowance was restricted to only `5 lakhs per year. She relied on the order of the Assessing Officer and the CIT(A).

5. We have considered the rival submissions and perused the order of the Assessing Officer and the CIT(A) and also the order passed by the Assessing Officer under Section 254 of the Act dated 26th June, 2013 for earlier assessment years 2002-03 and 2004-05. We find that the Assessing Officer has allowed the entire claim of the assessee with regard to the deduction of rent claimed by the assessee vide its order dated 26th June, 2013 passed under Section 254 of the Act for the earlier assessment years 2002-03 and 2004-05. The Assessing Officer has recorded that keeping in view these facts and details of the space occupied etc., the past history and in accordance with the directions of the ITAT, the entire rent paid is allowable. In these facts, we are of the view that there being no material difference in the facts of the case of the assessee for the relevant assessment year 2009-10 as compared to the facts of the case in the earlier assessment years, the entire claim of rent paid is allowable and, accordingly, the ground of appeal No.1 of the assessee is allowed.

ITA No.4759/Del/2012 No.4759/Del/2012 - Revenue's appeal :-

:-

6. The ground of appeal Nos.1, 2 & 3 of the Revenue's appeal are as under:-

"1. Whether Ld. CIT(A) was correct in law to delete the addition of Rs.1,56,66,615/- made by the AO in respect of salary expenses?

2. Whether the amount of Rs.1,56,66,615/- claimed by the assessee as salary expenses was wholly and exclusively for the purpose of business so as to be eligible for deduction u/s 37(1) of the Act?

4 ITA-4723 & 4759/D/2012

3. Whether ld.CIT(A) was correct in law in allowing entire salary expenses, accepting unsubstantiated explanation of the assessee?"

7. Learned DR submitted that the disallowance was made out of salary expenses for the detailed reasons as recorded by the Assessing Officer in paragraph 4 of the assessment order. She referred to the relevant portion of the assessment order in support of the case of the Revenue. She relied on the order of the Assessing Officer.

8. Learned counsel for the assessee has opposed the submissions of the learned DR. He submitted that the issue is covered in favour of the assessee by the decision of Delhi Tribunal in assessee's own case for the earlier AY 2002-03, 2004-05, 2005-06 & 2006-07 dated 17th October, 2008 wherein the Tribunal has upheld the order of the CIT(A) and Revenue's appeal on this issue was dismissed. He submitted that the facts and circumstances of the case are identical for the relevant assessment year as they were for the earlier assessment years 2002- 03, 2004-05, 2005-06 & 2006-07.

9. We have considered the rival submissions and perused the order of the Assessing Officer and the CIT(A). We find that the CIT(A) has recorded in his appellate order that similar additions were made in the AY 2002-03, 2004-05, 2005-06 & 2006-07 and the Tribunal, vide order dated 17th October, 2008, has upheld the order of the CIT(A) in these assessment years who has decided the issue in favour of the assessee. The CIT(A) has further recorded that the facts of the case of the assessee for the relevant assessment year and the earlier assessment years are the same. The CIT(A) has recorded that since the issue has been decided by both the CIT(A) and by the Jurisdictional Tribunal in favour of the assessee for the AY 2002-03, 2004-05, 2005-06 & 2006- 5 ITA-4723 & 4759/D/2012

07 and, the facts and circumstances remain the same in this assessment year also, the issue is decided in favour of the assessee and the disallowance made is deleted. There being no mistake in the order of learned CIT(A) on this issue and the issue being covered in favour of the assessee with the decision of the Tribunal in assessee's own case for earlier assessment years detailed above, we decide the issue in favour of the assessee and the grounds of appeal 1 to 3 of the Revenue's appeal are dismissed.

10. Ground of appeal No.4 raised by the Revenue is as under:-

"Whether Ld.CIT(A) was correct in law to delete the addition of Rs.28,97,213/- made by the AO on account of interest on inter-corporate borrowings?"

11. Learned DR submitted that the disallowance was made by the Assessing Officer on account of interest on inter-corporate borrowings and the detailed reasons thereof have been given in paragraph 6 of the assessment order. She has referred to the relevant portion of the assessment order in support of the case of the Revenue.

12. Learned counsel for the assessee has opposed the submissions of the learned DR. He submitted that the issue of disallowance of interest on inter-corporate borrowings is covered in favour of the assessee with the decision of the Delhi Tribunal in assessee's own case for the AY 1999-2000 and in subsequent assessment years including AY 2005-06 & 2006-07. He submitted that the facts of the case of the assessee for the relevant assessment year were identical with the facts of the case of the assessee in earlier assessment years. He submitted that the Department's appeal for the AY 1999-2000 before the Hon'ble Delhi High Court was also dismissed by the Hon'ble High Court.

6 ITA-4723 & 4759/D/2012

13. We have considered the rival submissions and perused the order of the Assessing Officer and the CIT(A). We find that the CIT(A) in his appellate order has recorded that identical disallowance of interest was made in the earlier AY 1999-2000 and also in subsequent assessment years including AY 2005-06 and 2006-07 and the same was deleted by the CIT(A) and Department's appeals against the said order of the CIT(A) were dismissed by the ITAT. He has further given a finding that the Assessing Officer has not brought any adverse material on record to suggest that the interest was not paid for the purpose of business. The Revenue's appeal before the Hon'ble Delhi High Court for AY 1999- 2000 was dismissed by the Hon'ble High Court. The CIT(A) has concluded that since the facts and circumstances of the case during this year were similar to those of AY 1999-2000, 2001-02, 2004-05, 2005-06 & 2006-07, there was no scope to deviate from the finding of the Jurisdictional Tribunal and the Hon'ble High Court. Accordingly, we hold that there is merit in ground of appeal No.4 of the Revenue, which is accordingly dismissed.

14. Ground No.5 of the Revenue's appeal reads as under:-

"Whether Ld.CIT(A) was correct in law to delete the addition of Rs.3,62,976/- made by the Assessing Officer on a/c of disallowance of loss debited suffered by M/s DBFL, PF Trust?"

15. Learned DR has relied on the order of the Assessing Officer.

16. Learned counsel for the assessee submitted that the assessee was bound by clause 48 of the trust deed whereby it has to pay the interest on the employees' contribution to Employees Provident Fund and, therefore, no disallowance of the interest paid on Employees Provident Fund could be made.

7 ITA-4723 & 4759/D/2012

17. We have considered the rival submissions and perused the order of the Assessing Officer and the CIT(A). We find that the basic facts of the case are not in dispute. The assessee, as per clause 48 of the relevant rules, was obliged to pay interest at the rate of 8.5% as prescribed by the Central Government on the amount of employees' contribution towards the PF. Thus, the interest paid by the assessee was wholly and exclusively for business purpose of the assessee company and as per law applicable and, therefore, the same was an allowable expenditure and was rightly allowed by the CIT(A). Accordingly, the order of learned CIT(A) on this issue is confirmed and ground No.5 of the Revenue's appeal is dismissed.

18. In the result, the appeal of the assessee is allowed and the appeal of the Revenue is dismissed.

Decision pronounced in the open Court on 4th March, 2015.

Sd/- Sd/- (T.S. KAPOOR) KAPOOR) (G.C. (G.C. GUPTA) GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT

VK.

Copy forwarded to: -

1. Assessee : M/s Dalmia (Bros.) Pvt.Ltd., 2nd Floor, Indraprastha Building, 21, Barakhamba Road, New Delhi - 110 001.

2. Revenue : Deputy Commissioner of Income Tax, Circle- Circle-10(1), New Delhi. Delhi.

3. CIT 4. CIT(A) 5. DR, ITAT

Assistant Registrar