Northern Strips Ltd., New Delhi vs Department Of Income Tax
- CitationITA No. 606/Del/2013
Ratio decidendi
The rule this decision rests on
On ground no. 2, where the assessment was made under the search-assessment provisions and the same addition had already been deleted in the quantum (regular assessment) appeal, which deletion the Tribunal had confirmed in an earlier appeal: where an addition made in a block or search assessment is the same as an addition already deleted in the regular assessment, and that deletion has been upheld in appeal, the consequential addition in the search assessment cannot be sustained; the provisions for abatement of assessment proceedings do not abate the appellate proceedings, so the outcome of the quantum appeal governs the consequential addition. On ground no. 3, an addition that is consequential to an addition deleted under the preceding principle falls with it and is dismissed on the same reasoning. On ground no. 4, where the expenditure on a company's credit card is not shown to be fictitious or false and the only question is whether some part was for personal use by directors, an estimated disallowance cannot be made in the hands of the company, since personal benefits to directors are taxable either as perquisites in the directors' hands or as fringe benefit tax in the hands of the employer; and absent any evidence that the expenditure was for personal rather than company purposes, the addition is not sustainable.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
DCIT, C.C. 13, Room no.332 vs. Northern Strips Ltd. ARA Centre, Jhandewalan Extn 1, Central Market New Delhi West Avenue Road West Punjabi Bagh New Delhi 110 026
PAN: AAACN 0642 C (Appellant) (Respondent)
Assessee by : Sh. Ved Jain, C.A. Ms.Rano Jain, Adv. Sh. VM Chourasiya, Adv. Dept. by : Sh. Gunjan Prasad, CIT, D.R.
ORDER
PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER
This is an appeal filed by the Revenue against the order of the Ld.CIT(A), New Delhi dated 16.11.2012 pertaining to the Assessment Year (A.Y.) 2004-05 on the following grounds.
"1. The order of the Ld.CIT(A) is not correct in law and facts.
2. On the facts and in circumstances of the case the Ld.CIT(A) has erred in deleting the addition of Rs.15,00,000/- made by AO u/s 68 of the I.T.Act.
3. On the facts and in circumstances of the case the Ld.CIT(A) has erred in deleting the addition of Rs.30,000/- of commission @ 2% on amount received as accommodation entry.
4. On the facts and in circumstances of the case the Ld.CIT(A) has erred in deleting the addition of Rs.1,11,097/- on account of credit card expenses made by AO.
5. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal."
ITA 606/Del/2013 AY: 2004-05 Northern Strips Ltd.
2. We have heard Mr.Gunjan Prasad, Ld.CIT(A), D.R. on behalf of the Revenue and Mr.Ved Jain, the Ld.Counsel for the assessee.
3. On a careful consideration of the facts and circumstances of the case, on perusal of material on record, orders of the authorities below, case laws cited, we hold as follows.
5. Ground nos. 1 is general in nature.
6. On Ground no. 2, the Ld.CIT(Appeals) has at page 24 para 4.2 held as follows.
"The appeal has been allowed in the quantum appeal. Without going into the legality or merits of the additions in the present assessment order, since the appeal has been allowed in the quantum appeal, it cannot be sustained in the present assessment order where the addition is consequential. If the revenue is in appeal against the quantum appeal order and finally succeeds there, automatically the assessment will be sustained in this assessment order. Section 153A, 153B and 153C of the Act provide for abatement of the assessment proceedings, not of the appellate proceedings. This ground of appeal is allowed accordingly. Appellant gets relief of Rs.15,30,000/-."
6.2. We find no infirmity in the same. The AO had made the very same addition earlier in an order passed u/s 147 r.w.s. 143(3) of the Income Tax Act, 1961 (the Act). This addition was deleted by the First Appellate Authority and such deletion was confirmed by the ITAT in ITA no.4388/Del/2012 vide order dt. 23.12.2013. Consistent with the view taken therein we dispose of this ground of the assessee.
7. Ground no.3 is against the addition of an amount of Rs.30,000/-. This addition is consequential to the addition made against which ground no.2 has been raised by the Revenue. Consistent with the view taken by us in ground no.2, we dismiss this ground no.3 of the Revenue.
2 ITA 606/Del/2013 AY: 2004-05 Northern Strips Ltd.
8. On ground no.4 the First Appellate Authority at para 5.2 page 26 of its order held as follows.
"5.2. I have considered the submissions of the appellant and the assessment order. The appellant is a company whose accounts are audited and there is no evidence to conclude that the expenses incurred by the appellant company are either fictitious or false. Thus, the fact of the expenditure is not disputed. The only issue is whether in the use of the vehicles, there was some element of personal use by the Directors. In this context, it would be of note that for dealing with such personal use, there is provision for taxation of perquisites in the hands of the employees. Alternately, Fringe Benefit Tax (FBT) was introduced in Finance Act, 2005 to tax intangible and invisible benefits in the hands of the employer. The addition, therefore, can be made either in the hands of the Directors as perquisite or in the hands of the appellant company as FBT. There is no case for estimated disallowance in the hands of the appellant company. The addition of Rs.1,11,097/- is, therefore, deleted. The appellant gets a relief of Rs.1,11,097/-."
8.1. We find no infirmity in the same. There is no evidence that the expenditure incurred on the credit card is for the personal use of the assessee and not for the company. In the result this ground is dismissed.
9. Ground no.5 is general in nature.
10. In the result the appeal by the Revenue stands dismissed.
Order pronounced in the open court on 08th May, 2015.
Sd/- Sd/- (C.M. GARG) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 08th May, 2015
· Manga
3 ITA 606/Del/2013 AY: 2004-05 Northern Strips Ltd.
Copy forwarded to: -
1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY By Order,
ASSISTANT REGISTRAR
4
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