Rajinder Kumar Jain, New Delhi vs Assessee

Shri Rajinder Kumar Jain, vs. ACIT, Circle 27 (1), 8/149, Airport Hotel & Restaurant, New Delhi. Mehram Nagar, Delhi Cantt., New Delhi.

(PAN : AAFPJ2465B)

ITA Nos.634 & 633/Del./2013 ASSESSMENT YEARS : 2004-05 & 2009-10

ACIT, Circle 27 (1), vs. Shri Rajinder Kumar Jain, New Delhi. 8/149, Airport Hotel & Restaurant, Mehram Nagar, Delhi Cantt., New Delhi.

(PAN : AAFPJ2465B)

(APPELLANT) (RESPONDENT)

ASSESSEE BY : Shri Ved Jain, CA REVENUE by : Shri Vikram Sahay, Senior DR

ORDER

PER BENCH :

ITA No.328/Del/2013 filed by the assessee and ITA No.634/Del/2013

filed by the revenue, which are cross appeals for the assessment year 2004-05,

emanate from the order of the CIT (Appeals)-XXIV, New Delhi dated

20.11.2012. ITA No.329/Del/2013 filed by the assessee and ITA 2 ITA NOS.328, 329, 633 & 634/Del/2013

No.633/Del/2013 filed by the revenue, which are cross appeals for the

assessment year 2009-10, emanate from the order of the CIT (Appeals)-XXIV,

New Delhi dated 20.11.2012.

2. First we take up the appeals for the assessment year 2004-05. The return

of income for the year was filed on 05.10.2004 declaring income of

Rs.2,54,244/-. The assessment was finalized at an income of Rs.45,87,460/-.

The CIT (A) has granted part relief against which assessee and revenue are in

appeal before us taking the following grounds :-

"ITA No.328/Del/2013 (Assessee's appeal)

1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax is bad both in the eye of law and on facts.

2. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in ignoring the contention of the appellant that the reopening of the assessment and consequent reassessment proceedings without complying with the statutory conditions prescribed under Section 147 read with Section 148 of the Act are bad in law and liable to be quashed.

3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in ignoring the contention of the assessee that the reasons recorded for reopening the assessment are vague and in the absence of a live nexus it does not meet with the requirements of Section 147 of the Act.

4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in ignoring the contention of the assessee that the reopening of the assessment and the reassessment order is bad and liable to be quashed being barred by limitation as the reasons recorded for reopening has been provided after the end of six years from the end of the relevant assessment year.

5. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in sustaining the disallowance of 10% of service charges paid by the assessee to its employees.

6. That the appellant craves leave to add, amend or alter any of the grounds of appeal."

3 ITA NOS.328, 329, 633 & 634/Del/2013

"ITA No.634/Del/2013 (Revenue's appeal) On the facts and circumstances of the case and in law CIT (A) has erred in -

(i) Deleting the addition of Rs.34,58,352/- made on account of disallowance of commission expenses.

(ii) Deleting the addition of Rs.7,87,374/- made on account of disallowance of service charges.

(iii) The appellant craves the right to add any other ground(s) of appeal during the course of hearing of this appeal."

3. Ground Nos.1 & 6 in assessee's appeal and ground no.(iii) in revenue's

appeal are general in nature and do not require any adjudication.

4. Ground Nos.2 to 4 in the assessee's appeal were not pressed, hence the

same are dismissed as not pressed.

5. The only ground remained for adjudication in assessee's appeal is Ground

No.5 in which the assessee has challenged the sustenance of addition of 10% of

service charges paid by the assessee to its employees. Ground no.(ii) in

revenue's appeal is also with regard to the deletion of addition of service

charges of Rs.7,87,374/-.

6. At the outset of the hearing, ld. AR submitted that this issue has travelled

to the ITAT in assessee's own case in the assessment year 2008-09 in ITA

No.2777/Del/2011 and ITA No.3109/Del/2011 and the ITAT vide its order

dated 22.08.2014 restricted the disallowance of 10% of the actual payments of

service charges. The relevant para 14 of this order is reproduced below :-

"14. We find that the practice of payment of service charges to staff prevailing in the trade has not been disputed by the Assessing Officer. The only dispute was the genuineness of the claimed payment. The Assessing Officer 4 ITA NOS.328, 329, 633 & 634/Del/2013

doubted the genuineness of the actual payment of service charges and disallowed the entire Claim' resulting in the addition of Rs.37,80,412. Learned CIT(Appeals), however, keeping in view the practice followed by the assessee over the years which were accepted by the Assessing Officer in the past in the assessment framed under sec. 143(3) of the Income-tax Act, 1961 and keeping in mind other factors, as discussed above, has given relief by restricting the disallowance to 10% of actual payment of service charges resulting in restriction of disallowance to Rs.3,78.041. As discussed above, we find that the said action of the first appellate authority in giving substantial relief to the assessee is based on sufficient reasons discussed by him in his findings reproduced above to which we fully concur with. We, thus, do not find any reason to interfere therewith. The same is upheld. Ground No.3 of the appeal preferred by the assessee and ground No.2 of the appeal filed by the revenue are thus rejected."

7. We have heard both the sides on the issue. The issue has already been

decided by the ITAT in the assessee's own case in assessment year 2008-09.

Facts and circumstances remain the same, respectfully following the aforesaid

decision of the ITAT, we dismiss this issue in the assessee's appeal as well as

revenue's appeal. Accordingly, ground no.5 of assessee's appeal and ground

no.(ii) of revenue's appeal are dismissed.

8. Ground No.1 in revenue's appeal is with regard to the deletion of addition

of Rs.34,58,352/- made on account of commission expenses.

9. At the outset, it is submitted that this issue is also covered by the decision

of ITAT, cited supra, in assessee's own case in the assessment year 2008-09. In

assessment year 2008-09, the CIT (A) has restricted the disallowance to 10% of

the actual payment of commission to taxiwalas as against 40% estimated by the

Assessing Officer. The ITAT vide para 9 upheld the order of the CIT (A)'s

estimation of disallowance to 10% of the actual payment of commission to 5 ITA NOS.328, 329, 633 & 634/Del/2013

taxiwalas as against 40% disallowed by the Assessing Officer. The para 9 of

the aforesaid ITAT order is reproduced below :-

"As discussed above, the first appellate order on the issue is comprehensive and reasoned one, hence, we are not inclined to interfere therewith. Learned CIT(Appeals)'s estimation of disallowance to 10% of actual payment of commission to taxiwalas as against 40% disallowed by the Assessing Officer is based on the reasons discussed by him to which we fully concur with. The first appellate order in this regard is thus upheld. Ground No.2 of the appeal preferred by the assessee and ground No.1 of the appeal filed by the revenue on the issue are thus rejected."

Facts and circumstances remain the same in this assessment year, respectfully

following the same, we allow revenue's appeal to that extent.

10. In the result, the appeal of the assessee is dismissed and the appeal of the

revenue is partly allowed.

11. Now we take up the appeals for the assessment year 2009-10. The return

of income for the year was filed on 29.09.2009 declaring income of

Rs.28,80,410/-. The assessment was finalized at an income of Rs.1,80,40,620/-.

The CIT (A) has granted part relief against which assessee and revenue are in

appeal before us taking the following grounds :-

ITA No.329/Del/2013 (Assessee's appeal)

"1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.

2(i) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in restricting the commission expenses to the extent of 50% of room rent and disallowing the balance amount.

(ii) That the abovesaid disallowance has been confirmed ignoring the explanation and evidences submitted by the assessee in support of its contention.

6 ITA NOS.328, 329, 633 & 634/Del/2013

3. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in sustaining the disallowance of 10% of service charges paid by the assessee to its employees.

4. That the appellant craves leave to add, amend or alter any of the grounds of appeal."

ITA No.634/Del/2013 (Revenue's appeal)

"On the facts and circumstances of the case and in law CIT (A) has erred in -

(i) Deleting the addition of Rs.1,27,93,719/- made on account of disallowance of commission expenses.

(ii) Deleting the addition of Rs.29,66,832/- made on account of disallowance of service charges.

(iii) The appellant craves the right to add any other ground(s) of appeal during the course of hearing of this appeal."

12. Ground Nos.1 & 4 in assessee's appeal and ground no.(iii) in revenue's appeal are general in nature and do not require any adjudication.

13. Ground Nos.2 (i) & (ii) in the assessee's appeal and ground no.(i) in

revenue's appeal are with regard to the payment of commission as percentage of

the room rent.

14. The same issue has been considered by the ITAT in assessment year

2008-09, cited supra, wherein the estimation of disallowance to 10% of the

commission to taxiwalas has been confirmed. The facts being the same, we

restrict the disallowance to 10% of actual commission paid. Accordingly, the

assessee's ground no.2(i) & (ii) is partly allowed and the revenue's ground

no.(i) is dismissed.

7

ITA NOS.328, 329, 633 & 634/Del/2013

15. Ground No.3 in assessee's appeal and ground no.(ii) in revenue's appeal

are in sustaining the disallowance of 10% of service charges paid by the

assessee to its employees.

16. This issue has also been decided by the ITAT in assessment year 2008-

09, cited supra, wherein the disallowance has been restricted to 10% of the

actual service charges. Following the same, we restrict the disallowance to 10%

and dismiss the ground of assessee as well as revenue on this issue.

17. In the result, the appeal of the assessee is partly allowed and the appeal of

the revenue is dismissed.

18. To sum up : the assessee's appeal for assessment year 2004-05 (ITA

No.328/Del/2013) is dismissed and for assessment year 2009-10 (ITA

No.329/Del/2013) is partly allowed and the revenue's appeal for assessment

year 2004-05 (ITA No.634/Del/2013) is partly allowed and for assessment year

2009-10 (ITA No.633/Del/2013) is dismissed

Order pronounced in open court on this 24th day of February, 2015.

Sd/- sd/- (C.M. GARG) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Dated the 24th day of February, 2015 TS 8 ITA NOS.328, 329, 633 & 634/Del/2013

Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-XXIV, Delhi. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.