Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI
PER SHAMIM YAHYA, ACCOUNTANT MEMBER :
This appeal by the Revenue is directed against the order of ld. CIT (Appeals)-3, New Delhi dated 23.09.2019 pertaining to the Assessment Year 2016-17.
The grounds of appeal taken by the Revenue read as under :- “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs.5,26,78,135/- made by the Assessing Officer.”
3. In this case, AO noted that assessee has submitted that it has offered to tax the interest earned on business deposits. AO noted the appearing in P&L account was because of other business activities. AO asked the assessee to justify the GP and NP ratio and reasons for inflated expenses despite fall in sales. He further observed that assessee earned major part of income from interest i.e. total of Rs.5,50,68,761/- has been received towards interest which was income from other sources. AO noted that this constitutes 44.28% of total revenue. He held that since no nexus has been established between the income earned and expenses incurred 44.28% of total expenses claimed of Rs.11,89,65,980 was disallowed. Hence, the disallowance came to Rs.5,26,78,135/-.
Before the ld. CIT (A), assessee made elaborate submissions. Ld. CIT (A) considered the same. Ld. CIT (A) was of the opinion that AO has not passed an appropriate order and not appreciated the complete facts. Ld. CIT (A) gave following findings in this regard :-
“ I have gone through the facts of the case and the submission made by the AR. It has been contended by the appellant receives interest on business deposits made by it as per the agreement entered with the developers and during the year, the appellant had earned interest of Rs. 5,50,68,761/- from such deposits in addition to management fees of Rs.6.92 crores. It has been contended that the interest income has been shown as business income and not under the head income from other sources as stated by the AO. The AR has submitted that the expenses have been incurred for normal business purposes and are in the nature of salary, rent, communication, travelling etc. and the AO has made the disallowance in an adhoc manner and the same needs to be deleted. On perusal of the complete facts, it is observed that the AO has not given any specific reason to disallow the expenses on adhoc basis. The AO has not appreciated the complete facts and has not passed a speaking order. No defect in the books of account has been brought on record and it has not been stated that the expenses are not genuine or have not been incurred for the purposes of business. In view of these fact there is no reason to uphold
Against the above order, Revenue is in appeal before us. We have heard both the parties and perused the records.
Ld. DR for the Revenue relied upon the order of AO.
Per contra, ld. Counsel of the assessee strongly defended the order of ld. CIT (A). He submitted that ld. CIT (A) has appreciated the matter in right perspective and he submitted that AO has passed a laconic and non-speaking order. He relied upon the order of ld. CIT (A).
Upon careful consideration, we find ourselves in agreement with the ld. CIT (A) that AO has not given proper details and passed a speaking order. No defects in the books of account were brought on record. Hence, ad hoc disallowance is not permissible. In our considered opinion, order passed by the ld. CIT (A) is a reasonable one and does not require any interference on our part.
In the result, the appeal of the Revenue stands dismissed. Order pronounced in the open court on this 22nd day of March, 2023.