ACIT CIRCLE 5(1), NEW DELHI vs. BIGFOOT RETAIL SOLUTION PVT LTD, NEW DELHI

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ITA 4595/DEL/2019Status: DisposedITAT Delhi07 June 2022AY 2015-165 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision to delete the addition. The CIT(A) had accepted the assessee's submission that a portion of the amount was netted off and offered for taxation, while the remainder was genuine security deposits, relying on a High Court precedent.

What were the facts?

The assessee company, engaged in IT enabled and BPO services, declared a loss for AY 2015-16. The Assessing Officer (AO) added Rs. 1,53,20,438/- shown as security deposits/business advances to the assessee's income, treating it as revenue receipts.

What were the issues?

The primary issue was whether the amount shown as security deposits/business advances by the assessee constituted taxable revenue receipts.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES “A” : DELHI

Before: SHRI ANIL CHATURVEDI & SHRI N.K. CHOUDHARY

Hearing: 07.06.2022Pronounced: 07.06.2022

ORDER PER ANIL CHATURVEDI, A.M.

This appeal by Revenue has been directed against the Order of the Ld. CIT(A)-2, New Delhi, dated 27.02.2019 in Appeal No.10131/17-18 relating to the A.Y. 2015-2016.

2.

The facts of the case, in brief, are that the assessee is a company engaged in the business of providing IT enabled and BPO services. It electronically filed its return

2 ITA.No.4595/Del./2019 M/s. Bigfoot Retail Solutions Pvt. Ltd., New Delhi. of income for the A.Y. 2015-16 on 15.09.2015 declaring loss of Rs.2,20,29,872/-. The case was selected for scrutiny through CASS. Thereafter, assessment was framed under section 143(3) of the I.T. Act, 1961 vide order dated 11.09.2017 and net loss was determined at Rs.39,03,530/-. Aggrieved by the order of the A.O, assessee carried the matter in appeal before the Ld. CIT(A) who vide order dated 27.02.2019 granted substantial relief to the assessee.

3.

Aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before the Tribunal by raising the following ground:

“On the facts and circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs.1,53,20,438/- made on account of security deposits/business advances by ignoring the observations and findings of the Assessing Officer in the assessment order.”

4.

On the date of hearing, none appeared on behalf of the assessee though notice was served at the given

3 ITA.No.4595/Del./2019 M/s. Bigfoot Retail Solutions Pvt. Ltd., New Delhi. address in Form No.36. In such a situation, we decide to dispose of the appeal ex-parte qua the assessee and after hearing the Ld. D.R.

5.

During the course of assessment proceedings A.O. noted that assessee had shown Rs.1,53,20,438/- as security deposit received from various persons. A.O. observed that the security deposits varied from Rs.1000/- to Rs.24,000/-. According to A.O. assessee had not provided any logic regarding the variation in the amount taken as security deposits. He also noted that in some cases security deposit was continuing from preceding years. A.O. concluded that assessee was not able to prove that the amount of security deposits was on account of security deposits or revenue receipts. He accordingly considered the aggregate amount of Rs.1,53,20,438/- as revenue receipts and made its addition.

5.1. Aggrieved by the order of the A.O, assessee carried the matter in appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee inter alia, submitted that out of the 4 ITA.No.4595/Del./2019 M/s. Bigfoot Retail Solutions Pvt. Ltd., New Delhi. addition of Rs.1,53,20,438/-, Rs.1,32,71,926/- was netted out during the year and was offered for taxation and the balance amount of Rs.20,48,511/- was shown as liability which was in the nature of security deposits. The Ld. CIT(A) after considering the submissions of the assessee and after relying on the decision rendered by the Ho’ble Delhi High Court in the case of CIT vs., Asian Hotels Limited [2008] 215 CTR 81 (Del.) held that there was no question of taxability of security deposits. He thus, decided the issue in favour of assessee.

6.

Before us, the Ld. D.R. supported the order of the A.O.

7.

We have heard the Ld. D.R. and perused the material on record. The issue in the present case is about the taxability of security deposits amounting to Rs.1.53 crores (rounded off). We find, before the Ld. CIT(A) assessee had inter alia submitted that out of total amount of Rs.1.53 crores, Rs.1.32 crores was netted off and was offered for taxation in the same year and the balance amount of 5 ITA.No.4595/Del./2019 M/s. Bigfoot Retail Solutions Pvt. Ltd., New Delhi. Rs.20,48,511/- was in the nature of deposits. We find the Ld. CIT(A) after considering the submissions of the assessee and relying on the decision Hon’ble Delhi High Court in the case of Asian Hotels Limited (supra) deleted the addition. Before us no fallacy about the findings of the Ld. CIT(A) has been pointed out by the Revenue. We, therefore, find no reason to interfere with the order of the Ld. CIT(A) and thus, the ground raised by the Revenue is dismissed. In the result, appeal of the Revenue is 8. dismissed.

Order pronounced in the open court on 07.06.2022.

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