ACIT, CIRCLE- 20(2), NEW DELHI vs. QNS FACILITY MANAGEMENT PVT. LTD., NEW DELHI

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ITA 6357/DEL/2017Status: DisposedITAT Delhi09 February 2022AY 2013-145 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 dismissed the Revenue's appeal, citing a Supreme Court order that imposed a moratorium on proceedings against Unitech Limited and its subsidiaries. The Revenue was granted liberty to approach the Tribunal after the moratorium period ends.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting disallowances related to maintenance charges, sinking funds, asset replacement accounts, Section 14A, and delayed EPF/ESIC payments. The assessee is a facility management company and part of the Unitech Group.

What were the issues?

Whether the CIT(A) erred in deleting various disallowances made by the AO. The primary reason for dismissal was a moratorium imposed by the Supreme Court on proceedings against the assessee's group.

Which sections of the Income-tax Act were involved?

Section 14A,Section 8D,Section 2(24)(X),Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI ‘F’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI AMIT SHUKLA

For Appellant: Ms. Ankita, CA
For Respondent: Shri Kipgen, CIT-DR
Hearing: 09.02.2022Pronounced: 09.02.2022

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-

1.

This appeal by the Revenue is preferred against the order of the Commissioner of Income Tax [Appeals]-07, New Delhi dated 31.07.2017 pertaining to Assessment Year 2013-14.

2.

The grievances of the Revenue read as under:

“1. Whether on the facts and under the circumstances of the case, the Ld. CIT (A) has erred in deleting disallowance of Rs. 6,00,01,073/-, ignoring the fact that the total maintenance charges received by the appellant irrespective of its nomenclature constitutes revenue receipts and appropriation out of the same for so called sinking funds cannot be allowed as deduction.

2. Whether on the facts and under the circumstances of the case, the Ld. CIT (A) has erred in deleting disallowance of Rs. 6,00,01,073/-, being amount transferred to asset replacement account from the maintenance fees & charges ignoring the fact that the assessee is not the owner of the property and plant/ equipments installed in the complex and it adopted this method to avoid being taxed on the amount by way of a colourable device, as the utilization amount is Rs. 1.06 crores out of transferred amount of Rs. 6,0,01,176/- during the year.

3. Whether on the facts and under the circumstances of the case, the Ld. CIT (A) has erred in deleting the disallowance of Rs. 9,15,842/- made by the AO u/s 14A r.w.r 8D of the I T Act, 1961 by ignoring the mandatory provisions of section 14A r.w.r 8D of the Income Tax Act, 1961.

4. Whether on the facts and under the circumstances of the case, Ld. CIT (A) erred in law by deleting the addition/disallowance of Rs. 19,66,540/- made by the AO u/s 2(24)(X) r.w.s 36(l)(va) on account of delayed payment of EPF and ESIC, ignoring the clarification issued by the binding Circular No. 22/2015 of CBDT.

5. The appellant craves to be allowed to add any fresh ground(s) of appeal and/or delete or amend any of the ground(s) of appeal.”

3.

Representatives were heard at length. Case records carefully perused.

4.

Facts, as culled out from the assessment order, show that the assessee company is engaged in the business of facilities management. The assessee company is a part of the Unitech Group. It would be pertinent to refer to the judgment of the Hon'ble Supreme Court in Civil Appeal No. 10856/2016 in the case of Bhupinder Singh Vs. Unitech Ltd wherein the Hon'ble Supreme Court approved the proposal of the Ministry of Corporate Affairs, Government of India vide its order dated 20.01.2020 whereby the erstwhile management of Unitech was superseded and constitution of new management was approved. The relevant extract of the order is as under:

“Clause vii - Pending further orders of this Court, there shall be a moratorium against the institution of proceedings against Unitech Limited and its subsidiaries. The moratorium shall also extend to existing proceedings against the company as well as the enforcement of orders that may have been passed against the company.”

5.

In light of the aforementioned judgment of the Hon'ble Supreme Court, this appeal filed by the Revenue is dismissed. However, liberty is given to the Revenue to approach this Tribunal once the moratorium period is over as per the provisions of law.

6.

In the result, with the above directions, the appeal of the Revenue is dismissed.

The order is pronounced in the open court on 09.02.2022 in the present of both the rival representatives.

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