DCIT, CIRCLE- 7(1), NEW DELHI vs. DLF HOMES DEVELOPERS LTD., NEW DELHI

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ITA 4155/DEL/2017Status: DisposedITAT Delhi31 August 2020AY 2012-133 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, finding that the school running expenses were integral to the assessee's business and that the golf club membership receipts were correctly spread over the membership period. The disallowance under Section 14A was also deleted as the AO lacked the required dissatisfaction and the assessee had sufficient own funds.

What were the facts?

The revenue appealed against the deletion of additions made by the AO on account of school running expenses, non-refundable golf club membership, and disallowance under Section 14A. The CIT(A) had deleted these additions.

What were the issues?

Whether school running expenses and golf club membership receipts are revenue receipts or business expenditure, and whether the disallowance under Section 14A was justified.

Which sections of the Income-tax Act were involved?

Section 14A

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH ‘B’, NEW DELHI

Before: Sh. Amit ShuklaDr. B. R. R. Kumar

For Respondent: Ms. Nidhi Srivastava, CIT DR
Hearing: 04.08.2020Pronounced: 31.08.2020

Per Dr. B. R. R. Kumar, Accountant Member:

1.

The present appeal has been filed by the revenue against the order of the ld. CIT(A)-3, Delhi dated 16.03.2017.

2.

Following grounds have been raised by the revenue:

1. Ld. CIT (A) has erred in deleting the addition made by the AO on account of school running expenses amounting to Rs.27,47,546/- without appreciating the facts of the case that the school running expenses cannot be claimed as an expenditure for business purpose in the case of the assessee.

2. The ld. CIT (A) has erred in deleting the addition made by the AO on account of non refundable Golf Club Membership amounting to Rs.4,74,17,236/- which is a revenue receipt.

3. The ld. CIT (A) has erred in deleting the disallowance made by the AO of Rs.143,22,59,240/-

2 DLF Homes Developers Ltd. u/s 14A read with Rule 8D(2)(ii) & (iii) of the I.T. Act without appreciating the facts of the case.”

School Running Expenses:

3.

The similar matter has been adjudicated by the Co- ordinate Bench of ITAT Delhi in for the assessment year 2011-12 in favour of the assessee wherein it was held that running of the school is integrally related to the business activities of the assessee and has been rightly treated so by the ld. CIT (A). In the absence of any material difference in the facts of the case before us, we hereby decline to interfere with the order of the ld. CIT (A).

Non-Refundable Golf Club Membership:

4.

The similar matter has been adjudicated by the Co- ordinate Bench of ITAT Delhi in for the assessment year 2011-12 in favour of the assessee wherein the ld. CIT (A) held that the approach of the assessee in spreading out the membership fee receipts for the period of membership cannot be faulted with. The decision of the ld. CIT (A) has been accepted by the ITAT, Hon’ble High Court of Delhi and the SLP filed by the revenue has been dismissed by the Hon’ble Apex Court. In the absence of any material difference in the facts of the case before us, we hereby decline to interfere with the order of the ld. CIT (A).

3 DLF Homes Developers Ltd. Disallowance u/s 14A:

5.

During the year, the assessee earned dividend income of Rs.40,32,638/- on account of investments in shares worth Rs.2007.06 cr. The total interest free fund available with the assessee was Rs.2482.74 cr. The AO has disallowed an amount of Rs.143.22 cr. The ld. CIT (A) has deleted the addition relying on the judgment of Hon’ble Jurisdictional High Court in the case of Maxopp Investment Ltd. Vs CIT 247 CTR 162 and holding that the Assessing Officer has not recorded the procedural dissatisfaction required to be recorded in accordance with the provisions of sub-Section 2 of Section 14A. The ld. CIT (A) held that the suo moto disallowance of Rs.3,90,760/- made by the Assessing Officer is sufficient to meet the expenses disallowable. Since, the assessee has sufficient own funds require for the investments, suo moto disallowed Rs.3,90,760/- on account of expenditure and since no dissatisfaction has been recorded by the Assessing Officer, we hereby decline to interfere with the order of the ld. CIT (A).

6.

In the result, the appeal of the revenue is dismissed. Order Pronounced in the Open Court on 31/08/2020.

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