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Income Tax Appellate Tribunal, DELHI BENCHES : F : NEW DELHI
Before: SHRI ANUBHAV SHARMA
ORDER PER ANUBHAV SHARMA, JM: These are appeals preferred by the Assessees as well as the Revenue against the orders of the Ld. Commissioner of Income-tax (Appeals)-3, New Delhi (hereinafter referred to as the First Appellate Authority or ‘the ld. FAA’ for short) in appeals filed before him against the orders of the ld. Assessing Officer (hereinafter referred to as the Ld. AO, for short) passed u/s 143(3) of the Income-tax Act, 1961 (hereafter referred to as ‘the Act’). Further details of the orders of the lower authorities are as under:- ITA No. & Appeal No. & Date of order of AO who passed the Assessment Year the CIT(A) assessment order & Date of order 3154/Del/2019 10227/17-18, dated 22.02.2019 Addl. CIT, Spl. Range-2, New 2015-15 Delhi, date: 26.12.2017 4598/Del/2019 - Do - - Do - 2015-16 8377/Del/2019 10149/18-19 Dated 05.09.2019 Addl. CIT, Spl. Range-2, New 2016-17 Delhi, date: 13.12.2018 3155/Del/2019 10227/17-18 dated 22.02.2019 Addl.CIT, spl. Range-2, New 2015-16 Delhi, dated 28.12.2017 4597/Del/2019 10227/17-18 dated 22.02.2019 Addl.CIT, Special Range-2, 2015-16 New Delhi, dated 28.12.2017
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & 6847/Del/2019 10143/18-19 Dated 28.05.2019 Addl.CIT, Special Range-2, 2016-17 New Delhi, dated 29.11.2018 3211/Del/2019 10226/17-18, dated 22.02.2019 Addl.CIT, Special Range-2, 2015-16 New Delhi, dated 28.12.2017 6664/Del/2019 10206/18-19 Dated 28.05.2019 Addl.CIT, Special Range-2, 2016-17 New Delhi, dated 12.12.2018 193/Del/2021 10600/19-20 Dated 26.08.2020 ACIT, Circle-5(2), Delhi, dated 24.12.2019 2. Heard and perused the record. The appeals of the three entities which are part of the same group were heard together as they involve some common question of law and facts which can be conveniently disposed of in the form of issues. These entities are primarily: (Entity No. i) Candor Gurgaon One Realty Projects Private Limited; ( Entity No. ii) Candor Gurgaon Two Developers and Projects Private Ltd.; and (Entity No. iii ) Candor Kolkata One Hi-Tech Structures Pvt. Ltd. The grounds raised in the appeals of these three entities are adjudicated in the form of following issues.
3. Issue No.1: The first issue is of disallowance u/s 14A of the Act in appeals of entity (i) and (iii) for AY 2015-16. The ld. AR has primarily submitted that the AO has failed to record his satisfaction in terms of section 14A(2) of the Act while making the impugned disallowance and has mechanically resorted to Rule 8D of the Rules while making the adjustments. The ld. DR has although defended the addition, what we find is that in the case of entity (ii), in AY 2010- 11, vide and in case of entity (ii) and (iii) for AY 2015- 16 in in regard to similar disallowances, assessee were 4
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & benefitted on the basis of the settled law that the AO is required to form a satisfaction in terms of section 14A of the Act and the disallowance cannot be automatic particularly in regard to entity No.(iii) the ld. AR has pointed out a factual aspect, which is not rebutted, that this assessee is not in receipt of any dividend income. The ld. AR has also pointed out that there has been no indirect expenses related to any investments and the assessee does not hold any investments during the year under consideration. Thus, relying the principle of law that major expenditure debited to be disallowed should have a correlation with the earning of exempt income as held by the Hon’ble Supreme Court in the case of Maxopp Investment Ltd. vs. CIT (2018) 91 taxmann.com 154 (SC), the impugned disallowance deserves to be deleted. The corresponding grounds in the appeal of entity No.(i) and entity No.(iii) for AY 2015-16 are sustained. The impugned addition is deleted.
Issue No.2: The issue raised is common for entity No.(i) in AY 2015-16, by way of appeal of department and entity No.(ii) in AY 2015-16 arising by appeal of department and in AY 2016-17 by assessee’s appeal. The issue arises out of the assessee’s payment of brokerage fees which were disallowed by the ld. AO. The ld. AR has pointed out that the assessee are engaged in the business of developing commercial real estate property in India and is primarily involved in developing and leasing of investment property in information
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & technology/information technology enabled services in the Special Economic Zone. The ld. AR has submitted that since the assessee is engaged in the business of rental of properties, accordingly, the assessee engaged brokers for procurement of the tenants in the ordinary course of business. The details of disputed brokerage fees paid is as follows:- Amount of Evidence Paperbook Name of the Entity AY / Brokerage Submitted Reference CBRE South Copy of Page 213-216 Entity 1 2015-16 Asia Pvt. Ltd. 4,46,72,992 Invoices of PB (4598/DEL/2019 Jones Lang Departmental Copy of lease Page 217-316 Lasalle 6,05,11,919 agreements of PB Appeal since allowed by CIT(A) Property Consultants 10.51.84,911 Total Jones Lang Copy of Page 366-370 Entity 2 2015-16 Lasalle 2,39,70,587 Invoices of PB-III Property (4597/DEL/2019) Copy of lease Page 371-498 Consultants agreements of PB Departmental (India) Pvt. Appeal since Colliers Copy of Page 185 of Entity 2 2016-17 PB Internationa Ledger of (6847/DEL/2019 Brokerage 1 (India) Page 186-194 ) of PB 1,21,67,363 Property Copy of Invoices Assessee’s Appeal Services Pvt. Jones Lang Page 195-198 1,58,30,901 of PB since the Ld. CIT(A) Lasalle Copy of Form erred in holding that Property the assessee has not Consultants 6
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & ITA No.193/Del/2021
Total 2,79,98,263
Although the ld. DR has supported the findings of the ld. tax authorities below, we find that in assessee’s group concern entity No.(iii) vide vide order dated 14.06.2023, similar set of evidences in the form of copy of invoices and lease agreements furnished were considered sufficient piece of evidence to justify the payment of brokerage fee. Given the nature of business of the assessee it is to be accepted that business of rental of properties for commercial rental specially, require engaging brokers as a common practice. The expenses are not proportionate to the business format and are very much in the ordinary course of business. The ld. AR has demonstrated that in case of entity (ii) for AY 2016-17 tax was deducted at source on the brokerage fee paid to the brokers and copies of form 16 are on record. Thus, the findings of ld.CIT(A) in favour of the assessee entity (i) and entity (ii) for AY 2015-16 require no interference. At the same time, the disallowance made in AY 2016-17 in case of entity (ii) deserves to be deleted. Accordingly, the corresponding grounds No.1 and 2 in case of entity No.(i) and entity No.(ii) for AY 2015-16 in appeal of department are dismissed while ground No.1 in case of entity No.(ii) for AY 2016-17 is sustained. The impugned addition for AY 2016- 17 stands deleted.
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & ITA No.193/Del/2021
Issue No.3: This issue arises out of denial of deduction u/s 80IAB of the Act on income from car parking rentals. The issue arises out of appeal of assessees entity No.(i) for AY 2016-17, entity (ii) for AY 2016-17 and entity No.(iii) for AY 2016-17 and 2017-18. The Revenue, through ld. DR as well, has alleged that the said income is not derived from the car business of the assessee i.e., SEZ business. The ld. AR has drawn our attention to the fact that the similar source of income has been considered in case of entity No.(ii) for AY 2010-11 bearing order dated 30.09.2022. Similar relief has been granted in case of entities No.(ii) and (iii) in the order dated 14th June, 2023 in for AY 2016-17 and in case of entity No.(i) by order dated 01.05.2024 vide ITA No.8377 (supra). The ld. DR could not point out any distinguishing fact. Consequently, these additions deserves to be deleted. Accordingly, the corresponding grounds in case of the three entities for respective years mentioned aforesaid stand allowed.
Issue No.4: This issue is common to the three entities in appeal for AY 2015-16. The issue arises out of disallowance of settlement fee paid for termination of service contract by these assessee with certain parties which were providing services in the nature of project management, operation and maintenance, etc. The ld. AR has provided a brief synopsis of the relevant
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & agreements and parties and the nature of services. The same is reproduced below:-
The ld. AR has submitted that the assessee company at the time of its incorporation were part of Unitech group and incorporated to development of SEZ. They were eligible claim deduction u/s 80IAB. They were incorporated in ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & 2005 and during the financial year 2014-15 relevant to AY 2015-16, there were some structural and ownership changes in the holding company of the assessee and to enforce the changes agreed by Implementation Agreement dated 12.06.2014 copy of which is placed at pages 178 to 197 of the paper book of entity No.(iii) for AY 2015-16. The ld. AR has submitted that the services which were being availed were recurring in nature and have been claimed as revenue expenses by the assessee in earlier years. However, in order to give an exit and discontinue the services which were being availed from existing service providers, the assessee entered into agreements with the service providers and had agreed to pay a settlement/service fee towards termination of the pre-existing agreements. The details of the service providers and nature of their agreements along with amounts paid to them are detailed as follows:-
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & ITA No.193/Del/2021
The ld. AR has referred to the copy of project management consultancy service agreement entered between entity No. (iii) and Unitech Ltd., copy of which is available at pages 83 to 103 of the paper book of entity No. (iii) for AY 2015-16 in ITA No.3211/Del/2019. The copy of service agreement entered between entity No.(iii) QNS Facility Management Pvt. Ltd., available at pages 104 to 126 of the paper book of entity (iii) for AY 2015-16 and the copy of settlement agreement entered into between entity No.(iii) with service providing entities copy of which is available at pages 127 to 140, 141 to 154 and 155 to 177 of the paper book of entity No.(iii) for AY 2015-16. The ld. AR has submitted that these settlements were arrived and the amounts were paid to 11
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & service provider for discharge of their service agreements in order to enter into fresh contract with new service providers for rendition of such services. It was submitted that the expenses are allowable u/s 37 of the Act as they were incurred wholly and exclusively for the purpose of business. 9.1 The ld. DR, supporting the findings of the ld. tax authorities below, appreciated before us that the ld. tax authorizes have made correct conclusions which can be summarized as below:- “a. It was alleged that in the absence of a termination clause specifying the terms of settlement in the pre-existing agreements, the Assessee was not legally obligated to pay the impugned compensation. b. It was further observed that the details of the services provided under the pre-existing agreements (as mentioned above) were insufficient while questioning the intention behind payment of such fee. c. It was further alleged that by dissociating itself from the Unitech group whose market value was crippling and instead availing the services of reputed service providers, the Assessee was in turn enhancing its brand value, goodwill and market worth, d. It was also alleged that benefits accruing to the Assessee due to its association with reputed service providers, if any, was of an enduring nature and therefore, the expenses so incurred were capital expenses.” 9.2 The ld. AR has submitted that a long-term advantage cannot be considered to be of enduring benefit acquired by the assessee to hold the expenses were capital in nature. Reliance was placed on the decision of the Hon’ble Supreme Court in the case of Empire Jute Company Ltd. vs. CIT (1980) 3 Taxman 69 12
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & (SC). It was submitted that no new asset was created and the advantage drawn was for continuing the running of business operations.
To decide this issue, what is important, is to understand the nature of services which Unitech companies were providing and for convenience the services referred in Annexure A to the Project Management Consultant Appointment Agreement dated 14.12.2006 are reproduced. Services to be performed by the Project Management Consultant shall include: (i) . Consultant Instruction and Monitoring: a. assistance with the appointment of Other Consultants; b. establishing the responsibilities of the Other Consultants and using best endeavours to ensure that the responsibilities of and information production by Other Consultants are clearly stated and expressly conveyed to each of them; c. determining, in consultation and with the approval of the Project Company, the limit of the authority of any of the Other Consultants to issue instructions without obtaining the Project Company's and/or the Project Management Consultant's prior approval; d. instructing Other Consultants, contractors and other professional advisors in connection with the development process; and e. monitoring the performance of the Other Consultants of their obligations to the Project Company. (ii) Brief, Design and Quality Control: a. overall management of design and planning; and b. reviewing Other Consultants’ technical designs and feasibility of proposals with specialist contractors. (iii) Reporting and Meetings: a. arranging for and making best endeavours to ensure that appropriate, correct and timely information is provided to the Project 13
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & ITA No.193/Del/2021
Company and the Project Company is specifically informed of the decisions that are required to be taken by the Project Company; b. co-coordinating with all the members of the Project team including Other Consultants regarding their reporting and recording procedures; and c. convening and chairing all scheduled Project meetings related to the scope of the Project, as and when may be considered necessary. (iv) Financial Reporting: a. providing timely advice and reasonable assistance to the Project Company to ensure the Project Company’s compliance with its ongoing financial reporting obligations; b. providing all information necessary for the preparation of the Project Company’s financial reports and accounts, to be audited in accordance with generally accepted accounting principles; c. assisting with the appointment of, liaising with, and monitoring the ongoing services of, the Project Company’s auditors and other financial advisers (if any); and d. preparing management accounts and assisting the Project Company to prepare all necessary tax returns and other tax-related documentation. (v) Programming: a. co-ordination with Other Consultants; b. prepare and maintain a master programme, from concept to completion to record principal activities and identify critical dates and milestones relating to time bound completions of various identified stages of the Project; c. advise the Project Company of changes, recommend appropriate action and obtain authorization; and d. review, in conjunction with the design consultants, the contractors' programme; seek clarification of contractors' programme proposals, if necessary, and incorporate these into master programme. (vi) Capital Budgeting: a. monitoring and advising Other Consultants in the preparation of Project Budget costs, for the Project Company’s approval. (vii) Construction Economics and Financial Management:
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & a. using best endeavours to ensure that the Other Consultants are providing adequate and timely information for the preparation of tender documentation; b. obtaining the Proj ect Company’s prior written authorisation for costs of variations when limit of authority is exceeded beyond 10% as compared to the cost budgeted; c. find out and verify, in conjunction with Other Consultants, fees for statutory approvals and authorise the payment with the Project Company’s approval; d. review, verify and recommend Other Consultants' applications for payment provisional on the Project Company’s approval; e. review, verify and recommend all other invoices related to the development of the Project, provisional on the Project Company’s approval; and f. ensuring within reasonable and best endeavours that Other Consultants prepare final account and agree settlement provisional on the Project Company's approval. (viii) Cash Flow: a. review, verify and recommend payments to the Other Consultants; and b. authorise any other payments due and check against cash flow. Notify the Project Company of payment due dates in relation to Other Consultants. (ix) Contract Procedures: a. decide in consultation with the relevant Other Consultants, the selection and method of appointment of preferred or nominated sub- contractors and agree on the extent of design and specifications to be included in tender documents and make a recommendation to the Project Company accordingly; b. advise on the procurement procedure for selection of sub- contractors and decide on type and form of contract with them. Monitor and guide Other Consultants in the preparation and assembly of tender documents. In connection with the Other Consultants, review and check the form and content of the tender document; c. prepare list of tenderers, conduct interviews, if required, and obtain the Project Company’s approval for their appointment and assignment of work to them; d. arrange with Other Consultants technical analysis of tender; obtain clarification on ambiguities and prepare tender report; 15
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & e. conduct commercial discussions and negotiations and prepare tender award recommendation in this regard; and f. use reasonable endeavours to negotiate into the terms of agreements with Other Consultants, where appropriate, to place obligations on such Other Consultants to procure and maintain such insurance cover as is reasonable having regard to the duties the Other Consultant has been appointed to perform, its potential liabilities and the availability of such insurance and the terms on which such insurance is offered (including, without limitation, the premium). (x) Management of pre-letting, pre-selling, billing and collection of rent: a. overall management of pre-letting, pre-selling, billing and collection of rent; b. management of letting, lease renewals, lease restructuring, assignments, rent reviews (if applicable and if possible) continually to optimize the occupation of each property; c. liaising with tenants to address concerns and requirements; and d. providing arrangements for billing and collecting rents including maintenance charges. (xi) Contract Management: a. overall management of procurement and construction; b. providing reasonable assistance to the Project Company in its defence against any claims brought against it by third parties (including Other Consultants), and providing reasonable assistance to the Project Company with the conduct of any claims by the Project Company against any Other Consultant or other third party, including without limitation, co- ordinating and advising on the appointment of any legal advisers, and preparing and/or assembling documentation necessary for the conduct of any claim; and c. taking reasonable steps, having regard to the circumstances of the loss, to make prompt recommendations on ways to reduce any loss suffered, or to be suffered, by the Project Company as a result of any breach of an agreement by, or the negligence or wilful default of any Other Consultant to the extent that the Project Management Consultant becomes aware of such a breach. (xii) Building Management, Commissioning and Maintenance:
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & a. liaise with Other Consultants to arrange handover to the Project Company of the completed Project; b. liaise with the Project Company and Other Consultants on commissioning. Obtain maintenance manuals, test certificates, warranties, operating instructions, 'as-built' drawings and 'as-installed' diagrams to be forwarded to the Project Company; c. arranging for works of maintenance, repair and the provision of maintenance services, and instructing contractors and professional advisers in connection with such work; d. assist the Project Company in getting the necessary information from respective Other Consultants for all necessary statutory approvals. The role of the Project Management Consultant shall be limited to assisting and providing the information and in no way would be responsible for securing the statutory approvals directly; and e. administering health, safety and environmental issues, to the extent applicable and that may arise.
10.1 We have given our thoughtful consideration to the issue and what immediately strikes is that certainly there was no obligation to compensate at the time of termination of agreements with service provider, but in the absence of any contractual obligations also parties to a contract can arrive at a settlement to compensate for any change in terms of contract if same has some financial implications as cost or benefit to either party. What was necessary to be examined by the ld. Tax authorities was if the compensation paid by assesse commensurates with avoidance of any cost or earning any benefit to assesse. However, there seems to have been no such factual enquiry by the ld. Tax Authorities but on basis of intangible gains to assesse in terms of enhancing its brand value, goodwill and market worth, by engaging new service provider the compensation has been questioned. It comes up that as there were some 17
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & structural and ownership changes in the holding company of the assessee and to enforce the changes agreed by Implementation Agreement dated 12.06.2014, new service provider was engaged and that came with replacement cost in the form of compensation to outgoing service provider. 10.2 We are of the considered view that the ld.CIT(A) has fallen in error in considering the nature of services to be giving or extending enduring benefit and by paying compensation amount, the appellant availed a profit making apparatus. As we consider the nature of services reproduced above being part of Annexure- A appended to the Project Management Consultant Appointment Agreement available at pages 83 to 103 of the paper book for AY 2015-16 and from the Service Agreement copy available at pages 104 to 126 of the paper book, we find that the services which were being performed under the Project Management Consultant Appointment Agreement were not merely the services of providing manpower, but, in fact, the whole SEZ Development Plan was to be executed by Unitech Ltd. and Unitech Hi-Tech Structures Ltd. by this agreement dated 14.12.2006. Clause 7.1 provided that Unitech Ltd. as Project Management Consultant (PMC) was to be paid fee at the rate of 5% of the total Cost. Now as the project SEZ was to run over a period with constructions activity on continuous basis then certainly PMC would loose revenue on the transfer of services to the Brookfield Unitech Hi-tech Structures Ltd. Pertinent to mention is ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & ITA No.193/Del/2021 that as developer the assessee along with Unitech Developer and Project Ltd. were supposed to construct IT buildings and the project was to be implemented and operated in terms of Special Economic Zone Act, 2005. We find that consequent to this payment of compensation only Unitech Ltd. had agreed to undertake all necessary steps to ensure the transfer of these services of asset management with the objective of ultimately transitioning the operation management of the project to the new service providers. Thus, the services rendered were not of the nature which can be said to be giving enduring benefit, but, the day-to-day management of the assets management of project were involved. Merely because the project was to run over the years and some benefit of enduring nature may develop, that cannot lead to a conclusion that compensation was being paid for acquiring a capital asset. It is not a case of creation of a new asset so as to allege expansion of the profit making apparatus of the company. The only advantage the assessee acquired was facilitating the smooth and efficient running of its SEZ project business operations. In fact, the whole situation has arisen due to inability of Unitech group to provide such services. The new service provider Brookfield is shown to be an expert in the area and with the completion of the project of SEZ, certainly, the assessee would require more effective operations of IT/ITES Special Economic Zone. Thus, the claim of the assessee that due to withdrawal of Unitech Group, the assessee had ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & ITA No.193/Del/2021 to engage Brookfield for providing the services should have been accepted. This explains the commercial expediency for premature termination of the agreement.
10.3 In any case, since the assessee is eligible for section 80IAB deduction, 100% of its profits would have been allowable for deduction, so, there was no reason for the assessee to inflate its expenditure in order to reduce any tax liability. Further, there is no case of the Revenue of any undue advantage being extended to any group entity, rather, the manner in which the inferences have been drawn the compensation granted has not been questioned on account of any inflation or arbitrariness, but, only on the basis that the assessee was not under a legal obligation to pay a compensation. However, to our mind, where the assessee was supposed to run the project on continuous basis any disadvantage to the project due to the possible dispute with Unitech group could have led to more severe repercussions. Thus, the assessee’s decision to compensate the outgoing service provider could not have been considered to be an exercise to acquire any profit making apparatus. The compensation given for premature termination of an agreement was completely driven by commercial expediency and such settlement payment would, certainly, come within the ambit of revenue expenditure. Reliance in this regard can be placed on the following decisions:- (i) CIT vs. Motor Industries Co. Ltd. [1997] 93 TAXMAN 157 (KAR.);
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & ITA No.193/Del/2021
(ii) CIT vs. Ashok Leyland Ltd. [1972] 86 ITR 549 (SC); (iii) CIT vs. De Luxe Film Distributors Ltd. [1978] 114 ITR 434 (CAL.); and (iv) Life Insurance Corporation of India vs. CIT [1979] 119 ITR 900 (Bombay)
10.4 In the light of the aforesaid, we are inclined to decide this issue in favour of the assessee.
Issue No.5: The issue arises out of the determination of issue No.4 above for which the assessee has claimed that even if the settlement fee is considered to be not an allowable expense, the assessee companies are eligible for deduction u/s 80IAB and actually for AY 2015-16 these entities had not claimed deduction u/s 80IAB on account of operating loss and the disallowances of expenses if sustained would result in operating profits for which the assessee will be entitled for benefit of section 80IAB. In this context, the ld. AR has submitted on a without prejudice basis that in the event that the impugned appeal of Entity 1, Entity 2 and Entity 3 for AY 2015-16 in ITA 3154/DEL/2019; ITA 3155/DEL/2019 and 3211/DEL/2019 (respectively) results in a positive income to the Assessee on account of the disallowance of the settlement fee, the consequent deduction u/s 80IAB ought to be allowed to the Assessee on the enhanced income in view of CBDT Circular 37 of 2016 (copy filed at Pg. 502- 503 of PB-III of Entity 2. for AY 2015-16 in ITA 3155/DEL/201Q). Further, the 21
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & appellant also placed reliance on the submission made in the additional grounds filed in Entity 2 & 3. Further reliance is placed on the following judgements of various appellate authorities wherein it has been specifically held that if expenditure disallowed is related to the business activity against which Chapter VI-A deduction has been claimed (section 80IAB in the instant case), the corresponding deduction ought to be allowed on the enhanced income: 1. DIC Fine Chemicals (P.) Ltd. vs. DCIT ([2019] 107 taxmann.com 213 (Kollcata - Trib.) 2. ITO vs. Keval Construction (Tax Appeal No. 443 of 2012) 3. CIT vs. Sunil Vishwambharnath Tiwari (IT Appeal No. 2 of 2011) 4. PCIT vs. Surya Merchants Ltd. (IT Appeal No. 248 of 2015) 12. As the issue no. 4 now stands decided in favour of assesse this issue becomes otiose and needs no separate determination. Accordingly left academic.
Issue No.6: This issue arises out of denial of set off of business losses and unabsorbed depreciation of AY 2015-16 in AY 2016-17 in case of all the three entities. In this context, we find that instant ground is consequential to the appeal of the Assessee filed in AY 2015-16 for Entity 1, Entity 2 and Entity 3 in ITA 3154/DEL/2019; ITA 3155/DEL/2019 and 3211/DEL/2019 respectively. In the event, the addition made in AY 2015-16 is deleted, the allowance of brought forward losses and unabsorbed depreciation would be reinstated. As the issue no. 22
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & 4 is decided in favour of assessee, the Ld. AO is directed to compute the income and deduction under section 80IAB of the Act for the AY 2016-17 in all 3 entities in conformity with assessed loss/income as computed pursuant to the order of the appeals for the AY 2015-16 in all 3 entities. Accordingly issue is allowed for statistical purposes.
Issue no. 7; This issue is peculiar to Entity i for AY 2015-16 in ITA 3154/DEL/2019 and concerns Short credit of TDS. In this regard, it comes up that the Assessee Entity i had claimed a TDS credit of INR 6,35,96,880 in its revised return of income. A copy of the ITR Acknowledgement evidencing the same is filed at page 47 of PB for Entity 1 for AY 2015-16 in ITA 3154/DEL/201Q. However, the Ld. AO in its computation sheet forming part of the assessment order has granted TDS credit of only INR 6,35,40,942 thereby resulting in a short credit of TDS by INR 55,938.
14.1 In this regard, it comes up that the Assessee Entity ii had claimed a TDS credit of INR 25,53,70,752 in its revised ROI. A copy of the ITR Acknowledgement evidencing the same is enclosed at page 49 of PB for Entity 2 for AY 2015-16 in ITA 3155/DEL/201Q. However, the Ld. AO in its computation sheet forming part of the assessment order has granted TDS credit
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & of only INR 23,45,02,968 thereby resulting in a short credit of TDS by INR 2,08,67,784.
14.2 In this regard, it comes up that the Assessee Entity iii had claimed a TDS credit of INR 13,41,30,030 in its revised ROI. A copy of the ITR Acknowledgement evidencing the same is enclosed at page 47 of PB for Entity 3 for AY 2015-16 in ITA 3211/DEL/2019. However, the Ld. AO in its computation sheet forming part of the assessment order has granted TDS credit of only INR 12,47,29,870 thereby resulting in a short credit of TDS by INR 93,80,160.
It was pointed out by ld. AR that the Ld. AO has failed to give effect to the CIT(A)’s order wherein the AO was directed to grant full credit of TDS after due verification. Accordingly, it is directed that ld. AO shall give the TDS credit of to the assesse entities. Issue with corresponding ground is allowed for statistical purposes in appeals of assessee.
Issue 8: The issue covers general ground in the appeals challenging Levy of interest u/s 234A and 234B of the Act and initiation of Penalty proceedings u/s 271(1)(c) is consequential in nature. While the ground for Levy of interest u/s 115P is not pressed by the Assessee. Accordingly allowed as consequential and withdrawn respectively. 24
ITAs No.3154, 4598, 8377, 3155, 4597, 6847, 3211 & 6664/Del/2019; & ITA No.193/Del/2021