Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH ‘G’ : NEW DELHI
Before: SHRI H.S. SIDHU & SHRI O.P. KANT
Date of hearing : 27-09-2016 Date of order : 29-09-2016
ORDER PER H.S. SIDHU, JM
The Assessee has filed the Appeal against the Order dated 9.7.2012 of the Ld. CIT(A)-XII, New Delhi pertaining to assessment year 2009-10 and raised the following grounds:-
That on the facts and circumstances of the case and in law:- 1. The assessment order is illegal and void.
2. The Ld. CIT erred in sustaining the addition of Rs. 6 crores
payable by Nelia Retail Pvt. Ltd. to Sports Station Pvt. Ltd., holding company, as income of the assessee company. 3. The Ld. CIT(A) erred in sustaining the addition of Rs. 42,75,600/- being the compensation received on account of “store deposit” under the Transfer Agreement as business income.
The appellant craves leave to amend or withdraw any of the grounds or file additional grounds during the course of hearing.
Assessee has also filed an Application for admission of additional ground of Appeal vide its Application dated 05.8.2015 in which the assessee has stated that in view of the settled decisions in the case of NTPC 229 ITR 383 (SC), (legal ground can be raised for first time in collateral and second round also).
The legal ground can be very well raised for first before the ITAT which goes to the root of the matter. For the sake of convenience, the legal additional ground raised by the asseseee is reproduced as under:-
“1. The addition of Rs. 6 crore by the AO and confirmed by the Ld.
CIT(A) is arbitrary, unjustified and ex-facie illegal and deserve to be deleted as the impugned receipt has already been taxed u/s. 143(3) on 20.12.2010 in AY 2008-09 in the hands of M/s Sports Station India Pvt.
Ltd., i.e., the holding company of the appellant.”
Ld. Counsel of the Assessee requested that keeping in view of the decision of the Hon’ble Supreme Court of India in the case of NTPC 229 ITR 383 (SC) (Supra), the additional ground raised by the assessee may be admitted and decided first.
On the contrary, Ld. DR strongly opposed the admission of additional ground (legal) raised by the assessee.
After hearing both the parties as well as perusing the additional ground alongwith the orders passed by the Revenue Authorities, We are of the considered view that in view of the decision of the Hon’ble Supreme Court of India in the case of NTPC Limited 229 ITR 383 (Supra), the additional ground raised by the assessee vide its Application dated 5.8.2015 is purely legal ground and did not require fresh facts which is to be investigated and goes to the root of the matter. In the interest of justice, we admit the aforesaid additional ground raised by the assessee, in view of the case law of NTPC Limited (Supra) and proceed to decide the additional ground first.
The brief facts of the case are that in this case the assessee filed electronic return declaring NIL income on 30.9.2011. The return was processed u/s. 143(1) of the I.T. Act, 1961 and subsequently selected for scrutiny. In response to the statutory notices Assessee’s AR of the assessee attended the proceedings and filed details and documents called for from time to time. The assessee is a company and is engaged in the business of retail activity with respect to branded footwear/ apparels and accessories and leather goods.
Necessary details and information as called for have been filed by the assessee.
After perusing the same the AO added the various additions and assessed the income of the assessee at Rs. 6,52,93,559/- by completing the assessment u/s. 143(3) of the I.T. Act, 1961 vide his order dated 28.12.2011.
Against the Order of the AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 09.7.2012 has dismissed the appeal of the Assessee.
Aggrieved with the aforesaid order of the Ld. CIT(A), Assessee is in Appeal before the Tribunal for challenging the issue raised vide additional as well as the addition in dispute.
At the time of hearing, with regard to Ground No. 2 and additional ground, as aforesaid, are concerned, Ld. Counsel of the assessee has stated that the addition of Rs. 6 Crore made by the AO and confirmed by the Ld. CIT(A) is arbitrary, unjustified and ex-facie illegal and deserves to be deleted as the impugned receipt has already been taxed u/s. 143(3) on 20.12.2010 in AY 2008- 09 in the hands of M/s Sports Station India Pvt. Ltd., i.e. the holding company of the Assessee. Therefore, he stated that addition of Rs. 6 crore may be deleted.
To support his aforesaid contention, he relied upon the following case laws and attached the copies of the said decisions with the Paper Book.
- Laxmipat Singhania vs. CIT (1969) 72 ITR 0291 (SC) - CIT vs. R. Dalmia (1982) 135 ITR 0346 (Del.) - Jyotindra Natwarlal Nak vs. ITO (2013) 21 ITR (Trib.) 0252 (Mum). - DCIT vs. Standard Fireworks (P) Ltd. (2010) 128 TTJ 0001 (Chennai) (TM) - Suresh K. Jajoo vs. ACIT (2010) 39 SOT 514 (Mum.) 10. On the contrary, Ld. DR relied upon the orders passed by the authorities below. He stated that AO must tax the right person. Merely because a wrong person is taxed with respect to a particular income, the AO is not precluded from taxing the right person with respect to that income. He further stated that further, the person lawfully liable to be taxed can claim no immunity because the AO has taxed the said income in the hands of another person contrary to law. He further stated that the wrong tax payer has the remedy of revision u/s. 264 of the I.T. Act. If the assessment of the wrong tax payer has been made u/s. 143(3) or 144, then the wrong tax payer can apply to the CIT or Pr. CIT to revise the assessment, as per law.
We have heard the Ld. DR as well as Ld. Counsel of the Assessee. The arguments advanced by the Ld. DR are contrary to the facts of the present case, because we cannot go beyond the issue in dispute, and therefore, we are deciding the issue in dispute, after hearing both the parties and according to the orders passed by the Revenue Authorities as well as the provisions of law. As far as additional ground and ground no. 2, as aforesaid, are concerned, we note that these grounds are relating to addition of Rs. 6 crore made in the hands of the assessee which has already been taxed in the hands of its holding company rendering the impugned addition as ex-facie illegal, arbitrary and unjustified.
The holding company i.e. M/s Sports Station India Pvt. Ltd. filed its return of income for A.Y. 2008-09 on 30/09/2008 before the Addl. CIT, Range -9, New Delhi. This company declared the amount of Rs. 6 crore as an extraordinary item in its P & L account. This amount of Rs. 6 crore was taxed accordingly by the then AO vide assessment order dated 20/12/2010 u/s 143(3) of the I.T. Act.
(placed at page 275 of the Paper Book). This assessment order of the holding company has attained finality. The AO [ITO, Ward-9(2)] of the assessee has again taxed this amount of Rs. 6 crore in the hands of the assessee, i.e., the subsidiary, in the A. Y. 2009-10 vide assessment order dated 28/12/2011 u/s 143(3), i.e., after more than a year. The cardinal principle of taxation is that an income cannot be taxed twice unless it is so provided in the IT Act. Therefore, in our considered opinion, the addition made by the AO is totally illegal and accordingly the assessment order is illegal to this extent. Therefore, the Ld. CIT(A) has erred in sustaining the addition of Rs. 6 crore in the hands of the assessee. We find that in the case of Laxmipat Singhania vs. CIT, (1969) 72 ITR 0291 (SC) it has been held as under:-
“8…. It is a fundamental rule of the law of taxation that, unless otherwise expressly provided, income cannot be taxed twice ......”
11.1 In the case of CIT vs. R. Dalmia, (1982) 135 ITR 0346 (Del), it has been held that "Dividend-Chargeability-Dividend returned by assessee in asst. yr.
1959-60, assessment made and attained finality, same cannot be taxed again in asst. yr. 1960-61"
11.2 In the case of Jyotindra Natwarlal Naik vs ITO, (2013) 21 ITR(Trib.)
0252 (Mum) "Conclusion:
“Where income i.e. Capital gains from sale of ancestral property and interest on mutual funds has been shown by HUF and has been accepted by the department, same cannot be assessed in the individual capacity" 11.3 In the case of DCIT vs. Standard Fireworks (P) Ltd. (2010) 128 TTJ 0001 (Chennai) TM
“1…….However, at the same time, one of the cardinal principles of taxation is that same income cannot be taxed twice…..”
11.4 In the case of Suresh K Jajoo Vs. ACIT (2010) 39 SOT 514 (Mum)
“31….The Hon’ble Court upheld the order of the Tribunal and held that the sum of RS. 3,12,500/- already assessed for the asstt. Year 1959-60, could not again be assessed for the asstt. Year 1960-61, since the orders of the IT authorities for the earlier year had become final……………”
11.5 In the background of the aforesaid facts and circumstances of the case as discussed above, in the case of the assessee, we note that the income of Rs. 6 crore has already been taxed in the hands of the holding company during last year. Therefore, the same could not be taxed again in the hands of the subsidiary company during this year. Accordingly, we are of the considered view that the above issue is exactly the similar and identical to the issue involved in the present appeal and is squarely covered by the decisions as discussed above. Hence, respectfully following the above precedents, we delete the addition of Rs. 6 Crores (Rupees Six Crores) and decide the additional ground and ground no. 2 raised in the assessee’s Appeal in favor of the Assessee and against the Revenue.
With regard to ground no. 3 relating to sustaining the addition of Rs. 42,75,600/- being the compensation received on account of “store deposit” under the Transfer Agreement as business income is concerned, we find that this addition is of Rs.42,75,600/- on account of advance given for hiring the premises for opening a new store in the shopping mall named Emporio, DLF Place, Vasant Kunj New Delhi. The amount of Rs. 42,75,600/- was paid by the holding company directly to the landlord, i.e., M/s Regency Park Property Management Services Pvt. Ltd on behalf of the assessee. Since the payment was made directly by the holding company and not through the assessee, the entry did not find place in the accounts of the assessee. In the books of the account of the holding company, it is reflected as security deposit. Subsequently, it was transferred from the security deposit to the assessee's account in the next year. Therefore, in our considered opinion, the amount of Rs. 42,75,600/-, being advance given by the holding company directly to the landlord on behalf of the assessee, was transferred to the assessee's account subsequently. We also note that no profit element is involved in this transaction which is in fact an advance given to the assessee through the security deposit route and deserve to be deleted.
Accordingly, we delete the addition of Rs. 42,75,600/- and allow the ground no. 3 in favour of the Assessee and against the Revenue.
In the result, the Assessee’s Appeal stands allowed.
Order pronounced in Open Court on this 29-09-2016.