PRINCIPAL COMMISIONER OF INCOME TAX-9 vs. VATIKA HOSPITALITY PVT.LTD.

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ITA/736/2017HC DelhiDLHC01325005201718 September 2017Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH3 pages
AI SummaryDismissed

What did the High Court hold?

The ITAT concurred with the CIT(A) that the expenses on crockery, cutlery, and utensils were revenue expenditure, and that the addition based on retrieved documents was not sustainable due to reconciliation and lack of discrepancies. The High Court found no substantial question of law.

What were the facts?

The Revenue appealed against an ITAT order concerning additions made by the AO. The first issue involved expenses on crockery, cutlery, and utensils, which the AO treated as capital expenditure. The second issue concerned an addition based on documents retrieved from a computer during survey proceedings.

What were the issues?

Whether expenses on crockery, cutlery, and utensils are capital or revenue expenditure, and whether additions based on computer-retrieved documents are valid without discrepancies.

AI-generated summary — verify with the full judgment below

ITA 736/2017 Page 1 of 3

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI 8 +

ITA No. 736/2017

PRINCIPAL COMMISIONER OF INCOME TAX-9 .....Appellant Through: Mr. Rahul Chaudhary, Senior standing counsel with Mr. Sanjay Kumar Mishra, Junior standing counsel.

versus

VATIKA HOSPITALITY PVT LTD

.....Respondent Through: Mr. C.S. Aggarwal, Senior Advocate with Mr. Prakash Kumar, Advocate.

CORAM: JUSTICE S. MURALIDHAR JUSTICE PRATHIBA M. SINGH

O R D E R %

18.09.2017 1. There are two questions urged by the Revenue in this appeal against the impugned order dated 13th February 2017 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No. 2331/Del/2012 for the Assessment Year (‘AY’) 2008-09.

2.

The first question concerns the addition of Rs. 3,35,33,933/- made by the Assessing Officer (‘AO’), treating the expenses claimed on crockery, cutlery, utensils, etc. to be capital in nature on the premise that they were incurred in respect of a ‘resort launched for the first time’.

3.

In the appeal filed by the Assessee against the aforementioned order of the AO, the Commissioner of Income Tax (Appeals) [‘CIT (A)’], by the

ITA 736/2017 Page 2 of 3

order dated 6th March 2012, sustained the disallowance only to the extent of Rs. 31,92,313/- and deleted the addition to the extent of Rs. 3,03,47,020/-. The CIT (A) found as a fact that the resort was restarted after repairs.

4.

Appeals were filed both by the Revenue and the Assessee before the ITAT. By the impugned order of the ITAT, the Assessee’s appeal was allowed and the Revenue’s appeal was dismissed. The Revenue has filed the present appeal only against the order passed by the ITAT in its appeal, i.e. ITA No. 2331/Del/2012. The ITAT has by the impugned order concurred with the CIT (A) on facts and held that the entire expenditure incurred on crockery, cutlery, utensils, etc. should be treated as revenue expenditure.

5.

The Court is not persuaded by the learned counsel for the Revenue that the above concurrent factual finding of the CIT (A) and the ITAT is perverse. No substantial question of law arises as regards the said issue.

6.

The second question urged by the Revenue concerns the deletion of an addition of Rs. 10,00,51,049/- made by the AO on the basis of certain documents which were retrieved from the hard disc of the computer impounded during survey proceedings held on 4th February 2010.

7.

On this issue, the CIT (A) has in the order dated 6th March 2012 discussed in detail the reconciliation statement, which was prepared twice – once during the proceedings before the CIT (A). No discrepancy was found in the balance sheet and profit and loss account. This finding again has been concurred with by the ITAT in the impugned order.

ITA 736/2017 Page 3 of 3

8.

Here again, the learned counsel for the Revenue has been unable to persuade the Court that the concurrent factual finding is perverse. The Court, therefore, declines to frame a question on this issue as well.

9.

The appeal is accordingly dismissed.

S. MURALIDHAR, J.

PRATHIBA M. SINGH, J. SEPTEMBER 18, 2017 Rm

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