M/S. INDIA HOUSING. ,KOLKATA vs. DCIT, CIR-54, KOLKATA, KOLKATA

The assessee filed the miscellaneous applications No. 36 & 37/KOL/2024 arising out of & 1219/KOL/2023. It was pointed out that ground No.3 pertaining to the issue of supervision charges, which was incidental to the business of the assessee, was covered in favour of the assessee, by the order of the co-ordinate bench of the ITAT, Kolkata Bench, vide order dated 11/12/2019 in for A.Y. 2011-12, whereas the Tribunal set aside the issue to the Ld.AO for further verification whether the same issue was duly covered by the order of the co-ordinate bench of Kolkata and vide paragraph 18 has inadvertently held that “Considering the above ground nos. 1, 2, 3 & 6 are allowed for statistical purposes,”. The assessee therefore, pleads that the mistake may be corrected.

by the revenue by observing as under:-

15. We note that the supervision charges have been paid by assessee as per an agreement. The assessee has deducted tax at source while making payment. The payment was made through banking channel. The Id. Assessing Officer was aware about the assessee^s agreement. The assessee has paid service tax on the mall management expenses and, therefore, there arises no occasion of doubting genuineness of the expenses. The Id. Assessing Officer has not demonstrated as to how the expenditure incurred by the assessee for giving overall mall management supervision work to M/s. Sahara Prime City Ltd. was in excess of the fair market value of service or facility or was not as per legitimate needs of the business of the assessee. The maintenance of huge mall having area of 2,50,000 sq. ft., the assessee has to incur management supervision charges. Moreover, AO has not rejected books of accounts of the assessee and assessment is framed by AO under section 143(3) of the Act. Based on the factual position narrated above, we are of the view that there is no infirmity in the order of Id. CIT(A). We note that for eligibility of an allowance u/s 37(1) of the Act, there should be a nexus between the expenditure and the purpose of the business and the expenditure should have been wholly and exclusively laid out for that purpose. Once these facts are established, the revenue cannot justifiably claim to put itself in the arm chair of business man or in a position of the Board of Director and assumed the role of ascertaining how much is reasonable expenditure having regard to the circumstances of the case. We note that the assessee has incurred management supervision charges for the purpose of business and if the expenditure is incurred Cross Objection No.l6/Kol/2015 & M/s India Housing bona fide in relation to business activity then it would be an allowable expenditure. That being so, we decline to interfere in the order passed by Id. CIT(A), his order on this issue is hereby accepted and grounds of appeal raised by the Revenue is dismissed."

4 M.A. No36 & 37 /KOL/21024 & 1219 /KOL/2023 India Housing 4. We further observe that the issue was challenged before the Hon’ble High Court of Calcutta bearing of 2020, copy of which is enclosed at paper book page 135 wherein the Hon’ble Calcutta High Court ruled that the deletion of addition made by the Assessing Officer on supervision charge under section 40A(ii) of the Income Tax Act,1961 was a purely factual exercise and perversity in the order was not shown.