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Income Tax Appellate Tribunal, DELHI BENCH “SMC-2” NEW DELHI
Before: SHRI S.V. MEHROTRA :
This appeal, preferred by the revenue, is directed against the order dated 19-12-2013, passed by the ld. CIT(A)-IX, New Delhi in appeal no. TR-123/13-14, relating to A.Y. 2008-09. Grounds raised are as under: “1. Whether on the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting the disallowance of Rs. 30,45,595/- on account of expense, despite the fact that the assessee had failed to prove genuineness of nexus of expenditure with business.
2. Whether on the facts and in the circumstances of the case, the Ld CIT(A) has erred in deleting the disallowance of Rs. 30,45,595/- on account of expenses, despite the fact that the assessee had failed to furnish any evidence regarding
2 ITA 1501/Del/14 ACIT Vs. Chimes Holding genuineness of incurring the salary and consultancy expenses for the purpose of business and even the details of parties from whom consultancy received was not provided by the assessee. 3. on the facts and in the circumstances of the case the impugned order passed by the Ld. CIT(A) is perverse both in facts and law. 4. The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of the hearing of the appeal.”
2. Brief facts of the case are that the assessee, a partnership firm, in the relevant assessment year, was engaged in the business of providing management consultancy services for providing management inventorying & consulting services for establishment of new projects and to provide advisory services for effective administration, organization development and improvement of the new or existing business, to engage in the business of real estate promotion, development and project management. The assessee had filed return of income declaring nil income. The assessment was completed at a total income of Rs. 7,23,128/- as under: Returned Income/Loss (-) 23,22,467 Add: 11/12th of total expenses claimed disallowed 30,45,595 Assessed Income Rs. 7,23,128 2.1. Ld. CIT(A), while partly allowing the assessee’s appeal, deleted the disallowance observing as under:
“During the appellate proceeding, the appellant submitted that in the case of assessee for the A.Y. 2007-08 the Hon'ble ITAT, New Delhi vide order dated 30.09.2013 in has given decision in favour of the appellant
3 ITA 1501/Del/14 ACIT Vs. Chimes Holding dismissing the appeal of the Revenue against order of the Ld. CIT(A) mentioned above. The Hon'ble ITAT held that, "We have heard both the sides, considered the material on record, case law cited by rival side and find that Ld. CIT(A) has considered each and every aspect of the matter and passed a very elaborate and reasoned order. The conclusion as drawn and is reproduced in earlier part of this order gives adequate basis. Neither any infirmity nor any flaw has been noticed in such conclusion as drawn by Ld. CIT(A) nor any convincing reason has been given to take a different view. Therefore, considering the entirety of the facts, circumstances and material on record and while concurring with conclusion and finding of Ld. CIT(A), we uphold his order and dismiss the appeal of the revenue being devoid of any merit". In view of the decision of the Hon'ble ITAT, in the case of appellant, on the same facts and circumstances, the addition made on this account is deleted and this ground of appeal is allowed.”
3. I have heard rival submissions and perused the material available on record. The ld. CIT(A) in arriving at his conclusion has relied on ITAT order in assessee’s own case for AY 2007-08. Further, I find that the said order of the ITAT has been upheld by the Hon’ble Delhi High Court vide order dated 24-11-2014 in inter alia, observing as under: “7. The finding of the Tribunal affirming the findings given by the Commissioner of Income Tax (Appeals) is essentially factual in nature. The assessee had set up new business and had accordingly engaged services of different employees who were 4 ITA 1501/Del/14 ACIT Vs. Chimes Holding paid salaries and IDS on the salary was deducted. No attempt was made by the Assessing Officer to question the said employees and verify from them whether they had actually undertaken any work as was stated by the respondent assessee. Regarding professional or consultancy fee paid, details with regard to services rendered was clearly indicated. The Assessing Officer, it is accepted did not write and did not carry out further investigation or question the consultants. Copy of the agreements filed by the assessee with the consultants and their details were simply ignored by the Assessing Officer.
Whether or not to engage a particular person as an employee is a business decision of the assessee. Whether it is prudent or wise are irrelevant. Reasonableness of the payment cannot be examined and gone into by the Assessing Officer, unless permitted by the statute as in case of related or associated person or when the transaction or relationship is not at arms? length. An Assessing Officer can go into the question, whether the expenditure incurred is wholly and exclusively for the purpose of business. Expenditure which is not genuine would not be wholly and exclusively for the purpose of business. For deciding the said aspect, facts have to be ascertained and thereafter finding can be given, that the expenditure did not relate to business but was made for some other and non business purpose or object. In the present case, the assessee had claimed that they had employed services giving full details of the employees including their addresses, their qualifications and their P AN numbers. In case the Assessing Officer felt that the expenditure incurred was not wholly or exclusively for the purpose of business but merely a sham and camouflage, investigation by making inquiries from the employees was necessary. The conclusion reached by the Assessing Officer is rather presumptory and based on assumptions.
5 ITA 1501/Del/14 ACIT Vs. Chimes Holding We therefore do not find any reason to interfere with the impugned order and upset the factual findings affirmed by the Tribunal, accepting the reasons given by the Commissioner of Income Tax (Appeals). The appeal is accordingly dismissed.” 3.1. No change in facts for the assessment year under consideration have been pointed out by either of the parties. The order of ld. CIT(A) being in conformity with the earlier order of the ITAT for earlier year, which in turn has been affirmed by the Hon’ble High Court, I see no reason to interfere with the order of ld. CIT(A). The order of CIT(A) is accordingly upheld.
In the result, revenue’s appeal is dismissed.
Order pronounced in open court on 09/10/2015.
Sd/- (S.V. MEHROTRA) ACCOUNTANT MEMBER Dated: 09/10/2015. *MP* Copy of order to: 1. Assessee 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, New Delhi.
6 ITA 1501/Del/14 ACIT Vs. Chimes Holding -+ Date Initial
Draft dictated on -10.2015 PS
Draft placed before author .10.2015 PS
Draft proposed & placed before the second JM/AM member
4. Draft discussed/approved by Second Member. JM/AM
Approved Draft comes to the Sr.PS/PS PS/PS
Kept for pronouncement on PS
File sent to the Bench Clerk PS
8. Date on which file goes to the AR
Date on which file goes to the Head Clerk.
Date of dispatch of Order.