ACIT, CIRCLE- 20(2), NEW DELHI vs. QNS FACILITY MANAGEMENT PVT. LTD., NEW DELHI

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ITA 197/DEL/2018Status: DisposedITAT Delhi08 November 2023AY 2014-15Bench: N.K. BILLAIYA (Accountant Member), MS. ASTHA CHANDRA (Judicial Member)4 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal dismissed the Revenue's appeal without going into the merits of the case. This was due to a moratorium granted by the Supreme Court against Unitech and its subsidiaries, preventing proceedings.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting disallowances made by the AO concerning Section 14A, delayed payment of EPF/ESIC, and transfer to an asset replacement account. The assessee company is a subsidiary of Unitech Limited.

What were the issues?

Whether the CIT(A) erred in deleting disallowances related to Section 14A, employee contributions to PF/ESIC, and transfers to an asset replacement account. The appeal was dismissed due to a moratorium on proceedings against the assessee's parent company.

Which sections of the Income-tax Act were involved?

Section 14A,Section 2(24)(x),Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “F”: NEW DELHI

Before: N.K. BILLAIYA & MS. ASTHA CHANDRA

For Respondent: Shri Vivek Vardhan, Sr. DR
Hearing: 08/11/2023

The appeal filed by the Revenue is directed against the order dated 11.10.2017 of the Ld. Commissioner of Income Tax (Appeals)-25, Delhi (“CIT(A)”) pertaining to Assessment Year (“AY”) 2014-15.

2.

The Revenue has taken the following grounds:-

1. On the facts and under the circumstances of the case, the Ld.CIT(A) has erred in deleting the disallowance of Rs. 18,32,115/ made by the Assessing Officer u/s 14A r.w.r 8D by ignoring the mandatory provisions of Rule 8D r.w.s 14A of the Income Tax Act, 1961.

2. "On the facts and circumstances of the case, Ld. CIT (A) has erred in law by deleting the addition/disallowance of Rs. 58,64,643/- made by the AO u/s 2(24)(x) r.w.s 36(1)(va) on account of delayed payment of ACIT vs. QNS Facility Management Pvt. Ltd. 2 EPF and ESIC, ignoring the clarification issued by the binding circular no. 22/2015 of CBDT." 3. "On the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting disallowance of Rs. 7,51,00,000/-, ignoring the fact that the total maintenance charges received by the appellant irrespective of its nomenclature constitutes revenue receipts and appropriation out of the same for so called sinking funds cannot be allowed as deduction." 4. "On the facts and under the circumstances of the case, the Ld. CIT (A) has erred in deleting the disallowance of Rs. 7,51,00,000/- being amount transferred to asset replacement account from the maintenance fees & charges, ignoring the fact that the assessee is not the owner of the property and plant/equipments installed in the complex and it adopted this method to avoid being taxed on the amount by way of a colourable device, as the utilization amount is Rs. 14.30 lacs out of transferred amount of Rs. 7.51 crores during the year."

3.

Briefly stated, the assessee company is engaged in the business of facilities management. It e-filed its return for AY 2014-15 declaring income of Rs. 49,50,64,910/-. The case was selected for scrutiny assessment under CASS. Statutory notices issued were complied with and requisite details were filed. The Ld. Assessing Officer (“AO”) completed the assessment on total income of Rs. 59,07,88,150/- on 30.10.2016 under section 143(3) of the Income Tax Act, 1961 (the “Act”) including therein, interalia, disallowance of Rs. 18,32,115/- under section 14A r.w. rule 8D; disallowance of Rs. 58,64,643/- being employees contribution of PF & ESI under section 36(1)(va) r.w. section 2(24)(x) of the Act and disallowance of Rs. 7,51,00,000/- being the amount transferred to Asset Replacement Account from the Maintenance Fees & Charges.

4.

On appeal filed by the assessee, the Ld. CIT(A) deleted all the aforementioned disallowances.

5.

Aggrieved, the Revenue is in appeal before the Tribunal and all the grounds relate to those disallowances.

ACIT vs. QNS Facility Management Pvt. Ltd. 3 6. Despite several opportunities given none attended for the assessee. We heard the Ld. Sr. DR.

7.

The Ld. Sr. DR brought it to our notice that the assessee company is a subsidiary of Unitech Limited and that the Hon’ble Supreme Court vide its order 20.01.2020 passed in Civil No. 10854/2016 titled as Bhupinder Singh vs. Unitech Limited has granted moratorium against the institution of proceedings against Unitech and its subsidiaries. Further, the moratorium was also extended to the existing proceedings against the company as well as enforcement orders that may have been passed against the company.

8.

The present status is not known in the absence of representation before us by the assessee and/or the authorised representative of the present new management. Under the circumstances, we dismiss the appeal of the Revenue without going into the merits of the case.

9.

The Revenue shall be free to institute the appeal on lifting of the aforesaid moratorium, if so advised, for which the Ld. Sr. DR had no objection.

10.

In the result, the appeal of the Revenue is dismissed.

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