2020 (11) TMI 139 - AT - Income Tax

Addition on account of professional and consultation fees - CIT-A deleted addition - HELD THAT - CIT (Appeals) has given a categorical finding that the issue had come up in the assessment proceedings for Assessment Year 2007-08 which was decided by the Tribunal 2013 (12) TMI 1353 - ITAT DELHI and there is no deviation of any facts in the present assessment year as well. The CIT (Appeals) has rightly observed that the assessee availed services to control this group SCHI in order to carry out the due diligence and risk analysis with the target hotels. Thus, these expenses are Revenue in nature. Thus, ground No. 1 of the Revenue s appeal is dismissed. Advertisement and sale promotion expenses - Revenue or capital expenses - HELD THAT - advertisement and sale promotion expenses are Revenue expenses as held in Assessment Year 2007-08 2013 (12) TMI 1353 - ITAT DELHI in assessee s own case and there is no different facts emerging in present assessment year which are identical to the said assessment year 2007-08. Therefore, ground No. 2 of the Revenue s appeal is dismissed. Addition on account of loss on waiver of loans - CIT-A deleted addition - HELD THAT - As evident that in order to safe-guard its financial interest the assessee closed the credit facility for which settlement took place between the assessee and the borrower M/s. GLH. As a result of such a settlement the assessee was able to recover its dues including interest receivable which were discounted at 9.5% to arrive at a NCB and in the said process the assessee incurred a net loss of ₹ 1,33,40,751/-. This loss has been already offered for taxation in the relevant assessment years. CIT (Appeals) has rightly deleted the said addition and there is no need to interfere with the findings of the CIT (Appeals). Ground No. 3 of the Revenue s appeal is dismissed.

Summary

Issues: Revenue's appeal against the order of the Commissioner of Income Tax (Appeals) for assessment year 2008-09.

The judgment involves three main issues raised by the Revenue in their appeal. The first issue pertains to the addition of professional and consultation fees, amounting to ?17,90,806, which the Revenue sought to include but was deleted by the Commissioner of Income Tax (Appeals). The second issue concerns the addition of ?1,40,69,932 made by the Assessing Officer on account of advertisement and sale promotion, which was also deleted by the Commissioner of Income Tax (Appeals). The third issue revolves around the addition of ?1,33,40,751 on account of loss on waiver of loans, which the Revenue sought to include but was deleted by the Commissioner of Income Tax (Appeals).

Professional and Consultation Fee:
The Revenue contended that the Commissioner of Income Tax (Appeals) erred in deleting the addition of ?17,90,806 on account of professional and consultation fees. However, the Tribunal upheld the decision of the Commissioner, stating that the expenses were revenue in nature. The Tribunal noted that similar issues had been decided in favor of the assessee in the previous assessment year, and there were no deviations in the current assessment year. The expenses were incurred for due diligence and risk analysis with target hotels, qualifying them as revenue expenses. Consequently, the Tribunal dismissed the Revenue's appeal on this ground.

Advertisement and Sale Promotion Expenses:
Regarding the addition of ?1,40,69,932 made by the Assessing Officer for advertisement and sale promotion expenses, the Tribunal upheld the decision of the Commissioner of Income Tax (Appeals). The Tribunal emphasized that these expenses were revenue in nature, as previously held in the assessee's case for the assessment year 2007-08. Since there were no new facts emerging in the current assessment year, the Tribunal dismissed the Revenue's appeal on this ground as well.

Loss on Waiver of Loans:
The third issue involved the addition of ?1,33,40,751 on account of loss on waiver of loans. The Commissioner of Income Tax (Appeals) had deleted this addition, and the Tribunal affirmed this decision. The Tribunal found that the assessee had converted outstanding demands into loans to safeguard its financial interests, resulting in a net loss. This loss had already been offered for taxation in relevant assessment years. The Tribunal agreed with the Commissioner's findings and dismissed the Revenue's appeal on this ground too.

In conclusion, the Tribunal dismissed the Revenue's appeal against the Commissioner of Income Tax (Appeals) order for assessment year 2008-09, upholding the decisions on all three issues raised by the Revenue.