9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (4) TMI 699 - AT - Income TaxDiversion of income - Allowable busniss expenditure u/s 37 - deduction of the amount utilized by it from TIUF towards construction of flyovers etc. - Held that - Hon ble Delhi High Court in the assessee s own case has held that the amount standing in TIUF and interest is not diverted at source by way of overriding title and has to be included in the taxable income of the assessee and, simultaneously, the expenditure incurred on construction of flyovers etc. is a revenue expenditure, which should be allowed as deduction. We cannot give effect to this judgment unless not only the question of allowing deduction as claimed through the additional ground is allowed, but also the inclusion of the amount in the total income, being the stand point of the Revenue, is also upheld. Since both the sides are fairly accepting this position, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this issue is set aside and the matter is restored to the file of Assessing Officer for considering the taxability and deductibility in terms of the aforesaid judgment of the Hon ble Delhi High Court in the assessee s own case. Provision for leave encashment allowability - Held that - The deduction cannot be allowed in terms of section 43B (f) on the making a mere provision unless the amount is actually paid. As the assessee has admittedly not made the payment of the amount in question and claimed deduction on the basis of provision, we are of the considered opinion that the assessee s contention cannot be accepted on this score. Similar view has been taken by the Delhi Tribunal in DLF Home Developers Ltd. vs. ACIT (2013 (11) TMI 963 - ITAT DELHI). - Decided against assessee. Addition on account of income from Dilli Haat. - Held that - The twin conditions of objects and nature of activity, it clearly emerges that both the tests are satisfied inasmuch as the object of the assessee company is to promote tourism by providing entertainment to tourists through cultural events etc. Further, the nature of the business activity of the assessee unmistakably deciphers that it cannot be carried out without letting out stalls on regular frequency to different craftsmen. In the above hue, we have absolutely no doubt in our mind that income of ₹ 1.82 crore earned by the assessee from use of craft stalls on 15 days basis is Business income and has been erroneously considered by the authorities below as Income from house property . The impugned order is pro tanto vacated. In view of decision in holding rental income from craftsmen as Business income on the first principles, we do not consider it expedient to discuss other issues raised by both the sides in support of their respective claims as to whether or not the assessee was owner of Dilli Haat , which is a mandatory condition for computing income under the head Income from house property and rule of consistency etc. For the remaining amount of ₹ 54.00 lac, we find that the same consists of ₹ 41.00 lac, being, income from space rented on regular basis and ₹ 12.99 lac, being, licence fee for allowing activities of food court, souvenir shops, bank and PCO. This amount of ₹ 54 lac has been earned by the assessee from the letting out of its permanent structures. The same cannot be equated with income of ₹ 1.82 crore discussed above, being, licence fee for use of craft stalls on 15 day basis. The ld. AR was fair enough not to contest the taxability of ₹ 54.00 lac as income held by the lower authorities to be falling under the head Income from house property. Addition under Section 40A(3) - Held that - Rule 6DD deals with cases and circumstances in which a payment or aggregate of payments exceeding the specified limit may be made to a person in a date otherwise by an account payee cheque or account bank draft. Clause (l) provides that where the payment is made by an authorized dealer over a money changer against purchase of foreign currency or travellers cheque in the normal course of his business . Since the instant transaction is duly covered under Rule 6DD(l), we hold that the learned CIT(A) was justified in deleting this disallowance. Disallowance u/s 40(A)(7) on account of provision of gratuity - Held that - CIT(A) has recorded that the assessee made payment towards approved gratuity fund before the due date of filing of return of income under Section 139(1) of the Act and thus the provisions of Section 43B are not attracted. This finding has not been controverted by the ld. DR. Disallowance on account of late deposit of employer s contribution to the provident fund - Held that - It is seen as an admitted position that the assessee deposited the employees contribution towards EPF and ESIC before the due date u/s 139(1) of the Act - addition to be deleted. Addition on payments made by the assessee to professional and contractors by treating the same as covered under Section 40(a)(ia) - Held that - Disallowance under Section 40(a)(ia) would be called for only if the assessee fails to deduct tax at source. If, however, deduction of tax at source is made but under a wrong section or there is some calculation mistake in the amount deduction of tax at source, the provision of Section 40(a)(ia) cannot be attracted. As the case of the assessee is that of short deduction of tax at source due to non charging of surcharge and not a case of non deduction of tax at source, we hold that the provision of Section 40(a)(ia) cannot be magnetized and consequently no disallowance is warranted. The impugned order is set aside to this extent. This ground is allowed. Disallowance u/s 40(a)(ia) on account of short deduction of tax at source - Held that - Facts of this ground are similar to those of last ground of the assessee s appeal for the A.Y. 2007-08. Here also, the assessee did deduct tax at source, but such tax withholding was without proper surcharge which resulted into overall short deduction of tax at source. Following the view taken hereinabove, we allow this ground of appeal.
Issues Involved:
1. Deduction of expenses from TIUF under Section 37. 2. Provision for leave encashment. 3. Income from 'Dilli Haat' - classification as 'Business income' or 'Income from house property'. 4. Disallowance under Section 40(a)(i) and 40(a)(ia). 5. Disallowance under Section 40A(3). 6. Disallowance under Section 40A(7) - provision for gratuity. 7. Late deposit of employer's and employees' contribution to provident fund under Section 43B. 8. Income from IITM, Delhi. Issue-wise Detailed Analysis: 1. Deduction of expenses from TIUF under Section 37: The assessee sought deduction for amounts utilized from the Transportation and Infrastructure Utilization Fund (TIUF) towards construction of flyovers, as per the Delhi High Court's order. The Tribunal noted that the Delhi High Court had held such expenses as revenue expenditure deductible under Section 37 and that amounts in TIUF were not diverted by overriding title, thus includable in taxable income. The Tribunal admitted the additional ground raised by the assessee and remitted the matter back to the Assessing Officer (AO) to consider the taxability and deductibility in line with the High Court's judgment. 2. Provision for leave encashment: The assessee claimed deduction for provision for leave encashment based on actuarial valuation. The Tribunal noted the Supreme Court's stay on the Calcutta High Court's judgment in Exide Industries Ltd. case and held that deduction under Section 43B(f) is allowable only on actual payment. Since the assessee had not made the payment, the Tribunal dismissed the additional ground for deduction of the provision for leave encashment. 3. Income from 'Dilli Haat': The assessee's income from 'Dilli Haat' was treated as 'Income from house property' by the AO, while the assessee claimed it as 'Business income'. The Tribunal examined the nature of activities and the main objects of the assessee, concluding that income from craft stalls, which were integral to promoting tourism, should be classified as 'Business income'. However, income from permanent structures rented on a regular basis was upheld as 'Income from house property'. The AO was directed to allow necessary deductions accordingly. 4. Disallowance under Section 40(a)(i) and 40(a)(ia): The Tribunal addressed various disallowances under Sections 40(a)(i) and 40(a)(ia) for non-deduction or short deduction of tax at source. It upheld the CIT(A)'s deletion of disallowances where certificates for non-deduction were obtained or where the recipients were non-residents without a permanent establishment in India. For payments to Sri Lanka Tourism Board and India Tourism, the Tribunal remitted the matter to the AO for verification of the nature of payments and applicability of tax deduction provisions. 5. Disallowance under Section 40A(3): The AO disallowed payments made in foreign currency under Section 40A(3). The Tribunal upheld the CIT(A)'s deletion of this disallowance, noting that Rule 6DD(l) exempts payments made by authorized dealers against purchase of foreign currency. 6. Disallowance under Section 40A(7) - provision for gratuity: The AO disallowed the provision for gratuity under Section 40A(7). The Tribunal upheld the CIT(A)'s deletion of this disallowance, noting that the provision was made towards an approved gratuity fund and payment was made before the due date for filing the return, thus Section 43B was not attracted. 7. Late deposit of employer's and employees' contribution to provident fund under Section 43B: The AO disallowed late deposits of provident fund contributions. The Tribunal, following the Supreme Court and Delhi High Court judgments, held that both employer's and employees' contributions are deductible if paid before the due date for filing the return. The Tribunal ordered the deletion of the disallowance for late deposits made before the due date. 8. Income from IITM, Delhi: The AO included the income of IITM-D in the assessee's total income. The Tribunal remitted the matter back to the AO to examine the change in arrangement from 1.4.2009 and its impact on the assessee's income before and after the change. Conclusion: The Tribunal provided detailed directions on each issue, emphasizing adherence to judicial precedents and statutory provisions. The matters were largely remitted back to the AO for fresh consideration in light of the Tribunal's findings and legal interpretations.
|
