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2019 (9) TMI 89 - AT - Income TaxAddition on account of income from Dilli Haat - treating part of income from Dilli Haat as rental income and restricting the claim of expenses to 30% of the receipts - HELD THAT - As decided in own case 2018 (4) TMI 699 - ITAT DELHI we direct the AO to assess the amount of 2, 39, 66, 739/- received by assessee for use of the craft stalls in A. Y. 2010-11 and 2, 78, 05, 181/- for A. Y. 2012-13 as Assessee s income under the head Profits and Gains of Business or Profession and the balance amount of 98, 87, 914/- for A.Y. 2010-11 and 1, 98, 51, 494/- for A.Y. 2012-13 is to be assessed as Income from House Property . Addition to the income of the assessee on account of understatement of bank interest - HELD THAT - Income of a taxpayer is not required to be computed merely with reference to the TDS Certificate but assessment of an income is an altogether independent exercise. We wish to add that income of an Assessee under the head Profits and Gains of Business or Profession and Income from other sources is to be determined regardless of whether tax was deducted at source in respect of amounts received or accrued to the assessee. What is relevant is the system of accounting regularly employed by the assessee - whether it is cash system or mercantile system. The assessee is not permitted to use mixed or hybrid system of accounting under which some items of income / expenditure are accounted for under cash system and the remaining items of income / expenditure are accounted for under mercantile. Assessee is a public sector undertaking is irrelevant. It is also immaterial whether the assessee was facing liquidity crunch. When the income has to be assessed during the year and when tax is to be paid in accordance with law on such income the assessee cannot postpone the year in which the income will be offered to tax merely because the assessee has a liquidity crunch. Requirement of liquid funds by an assessee howsoever genuine the requirement may be cannot be accepted as a legitimate justification for postponement of the year in which income will be offered by the assessee. Therefore in the facts of the case before us the exercise of determining assessee s income lead us to the conclusion that the aforesaid income amounting by way of interest on Fixed Deposits in Bank is to be assessed during the year. Addition u/s 43B on account of advance excise duty - HELD THAT - Respectfully following these judicial precedents we also decide this issue in favour of the assessee and direct the AO to delete additions for A.Y. 2010-11 and 2012-13 made by the Assessing Officer U/s 43B of I.T. Act on account of advance excise duty. Disallowance of the provision for the Leave Encashment - AO invoked Section 43B(f) of I.T. Act and made additions - HELD THAT - This issue is covered against the assessee vide aforesaid order 2018 (4) TMI 699 - ITAT DELHI of Co-ordinate Bench of ITAT Delhi in assessee s own case. Respectfully following the aforesaid decision of Co-ordinate Bench of ITAT Delhi vide order dated 28.03.2018; we also decide this issue in favour of Revenue Disallowance of the payment made by the assessee to Central Road Research Institute ( CRRI ) for undertaking research regarding the concrete strength in bridges and had claimed weighted deduction @ 125% of the sum so paid U/s 35(1)(iia) - AO disallowed this claim on the ground that the documentary evidence did not contain the name of the assessee - HELD THAT - After considering the order of the Ld. CIT(A) and on perusal of the evidences filed by the Ld. AR of the assessee and after taking into account the submissions made by the Ld. AR of the assessee we are of the view that the claim made by the assessee is proper and sustainable. The order passed by Ld. CIT(A) on this issue is sound proper and in accordance with law in the facts and circumstances of the case. Disallowances of loss claimed - HELD THAT - CIT(A) allowed assessee s claim holding that the assessee has been exclusively managing administrating this institute without any interference of the concerned Ministry; and that the AO had not disputed that the institute was run by the assessee and had sustained the losses claimed by the assessee. At the time of hearing before us the Ld. DR drew our attention to the facts that the issue was remanded back to the AO in 2018 (4) TMI 699 - ITAT DELHI in assessee s own case for A.Y. 2009-10. The Ld. DR submitted that for A.Y. 2010-11 and 2012-13 also this issue may be remanded back to the AO for fresh order after necessary verification of the claim. The Ld. AR of the assessee agreed that the issue may be remanded back to the AO for fresh order. Disallowance being 50% of the expenses claimed by assessee towards Tourism promotion expense and Hiring of tent purpose thereof - HELD THAT - Assessee submitted that the issue may be remanded back to the file of the AO for verification and fresh order on this issue. In reply the Ld. DR did not express any objection to remanding of the issue back to the file of the AO for verification and fresh order. In the fitness of things and as both sides agree we remand this issue to the file of the AO for necessary verification and fresh order. The AO is directed before he passes fresh order to provide opportunity to the assessee to produce / submit relevant details and documentary evidences.
Issues Involved:
1. Deduction of advance excise duty under Section 43B. 2. Deduction of provision for leave encashment. 3. Treatment of income from "Dilli Haat" as business income or rental income. 4. Treatment of revised return and remand report. 5. Claim of brought forward losses. 6. Rejection of provision for doubtful debts and loans. 7. Addition on account of understatement of bank interest. 8. Disallowance of payment to CRRI under Section 35(1)(iia). 9. Disallowance of loss related to Delhi Institute of Tourism and Travel Management (DITTM). 10. Disallowance of tourism promotion expenses and hiring of tent expenses. Detailed Analysis: 1. Deduction of Advance Excise Duty under Section 43B: The AO disallowed the deduction of advance excise duty, arguing it pertained to next year’s expenses. The assessee contended that advance payment was mandatory under excise rules. The Tribunal referred to previous orders in the assessee’s favor by the ITAT and Hon’ble Delhi High Court, directing the AO to delete the disallowance of ?7,50,48,000 for AY 2010-11 and ?5,20,17,982 for AY 2012-13. 2. Deduction of Provision for Leave Encashment: The AO disallowed the provision for leave encashment under Section 43B(f), as the amounts were not paid by the due date of filing the return. The Tribunal, following the precedent set by the ITAT for AY 2004-05 to 2009-10, upheld the disallowance of ?1,80,75,136 for AY 2010-11 and ?1,43,34,019 for AY 2012-13. 3. Treatment of Income from "Dilli Haat": The AO treated part of the income from "Dilli Haat" as rental income, allowing only 30% of the expenses. The Tribunal, referencing the ITAT’s decision for AY 2004-05 to 2009-10, directed the AO to treat ?2,39,66,739 for AY 2010-11 and ?2,78,05,181 for AY 2012-13 as business income, and the remaining as rental income, allowing necessary deductions as per law. 4. Treatment of Revised Return and Remand Report: The Tribunal dismissed the grounds related to the revised return and remand report for AY 2010-11 as not pressed by the assessee. 5. Claim of Brought Forward Losses: The Tribunal did not specifically address the claim of brought forward losses amounting to ?5,61,25,314 in the detailed analysis. 6. Rejection of Provision for Doubtful Debts and Loans: The Tribunal dismissed the grounds related to the provision for doubtful debts and loans for AY 2012-13 as not pressed by the assessee. 7. Addition on Account of Understatement of Bank Interest: The AO added ?61,81,344 to the income for understatement of bank interest. The Tribunal upheld the addition, emphasizing that the assessee must follow the mercantile system of accounting consistently and cannot switch to a cash basis for specific items. 8. Disallowance of Payment to CRRI under Section 35(1)(iia): The AO disallowed the deduction claimed for payment to CRRI. The Tribunal upheld the CIT(A)’s decision to allow the deduction, noting that CRRI is an approved institution under Section 35(1)(ii) and the payment was properly documented. 9. Disallowance of Loss Related to DITTM: The AO disallowed the loss claimed for DITTM. The Tribunal remanded the issue back to the AO for fresh verification and order, as both parties agreed to this course of action. 10. Disallowance of Tourism Promotion Expenses and Hiring of Tent Expenses: The AO disallowed 50% of the expenses claimed for tourism promotion and hiring of tents. The Tribunal remanded the issue back to the AO for verification and fresh order, directing the AO to provide the assessee an opportunity to submit relevant details and documentary evidence. Conclusion: The appeals were partly allowed for statistical purposes, with specific directions for remand and verification on several issues, while upholding or dismissing others based on precedents and detailed analysis of facts and law.
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