9911796707
TMI Blog2018 (4) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... dditional ground, that is relevant for the assessment years 2004-05 to 2007-08, reads as under:- "The assessee be allowed deduction of the amount utilized by it from TIUF towards construction of flyovers etc., as expenses allowable under section 37 of the Income-tax Act in pursuance of the order of Delhi High Court in the case of assessee company." 3. Briefly stated, the facts of the case for the assessment year 2004-05 are that the assessee is a wholly owned Government company of the Government of NCT of Delhi. During the year under consideration, it was engaged in the business of tourism development, transportation, manufacturing and trading in Indian made foreign liquor and country liquor and civil engineering activities of construction on behalf of the Government of NCT of Delhi. The assessee debited a sum of Rs. 26,62,23,175/- to its Profit & Loss Account towards transfer to Transportation and Infrastructure Utilisation Fund (TIUF). Interest of Rs. 2,04,14,661/-, earned on surplus of this fund invested in banks etc., was directly credited to TIUF account. The assessee directly transferred a sum of Rs. 6,63,82,520/- in the TIUF as contribution from other corporations. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 20.03.2012, overturned the order of the Tribunal by holding that the expenditure incurred by the assessee on construction of flyovers etc., was revenue expense and, hence, deductible u/s 37 of the Act. At the same time, the Hon'ble High Court also held that the amount standing in TIUF was not diverted at source by way of overriding title and was, therefore, liable to be included in the total income of the assessee. It is pursuant to this judgment of the Hon'ble Delhi High Court that the assessee has approached the Tribunal by means of the instant additional ground urging that deduction should be allowed u/s 37 towards construction of flyovers etc. from the TIUF. 5. In view of the foregoing factual and legal discussion, it is clear that pursuant to the judgment of the Hon'ble High Court, the raising of the additional ground has become eminent. As a matter of fact, not admitting the additional ground would amount to violating the judgment of the Hon'ble jurisdictional High Court in assessee's own case, which is not possible. Since this ground raises a question of law arising from the facts which are already on record, we admit the additional ground for disposal on meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osition. 8. Now, we are confronted with the judgment of the Hon'ble Delhi High Court in the assessee's own case, in which it has been 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. 9. Another additional ground has been raised by the assessee which is relevant for assessment year 2004 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to section 43B by way of insertion of clause (f), as unconstitutional. However, it is important to note that the Hon'ble Supreme Court vide its judgment dated 8.5.2009 in CIT Vs. Exide Industries Ltd. and Another has stayed the operation of the Hon'ble Calcutta High Court's judgment in Exide Industries. It has further been held by the Hon'ble Supreme Court that : 'the assessee would, during the pendency of this Civil Appeal, pay tax as if Section 43B(f) is on the Statute Book but at the same time it would be entitled to make a claim in its returns.' In view of the clear enunciation of law by the Hon'ble Supreme Court, we are of the considered opinion 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 (ITA No. 2559/Del/2013) vide order dated 31.10.2013. In view of the foregoing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecord, we find from the Memorandum of Association of the assessee company that its main object include 'Development of tourism'. Clause 1(d) of the Memorandum of Association provides that the main objects of the company are : 'to develop tourism and to provide entertainment to tourists by way of cultural shows, tourist complexes, entertainment and amusement parks, dances, music concerts, ballets, films, shows, sports and games, son-et-lumiere spectacles and others'. Thus, it is evident from the object clause of the assessee company that it was set up, inter alia, to develop tourism by providing entertainment to tourists by way of cultural shows etc. A copy of the brochure of 'Dilli Haat' has been placed on page 47 of the paper book, which shows that 'Dilli Haat' is like a village fair bustling in the heart of India's capital metropolis. It lists certain month-wise popular events/festivals at 'Dilli Haat', which include Lohri/Pongal in January, 'Dilli Haat' anniversary celebrations in March, Bihu/Baisakhi in April, Sharbat Mela in May so on and so forth. Here, it is significant to mention that the idea of 'Dilli Haat' was mooted by the Ministry of Tourism, Government of India in 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly is allowed. You are, therefore, suggested to contract this office on any working day between 4 PM to 6 PM and submit his/her bio-data (with the proof) with photograph name, age and father's/husband's name, relationship with you may be clearly indicated in the bio-data of the helper/assistant. No helper/assistant is allowed to assist you at Dilli Haat without attestation of his/her bio-data from this office. (iv) You must keep your identity card cum passbook in the stall during the entire exhibition period and must produce the same, whenever demanded by any officer/officials of the office of the Development Commissioner (Handicrafts) or inspection team. (v) Neither you nor any of your family members must have participated in any program at Dilli Haat during the last three months." 16. There are other selection letters for participants on the same terms and conditions as have been set out above. It is this rental income @ Rs. 200/- per day per participant for a period of 15 days, which for the year has swelled to Rs. 1,82,14,880/-. The question is whether this amount of Rs. 1.82 crore for use of craft stalls out of total rental income of Rs. 2.36 crore is chargeable under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undertook different schemes under which certain sheds were constructed and space was hired out with infrastructure facilities to the entrepreneurs. The question arose whether income from such hiring out was assessable as 'Business income' or 'Income from house property.' The Hon'ble High Court held such income to be 'Business income'. 18. Recently, the Hon'ble Supreme Court in Chennai Properties and Investments Ltd. vs. CIT (2015) 373 ITR 673 (SC), considered the case of a company whose main object was to acquire the properties and to let them out. The assessee rented out such properties and earned rental income therefrom, which was offered as income from business. The Assessing Officer treated the same as rental income. When the matter finally came up before the Hon'ble Supreme Court, their Lordships noticed that the main object of that assessee was to hold the properties and earn income by letting them out. Approving the stand of the assessee, the Hon'ble Supreme Court held that the income from letting out of the property was 'Business income'. It noted certain relevant facts for deciding whether income from letting out is a 'Business income' or 'Income from hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come 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. 22. Turning to the remaining amount of Rs. 54.00 lac, we find that the same consists of Rs. 41.00 lac, being, income from space rented on regular basis and Rs. 12.99 lac, being, licence fee for allowing activities of food court, souvenir shops, bank and PCO. This amount of Rs. 54 lac has been earned by the assessee from the letting out of its permanent structures. The same cannot be equated with income of Rs. 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 Rs. 54.00 lac as income held by the lower authorities to be falling under the head 'Income from house property.' 23. To sum up, we hold that income of Rs. 1.82 crore be considered as 'Business income' and Rs. 54.00 lac as 'Income from house property.' The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .Y. 2004-05. We have discussed this issue at length. Following the view taken hereinabove, we direct that the rental income from the use of craft stalls allotted to 'Participants' be treated as 'Business income' and the remaining rental income as falling under the head 'Income from house property'. The Assessing Officer is directed to allow deductions against the above incomes in consonance with our directions given for the A.Y. 2004-05 above. 31. In the result, the appeal is partly allowed for statistical purposes. Assessment Year 2006-07 32. The first additional ground taken by the assessee for the A.Y. 2004-05 regarding the diversion of income and the consequential stand of the Revenue for not allowing deduction of the expenses, raised for the instant year as well, is hereby disposed off accordingly. The AO is directed to decide this issue afresh in terms of direction given above. 33. The next issue is against confirmation of disallowance of Rs. 29,79,842/- under Section 40 (a) of the Act. Considering the tax audit report of the assessee, in which a sum of Rs. 29.79 lac was shown as inadmissible under Section 40 (a)(i) of the Act, the Assessing Officer made the disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside the impugned order on this issue and send the matter to the AO for following the mandate given on this issue in our order for the A.Y. 2004-05. 42. Ground no. 3 of the Revenue's appeal is against deletion of disallowance of Rs. 43,21,182/- out of disallowance of Rs. 44,54,806 made by Assessing Officer under Section 40(a)(i)/(ia) of the Act. Ground no. 2 of the assessee's appeal is related to the ground taken by the Revenue in which sustenance of part addition has been challenged. 43. Factual aspects of these grounds are that the Tax audit report indicated disallowance of Rs. 44,54,842/- under Section 40(a)(i) of the Act. On being called upon to explain as to why this disallowance was not made in the computation of total income, the assessee submitted that in most of the cases, the assessee either obtained TDS exemption certificates under Section 195 or the payments did not require deduction at source as these were made to the Government. Not convinced with the assessee's submissions, the A.O. made an addition of Rs. 44,54,842/- u/s 40(a) of the Act. The learned CIT(A) deleted the disallowance in respect of payments made to E4 Entertainment and M/s Brisc International i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India. Once it is held that income of Airport Donijil Hotel is not chargeable to tax in India on the amount paid by the assessee, no disallowance under Section 40(a)(i) can be made. 47. In so far as the payment of Rs. 46,437/- made to Sri Lanka Tourism Board is concerned, we find that the assessee's contention of Sri Lanka Tourism Board being "the Government" and hence not requiring any deduction of tax at source in terms of Section 196 of the Act, is not substantiated. Section 196 of the Act clearly provides that notwithstanding anything contained in the earlier provision of this Chapter, no deduction of tax shall be made by any person from any sum payable, inter alia, to the "the Government". Sri Lanka Tourism Board is a separate Board constituted under the laws of Sri Lanka and hence cannot be considered as 'the Government of Sri Lanka'. We, therefore, reject the contention raised by the learned AR on this score. 48. As regards, the nature of payment, the learned AR contended that this amount was paid for exhibition in Sri Lanka and hence no income can be said to have accrued in India requiring deduction for tax at source. We find that no contention in this regard was made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 54. Ground no. 5 of the Revenue's appeal is against deletion of disallowance of Rs. 88,09,548/- made by Assessing Officer under Section 40(A)(7) of the Act on account of provision of gratuity. 55. The facts of this ground are that the assessee made a provision of gratuity amounting to Rs. 88.09 lac. The Assessing Officer held that the amount was disallowable under Section 40A(7) as its payment was made after the close of the year. The learned CIT(A) held that Section 40A(7)(b) clearly provides that no disallowance will be made under this section if the provision is made towards an approved gratuity fund. Since the provision was made by the assessee towards an approved gratuity fund, the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proviso and omission of the second proviso to section 43B by the Finance Act, 2003 is retrospective. The Hon'ble Delhi High Court in the case of CIT v. Aimil Limited [(2010) 321 ITR 508 (Delhi)] has allowed deduction in respect of employees' share when the amount was paid before the due date. When we consider these two judgments, it becomes patent that both the employer's and employees' contribution are allowable as deduction if the amount of provident fund etc., though belatedly, but is paid before the due date of filing of return u/s 139(1) of the Act. 60. Adverting to the facts of the instant case, 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. Respectfully following the aforenoted judgment of the Hon'ble jurisdictional High Court, we order for the deletion of the addition sustained in the first appeal on account of late deposit of employees' contribution to the Provident fund. Following the above judgments, we also uphold the impugned order on deleting the addition on account of late deposit of employer's contribution. 61. Ground no. 7 of the Revenue's appeal and ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that income of IITTM-D was not liable to be included in the income of the assessee as has been set up by the Revenue. On the other hand, the learned DR submitted that the assessee has itself claimed deduction for loss of IITTM-D its return for the A.Y. 2012-13 on the premise that it was its own loss. On a specific query, the learned AR submitted that some change took place in the arrangement on 1.4.2009 as a result of which the income/loss of IITTM-D became that of the assessee. The Revenue is aggrieved in its appeal for the A.Y. 2012-13 against the allowability of loss of IITTM-D against the assessee's income. Though the appeal for the A.Y. 2012-13 is also fixed before the Tribunal today itself, the learned AR was not prepared with the matter and sought an adjournment. In view of the fact that loss of IITTM Delhi has been incorporated in the assessee's profit and loss account for the A.Y. 2012- 13, what transpired on 1.4.2009, in so far as a running of IITTM-D is concerned, is relevant. Necessary details about the changes made from 1.4.2009 are not readily available with leaned AR. We, therefore, set aside the impugned order on this issue and send the matter back to the file of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 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. 70. In the result, both the appeals are partly allowed for statistical purposes. Assessment Year 2008-09 71. The first issue raised in this appeal is against disallowance under Section 40(a)(ia) amounting to Rs. 96,761/- on account of short deduction of tax at source. 72. 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. 73. Next ground is against addition of Rs. 31,11,525/- made by Assessing Officer on account of income from "Dilli Haat". 74. Here again, we find that this issue has been dealt with by us elaborately in the assessee's appeal for the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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