9911796707
TMI Blog2018 (11) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... llowance under challenge. - Decided against revenue. Deduction/ Exemption of LTCG u/s 54F - use of ground floor as commercial purpose and other three floor for residential purpose - The question that arises for our consideration is as to whether the CIT(A) has rightly apportioned assessee’s deduction to 25% is to 75%; floor-wise or not - Held that:- Our instant adjudication supports the CIT(A)’s action to this effect as he has rightly proceeded on an assumption that section 54F is a deduction provision to the liberally construed. This is not the Revenue’s case that the 3 floors of the building in question are not used for residential purposes. We therefore affirm the CIT(A)’s findings under challenge restricting the assessee’s deduction claim to the extent residential portion of the building only by treating the same to be “a residential house” as per the true legislative intent u/s 54F - Decided against revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... (f) The payments to the agents were made by account payee cheque the gents whose commissions the AO disallowed as not for the purpose of business were as follows: Sl.No. Name of commission agents PAN Gross commission 1 Pradip Jiswal ACXPJ 1983G 5,00,000 2 Ragav Trust Rahul Trust AAATR 3121P AAATR 4724Q 5,00,000 5,00,000 4 5 Urmila Devi Jiswal Reema Jaiswal AGHPJ 0842Q AJNPJ 7607C 2,30,000 2,20,000 6 7 Kiran Jaiswal Ashok Kr Jaiswal AKYPJ 5714C ACWPJ 3917D 1,25,000 3,00,000 8 9 Jayant Jaiswal Seema Jaiswal AKYPJ 5737F AILPJ 3705A 1,25,000 3,00,000 10 11 Durgadas Karmakar Sujata Karmakar AAFHD 9208Q ATGPK 0744 G 2,00,000 1,50,000 12 Manas Kanjilal AFCPK 7807G 3,00,000 13 Parth Pratim Bhattacherjee ADVPB 8331 P 85,000 14 15 Kabita Jaiswal Triveni Prasad Jaiswal AILPJ 3706D AGHPJ 0841P 3,25,000 2,25,000 16 17 18 19 Anil Kr Bhuwalka HUF Rahul Bhuwalka Avisek Bhuwalka Rohit Bhuwalka AACHA 5021M AQZPB 3362M BBJPB 7165G BCCPB 7484G 1,20,000 3,15,000 1,85,000 1,80,000 20 Sunil Kr Bhuwalka AAFHS 5744G 2,00,000 21 22 Plenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on portals like Naukri.com etc but as the profile of the candidates being in very high positions, such quality of data base is not available most of the times. It is a common knowledge that good quality manpower is pouched by companies. In fact many senior bureaucrats are also being poached by the Corporates. Therefore given the senior profile and sensitive position of the companies and candidates the nature of the assessee's business is such that it has to rely on discreet information. Such discreet information is available directly from the prospective candidate who meets the requirement of the client and is ready to leave his/her present assignment and take a new job. Only if this information is available then the assessee is able to move further. This information is available only with the persons who has direct knowledge that a particular candidate is interested in leaving his/her existing job or such information is available indirectly i.e. a close associate of the proposed candidate reveals such information about the interest of the candidate to change his job. This is the most important and vital information in the business of the assessee. This role of sharing informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company. The candidate is not concerned if the person contacting him is an employee of the company or an outsourced agency. The assessee has relied on various case laws. I find most of the case laws apply to the case of the appellant hence the same are not once again in reproduced in the order. I find that the appellant has made the commission by account payee cheques, the appellant has produced full details of commission expenses including complete details including payment by cheques bills and recipients income tax PAN details, the name of candidates and their CV and the job to which they were placed was also provided I thus find that the AO failed to carry out any relevant enquiry in this respect. I find that in the preceding year i.e. assessment year, the assessee was engaged in the same business and also taken services from the parties and paid commission to them and no disallowance was made by the AO. I also find that in AY 2013-2014 the assessee case was assessed u/s.143(B) of the IT Act 1961 by the same office and the commission expenses paid were duly accepted in scrutiny assessment and no disallowance were made. I therefore hold that the commission expenses were incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s' requirement business. He declared income from the said business activity amounting to ₹198.70 lakh along with commission of ₹79.55 lakh debited in the profit and loss account. The Assessing Officer disallowed a part thereof to the extent of the impugned sum of ₹51,56,694/- mainly on the ground that the corresponding parties did not support his case. We make it clear that all the corresponding payments have been subjected to TDS; wherever necessary. There has not been any enquiry on part of the Assessing Officer to find out as to whether all these parties who have not supported assessee's case have claimed the corresponding TDS credit or not is respective tax records. Coupled with this, we find that the Assessing Officer has also not carried out the necessary verification on assessee's ultimate customers/clients who have appointed the highly qualified personnel through the assessee. The Revenue further fails to rebut the fact that similar commission payments have already been accepted as allowable in latter assessment years (supra). We therefore take into account all these facts and circumstances to uphold the CIT(A)'s findings deleting the impugned disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t applicable and hence the disallowed the entire claim of the deduction made by the appellant. The AO also had issued commission to the ITO Bangalore the visit the site and the said ITO on visit to the found that the building was in a structure form and had a glass façade. Without observed that the building comprised of basement, silt area, ground floor, first floor, second floor terrace and lift and as per the AO the 2nd floor was only residential. The AO then held that as per his estimate the cost of construction of 2nd floor was to be determined by dividing the entire area for the building including terrace and lift room etc and the cost for the second floor was to be estimated at 15% lower than the average cost. The AO thus held that even if the deduction was to be allowed the deduction should be ₹ 14,98,481 instead of ₹ 56,52,242. 4.9 I have perused the assessment order and considered the written submission and oral submissions made by the Authorised Representative of the appellant. I find that the building was sanctioned as residential and commercial building however on physical verification of the building by the ITO t Bangalore no commercial activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d strict construction of n exemption provision is to be invoked at different stages of interpreting it. When the question is whether a subject falls in the notification or in the exemption clause then it being in the nature of exception is to be construed strictly and against the subject but once ambiguity or doubt about applicability is lifted and the subject falls in the notification then full play should be given to it and it calls for a wider and liberal construction. (See Union of India v. Wood Papers Ltd. [(1990) 4SCC 256: 1990 SCC (Tax) 422] and Mangalore Chemicals and Fertilisers Ltd. v. CCT [1992 Supp (1) SCC 21] to which reference has been made earlier.)" 22. In G.P. Ceramics (P) Ltd. v. CTT (2009) 2 SCC 90], this Court has held: (SCC pp. 101-102, para 29) "29. It is now a well-established principle of law that whereas eligibility criteria laid down in an exemption notification are required to be construed strictly, once it is found that the applicant satisfies the same, the exemption notification should be construed liberally. [See CTT v. DSM Group of Industries [(2005) 1 SCC 657] (SCC para 26); ITSCO Ltd. v. State of Jharkhand [(2005) 4 SCC 272] (SCC para 42- 45); St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e restricted to 75% of the claim made by the appellant. I therefore determine the deduction u/s 54F of the Act at ₹ 42,39,181 (75% of ₹ 56,52,242) and the AO is directed to recomputed the capital gains accordingly. This ground is partly allowed." Learned Departmental Representative vehemently contends that Assessing Officer had rightly made the impugned disallowance as the assessee had not fulfilled the relevant conditions for claiming section 54F deduction in question. We do not find any dispute between parties about the assessee having transferred his relevant capital asset followed by re-investment of the consequential capital gains is new asset which happens to be both residential as well as commercial. The Revenue's endeavour is to disallow the entire deduction component qua the re-investment of assessee's capital gains made in the new building comprising of four floors. We make it clear that taxpayer is very fair in declaring the ground floor of his new house as used for commercial purpose as against the remaining three upper floors taken as a residential unit. The question that arises for our consideration is as to whether the CIT(A) has rightly apportioned asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
