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TMI Blog2024 (8) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... ds by holding that the employees' contribution to the ESI which is deemed as the employer's income u/s 2(24)(x) of the Income Tax Act (the Act) and which is subject to deduction u/s 36(1)(va) of the Act is also governed by Section 43B of the Act? 3. Whether in facts and circumstances of the case, the Ld. CIT(A) is legally justified in restricting the disallowance of Rs. 3,23,435/- to Rs. 10,759/- u/s 14A of the Act r.w. R 8D of the Income Tax Rules 1962 (the Rule) on the ground that disallowance should be equivalent to tax exempt income without considering a legal principle that allowability of expenditure under the Act is not conditional upon earning of income as upheld by Hon'ble Supreme Court in case of CIT Vs Rajendra Prasad Moody (1978) 115 ITR 519? 3.1 Whether in the facts and circumstances of the case, the Ld. CIT(A) is legally justified in restricting the disallowance of Rs. 3,23,435/- to Rs. 10,759/- u/s 14A of the Act r.w. R 8D of the Rule without considering ratio decidendi as upheld in case of Maxopp Investment Vs CIT [2012] 347 ITR 272 (Delhi) on application of Rule 8D? 4. Whether in facts and circumstances of the case, the Ld. CIT(A) is legally justi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee never received maintenance charges and the tax can be levied on the real income. He relied upon the decision of the learned CIT(Appeals). 6. We have heard rival contentions and perused the material on record. We find that learned CIT(Appeals) in deciding the issue has given finding of fact by observing as under: "Decision I have considered the observation of the AO, submissions, paper book & arguments of Ld AR. It is seen that the AO has made the addition of Rs. 17,97,330/- on a/c of maintenance charges. The AO has observed that the appellant has not recognized the revenue of Rs. 17,97,330/- inspite of raising the bills on shop owners/tenant hence he made the additions of the same. The appellant has submitted before the AO as well as before me that bills raised towards maintenance charges of M2k mall at Rohini for Rs. 9,06,804/- and M2k Pitampura for Rs. 8,90,526/- aggregating to Rs. 17,97,330/- was neither admitted nor acknowledge by shop owners/tenant. These shop owners/tenant has refused to pay the maintenance charges. The evidence of refusal by the shop owner/tenant were also filed in paper book filed by appellant at Page no. 55 to 86 & 70-71 of the paper book. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by this method in previous years in assessment u/s 143(3) of the Act. The AO has not brought any material on record to show that departure from accepted method is required due to change in facts. The facts of the above cited judgments are identical to the facts of the appellant case. Since the persons to whom bills for maintenance charges were raised have denied the payment at the beginning itself, the refusal by the parties to acknowledge as a liability to pay the maintenance charges shows that no right to receive accrued to the appellant. Respectfully following the decision of Hon'ble Supreme Court cited supra it is held that neither the income accrued nor arose to the appellant hence the addition made by the AO is not justified. Accordingly the additions of Rs. 17, 97, 330/- made by AO is hereby deleted. This ground of appeal is allowed." 7. The above finding of fact given by the learned CIT(Appeals) is not rebutted by the Revenue by placing any contrary material on record. The Revenue has not brought any evidence suggesting that the maintenance charges were actually received by the assessee. Therefore, in the absence of such material we do not see any infirmity into th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... grossly erred in making the addition and the Revenue has not made such addition in the subsequent years and in preceding year. The learned CIT(A) has taken note of the fact and also examined the ratio laid down by the Hon'ble Delhi High Court in the case of Ansal Housing Ltd. and the judgment of Hon'ble Supreme Court in the case of Chennai Property vs. CIT. 17. We have heard rival submissions and perused the material on record. The Revenue could not rebut the fact that there was no addition made in the subsequent years by the Revenue and he strongly relied upon the decision of the learned CIT(Appeals). We find that the learned CIT(A) deleted the addition by observing as under: "Decision:- I have carefully considered the impugned assessment order of AO, submissions, paper book and arguments of Ld AR. The facts that transpire from the assessment order are that the appellant has constructed two malls one at M2k Rohini and other Magnum Plaza Pitampura. The total area at Rohini is 36153.98 sq. ft. out of above Area 5824.70 sq. ft. is sold out and area of 18305.88 sq. ft. is being used for cinema hall of the appellant. Income of the same is offered for taxation and accepted by AO. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chitect about the floor plan and also actual photographs of the Area/Shops under dispute. The copy of these documents were filed at Page no. 103 to 127 of the Paper Book filed along with submission dated 25.08.2015. Further the appellant vide its submission dated 27/01/2015 (as reproduced by AO on page no. 19, 1" Para) contended that "you deputed your staff to visit the premises of the assessee to whom the actual status of the Shops/Area was shown to established that the shops are incomplete and used by the assessee as godown, common passage for the business of the assessee. The AO rejected the contention of the appellant and concluded that the appellant has not shown any work in progress in its balance sheet and all the area is shown as stock in trade. Hence the contention of the appellant is contradictory. Accordingly AO computed the ALV and made the additions. The AO has extensively referred the judgment of Hon'ble High Court of Delhi in the case of CIT vs. Ansal Housing finance & leasing 354-ITR-180 (Delhi) to strengthen his conclusion, where as the case of the appellant is that since the Area/Shops are incomplete and used for the passage of cinema halls and storage by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... object of the appellant is to acquire, build, operate and let out the properties and malls, hence law laid down by Hon'ble Supreme Court in case of the Chennai properties supra is squarely applicable to the appellant. In view of above law and facts of the case the provision of sec. 23 of the Act cannot be invoked in the case of appellant and additions made by AO is to be deleted. The Ld. AR of the appellant also submitted that, the contention of the appellant regarding the use of the area under dispute is accepted by AO in preceding assessment years and even in subsequent assessment years, wherein the assessments are completed U/s 153A/143(3) of the Act. The Ld. AR of the appellant also filed copy of the assessment order for the assessment year 2013-14 passed u/s 143(3) of the Act on dated 15.03.2016 wherein after detail examination of the facts the contention of the appellant for the area under dispute is accepted by AO. Copy of assessment orders for the preceding assessment years and subsequent year were filed at page no. 01 to 22 of Annexure "A" of the submission dated 27.09.2016. In view of above facts as well as the law laid down by Supreme Court of India in the case of Radh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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