ITAT confirmed the deletion of disallowances

1. Assessee company was engaged in the business of real estate,consultancy services, site management services, professional advisory and project management services. It filed a return of income declaring an income of Rs. 29,58,90,498/-. The return was processed u/s 143(1) (of Income Tax Act, 1961).AO completed the assessment u/s 143(3) (of Income Tax Act, 1961) at an income of Rs.32,47,12,801/- after making disallowances at: Rs.2,85,55,000/- on account of disallowance u/s 36(1)(ii) (of Income Tax Act, 1961); Rs.1,58,568/- on account of disallowance u/s 14A (of Income Tax Act, 1961); and Rs.1,08,735 on account of disallowance of depreciation u/s 32 (of Income Tax Act, 1961). For AY 2008-2009, AO disallowed Rs. 6,47,27,888 representing commission paid to Shri Anshuman Magazine, Director of the assessee company by invoking section 36(1)(ii) (of Income Tax Act, 1961), and Rs. 27,22,514/- out of recruitment and training expenses.

2. CIT(A) deleted the disallowances.

3. On appeal, the ITAT held as under:

"The aforesaid judgments are squarely apply to the facts of the assessee company. Here too, the commission has not been paid to Rashmi Magazine, other shareholder of assessee company and commission was paid to Anshuman Magazine for services rendered by him as per terms of appointment as a managing director, which has been taxed as salary in his hands in the instant year. Having regard to the above judicial position, the ground raised by the revenue is rejected.

We find that CIT(A) has directed the AO to compute the disallowance in accordance in the manner held in para 42 of Hon'ble jurisdictional High Court in the case of Maxopp Investment Ltd. - 347 ITR 272 (Del).

4. Respectfully following the above, we do not find any infirmity in the order of CIT(A). No reasons have been stated by the ld. DR to deviate from the above conclusion. Thus, in light of the above, ground raised by the revenue is rejected.

5. We have considered the rival submission of both the parties and carefully gone through the material placed on the record. In our opinion, since computer accessories in the aforesaid decisions have been held to be part of computer, therefore they are also entitled to higher rate of deprecation. Hence, the finding of ld. CIT(A) deleting the disallowance is upheld and ground raised by the revenue is dismissed.

6. We have considered the rival submission of both the parties and carefully gone through the material placed on the record. In light of the discussions in Ground No.3 in ITA No.709/Del/2012, it is clear that the issue is squarely covered. Thus, following the said reasons, the ground raised by the revenue is rejected.

However, in those cases where the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of matching concept is satisfied, which up to now has been restricted to the cases of debentures.

7.The above judgment squarely applies to the facts of the case of appellant in as much as the expenditure is on revenue account and has been incurred in the year under consideration and hence is an eligible expenditure. It is not the case of the assessee that such expenditure be spread over and hence the disallowance is contrary to above judgment.

8.For the reasons stated above, disallowance made of Rs. 27,22,514/- out of total claim of expenditure of Rs. 34,03,142/- is deleted. Grounds raised by the appellant are allowed.

Case Reference - ACIT, Circle 3 (1), vs. M/s. C.B. Richard Ellis South Asia Pvt. Ltd

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH 'B' : NEW DELHI)

BEFORE SHRI A.T. VARKEY, JUDICIAL MEMBER AND

SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER

ITA No.709/Del./2012

(ASSESSMENT YEAR : 2007-08)

ITA No.775/Del./2013

(ASSESSMENT YEAR : 2008-09)