Delhi High Court
The Pr. Commissioner Of Income Tax ... vs Rambagh Palace Hotels Pvt. Ltd. on 5 October, 2018
$~12.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ INCOME TAX APPEAL No. 1104/2018
Date of decision: 5th October, 2018
THE PR. COMMISSIONER OF INCOME TAX -7..... Appellant
Through Mr. Ruchir Bhatia, Advocate.
versus
RAMBAGH PALACE HOTELS PVT. LTD. ..... Respondent
Through Mr. Aditya Vohra, Advocate.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE CHANDER SHEKHAR
SANJIV KHANNA, J. (ORAL):
Revenue in this appeal under Section 260A of the Income Tax Act,
1961 (Act, for short), which relates to Assessment Year 2003-2004 impugns
the order dated 23rd March, 2018 passed by the Income Tax Appellate
Tribunal (Tribunal, for short) in the case of Rambagh Palace Hotels Private
Limited (respondent-assessee).
2. The appeal arises from cross appeals ITA Nos. 6024/Del/2014 and
6097/Del/2014 filed by the respondent-assessee and Revenue, respectively
before the Tribunal.
ITA No. 1104/2018 Page 1 of 4
3. The appeal is confined and restricted to deletion of ad hoc
disallowance of Rs.1,38,00,058/-, being 50% of Rs.2,76,00,116/- claimed as
expenditure incurred on repair and maintenance of the hotel. The Assessing
Officer in his order dated 07.03.2013 had referred to the complaint by one
Rajkumar Devraj, and had reopened assessment under Section 147 read with
Section 148 of the Act. The assessment order records that the respondent-
assessee in response to notice dated 01.03.2013, had furnished list of
vendors who had performed and undertaken repair and maintenance service.
Four vendors had appeared before the Assessing Officer to substantiate
genuineness of the expenditure and their statements were recorded on oath.
Documents were also produced by the said vendors. The Assessing Officer
held that the respondent-assessee had been able to establish genuineness of
the expenditure from the said four vendors amounting to Rs.2,48,08,464/-.
However, the respondent-assessee had not been able to produce
confirmations or produce other vendors to whom payments of
Rs.2,76,00,116/- had been made. The Assessing Officer made an ad hoc
disallowance of Rs. 1,38,00,058/- . The Assessing Officer had also
observed and held that payments to the vendors "Chandra Singh Contractor"
and "National Sanitation" was capital in nature. However, the Revenue has
not preferred the present appeal on the said aspect.
ITA No. 1104/2018 Page 2 of 4
4. The Commissioner of Income Tax (Appeals) in order dated
29.08.2014, reduced the ad hoc disallowance from 50% to 5%, i.e., Rs.
13,80,005/-, after recording his reasons and observing that the respondent-
assessee had produced invoices and ledgers of contractors. Payments made
to the said contractors/vendors had also been accepted in subsequent years.
Evidence on record, it was observed had established that the parties who had
rendered the services were existing and genuine parties. At the same time
the Commissioner of Income Tax (Appeals) held that there could still be
some doubt about the existence of the said contractors and hence 5%
disallowance was justified.
5. Thereupon, cross appeals as noticed above were preferred by the
Revenue and the respondent-assessee to the Tribunal.
6. The Tribunal in the impugned order has referred to their earlier
orders, as the Assessing Officer had made similar disallowances in other
years. The Tribunal has held that the respondent-assessee had filed
complete details of the said vendors, including their PAN, invoices raised,
ledger accounts, etc. The Tribunal in these circumstances had followed
earlier decision of the Coordinate Bench of the Tribunal in the case of the
respondent-assessee for the Assessment Years 2006-07 and 2009-10.
ITA No. 1104/2018 Page 3 of 4
Accordingly, the appeal filed by the Revenue was dismissed and the appeal
filed by the respondent-assessee has been allowed, directing deletion of the
ad hoc disallowance of expenditure.
7. The findings of the Tribunal are primarily factual. We do not see any
perversity in the said findings. We may record that we have dismissed the
appeal preferred by the Revenue making similar ad hoc disallowance for the
Assessment Year 2005-06 vide order dated 17th September, 2018 in ITA No.
1014/2018. For the aforesaid, this appeal has no merit and is dismissed with
no order as to costs.
SANJIV KHANNA, J.
CHANDER SHEKHAR, J.
OCTOBER 05, 2018
VKR
