IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `G' NEW DELHI
BEFORE SHRI R.K.GUPTA, JUDICIAL MEMBER
AND
SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER
I.T.A .No.-3306/Del/2010
ASSESSMENT YEAR-2007-08
Spank Hotels Pvt. Ltd., Vs. ACIT,
B-6/17, Safdurjung Enclave, Circle-9(1),
New Delhi-29 C.R.Building, New Delhi.
(APPELLANT) (RESPONDENT)
Appellant by: Sh. V.K.Jain, CA
Respondent by: Dr. Prabha Kant, Sr. DR
Date of Hearing:-04.10.2012
Date of Pronouncement:- 10.10.2012
ORDER
PER R.K.GUPTA, JM
This is an appeal filed by the assessee against the order of Ld. CIT(A)-XII,
New Delhi dated 17.03.2010 relating Assessment Year 2007-08. Ground No-2
which is in respect to disallowance of expenses u/s 40A(2)(b) was not pressed.
Therefore, the same is dismissed as not pressed.
2. The main issue is against confirmation of Rs. 20 lacs u/s 40(A)(2)(b) of the
Act.
3. Ld. Counsel of the assessee submitted that on similar facts, the
disallowance was made for immediately succeeding year i.e AY 2008-09 which
was deleted by Ld. CIT(A) and order of the Ld. CIT(A) has been confirmed by
2 I.T.A .No.-3306/Del/2010
the Tribunal while deciding appeal in ITA No. 4631/Del/2011 vide order dated
22.06.2012. Copy of the same was also filed.
4. On the other hand, Ld. DR strongly objected the contention of Ld. AR.
There is no due income of except income from interest and dividend. Dividend is
considered u/s 14A and drawing interest i.e from FDR, no service could be
attributed for earning the interest. The Assessing Officer has already given a
reasonable deduction on account of salary i.e Rs. 5 lacs out of Rs. 30 lacs claimed
by assessee. Ld. CIT(A) again has given further relief of Rs. 5 lacs. It was,
further submitted that salary is to be proportionate to the services provided and
reasonable salary has already been allowed, therefore, the assessee should not be
allowed for further relief.
5. After considering the submissions and perusing the material on record, we
find that assessee deserves to succeed on the issue involved. It is seen that
A.O has disallowed salary u/s 40(A)(2)(b) for succeeding year i.e AY 2008-09
also. The salary was disallowed u/s 40(A)(2)(b) which was deleted by Ld.
CIT(A) and Tribunal has confirmed the order of the Ld. CIT(A) for AY 2008-09.
There is no change in facts and circumstances. In subsequent year, the salary
paid to the same Director, has been held as reasonable by the Tribunal.
Therefore, in our considered view in preceding year, it cannot be said that the
salary amount is not justified. Same activities are involved i.e earning of
dividend and as earning of interest in subsequent year. Now Ld. DR wants that
salary should be allowed only of the proportionate amount of the services
3 I.T.A .No.-3306/Del/2010
rendered. It is very difficult to attribute the part of services provided by the
Director that how much proportionate is correct or how much is not correct. This
has to be seen in view of the section 40(A)(2)(b) in which basis the Assessing
Officer has disallowed.
6. As stated above, the order of Assessing Officer was not approved either by
Ld. CIT(A) or by Tribunal for immediately succeeding year. Respectfully
following the Tribunal, we direct to allow his claim for the year under
consideration also.
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the Open Court on 10.10.2012.
Sd/- Sd/-
(S.V.MEHROTRA) (R.K.GUPTA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 10/10/2012
*AMIT KUMAR*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT, NEW DELHI
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