Pro Commissioner Of Income Tax Delhi-L v. M/S Organizing Committee Hero Honda Fih World Cup

$~21 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 353/2018 and CM APPL. 11640/2018 PRO COMMISSIONER OF INCOME TAX DELHI-L ..... Appellant Through: Mr. Zoheb Hossain, Sr. Standing Counsel. versus M/S ORGANIZING COMMITTEE HERO HONDA FIH WORLD CUP ..... Respondent Through: CORAM:HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE A. K. CHAWLA O R D E R% 23.03.2018 –The Revenue urges two question of law firstly, with respect to the disallowance under Section 40(A)(ia) of the Income Tax Act, 1961, and secondly, relating to the amounts of the alleged undisclosed income by way of bogus credits to the tune of `66,50,763/- claimed by the assessee. The assessee organisation entered into a contractual relationship with the Federation of International Hockey (FIH) for -organising the Men’s Hockey World Cup in the financial year 200910. Under the arrangements, the FIH was to act as the facilitator, receiving the amounts and arranging for provisional services ITA 353/2018 Page 1 of 3 connected with the Event (services primarily concerned with the travel, hospitality and provision of food etc.). The AO was of the opinion that the reimbursements claimed by the FIH on account of payouts made by it on behalf of the assessee (Event organiser/ sponsor) were tax deductable under Section 195 of the Act. The assessee contended that the payments made by it to FIH were by way of reimbursement of the expenses claimed by the later, which were duly supported by the documentary evidence. The AO rejected the explanation and held that the payouts by the FIH also included commission which was per se taxable, and therefore, tax deductable. The CIT(A) accepted the assessee’s explanation that the reimbursement claimed was such as the assessee could not hold an independent inquiry into each transaction; the ITAT affirmed the decision. The Revenue urges that the facts clearly disclosed in the income, did exist in support of the transactions for which reimbursement was claimed by the FIH; therefore, it was incumbent upon the assessee to deduct the tax amount. The Court is of the opinion that the findings of fact in this regard are conclusive. The lower Appellate Authorities, after considering the submissions, clearly held that the record would indicate that the asessee had no privity of contract with the service provider. Having regard to the overall circumstances, the Court is of the opinion that no substantial question of law arises in this regard. With respect to the additions made under Section 68 of the Act, ITA 353/2018 the Court notices that the AO conducted a first level inquiry by issuing notices under Section 133(6) of the Act but stopped further inquiry. After obtaining the PAN particulars, bank account details and other particulars relating to the identity of the creditors, the AO did not further exert himself to obtain any information or documents from the concerned banks. In these circumstances, the lower Appellate Authorities correctly inferred that the assessee had discharged the initial burden of establishing the identity of the creditors, the genuineness of the transactions and the credit worthiness of the third party. No substantial question of law arises even in this regard. For the above reasons, it is held that no substantial question of law arises. The appeal is therefore dismissed along with the pending application. S. RAVINDRA BHAT, J MARCH 23, 2018 nn A. K. CHAWLA, J ITA 353/2018