DCIT Vs Haryana Urban Development Authority (ITAT Chandigarh)
The Chandigarh Bench of the Income Tax Appellate Tribunal adjudicated an appeal filed by the Revenue against the order of the Commissioner of Income Tax (Appeals) for assessment year 2018–19. The sole issue raised was whether salary expenditure incurred by Haryana Urban Development Authority (HUDA) on employees of the Department of Urban Estates (DUE) was allowable as business expenditure, given that DUE is a separate department of the State Government under the administrative control of the Director General, Town and Country Planning.
The Commissioner (Appeals) deleted the disallowance of ₹7,01,24,201 made by the Assessing Officer, relying on earlier Tribunal decisions in the assessee’s own case for multiple assessment years ranging from 2004–05 to 2014–15. In those years, the Tribunal had consistently held that after the transfer of functions from the Department of Urban Estates to HUDA in 1977, the employees of DUE were working fully and wholly for HUDA. As such, the salary and related expenditure incurred on those employees was held to be for business purposes and allowable as revenue expenditure. The Commissioner (Appeals) also noted that a similar disallowance made for assessment year 2015–16 had been deleted, and the Tribunal had dismissed the Revenue’s appeal on that issue.
