M/s. Showtime Events India (P) Ltd., New Delhi V. ITO, New Delhi

CO 116/DEL/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0541 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 09-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 08-04-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 23-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Assessee Lawyers: SUNIL K SHARMA
• Keywords: Gift; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : G : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI C.M. GARG, JM ITA NO.5522/DEL/2013 ASSESSMENT YEAR : 2010-11 ITO, WARD 8(2), NEW DELHI. VS. SHOWTIME EVENTS INDIA (P) LTD., 52B, OKHLA INDUSTRIAL ESTATE, PHASE-III, OKHLA, NEW DELHI. PAN: AABCS7892N CO NO.116/DEL/2014 (ITA NO.5522/DEL/2013) ASSESSMENT YEAR : 2010-11 SHOWTIME EVENTS INDIA (P) LTD., 52B, OKHLA INDUSTRIAL ESTATE, PHASE-III, OKHLA, NEW DELHI. PAN: AABCS7892N VS. ITO, WARD 8(2), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUNIL K. SHARMA, FCA DEPARTMENT BY : SHRI B.R.R. KUMAR, SR. DR DATE OF HEARING : 08.04.2015 DATE OF PRONOUNCEMENT : .04.2015 ITA NO.5522/DEL/2013 CO NO.116/DEL/2014 2 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE CIT(A ) ON 17.7.2013 IN RELATION TO THE ASSESSMENT YEAR 2010-11. 2. THE FIRST GROUND OF THE REVENUES APPEAL AND THE ONLY GROUND OF THE ASSESSEES CROSS OBJECTION IS IN RESPECT OF DIS ALLOWANCE ON ACCOUNT OF CONSULTANCY CHARGE PAID TO THE RELATED PERSONS M ADE U/S 40A(2)(B) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED ` THE ACT). 3. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSES SEE PAID A SUM OF RS.18 LAC (SIC. RS.25 LAC) AS CONSULTANCY CHARGES TO MS. JEAN MENEZES, WIFE OF ONE OF THE DIRECTORS. ON BEING CALLED UPON TO EXPLAIN AS TO WHY THIS AMOUNT BE NOT DISALLOWED U/S 40A(2)(B), THE AS SESSEE SUBMITTED A COPY OF AGREEMENT BY WHICH CONSULTANCY CHARGES WERE FIXED AT RS.1,50,000/- PER MONTH PAYABLE TO MS. JEAN MENEZES . THE AO DID NOT FIND THE AMOUNT PAID TO MS. JEAN MENEZES AS REASONA BLE AND, ACCORDINGLY, DISALLOWED A SUM OF RS.13 LAC. THE LD . CIT(A) REDUCED THE ITA NO.5522/DEL/2013 CO NO.116/DEL/2014 3 DISALLOWANCE TO RS.9 LAC, THEREBY ALLOWING RELIEF O F RS.4 LAC. BOTH THE SIDES ARE IN APPEAL AGAINST THE IMPUGNED ORDER TO T HE EXTENT IT IS PREJUDICIAL TO THEIR RESPECTIVE INTERESTS. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS OBSERVED FROM PARA 7.3 OF THE IMPUGNED ORDER THAT THE ASSESSEE HAD A FLEET OF 30 PERSONS WORKING IN THE COMPANY AS CONSULTANTS/RETAINERS AND A MAJORITY OF THEM WERE P AID LESS THAN RS.5 LAC PER ANNUM. THE LD. CIT(A) HAS HELD THAT THE SERVIC ES RENDERED BY MS. JEAN MENEZES WERE MAINLY FOR DECORATION AND ARRANGI NG OF GIFT ITEMS. THESE RECORDINGS HAVE NOT BEEN CONTROVERTED BY THE EITHER SIDE. CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE INSTANT CASE, WE ARE SATISFIED THAT THE LD. CIT(A) WAS JUSTIFIED IN RESTRICTING THE ADDITION TO RS. 9 LAC. NO INTERFERENCE IS, THEREFO RE, WARRANTED IN THE IMPUGNED ORDER ON THIS SCORE. THE GROUNDS TAKEN BY THE ASSESSEE AS WELL AS THE REVENUE STAND DISMISSED. 5. THE SECOND GROUND OF THE REVENUES APPEAL IS AGA INST THE DELETION OF ADDITION OF RS.21,60,144/- MADE BY THE AO ON ACC OUNT OF BAD DEBTS. ITA NO.5522/DEL/2013 CO NO.116/DEL/2014 4 BRIEFLY STATED, THE FACTS OF THIS GROUND ARE THAT T HE ASSESSEE CLAIMED DEDUCTION FOR A SUM OF RS.21,60,144/- AS BAD DEBT W RITTEN OFF. THE AO MADE DISALLOWANCE FOR THE SAID SUM ON THE GROUND TH AT THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE OR DETAILS ABOUT THE EFFORTS MADE FOR THE RECOVERY THE DEBTS. THE LD. CIT(A) OVERTURNED THE ASSESSMENT ORDER ON THIS ISSUE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE ON THE FAC T THAT THE ASSESSEE WROTE OFF THE AMOUNT OF BAD DEBTS IN ITS BOOKS OF A CCOUNT. THE AO DISALLOWED THE AMOUNT SIMPLY FOR THE REASON THAT TH E ASSESSEE COULD NOT POINT OUT ANY EFFORTS MADE FOR THE RECOVERY OF THE AMOUNT. THE OTHERWISE DEDUCTIBILITY OF THE AMOUNT OF BAD DEBT W AS NOT OBJECTED TO. THE HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS. CIT (2010) 323 ITR 397 (SC) HAS HELD THAT AFTER 1.4.1989, THE ASSESSEE IS NOT REQUIRED TO ESTABLISH THAT THE DEBT BECAME BAD IN T HE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION . A SIMPLE WRITE OFF OF THE BAD DEBT IS SUFFICIENT TO GRANT DEDUCTION. IN VIEW OF THE DIRECT ITA NO.5522/DEL/2013 CO NO.116/DEL/2014 5 JUDGMENT OF THE HONBLE SUPREME COURT ON THIS ISSUE , WE ARE CONVINCED THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THIS ADDITION. THIS GROUND FAILS. 7. THE LAST EFFECTIVE GROUND IS AGAINST THE DELETIO N OF DISALLOWANCE OF RS.9,58,407/- MADE BY THE AO ON ACCOUNT OF ADJUSTME NT OF BROUGHT FORWARD BUSINESS LOSSES. THE ASSESSEE CLAIMED ADJU STMENT OF BROUGHT FORWARD BUSINESS LOSS OF RS.9.58 LAC. THE AO, ON A PERUSAL OF TAX AUDIT REPORT, OBSERVED THAT THE AUDITORS MENTIONED NOT A PPLICABLE AGAINST COLUMN NO. 25 OF FORM NO. 3CD. HE, THEREFORE, DID NOT ALLOW THE CREDIT FOR THE BROUGHT FORWARD LOSS. THE LD. CIT(A) OVERTU RNED THE ASSESSMENT ORDER ON THIS ISSUE. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE GAVE COMPLETE DETAILS OF BROUGHT FORWARD LOSS IN ITS INCOME-TAX RETURN AND A LSO CLAIMED ADJUSTMENT ON ACCOUNT OF SUCH BROUGHT FORWARD LOSSE S, ETC. SIMPLY ON THE BASIS OF A COLUMN OF THE TAX AUDIT REPORT, NOT PROPERLY FILLED BY THE AUDITOR, THE AO OUGHT NOT TO HAVE REJECTED THE CLA IM WHEN THERE WAS ITA NO.5522/DEL/2013 CO NO.116/DEL/2014 6 SUFFICIENT MATERIAL ON RECORD TO INDICATE THAT THER E WAS, IN FACT, A BROUGHT FORWARD BUSINESS LOSS TO THIS EXTENT. WE, THEREFOR E, APPROVE THE IMPUGNED ORDER ON THIS ISSUE. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE STAND DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 09.04.201 5. SD/- SD/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 09 TH APRIL, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.