SHOPPE TILL U DROP PVT. LTD., MUMBAI V. ITO - 2(3)(2), MUMBAI

CO 201/MUM/2016

• Counselvise Citation: [2016] 123 COUNSELVISE.COM (IT) 2644 (ITAT-MUMBAI)
• Duration Of Justice: 16 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 07-12-2016
• Court: TRIBUNAL
• Department Lawyers: S R KIRTANE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM ITA NO. 4116 / MUM/20 1 6 ( ASSESSMENT YEAR : 2010 - 11 ) ITO 2(3)(2), MUMBAI VS. M/S. SHOPPE TILL U DROP PVT. LTD., 1 ST FLOOR, CECIL COURT, LANDSDOWNE ROAD, COLABA, MUMBAI 400 039 PAN/GIR NO. AAMCS0176L APPELLANT ) .. RESPONDENT ) CO NO. 201/ MUM/20 16 ( ASSESSMENT YEAR : 2010 - 11 ) M/S. SHOPPE TILL U DROP PVT. LTD., 1 ST FLOOR, CECIL COURT, LANDSDOWNE ROAD, COLABA, MUMBAI 400 039 VS. ITO 2(3)(2), MUMB AI PAN/GIR NO. AAMCS0176L APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI S.R.KIRTANE ASSESSEE BY SHRI NIKHIL TIWARI DATE OF HEARING 2 0 / 12 /2016 DATE OF PRONOUNCEME NT 23 / 12 /2016 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2010 - 11. 2. IN THE APPEAL FILED BY REVENUE, REVENUE IS AGGRIEVED FOR DELETING THE ADDITION ON ACCOUNT OF SALARY EXPENSES OF RS.53,54,334/ - . 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. ITA NO. 4116/MUM/2016 & CO 201/MUM/2016 M/S. SHOPPE TILL U DROP PVT. LTD., 2 4. FACTS IN BRIEF ARE THAT THE ASSESSEE - COMPANY IS STATED TO BE A COMPANY FORMED TO OPERATE AN ONLINE SHOPPING PORTAL ON ITS WEBSITE FACILITATING THE VENDORS OF THE PRODUCT AND SERVIC ES TO ADVERTISE, DISPLAY, PROMOTE AND SELL ONLINE THEIR PRODUCTS AND SERVICES. THE COMPANY WAS INCORPORATED IN 2008. 5. DURING THE COURSE OF ASSESSMENT, AO FOUND THAT ASSESSEE HAS INCURRED EXPENDITURE ON ACCOUNT OF SALARY UNDER THE HEAD WORK IN PROGRESS . HOWEVER, THESE EXPENDITURES WERE NOT CLAIMED IN THE P & L ACCOUNT, BUT WAS CARRI ED FORWARD IN THE BALANCE SHEET. AO DISALLOWED PART OF THE SALARY EXPENSES ON THE PLEA THAT ASSESSEE FAILED TO SUBSTANTIATE THE CLAIM OF EXPENSES. 6. BY THE IMPUGNED ORDER, CI T(A) DELETED THE DISALLOWANCE OF SALARY EXPENSES AFTER OBSERVING AS UNDER: - 5.10. AS REGARDS THE SALARY EXPENSES OF RS.53,54,334/ - , NO COMMENT HAS BEEN OFFERED BY THE AO IN THE REMAND REPORT. THE APPELLANT HAS SUBMITTED THAT ALL THE DETAILS WERE SUBMITTED TO THE AO AND SUCH EXPENSES HAVE BEEN PAID BY THE GROUP COMPANY, M/S.COX AND KINGS ON BEHALF OF THE ASSESSEE FOR THREE EMPLOYEES VIZ. MR. AROOP SEN RS.23,29,950 / - , MS. RENUKA BALASUBRAMANIAM - RS.12,29,309/ - AND MR. YUSUF POONAWALA RS.17,95,075/ - . THE APPEL LANT HAS ENCLOSED FROM NO.16 FOR RS.50,22,444/ - AND STATED THAT THE BALANCE OF RS.3,31,892/ - PERTAINS TO EMPLOYER'S CONTRIBUTION TO THE PROVIDENT FUND AND BONUS. FURTHER, THE APPELLANT HAS STATED THAT M/S.COX AND KINGS LTD. WHO HAS PAID THE EXPENSES ON BEH ALF OF THE APPELLANT HAS NOT CLAIMED THE SAID EXPENSES IN ITS RETURN OF INCOME FOR A.Y.2010 - 11 OR IN OTHER ASSESSMENT YEARS. THEY HAVE ALSO NOT SHOWN THE EXPENSES AS FIXED ASSETS OF ACQUISITION. FURTHER, TAX HAS BEEN DEDUCED WHILE MAKING THE SAID PAYMENTS. M/S.COX & KINGS LTD. HAVE ALSO SHOWN EXPENSES AS RECOVERABLE FROM THE APPELLANT AND THE APPELLANT HAS SHOWN THE SAME AS CURRENT LIABILITY. HENCE, THE EXPENSES OF RS.53,54,334/ - IS AN ALLOWABLE EXPENDITURE AND THE AO IS DIRECTED TO ALLOW THE SAME. IN THE ITA NO. 4116/MUM/2016 & CO 201/MUM/2016 M/S. SHOPPE TILL U DROP PVT. LTD., 3 R ESULT, EXPENSE OF RS.7,93,301/ - IS DISALLOWED AND THE BALANCE IS ALLOWED. THE GROUND IS PARTLY ALLOWED. 7. AGAINST THE ABOVE ORDER OF CIT(A) , REVENUE IS IN FURTHER APPEAL BEFORE US. 8. I HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT AFTER CALLING THE R EMAND REPORT, CIT(A) RECORDED CATEGORICAL FINDING TO THE EFFECT THAT SALARY EXPENSES HAVE BEEN PAID BY A GROUP COMPANY M/S.COX AND KINGS ON BEHALF OF THE ASSESSEE FOR THREE EMPLOYEES. ASSESSEE HAS ALSO FILED FORM NO.16 FOR RS.50,22,444/ - AND BALANCE RS.3,3 1,892/ - PERTAINING TO EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND AND BONUS. AS PER THE FINDING RECORDED BY CIT(A) M/S. COX AND KINGS WHO HAS PAID EXPENSES ON BEHALF THE ASSESSEE HAS NOT CLAIMED THE SAID EXPENSES IN ITS RETURN OF INCOME FOR ASSESSMENT YE AR 2010 - 11 OR IN OTHER ASSESSMENT YEARS. THE DETAILED FINDING RECORDED BY CIT(A) HAS NOT BEEN CONTROVERTED. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A) FOR DELETING THE SALARY EXPENSES OF RS. 53,54,334/ - . 9. IT IS PERTINENT T O MENTION HERE THAT IN THIS CASE RETURN INCOME OF RS.23,043/ - WAS ASSESSED BY THE AO AT NIL INCOME. WHATEVER THE AO HAS DISALLOWED WAS THE CAPITAL WORK IN PROGRESS, BECAUSE THE SALARY EXPENSES WERE NOT DEBITED TO THE P & L ACCOUNT BUT WAS ADDED IN THE CAPI TAL WORK IN PROGRESS WHICH WAS NOT ACCEPTED BY THE AO. SINCE THE INCOME ASSESSED BY AO WAS AT NIL, IT COMES WITHIN SMC POWER. ACCORDINGLY, THE ABOVE CASE WAS HEARD IN SMC BENCH AND DECIDED ACCORDINGLY. ITA NO. 4116/MUM/2016 & CO 201/MUM/2016 M/S. SHOPPE TILL U DROP PVT. LTD., 4 10. THE CROSS OBJECTION FILED BY THE ASSESSEE ARE JUST IN SUPPORT OF THE CONCLUSION DRAWN BY THE CIT(A). AS WE HAVE ALREADY UPHELD THE FINDING OF CIT(A), THE CROSS OBJECTION FILED BY ASSESSEE BECOMES INFRUCTUOUS. 11. IN THE RESULT, APPEAL FILED BY THE REVENUE AND CROSS OBJECTION ARE DISMISSED. O RDER PRONOUNCE D IN THE OPEN COURT ON THIS 23 / 12 /2016 S D/ - ( R.C.SHARMA ) ACCOUNTANT MEMBER MUMBAI ; DATED 23 / 12 /201 6 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPON DENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//