FOODS AND INNS LTD, MUMBAI V. ASST CIT 10(2), MUMBAI

CO 32/MUM/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6884 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 25-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 08-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: KESHAV B BHUJALE
• Keywords: Opportunity of being heard; Proportionate interest; Commercial expediency; Revenue expenditure
• Section: 14A

Judgement Text

1 ITA 3995 /MUM/2010 & CO 32/M/2011 M/S FOODS AND INN LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI F BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI R.K. PAN DA, A.M. ITA NO. 3995/MUM/2010 (ASSESSMENT YEAR 2006-07) A.C.I.T. 10(2), ROOM NO. 432, 4 TH FLOOR, AAYAKAR BHAWAN, M.K. MARG, MUMBAI 400 020. VS M/S FOODS AND INNS LTD., SION TROMBAY ROAD, DEONAR, MUMBAI. 88 ( APPELLANT ) (RESPONDENT) PAN NO. AAACF 0512 C C.O. 32/MUM/2011 (ARISING OUT OF ITA NO. 3995/MUM/2010) ASSESSMENT YEAR 2006-07) M/S FOODS AND INNS LTD., SION TROMBAY ROAD, DEONAR, MUMBAI. 88 VS A.C.I.T. 10(2), ROOM NO. 432, 4 TH FLOOR, AAYAKAR BHAWAN, M.K. MARG, MUMBAI 400 020. (CROSS OBJECTOR) (RESPONDENT) PAN NO. AAACF 0512 C ASSESSEE BY SHRI KESHAV B. BHUJALE DEPARTMENT BY SHRI V.V. SHASTRI DATE OF HEARING 25.01.2012 DATE OF PRONOUNCEMENT 31.01.2012 ORDER PER R K PANDA, AM THE APPEAL FILED BY THE REVENUE AND THE C.O. FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DTD. 02.03.2010 OF THE L D. CIT(A)-21, MUMBAI RELATING TO A.Y. 2006-07. FOR THE SAKE OF CONVENIEN CE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER. ITA 3995/MUM/2010 FOR A.Y. 2006-07 (BY REVENUE) 2 ITA 3995 /MUM/2010 & CO 32/M/2011 M/S FOODS AND INN LTD. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN APPLYING RATIO OF THE DECISION OF THE HONBLE SC IN THE CASE OF M/S S.A. BUILDERS AS IN THIS CASE LOAN WERE NOT ADVANCED FOR THE PURPOSE OF THE BUSINESS OF THE ASS ESSEE AND THERE IS NO COMMERCIAL EXPEDIENCY FOR ASSESSEE TO ADVANCE SUCH LOAN. 2.1 AFTER HEARING BOTH THE SIDES WE FIND THE A.O. D ISALLOWED AN AMOUNT OF RS. 8,77,132/- AS PROPORTIONATE INTEREST BEING INTE REST FREE LOAN TO ITS SUBSIDIARY CONCERN M/S DRAVYA FINANCE LIMITED. IN A PPEAL, THE LD. CIT(A) FOLLOWING THE ORDER OF HIS PREDECESSOR FOR THE A.Y. 2004-05 DELETED THE DISALLOWANCE. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 3. AFTER HEARING BOTH THE SIDES WE FIND THE CO-ORDI NATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO. 123/MU M/2009 ORDER DTD. 23.09.2009 FOR A.Y. 2004-05 HAS DECIDED THE ISSUE A ND RESTORED THE SAME TO THE FILE OF THE A.O. BY HOLDING AS UNDER:- WE HAVE CAREFULLY CONSIDERED THE ARGUMENT OF BOTH THE SIDES AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THA T IN THE EARLIER YEARS I.E. ASSESSMENT YEARS 1998-99 TO 2000-01, THE ITAT HAS SET ASIDE THE MATTER BACK TO THE FILE OF ASSESSING OFFI CER FOR RE- ADJUDICATION IN THE LIGHT OF THE DECISION OF HONBL E APEX COURT IN THE CASE OF S.A. BUILDERS LTD. (SUPRA). ADMITTEDLY, TH E MONEY WAS ADVANCED TO THE SISTER CONCERNS IN THE EARLIER YEAR S AND NOT IN THE YEAR UNDER APPEAL. WHEN THE MONEY WAS ADVANCED IN T HE EARLIER YEAR, IT HAS TO BE EXAMINED IN THE EARLIER YEAR, AS TO WHETHER SUCH ADVANCE WAS FOR THE PURPOSE OF BUSINESS OR NOT AND THE FINDING OF EARLIER YEAR IS TO BE APPLIED IN THE YEAR UNDER CON SIDERATION. IN VIEW OF ABOVE, WE DEEM IT PROPER TO SET ASIDE THE O RDERS OF LOWER AUTHORITIES AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER. WE DIRECT HIM TO RE-ADJUDICATE THE SAME A S PER OUR OBSERVATION ABOVE. NEEDLESS TO MENTION THAT THE AS SESSING OFFICER WILL ALLOW ADEQUATE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE WHILE RE-ADJUDICATING THE MATTER. 3 ITA 3995 /MUM/2010 & CO 32/M/2011 M/S FOODS AND INN LTD. 3.1 SINCE THE LD. CIT(A) WHILE DELETING THE DISALLO WANCE HAS FOLLOWED THE ORDER OF HIS PREDECESSOR FOR A.Y. 2004-05 AND SINCE THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF THE A.O. FOR FRES H ADJUDICATION, THEREFORE, WE DEEM IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO ADJUDICATE THE SAME IN THE LIGHT OF THE DIRECTION O F THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2004-05 AND IN ACCORDANCE WITH LA W AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GRO UND RAISED BY THE REVENUE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURP OSES. C.O. NO. 32/MUM/2011 (BY ASSESSEE) 4. THE FIRST ISSUE IN THE C.O. FILED BY THE ASSESSE E RELATES TO THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS . 1 LAC TOWARDS THE EXPENDITURE ON CORPORATE CLUB MEMBERSHIP FEES MADE BY THE A.O. 4.1 AFTER HEARING BOTH THE SIDES WE FIND IDENTICAL ISSUE HAD COME UP BEFORE THE TRIBUNAL IN ASSESSEES OWN CASE DURING A .Y. 2004-05. WE FIND THE TRIBUNAL IN ITA NO. 123/MUM/2009 ORDER DTD. 23.9.20 09 VIDE PARA NO. 7 OF THE SAID ORDER DELETED THE DISALLOWANCE BY HOLDING AS UNDER:- WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MAT ERIAL PLACED BEFORE US. WE FIND THAT THE IDENTICAL ISSUE IS CON SIDERED BY THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 199 9-2000 VIDE ITA NO. 4793/MUM/2002 WHEREIN THE ITAT ALLOWED THE DEDUCTION FOR CLUB MEMBERSHIP FEE AS REVENUE EXPENDITURE. SI NCE THE FACTS ARE IDENTICAL, WE RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE ITAT IN ASSESSEES OWN CASE, UPHOLD THE ORDER OF TH E CIT(A) AND REJECT GROUND NO. 2 OF THE REVENUES APPEAL. 4.2 RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNA L IN ASSESSEES OWN CASE AND IN ABSENCE OF ANY CONTRARY MATERIAL BROUGHT TO OUR NOTICEBY THE LD. D.R. 4 ITA 3995 /MUM/2010 & CO 32/M/2011 M/S FOODS AND INN LTD. WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS IS SUE AND DIRECT THE A.O. TO DELETE THE DISALLOWANCE. THE GROUND RAISED IN THE C .O. BY THE ASSESSEE IS ACCORDINGLY ALLOWED. 5. IN GROUND NO. 2A OF THE C.O., THE ASSESSEE HAS C HALLENGED THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF RS . 12,76,419/- MADE BY THE A.O. U/S 14A OF THE ACT. 5.1 BOTH THE PARTIES FAIRLY AGREED THAT THE ISSUE H AS TO GO BACK TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION IN THE LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ BOY CE MFG. CO. LTD. V. DCIT REPORTED IN 328 ITR 281 (BOM). IN VIEW OF THE ABOV E SUBMISSION MADE BY BOTH THE SIDES, WE RESTORE THE ISSUE BACK TO THE FI LE OF THE A.O. WITH A DIRECTION TO ADJUDICATE THE SAME AFRESH IN THE LIGH T OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF GO DREJ BOYE MFG. CO. LTD. (SUPRA) AND IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDIN GLY. THIS GROUND RAISED BY THE ASSESSEE IN ITS C.O. IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, THE APPEAL FILE BY THE REVENUE AN D THE C.O. FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 31.01.2012 SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER SD/- ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 31.01.2012 5 ITA 3995 /MUM/2010 & CO 32/M/2011 M/S FOODS AND INN LTD. RK COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT M.C. X, MUMBAI 4 CIT (A) 21, MUMBAI 5 DR BENCH F 6 MASTER FILE /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI