Tradeswift Broking Pvt. Ltd., Jaipur V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, Jaipur

CO 35/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8088 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 23-10-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA JHA CIT S
• Assessee Lawyers: RAJIV SOGANI CAS D
• Keywords: Tax effect; Reason to believe; Revenue expenditure; Reassessment proceedings; Capital expenditure
• Section: 143(3); 147

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES A, JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM VK;DJ VIHY LA - @ ITA NO. 986/JP/2018 FU/KZKJ.K O'KZ @ ASSESSMENT YEAR : 2010-11 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR. C UKE VS. M/S TRADESWIFT BROKING PVT. LTD., 4 TH FLOOR, BAID HOUSE, 1, TARA NAGAR, AJMER ROAD, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: AAECA 3760 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT IZR;K{KSI.K @ C.O. NO. 35/JP/2018 (ARISING OUT OF VK;DJ VIHY LA -@ ITA NO. 986/JP/2018) FU/KZKJ.K O'KZ @ ASSESSMENT YEAR: 2010-11 M/S TRADESWIFT BROKING PVT. LTD., 4 TH FLOOR, BAID HOUSE, 1, TARA NAGAR, AJMER ROAD, JAIPUR. C UKE VS. A.C.I.T. CIRCLE-2, JAIPUR. LFKK;H YS[KK LA -@THVKBZVKJ LA-@ PAN/GIR NO.: AAECA 3760 A IZR;K{KSID@ OBJECTOR IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA JHA (ADDL. CIT) FU/KZKFJRH DH VKSJ LS S@ ASSESSEE BY : MS. SHIVANGI SAMDHANI & SHRI RAJIV SOGANI (CAS). LQUOKBZ DH RKJH[K @ DATE OF HEARING: 25/04/2019 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 15/07/2019 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-I JAIPUR DATED 26/06/2018 FOR THE A.Y. 2010-11 IN THE MATTER OF ORDER PASSED U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). FOLLOWING 2 ITA NO. 986/JP/2018 & CO 35/JP/2018 ACIT VS M/S TRADESWIFT BROKING PVT. LTD. GROUNDS HAVE BEEN TAKEN BY THE REVENUE IN ITS APPEAL AND THE ASSESSEE IN ITS CROSS OBJECTION: GROUNDS OF REVENUES APPEAL 1. WHETHER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE REGISTRATION CHARGES PAID TO CDSL/SEBI/DP BY TREATING THE SAME AS REVENUE EXPENDITURE AND NOT CAPITAL EXPENDITURE? THE APPELLANT CRAVES THE RIGHT TO AMEND ALTER OR ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. GROUNDS OF ASSESSEES C.O. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LD. A.O., IN REOPENING THE CASE OF THE ASSESSEE COMPANY, UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 BY NOT ADJUDICATING THE SAID GROUND. THE ACTION OF THE LD. CIT(A) IS ILLEGAL, UNJUSTIFIED AND ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING SUCH REASSESSMENT PROCEEDINGS. 2. THE ASSEESSEE COMPANY CRAVES ITS RIGHTS TO ADD, AMEND OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE COMPANY IS A STOCK BROKER AND IS ENGAGED IN THE BUSINESS OF SHARE TRADING AND STOCK BROKING AS A MEMBER OF NSE AND IS ALSO ENGAGED IN CURRENCY DERIVATIVES BROKER AS MEMBER OF MCX-SX. THE ASSESSEE COMPANY DURING THE YEAR UNDER CONSIDERATION DEBITED RS. 1,05,000 AS REGISTRATION CHARGES CDSL/SEBI/DP TOWARDS REGISTRATION AS A DEPOSITORY PARTICIPANT FOR PROVIDING DEMAT FACILITIES TO CLIENTS. THE AO, CONSIDERED THE REGISTRATION CHARGES TO BE IN THE NATURE OF CAPITAL EXPENDITURE, ON THE FOOTING THAT THEY ARE ONE-TIME CHARGES TO ESTABLISH 3 ITA NO. 986/JP/2018 & CO 35/JP/2018 ACIT VS M/S TRADESWIFT BROKING PVT. LTD. THE NEW BUSINESS OR FOR SMOOTH AND EFFICIENT RUNNING OF THE EXISTING BUSINESS. 4. BY THE IMPUGNED ORDER, THE LD. CIT(A) AFTER APPLYING THE JUDICIAL PRONOUNCEMENTS LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF NESET HOLDINGS (P) LTD. VS CIT (2006) 151 TAXMAN 309, HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF CIT VS. INFOSYS TECHNOLOGIES LTD. (2014) 43 TAXMANN.COM 251 (KAR), HONBLE SUPREME COURT DECISION IN THE CASE OF M/S ASSAM BENGAL CEMENT CO. LTD. VS. CIT (1955) 27 ITR 34 AND EMPIRE JUTE CO. LTD. VS CIT (1980) 124 ITR 1 HELD THAT THE EXPENDITURE ON REGISTRATION WAS REVENUE IN NATURE. AGAINST THIS FINDING OF THE LD. CIT(A), THE REVENUE IS IN FURTHER APPEAL BEFORE THE ITAT. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND THAT THE ASSESSEE HAS PAID A SUM OF RS. 1,05,000/- TOWARDS REGISTRATION CHARGES TO CDSL/SEBI/DP AND CLAIMED THE SAME AS REVENUE EXPENDITURE, WHICH WAS DISALLOWED BY THE AO BY OBSERVING THAT THIS IS ONE TIME PAYMENT MADE BY THE APPELLANT TO ESTABLISH NEW BUSINESS OR SMOOTHLY RUNNING AND BETTER EFFICIENCY OF EXISTING BUSINESS AND WOULD BE UTILIZED TILL THE RUNNING OF THE BUSINESS. THE REGISTRATION CHARGES PAID BY THE ASSESSEE WAS NOT IN THE NATURE OF CAPITAL EXPENDITURE AS NEITHER ANY ASSET HAS BEEN CREATED NOR ANY BENEFIT OF ENDURING NATURE WAS OBTAINED BY THE ASSESSEE. ACCORDINGLY, WE 4 ITA NO. 986/JP/2018 & CO 35/JP/2018 ACIT VS M/S TRADESWIFT BROKING PVT. LTD. DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) FOR TREATING THE SAME AS REVENUE IN NATURE. 6. MOREOVER, THE TAX EFFECT IN THE APPEAL FILED BY THE REVENUE IS LESS THAN RS. 20.00 LACS, THEREFORE, IN VIEW OF CBDT CIRCULAR NO. 3 OF 2018 DATED 11.07.2018, THE APPEAL OF THE DEPARTMENT IS NOT MAINTAINABLE AND DESERVES TO BE DISMISSED. 7. IN THE CROSS OBJECTION, THE ASSESSEE IS AGGRIEVED FOR REOPENING OF THE ASSESSMENT. 8. FROM THE RECORD WE FOUND THAT AFTER RECORDING SUFFICIENT REASON, THE A.O. HAS REOPENED THE ASSESSMENT. BEFORE PROCEEDINGS, THE A.O. HAS ALSO DISPOSED OFF THE OBJECTIONS RAISED BY THE ASSESSEE. AS PER THE REASONS RECORDED, WE FOUND THAT THE A.O. HAS SUFFICIENT REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME TO THE TUNE OF REGISTRATION CHARGES CLAIMED AS EXPENDITURE. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE REOPENING OF THE ASSESSEE. 9. IN THE RESULT, BOTH, THE APPEAL OF THE REVENUE AS WELL AS C.O. OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2019. SD/- SD/- FOT; IKY JKO JES'K LH 'KEKZ (VIJAY PAL RAO) (RAMESH C SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKA D@ DATED:- 15 TH JULY, 2019 5 ITA NO. 986/JP/2018 & CO 35/JP/2018 ACIT VS M/S TRADESWIFT BROKING PVT. LTD. *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-2, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S TRADESWIFT BROKING PVT. LTD., JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 986/JP/2018 & CO 35/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR