M/s Imperial Health Research Centre Ltd , Bangalore V. Assistant Commissioner of Income Tax Circle-2(3)(1), Bangalore

CO 92/BANG/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7507 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 01-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-09-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 30-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S V RAVISHANKAR
• Assessee Lawyers: PRIYADARSHI MISHRA
• Keywords: Opportunity of being heard; Tax effect; Revenue expenditure; Set aside

Judgement Text

ITA NO.979/BANG/2017 & CO NO.92/BANG/2017 N.S, IMPERIAL HEALTH RESEARCH CENTRE LTD., BENGALUR U IN THE INCOME TAX APPELLATE TRIBUNAL BBENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENTAND SHRI B.R. BASKARAN , ACCOUTANT MEMBER ITA NO.979/BANG/2017 ASSESSMENT YEAR: 2010-11 ACIT, CIRCLE-2(3)(1) BENGALURU PAN NO :AABCI5313C VS. M/S. IMPERIAL HEALTH RESEARCH CENTRE LTD. NO.154/11, OPP. IMB BANNERGHATTA ROAD BILEKAHALLI BANGALORE-560 076 APPELLANT RESPONDENT C.O. NO.92/BANG/2017 (ARISING OUT OF ITA NO.979/BANG/2017) ASSESSMENT YEAR: 2010-11 M/S. IMPERIAL HEALTH RESEARCH CENTRE LTD. NO.154/11, OPP. IMB BANNERGHATTA ROAD BILEKAHALLI BANGALORE-560 076 VS. ACIT, CIRCLE-2(3)(1) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI PRIYADARSHI MISHRA, D.R. RESPONDENT BY : SHRI S.V. RAVI SHANKAR, A.R. DATE OF HEARING : 01.09.2020 DATE OF PRONOUNCEMENT : 01 . 0 9 .20 20 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE AND THE CROSS OBJE CTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATE D 24.01.2017 PASSED BY LD. CIT(A)-2, BENGALURU AND THEY RELATE T O THE ASSESSMENT YEAR 2010-11. ITA NO.979/BANG/2017 & CO NO.92/BANG/2017 N.S, IMPERIAL HEALTH RESEARCH CENTRE LTD., BENGALUR U PAGE 2 OF 4 2. AT THE TIME OF HEARING, THE LD. D.R. FAIRLY SUBM ITTED THAT THE TAX EFFECT INVOLVED IN THE APPEAL FILED BY THE REVE NUE ON THE DISPUTED ISSUES IS LESS THAN RS.50 LAKHS. ACCORDINGLY, HE S UBMITTED THAT THIS APPEAL COULD NOT BE PURSUED BY THE REVENUE AS PER T HE CIRCULAR NO.17/2019 DATED 08.08.2019 ISSUED BY THE CBDT. 3. IN VIEW OF THE SUBMISSION MADE BY THE LD. D.R., WE DISMISS THE APPEAL OF THE REVENUE IN LIMINI. 4. WE SHALL NOW TAKE UP THE CROSS OBJECTION FILED B Y THE ASSESSEE. THE ONLY ISSUE URGED IS WITH REGARD TO T HE DISALLOWANCE OF RS.76,33,989/-, BEING THE CONSULTATION FEES PAID TO A MANAGEMENT CONSULTING FIRM NAMED M/S. MCKINSEY & COMPANY. 5. THE LD. A.R. SUBMITTED THAT THE ASSESSEE IS RUNN ING A SUPER SPECIALTY HOSPITAL AND IS SUBSIDIARY OF M/S. APOLLO HOSPITAL ENTERPRISES LTD. (AHEL). HE SUBMITTED THAT THE HOL DING COMPANY HAS ENGAGED M/S. MCKINSEY & COMPANY, A GLOBAL MANAG EMENT CONSULTING FIRM SEEKING ADVICE ON IMPROVEMENT OF OP ERATIONAL EFFICIENCY, CLINICAL EXCELLENCE AND OTHER MANAGEMEN T RELATED AREA. THE HOLDING COMPANY HAS SPENT A SUM OF RS.7, 61,07, 000/- IN THIS REGARD FOR ENTIRE GROUP AND HAS ALLOCATED A SUM OF RS.76,33,989/- TO THE ASSESSEE AS ITS SHARE. THE ASSESSEE CLAIMED THE SAME AS REVENUE EXPENDITURE. THE LD. A.R. SUBMITTED THAT T HE ABOVE SAID AMOUNT WAS PAID TO M/S. MCKINSEY & COMPANY IN ORDER TO IMPROVE MANAGERIAL, ADMINISTRATIVE AND OPERATIONAL EFFICIEN CY OF THE ASSESSEE COMPANY AND HENCE IT CONSTITUTES REVENUE E XPENDITURE. HOWEVER, THE A.O. HAS TREATED THE SUM AS CAPITAL IN NATURE AND ALSO HELD THAT THE SAID EXPENDITURE IS RELATED TO THE HO LDING COMPANY ITA NO.979/BANG/2017 & CO NO.92/BANG/2017 N.S, IMPERIAL HEALTH RESEARCH CENTRE LTD., BENGALUR U PAGE 3 OF 4 AND NOT TO THE ASSESSEE COMPANY. ACCORDINGLY, THE A.O. HAS DISALLOWED THE SAME. 6. THE LD. A.R. SUBMITTED THAT THE LD. CIT(A) HAS, HOWEVER, CONFIRMED THE ADDITION BY CONSIDERING DIFFERENT FAC TS, I.E.,THE FACTS RELATING TO ANOTHER PAYMENT BY WAY OF OPERATIONAL M ANAGEMENT FEES MADE BY THE ASSESSEE TO ITS HOLDING COMPANY. FURTH ER, THE ORDER OF LD. CIT(A) IS ALSO CRYPTIC IN NATURE. 7. WE HEARD LD. D.R. ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICE THAT THE LD. CIT(A) HAS NOT APPRECIATED THE FACTS RELATING TO THIS ISSUE IN A PROPER WAY AND HENCE, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF LD. CIT(A). ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LD. C IT(A) ON THIS ISSUE AND RESTORE THE SAME TO HIS FILE FOR ADJUDICA TING IT AFRESH, AFTER AFFORDING AN ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS TREATE D AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST SEPTEMBER, 2020. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 1 ST SEPT, 2020. VG/SPS ITA NO.979/BANG/2017 & CO NO.92/BANG/2017 N.S, IMPERIAL HEALTH RESEARCH CENTRE LTD., BENGALUR U PAGE 4 OF 4 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.