Team HR Services Private Limited, CHENNAI V. ACIT Corporate Circle 3(1), CHENNAI

ITA 1088/CHNY/2019

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 6237 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 14-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ASHIK SHA
• Keywords: Fair market value; Set aside

Judgement Text

आयकर अपीलीय अिधकरण, ‘बी’ यायपीठ,चे ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI ीमहावीर सह, उपा य एवं ी मनोज कुमार अ वाल, लेखा सद"यके सम BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A Nos.1087 & 1088/CHNY/2019 िनधा%रण वष%/ Assessment Years: 2013-2014 & 2014-2015 M/s. Team HR Services Private Limited, Pycrofts Garden Road, Nungambakkam, Chennai – 600 006. PAN : AACCT 2148K Vs. The Assistant Commissioner of Income Tax, Corporate Circle – 3(1), Aayakar Bhavan, Wanaparthy Block, 121, Nungambakkam High Road, Chennai – 600 034. (अपीलाथ /Appellant) ( यथ /Respondent) अपीलाथ क ओरसे अपीलाथ क ओरसेअपीलाथ क ओरसे अपीलाथ क ओरसे /Appellant by : Mr. Ashik Sha, Chartered Accountant यथ क ओरसे यथ क ओरसे यथ क ओरसे यथ क ओरसे /Respondent by : Mr. R. Bhoopathi, JCIT सुनवाई क तारीख/Date of Hearing : 03.08.2022 घोषणा क तारीख/Date of Pronouncement : 17.08.2022 आदेश आदेशआदेश आदेश /O R D E R PER MAHAVIR SINGH, VP: These two appeals by the Assessee are arising out of different orders of the Commissioner of Income Tax (Appeals)-7, Chennai in Appeal Nos.101 & 116(T)/CIT(A)- 7/2017-18; vide orders of even date 31.01.2019. Assessments were framed by the Assistant Commissioner of Income Tax, Corporate Circle – 3(1), Chennai for the Assessment Years 2013 – 2014 and 2014 – 2015 :: 2 :: I.T.A Nos.1087 & 1088/CHNY/2019 u/s.143(3) of the Income Tax Act, 1961 (hereinafter “the Act) vide orders dated 23.03.2016 and 30.12.21016 respectively. 2. The first common issue in these two appeals of the Assessee is as regards to the order of the Commissioner of Income Tax (Appeals) confirming the action of the Assessing Officer in making the disallowance of the employees contribution of the labour welfare fund scheme amounting to Rs.70,945/- for the Assessment Year 2013 – 2014 and Rs.4,63,247/- for the Assessment Year 2014 – 2015. 3. At the outset, the learned Counsel for the Assessee stated that the payments are made within the due date of filing of the return of income u/s.139(1) of the Act, i.e. before the due date of filing of the return of income in the respective assessment years but when a query was put to him, as to whether the dates are available, he could not answer but he stated that for the purpose of verification of :: 3 :: I.T.A Nos.1087 & 1088/CHNY/2019 the dates, the matter be remanded back to the file of the Assessing Officer. When these facts were put to the learned Senior Departmental Representative, he relied only on the assessment order and that of the order of the Commissioner of Income Tax (Appeals). 4. After hearing the rival contentions and on going through the facts and circumstances of the case, we noted that the issue of the payment of Employees State Insurance [ESI] and Provident Fund [PF] before the due date of filing of the return of income u/s.139(1) of the Act is covered in favour of the Assessee and against the Revenue by the decision of the Co-ordinate Bench of this Tribunal in the case of M/s. Adyar Ananda Bhavan Sweets India Private Limited, Chennai Vs. The Assistant Commissioner of Income Tax, Chennai in I.T.A. Nos.401 & 402/Chny/2021, order dated 08.12.2021. 5. Now, the only issue that remains is the date on which the payment for ESI and PF are made by the :: 4 :: I.T.A Nos.1087 & 1088/CHNY/2019 Assessee which needs to be verified. The Assessing Officer is directed to verify the date, and if the payments were made within the due date of filing of the return of income of the Assessee u/s.139(1) of the Act, the Assessing Officer will allow the claim accordingly. This common issue in the Assessee’s appeal, in both the years is allowed accordingly. 6. The next common issue in these two appeals of the Assessee is as regards to the order of the Commissioner of Income Tax (Appeals) confirming the action of the Assessing Officer in making the disallowance u/s.40A(2)(b) of the Act, being expenditure claimed in respect for which the payment that has been made is excessive or unreasonable, having regard to the fair market value of the goods, services and facilities for which payments were made. 7. The brief facts of the case are that the Assessee has claimed to have made payment and claimed deduction on the payments amounting to Rs.3,13,70,945/- for the :: 5 :: I.T.A Nos.1087 & 1088/CHNY/2019 Assessment Year 2013 – 2014 and for an amount of Rs.2,84,91,410/- for the Assessment Year 2014 – 2015, being payments made towards the support services to its group company M/s. Randstad India Private Limited [‘Randstad India’]. According to the Assessing Officer, in both the years, the Assessee has not filed any details in regard to the claim of the support services charges paid to its subsidiary company and in the absence of the same, in both the years; the Assessing Officer had disallowed the claim of the Assessee. The Commissioner of Income Tax (Appeals) without speaking anything on the merits had also disallowed the claim. Aggrieved, the Assessee is now before the Tribunal. 8. We have heard the rival contentions and had gone through the facts and circumstances of the case. Before us, the learned Counsel for the Assessee has submitted that the Assessee has made payments towards support services to its group company, M/s. Randstad India Private Limited and the Assessing Officer had disallowed and the CIT(A) :: 6 :: I.T.A Nos.1087 & 1088/CHNY/2019 also had confirmed the same in the absence of any details. The plea of the learned Counsel for the Assessee was that the disallowance u/s.40A(2)(b) of the Act can be made by the Assessing Officer only when he is satisfied that the expenditure in respect of which the payment has been made is excessive or unreasonable and having regard to the fair market value of the goods, services and facilities for which such payments were made. He stated that the Assessing Officer has no where proved that the payment made is excessive or unreasonable but when confronted to the learned Counsel for the Assessee, he stated that the details are not filed and without the details, how will the Assessing Officer examine that the payments made are excessive or unreasonable. When a query was put to the learned Senior Departmental Representative, he only requested that the matter may be restored back to the file of the Assessing Officer for allowing one more opportunity to the Assessee to file the details. Otherwise, he contested :: 7 :: I.T.A Nos.1087 & 1088/CHNY/2019 on the issue and relied on the assessment order and the order of the Commissioner of Income Tax (Appeals). 9. After hearing to the rival contentions and on going through the facts and circumstances of the case, we noted that none of the authorities below have examined the details and now the Assessee before us has filed some of the details which needs to be examined. Hence, we remand this issue back to the file of the Assessing Officer for fresh adjudication, in both the years. Accordingly, this addition made by the Assessing Officer and confirmed by the Commissioner of Income Tax (Appeals) is set aside and the matter remanded back to the file of the Assessing Officer for fresh adjudication. This issue in both the appeals of the Assessee is allowed for statistical purposes. 10. The next issue in I.T.A. No.1087/Chny/2019 for the Assessment Year 2013 – 2014 is raised by way of an additional ground and the relevant additional ground reads as under: :: 8 :: I.T.A Nos.1087 & 1088/CHNY/2019 “On the facts and circumstances of the case and law, the learned Assessing Officer erred in disallowing the provision for gratuity, failing to appreciate that the same has been already disallowed by the Appellant in the return of income filed.” The learned Counsel for the Assessee stated that this ground was very much agitated before the Commissioner of Income Tax (Appeals) and the CIT(A) had also set aside the issue back to the file of the Assessing Officer. Hence, he requested that the above ground of provision for gratuity amounting to Rs.1,03,15,036/- be admitted for adjudication. 11. We hereby admit this ground on the provision for gratuity amounting to Rs.1,03,15,036/- and adjudicate upon. 12. The learned Counsel for the Assessee stated that during the Assessment Year 2013 – 2014, the Assessee had created a provision for gratuity amounting to Rs.1,03,15,036/- and the same was added back in the return of income that was filed on 30.09.2013. However, :: 9 :: I.T.A Nos.1087 & 1088/CHNY/2019 the Assessing Officer had disallowed the same u/s.40A(7) of the Act resulting in double addition. Against the said disallowance, the Assessee had appealed before the CIT(A) who in turn vide order dated 31.01.2019 directed the Assessing Officer to verify and delete the disallowance, if the same is suo-motto disallowed in the return of income. Accordingly, while filing the appeal before ITAT, the Assessee did not take this specific ground. However, the Assessing Officer in his order dated 30.12.2019, giving effect to the order of the CIT(A), upheld the disallowance on the basis that the Assessee had failed to provide details without appreciating that the details were filed vide letter dated 02.04.2019, pointing out the fact that the amount has already been disallowed in the computation of the total income and thus the disallowance would tantamount to double disallowance. 13. The learned Counsel for the Assessee now drew our attention to the accounts of the Assessee filed in the Assessee’s paper-book at Page Nos.1 to 42 and particularly :: 10 :: I.T.A Nos.1087 & 1088/CHNY/2019 at Page No.39 [Schedule-1]; wherein the computation of income from the business is enclosed and the gratuity amount is clearly added back in the income of the Assessee. When a query was put to the learned Senior Departmental Representative, he could not confront on the above factual situation. 14. After going through the evidences filed by the Assessee, this gratuity amounting to Rs.1,03,15,036/- is already added back to the returned income of the Assessee and now during the assessment proceedings, added again will it tantamount to double addition. Hence, we delete the addition and allow this issue in this appeal [I.T.A. No.1087/Chny/2019] of the Assessee. One more point that the Assessing Officer while giving effect to the order of the Commissioner of Income Tax (Appeals) has added this amount again, and we thereby direct him to delete the addition through this order of ours. Thus, this issue in the Assessee’s appeal is allowed. :: 11 :: I.T.A Nos.1087 & 1088/CHNY/2019 15. The next issue in I.T.A. No.1088/Chny/2019 for the Assessment Year 2014 – 2015 is as regards to the order of the Commissioner of Income Tax (Appeals) confirming the action of the Assessing Officer in denying the set-off brought forward losses against the income from business or profession which is consequential in nature. 16. We noted that the Assessee has given details on the brought forward losses for the Assessment Years 2009 – 2010 and 2010 – 2011, as under: Year Brought forward business losses [INR] A.Y. – 2009 - 2010 21,81,573 A.Y. - 2010 - 2011 1,61,43,707 Total 1,83,25,280 The Commissioner of Income Tax (Appeals) has already directed the Assessing Officer to adjust the brought forward losses and as a consequential item, we also confirm the direction and direct the Assessing Officer to allow the above brought forward loss adjustment, consequent to giving effect to the order for the Assessment Years 2012 – 2013 :: 12 :: I.T.A Nos.1087 & 1088/CHNY/2019 and 2013 – 2014 and we direct the Assessing Officer accordingly. Hence, this issue in the Assessee’s appeal in I.T.A. No.1088/Chny/2019 is remanded back to the file of the Assessing Officer and is allowed for statistical purposes. 17. In the result, the appeals of the Assessee in I.T.A Nos.1087 & 1088/CHNY/2019 are partly allowed for statistical purposes. Order pronounced in the court on 17 th August, 2022 at Chennai. Sd/- Sd/- (मनोज कुमार अ वाल) (MANOJ KUMAR AGGARWAL) लेखा सद य/ACCOUNTANT MEMBER (महावीर िसंह ) (MAHAVIR SINGH) उपा य /VICE PRESIDENT चे ई/Chennai, दनांक/Dated, the 17 th August, 2022 IA, Sr. PS आदेशकी ितिलिपअ ेिषत/Copy to: 1. अपीलाथ /Appellant 2. थ /Respondent 3. आयकरआयु (अपील)/CIT(A) 4. आयकरआयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड"फाईल/GF