M/s Kolkata West International City Pvt. Ltd., Howrah V. DCIT, CIR-11, KOLKATA, Kolkata

ITA 1095/KOL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3319 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 20-05-2014
• Court: TRIBUNAL
• Department Lawyers: SANDEEP CHAUBE
• Assessee Lawyers: AMIT KUMAR ACA
• Keywords: Gift; Assessment record; Revenue expenditure
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH D, KO LKATA [BEFORE HONBLE SHRI N.V.VASUDEVAN, JM & SHRI WAS EEM AHMED, AM] ITA NO.1095/KOL/2014 ASSESSMENT YEAR : 2009-10 M /S. KOLKATA WEST INTERNATIONAL CITY. -VERSUS- D.C.I .T., CIRCLE-11, PVT. LTD., KOLKATA KOLKATA (PAN:AACCK 4887 A) (APPELLANT ) (RESPONDENT) FOR THE APPELLANT : SHRI AMIT KUMAR, ACA FOR THE RESPONDENT : SHRI SANDEEP CHAUBE, CIT(DR) DATE OF HEARING : 17.12.2015. DATE OF PRONOUNCEMENT : 15.1.2016. ORDER PER SHRI N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE DIREC TED AGAINST THE ORDER DATED 13.03.2014 OF CIT-IV, KOLKATA PASSED U/S 263 OF THE ACT RELATING TO A.Y.2009-10. 2. THE ASSESSEE IS A COMPANY. IT IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT. FOR A.Y.2009-10 THE ASSESSEE FILED RET URN OF INCOME DECLARING TOTAL INCOME OF RS.1,15,94,328/-. IN THE COURSE OF ASSESS MENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE RECOGNIZED ITS REVENUE FROM ITS I NTEGRATED TOWNSHIP PROJECT AS PER AS-9 ISSUED BY THE CHARTERED ACCOUNTANTS OF INDIA ( ICAI). HOWEVER, THE VARIOUS EXPENSES IN THE NATURE OF BROKERAGE AND COMMISSION, TRAVELLING, ELECTRICITY CHARGES, PROPERTY DEVELOPMENT EXPENSES, PRINTING & STATIONER Y, GIFTS, COMMUNICATION EXPENSES, LEGAL & PROFESSIONAL CHARGES, SERVICE & MAINTENANCE CHARGES, SECURITY CHARGES, MYSAP IMPLEMENTATION CHARGES, CONSULTANCY CHARGES, MISCELLANEOUS EXPENSES ETC WHICH ARE DIRECTLY CONNECTED OR ARE INCIDENTAL TO THE WORK OF THE PROJECT HAVE BEEN DEBITED TO THE PROFIT AND LOSS ACCOUNT AND CLAIMED AS REVENUE EXPENDITURE. THE AO ACCORDINGLY WAS OF THE VIEW THAT THE ASSESSEE SHOUL D RECOGNIZE THE EXPENDITURE ALSO IN ITA NO.1095/KOL/2014 M/S. KOLKATA WEST INTERNATIONAL C ITY PVT. LTD.. A.YR.2009-10 2 THE SAME MANNER IN WHICH THE INCOME IS RECOGNIZED. ACCORDINGLY HE MADE ADHOC DISALLOWANCE OF EXPENSES UNDER THE VARIOUS HEADS RE FERRED TO EARLIER. IT CAN BE SEEN FROM THE LIST OF EXPENDITURES SET OUT EARLIER THAT ONE OF THE ITEMS WAS SECURITY CHARGES. IN THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT THERE IS NO SEPARATE DISCUSSION NOR ANY DISALLOWANCE OF SECURITY CHARGES MADE BY THE AO. AO PASSED AN ORDER OF ASSESSMENT ON 19.12.2009. 3. C.I.T. IN EXERCISE OF HIS POWERS U/S 263 OF THE ACT WAS OF THE VIEW THAT THE AFORESAID ORDER OF THE AO WAS ERRONEOUS AND PREJUDI CIAL TO THE INTEREST OF THE REVENUE FOR THE FOLLOWING REASONS :- ON EXAMINATION OF ASSESSMENT RECORDS IT WAS NOTICED THAT IN THE EARLIER YEAR I.E. A. Y - 2007-08 THE ASSESSEE COMPANY HAD CLAIMED VARIOUS EX PENSES OUT OF WHICH THE ASSESSING OFFICER DISALLOWED 75% FOR PRECEDING YEAR IN 2007-0 8 AND ALLOWED ONLY 25% TO THE ASSESSEE. IN THE CURRENT YEAR THE ASSESSEE CLAIMED SIMILAR EXPENSES AMOUNTING TO RS. 73,41,000/-, BUT IN THE CURRENT YEAR THE A.O DID NO T FOLLOW THE SAME DISALLOWANCE. SINCE THE NATURE OF THE BUSINESS WAS REMAINED THE SAME DU RING THE PREVIOUS YEAR, THEREFORE, THE SAME METHODOLOGY COULD HAVE BEEN ADOPTED FOR TH E AFORESAID EXPENDITURE. 4. IN REPLY TO THE SHOW CAUSE NOTICE U/S.263 OF TH E ACT, THE ASSESSEE SUBMITTED THAT THE ADDITION MADE BY THE A.O. IN EARLIER YEAR WAS ALREA DY DELETED BY ID. CIT(A). 5. THE CIT HOWEVER HELD THAT THE ASSESSMENT HAS TO BE SET ASIDE TO THE ASESSING OFFICER WITH THE DIRECTION TO HAVE A FRESH LOOK INTO THE MATTER. THE CIT DIRECTED THAT THE ASSESSING OFFICER MUST ENSURE FOR THAT ANY DISALLOWANCE WHICH IS REQU IRED TO BE MADE SHOULD BE BASED ON MERIT AND THE DISALLOWANCE SHOULD NOT BE MADE ON AD-HOC B ASIS. 6. AGGRIEVED BY THE ORDER OF C.I.T. THE ASSESSEE H AS PREFERRED THE PRESENT APPEAL FOR THE TRIBUNAL. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT FOR A.Y.2007-08 SIMILAR DISALLOWANCE MADE BY THE AO WAS DELETED BY CIT(A). THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE HONBLE ITAT AGAINST THE AFORESAID ORDER OF THE C.I.T.(A) FOR A.Y.2007-08. BUT NEVERTHELESS IT CANN OT BE SAID THAT THE ORDER PASSED BY AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LEARNED DR RELIED ON THE ORDER OF C.I.T. ITA NO.1095/KOL/2014 M/S. KOLKATA WEST INTERNATIONAL C ITY PVT. LTD.. A.YR.2009-10 3 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IT IS SEEN THAT THE ORDER OF AO FOR A.Y.2007-08 WAS PASSED ON 27.12.2010 . AGAINST THE SAID ORDER CIT PASSED ORDER ON 22.04.2013. ASSESSMENT ORDER IN THE PRESENT ASSESSM ENT YEAR WAS PASSED BY THE AO ON 19.12.2011. THEREFORE, AS ON THE DATE ON WHICH T HE AO PASSED THE ORDER FOR A.Y.2009-10 SIMILAR ADDITION MADE BY AO FOR A.Y.200 7-08 EXISTED. IT IS ALSO SEEN FROM A PERUSAL OF THE ORDER OF AO U/S 143(3) OF THE ACT THAT THE AO HAD INTENDED TO DISALLOW EXPENDITURE UNDER THE HEAD SECURITY CHARG ES BUT HAD INADVERTENTLY NOT MADE ADHOC DISALLOWANCE AS WAS DONE IN RESPECT OF O THER EXPENSES. WE, THEREFORE, ARE OF THE VIEW THAT THE ORDER OF AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE AND THEREFORE JURISDICTION U/S 263 OF THE A CT WAS RIGHTLY INVOKED BY C.I.T. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 15.1.2016. SD/- SD/- [WASEEM AHMED] [N.V.VASUDEVAN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 15.1.2016. R.G.(.P.S.) COPY OF THE ORDER FORWARDED TO: 1. M/S. KOLKATA WEST INTERNATIONAL CITY PVT. LTD, V ICHITRA, KWIC, SALAP JUNCTION, AMTA, HOWRAH-711403. 2 THE D.C.I.T., CIRCLE-11, KOLKATA. 3. THE CIT-IV, KOLKATA, 5. DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES