M/s. Bhima Riddhi Infotainment Pvt.Ltd, Kolhapur V. Assistant Commissioner of Income tax,

ITA 115/PUN/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0866 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 16-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HOSHANG B IRANI
• Keywords: Set aside
• Section: 73; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 115 /PUN/201 7 / ASSESSMENT YEAR : 20 13 - 14 M/S. BHIMA RIDDHI INFOTAINMENT PVT. LTD., 446, KAILASH TOWER, 3 RD FLOOR, STATION ROAD, KOLHAPUR - 416001 PAN : AADCB3933D ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, C IRCLE 2, KOLHAPUR / RESPONDENT ASSESSEE BY : S HRI NIKHIL PATHAK REVENUE BY : SHRI HOSHANG B. IRANI / DATE OF HEARING : 09 - 12 - 2019 / DATE OF PRONOUNCEMENT : 19 - 12 - 2019 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 24 - 10 - 2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 2, KOLHAPUR [CIT(A)] FOR ASSESSMENT YEAR 20 13 - 14. 2 ITA NO.115/PUN/2017, A.Y. 2013 - 14 2. THE ASSESSEE RAISED THREE GROUNDS OF APPEAL AMONGST WHICH THE ONLY ISSUE EMANATES FOR OUR CONSIDERATION IS AS TO WHETHER THE CIT(A) JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE AO AT 15% ON ACCOUNT OF OPERATION AND DISTRIBUTION CHARGES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. HEARD BOTH PARTIES AND PERUSED THE MATERIALS AVAILAB LE ON RECORD. ACCORDING TO AO THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY CARRIES ON THE BUSINESS OF PROVIDING TV CABLE SERVICES, INTERNET AND BROADBAND SERVICES THROUGH CABLE AND CONDUCTS ITS BUSINESS UNDER THE NAME AND STYLE OF M/S. BHIMA RIDDHI INF OTAINMENT PVT. LTD. THE AO ON EXAMINATION OF DETAILS FOUND A PAYMENT OF RS.1,20,00,000/ - MADE TO M/S. BHIMA RIDDHI CABLE NETWORK FOR OPERATIONS AND DISTRIBUTION CHARGES IS EXCESSIVE , TAKING INTO CONSIDERATION THE ACTIVITY OF OPERATIONS AND DISTRIBUTION WORK DONE. FURTHER, ACCORDING TO HIM THE ASSESSEE DID NOT OFFER ANY EXPLANATION IN THE ASSESSMENT PROCEEDINGS AND DISALLOWED RS.18,00,000/ - (15% OF RS.1,20, 00,000/ - ) AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE CIT(A) CONFIRMED THE ORDER O F AO TAKING INTO CONSIDERATION THE SIMILAR DISALLOWANCE WHICH WAS ACCEPTED BY THE ASSESSEE INVOLVING THE IMMEDIATE PRECEDING YEARS. 4. SHRI NIKHIL PATHAK, THE LD. AR SUBMITTED THAT M/S. BHIMA RIDDHI CABLE NETWORK IS A SISTER CONCERN OF ASSESSEE AND ACCOUNTED THE SAID RECEIPT OF RS.1,20,00,000/ - IN ITS ACCOUNT S AND OFFER ED TO TAX. HE ARGUED WHEN THE SAID SUM WAS ACCOUNTED AND OFFERED TO TAX BY THE SISTER CONCERN OF ASSESSEE THERE CANNOT BE ADDITION IN THE HANDS OF ASSESSEE AND REFERRED TO PROFIT AND LOSS ACCOUNT AT PAGE NO. 55 OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAS SHOWN THE PAYMENT MADE TO ITS SISTER CONCERN UNDER 3 ITA NO.115/PUN/2017, A.Y. 2013 - 14 THE HEAD OTHER EXPENSES AND THE ASSESSEE RIGHTLY INCURRED SAID EXPENSES FOR ITS BUSINESS PURPOSES AND REFERRED TO THE DET AILS OF OTHER EXPENSE S AT PAGE NO. 68 OF THE PAPER BOOK. HE SUBMITS THAT THE ASSESSEE PAID SAID AMOUNT UNDER AGREEMENT FOR ITS CONTRACT SERVICES IN DISTRIBUTION AND OPERATION CHARGES. ADMITTEDLY, WE FIND THAT THERE WAS NO DISPUTE ACCEPTING THE DISALLOWAN CE MADE IN IMMEDIATE PRECEDING YEARS 2011 - 12 AND 2012 - 13 @ 2.5% AND 15%, RESPECTIVELY. THE ONLY CONTENTION OF LD. AR IS THAT THERE CANNOT BE ADDITION IN THE HANDS OF ASSESSEE BY REFERRING TO PAGE NO. 73 OF THE PAPER BOOK THAT M/S. BHIMA RIDDHI CABLE NETWO RK WHICH IS A SISTER CONCERN OF THE ASSESSEE IS ACCOUNTED THE SAID RECEIPT AND OFFERED TO TAX. HAVING CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ORDER OF CIT(A) THERE WAS NO EXPLANATION OFFERED BY THE ASSESSEE BEFORE THE AO AND CIT(A) REG ARDING THE ABOVE SAID PAYMENT BY EVIDENCES. BEFORE US, NO EVIDENCE WHATSOEVER PRODUCED EXCEPT TO SAY THAT WHEN THE RECIPIENT ACCOUNTED THE RECEIPT FROM THE ASSESSEE IN ITS ACCOUNT AND OFFER ED TO TAX, IN OUR OPINION , IS NOT ACCEPTABLE BUT HOWEVER WE RESTRI CT THE DISALLOWANCE @ 10% OF RS.1,20,00,000/ - WHICH IS REASONABLE AND THEREFORE, THE ORDER OF CIT(A) IS SET ASIDE. THUS, THE AO IS DIRECTED TO GIVE EFFECT AS INDICATED ABOVE. THE GROUND NOS. 1 TO 3 RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 5. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DECEMBER, 2019. SD/ - SD/ - ( R.S. SYAL ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 19 TH DECEMBER, 2019 RK 4 ITA NO.115/PUN/2017, A.Y. 2013 - 14 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, KOLHAPUR 4. THE PR. COMMISSIONER OF INCOME TAX - 2, KOLHAPUR 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE