Hiq Power Associates Private Limited, CHENNAI V. DCIT Corporate Circle 2(2), CHENNAI

ITA 1160/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4126 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2015-2016
• Appeal Filed On: 22-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: C.S. SEETHARAMAN
• Section: 73

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, C HENNAI . . . , , ! ' BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 1160/CHNY/2019 / ASSESSMENT YEAR : 2015-16 M/S. HIQ POWER ASSOCIATES PRIVATE LTD., NO. 7/442, PARSN MANERE B WING, ANNA SALAI, MOUNT ROAD, CHENNAI 600 006. [PAN: AABCH 3037J] VS. DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 2(2), CHENNAI 600 034. ( / APPELLANT) ( #$%& /RESPONDENT ) %& ' ( / APPELLANT BY : SHRI. C.S. SEETHARAMAN, CA #$%& ' ( / RESPONDENT BY : SHRI. AR V SREENIVASAN, JCIT * '+! /DATE OF HEARING : 20.11.2019 ,-. '+! /DATE OF PRONOUNCEMENT : 18.02.2020 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI IN ITA NO. 177/TR/CIT(A)-5/2017-18 DATED 19.02.2019 FOR ASSESS MENT YEAR 2015- 16. :-2-: ITA NO.1160/CHNY/2019 2. M/S. HIQ POWER ASSOCIATES PVT. LTD., THE ASSESSE E, IS A SERVICE PROVIDER FOR METALLURGICAL CONSULTANCY, POWER PLANT CONSULTANCY ETC. THE ASSESSEE ADMITTED RS. 74,90,973/- FROM SALE OF SERVICES, AGAINST WHICH IT HAS CLAIMED EMPLOYEES SALARY AND INCENTIVE S OF RS. 1,15,32,641/- UNDER THE HEAD EMPLOYEE BENEFIT SCHEM E. AFTER CONSIDERING THE ASSESSEES EXPLANATION ETC., THE AS SESSING OFFICER DISALLOWED 50% OF THE EXPENDITURE HOLDING, INTER AL IA, THAT THE ASSESSEES REPLY IS AMBIGUOUS AND NOT SUPPORTED BY DOCUMENTARY EVIDENCE. AGGRIEVED, THE ASSESSEE FILED APPEAL BEF ORE THE CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL. AGGRIEVED AGAINST THAT ORDER, THE ASSESSEE FILED THIS APPEAL. 3. THE LD. AR SUBMITTED THAT THE ASSESSEE IS A SERV ICE PROVIDER FOR METALLURGICAL CONSULTANCY, POWER PLANT CONSULTANCY AND THE NATURE OF BUSINESS IS DEPENDENT ON GOVERNMENT POLICY. 35 EMP LOYEES HAVE BEEN WORKING WITH THE COMPANY AND THEIR SALARIES HAVE TO BE PAID IRRESPECTIVE OF THE REVENUE. THE EMPLOYMENT OF PE RSONNEL DEPENDS ON ONGOING PROJECTS AND PROJECTS ON HAND AND ALSO PROJ ECTS EXPECTED TO BE AWARDED IN FUTURE AND THEY CANNOT BE APPOINTED OR T HROWN OUT BY OUR WILL. THEREFORE, THE AR PLEADED THAT THE ASSESSEE S CLAIM IS IN ACCORDANCE WITH THE BUSINESS EXIGENCY AND HENCE IT MAY BE ALLOWED. :-3-: ITA NO.1160/CHNY/2019 4. PER CONTRA, THE LD. DR SUBMITTED THAT THE ASSESS EE NEITHER SUBMITTED THE RELEVANT DOCUMENTS EITHER BEFORE THE AO OR BEFORE THE LD. CIT(A). HE INVITED OUT ATTENTION TO THE RELEVA NT PORTION OF THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) REQUIRED THE ASSESSEE TO FURNISH THE COPIES OF APPOINTMENT LETTE RS OF MARKETING EXECUTIVE ALONG WITH THEIR EDUCATIONAL QUALIFICATI ONS ETC TO JUSTIFY THE SERVICES RENDERED ARE OF REVENUE IN NATURE AND IT W AS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ASSESSEES BUSIN ESS. SINCE, THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENTARY EVIDENCE S, THE LD. CIT(A) HELD THAT THE ONUS OF PROOF AT ALL RELEVANT TIMES R ESTS UPON THE ASSESSEE. IT IS FOR THE ASSESSEE TO ESTABLISH BY E VIDENCE THAT A PARTICULAR ALLOWANCE IS JUSTIFIED AND RELIED ON 73 ITR 634 (SC). THEREFORE, THE LD. DR SUPPORTED THE ORDERS OF THE L OWER AUTHORITIES. 5. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. IT IS CLEAR FROM THE ABOVE THAT AGAINST THE LOW INCOME ADMITTED BY THE ASSESSEE,THE ASSESSEE HAS CLAIMED H UGE EXPENDITURE UNDER THE HEAD EMPLOYEES SALARY AND INCENTIVES. TH E ASSESSEE MAY BE RIGHT IN SAYING THAT THE EMPLOYMENT OF PERSONNEL DE PENDS ON THE ONGOING PROJECTS AND THE PROJECTS EXPECTED TO BE AW ARDED IN FUTURE ETC. HOWEVER, THE GENUINENESS OF THE CLAIM HAS TO BE EXP LAINED BY THE ASSESSEE BY FURNISHING THE RELEVANT MATERIAL BEFORE THE LOWER :-4-: ITA NO.1160/CHNY/2019 AUTHORITIES. IN THIS CASE, THOUGH THE ASSESSEE HAS NOT LAID SUCH EVIDENCES BEFORE THE LOWER AUTHORITIES, IN THE INTE RESTS OF JUSTICE, WE DEEM IT FIT TO REMIT THIS ISSUE BACK TO THE AO FOR A FRESH EXAMINATION. THE ASSESSEE SHALL LAY RELEVANT MATERIALS IN SUPP ORT OF ITS CONTENTION BEFORE THE AO AND COMPLY WITH THE REQUIREMENTS OF THE AO IN ACCORDANCE WITH LAW. THE AO IS FREE TO CONDUCT APPR OPRIATE ENQUIRY AS DEEMED FIT, BUT HE SHALL FURNISH ADEQUATE OPPORTUN ITY TO THE ASSESSSEE ON THE MATERIAL ETC TO BE USED AGAINST IT AND DECI DE THE MATTER IN ACCORDANCE WITH LAW. 6. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON TUESDAY, 18 TH FEBRUARY, 2020 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ! ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, / /DATED: 18 TH FEBRUARY, 2020 JPV '#+0121.+ /COPY TO: 1. %& / APPELLANT 2. #$%& /RESPONDENT 3. * 3+ ) ( /CIT(A) 4. * 3+ /CIT 5. 14#+ /DR 6. 567 /GF