M/s Medha Servo Drives Private Limited, Hyderabad V. DCIT, Hyderabad

ITA 1190/HYD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9849 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMLAN TRIPATHY
• Assessee Lawyers: C N PRASAD
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI N.R.S. GANESAN, JM AND SHRI CHANDRA POOJARI, AM I.T.A. NO. 1189/HYD/2009 (ASSESSMENT YEAR 2005-06) I.T.A. NO. 1190/HYD/2009 (ASSESSMENT YEAR 2006-07) M/S. MEDHA SERVO DRIVES PVT. LTD., HYDERABAD PAN: AACBM3917A VS. DCIT, CIRCLE 16(2) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI C.N. PRASAD RESPONDENT BY: SHRI AMLAN TRIPATHY O R D E R PER NRS GANESAN, JM: THE ASSESSEE FILED THE ABOVE TWO APPEALS AGAINST T HE TWO INDEPENDENT ORDERS OF THE CIT(A)-V, HYDERABAD D ATED 13.11.2009 FOR THE ASSESSMENT YEARS 2005-06 AND 200 6- 07. SINCE COMMON GROUNDS ARE TAKEN BY THE ASSESSEE IN BOTH THE APPEALS, WE HEARD BOTH THE APPEALS TOGETHE R AND DISPOSING OF THE SAME BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE ONLY ISSUE ARISING FOR CONSIDERATION IN BOTH THE YEARS IS DISALLOWING OF EXPENDITURE WHICH WAS ISSUE D TO EMPLOYEES AS ESOPS AND THE SAID EXPENDITURE WAS TRE ATED AS PERQUISITE TO THE EMPLOYEES AND DEBITED THE STAF F I.T.A. NOS. 1189 & 1190/HYD/2009 M/S. MEDHA SERVO DRIVES PVT. LTD. =========================== 2 WELFARE EXPENSES ACCOUNT AND CLAIMED THE EXPENDITUR E IN ITS P & L ACCOUNT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING O FFICER FOUND THAT THE ASSESSEE HAS INCURRED EXPENDITURE TO WARDS ALLOTMENT OF ESOPS AND DEBITED THE SAME TO THE PROF IT AND LOSS A/C. SINCE THE EXPENDITURE IS ONLY NOTIONAL THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE ELIGIBILITY OF THE SAME FOR ALLOWANCE U/S. 37(1) OF THE I.T. ACT. THE ASSESSEE RELIED ON THE DECISION OF ITAT C HENNAI BENCH IN M/S. SSI LTD. VS. DCIT IN ITA NO. 1384/MDS /04. HOWEVER, THE ASSESSING OFFICER DISTINGUISHED THE CA SE-LAW RELIED ON BY THE ASSESSEE AND MADE THE DISALLOWANCE OF EXPENDITURE INCURRED TOWARDS ESOPS AMOUNTING TO RS.6,75,000 IN A.Y. 2005-06 AND RS.7,40,000 IN A.Y. 2006- 07. IN APPEAL, THE CIT(A) UPHELD THE ORDERS OF THE ASSESSING OFFICER AND CONFIRMED THE DISALLOWANCE MA DE. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TR IBUNAL. 4. WE HAVE HEARD SHRI C.N. PRASAD, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE AND SHRI AMLAN TRIP ATHI, THE LEARNED DR. AT THE OUTSET THE LEARNED DR SUBMI TTED THAT THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE FO R ASSESSMENT YEARS 2003-04 AND 2004-05 IN I.T.A. NOS. I.T.A. NOS. 1189 & 1190/HYD/2009 M/S. MEDHA SERVO DRIVES PVT. LTD. =========================== 3 1099/HYD/06, ITA 1114/HYD/08 AND ITA NO. 749/HYD/ 2009 VIDE ORDER DATED 30TH DECEMBER, 2010. 5. THE LEARNED REPRESENTATIVE FOR THE ASSESSEE FAIR LY CONCEDED THAT THE ISSUE WAS COVERED AGAINST THE ASS ESSEE BY THE DECISION OF THIS TRIBUNAL (SUPRA). 6. WE HAVE CONSIDERED THE SUBMISSIONS ON EITHER SID E AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO GONE THROUGH THE ORDER OF THE CO-ORDINATE BENCH OF THIS TRIBUNAL DATED 30TH DECEMBER, 2010. SINCE THE ISSUE ARISES FOR CONSIDERATION IS SIMILAR AND IDENT ICAL, IN OUR OPINION, THE ORDER OF THE TRIBUNAL IN ASSESSEE' S OWN CASE FOR A.YS. 2003-04 AND 2004-05 IS EQUALLY APPLI CABLE FOR THE YEARS UNDER CONSIDERATION. FOLLOWING THE SA ME RATIO, THE ORDERS OF THE LOWER AUTHORITIES ARE CONF IRMED AND THE GROUNDS RAISED BY THE ASSESSEE ARE REJECTED. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1ST FEBRUARY, 2011. SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER SD/- (N.R.S. GANESAN) JUDICIAL MEMBER HYDERABAD, DATED 1ST FEBRUARY, 2011 TPRAO I.T.A. NOS. 1189 & 1190/HYD/2009 M/S. MEDHA SERVO DRIVES PVT. LTD. =========================== 4 COPY FORWARDED TO: 1. M/S. MEDHA SERVO DRIVES PVT. LTD., C/O. M/S. V.G . RAO & ASSOCIATES, CHARTERED ACCOUNTANTS, 306, 3RD FLOOR, OASIS PLAZA, TILAK ROAD, ABIDS, HYDERABAD-50 0 001. 2. DCIT, CIRCLE 16(2), HYDERABAD. 3. THE CIT(A)-V, HYDERABAD. 4 THE CIT-IV, HYDERABAD 5. THE DR B BENCH, ITAT, HYDERABAD