M/s Lepakshi Knowledge Hub Pvt ltd , Bangalore V. Assistant Commissioner of Income TAx Circle-4(1)(1), Bangalore

ITA 1258/BANG/2018

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 1883 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-04-2021
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ADARSH K G
• Section: 143(3); 148

Judgement Text

ITA NO.1258/BANG/2018 M/S. LEPAKSHI KNOWLEDGE HUB PVT. LTD., BENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL CBENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENTAND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NO.1258/BANG/2018 ASSESSMENT YEAR: 2009-10 M/S. LEPAKSHI KNOWLEDGE HUB PVT. LTD. NO.26/1, 1&2 ND FLOOR IBIS HOTEL, HOSUR ROAD BENGALURU 560 008 PAN NO :AABCL4609G VS. ACIT CIRCLE-4(1)(1) BENGALURU APPELLANT RESPONDENT APPELLANT BY : SHRI ADARSH K.G., A.R. RESPONDENT BY : SHRI PRADEEP KUMAR, D.R. DATE OF HEARING : 08.03.2021 DATE OF PRONOUNCEMENT : 08.03.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 14.12.2017 PASSED BY LD. CIT(A)-4 AND IT RELATES TO THE ASSESSMENT YEAR 2009-10. 2. THE GROUNDS OF APPEAL URGED BY THE ASSESSEE GIVE RISE TO THE FOLLOWING TWO GROUNDS:- A) VALIDITY OF RE-OPENING OF ASSESSMENT B) DISALLOWANCE OF EXPENSES OF RS.87.98 LAKHS. ITA NO.1258/BANG/2018 M/S. LEPAKSHI KNOWLEDGE HUB PVT. LTD., BENGALURU PAGE 2 OF 4 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF ESTA BLISHING INTEGRATED KNOWLEDGE HUBS AT EDUCATIONAL INSTITUTIO NS. THE ORIGINAL ASSESSMENT IN THE HANDS OF THE ASSESSEE WAS COMPLET ED U/S 143(3) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT] ON 7.12.2011. IN ITS RETURN OF INCOME, THE ASSESSEE HAD DECLARED LOSS OF RS.78.86 LAKHS, AFTER CLAIMING EXPENSES OF RS.87.98 LAKHS. THE A.O ., IN THE ORIGINAL ASSESSMENT PROCEEDINGS, TOOK THE VIEW THAT BUSINESS OF THE ASSESSEE HAS NOT BEEN COMMENCED. ACCORDINGLY, HE H ELD THAT THE ENTIRE EXPENSES OF RS.87.98 LAKHS CLAIMED BY THE AS SESSEE SHOULD BE CAPITALIZED AS THEY HAVE BEEN INCURRED AT PRE-CO MMENCEMENT STAGE OF THE BUSINESS. ACCORDINGLY, THE A.O. DISAL LOWED THE EXPENDITURE CLAIMED AMOUNTING TO RS.87.98 LAKHS AND DETERMINED THE TOTAL INCOME OF THE ASSESSEE AT RS.6.78 LAKHS. 4. SUBSEQUENTLY, THE A.O. RE-OPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT. IN THE RE-OPENED ASSESS MENT, THE A.O. STARTED COMPUTING THE TOTAL INCOME BY ADOPTING THE TOTAL INCOME FIGURE OF RS.6.78 LAKHS, THAT WAS DETERMINED IN THE ORIGINAL ASSESSMENT PROCEEDINGS. IN THE RE-ASSESSMENT PROCE EDINGS ALSO, THE A.O. DISALLOWED THE EXPENDITURE OF RS.87.98 LAK HS HOLDING THE SAME AS NON-GENUINE AND ACCORDINGLY, COMPUTED THE T OTAL INCOME AT RS.94.76 LAKHS. 5. BEFORE LD. CIT(A), THE ASSESSEE SUBMITTED THAT T HE ADDITION OF RS.87.98 LAKHS MADE BY THE A.O. IN THE RE-ASSESSMEN T PROCEEDINGS HAS RESULTED IN DOUBLE TAXATION OF THE SAME AMOUNT. THE LD. CIT(A) IN PRINCIPLE UPHELD THE VIEW OF THE A.O. THAT THE E XPENDITURE CLAIMED BY THE ASSESSEE IS NOT NON-GENUINE. HOWEVE R, HE DIRECTED THE A.O. TO TAKE APPROPRIATE RECTIFICATION ACTION W HILE COMPUTING THE TOTAL INCOME, ARISING OUT OF BOTH ASSESSMENT ORDERS . STILL AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. ITA NO.1258/BANG/2018 M/S. LEPAKSHI KNOWLEDGE HUB PVT. LTD., BENGALURU PAGE 3 OF 4 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE NOTICE THAT THE A.O. HAD DISALLOWED THE EXPENDITURE CLAIM OF RS.87.98 LAKHS IN THE ORIGINAL ASSESSMENT PROCEEDINGS HOLDING THE SAME AS PRE-COMM ENCEMENT EXPENSES. IN THE RE-ASSESSMENT PROCEEDINGS, THE A. O. HAS MADE THE DISALLOWANCE OF VERY SAME AMOUNT OF RS.87.98 LAKHS HOLDING IT AS NON-GENUINE. WHILE COMPUTING TOTAL INCOME IN RE-AS SESSMENT PROCEEDINGS, THE AO STARTED WITH THE TOTAL INCOME D ETERMINED IN THE ORIGINAL ASSESSMENT PROCEEDINGS, IN WHICH, THE AMOU NT OF RS.87.98 LAKHS HAD ALREADY BEEN DISALLOWED. WE MAY RECALL T HAT THE ASSESSEE HAD RETURNED LOSS OF RS.78.86 LAKHS AND AFTER DISAL LOWANCE OF RS.87.98 LAKHS, THE ASSESSED INCOME WAS DETERMINED AT RS.6.98 LAKHS IN THE ORIGINAL ASSESSMENT PROCEEDINGS. IN T HE RE-ASSESSMENT PROCEEDINGS, THE A.O. HAS PROCEEDED TO COMPUTE THE TOTAL INCOME BY ADOPTING THE ABOVE SAID FIGURE OF RS.6.78 LAKHS AND AGAIN MADE THE ADDITION OF RS.87.98 LAKHS AND ACCORDINGLY, COMPUTE D THE TOTAL INCOME AT RS.94.76 LAKHS. 7. A PERUSAL OF ABOVE SAID FACTS WOULD SHOW THA T THE AMOUNT OF RS.87.98 LAKHS HAS BEEN ADDED TWICE BY THE A.O. I.E . ONCE IN THE ORIGINAL ASSESSMENT ORDER AND AGAIN IN THE RE-ASSES SMENT ORDER. HENCE, THERE IS MERIT IN THE CONTENTION OF THE ASSE SSEE THAT THERE IS DOUBLE TAXATION OF THE SAME AMOUNT, WHICH IS NOT PE RMISSIBLE UNDER THE LAW. ACCORDINGLY, WE DIRECT THE A.O. TO DELETE THE DISALLOWANCE OF RS.87.98 LAKHS MADE IN THE RE-ASSES SMENT ORDER. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) WOULD STAN D MODIFIED. 8. SINCE WE HAVE GRANTED RELIEF TO THE ASSESSEE ON MERITS, WE DO NOT FIND IT NECESSARY TO ADJUDICATE THE LEGAL ISSUE S URGED ON VALIDITY OF RE-OPENING OF ASSESSMENT, AS THE SAME WOULD BE A CADEMIC IN NATURE. ITA NO.1258/BANG/2018 M/S. LEPAKSHI KNOWLEDGE HUB PVT. LTD., BENGALURU PAGE 4 OF 4 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MAR, 2021. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 8 TH MAR, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.