WEIZMANN LTD ( IN RESPECT OF KARMA ENERGY LTD AMALGAMATED WITH WEIZMANN LTD W.E.F. 01.04.2009), MUMBAI V. ITO 4(2)(4), MUMBAI

ITA 1356/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79171 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 11-06-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 15-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Section: 142(1); 115JB; 194C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G B ENCH, MUMBAI . , !'# $ $ $ $ , %& '()* , %+ ,- % # BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ I.T.A. NO.1356/MUM/2011 ( . . . . / ASSESSMENT YEAR :2007-08 M/S. WEIZMANN LTD.(IN RESPECT OF KARMA ENERGY LTD. AMALGAMATED WITH WEIZMANN LTD W.E.F. 1.4.2009) EMPIRE HOUSE, 214, DR. D.N. ROAD, ENT. A.K. NAYAK MARG, FORT, MUMBAI-400 001 / VS. THE ITO 4(2)(4), MUMBAI -/ %+ ./ 0 ./ PAN/GIR NO. : AACCA 6003E ( /1 / APPELLANT ) .. ( 23/1 / RESPONDENT ) /1 4 % / APPELLANT BY: SHRI VIJAY MEHTA 23/1 5 4 % / RESPONDENT BY: SHRI R.K. SAHU 5 6+ / DATE OF HEARING :11.06.2014 7. 5 6+ / DATE OF PRONOUNCEMENT :18.06.2014 ,%8 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-10, MUMBAI DT.24.12.2010 PERTAINING TO A.Y. 2007-08. 2. THE GRIEVANCES OF THE ASSESSEE READ AS UNDER: ITA NO. 1356/M/2011 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE HONBLE CIT(A) GROSSLY ERRED IN CONFIR MING THE DISALLOWANCE MADE BY THE LD. AO U/S. 40(A)(IA) AT RS. 30,24,456/-, BEING PAYMENT MADE FOR REIMBURSEMENT O F EXPENSES INCURRED BY WEIZMANN CORPORATE SERVICES LT D. ON BEHALF OF THE APPELLANT, ON WHICH TDS PROVISIONS A RE NOT APPLICABLE. THE APPELLANT COMPANY PRAYS THAT THE SAID DISALLOWANCE MAY PLEASE BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE HONBLE CIT(A) GROSSLY ERRED IN CONFIR MING THE A.O[S VIEW FOR NOT RECTIFYING THE MISTAKE OF THE A PPELLANT TO CLAIM CARRY FORWARD OF LONG TERM CAPITAL LOSS OF RS . 33,28,773/- WHICH WAS OMITTED TO BE CONSIDERED WHIL E FILING OF RETURN OF INCOME. THE APPELLANT COMPANY PRAYS T HAT THE SAID LOSS OF RS. 33,28,773/- MAY PLEASE BE ALLOWED TO BE CARRIED FORWARD. 3. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSE SSEE STATED THAT SINCE ASSESSEE DOES NOT HAVE CAPITAL GAINS, HE IS N OT PRESSING GROUND NO. 2. GROUND NO. 2 IS ACCORDINGLY DISMISSED AS NOT PR ESSED. 4. THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINES S OF WIND FARM DEVELOPMENT. RETURN OF INCOME DECLARING NIL INCOME AND BOOK PROFIT OF RS. 5.01 CRORES U/S. 115JB WAS FILED ON 30.10.2007. THE RETURN WAS TAKEN UP FOR SCRUTINY AND STATUTORY NOTICES U/S. 143(2) A ND 142(1) WERE ISSUED AND DULY SERVED UPON THE ASSESSEE. 5. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS REI MBURSED RS. 30,24,456/- TO ITS HOLDING COMPANY WEIZMANN CORPORA TE SERVICE LTD. (WCSL) UNDER A CONTRACT. THE ASSESSEE WAS ASKED TO JUSTIFY WHY TAX HAS NOT BEEN DEDUCTED AT SOURCE ON THIS REIMBURSEMENT O F RS. 30,24,456/-. IT WAS EXPLAINED THAT TDS PROVISIONS ARE NOT APPLICABL E AS THE PAYMENTS ARE IN THE NATURE OF REIMBURSEMENT AND DOES NOT INCLUDE ANY INCOME ELEMENT. IT WAS POINTED OUT THAT IN EARLIER YEAR ALSO SIMILA R ISSUE WAS CONSIDERED BY ITA NO. 1356/M/2011 3 THE LD. CIT(A) AND WAS DECIDED IN FAVOUR OF THE ASS ESSEE. THEREFORE, NO DISALLOWANCE IS CALLED FOR THE YEAR UNDER CONSIDERA TION. 5.1. THE AO CONSIDERED THE ISSUE IN THE LIGHT OF TH E CONTRACT WITH THE HOLDING COMPANY AND FINALLY CAME TO THE CONCLUSION THAT THE PAYMENT OF RS. 30,24,456/- COMES WITHIN THE PURVIEW OF THE PRO VISIONS OF SEC. 194C OF THE ACT AND SINCE NO TAX HAS BEEN DEDUCTED AT SO URCE, THE AO DISALLOWED RS. 30,24,456/- U/S. 40A(IA) OF THE ACT. 6. AGGRIEVED, ASSESSEE CARRIED THE MATTER BEFORE TH E LD. CIT(A). IT WAS POINTED OUT TO THE LD. CIT(A) THAT AN IDENTICAL ISSUE HAS ALSO ARISEN IN A.Y. 2006-07 AND THE LD. CIT(A) VIDE HIS ORDER D T. 29.10.2010 HAS ALLOWED THE APPEAL OF THE ASSESSEE. AFTER CONSIDERI NG THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) WAS OF THE OPINION THAT THE DECISION IN THE CASE OF ASSOCIATED CEMENT CO. LTD. VS CIT (201 ITR 435) SQUARELY APPLY ON THE FACTS OF THE CASE AND CONFIRMED THE DI SALLOWANCE OF RS. 30,24,456/-. 7. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. T HE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR EARLIER YEARS AND POINTED O UT THAT A SIMILAR DISALLOWANCE HAS BEEN DELETED BY THE TRIBUNAL. FAC TS AND CIRCUMSTANCES BEING IDENTICAL, IT WAS PRAYED THAT SIMILAR VIEW SH OULD BE FOLLOWED. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTING THE ORDER OF THE AO STATED THAT THE RELEVANT PROVISION S OF SEC. 40A(IA) HAS BEEN INSERTED W.E.F 1.4.2006 THEREFORE IN THE EARLI ER YEARS THERE WAS NO OCCASION FOR THE DISALLOWANCE U/S. 40A(IA) OF THE A CT. THE LD. DR FURTHER STATED THAT EACH YEAR IS CONSIDERED AS A SEPARATE U NIT AND THEREFORE FINDINGS OF EARLIER YEARS ARE NOT BINDING FOR THE Y EAR UNDER CONSIDERATION. ITA NO. 1356/M/2011 4 9. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE LOWER AUTHORITIES AND THE DECISION OF THE TRIBUNAL. IT IS AN UNDISPU TED FACT THAT THE ASSESSEE HAS REIMBURSED THE EXPENSES TO ITS HOLDING COMPANY. IT IS ALSO AN UNDISPUTED FACT THAT SUCH REIMBURSEMENT IS ON ACCOU NT OF A CONTRACTUAL LIABILITY BETWEEN THE HOLDING AND THE SUBSIDIARY CO MPANY. UNDOUBTEDLY, THE ASSESSEE WAS MAKING PAYMENT OF RS. 2.40 LAKHS P ER MONTH TO THE HOLDING COMPANY SUBJECT TO THE FINAL SETTLEMENT AT THE END OF THE YEAR BUT THIS BY ITSELF DOES NOT MEAN THAT THERE WAS A PROFI T ELEMENT IN THE REIMBURSEMENT OF THE EXPENDITURES. 9.1. THE ASSESSEE RECEIVED A DEBIT NOTE FROM ITS HO LDING COMPANY ON 31.3.2007 BY WHICH THE HOLDING COMPANY HAS DEBITED THE ASSESSEE TOWARDS SHARE OF COMMON PERSONNEL AND COMMON UTILI TY AMOUNTING TO RS. 30,24,456/-. THIS ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 226/M/2010 FOR A.Y. 2006-07 FROM WHICH YEAR THE RELEVANT PROVISIONS OF SEC. 40(A)(IA ) BECAME OPERATIVE, IN FAVOUR OF THE ASSESSEE. RESPECTFULLY FOLLOWING DEC ISION OF THE TRIBUNAL, WE DIRECT THE AO TO DELETE THE ADDITION OF RS. 30,2 4,L456/-. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE, 2014 . ,%8 5 . +% 9 :, ; 18.6.2014 5 < SD/- SD/- (D.MANMOHAN ) (N.K. BILLAIYA) !'# /VICE PRESIDENT %+ ,- / ACCOUNTANT MEMBER MUMBAI; :, DATED 18.6.2014 . . ./ RJ , SR. PS ITA NO. 1356/M/2011 5 ,%8 ,%8 ,%8 ,%8 5 55 5 26' 26' 26' 26' =%'.6 =%'.6 =%'.6 =%'.6 / COPY OF THE ORDER FORWARDED TO : 1. /1 / THE APPELLANT 2. 23/1 / THE RESPONDENT. 3. > ( ) / THE CIT(A)- 4. > / CIT 5. '?< 26 , , / DR, ITAT, MUMBAI 6. < @ / GUARD FILE. ,%8 ,%8 ,%8 ,%8 / BY ORDER, 3'6 26 //TRUE COPY// ! !! ! / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI