ACIT 2(1)(1), MUMBAI V. BOBCARDS LTD, MUMBAI

ITA 1436/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2428 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 10-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPAK RIPOTE
• Assessee Lawyers: YASH SHAH
• Keywords: Business expenditure
• Section: 143(3); 10; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH , JUDICIAL MEMBER ITA NO S . 1436 & 1437 /MUM/201 5 : (A.Y S : 20 1 0 - 11 & 2011 - 12 ) ACIT - 2(1)(1), MUMBAI (APPELLANT) VS. M/S. BOBCARDS LTD. BARODA HOUSE, BEHIND DEWAN SHOPPING CENTRE, S.V. ROAD, JOGESHWARI (W), MUMBAI 102. PAN : AAACB1989L (RESPONDENT) ASSESSEE BY : SHRI YASH SHAH & SHRI DALPAT SHAH REVENUE BY : SHRI DEEPAK RIPOTE DATE OF HEARING : 1 8 /0 7 /2016 DATE OF PRONOUNCEMENT : 22 /0 7 /2016 O R D E R PER G.S. PANNU , AM : BOTH THE APPEALS BY THE REVENUE RELATING TO ASSESSMENT YEARS 2010 - 11 & 2011 - 12 INVOLVE A COMMON ISSUE AND THEREFORE THEY HAVE BEEN CLUBBED TOGETHER AND HEARD TOGETHER AND A CONSOLIDATED ORDER IS BEING PASSED FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. ITA NO. 1436/MUM/2015 PERTAINING TO ASSESSMENT YEAR 2010 - 11 IS TAKEN AS A LEAD CASE. THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 4, MUMBAI DATED 23 . 12 .2 014, WHICH IN TURN HA S ARISEN FROM ORDER PASSED BY THE ASSESSING OFFICER DATED 16 .0 2 .201 3 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 M/S. BOBCARDS LTD. ITA NOS. 1436 & 1437/MUM/2015 3. IN THIS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE TAX DEDUCTED ON THE SERVICE CHARGES PAID FOR THE SERVICES PROVIDED BY VISA/MASTERCARD INTERNATIONAL, IGNORING THE PERTINENT FACT THAT THIS PAYMENT WAS NOT AN EXPENDITURE IN THE HANDS OF THE ASSESSEE AND HAD NOT BEEN INCURRED FOR THE PURPOSE OF THE ASSESSEES BUSINESS AND CONSEQUENTLY, THE TDS PAID WAS NOT AN ALLOWABLE DEDUCTION. 4. BRIEFLY PUT, THE RELEVANT FACTS ARE THAT THE RESPONDENT - ASSESSEE IS A COMPANY INCORPORATED U NDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER - ALIA , ENGAGED IN THE BUSINESS OF CREDIT CARD OPERATIONS AND FINANCING PAYMENTS THROUGH CREDIT CARDS, DEBIT CARDS AND FOREX OPERATIONS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAD PAID TAX IN RESPECT OF THE CHARGES FOR SERVICES PROVIDED BY VISA/MASTERCARD INTERNATIONAL ON THE GROUND THAT SUCH AN EXPENDITURE WAS BORN E OUT OF CONTRACTUAL OBLIGATION. THE CLAIM OF THE ASSESSEE WAS THAT IN TERMS OF THE AGREEMENT WITH VISA/MASTERCARD INTERNATIONAL, ASSESSEE WAS REQUIRED TO BEAR THE TAX LIABILITY ON PAYMENT MADE BY ASSESSEE TO SUCH COMPANIES AND, THEREFORE, DURING THE YEAR UNDER CONSIDERATION AN AMOUNT OF RS.44,83,888/ - WAS CLAIMED AS BUSINESS EXPENDITURE ON THIS COUNT . THE ASSESSING OFFICER, HOWEVER, DISALLOWED THE EXPENDITURE ON THE BASIS OF HIS STAND IN THE EARLIER YEARS. THE CIT(A) NOTIC ED THAT THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR (I) ASSESSMENT YEARS 2003 - 04, 2004 - 05 & 2005 - 06 VIDE ITA NOS. 4 882, 2475, 6527/MUM/2010 DATED 20.6.2012 ; (II) ASSESSMENT YEAR 2007 - 08 VIDE ITA NO. 7678/MUM/2010 DATED 18.9.2012 AND (III) ASSESSMENT YEAR 2008 - 09 VIDE ITA NO. 3 M/S. BOBCARDS LTD. ITA NOS. 1436 & 1437/MUM/2015 7660/MUM/2011 DATED 5.4.2013 HAS DELETED SUCH ADDITION AND FOLLOWING THE AFORESAID PRECEDENT S , HE HAS SINCE DELETED THE ADDITION IN THE INSTANT YEAR ALSO. AGAINST SUCH A DECISION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 5. BEFORE US, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE PRECEDENT S RELIED UPON BY CIT(A) IN ORDER TO DELETE THE AD DITION CONTINUE TO HOLD THE FIELD AND THEY HAVE NOT BEEN ALTERED BY ANY HIGHER AUTHORITY. AS A CONSEQUENCE, IN VIEW OF THE AFORESAID PRECEDENTS, THERE IS NO ERROR ON THE PART OF CIT(A) IN DELETING THE ADDITION, WHICH WE HEREBY AFFIRM. IN THE RESULT, APPE AL OF THE REVENUE FOR ASSESSMENT YEAR 2010 - 11 IS DISMISSED. 6. INSOFAR APPEAL FOR ASSESSMENT YEAR 2011 - 12 IS CONCERNED, THE ISSUE AS WELL AS THE FACTS AND CIRCUMSTANCES ARE PARI MATERIA TO THOSE CONSIDERED BY US IN THE REVENUES APPEAL FOR ASSESSMENT YEAR 2010 - 11 IN THE EARLIER PARAGRAPHS ; AND , THUS OUR DECISION IN THE APPEAL FOR ASSESSMENT YEAR 2010 - 11 SHALL MUTATIS MUTANDIS APPLY FOR ASSESSMENT YEAR 2011 - 12 ALSO. 7. RESULTANTLY, CAPTIONED APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE O PEN COURT ON 2 2 N D JULY, 2016. SD/ - SD/ - ( AMARJIT SINGH ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 2 2 N D JULY, 2016 *SSL* 4 M/S. BOBCARDS LTD. ITA NOS. 1436 & 1437/MUM/2015 COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, I BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI