ITO, CHENNAI V. HMH Education consultants (I) P. Ltd., CHENNAI

ITA 1789/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8036 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Department
• Bench Allotted: C
• Next Hearing Date: 28-01-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 06-08-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI ... , , , BEFORE SHRI N.R.S.GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER ./ I.T.A.NO.1789 /MDS./2015 ( / ASSESSMENT YEAR :2011-12) & C.O. NO.110/MDS./2015 THE INCOME TAX OFFICER, CORPORATE WARD-2(3), ROM NO.514,CHENNAI 600 034. VS. M/S.HMH EDUCATION CONSULTANTS (I) P. LTD ., 45,3 RD FLOOR, NO.1,CEEBROS CENTRE, MONTIETH ROAD, EGMORE, CHENNAI 600 008. PAN AABCH 1210 M ( / APPELLANT ) ( / RESPONDENT ) / CROSS OBJECTOR !' # $ / APPELLANT BY : MR.A.V.SREEKANTH, JCIT, D.R %&!' # $ / RESPONDENT BY : NONE ' ( # )* / DATE OF HEARING : 28.01.2016 +, # )* /DATE OF PRONOUNCEMENT : 10.02.2016 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE ITA NO.1789/MDS/2015 CO NO.110/MDS./2015 2 COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI, D ATED 25.02.2015 RELEVANT TO THE ASSESSMENT YEAR 2011-12. 2.1 THE ISSUE RAISED BY THE REVENUE ITS APPEALS IS THAT THE CIT(A) OUGHT NOT TO HAVE COMPARED WITH THE DISALLOWANCE OF CURRICULUM DEVELOPMENT EXPENSES MADE FOR THE A.Y. 2011-12 WITH THAT FOR A.Y.2010-11 WHEN THE APPEAL WAS DISMISSED FOR THE A .Y.2010-11. 2.2 THE ASSESSEE HAS FILED CROSS-OBJECTIONS IN SUP PORT OF THE IMPUGNED ORDER. 3.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE COMPANY IS ASSOCIATED WITH M/S.ANNAMALAI UNIVERSITY FOR CONDUC TING CLASSES FOR THE CORRESPONDENCE COURSE OF THE UNIVERSITY FOR WHI CH IT HAS ENTERED INTO AN AGREEMENT DATED 10.04.2008. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSE SSEE HAD CLAIMED A SUM OF RS.40,44,000/- TOWARDS CURRICULUM DEVELOPMENT EXPENSES. IN RESPONSE TO THE AOS LETTER, THE ASSES SEE EXPLAINED THAT IN THE PROCESS OF CONDUCTING THE DISTANCE EDUCATION AT DIFFERENT PLACES OF THE COUNTRY, THE ASSESSEE HAD APPOINTED C ERTAIN LIAISIONING ITA NO.1789/MDS/2015 CO NO.110/MDS./2015 3 OFFICERS. THE REMUNERATION PAID TO THE SAID LIAISIO NING OFFICERS WERE MADE AT DIFFERENT PLACES AT DIFFERENT TIMES. THE AO WHILE COMPLETING THE ASSESSMENT U/S.143(3) OF THE ACT ON 29.01.201 4, REJECTED THE ASSESSEES CLAIM OF CURRICULUM DEVELOPMENT EXPENSES ON THE GROUND THAT MOST OF THESE EXPENSES WERE PAID BY CASH AND A SSESSEE FAILED TO FURNISH NECESSARY VOUCHERS ETC. 3.2 ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSES SEE COMPANY HAS THE RESPONSIBILITY OF CONDUCTING THE DISTANCE E DUCATION AT DIFFERENT PLACES OF THE COUNTRY, FOR WHICH IT HAD APPOINTED C ERTAIN LIAISONING OFFICERS. THE REMUNERATION PAID TO THE SAID LIAISON ING OFFICERS WAS SHOWN AS CURRICULAM DEVELOPMENT EXPENSES WHICH WE RE MADE AT DIFFERENT PLACES AT DIFFERENT TIMES. FURTHER, CIT(A ) OBSERVED THAT THE FACTS OF THE A.YS.2010-1 1 AND 2011-12 ARE EXACTLY IDENTICAL. IN THE A.Y 2010-11, THE ASSESSING OFFICER HAS DISALLOWED 2 5% OF THE CURRICULAM DEVELOPMENT EXPENSES CLAIMED OF ` 40,15,500/- AND ADDED TO THE TOTAL INCOME, BUT IN THE ASSESSMENT OF A.Y.2011-12, THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE AMOUNT, THOUGH THE FACTS ARE IDENTICAL. FURTHER, IT WAS FOUND THAT THE ASSES SING OFFICER IN HIS ITA NO.1789/MDS/2015 CO NO.110/MDS./2015 4 ORDER OF A.Y2011- 12 ALSO MENTIONED THAT A SIMILAR DISALLOWANCE WAS MADE IN A. Y.2010-11, AND THE ASSESSEE HAS NOT CONT ESTED THE ADDITION IN APPEAL. THE ABOVE DISALLOWANCES OF CU RRICULAM DEVELOPMENT EXPENSES WAS PRIMARILY FOR THE WANT OF NECESSARY EVIDENCES. AT THE SAME TIME, THE ASSESSEE, BEFORE T HE ASSESSING OFFICER, FAILED TO FURNISH ALL THE DETAILS AND EVID ENCES TO PROVE THAT THE EXPENSES CLAIMED ARE GENUINE. THEREFORE, CIT(A) CAM E TO A CONCLUSION THAT THE ASSESSING OFFICER IS CORRECTLY JUSTIFIED TO DISALLOW THE EXPENSES CLAIMED FOR WANT OF DETAILS AND EVIDEN CES. IN VIEW OF THE ABOVE REASONS, CIT(A) DIRECTED THE ASSESSING OF FICER TO DISALLOW 25% OF THE CURRICULAM DEVELOPMENT EXPENSES CLAIME D, IN THE ASSESSMENT OF A.Y.2011-12 AS IN HIS ORDER FOR A.Y.2 010-11. THEREFORE ,THE CIT(A) RESTRICTED THE DISALLOWANCE OF CURRICULAM DEVELOPMENT EXPENSES TO RS. 10,11,000/- (BEING 25% OF RS.40,44,000/-) IN THE ASSESSMENT OF A.Y.2011-12 AL SO. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 4. NONE APPEARED FROM THE ASSESSEE. WE PROCEED TO DECIDE THE APPEAL AFTER HEARING THE LD.D.R. THE CIT(A) DIRECT ED TO DISALLOW THE ITA NO.1789/MDS/2015 CO NO.110/MDS./2015 5 CURRICULUM DEVELOPMENT EXPENSES AT 25% OF TOTAL EXP ENSES OF THIS ON THE REASON THAT IN EARLIER YEAR FOR ASSESSMENT YEAR 2010-11, THE DISALLOWANCE OF CURRICULUM DEVELOPMENT EXPENSES WAS AT 25%. THE MAIN CONTENTION OF THE LD.D.R BEFOE US THAT CIT(A) MUST HAVE CALLED FOR REMAND REPORT UNDER RULES 46A OF INCOME TAX RU LES WHEN RESORTING TO AN ADHOC DISALLOWANCE IN COMPARISON WI TH THE PERCENTAGE OF AN EARLIER YEAR FOR WHICH THE APPEAL FILED BELATEDLY WAS DISMISSED. HOWEVER, LD.D.R IS NOT ABLE TO SHOW THE DIFFERENCE IN FACTS OF THIS ASSESSMENT YEAR TO THAT OF ASSESSMENT YEAR 2010-11. WHEN THE CIT(A) RECORDED ALL THE FACTS FOR BOTH THE ASSESSMENT YEARS. IT IS SEEN THAT THE FACTS WERE SAME FOR BOT H THE ASSESSMENT YEARS. HENCE, IN OUR OPINION, WHAT IS APPLICABLE TO THE ASSESSMENT YEAR 2010-11 WITH REGARD TO THE DISALLOWANCE OF CUR RICULUM DEVELOPMENT EXPENSES IS ALSO APPLICABLE FOR THE ASS ESSMENT YEAR 2011-12 ALSO. AS SUCH IN OUR OPINION CIT(A) HAS TA KEN A CORRECT VIEW ON THE MATTER AND IT IS NOT REQUIRED ANY INTERFERE NCE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO.1789/MDS/2015 CO NO.110/MDS./2015 6 5. SINCE WE HAVE DISMISSED THE REVENUES APPEAL, THE CROSS OBJECTIONS FILED BY ASSESSEE HAVE BECOME INFRUCTUOU S AND ACCORDINGLY DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AS WELL AS THE CROSS OBJECTIONS OF THE ASSESSEE BECOME INFRUCT UOUS. ORDER PRONOUNCED ON WEDNESDAY, THE 10 TH OF FEBRUARY,2016 AT CHENNAI. SD/- SD/- ( ' . . '# . $ ) ( N.R.S.GANESAN ) ( ) (CHANDRA POOJARI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 10 TH FEBRUARY,2016 . K S SUNDARAM. # %)-. / . ) /COPY TO: 1. !' /APPELLANT 2. %&!' /RESPONDENT 3. ' 0) () /CIT(A) 4. ' 0) /CIT 5. .3 %)4 /DR 6. 5 6( /GF