ACIT, New Delhi V. M/s. G4S Cash Services (India) Pvt. Ltd., New Delhi

ITA 1818/DEL/2012

• Counselvise Citation: 181820114 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 27-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 19-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C: NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI I. C. SUDHIR , JUDICIAL MEMBER ITA NO. 1818/DEL/2012 ASSESSMENT YEAR 2006-07 ACIT, CIRCLE 12(1) VS. M/S. G4S CASH S ERVICES (INDIA) NEW DELHI. PVT. LTD., F-89/4/2, OKHLA INDUSTRIAL AREA, PH-1, NEW DELHI 110 030. (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI SATPAL SINGH, SR. DR RESPONDENT BY : NONE ORDER PER I.C. SUDHIR, JUDICIAL MEMBER THE REVENUE HAS IMPUGNED FIRST APPELLATE OR DER ON THE FOLLOWING GROUNDS :- 1. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CI RCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE DISALLOWANCE OF RS. 15,87,472/- MADE BY THE AO ON ACCOUNT OF ROYALTY PAYMENT. 2. WHETHER LD. CIT(A) WAS CORRECT ON FACTS AND CIR CUMSTANCES OF THE CASE AND IN LAW IN DELETING THE ADDITION OF RS. 15,76,537/- MADE BY THE AON ON ACCOUNT OF NON RECONCILIATION OF ACCOUNTS OF PARTIES. 2. AT THE OUTSET OF HEARING LD. AR POINTED OU T THAT THE ISSUE RAISED IN GROUND NO. 1 IS COVERED BY THE DECISION DATED 31.3.2010 OF THE TRIBUNAL IN THE CASE OF G4S SECURITY SYSTEM INDIA (P) LTD. VS. DCIT (ASSTT. YEAR 2003-04), ITA NO. 1094/D/2008 AND IN THE CASE OF DCIT VS. G4S SECURIT Y SYSTEM HOLDING THE ROYALTY PAYMENT AS REVENUE EXPENDITURE. HE POINTED OUT THAT THE HONBLE DELHI ITA NO. 1818/DEL/12 2 HIGH COURT IN THE CASE OF G4S SECURITY SERVICES AND G4S SECURITY SYSTEM VIDE ITS JUDGMENT OF 11.7.2011 IN ITA NOS. 1943/2010, ITA NO . 763/2011 & 765/2011 HAS DISMISSED THE APPEAL OF THE DEPARTMENT AGAINST THE ABOVE ORDER OF THE TRIBUNAL IN WHICH ROYALTY WAS ALLOWED AS REVENUE EX PENDITURE. THE LD. DR DID NOT DISPUTE THE ABOVE SUBMISSION OF THE ASSESSEE. 3. HAVING GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW WE FIND THAT THE ASSESEE I.E. G4S CASH SERVICES INDIA PVT. LTD. A PR IVATE LTD. COMPANY IS ENGAGED IN THE BUSINESS OF HANDLING OF CASH AND BULLION. GR OUP 4 FALCK A/S OF POLITITORIAL COPENHEGAN, DENMARK IS A FOREIGN COMPANY WITH GROUP 4 HOLDINGS (P) LTD. OF MAHIPALPUR, NEW DELHI AS ITS SUBSIDIARY COMPANY BUT HOLDING COMPANY OF SEVEN OTHER COMPANIES IN INDIA, THE ASSESSEE BEING ONE O F THEM. THE INDIA HOLDING COMPANY GETS ROYALTY FROM ITS OTHER COMPANIES IN IN DIA AND IN TURN GIVES ROYALTY TO THE FOREIGN COMPANY. AN IDENTICAL ISSUE OF PAYME NT ROYALTY AS TO WHETHER IT IS CAPITAL OR REVENUE EXPENDITURE WAS RAISED IN THE GR OUP COMPANIES OF THE ASSESSEE I.E. G4S SECURITY SYSTEM INDIA (P) LTD. AN D G4S SECURITY SERVICE (PVT.) LTD. (SUPRA) BEFORE THE TRIBUNAL WHEREIN VIDE ITS O RDER DATED 31.3.2010 THE TRIBUNAL HELD THE ROYALTY PAYMENT AS REVENUE EXPEND ITURE. THE HONBLE HIGH COURT VIDE ITS DECISION DATED 11.7.2011 (SUPRA) HAS UPHELD THE ABOVE DECISION OF THE TRIBUNAL ON THE ISSUE. FOLLOWING THESE DECISION S, WE ARE OF THE VIEW THAT LD. CIT(A) HAS RIGHTLY DECIDED THE ISSUE RAISED IN GRO UND NO. 1 IN FAVOUR OF THE ASSESSEE HOLDING THAT THE ROYALTY PAYMENT AS REVENU E EXPENDITURE. THE SAME IS UPHELD. GROUND NO. 1 IS ACCORDINGLY REJECTED. ITA NO. 1818/DEL/12 3 GROUND NO. 2 4. THE AO DISALLOWED RS. 15,76,537/- IE. AM OUNT PAYABLE TO CERTAIN PARTIES SINCE THE ASSESSEE FAILED TO FURNISH INCOME TAX PAR TICULARS IN RESPECT OF THOSE PARTIES. LD. CIT(A) BEING CONVINCED WITH THE EXPLAN ATION OF THE ASSESSEE HAS HOWEVER DELETED THE ADDITION, WHICH HAS BEEN QUEST IONED BEFORE THE TRIBUNAL. 5. IN SUPPORT OF THE GROUND LD. DR HAS BAS ICALLY PLACED RELIANCE ON THE ASSESSMENT ORDER WITH THE SUBMISSION THAT THE ONUS LIES HEAVILY ON THE CLAIMANT ASSESSEE TO ESTABLISH THE GENUINENESS OF THE CLAIM TO WHICH THE ASSESSEE HAS THOROUGHLY FAILED TO. THE LD. CIT(A) WAS THUS NOT J USTIFIED IN DELETING THE ADDITION IN QUESTION MADE BY WAY OF DISALLOWANCE OF THE CLAIM. THE LD. AR ON THE OTHER HAND SUBMITTED THAT THE AO IGNORED THE EX PLANATION OF THE ASSESSEE SUPPORTED WITH CONFIRMATION / RECONCILIATION / LEDG ER ACCOUNT ALONGWITH DOCUMENTARY EVIDENCE RELATING TO CLOSING BALANCE OF THE SUNDRY CREDITORS. THE AO HAS MADE THE ADDITIONS WITHOUT VERIFYING THE REC ORDS AND WITHOUT PROVIDING PROPER OPPORTUNITY TO THE ASSESSEE COMPANY. THE ASS ESSEE HAD SUBMITTED THE INCOME TAX PARTICULARS AND DETAILS PERTAINING TO TH E PARTIES DURING THE FIRST APPELLATE PROCEEDINGS. IN SUPPORT HE REFERRED PAGE NO. 4 PARA 5 OF THE FIRST APPELLATE ORDER. 6. CONSIDERING THE ABOVE SUBMISSION WE FIND THAT BEFORE THE LD. CIT(A) THE ASSESSEE HAD FURNISHED THE ADDRESS AND INCOME TAX P ARTICULARS OF THE PARTIES CONCERNED AS UNDER :- ITA NO. 1818/DEL/12 4 7. THE LD. CIT(A) INVITED COMMENTS OF THE A O ON THE ABOVE DETAILS OF THE PARTIES BUT THE AO DID NOT BOTHER TO SEND HIS REMAN D REPORT EVEN AFTER 6 REMINDERS. LD. CIT(A) HAS THUS ACCEPTED THE VERSION OF THE ASSESSEE AS UNREBUTTED AND HAS DELETED THE ADDITION. WE DO NOT FIND INFIRMITY IN THE FIRST APPELLATE ORDER IN THIS REGARD AS IN ABSENCE OF ADV ERSE COMMENTS OF THE AO DESPITE SEVERAL OPPORTUNITIES GRANTED TO HIM, LD. C IT(A) WAS HAVING NO OPTION BUT TO ACCEPT THE CORRECTNESS OF THE EXPLANATION OF THE ASSESSEE. THE GROUND NO. 2 IS ACCORDINGLY REJECTED. 8. IN THE RESULT APPEAL IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 4 TH NOVEMBER, 2013 SD/- SD/- (S.V. MEHROTRA) ( I.C. SUDHIR ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE 14 TH NOVEMBER, 2013 NAME OF THE PARTY ADDRESS PAN VISTAR CONSTRUCTIONS P LTD. C-23, G.K. ENCLAVE PART-I, NEW DELHI. AAACV1033H VIVA CUSTOMS CARGO CLEARING AGENTS A-11-251/20/B,(176), MOTILAL NAGAR, BEGUMPET, HYDERABAD 500 016. AACFV0675L VEEJAY TRAVELS 28/2767, PONNETH SOUTH ROAD, KADAVNTHRA COCHIN-20 AJLPJ7316C ITA NO. 1818/DEL/12 5 VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER DEPUTY REGISTRAR, ITAT