MAHINDRA WATER UTILITEIS LTD, MUMBAI V. ASST CIT RG 6(3), MUMBAI

ITA 1933/MUM/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9773 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 28-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 11-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Assessee Lawyers: PRASAD BAPAT
• Keywords: Business expenditure; Opportunity of being heard
• Section: 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE S HRI B.R. BASKARAN (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 1933 /MUM/20 1 3 ASSESSMENT YEAR: 2009 - 2010 M/S MAHINDRA WATER UTILITIES LTD., 5 TH FLOOR, MAHINDRA TOWERS, WORL I, MUMBAI - 400018 PAN: AAACM4471A VS. THE ASSTT. CIT, RANGE 6(3), AAYKAR BHAVAN, MUMBAI - 400020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRASAD BAPAT (AR) RESPONDENT BY : SHRI M.C. OMI NINGSHEN (DR) DATE OF HEARING: 28 /04 /201 7 DATE OF PRONOUNCEMENT: 27 / 0 7 /201 7 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 12/01/2012 PASSED BY LD. CIT (APPEALS ) - 12 , MUMBAI FOR THE A S S ESSM ENT YEAR 2009 - 2010 , WHEREBY THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE APPELLANT/ASSESSEE FILED AGAINST ASSESSMENT ORDER PASSED U/S 143 (3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY EN GAGED IN THE BUSINESS OF OPERATING AND MANAGING WATER AND SEWERAGE SYSTEMS , FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR DECLARING THE TOTAL INCOME OF RS. 7,57,94,025/ - UNDER THE NORMAL PROVISIONS OF THE ACT AND RS. 7,88,41, 527/ - UNDER SEC TION 115JB OF THE ACT. THE RETURN WAS PROCESSED AND AFTER 2 ITA NO. 1933/MUM/2013 ASSESSMENT YEAR: 2009 - 2010 SCRUTINY THE AO DETERMINED THE ASSESSEES INCOME AT RS. 8,41,94 ,030/ - . THE ASSESSEE HA D MADE PROVISION FOR PAYMENT OF TECHNICAL FEES OF RS. 84,00,000/ - PAYABLE TO UNITED UTILITIES INTERNATIONAL LTD. HOWEVER, THE SAME HAD NOT BEEN ADDED BACK WHILE COMPUTING THE TOTAL INCOME FOR THE YEAR UNDER CONSIDERATION. THE AO ADDED THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE HOLDING THAT THE INCOME TAX ACT PERMITS THE DEDUCTION OF ONLY THOSE EXPENSES WHICH ARE ACT UALLY INCURRED DURING THE YEAR OR WHOSE LIABILITY TO INCUR ARISES DURING THE YEAR. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT (A) IN FIRST APPEAL. THE LD. CIT (A) AFTER HEARING THE ASSESSEE DI S MISSED THE AP PEAL BY FOLLOWING THE ORDERS OF THE THEN CIT (A) PASSED IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR S 2007 - 08 AND 2008 - 09. 4 . STILL A GGRIEVED BY THE IMPUGNED ORDER PASSED BY THE LD. CIT (APPEALS) , THE ASSESSE E HAS PREFERRED THIS APPEAL BEFORE THE TRIB UNAL ON THE FOLLOWING EFFECTIVE GROUND: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 84,00,000/ - AS CONTINGENT LIABILITY WITHOUT APPRECIATING THAT IT WAS AN ACCRUED LIABILITY AND BUSI NESS EXPENDITURE OF THE APPELLANT. 5. DURING PENDENCY OF THE SAID APPEAL THE ASSESSEE RAISED THE FOLLOWING ADDITIONAL GROUND OF APPEAL : 2 . WITHOUT PREJUDICE TO OUR CONTENTION AS PER GROUND NO 1 SUBMITTED ALONG WITH FORM NO. 36 THAT PROVISION OF RS. 84 ,00,000 WS AN ACCRUED LIABILITY AND BUSINESS EXPENDITURE, AS AN ALTERNATE GROUND, BASED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, BILL RAISED BY UNITED UTILITIES INTERNATIONAL LIMITED BEING BILL NO. B 3450 DATED 18 TH APRIL 2008 TOWARDS 3 ITA NO. 1933/MUM/2013 ASSESSMENT YEAR: 2009 - 2010 FEES P AYABLE BE ALLOWED AS EXPENDITURE FOR THE YEAR UNDER CONSIDERATION. 3 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE EXPENSES OF RS. 4,48,041 REVERSED AND OFFERED DURING THE YEAR BE TREATED AS NOT TAXABLE SINCE THE CORRESPONDING EXPENSES PROVIDED AND CLAIMED IN AY 2008 - 09 HAVE BEEN DISALLOWED. 6. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL HAS CONFIRMED THE SIMILAR ADDITION IN ASSESSEES OWN CASE ITA NO 1032/MUM/2011 AND 6429/MUM/2011 FOR THE ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 RESPECTIVELY VIDE COMMON ORDER DATED 07.05.2014 UPHOLDING THE FINDINGS OF THE LD. CIT(A) THAT SINCE THE ASSESSEE HAS FAILED TO PRODUCE INVOICES RAISED BY THE PARTY DURING THE YEAR UNDER CONSIDERATION FOR THE SERVICES RENDERED, THE AO HAS RIGHT LY MADE THE ADDITION IN QUESTION TREATING THE SAME AS UNASCERTAINED OR CONTINGENT LIABILITY. BUT IN THE PRESENT CASE THE ASSESSEE HAS SUBMITTED THE INVOICE RAISED BY THE CONCERNED PARTY, THEREFORE, THE LD CIT(A) HAS WRONGLY CONFIRMED THE ADDITION. 7 . ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE RELYING ON THE ORDER UNDER CHALLENGE SUBMITTED THAT THERE IS NO INFIRMITY IN THE IMPUGNED ORDER AS THE IDENTICAL ISSUE HAS ALREADY BEEN DECIDED AGAINST THE ASSESSEE BY THE ITAT IN ASSESSEES OWN APPEALS F OR THE ASSESSMENT YEAR S 2007 - 08 AND 2008 - 09. THE LD. DR FURTHER SUBMITTED SINCE THERE IS NO MERIT IN THE ASSESSEES APPEAL, THE SAME IS LIABLE TO BE SET ASIDE. 8 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL ON RECORD. GROUND NO 2&3 A RE REGARDING CONFIRMATION OF ADDITION RS. 84,00,000/ - MADE BY THE AO. THE COORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THE IDENTICAL ISSUE AGAINST THE ASSESSEE IN ASSESSEES OWN CASE ITA NO 1032/MUM/2011 AND 6429/MUM/2011 FOR THE ASSESSMENT YEAR 2007 - 08 AND 4 ITA NO. 1933/MUM/2013 ASSESSMENT YEAR: 2009 - 2010 2008 - 09 RESPECTIVELY VIDE COMMON ORDER DATED 07.05.2014. WE NOTICE THAT THE COORDINATE BENCH HAS UPHELD THE FINDINGS OF THE LD. CIT(A) PERTAINING TO THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 ON THE GROUND THAT SINCE THE ASSESSEE HAS FAILED TO PRODUCE ANY I NVOICE RAISED BY UNITED UTILITIES LTD. PERTAINING TO THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION , THE LD. CIT(A) HAS RIGHTLY CONFIRMED THE ACTION OF THE AO AND TREATED THE AMOUNT IN QUESTION AS UNASCERTAINED OR CONTINGENT LIABILI TY. 9 . HOWEVER, IN THE PRESENT CASE, AS POINTED OUT BY THE LD. COUNSEL, THE FACTS AND CIRCUMSTANCES ARE DIFFERENT FROM THE ASSESSEES CASES PERTAINING TO THE EARLIER YEARS REFERRED ABOVE . THE ASSESSEE HAS SUBMITTED BEFORE US THE COPY OF INVOICE DATED 18.0 4.2008 RAISED BY UNITED UTILITIES WHICH PRIMA FACIE ESTABLISH THAT THE PARTY HAS RAISED THE BILL/INVOICE FOR THE SERVICES RENDERED DURING THE RELEVANT FINANCIAL YEAR. SINCE, THE ASSESSEE HAS PLACED ON RECORD THE INVOICE IN RAISED BY THE PARTY CONCERNED, IN OUR CONSIDERED OPINION THE SAME IS REQUIRED TO BE VERIFIED BY THE AO. SO , IN THE INTEREST OF JUSTICE, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND RESTORE TH IS ISSUE BACK TO THE AO WITH THE DIRECTION TO VERIFY THE INVOICE IN QUESTION AND PASS ASSESSME NT ORDER AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 10. VIDE GROUND NO 3, THE ASSESSEE HAS URGED THAT THE TRIBUNAL HAS CONFIRMED THE DISALLOWANCE FOR THE PROVISIONS FOR VARIOUS EXPENSES AMOUNTING TO RS. 4,48,041/ - IN T HE YEAR 2008 - 09, HOWEVER, THESE EXPENSE WERE REVERSED AND OFFERED TO TAX BY THE APPELLANT IN THE ASSESSMENT YEAR 2009 - 10. SINCE, THE EXPENSES WERE DISALLOWED IN THE YEAR 2008 - 09 THE REVERSAL OF THESE EXPENSES SHOULD NOT BE ONCE AGAIN TAXED IN THE ASSESSMEN T YEAR 2009 - 10. T HE ASSESSEE HAS RAISED THIS GROUND FOR THE FIRST TIME BEFORE THE TRIBUNAL. HENCE, THE SAME IS REQUIRED TO BE VERIFIED BY THE AO. HENCE, WE RESTORED THIS ISSUE TO THE FILE OF AO FOR VERIFICATION AND TAKING APPROPRIATE ACTION AS PER THE PROV ISIONS OF LAW. 5 ITA NO. 1933/MUM/2013 ASSESSMENT YEAR: 2009 - 2010 IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 200 9 - 2010 IS ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 27 TH JULY , 2017 . SD/ - SD/ - ( B.R. BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 27 / 0 7 / 2017 ALINDRA PS / COPY OF THE ORDER FORWARDED T O : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI