DCIT (OSD) CIR 2(2), MUMBAI V. LIVING AUDIO P. LTD, MUMBAI

ITA 1981/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92950 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 12-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANIL J SATHE
• Assessee Lawyers: PAWAN KUMAR BUREA

Judgement Text

, J IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI , . . , , . . , BEFORE SHRI I.P. BANSAL , J M AND SHRI B.R. BASKARAN , A M . / ITA NO. 1981 / MUM/ 201 1 ( / ASSESSMENT YEAR : 200 7 - 0 8 ) DCIT(OSD) CIR 2(2), AAYAKAR BHAVAN, ROOM NO.545, 5 TH FLOOR, M.K. ROAD, MUMBAI 400 0 20 .. / APPELLANT V/S LIVING AUDIO PVT. LTD., 222, 2 ND FLOOR, KEWAL INDUSTRIAL EST ATE, LOWER PAREL, MUMBAI - 400013 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AAACL9063B APPELLANT BY : SHRI PAWAN KUMAR BUREA (DR) REVENUE BY : SHRI ANIL J. SATHE (A R) / DATE O F HEARING 15 .0 6 .201 5 / DATE OF ORDER 17 .0 6 .2015 / ORDER . . , / PER B.R. BASKARAN , A .M. THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 16 - 1 2 - 201 0 PASSED BY LD CIT(A) - 5 , M UMBAI AND IT RELATES TO THE ASSESSMENT YEAR 200 7 - 0 8 . LIVING AUDIO PVT. 2 2. THE REVENUE I S AGGRIEVED BY THE DECISION OF LD. CIT(A) IN DELETING THE ASSESSMENT OF RS.72.92 LAKHS MADE BY THE ASSESSING OFFICER. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN AUDIO AND VIDEO EQUIPMENTS . A CCORDING TO LD. AR, THE ASSESSEE IS ALSO UNDERTAKING CONTRACT WORKS O F INSTALLING H OME THEATERS AT THE PLACES OF ITS CUSTOMERS. THE AO NOTICE D FROM THE B ALANCE SHEET OF THE ASSES SEE THAT A SUM OF RS.7 2.92 LAKHS WAS SHOWN AS A DVANCES RECEIVED FROM CUSTOMERS AGAINST PROJECT SALES . THE AO ASKED THE ASSESSEE AS TO WHY THE SAME CANNOT BE CONSIDERED AS THE INCOME . IN RESPONSE THERETO , THE ASSESSEE SUBMITTED THAT IT I S UNDERTAKING SER VICE CONTRACT WORKS FROM ITS CUSTOMERS FOR INSTALLATION OF HOME THEATRES AND INCOME WA S RECOGNIZED ONLY UPON COMPLETION OF THE CONTRACT. THE AO WAS NOT CONVINC ED WITH THE SAID EXPLANATION. THE AO TOOK THE VIEW THAT THE ASSESSEE I S IN THE BUSINESS OF TRADIN G IN AUDIO AND VIDEO EQUIPMENTS AND THE ADVANCES MONEY RECEIVED BY THE ASSESSEE IS IN RESPECT OF SALES MADE BY IT. ACCORDINGLY, THE AO HELD THAT THE SUM OF RS. 72.92 LAKHS , REFERR ED ABOVE REP RESENT SALE PROCEED S OF THE ASSESSEE. ACCORDINGLY, HE ASSESSED THE SAME AS INCOME OF THE ASSESS E E . HOWEVER , THE LD CIT(A) DELETED THE SAME AND HENCE THE REVENUE HAS FILED THIS APPEAL BEFORE US. 4. WE NOTICE THAT THE ASSESSING OFFICER WAS UNDER THE IMPRESSION THAT THE ASSESSEE IS ENGAGED IN TRADING OF AUDIO AND VIDEO EQ UIPMENTS, I.E., BUSINESS ACTIVITIES RELATING TO UNDERTAKING OF CONTRACT WORKS FOR INSTALLA TION OF HOME THEATERS APPEARS TO HAVE ESCAPED THE ATTENTION OF THE ASSESSING OFFICER. WE NOTICE THAT THE LD. CIT(A) HAS APPRECIATED ALL THE BUSINESS ACTIVITIES CARRI ED ON BY THE ASSESSEE AND LIVING AUDIO PVT. 3 HENCE HE HAS DEL E TED THE ADDITION MADE BY THE AO BY ACCEPTING THE CONTENTIONS OF THE ASSESSEE THAT THE CONTRACT WORK WAS NOT COMPLETED IN THIS YEAR . HOWEVER, WE NOTICE THAT LD. CIT(A) HAS GRANTED RELIEF WITHOUT EXAMINING THE ADVAN CES RECEIVED FROM EACH PARTY, EXTEN T OF WORK COMPLETED, BALANCE SHEET AMOUNT TO BE RECEIVED ETC. 5. T HE ASSESSEE HAS FILED THE DETAILS OF ADVANCES RECEIVED IN PAGES 8 & 9 OF THE PAPER BOOK. O N A PERUSAL OF THE SAME, WE NOTICE THAT T HE ASSESSEE HAS R ECEIVED AGGREGATE AMOUNT OF ADVANCES OF RS.72.92 LAKHS FROM 7 PARTIES . WITH REGARD TO THE AMOUNT RECEIVED FROM SHRI ASHISH GOEL, WE NOTICE THAT THE ASSESSEE HAS RECEIVED ENTIRE AMOUNT ON 22.12.2006 ITSELF , BUT THE RELEVANT INVOICE WAS RAISED ONLY ON 31.0 3.2008 . W ITH REGARD TO A PARTY NAMED SHARVIL PATEL, WE NOTICE THAT THE ASSESSEE RECEIVED ADVANCES OF RS.45.80 LAKHS DURING THE YEAR UNDER CONSIDERATION AND INVOICES WAS RAISED ON 31.03.2008 FOR AN AMOUNT OF 49.52 LAKHS, WHICH MEANS THE ASSESSEE HAS RECEIV ED ALMOST 90% OF THE INVOICES VALUE DURING THE YEAR UNDER CONSIDERATION. 6. THE ABOVE SAID DISCUSSION W OULD SHOW THAT THE LD CIT(A) HAS NOT EXAMINED THE ISSUE RELATING TO REVENUE RECOGNITION PARTY WISE. THERE SHOULD NOT BE ANY DISPUTE THAT THE REVENU E HAS TO BE RECOGNIZED BY DULY CONSIDERING THE TERMS AND CONDITIONS ENTERED BETWEEN THE PARTIES. HOWEVER, THE ASSESSING OFFICER HAS PROCEEDED TO ASSESS THE IMPUGNED ADVANCE WITH THE OBSERVATION THAT THE RISKS AND REWARD ATTACHED TO THE SALES REPRESENTING ADVANCES HAVE ALREADY BEEN TRANSFERRED. IN OUR VIEW, THE AO SEEMS TO HAVE MADE THE ABOVE SAID OBSERVATION WITHOUT PROPERLY EXAMINING EACH OF THE ADVANCES RECEIVED BY THE ASSESSEE. W E FURTHER NOTICE THAT THE ASSESSING OFFICER, WHILE LIVING AUDIO PVT. 4 ASSESSING ADVANCES RECE IVED FROM PARTIES, HAS NOT GIVEN DEDUCTION FOR CORRESPONDING EXPENDITURE. 7 . THUS WE NOTICE THAT THE ASSESSING OFFICER HAS PROCEEDED TO ASSESS THE ADVANCE AMOUNT RECEIVED BY THE ASSESSEE WITHOUT EXAMINING THE SAME IN THE PROPER PROSPECTIVE. AS ALREADY STA TED THE LD. CIT(A) HAS ALSO GRANTED RELIEF WITHOUT EXAMINING THE ADVANCES RECEIVED FROM EACH OF THE PARTIES. UNDER THE SE SET OF FACTS, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRE S FRESH EXAMIN ATION AT THE END OF THE AO. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH TH E DIRECTION TO EXAMINE THE SAME AFRESH BY DULY EXAMINING THE NATURE OF TRANSACTIONS ENTERED BY THE ASSESSEE AND ALSO BY DULY CONSIDERING INFORMATION AND EXPLA N ATIONS THAT M AY BE FURNISHED BY THE ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. 8 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT O N 17TH DAY OF JUNE, 201 5. SD . . I.P.BANSAL JUDICIAL MEMBER SD . . B.R. BASKARAN ACCOUNTANT MEMBER MUMBAI, DATED : 17 . 06 .2015 PATEL LIVING AUDIO PVT. 5 / COPY OF THE ORDE R FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE CIT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER TRUE COPY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI