The DCIT, Circle-8, Ahmedabad V. M/s. Winners Business Link Pvt.Ltd., Ahmedabad

ITA 2021/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1191 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-06-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 14A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., , !' BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ I.T.A. NO.2021/AHD/2012 ( / ASSESSMENT YEAR : 2009-10) THE DCIT CIRCLE-8 AHMEDABAD / VS. WINNERS BUSINESS LINK PVT.LTD. JEEVAN KAMAL COMPLEX NR.NAVRANGPURA POLICE STATION NAVRANGPURA, AHMEDABAD $ ./ ./ PAN/GIR NO. : AAACW 1747 P ( $' / APPELLANT ) .. ( ()$' / RESPONDENT ) $'* / APPELLANT BY : SHRI K. MADHUSUDAN, SR.DR ()$'+* / RESPONDENT BY : -NONE- ,+ / DATE OF HEARING 16/06/2016 -./+ / DATE OF PRONOUNCEMENT 07/07/2016 / O R D E R PER SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-XIV, AHMEDABAD DATED 28/06/2012 FOR THE ASSESSMENT YEAR 2009-10. ITA NO. 2021/AH D/2012 DCIT VS. WINNERS BUSINESS LINK PVT.LTD. ASST.YEAR 2009-10 - 2 - 2. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED ON THEIR BEHA LF THOUGH AS PER OFFICE RECORDS, THE NOTICE OF HEARING WAS DULY SERV ED TO THE ASSESSEE THROUGH OFFICE OF DCIT, CIRCLE-4(1)(2), AHMEDABAD L ETTER DATED 18/04/2016. WE THEREFORE PROCEED TO DECIDE THE AP PEAL EX-PARTE QUA THE ASSESSEE. 2.1. THE RELEVANT FACTS AS CULLED OUT FROM THE MATE RIALS ON RECORD ARE AS UNDER:- 2.2. ASSESSEE IS A COMPANY STATED TO BE IN THE BUS INESS OF PROVIDING DISCOUNT CARDS. ASSESSEE FILED ITS RETURN OF INCO ME FOR AY 2009-10 ON 25/09/2009 DECLARING TOTAL INCOME OF .NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S. 143(3) OF THE ACT VIDE ORDER DATED 17/08/2011 AND THE TOTAL INCOME WAS DETERMINED AT RS.1,90,12,590/-. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE ORDER DAT ED 28/06/2012 (IN APPEAL NO.CIT(A) XIV/ACIT, CIR.8/63/2011-12) GRANTE D SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GR OUND:- (1) WHETHER THE CIT(A) IS RIGHT IN LAW AND ON FACT S IN DELETING THE ADDITION MADE OF RS.91,26,856/-, ON ACCOUNT OF MEMBERSHIP FEES AFTER REJECTING THE ACCOUNTING POLICY FOLLOWED BY THE AO.. ITA NO. 2021/AH D/2012 DCIT VS. WINNERS BUSINESS LINK PVT.LTD. ASST.YEAR 2009-10 - 3 - 2.3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A O NOTICED THAT ASSESSEE WAS ENGAGED IN THE BUSINESS OF PROVIDING D ISCOUNT CARDS. ASSESSEE USED TO ISSUE CARDS TO THE MEMBERS ON PAYM ENT OF ONE TIME NON-REFUNDABLE MEMBERSHIP FEES, THE MEMBERSHIP PERI OD VARIED FROM ONE TO THIRTY YEARS AND THE MEMBERSHIP WAS NON-TRA NSFERABLE. THE CARD ISSUED BY THE ASSESSEE ENTITLED THE MEMBERS TO CERT AIN BENEFITS IN THE FORM OF DISCOUNT ON PURCHASES MADE BY THEM FROM SPE CIFIED SHOPS AND ALSO INSURANCE COVERAGE UNDER CERTAIN POLICIES OF G ENERAL INSURANCE. HE ALSO NOTICED THAT THE SALE OF CARDS WAS MADE THROUG H AGENTS WHO GOT COMMISSION FOR THE SERVICES RENDERED BY THEM, THE I NSURANCE PREMIUM PAYABLE ON THE POLICIES WAS ONE TIME PAYMENT TO NEW INDIA ASSURANCE CO.LTD. BY THE ASSESSEE AND THE ASSESSEE DID NOT HA VE TO PAY CLAIMS AGAINST THE RISK COVERED. HE ALSO NOTICED THAT COM MISSION WAS PAYABLE TO THE FIELD FORCE WITHIN ONE OR TWO MONTHS OF REALIZA TION OF CARD MONEY AND IT WAS A MAJOR EXPENSES OF THE ASSESSEE. AO NOTICE D THAT THE ASSESSEE RECOGNIZED REVENUE ON THE BASIS OF THE PERIOD FOR W HICH THE INCOME WAS RECEIVED AND THE EXPENSES OF INSURANCE PREMIUM WAS SPREAD OVER THE NUMBER OF YEARS FOR WHICH INSURANCE WAS AVAILABLE A ND THE EXPENSES WERE EXPENDED TAKING 30 YEARS AS THE EFFECTIVE LIFE OF A MEMBER. AO WAS OF THE VIEW THAT THE MOMENT THE ASSESSEE ENTERE D INTO AN AGREEMENT WITH NEW MEMBER AND DISCHARGED ITS OBLIGATION OF IN SURANCE, ETC. INCOME ACCRUED TO THE ASSESSEE AND THE SAME CANNOT BE POST PONED TO FEW YEARS. AO ALSO NOTICED THAT ASSESSEE HAD DEBITED ONLY THE INSURANCE PREMIUM ON ITA NO. 2021/AH D/2012 DCIT VS. WINNERS BUSINESS LINK PVT.LTD. ASST.YEAR 2009-10 - 4 - THE BASIS OF PERIOD FOR WHICH THE MEMBERSHIP WAS AV AILABLE AND AS FAR AS OTHER EXPENSES ARE CONCERNED, IT HAD CLAIMED THE EN TIRE EXPENSES IN THE FINANCIAL YEAR IN WHICH IT WAS INCURRED. HE WAS OF THE VIEW THAT ASSESSEE DID NOT RELATE EXPENSES TO THE MEMBERSHIP FEES AND THEREFORE NO CLAIM FOR PROVISION OF EXPENSES CAN BE MADE. HE ALSO NOTICED THAT THOUGH THE ASSESSEE HAD SHOWN RECEIPTS OF RS.4,00,88,955/-, BU T IN THE P&L ACCOUNT ASSESSEE HAD SHOWN MEMBERSHIP FEES OF RS.NIL. HE TH EREAFTER CONCLUDED THAT THE ACCOUNTING POLICIES FOLLOWED BY THE ASSESS EE WAS INCORRECT AND ACCORDINGLY REJECTED THE SYSTEM OF ACCOUNTING FOLLO WED BY THE ASSESSEE AND AFTER REJECTING THE BOOKS OF ACCOUNTS, CONSIDER ED THE ENTIRE MEMBERSHIP-FEE RECEIPTS AS INCOME AND AFTER ALLOWIN G THE EXPENDITURE TOWARDS COMMISSION AND INSURANCE, DETERMINED THE TO TAL INCOME AT RS.1,88,54,895/-. AGGRIEVED BY THE ORDER OF AO, A SSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER:- 2.3 DECISION: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND T HE SUBMISSIONS GIVEN BY THE APPELLANT. THE A. O. HAS MADE TWO ADDI TIONS, ONE BY REJECTING THE ACCOUNTING POLICY AND TREATING THE EN TIRE MEMBERSHIP FEE RECEIVED AS TAXABLE IN THE CURRENT ASSESSMENT YEAR. THE OTHER DISALLOWANCE HAS BEEN MADE U/S. 14A BY APPLYING THE PROVISIONS OF RULE 8D. SINCE THE APPELLANT HAS FILED GROUNDS OF APPEAL WHICH ARE INTERLINKED, THE SAME ARE TAKEN UP TOGETHER. HOWEVE R, FOR THE SAKE OF CONVENIENCE, THE DECISION IS BEING GIVEN WITH REFER ENCE TO THE NATURE OF ADDITION / DISALLOWANCE SEPARATELY. ITA NO. 2021/AH D/2012 DCIT VS. WINNERS BUSINESS LINK PVT.LTD. ASST.YEAR 2009-10 - 5 - (I) ADDITION ON ACCOUNT OF INSURANCE INCOME: IT IS NOTED THAT THE ISSUE IS COVERED BY MY ORDER F OR A. Y. 2008-09. WHILE DECIDING THE APPEAL FOR THAT YEAR, IT WAS NOTED TH AT THE ITAT HAS DECIDED THE CASE IN FAVOUR OF THE APPELLANT UP TO A SSESSMENT YEAR 2002- 03. FURTHER, THE CIT(A), FOLLOWING THE ORDER OF ITA T, HAVE DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT UP TO A. Y. 2007-0 8. RECENTLY, 'A' BENCH OF HON'BLE ITAT, AHMEDABAD HAS DECIDED THE APPEAL F OR A. Y. 2005-06 IN ITA NO. 36247AHD/2008 DATED 27/05/2011 IN THE CA SE OF THE APPELLANT AND THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE APPELLANT. RESPECTFULLY FOLLOWING THE DECISIONS OF MY PREDECES SORS AND THAT OF ITAT, AHMEDABAD, THE ADDITION MADE BY THE A.O. IS D IRECTED TO BE DELETED AND THE GROUND OF APPEAL IS ALLOWED. 3. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 3.1. BEFORE US, LD.SR.DR TOOK US THROUGH THE FINDIN GS OF THE AO AND SUPPORTED THE ORDER OF AO. 4. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RES PECT TO ADDITION MADE ON ACCOUNT OF MEMBERSHIP-FEES RECEIVED BY THE ASSESSEE . AO WAS OF THE VIEW THAT THE ENTIRE RECEIPT OF MEMBERSHIP-FEES IS THE INCOME OF THE ASSESSEE. WE FIND THAT LD.CIT(A) WHILE DECIDING T HE ISSUE IN FAVOUR OF ASSESSEE HAD NOTED THAT THE ISSUE IN THE YEAR UNDER CONSIDERATION WAS COVERED BY HIS ORDER IN ASSESSEES OWN CASE FOR AY 2008-09 AND WHILE ITA NO. 2021/AH D/2012 DCIT VS. WINNERS BUSINESS LINK PVT.LTD. ASST.YEAR 2009-10 - 6 - PASSING THAT ORDER IT WAS NOTED THAT THE TRIBUNAL H AD DECIDED THE ISSUE IN FAVOUR OF ASSESSEE UPTO AY 2002-03. HE HAS FURTHER NOTED THAT THE LD.CIT(A), FOLLOWING THE ORDER OF ITAT HAS DECIDED THE ISSUE IN FAVOUR OF ASSESSEE UPTO AY 2007-08 AND FURTHER THE COORDIN ATE BENCH OF TRIBUNAL (ITAT A BENCH AHMEDABAD) IN ASSESSEES O WN CASE FOR AY 2005-06 IN ITA NO.3624/AHD/2008, ORDER DATED 27/05/ 2011 HAD DECIDED THE ISSUE IN FAVOUR OF ASSESSEE. BEFORE US, REVENU E HAS NOT PLACED ANY MATERIAL ON RECORD TO CONTROVERT THE FINDINGS OF LD .CIT(A) NOR HAS PLACED ANY BINDING DECISION. IN VIEW OF THE AFORESAID FAC TS, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A) AND THUS THIS GROUND OF REVENUE IS DISMISSED. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 07 /0 7 /2016 SD/- SD/- .. () () ( R.P. TOLANI ) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 07/ 07 /2016 3..,.../ T.C. NAIR, SR. PS ITA NO. 2021/AH D/2012 DCIT VS. WINNERS BUSINESS LINK PVT.LTD. ASST.YEAR 2009-10 - 7 - !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. $' / THE APPELLANT 2. ()$' / THE RESPONDENT. 3. 456 7 / CONCERNED CIT 4. 7 ( ) / THE CIT(A)-XIV, AHMEDABAD 5. 89:(56 , 56/ , 4 / DR, ITAT, AHMEDABAD 6. :<=, / GUARD FILE. / BY ORDER, )8( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 17.6.16 (DICTATION-PAD 8- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 1.7.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.7.7.16 LATE EVENING 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8.7.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER