The ACIT, Circle-1, Surat V. M/s. Proximus Knowledge & Tech.Services Pvt.Ltd., Mumbai

ITA 2057/AHD/2012

• Counselvise Citation: 205720514 RSA 2012
• Duration Of Justice: 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 12-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK JOSHI
• Keywords: Depreciation; Opportunity of being heard
• Section: 14A; 37; 2

Judgement Text

`IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH, AHMEDABAD BEFORE SHRI D. K. TYAGI, JUDICIAL MEMBER AND SHRI T. R. MEENA, ACCOUNTANT MEMBER I.T.A. NO. 2057/ AHD/2012 (ASSESSMENT YEAR 2008-09) ACIT, CIRCLE 1, SURAT VS. M/S. PROXIMUS KNOWLEDGE & TECH. SERVICES PVT. LTD., BUILDING NO.16, INTERFACE, B WING, 3 RD FLOOR, LINK ROAD, MALAD (WEST) MUMBAI-64 PAN/GIR NO. : AADCA8575G (APPELLANT) .. (RESPONDENT) APPELLANT BY: SHRI ALOK JOSHI, CIT DR RESPONDENT BY: SHRI R.C.JAIN WITH SHRI PULKIT VIMAL MEHTA, ARS DATE OF HEARING: 26.10.2012 DATE OF PRONOUNCEMENT: 23.11.2012 O R D E R PER SHRI T. R. MEENA, AM:- THIS IS REVENUES APPEAL EMANATED FROM THE ORDER O F LD. CIT(A) I, SURAT ORDER DATED 26.06.2012 FOR THE ASSESSMENT YEA R 2008-09. FOLLOWING EFFECTIVE GROUNDS WERE RAISED BY THE REVENUE: 1. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION MADE O N ACCOUNT OF INTEREST PAYMENT CLAIMED U/S 36(L)(III) TO RS.1,81, 738/- AS-THE ASSESSEE HAS CLAIMED BANK CHARGES AS INTEREST PAID WHICH IS NOT ALLOWABLE AS EXPENSES U/S 36(L)(III). 2. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED BY DELETING THE ADDITION OF RS.20 , 12 , 571/- MADE I.T.A.NO.2057 /AHD/2012 2 U/S 40(A)(IA) EVEN THOUGH THE, ASSESSEE HAD VIOLATE D THE VERY PROVISIONS OF SECTION 40(A)(IA). 3. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED BY RESTRICTING THE ADDITION OF RS. L , 04 , 06,318/- MADE U/S 40(A)(IA) TO RS.L4 , 92,859/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO DEDUCT TDS AS PER THE P ROVISIONS OF SECTION 40(A)(IA). , 4. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AN D IN LAW, THE LD. CIT(A) HAS ERRED BY ALLOWING DEPRECIATION OF RS.44, 34,403/- WHICH THE A.O. HAD ADDED IN THE ABSENCE OF ANY JUST IFICATION FROM THE ASSESSEE, WITHOUT APPRECIATING THE FACT THAT TH E ASSESSEE HAS NOT DONE ANY BUSINESS ACTIVITIES DURING THE YEAR CONCER NED. 2. THE FIRST GROUND OF APPEAL IS AGAINST RESTRICTIN G THE ADDITION MADE BY THE A.O. AT RS.3,77,721 TO RS.1,81,738/- U/S 36( 1)(III) OF THE INCOME TAX ACT, 1961. THE A.O. OBSERVED THAT THE ASSESSEE HAD CLAIMED INTEREST PAYMENT OF RS.3,77,721/- IN THE P & L ACCOUNT WHICH WAS PAID TO THE BANK AND OTHER PERSONS. THE ASSESSEE HAS ADVANCED INTEREST FREE LOAN OF RS.8,07,37,042/- TO THE RELATED PARTY NAMELY M/S. M OBILE TELECOMMUNICATION LTD. THE A.O. HAD GIVEN REASONAB LE OPPORTUNITY OF BEING HEARD BUT THE REPLY OF THE ASSESSEE WAS NOT F OUND CONVINCING TO HIM. THUS, HE MADE ADDITION OF RS.3,77,721/-. BEI NG AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A). HE HAD FURNISHED DETAILS OF EXPENSES OF RS.3,77,721/- BEFO RE LD. CIT(A) WHICH HAS BEEN CONSIDERED BY HIM, THEREFORE, HE ALLOWED P ART RELIEF BY RESTRICTING THE ADDITION OF RS.1,81,738/- IN PLACE OF RS.3,77,721/-. NOW, THE REVENUE IS BEFORE US. 3. LD. D.R. CONTENDED THAT THE TOTAL EXPENSES ON AC COUNT OF INTEREST HAS BEEN DEBITED IN THE P & L ACCOUNT AT RS.3,77,72 1/-. THE ASSESSEE HAD ALSO GIVEN INTEREST FEE LOAN OF RS.8,07,37,042/- TO THE RELATED PARTY. THUS, THE A.O. HAD MADE ADDITION WHICH IS REQUIRED TO BE CONFIRMED. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED THAT LD. CIT(A) HAS RIGHTLY I.T.A.NO.2057 /AHD/2012 3 CONFIRMED THE ADDITION TO THE EXTENT OF RS.1,81,738 /- AFTER REDUCING VARIOUS EXPENSE FROM RS.3,77,721/-. THUS, THE ORDE R OF LD. CIT(A) IS TO BE CONFIRMED. 4. WE HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AND THE FACTS OF THE CASE. THE TOTAL EXPENSES CLAIMED UNDER THE HEA D INTEREST OF RS.3,77,721/- WHICH INCLUDES INTEREST PAID ON SECUR ED LOAN FOR VEHICLE, BANK CHARGES AND ALSO DISALLOWANCE U/S 14A OF THE I NCOME TAX ACT, 1961. THE DETAILS SUBMITTED BY THE ASSESSEE APPEARS TO BE REASONABLE AS THEY ARE NOT RELATED TO THE INTEREST BUT BANK CHARGES AND OT HER EXPENSES CHARGED BY THE BANK. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). THUS, THE REVENUES APPEAL ON THIS GROUND IS DISMISSED. 5. GROUNDS NO.2 & 3 ARE RELATED TO ADDITION OF RS.2 0,12,571/- OF RS.1,05,06,318/- U/S 40(A)(IA) FOR NOT PAYING TDS I N THE PRESCRIBED TIME. THE A.O. OBSERVED THAT THE ASSESSEE HAD MADE PAYMEN TS OF RS.20,12,571/- TO CONTRACTORS AS WELL AS PAYMENT OF RENT. SIMILARLY, THE APPELLANT HAS PAID RENT OF RS.1,04,06,318/- TO VARI OUS PARTIES BUT NOT PAID, THE TDS AS WELL AS DETAILS OF PAYMENT HAD NOT BEEN SUBMITTED BY THE ASSESSEE. THEREFORE, NOT ONLY TDS NOT PAID BY THE ASSESSEE BUT THE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR BUS INESS PURPOSE, HAS NOT BEEN ESTABLISHED BY THE APPELLANT BEFORE THE A.O. THEREFORE, A FURTHER ADDITION OF RS.1,04,06,318/- WAS MADE U/S 40(A)(IA) & U/S 37 OF THE INCOME TAX ACT, 1961. THE MATTER WAS CARRIED BEFOR E LD. CIT(A) WHO HAD PARTLY CONFIRMED THE APPEAL OUT OF RS.1,04,06,3 18/- ON THE GROUND THAT THE CLAIM OF DEDUCTION OF RS.9,09,386/- WAS PE RTAINING TO APRIL 2008 AND ON RS.5,02,473/- NO TDS WAS DEDUCTED. THUS, HE CONFIRMED THE ADDITION OF RS.14,92,859/-. BUT THE REMAINING ADDI TION OF RS.89,13,473/- WAS ALLOWED BY LD. CIT(A) BY TAKING REMAND REPORT F ROM THE A.O. AND ALSO FOLLOWING THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL RENDERED IN I.T.A.NO.2057 /AHD/2012 4 THE CASE OF BHARTI SHIPYARD IN I.T.A.NO. 2404/MUM/2 009 AND DECISION OF HONBLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF VIRGIN CREATORS IN GA NO.3200/2011 DATED 23.11.2011. NOW, THE REVENUE IS BEFORE US. 6. LD. D.R. VEHEMENTLY RELIED ON THE ORDER OF THE A .O. WHEREAS FROM THE SIDE OF THE APPELLANT, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAD DEDUCTED TDS AND DEPOSITED THE SAM E IN THE GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF FILING OF RETURN. HE ALSO RELIED ON THE DECISION OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF VIRGIN CREATORS (SUPRA). FURTHER, THE ASSESSEE CLAIMED THAT COPY O F RENT AGREEMENT BETWEEN PEOPLE INTERACTIVE (INDIA) PVT. LTD. AND PA RINEE DEVELOPERS AND PROPERTIES PVT. LTD. (PAGES 67-79 OF THE PAPER BOOK ) HAD BEEN SUBMITTED BEFORE LD. CIT(A) TO PROVE THE PURPOSE OF EXPENDIT URE WHICH WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS, W HICH HAS BEEN ALLOWED BY THE CIT(A) AFTER SEEKING THE REMAND REPORT FROM THE A.O. THE ASSESSEE IS RUNNING A CALL CENTRE AND HAD ACQUIRED VARIOUS FACILITIES FORM BOTH THE COMPANIES AND PAID RENT TO THEM. ACCORDIN GLY, HE HAD DEDUCTED TDS AND PAID BEFORE DUE DATE OF FILING OF RETURN BY THE ASSESSEE. THUS, HE REQUESTED TO CONFIRM THE ORDER OF LD. CIT(A). 7. WE HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW AND GONE THROUGH THE CASE LAWS CITED BY THE LD. A.R. THE ASSESSEE H AD DEDUCTED TDS AND PAID BEFORE DUE DATE OF FILING OF RETURN I.E. 30.09 .2008 FOR THE ASSESSMENT YEAR 2008-09 & PROVED THE PURPOSE O EXPENSES. THER EFORE, WE CONFIRM THE ORDER OF LD. CIT(A) AND THE APPEAL OF THE REVEN UE STANDS DISMISSED FOR THESE GROUNDS. 8. GROUND NO.4 IS AGAINST ALLOWING THE DEPRECIATION OF RS.44,34,400/- BY LD. CIT(A) IN ABSENCE OF ANY COMP UTATION. WE HAVE PERUSED THE ORDER OF LD. CIT(A) AND ALSO THE PAPER BOOK PAGE 21 WHICH SHOWS THAT THE ASSESSEE HAD DEBITED THE DEPRECIATIO N BEFORE PROFIT FOR I.T.A.NO.2057 /AHD/2012 5 TAXATION. NO COMPUTATION OF INCOME HAS BEEN FILED BY THE APPELLANT AT ANY STAGE. THEREFORE, LD. CIT(A) HAS RIGHTLY SET ASIDE THIS ISSUE TO THE A.O. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A). ACCORDINGLY, WE CONFIRM THE ORDER OF LD. CIT(A). 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. 10. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD./- SD./- (D. K. TYAGI) (T. R. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER SP COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 19.11.2012 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20.11.2012.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 23/11/2012 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.23/11 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23/1 1/2012 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. . I.T.A.NO.2057 /AHD/2012 6