ACIT, New Delhi V. M/s. Nussli Switzerland Ltd., New Delhi

ITA 2142/DEL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9245 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 10-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES E: DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA.NO.2142/0DEL./2017 ASSESSMENT YEAR 2012-2013 ACIT, CENTRAL CIRCLE - 17, ROOM NO.103, 1 ST FLOOR, HALL NO.1, ARA CENTRE, E-2, JHANDEWALAN, NEW DELHI. VS., M/S. NUSSALI SWITZERLAND LTD., C/O. KPA LEGAL, A-6, NITI BAGH, NEW DELHI 049. PAN AADCN3137F (APPELLANT) (RESPONDENT) FOR REVENUE : MS. RINKU SINGH, SR. D.R. FOR ASSESSEE : - NONE - DATE OF HEARING : 08 .0 7 .2019 DATE OF PRONOUNCEMENT : 08 .0 7 .2019 ORDER PER BHAVNESH SAINI, J.M. THIS APPEAL BY REVENUE HAS BEEN DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-27, NEW DELHI, DATED 27.01.2017, FOR THE A.Y. 2012-2013, CHALLENGING THE DELETION OF DISALLOWANCE OF LOSS OF RS.1,87,37,906/-. 2. BRIEF FACTS AS OBSERVED FROM THE ASSESSMENT ORDER ARE THAT ASSESSMENT IN THIS CASE WAS COMPLETED UNDER 2 ITA.NO.2142/DEL./2017 M/S. NUSSLI SWITZERLAND LTD., NEW DELHI. SECTION 143(3) OF THE I.T. ACT, 1961, AT NIL INCOME AS AGAINST THE RETURNED INCOME FILED OF LOSS OF RS.1,87,37,906/-. THE A.O. STATED IN THE ASSESSMENT ORDER THAT ASSESSEE HAS SHOWN :- SHORT TERM PROVISION AS RS. 26,44,599/- FEE FOR TECHNICAL SERVICES, FEE FOR PROFESSIONAL AND CONSULTANCY SERVICES RS. 37,36,713/- SALARY RS. 32,13,600/- SUPERVISION AND CONSULTANCY FOREIGN RS. 1,57,11,956/- 2.1. WHEREAS NO WORK WAS DONE BY THE ASSESSEE DURING THE YEAR AND NO COMPUTATION FOR LOSS OF CLAIM WAS FILED. IN THIS BACKGROUND, THE A.O. DISALLOWED THE LOSS CLAIMED BY THE ASSESSEE OF RS.1,87,37,906/-. 2.2. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD. CIT(A). THE WRITTEN SUBMISSIONS OF THE ASSESSEE IS REPRODUCED IN THE APPELLATE ORDER IN WHICH THE ASSESSEE BRIEFLY EXPLAINED THAT ASSESSEE FILED COMPLETE DETAILS BEFORE A.O. THE ASSESSEE WAS IN THE BUSINESS OF SUPPLYING MATERIAL FOR COMMONWEALTH GAMES WHICH TOOK PLACE IN AY 2011- 2012 AND WAS ALSO ENGAGED IN UNDERTAKING THE INCIDENTAL ACTIVITIES THERETO. THE ASSESSEE SUPPLIED THE REQUIRED 3 ITA.NO.2142/DEL./2017 M/S. NUSSLI SWITZERLAND LTD., NEW DELHI. MATERIAL AND LANDED IN COMPLEX LITIGATION AND ITS PAYMENTS WERE STUCK UP. THE ASSESSEE HAS BEEN FOLLOWING ITS RECOVERY AND CONTESTING THE CASES IN THE ORDINARY COURSE OF BUSINESS. THESE EXPENSES INCURRED ARE OF ADMINISTRATIVE NATURE, LITIGATION AND AUDIT FEE ETC., WHICH ARE ALLOWABLE AS IS HELD IN JUDICIAL DECISIONS WHICH SHOWS THAT EVEN IN CASES OF DEFUNCT COMPANY, THE EXPENSES INCURRED TO RETAIN THE STATUS AS A COMPANY ARE ALLOWABLE EXPENDITURE. IN THE INSTANT CASE, ASSESSEE COMPANY HAS INCURRED THE EXPENDITURE NOT ONLY FOR RETAINING ITS STATUS BUT CARRYING ON ITS BUSINESS INCLUDING THE MATTERS ARISING OUT OF THE CONDUCT OF BUSINESS. THEREFORE, DEDUCTIONS ARE ALLOWABLE. THE ASSESSEE RELIED UPON DECISION IN THE CASE OF ITO VS. MOKUL FINANCE LTD., 110 TTJ 445 (DEL.). IT WAS ALSO SUBMITTED THAT THERE WAS A CONTINUATION OF BUSINESS CARRIED ON BY ASSESSEE. THE ASSESSEE FURNISHED COMPLETE DETAILS IN SUPPORT OF THE ABOVE EXPLANATION. THE ASSESSEE HAS SUFFERED LOSSES WHICH IS ALLOWABLE DEDUCTION. THE LD. CIT(A) CONSIDERING THE MATERIAL ON RECORD, ALLOWED THE CLAIM OF ASSESSEE AND DELETED THE 4 ITA.NO.2142/DEL./2017 M/S. NUSSLI SWITZERLAND LTD., NEW DELHI. ADDITION. HIS FINDINGS IN PARA 5.3 AND 6 OF THE ORDER ARE REPRODUCED AS UNDER : 5.3. FINDING : I HAVE EXAMINED THE OBSERVATIONS MADE BY THE AO IN THE IMPUGNED ASSESSMENT ORDER, WRITTEN SUBMISSIONS AND SUPPLEMENTARY SUBMISSIONS OF THE APPELLANT AND VARIOUS EVIDENCES PLACED BY THE APPELLANT IN THE PAPER BOOK SUBMITTED AND WITH SUPPLEMENTARY WRITTEN SUBMISSIONS SUBMITTED. THE AR ALSO PRODUCED BEFORE ME VARIOUS REPLIES / DETAILS FILED BY THE ASSESSEE BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS, WHEREAS THE AO HAS NOT REFERRED TO ANY DETAILS / EVIDENCES / REPLIED FILED BY THE AR, IN THE IMPUGNED ASSESSMENT ORDER BEFORE DISALLOWING THE LOSS CLAIMED BY THE ASSESSEE. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT WHILE PASSING THE IMPUGNED ASSESSMENT ORDER NO DETAILS FILED BY THE AO WERE REFERRED TO, AND WITHOUT MAKING ANY EFFORT TO VERIFY THE SAME WITH THE CLAIM MADE BY THE ASSESSEE IN THE PROFIT AND LOSS A/C, THE AO DISALLOWED THE CLAIM OF THE APPELLANT ASSESSEE 5 ITA.NO.2142/DEL./2017 M/S. NUSSLI SWITZERLAND LTD., NEW DELHI. COMPANY. I FIND THAT ASSESSEE COMPANY HAS DEBITED ITS PROFIT AND LOSS A/C CLAIMING FOLLOWING EXPENSES AGAINST NIL RECEIPTS :- SUPERVISION AND CONSULTANCY SERVICES INDIA RS. 600(000) FREIGHT, TRANSPORTATION & HANDLING RS. 225(000) BANK GUARANTEE COMMISSION RS.10732(000) PAYMENT TO AUDITORS RS. 200(000) FOREIGN EXCHANGE FLUCTUATION LOSS RS.40351(000) ADMINISTRATIVE EXPENSES RS. 7144(000) TOTAL EXPENSES DEBITED TO P & L A/C RS.59251(000)(A) OUT OF ABOVE ASSESSEE HIMSELF ADDED BACK THE FOLLOWING EXPENSES DEBITED TO PROFIT AND LOSS A/C. INTEREST RS. 30(750) FOREIGN EXCHANGE FLUCTUATION LOSS INTEREST RS. 30(750) FOREIGN EXCHANGE FLUCTUATION LOSS RS.40350(511) EXPENSES TO WHICH TDS NOT DEDUCTED RS. 206(692) TOTAL OF THE ABOVE RS.40587(953) RS.40588(000) (B) BALANCE OF (A)- (B) RS.18663(000) (C) LESS EXPENSES DISALLOWANCE MADE IN PRECEDING YEAR U/S.40(A)(IA) TO BE 6 ITA.NO.2142/DEL./2017 M/S. NUSSLI SWITZERLAND LTD., NEW DELHI. ALLOWED IN THE YEAR UNDER CONSIDERATION, SINCE PAID TAX WAS DEPOSITED DURING THE YEAR U/S. RS. 75(000) TOTAL BUSINESS LOSS CLAIMED BY THE ASSESSEE AS PER COMPUTATION OF INCOME/RETURN OF INCOME. RS.18738(000) THUS, AFTER EXAMINING THE LEDGER ACCOUNTS AND CORRESPONDING BILLS PRODUCED BEFORE ME, I FIND THAT THE ABOVE BUSINESS LOSS CLAIMED BY THE APPELLANT ASSESSEE IS ON ACCOUNT OF SUPERVISION AND CONSULTANCY SERVICES - RS.6,00,000/- + FREIGHT, TRANSPORTATION 8S HANDLING RS.2,24,932 + BANK GUARANTEE COMMISSION RS.1,07,31,688/- + PROFESSIONAL & CONSULTANCY SERVICES PAID RS.69,80,490/-, TELEPHONE EXPENSES RS.1,32,487/- + RS.75,000/- DISALLOWANCE MADE IN PRECEDING PREVIOUS YEAR U/S 40(A)(IA), TO BE ALLOWED DURING THE YEAR SINCE TAX PAID DURING THE YEAR. THESE EXPENSES ARE INCURRED BY THE APPELLANT FOR THE BUSINESS ACTIVITIES OF THE ASSESSEE, AND THE ASSESSEE COMPANY HAS NOT YET BEEN CLOSED. IN VIEW OF MY ABOVE OBSERVATIONS, AS THE ASSESSMENT ORDER HAS BEEN PASSED BY THE AO IGNORING THE DETAILS / EVIDENCES / 7 ITA.NO.2142/DEL./2017 M/S. NUSSLI SWITZERLAND LTD., NEW DELHI. REPLIES SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LOSS CLAIMED ON ACCOUNT OF EXPENSES INCURRED IN ORDER TO MEET OUT THE BUSINESS EXIGENCIES OF THE ASSESSEE COMPANY AND THEREFORE, THE SAME DESERVES TO BE ALLOWED. I DO NOT FIND ANY REASON TO SUSTAIN THE ACTION OF THE AO, THEREFORE, THE BUSINESS LOSS CLAIMED BY THE APPELLANT IS HEREBY ALLOWED. 6. IN THE RESULT, THE APPEAL IS ALLOWED. 3. THE LD. D.R. RELIED UPON THE ORDER OF THE A.O. 4. ON THE OTHER HAND, NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE NOTIFYING THE DATE OF HEARING THROUGH REGISTERED POST. 5. AFTER CONSIDERING THE SUBMISSIONS OF THE LD. D.R, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE ASSESSEE SUBMITTED COMPLETE DETAILS AND PRODUCED BOOKS OF ACCOUNT ETC., BEFORE THE AUTHORITIES BELOW WHICH HAVE BEEN VERIFIED. THE ASSESSEE CLAIMED THE ABOVE EXPENSES WHICH ARE SUPPORTED BY BILLS/VOUCHERS ETC., THESE EXPENSES ARE 8 ITA.NO.2142/DEL./2017 M/S. NUSSLI SWITZERLAND LTD., NEW DELHI. INCURRED BY ASSESSEE FOR BUSINESS ACTIVITIES AND THE ASSESSEE COMPANY HAS NOT YET BEEN CLOSED. THUS, THE GENUINENESS OF THE EXPENSES COULD NOT BE IGNORED BY THE A.O. AND THERE WERE NO PURPOSE TO DISALLOW LOSS CLAIMED BY ASSESSEE. THE A.O. ALSO NOTED SPECIFICALLY THAT ASSESSEE APPEARED AND FILED DETAILS BEFORE A.O. WHICH HAVE NOT BEEN DISCUSSED IN THE ASSESSMENT ORDER. NO MATERIAL IS PRODUCED BEFORE US TO REBUT THE FINDING OF FACT RECORDED BY THE LD. CIT(A). IN VIEW OF THE ABOVE, THERE IS NO INFIRMITY POINTED OUT IN THE ORDER OF THE LD. CIT(A) IN DELETING THE ADDITION. WE, CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE DEPARTMENTAL APPEAL. 6. IN THE RESULT, APPEAL OF THE DEPARTMENT DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (B.R.R. KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 08 TH JULY, 2019 VBP/- 9 ITA.NO.2142/DEL./2017 M/S. NUSSLI SWITZERLAND LTD., NEW DELHI. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT E BENCH 6. GUARD FILE //BY ORDER// ASST. REGISTRAR : ITAT : DELHI BENCHES : DELHI.