SAIGAL SEA TRADE, MUMBAI V. ADDL CIT RG 18(1), MUMBAI

ITA 22/MUM/2017

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6136 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-10-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 02-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Assessee Lawyers: JITENDRA MOTWANI; VIDUSHI MAHESHWARI; MADHAV
• Keywords: Depreciation; Revenue expenditure
• Section: 143(3); 142(1); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G, BENCH MUM BAI BEFORE G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.22/MUM/2017 ( ASSESSMENT YEAR :2009-10 ) SAIGAL SEA TRADE B-203, NEELAM CENTRE, HIND CYCLE ROAD WORLI, MUMBAI-400 030 VS. ACIT-21(1) PIRAMAL CHAMBERS LALBAUG, PAREL MUMBAI-400 020 PAN/GIR NO. AAAFS6920K ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY V.VINOD KUMAR ASSESSEE BY JITENDRA MOTWANI & MS. VIDUSHI MAHESHWARI & MADHAV PANDHYA DATE OF HEARING 03/10/2019 DATE OF PRONOUNCEME NT 15 /10/2019 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)33, MUM BAI, DATED 27/10/2016 AND IT PERTAINS TO ASSESSMENT YEAR 2009- 10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THE COMMISSIONER OF INCOME TAX(APPEALS) - 33, MU MBAI [HEREINAFTER REFERRED TO AS 'THE CIT(A)'] ERRED IN CONFIRMING TH E DISALLOWANCE OF RS.23,27,500/- BEING COMMISSION PAID TO MS. NIVEDIT A SINGH IN THE COURSE OF CARRYING ON ITS BUSINESS ACTIVITY. THE APPELLANT SUBMITS THAT ON THE FACTS AND CIRCUMS TANCE OF THE CASE, THE AO OUGHT TO HAVE ALLOWED COMMISSION AS DE DUCTIBLE REVENUE EXPENDITURE. ITA NO.22/MUM/2017 SAIGAL SEA TRADE 2 2. THE CIT(A) ERRED IN CONFIRMING THE ACTION OF AO IN HOLDING THAT EXPENSES OF RS.14,60,680/- DEBITED TO LEGAL & PROF ESSIONAL EXPENSES TOWARDS FEES PAID FOR INTERIOR DESIGN AND SUPERVISI ON FEES FOR REPAIRS/RENOVATION WORK IS CAPITAL IN NATURE ELIGIB LE FOR DEPRECIATION. THE APPELLANT SUBMITS THAT THE SAID INTERIOR DESIGN AND SUPERVISION FEES PAID IS A DEDUCTIBLE REVENUE EXPENDITURE INCUR RED IN THE COURSE OF CARRYING ON BUSINESS AND SHALL BE ALLOWED IN FULL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF COMMISS ION AGENT FOR CARGO HANDLING TO FOREIGN SHIPPING COMPANIES, FILED ITS RETURN OF INCOME FOR AY 2009-10 ON 30/09/2009, DECLARING TOTA L INCOME OF RS. 46,09,61,366/-. THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE I.T.ACT, 1961 ON 30/11/2011 DETERMINING THE TOT AL INCOME AT RS. 46,24,13,780/-. THEREAFTER THE LD.CIT REVISED ASSES SMENT ORDER PASSED BY THE LD. AO U/S 263 OF THE I.T.ACT, 1961 A ND RESTORED THE ASSESSMENT TO THE FILE OF THE AO TO EXAMINE THE ISS UE OF COMMISSION PAYMENT TO M/S NIVEDITHA SINGH AND LEGAL & PROFESSI ONAL EXPENSES DEBITED INTO PROFIT AND LOSS ACCOUNT, IN RESPECT OF INTERIOR DESIGN AND REPAIRS AND RENOVATION WORKS. THE ASSESSEE HAS CHAL LENGED THE ORDER OF THE LD.CIT PASSED U/S 263 OF THE I.T.ACT, 1961, DATED 13/01/2014, BEFORE THE ITAT, MUMBAI. MEANWHILE, THE LD. AO HAS PASSED CONSEQUENTIAL ASSESSMENT ORDER U/S 143(3) R. W.S. 263 OF THE I.T.ACT, 1961 ON 31/03/2015 AND DETERMINED TOTAL IN COME OF RS. 46,60,55,720/- BY MAKING ADDITIONS TOWARDS COMMISSI ON PAID TO MS. NIVEDITHA SINGH AND EXPENDITURE INCURRED UNDER THE HEAD LEGAL AND PROFESSIONAL EXPENSES, AS PER THE DIRECTIONS OF THE LD.CIT. THE ASSESSEE HAS CHALLENGED THE ORDER OF THE LD. AO PAS SED U/S 143(3) R.W.S. 263 BEFORE THE FIRST APPELLATE AUTHORITY, BU T COULD NOT SUCCEED. THE LD. CIT(A) FOR THE DETAILED REASONS RECORDED IN HIS APPELLATE ORDER CONFIRMED ADDITIONS MADE BY THE AO TOWARDS CO MMISSION PAYMENT TO NIVEDITHA SINGH AND LEGAL AND PROFESSION AL CHARGES ITA NO.22/MUM/2017 SAIGAL SEA TRADE 3 INCURRED TOWARDS REPAIR AND RENOVATION WOKS. THE AS SESSEE HAS CARRIED MATTER IN FURTHER APPEAL BEFORE THE ITAT AN D SAID APPEAL IS PENDING FOR DISPOSAL IN ITA.NO. 22/MUM/2017. THEREA FTER, THE TRIBUNAL HAS DISPOSED OF APPEAL FILED BY THE ASSESS E AGAINST ORDER OF THE LD.CIT PASSED U/S.263 OF THE I.T.ACT, 1961 IN I TA.NO. 2511/ MUM/2014 AND UPHELD THE ORDER PASSED BY THE LD.CIT U/S 263 OF THE I.T.ACT, 1961, HOWEVER RESTORED THE APPEAL TO THE F ILE OF THE AO TO ADJUDICATE THE ISSUES AFRESH IN LIGHT OF VARIOUS EV IDENCES FILED BY THE ASSESSEE. THEREAFTER, THE LD. AO, CONSEQUENT TO THE DIRECTIONS OF THE ITAT TAKEN UP ASSESSMENT PROCEEDINGS AND ISSUED NOTICES U/S 142(1) AND CALLED UPON THE ASSESSEE TO FILE NECESSA RY EVIDENCES IN RESPECT OF ISSUES TAKEN UP BY THE LD.CIT IN U/S 263 PROCEEDINGS. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE SOLITARY ISSUE THAT ARISES FOR OUR CONSIDERATION IN THE GIVEN FACTS AND CIRCUMSTANCES OF THIS CASE IS WHETHER THE APPEAL FILED BY THE ASSESEE AGAINST ORD ER OF THE LD.CIT(A)-33, MUMBAI IS MAINTAINABLE IN VIEW OF THE FACT THAT CONSEQUENTIAL PROCEEDINGS, PURSUANT TO ORDER U/S 26 3 PASSED BY THE LD.CIT IS PENDING BEFORE THE LD. AO FOR DISPOSAL. W E FIND THAT THERE SHALL NOT BE TWO PROCEEDINGS, EXCEPT OTHERWISE PROV IDED IN THE ACT, INRESPECT OF REASSESSMENT OR REVISION PROCEEDINGS U /S 263. IN THIS CASE, WHETHER RIGHT OR WRONG, THERE ARE TWO PARALLE L PROCEEDINGS ARE PENDING BEFORE VARIOUS AUTHORITIES, INCLUDING THE I TAT ON SIMILAR ISSUES. THE ASSESSEE HAS CHALLENGED CONSEQUENTIAL O RDER PASSED BY THE AO PURSUANT TO DIRECTIONS OF THE LD.CIT U/S 263 BEFORE THE TRIBUNAL, BUT THE TRIBUNAL HAS RESTORED THE ISSUE B ACK TO THE FILE OF THE AO IN APPEAL FILED BY THE ASSESEE AGAINST ORDER OF THE LD.CIT U/S 263 OF THE ACT. UNDER THESE FACTS AND CIRCUMSTANCES , WE ARE OF THE ITA NO.22/MUM/2017 SAIGAL SEA TRADE 4 CONSIDERED VIEW THAT THE APPEAL FILED BY THE ASSESS EE AGAINST CONSEQUENTIAL ORDER PASSED BY THE AO IN PURSUANT TO ORDER U/S 263 BECOMES INFRUCTUOUS, BECAUSE THE SAME ISSUES ARE P ENDING BEFORE THE LD. AO FOR ADJUDICATION IN PURSUANT TO DIRECTIO NS OF THE ITAT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT APPEA L FILED BY THE ASSESEE AGAINST ORDER OF THE LD. AO /S 143(3) R.W.S . 263 IS NOT MAINTAINABLE AND ACCORDINGLY, THE SAME IS DISMISSED AS INFRUCTUOUS. HOWEVER, WE LEFT OPEN ALL OPTIONS TO BOTH SIDES TO CONTEST ON TWO ISSUES TAKEN UP BY THE LD.CIT IN 263 PROCEEDINGS, I N CONSEQUENTIAL PROCEEDINGS BEFORE THE LD. AO PURSUANT TO DIRECTION OF THE ITAT. WE, FURTHER MAKE IT CLEAR THAT THE LD. AO SHALL NOT ENFORCE DEMAND CREATED, IN THE ORDER PASSED IN PURSUANT TO DIRECTI ONS OF THE LD.CIT U/S 263 OF THE I.T.ACT, 1961, TILL SUCH TIME HE PAS SES FRESH ASSESSMENT ORDER IN PURSUANT TO DIRECTIONS OF THE I TAT. 5. IN THE RESULT, APPEAL FILED BY THE ASSESEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 15/10/ 2019 SD/- ( RAM LAL NEGI ) SD/- ( G. MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 15 /10/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. ITA NO.22/MUM/2017 SAIGAL SEA TRADE 5 BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//