M/S. Thiess India Private Limited, Kolkata V. ITO, Ward-12(4), Kolkata, Kolkata

ITA 2290/KOL/2014

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3136 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 31-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S SRIVASTAVA
• Assessee Lawyers: R R MODI
• Keywords: Depreciation; Opportunity of being heard; Question of law; Unabsorbed depreciation
• Section: 143(3); 115JB; 133(6); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.2290/KOL/2014 ASSESSMENT YEAR:2011-12 M/S THIESS INDIA PVT. LTD., 5B, RDB BOULEVARD, BLOCK-EP AND GP, SECTOR-5, SALT LAKE, KOLKATA-700 091 [ PAN NO.AACCT 4559J ] / V/S . INCOME TAX OFFICER, WARD-12(4), AAYKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI R.R.MODI, FCA /BY RESPONDENT SHRI S.SRIVASTAVA, CIT-DR /DATE OF HEARING 05-01-2016 /DATE OF PRONOUNCEMENT 10-02-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER PA SSED BY COMMISSIONER OF INCOME TAX, KOLKATA-IV DATED 03.11. 2014 U/S 263 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT). ASSESSMENT WAS FRAMED BY ITO WARD-12(4), KOLKATA U/S 143(3) OF THE ACT VIDE HIS ORDER DATED 21.03.2014 FOR ASSESSMENT YEAR 2011-12. ASSESSEE HA S RAISED THE FOLLOWING GROUNDS:- 1. FOR THAT THE ORDER OF THE LD. COMMISSIONER OF IN COME TAX (CIT) IS ARBITRARY, ILLEGAL AND BAD IN LAW. 2. THAT THE ASSUMPTION OF JURISDICTION UNDER SECTIO N 263 BY LD. CIT IS ERRONEOUS AND BAD AT LAW. 3. THAT THE PASSING OF ORDER BY ASSESSING OFFICER I S NEITHER ERRONEOUS NOR PREJUDICIAL TO REVENUE. ITA NO.2290/KOL/2014 A.Y. 2011-12 M/S THIESS INDIA PVT. LTD. V. ITO WD-12(4), KO L. PAGE 2 4. FOR THAT THE LD. CIT ERRED IN WRITING THE NATURE OF EXPENSE AS PERSONAL RECRUITMENT COST INSTEAD OF PERSONAL RECRUITMENT COST MEANING EMPLOYEE RECRUITMENT EXPENSE. THE EXPENSES WERE PRI MARILY PAID TO TWO CONSULTANTS FOR THE PURPOSE OF RECRUITING PERSONNEL 5. FOR THE LD. CIT ERRED IN CONFIRMING THE INTER CO MPANY LOAN TO THIESS MINES AMOUNTING TO RS.42,79,700/- WHEN THE SAID AMOUNT IS NOT INTERCOMPANY LOAN BUT SECURITY DEPOSIT LYING WITH M/S RDB TWO THOUSA ND PLUS LIMITED KOLKATA FOR OCCUPATION OF OFFICE PREMISES SINCE 24 TH JUNE, 2007. 6. FOR THE LD. CIT ERRED IN CONFIRMING NON AVAILABI LITY OF MAT CALCULATION EVEN IF BOOK PROFIT OF RS.23,41,956/- WHEN THE ASSESSEE COMPANY HAS BOUGHT FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION. THE LOWER OF THE TWO AS PER CLAUSE III OF EXPLANTING 1 TO 115JB (2) IS RS.1 08.39 LACS WHICH IS MUCH HIGHER THAN THE STATED BOOK PROFIT. 7. FOR THE LD. CIT ERRED IN ATTRACTION OF SECTION 4 0A(2)(B) FOR HUGE REMUNERATION AMOUNTING TO RS.124.12 LACS PAID TO KE Y MANAGEMENT PERSONNEL WHEN AN AMOUNT WAS PAID TO SENIOR MINING PROFESSIONALS AND OTHER FULL TIME EMPLOYEES OF THE COMPANY HAVING SOUND BUS INESS KNOWLEDGE AND PROFOUND EXPERIENCE IN THE FIELD AND HAVING NO SHAR EHOLDING IN THE COMPANY. THE SALARY PAID IS CONSIDERED REASONABLE COMMENSURA TE TO THE SPECIALIZED QUALIFICATION, SKILL, AND RICH EXPERIENCE OF THE CO NCERNED EMPLOYEES. 2. THE FACTS IN BRIEF ARE THAT ASSESSEE IS PRIVATE LIM ITED COMPANY AND ENGAGED IN THE BUSINESS OF MINING AS CONTRACTOR. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSING OFFICER FRAMED AS SESSMENT FOR THE YEAR UNDER CONSIDERATION AFTER MAKING CERTAIN ADDITION T O THE TOTAL INCOME OF ASSESSEE. HOWEVER, LD. CIT FOUND THE ORDER OF AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE AS THE AO FAILED TO CONDUCT THE NECESSARY ENQUIRY IN RESPECT OF THE FOLLOWING EXPEN SES : 1) THE ASSESSEE CLAIMED PERSONNEL RECRUITMENT EXPEN SES IN THE PROFIT & LOSS ACCOUNT FOR RS. 22,87,960.00 AND THE LAST YEAR SUCH EXPENSE WAS RS. 1410.00 ONLY. 2) THE ASSESSEE PROVIDED INTEREST FREE LOAN OF RS. 42,79,700.00 TO ITS ASSOCIATED CONCERN, NAMELY, M/S THAIESS MINES WITHO UT CHARGING ANY CHARGES THEREON. ON THE OTHER HAND, THE COMPANY HAS PAID INTEREST ITA NO.2290/KOL/2014 A.Y. 2011-12 M/S THIESS INDIA PVT. LTD. V. ITO WD-12(4), KO L. PAGE 3 AMOUNTING TO RS.1.85 CRORES ON THE MONEY BORROWED F ROM THE BANK FOR AN AMOUNT OF RS.16.94 CRORES. 3) WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE A CT THE PROVISIONS OF MAT HAVE NOT BEEN CONSIDERED ON ITS BOOK PROFIT OF RS.23,41,956/-. 4) NO JUSTIFICATION WAS ENQUIRED FOR MAKING THE PAY MENT OF RS. 124.12 LACS TO THE KEY MANAGEMENT PERSONNEL IN THE LIGHT OF THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT. ACCORDINGLY, LD. CIT ISSUED NOTICE U/S 263 OF THE A CT FOR CLARIFICATION ON THE ABOVE SUBJECT-MATTER. THE REPLY OF THE ASSESSEE STA ND AS UNDER : 1) PERSONNEL RECRUITMENT COST RS.22,87,960/-. IT IS SUBMITTED THAT THE NATURE OF EXPENSE IS NOT PERSONAL AS MENTIONED IN THE NOTICE. IT IS PERSONNEL MEANING EMPLOYEE R ECRUITMENT EXPENSES. THE EXPENSES WERE PRIMARILY PAID TO TWO C ONSULTANTS ABC CONSULTANTS P. LTD. A RENOWNED PAN INDIA MANPOWER R ECRUITMENT / PLACEMENT CONSULTANT RS.16.67 LACS AND INFO EDGE IN DIA P LTD. (NAUKRI.COM) A POPULAR EMPLOYMENT WEBSITE RS.6 LA CS. 2) INTER COMPANY LOAN TO M/S THIESS MINES RS.42,79,7 00 /-. IT IS MOST HUMBLY SUBMITTED THAT THE SAID AMOUNT IS NOT INTER-COMPANY LOAN BUT IS A SECURITY DEPOSIT LYING WITH THE LANDL ORD- M/S RDB TWO THOUSAND PLUS LTD., KOLKATA, FOR HAVING THE OCCUPAT ION OF OFFICE PREMISES SINCE 24 TH JUNE 2007. 3) CALCULATION FOR MAT IT IS SUBMITTED THAT THERE IS NO MAT LIABILITY AS T HE ASSESSEE-COMPANY HAS BROUGHT FORWARD BUSINESS LOSS AS WELL AS UNABSO RBED DEPRECIATION. THE LOWER OF THE TWO AS PER CLAUSE III OF EXPLANATI ON 1 TO 115JB (2) IS RS.108.39 LACS WHICH IS MUCH HIGHER THAT THE STATED BOOK PROFIT. THEREFORE THE PROVISIONS FOR MAT DO NOT APPLY IN TH E INSTANT CASE. ITA NO.2290/KOL/2014 A.Y. 2011-12 M/S THIESS INDIA PVT. LTD. V. ITO WD-12(4), KO L. PAGE 4 4) REMUNERATION PAID TO KEY MANAGERIAL PERSONNEL (KMP) -RS.124.12 LACS. IT IS SUBMITTED THAT SPECIFIED KMP ARE MR. CHRISTIA N FOSTERLING AND DR. RAMAN SRIKANT. ASSESSEE-COMPANY IS IN THE BUSINESS OF UNDERTAKING MINING CONTRACT BOTH THE PERSONS ARE SENIOR MINING PROFESSIONALS AND EMPLOYEES OF THE COMPANY. MR. CHRISTIAN FOSTERLING IS AN INTERNATIONALLY EXPERT ENGINEER FROM AUSTRALIA AND IS HAVING MORE T HAN 25 YEARS OF EXPERIENCE. HE IS ALSO COUNTY MANAGER OF THE COMPAN Y DURING THE SAID PERIOD. DR. RAMAN SRIKANTH IS A MINING ENGINEER FRO M INDIAN SCHOOL OF MINING (ISM), M.S. IN MINING ENGINEERING AND DUAL P HD IN MINING ENGINEERING AND OPERATIONS RESEARCH FROM THE PENNSY LVANIA STATE UNIVERSITY, USA WITH 20 YEARS EXPERIENCE. HE WAS E ARLIER EMPLOYED IN TATA STEEL AS GENERAL MANAGER. HE IS THE CEO OF THE COMPANY AND COUNTRY HEAD OF THIESS. IT IS CONTENDED THAT AN EMP LOYER FIXING THE REMUNERATION IS ENTITLED TO CONSIDER THE EXTENT OF BUSINESS, THE NATURE OF DUTIES TO BE PERFORMED, ROLES AND RESPONSIBILITY, T HE QUALIFICATION, SPECIAL APTITUDE AND EXPERIENCE OF THE EMPLOYEE, FUTURE PRO SPECTS OF EXTENSION OF THE BUSINESS AND A HOST OF OTHER RELATED CIRCUMS TANCES. THE COMPANY HAS PAID SALARY AS PER THE TERMS OF EMPLOYM ENT CONTRACT. THE SALARY PAID IS CONSIDERED REASONABLE COMMENSURATE T O THE SPECIALIZED SKILL AND RICH EXPERIENCE OF THE CONCERNED EMPLOYEE S. IN THE LIGHT OF ABOVE SECTION 40A(2)(B) IS NOT ATTRACTED. THE SAID PERSONS FURTHER DO NOT HAVE ANY SHAREHOLDING IN THE ASSESSEE-COMPANY. DURING PROCEEDING UNDER SECTION 143(2) OF THE ACT, DETAILS OF EMPLOYEE EXPENSES WERE DULY FURNISHED INCLUDING TDS DEDUCTED AND PAID. IT IS SUBMITTED THAT AO HAS DUTIFULLY ENQUIRED INTO THE A SPECTS DURING THE SCRUTINY PROCEEDINGS. THE ASSESSEE-COMPANY ALSO PLA CES RELIANCE ON FOLLOWING CASE IN THIS REGARD- DCIT V. SPARK HOTELS (P) LTD. IN ITA NO. 4631/DEL/2011. ITA NO.2290/KOL/2014 A.Y. 2011-12 M/S THIESS INDIA PVT. LTD. V. ITO WD-12(4), KO L. PAGE 5 BESIDES THE ABOVE, ASSESSEE ALSO SUBMITTED THE ASSE SSMENT PROCEEDINGS U/S 143(3) OF THE ACT BEFORE THE LD.CIT THAT ASSESSMEN T WAS FRAMED U/S 143(3) OF THE ACT IS MADE BY THE AO AFTER DETAILED AND PROPER ENQUIRY AND AFTER CONSIDERATION OF VARIOUS DOCUMENTS AND RECORDS FILE D BY THE ASSESSEE- COMPANY FROM TIME TO TIME IN RESPONSE TO THE REQUIR EMENTS OF THE AO. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO VERIFIED A ND RESPONSES TO NOTICE ISSUED U/S. 133(6) AND AFTER BEING SATISFIED ABOUT GENUINENESS OF TRANSACTIONS, PASSED THE ORDER WITHOUT MAKING ANY ADDITION EXCEPT AS DISCUSSED IN THE ASSESSMENT ORDER. HENCE THERE IS NO JUSTIFICATION I N FURTHER ISSUING NOTICE U/S. 263 OF THE ACT IN RESPECT OF THE SAID ORDER WHICH W AS PASSED U/S. 143(3) AND IN WHICH AO HAS CONSIDERED ALL THE ASPECTS OF THE F ACTS OF THE PRESENT CASE. 3. HOWEVER, THE LD. CIT HAS DISREGARDED THE CLAIM O F ASSESSEE BY OBSERVING AS UNDER : AFTER GOING THROUGH THE FACTS OF THE CASE, WRITTEN SUBMISSION OF THE ASSESSEE AND AS PER DISCUSSION I AM OF THE VIEW THAT THE ASS ESSMENT REQUIRED RECONSIDERATION THEREFORE, THE ASSESSMENT ORDER PAS SED BY THE AO IS SET ASIDE DENEVO, DIRECTING AO TO MAKE A FRESH ASSESSME NT AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . BEING AGGRIEVED BY THIS ORDER OF LD. CIT ASSESSEE P REFERRED AN APPEAL BEFORE US. SHRI R.R. MODI, LD. AUTHORIZED REPRESENTATIVE APPEA RING ON BEHALF OF ASSESSEE AND SHRI S.SRIVASTAVA, LD. DEPARTMENTAL RE PRESENTATIVE APPEARING ON BEHALF OF REVENUE. 4. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND HAVE ALSO GONE THROUGH THE MATERIALS AVAILABLE ON RECORD. BEFORE U S THE LD. AR HAS SUBMITTED A PAPER BOOK WHICH IS RUNNING PAGES 1 TO 69 AND CON TENDED THAT THE AO HAS MADE DETAILED ENQUIRY FOR THE ABOVE STATED EXPENSES AT THE TIME OF ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT. REGARDING THE PERSONNEL RECRUITMENT EXPENSES, LD. A R DREW OUR ATTENTION AT PAGES NO. 36 TO 39 OF THE PAPER BOOK WHERE THE INVO ICE OF ABC CONSULTANTS PVT. LTD. WAS PLACED WHICH WAS ALSO PRODUCED BEFORE THE AO. OUR ATTENTION ITA NO.2290/KOL/2014 A.Y. 2011-12 M/S THIESS INDIA PVT. LTD. V. ITO WD-12(4), KO L. PAGE 6 WAS DRAWN TO PAGE NO. 42 OF THE PAPER BOOK WHERE TH E INVOICE OF INFO EDGE (INDIA) LTD. WAS PLACED. LD. AR FURTHER SUBMITTED T HAT A NOTICE WAS ISSUED TO M/S ABC CONSULTANTS PVT. LTD. U/S. 133(6) OF THE AC T FOR THE CONFIRMATION. IN THIS CONNECTION, LD. AR SUBMITTED THE ADDRESS VIDE LETTER DATED 07.02.2014, WHICH IS PLACED ON PAGE NO. 58 OF THE PAPER BOOK. T HE REPLY OF ABC CONSULTANTS PVT. LTD. TO THE ITO IS PLACED ON AT PA GE 68 OF THE PAPER BOOK. REGARDING THE ISSUE OF INTER-COMPANY LOAN, TO M/S T HIESS MINES FOR RS.42,79,700/-, LD. AR DREW OUR ATTENTION AT PAGE N O.41 OF THE PAPER BOOK, WHERE THE DETAILS OF SECURITY DEPOSITS FOR AN AMOUN T OF RS.42,79,700/- WAS PLACED. THE ASSESSEE ALSO SUBMITTED THE ADDRESS OF LANDLORD-RDB TWO THOUSAND PLUS LTD. AT THE TIME OF ASSESSMENT U/S. 1 43(3) OF THE ACT. THE NECESSARY DETAIL IS PLACED ON PAGE NO. 58 OF THE PA PER BOOK. IN THIS REGARDS, THE RECONCILIATION STATEMENT BETWEEN THE ASSESSEE A ND THE LANDLORD FOR THE RENT AND PROVISION FOR MUNICIPAL TAX WAS FURNISHED WHICH IS PLACED ON PAGES 62 TO 65 OF THE PAPER BOOK. REGARDING THE ISSUE OF MAT CALCULATION LD. AR DREW OUR ATTENTION ON PAGE NO.40 OF THE PAPER BOOK WHERE THE COMPUTATION OF MA T WAS DULY FURNISHED FOR THE CONSIDERATION OF ITO AT THE TIME OF ASSESSMENT. REGARDING THE ISSUE OF REMUNERATION PAID TO THREE M ANAGERIAL PERSONNEL, IT WAS SUBMITTED THAT THE REMUNERATION PAID TO THE EMP LOYEES IS CONSIDERED REASONABLE AND COMMENSURATE TO THE SPECIALIZED SKIL LED AND RICH EXPERIENCE. 5. ON THE OTHER HAND THE LD. DR VEHEMENTLY RELIED O N THE ORDER OF LD. CIT. 6. NOW FROM THE AFORESAID DISCUSSION WE FIND THAT T HE LD. CIT TREATED THE ORDER OF THE AO ERRONEOUS IN SO FAR AS IT IS PREJUD ICIAL TO THE INTEREST OF REVENUE. IT IS BECAUSE THAT THE AO HAS NOT MADE REQ UIRED ENQUIRY AT THE TIME OF FRAMING ASSESSMENT PROCEEDINGS U/S. 143(3) OF TH E ACT. THEREFORE, THE LD. CIT HELD THE ORDER ERRONEOUS IN SO FAR PREJUDICIAL TO THE INTEREST OF REVENUE. NOW TO ARRIVE AT THE CORRECT CONCLUSION OF THE CASE , WE DEEM IT NECESSARY TO REPRODUCE THE RELEVANT PROVISIONS OF SECTION 263 OF THE ACT. ITA NO.2290/KOL/2014 A.Y. 2011-12 M/S THIESS INDIA PVT. LTD. V. ITO WD-12(4), KO L. PAGE 7 (1) THE COMMISSIONER MAY CALL FOR AND EXAMINE THE R ECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE [ASSESSING] OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, HE, MY , AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MA KING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SU CH ORDER THEREON AS THE CIRCUMSTANCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSESSMENT, OR CANCELLING THE ASSE SSMENT AND DIRECTING A FRESH ASSESSMENT. 6.1 THE SUM AND SUBSTANCE OF THE ABOVE REPRODUCED S ECTION 263(1) CAN BE SUMMARIZED IN THE FOLLOWING POINTS:-: 1) THE COMMISSIONER MAY CALL FOR AN EXAMINE THE REC ORD OF ANY PROCEEDING UNDER THE ACT; 2) IF HE CONSIDERS THAT THE ORDER PASSED BY THE AO IS (I) ERRONEOUS; AND (II) IS PREJUDICIAL TO THE INTEREST OF REVENUE; 3) HE HAS TO GIVE AN OPPORTUNITY OF HEARING IN THIS RESPECT TO THE ASSESSEE; AND 4) HE HAS TO MAKE OR CAUSE TO MAKE SUCH ENQUIRY AS HE DEEMS NECESSARY; 5) HE MAY PASS SUCH ORDER THEREON AS THE CIRCUMSTAN CES OF THE CASE JUSTIFY INCLUDING, (I) AN ORDER ENHANCING OR, (II) MODIFYING THE ASSESSMENT OR (III) CANCELLING THE ASSESSMENT AND DIRECTING A FRE SH ASSESSMENT. 6.2 NOW IN THE LIGHT OF ABOVE WORDS, WE HAVE TO EXA MINE AS TO WHETHER THE ORDER OF THE LD. CIT IS A VALID ORDER IN THE LIGHT OF THE ABOVE STATED POINTS/ PROVISIONS OF SECTION 263 OF THE ACT. IN THE CASE IN HAND, WE FIND FROM THE SUBMISSIONS O F THE ASSESSEE THAT SUFFICIENT ENQUIRIES HAVE BEEN MADE BY AO AT THE TI ME OF ASSESSMENT U/S 143(3) OF THE ACT. THEREFORE TO HOLD THE ORDER OF L D. CIT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE ON THE GROUN D THAT THE AO FAILED TO MAKE NECESSARY ENQUIRY AT THE TIME OF ASSESSMENT STAGE D OES NOT HOLD ANY MERIT. ITA NO.2290/KOL/2014 A.Y. 2011-12 M/S THIESS INDIA PVT. LTD. V. ITO WD-12(4), KO L. PAGE 8 WE FIND THAT WHEN NECESSARY ENQUIRIES HAVE BEEN MAD E BY AO AT THE TIME OF ASSESSMENT THEN IT IS INAPPROPRIATE TO HOLD THE ORD ER ERRONEOUS AND PREJUDICIAL TO THE INTEREST TO REVENUE. WE ALSO FIND THAT THE H ONBLE COURTS HAVE QUASHED THE PROCEEDINGS U/S/. 263 OF THE ACT WHERE THE NECE SSARY ENQUIRIES HAVE BEEN MADE BY AO AT THE TIME OF ASSESSMENT FURTHER WE FIN D SUPPORT FROM THE ORDER OF HOWEVER, WE FIND FROM DECISION OF HONBLE ALLAHA BAD HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VS. M/S ASHOK HANDLOOM FACTORY PVT. LTD. IN ITA NO. 19 OF 2016 DATED 01.02.2016 WHEREIN THE HONBLE HIGH COURT HAS HELD THAT IT IS SETTLED LAW THAT THE COMM ISSIONER OF INCOME TAX CAN EXERCISE HIS JURISDICTION U/S 263 OF THE ACT ONLY I N CASES WHERE NO ENQUIRY IS MADE BY THE ASSESSING OFFICER. IN THE INSTANT CASE, IT IS ADMITTED BY THE INCOME TAX DEPARTMENT THAT THE ASSESSING OFFICER HA D MADE SOME ENQUIRIES THOUGH ACCORDING TO THEM IT WAS NOT A PROPER ENQUIR Y. IN OUR VIEW OF THE FAT THAT SOME ENQUIRY WAS MADE IS SUFFICIENT TO DEBAR T HE AUTHORITIES FROM EXERCISING THE POWERS U/S 263 OF THE ACT. THE TRIBU NAL WAS ACCORDINGLY JUSTIFIED IN SETTING ASIDE THE ORDER PASSED U/S 263 OF THE ACT. WE DO NOT FIND ANY SUBSTANTIAL QUESTION OF LAW ARISING FOR CONSIDE RATION THE APPEAL IS ACCORDINGLY DISMISSED. IN THE CASE ONE HAND, THE AO HAS MADE AN ADDITION BY DISALLOWING THE COMMISSION EXPENSES AFTER MAKING TH E NECESSARY ENQUIRY. THE INSTANT CASE IS DULY COVERED WITH THE DECISION OF HONBLE ALLAHABAD HIGH COURT M/S ASHOK HANDLOOM FACTORY PVT. LTD. (SUPRA) AS DISCUSSED ABOVE, THEREFORE RELYING ON THE SAME, WE REVERSE THE ORDER OF LD. CIT FOR U/S 263 OF THE ACT. WE ARE ALSO PUTTING OUR RELIANCE IN THE DE CISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. SUNBEAM AUTO LTD. 332 ITR 167 AND CIT V. ANIL KUMAR SHARMA 335 ITR 83 (DEL) HELD THAT THE FACT AS TO WHETHER T HE AO HAS APPLIED HIS MIND OR NOT NEED NOT NECESSARILY BE DET ERMINED FROM WHAT HAS BEEN STATED IN THE ASSESSMENT ORDER ALONE, IT HAS T O BE EXAMINED AS TO WHETHER ANY INQUIRY WAS AT ALL CONDUCTED BY THE AO. THERE EXISTS A DIFFERENCE BETWEEN LACK OF INQUIRY AND INADEQUATE INQUIRY. IF THERE WERE ANY INQUIRY, EVEN INADEQUATE THAT WOULD NOT GIVE AN OCCASION TO EXERC ISE JURISDICTION U/S 263 OF ITA NO.2290/KOL/2014 A.Y. 2011-12 M/S THIESS INDIA PVT. LTD. V. ITO WD-12(4), KO L. PAGE 9 THE SAID ACT. ACCORDINGLY, ORDER PASSED BY LD. CIT U/S 263 OF THE ACT IS REVERSED HENCE, GROUND NO. 1 TO 6 RAISED BY ASSESSE E IS ALLOWED. 6.3 NOW REGARDING THE ISSUE OF REMUNERATION PAID TO THE EMPLOYEES FOR AN AMOUNT OF RS.124.12 LAKHS, LD. CIT FOUND THAT NECES SARY ENQUIRIES WERE NOT MADE BY AO AT THE TIME OF ASSESSMENT AS REQUIRED U/ S. 40A(2)(B) OF THE ACT. HOWEVER WE FIND THAT THE PROVISIONS OF SECTION 40A( 2)(B) DOES NOT APPLY IN THE INSTANT CASE AS THE PAYMENT HAS NOT BEEN MADE TO TH E PERSONS REFERRED IN THE SAID SECTION. BESIDES THE LD. AR SUBMITTED THAT THE NECESSARY ENQUIRY HAS BEEN MADE BY THE AO AT THE TIME OF ASSESSMENT. ON T HE OTHER HAND THE LD. DR FAILED TO CONTROVERT THE ARGUMENTS OF THE LD. AR . IN VIEW OF WE REVERSE THE ORDER OF THE LD. CIT(A) UNDER SECTION 263 OF THE AC T. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 10/02/2016 SD/- S D/- (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER KOLKATA, *DKP ! - 10/02/2016 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S THIESS INDIA PVT. LTD. 5B, RDB BOULE VARD, BLOCK-EP AN D GP, SECTOR-5, SALT LAKE, KOLKATA-91 2. /RESPONDENT-ITO WARD-12(4), AAYAKAR BHAWAN, P7CHOWR INGHEE SQ. KOL-69 3. '# % / CONCERNED CIT KOLKATA 4. % - / CIT (A) KOLKATA 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORD ER/ , /TRUE COPY/ / '#,