EXPERIAN SERVICES INDIA P.LTD, MUMBAI V. DCIT (OSD) 8(1), MUMBAI

ITA 2318/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7817 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2010-2011
• Appeal Filed On: 22-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SAMBIT MISHRA
• Assessee Lawyers: AAKANKSHA AHUJA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I, MU MBAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.2318/MUM/2015 (ASSESSMENT YEAR- 2010-11) EXPERIAN SERVICES INDIA (PVT LTD) EQUINOX BUSINESS PARK, 5 TH FLOOR, EAST WING, TOWER 3, LBS MARG, KURLA (WEST) MUMBAI-400060. PAN: AABCE9154H VS. DEPUTY COMMISSIONER OF INCOME TAX (OSD)-8(1), ROOM NO.204, 2 ND FLOOR, AAYAKAR BHAWAN MUMBAI- 400020. (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. AAKANKSHA AHUJA AR REVENUE BY : SH. SAMBIT MISHRA (DR) DATE OF HEARING : 16.02.2017 DATE OF PRONOUNCEMENT : 15.03.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL BY ASSESSEE U/S 253 OF THE INCOME-TAX A CT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS) [FOR SHORT THE CIT(A)] 16, MUMBAI DATED 30.04.2013 FOR ASSESSMENT YEAR (AY) 2010-11. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE LEARNED CIT(APPEALS) ERRED IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE UNDER SECTION 40(A)(V) RS.6,86,899/-. ( GROUND 1&2 ) 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPA NY IS ENGAGED IN THE BUSINESS OF ANALYTICS AND MARKETING SERVICES, FILED ITS RETURN OF INCOME FOR RELEVANT AY ON 07.10.2010 DECLARING LOSS OF RS. 9,45,61,736/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 26.03.2013. THE ASSESSING OFFI CER (AO) WHILE PASSING THE ASSESSMENT ORDER BESIDES THE OTHER DISALLOWANCE, DI SALLOWED A SUM OF RS. 6,86,899/- UNDER SECTION40(A)(V) HOLDING THAT THE A SSESSEE HAS NOT FILED ANY ITA NO.2318 /M/2015 EXPERIAN SERVICES INDIA PVT LTD 2 EVIDENCE IF SUCH PAYMENT OF TAX WAS A PART OF THE CONTRACT OF EMPLOYMENT OF EMPLOYEE OR THERE WAS ANY SUCH PRACTICE FOR PAYMENT OF TAX OF THE EMPLOYEE. ON APPEAL BEFORE COMMISSIONER (APPEALS) THE DISALLOWAN CE UNDER SECTION 40(A)(V) WAS CONFIRMED. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD CIT (A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE (AR ) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LEARNED AR OF THE ASSESSEE ARGUED THAT ASSESSEE IN ITS TAX AUDIT REPORT INADVERTENTLY HAS SHOWN AN AMOUNT OF R S. 6,86,899/- AS INADMISSIBLE UNDER SECTION 40(A)(V). THE ASSESSEE ALSO SUBMITTED FORM NO. 16 ISSUED TO ITS EMPLOYEE FOR THE ASSESSMENT YEAR 2010-11. THE ASSES SEE SUBMITTED DURING THE ASSESSMENT PROCEEDING THAT THEY HAVE PROVIDED ONLY ACCOMMODATION PERQUISITE OF RS. 70,782/-. NO OTHER NON-MONETARY PERQUISITE WAS PROVIDED TO THE EMPLOYEE. THE ASSESSEE DID NOT PAY TAX ON THE NON-MONETARY PE RQUISITE BY WAY OF ACCOMMODATION PROVIDED TO EMPLOYEE AND THEREFORE, N O EXEMPTION WAS CLAIMED UNDER SECTION 10(10 CC). THE SALARY EXPENSES HAVE B EEN TAXED IN THE HAND OF EMPLOYEE; THE ASSESSEE HAS DEDUCTED TAX AT SOURCE F ROM THE SALARY OF EMPLOYEE AND THEREFORE HAS NOT BORNE ANY PART OF TAX. IN THE ALTERNATIVE THE LEARNED AR OF THE ASSESSEE ARGUED THAT REVISE COMPUTATION OF INCO ME OF EMPLOYEE WAS NOT SUBMITTED BEFORE THE LOWER AUTHORITIES AND PRAYED T HAT MATTER MAY BE RESTORED BACK TO THE LOWER AUTHORITIES FOR VERIFICATION. IT WAS FURTHER ARGUED THAT THE ASSESSEE IS READY TO FILE THE AFFIDAVIT OF TAX AUDI TOR. ON THE OTHER HAND LEARNED AR FOR THE REVENUE ARGUED THAT THE ASSESSEE HAS INT ENTIONALLY AND DELIBERATELY FILED THE REPORT OF AUDITOR WHERE IT HAS BEEN SPECI FICALLY MENTIONED THAT A SUM OF RS. 6,86,899/-PAID TO AT THE TAX EXPENSES OF AN EMP LOYEE INADMISSIBLE UNDER SECTION 40(A)(V) OF THE ACT. THE ASSESSEE HAS NOT D ISALLOWED THE AMOUNT WHILE COMPUTING ITS TOTAL INCOME. 4. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND FURTHER GONE THROUGH THE ORDER OF AUTHORITIES BELOW. THE ASSESSING OFFIC ER WHILE FRAMING ASSESSMENT ORDER NOTICED THAT UNDER CLAUSE 17(F) OF TAX AUDIT REPORT, THE AUDITOR HAS ITA NO.2318 /M/2015 EXPERIAN SERVICES INDIA PVT LTD 3 QUALIFIED A SUM OF RS. 6,86,899/- PAID TO INCOME TA X EXPENSES OF AN EMPLOYEE INADMISSIBLE UNDER SECTION 40(A). HOWEVER, THE ASSE SSEE HAD NOT DISALLOWED THIS AMOUNT WHILE COMPUTING ITS TOTAL INCOME. THE ASSESS EE WAS ASKED TO EXPLAIN AS TO WHY THE SAME SHOULD NOT BE DISALLOWED. THE ASSESSEE FILED ITS REPLY VIDE REPLY DATED 22 ND NOV 2012. IN THE REPLY THE ASSESSEE CONTENDED TH AT THE AMOUNT OF INCOME TAX OF AN EMPLOYEE NAMELY MR JOSS ARIZCE HAS BEEN INCLUDED WHILE COMPUTING HIS TAXABLE INCOME UNDER THE HEAD SALARY. THIS AMOUNT IS TAXED IN THE HANDS OF EMPLOYEE, IT HAS BEEN TREATED AS SALARY EX PENSES AND DEDUCTION HAS BEEN CLAIMED FOR THESE EXPENSES. THE ASSESSEE AGAIN VIDE ITS LETTER DATED 11 TH MARCH 2013 CONTENDED THAT INCOME TAX HAS BEEN INADVERTENT LY SHOWN IN THE TAX AUDIT REPORT AS THE AMOUNT IS INADMISSIBLE. THE PHOTOCOPY OF FORM NO 16 ISSUED TO EMPLOYEE FOR RELEVANT ASSESSMENT YEAR WAS ALSO FILE D SHOWING THAT IT WAS NON- MONETARY PERQUISITE PROVIDED TO THE EMPLOYEE. THE A SSESSEE COMPANY ALSO FILED THE CONFIRMATION FROM THE AUDITORS. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SHOW IF THE SAID PAYMENT OF TAX WAS PART OF TERM AND CO NDITION OF THE EMPLOYMENT OR IF THERE IS SUCH PRACTICE OF PAYING INCOME TAX OF T HE EMPLOYEE BY THE ASSESSEE COMPANY AND WHETHER TAX HAS BEEN DEDUCTED AND PAID TO THE GOVERNMENT OF ON THESE PAYMENTS. THE LEARNED COMMISSIONER INCOME TAX (APPEALS) CONFIRMED THE DISALLOWANCE ON THE SIMILAR LINE HOLDING THAT THAT NO CREDIBLE EXPLANATION HAS BEEN FURNISHED BY ASSESSEE. 5. WE HAVE SEEN THAT DESPITE THE DIRECTION OF THE TRIB UNAL DATED 02.01.2017 THE ASSESSEE HAS NOT FILED THE AFFIDAVIT OF THE TAX AUD ITOR WHO HAD PREPARED THE AUDIT REPORT TO SUBSTANTIATE ITS CLAIM. WE HAVE FURTHER N OTICED THAT THE RETURN OF INCOME OF EMPLOYEE (MR. JOSE ARIZPE) FOR ASSESSMENT YEAR 2 010-11 IS FILED FOR THE FIRST TIME BEFORE HIS TRIBUNAL ONLY ON 15.02.2017. THUS, CONSIDERING THE SUBMISSION OF THE LD AR FOR THE ASSESSEE, WE RESTORE THE CASE TO THE FILE OF LD CIT(A) TO EXAMINE AND CONSIDER THE RETURN OF INCOME OF THE EMPLOYEE ( MR. JOSE ARIZPE). THE ASSESSEE IS ALSO DIRECTED TO FILE THE AFFIDAVIT OF THE TAX AUDITOR BEFORE LD CIT(A) TO SUBSTANTIATE THEIR CLAIM. AFTER CONSIDERING THE AFF IDAVIT OF TAX AUDITOR SO FILED AND ITA NO.2318 /M/2015 EXPERIAN SERVICES INDIA PVT LTD 4 THE OTHER EVIDENCES THE LD CIT (A) SHALL PASS ORDER IN ACCORDANCE WITH LAW. THE ASSESSEE IS DIRECTED TO FULLY COOPERATE DURING THE REMAND PROCEEDINGS AND PROVIDE ALL NECESSARY INFORMATION TO LD CIT(A). NEEDLESS TO SAY THAT THE LD CIT(A) SHALL GRANT OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE PASSING THE ORDER. WITH THIS DIRECTION THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 5 TH MARCH, 2017. SD/- SD/- (D.KARUNAKARA RAO) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 15/03/2017 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. UE COPY/