ITO, Ward - 2(2) , Kolkata V. M/s. Clininvent Research Pvt. Ltd., , Kolkata

ITA 2451/KOL/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1580 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-12-2020
• Assessment Year: 2010-2011
• Appeal Filed On: 22-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K TIBREWAL FCA LD
• Assessee Lawyers: IMOKABA JAMIR
• Keywords: Principle of natural justice; Additional evidence; TDS; Set aside
• Section: 143(3); 37(1); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SHRI P.M. JAGTAP, V.P (KZ) AND SHRI S.S. GODARA, JM I .T . A NO. 2451 /KOL/201 8 A.Y 20 1 0 - 11 I.T.O., WARD 2(2), KOLKATA V/S. M/S. CLININVENT RESEARCH PVT. LTD PAN: AACCC1934A (APPELLANT /DEPARTMENT ) (RESPONDENT) C.O NO. 3/KOL/2019 [ I .T . A NO. 2451/KOL/2018 A.Y 2010 - 11 ] M/S. CLININVENT RESEARCH V/S. I.T.O., WARD 2(2), KOLKATA PVT. LTD (ASSESSEE/CROSS OBJECTOR) (DEPAR T MENT/RESPONDENT) FOR THE RESPONDENT /DEPARTMENT : SHRI IMOKABA JAMIR, CIT/DR FOR THE APPELLANT/ASSESSEE : SHRI A.K. TIBREWAL, FCA, LD.AR DATE OF HEARING (VIRTUAL) : 08 - 12 - 2020 DATE OF PRONOUNCEMENT : 15 - 12 - 2020 ORDER SHRI S.S. GODARA, JM : 1. TH IS R EVENUES APPEAL AND ASSESSEE S CORRESPONDING CROSS OBJECTION FOR ASSESSMENT YEAR 20 1 0 - 11 ARISE AGAINST THE CIT (A) , 1 1 , KOLKATA S ORDER DATED 23 - 08 - 2018 PASSED IN CASE NO. 528/CIT(A) - 11/C - 8/14 - 15/KOL. AY 2010 - 11 INVOLVING PROCEEDINGS U/S 143(3) OF THE INCOME - TAX ACT, 1961 ( IN SHORT THE ACT ) . WE HAVE H EARD BOTH THE PARTIES. CASE FILE S PERUSED. 2 . WE NOTICE AT THE OUTSET THAT THE REVENUES SOLE SUBSTANTIVE GRIEVANCE RAISED IN THE INSTANT APPEAL CHALLENG ES CORRECTNESS OF THE CIT(A) S ORDER THAT HE HAS ERRED IN LAW AND ON FACTS IN ACCEPTING/ ADMITTING ASSESSEES ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF THE INCOME - TAX RULES, 1962 IN SHORT, THE RULES , THEREBY REVERSING THE 2 ITA NO. 2451/KOL/2018 AY 2010 - 11 C.O NO. 3/KOL/2019 AY 2010 - 11 CLININVENT RESEARCH P.LTD 2 A SSESSING O FFICER S AC TION DISALLOWING ITS PROJECT - WISE AND SALARY EXPENSES OF RS. 5,77,33,000/ - AND RS. 3 , 98,77,597/ - ; RESPECTIVELY . 3 . LEARNED CIT/DR AT THE OUTSET TOOK US TO THE ASSESSMENT ORDER DATED 30 - 03 - 2013 IN PARA S 3.1 AND 4.2 AT PAGES 2 - 3 THAT SINCE THE ASSE SSEE HAD FAILED TO PRODUCE PROJECT WISE EXPENDITURE WITH ITS CLIENTS ALONG WITH DETAILS OF MAN POWER, SET - UP AND PROJECTS UNDERTAKEN VIZ - A - VI Z ALLOCATION OF PLANT - WISE/PROJECT - WISE EXPENDITURE AND ALSO HAD NOT DEDUCTED TDS ON SALARY PAYMENTS PERTAINING TO ITS CLIENTS , M/S. PFIZER, NOVARTIS, BYE R & M/S. GLAXO (GSK) ETC , ( THE LATTER SUMS CLAIMED IN THE NATURE OF PROFESSIONAL FEES PAYABLE TO EMPLOYEES OF THE SAID CLIENTS/COMPANIES ) , BOTH THESE HEADS OF EXPENDITURE DESERVE D TO BE DISALLOWED. HE INVITED OUR ATTENTION TO THE CIT(A) CORRESPONDING LOWER APPELLATE DISCUSSION IN PARAS 6, 6.1 AND 9 AT PAGES 9 - 13 THAT THIS TAX PAYER HAD FILED ADDITIONAL DETAILS IN VOLVING THE RECONCILIATION OF COSTS AND REIMBURSEMENT DETAILS PERTAINING TO THE SAID F OUR ENTITIES I N FURTHERANCE TO THE RELEVANT AGREEMENTS FOR THE FIRST TIME IN APPELLATE PROCEEDINGS ONLY WHICH HAVE BEEN PUT TO FACTUAL VERIFICATION . LEARNED CIT/DR ALSO SUBMITTED THAT THE RELEVANT SAMPLE COPIES OF THE AGREEMENTS WITH THE ABOVE FOUR COMPAN IES NEVER SAW LIGHT OF THE DAY DURING THE COURSE OF ASSESSMENT AND COPIES OF NECESSARY TDS RETURN PERTAINING TO SAID ENTITIES HAD ALSO NOT BEEN FILED BEFORE THEREIN AND THEREFORE, THE INSTANT ISSUE DESERVE S TO BE RESTORED BACK TO THE A SSESSING O FFICER FOR HIS A FRESH ADJUDICATION. 4 . MR. TIBREWAL DRE W STRONG SUPPORT FROM THE CIT(A)S ORDER DELETING THE TWIN DISALLOWANCES ON THE BASIS OF CORRESPONDING AGREEMENTS WITH THE SAID FOUR ENTITIES (SUPRA) AFTER CARRYING OUT THE NECESSARY VERIFICATION . HE QUOTE D PAPER BOOK PAGES 1 TO 407 INDICATING CORRESPONDING DOCUMENTS FORMING PART OF ASSESSMENT AS WELL AS LOWER RECORDS. HE LASTLY CONTENDED THAT THE CIT(A) HAS RIGHTLY REVERSED THE ASSESSING AUTHORITY S ACTION DISALLOWING THE IMPUGNED PROJECT - WISE AND SA LARY EXPENSES. 5. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RIVAL SUBMISSIONS AGAINST AND IN SUPPORT OF THE CIT(A)S ACTION DELETING PROJECT WISE AND SALARY PAYMENT S 3 ITA NO. 2451/KOL/2018 AY 2010 - 11 C.O NO. 3/KOL/2019 AY 2010 - 11 CLININVENT RESEARCH P.LTD 3 DISALLOWANCE. WE MAKE IT CLEAR THAT THE R EVENUES SOLE SUBSTANTIVE GRIEVANCE IS THAT THE CIT(A) S ACTION UND E R CHALLENGE IN ADMITTING /ACCEPTING ADDITIONAL EVIDENCE HAS VIOLAT ED RULE 46A OF THE I.T RULES, 1962 S INC E THE ASSESS ING AUTHORITY HAS NOT BEEN AFFORDED ADEQUATE OPPORTUNITY OF HEARING . W E FIND FORCE IN THE R EVENUES INSTANT SOLE GRIEVANCE. WE SEE FROM A PERUSAL OF ASSESSEES COMPILATION OF DOCUMENTS FILED IN THE PAPER BOOK AT SL. NO. 14 TO 17 THAT THE IT HAD FILED COPIES OF AGREEMENT WITH M/S. NOVARTIS, PFIZER, B AYER & M/S. GLAXO (GSK) WITH SAMPLE COPIES OF EMPLOYMENT CONTRACTTS FILED BEFORE THE CIT(A) FOR THE FIRST TIME IN THE LOWER APPELLATE PROCEEDINGS ONLY. MR. TIBREWAL SOUGHT TO EMPHASIZE THAT THE ASSESSEE S TWO LETTERS DATED 25 - 03 - 2013 AND 24 - 11 - 2009 DULY PLAC E D ON RECORD THE CORRESPONDING SAMPLE COPIES OF EMPLOYMENT AGREEMENTS WITH ITS CLIENTS BEFORE THE A SSESSING O FFICER BEFORE COMPLETI ON OF THE REGULAR ASSESSMENT IN ISSUE DATED 30 - 03 - 2013. T HERE IS NO INDICATION IN THE CASE RECORDS AS TO WHETHER THE SE DETAILS HAD IN FACT BEEN FILED BEFORE THE A SSESSING O FFICER . WE DEEM IT APPROPRIATE IN THESE FACTS AND CIRCUMSTANCES THAT THE CIT(A) S ACTION ALLOWING RELIEF TO ASSESSEE IN DELETING THE PROJECT WISE AND SALARY EXPENSES DISALLOWANCE IS NOT SUSTAINABLE BEING IN VIOLATION OF PRINCIPLE NATURAL JUSTICE PRESCRIBED IN RULE 46A OF THE RULES. WE ACCORDINGLY ACCEPT THE R EVENUES SOLE SUBSTANTIVE GRIEVANCE AND RESTORE BOTH THE SE ISSUES TO THE A SSESSING O FFICER FOR HIS A FRESH ADJUDICATION ON MERIT S . WE MAKE IT CLEAR THAT THE ASSESSEE SHALL ALSO BE AT LIBERTY TO FILE NECESSARY EVIDENCE/PARTICULARS IN ADDITION TO THOSE ALREADY FORMING PART OF RECORD S . THE REVENU E S APPEAL (ITA NO. 2451/KOL/18 FOR AY 2010 - 11) STAND S ACCEPTED FOR STATISTICAL PURPOSE. C.O NO. 3/KOL/ 2019 ARISING OUT OF ITA NO. 2451/KOL/2018 AY 2010 - 11 - BY THE ASSESSEE 6. COMING TO ASSESSEES CROSS OBJECTION, WE FIND THAT ITS SOLITARY GRIEVANCE IS THAT BOTH THE LOWER AUTHORITIES HAVE ERRED IN LAW AND ON FACTS IN DISALLOWING COMMISSION OF RS.17 , 45 , 90 2/ - U/S. 37(1) OF THE ACT PAID TO SHRI SWADESH CHATTERJEE , AN AMERICAN R ESIDENT . BOTH THE PARTIES ARE AD IDEM THAT TH IS SOLE ISSUE BE RESTORED TO THE ASSESSING 4 ITA NO. 2451/KOL/2018 AY 2010 - 11 C.O NO. 3/KOL/2019 AY 2010 - 11 CLININVENT RESEARCH P.LTD 4 OFFICER SINCE REQUIRING FRESH ACTUAL VERIFICATION QUA ALLOWABILITY OF THE ABOVE CLAIM UNDER COMPANY LAW VIS - - VIS PROVISIONS OF THE ACT . WE THEREFORE, SET ASIDE THIS SOLE ISSUE RAISED IN ASSESSEES CROSS OBJECTION TO THE ASSESSING OFFICER FOR HIS A FRESH ADJUDICATION AS PER LAW. THE ASSESSEES CROSS OBJECTION (C.O NO. 3/KOL/19 ) IS ALSO T REATED AS ALLOWED FOR STATISTICAL PURPOSE S . 7. THIS R EVENUES APPEAL (ITA NO. 2451/KOL/2018 ) AND ASSESSEE S C.O ( NO. 3/KOL/2019) ARE ALLOWED FOR STATISTICAL PURPOSE IN ABOVE TERMS. ORDER PRONOUNCED IN THE COURT ON 15 - 12 - 2020 SD/ - SD/ - [ P.M.JAGTAP ] [ S.S.GODARA ] VICE PRESIDENT (KZ) JUDICIAL MEMBER DATED : 15 - 12 - 2020 **PRADIP, SR. PS C OPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ DEPARTMENT: THE ITO WAR 2(2) AAYKAR BHAWAN, P - 7 CHOWRINGHEE SQ., KOLKATA - 69. . 2. RESPONDENT/ ASSESSEE: M/S. CLININVENT RESEARCH PVT. LTD BLOCK - BN, PLOT - 7, SALTLAKE ELECTRONICS COMPLEX, KOLKATA - 91. 3..C.I.T (A) . - 4. C.I.T. - KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSISTANT REGISTRAR H.O.O/D.D.O KOLKATA