ACIT - 11(3), MUMBAI V. M/S SURESH A SHROFF & CO., MUMBAI

ITA 2645/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79388 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH L PATHADE
• Assessee Lawyers: AARTI VISANJI
• Keywords: Revised return
• Section: 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./I.T.A. NO.2645/MUM/2013 ( / ASSESSMENT YEAR :2008-09 ) ASSTT. COMMISSIONER OF INCOME TAX, 11(3), ROOM NO.446, 4 RD FLOOR, AAYAKAR BHAVAN, MUMBAI-400020 / VS. M/S SURESH A SHROFF AND CO., 3 RD FLOOR, LENTIN CHAMBERS, DALAL STREET FORT, MUMBAI-400001 ( / APPELLANT) .. ( !' / RESPONDENT) ./ #$ ./PAN/GIR NO. : AABFS1859A % / APPELLANT BY : SHRI PRAKASH L PATHADE !' & % /RESPONDENT BY : MS.AARTI VISANJI ' & ( ) / DATE OF HEARING : 9 .7.2014 *+ & ( ) /DATE OF PRONOUNCEMENT : 9. 7.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIREC TED AGAINST THE ORDER DATED 28.01.2013 PASSED BY LD CIT(A)-2, MUMBAI AND IT REL ATES TO THE ASSESSMENT YEAR 2008-09. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN GRANTING DEDUCTION U/S 40(B) OF THE ACT, WHEN THE ASSESSEE D ID NOT CLAIM THE SAME IN ITS RETURN OF INCOME. FURTHER WHETHER THE LD CIT(A) WA S JUSTIFIED IN HOLDING THAT THE I.T.A. NO.2645/MUM/2013 2 DEDUCTION U/S 40(B) IS ALLOWABLE ON THE RECEIPTS RE LATING TO NAME LICENCE FEES AND COMPENSATION FOR USE OF SHARED ASSETS. 3. THE FACTS RELATING TO THE ISSUE ARE STATED I N BRIEF. THE ASSESSEE HEREIN IS A FIRM OF ADVOCATES AND SOLICITORS. THE ASSESSEE FIR M FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION UNDER E-FILING METHOD. IN THE RETURN OF INCOME, THE DEDUCTION TOWARDS PARTNERS REMUNERATION ALLOWABLE U/S 40(B) OF THE ACT WAS OMITTED TO BE CLAIMED BY THE ASSESSEE. HENCE, THE AO DID NOT ALLOW DEDUCTION OF PARTNERS REMUNERATION. THE ASSESSEE FILED APPE AL BEFORE LD CIT(A) AND CLAIMED DEDUCTION U/S 40(B) OF THE ACT. IT IS TO B E NOTED THAT THE ASSESSEE FIRM HAD MOVED PETITION BEFORE THE ADMINISTRATIVE COMMIS SIONER U/S 264 OF THE ACT ON RECEIPT OF INTIMATION U/S 143(1) OF THE ACT. HO WEVER, THE ADMINISTRATIVE COMMISSIONER REJECTED THE SAME BY HOLDING THAT THE INTIMATION ISSUED U/S 143(1) OF THE ACT CANNOT BE CONSIDERED AS ORDER. 4. THE ASSESSEE FILED APPEAL BEFORE LD CIT(A) A ND INTER ALIA, CLAIMED DEDUCTION U/S 40(B) OF THE ACT. IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAD CREDITED FOLLOWING RECEIPTS UNDER THE HEAD OTHER I NCOME. NAME LICENSE FEES 20,00,000 COMPENSATION FOR USE OF SHARED ASSETS 50,08,473 --------------- 70,08,473 ======== THE ASSESSEE CONTENDED BEFORE LD CIT(A) THAT THE AB OVE SAID RECEIPTS SHOULD ALSO BE INCLUDED AS PART OF BOOK PROFIT FOR COMPU TING THE REMUNERATION ALLOWABLE U/S 40(B) OF THE ACT. THE ASSESSEE ALSO SUBMITTED THAT THE PARTNERS OF THE FIRM HAS ALREADY DECLARED THE REMUNERATION AS T HE INCOME IN THEIR RESPECTIVE I.T.A. NO.2645/MUM/2013 3 HANDS AND ACCORDINGLY CONTENDED THAT THE NON-ALLOWA NCE OF THE REMUNERATION WOULD RESULT IN DOUBLE ASSESSMENT OF SAME INCOME. 5. THE LD CIT(A) NOTICED THAT THE CLAIM MADE BY THE ASSESSEE FOR INCLUDING THE RECEIPTS RELATING TO NAME LICENSE FEES AND COMP ENSATION FOR USE OF SHARED ASSETS HAVE BEEN DIRECTED TO BE INCLUDED IN BOOK P ROFIT BY THE TRIBUNAL IN THE ASSESSEES OWN CASE RELATING TO ASSESSMENT YEAR 200 5-06. THE LD CIT(A), BY FOLLOWING THE DECISION OF THE TRIBUNAL REFERRED ABO VE, DIRECTED THE AO TO INCLUDE BOTH THE RECEIPTS CITED ABOVE IN THE BOOK PROFIT AND COMPUTE DEDUCTION U/S 40(B) OF THE ACT. AGGRIEVED BY THE DECISION RENDER ED BY LD CIT(A), THE REVENUE HAS FILED THIS APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE RECORD. IN THE INSTANT YEAR, THE ASSESSEE HAS OMITTED TO CLAIM DED UCTION OF REMUNERATION PAYABLE TO PARTNERS U/S 40(B) OF THE ACT. FROM TH E SUBMISSIONS MADE BEFORE LD CIT, WE NOTICE THAT THE ASSESSEE HAD OMITTED TO MA KE IDENTICAL CLAIMS IN THE EARLIER YEARS ALSO, BUT CLAIMED THE SAME IN THOSE Y EARS BY FILING REVISED RETURN OF INCOME. ACCORDING TO THE ASSESSEE, THE SAID OMISS ION HAS OCCURRED DURING THE INSTANT YEAR AND IN THE EARLIER YEARS DUE TO SOME S YSTEM ERROR. HOWEVER, IN THE INSTANT YEAR, THE ASSESSEE INADVERTENTLY OMITTED TO FILE REVISED RETURN OF INCOME AND HENCE THE SAME WAS OMITTED TO BE ALLOWED BY THE ASSESSING OFFICER. ACCORDING TO THE ASSESSEE, THE DUE DATE FOR FILING REVISED RETURN OF INCOME HAD EXPIRED BY THE TIME IT REALIZED ITS MISTAKE. 7. THERE IS NO DISPUTE WITH REGARD TO THE FACTS THAT THE ASSESSEE FIRM WAS ALLOWED DEDUCTION OF REMUNERATION PAYABLE TO THE PA RTNERS IN TERMS OF SEC. 40(B) I.T.A. NO.2645/MUM/2013 4 OF THE ACT IN THE EARLIER YEARS. HENCE, IN THE INS TANT YEAR ALSO, THE ASSESSEE SHOULD BE ENTITLED FOR SIMILAR DEDUCTION. IT MAY B E NOTED THAT THE DECISION RENDERED BY HONBLE APEX COURT IN THE CASE OF CIT V S. GOETZE INDIA LTD (284 ITR 323), WHEREIN THE HONBLE SUPREME COURT HAD HELD TH AT THE NEW CLAIM FOR DEDUCTION HAS TO BE MADE BY FILING REVISED RETURN O F INCOME DOES NOT IMPINGE THE POWER OF THE TRIBUNAL. IN THE INSTANT CASE, TH E ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 40(B) OF THE ACT IS NOT DISPUTED. HEN CE, IN OUR VIEW, THE LD CIT(A) WAS JUSTIFIED IN DIRECTING THE ASSESSING OFFICE TO COMPUTE DEDUCTION U/S 40(B) OF THE ACT. 8. THE QUESTION RELATING TO THE INCLUSION OF NAM E LICENSE FEES AND COMPENSATION FOR USE OF SHARED ASSETS IN THE BOOK PROFIT FOR THE PURPOSE OF COMPUTING DEDUCTION U/S 40(B) OF THE ACT HAS ALREAD Y BEEN CONSIDERED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE AND THE SAME HA S BEEN DECIDED IN FAVOUR OF THE ASSESSEE. WE NOTICE THAT THE LD CIT(A) HAS FOL LOWED THE DECISION RENDERED BY THE TRIBUNAL AND HENCE WE NO INFIRMITY IN HIS DE CISION. 9. IN VIEW OF THE FOREGOING DISCUSSIONS, WE DIRE CT THE ASSESSING OFFICER TO COMPUTE ELIGIBLE AMOUNT OF DEDUCTION U/S 40(B) OF T HE ACT AND ALLOW THE SAME. 10. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 9TH JULY, 2014 . *+ ' , -. / 0 9TH JULY, 2014 + & 2 3 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER - ' MUMBAI: 9 TH JULY,2014. I.T.A. NO.2645/MUM/2013 5 . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ' 5( ( ) / THE CIT(A)- CONCERNED 4. ' 5( / CIT CONCERNED 5. 67 2 !(8 , ) 8 , - ' / DR, ITAT, MUMBAI CONCERNED 6. 2 9 : / GUARD FILE. ; ' / BY ORDER, TRUE COPY < # (ASSTT. REGISTRAR) ) 8 , - ' /ITAT, MUMBAI