Telstra India Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 265/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3260 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 11-07-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K AGGARWAL SHUBHAM AGGAR WAL
• Keywords: Additional evidence
• Section: 244A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D: NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDENT AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 265/DEL /2014 ASSESSMENT YEAR: 2007-08 TELSTRA INDIA PVT. LTD., UNIT NOS. 518/519/520, 5 TH FLOOR, TOWER-B, DLF TOWERS, JASOLA, NEW DELHI-110044 (PAN: AAACT4900F) VS DCIT, CIRCLE-16(1), NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI S.K. AGGARWAL, SHUBHAM AGGAR WAL, CA RESPONDENT BY : SHRI AMIT JAIN, S R. DR DATE OF HEARING : 23.11.2017 DATE OF PRONOUNCEMENT : 20.02.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 30.09.2013 PASSED BY THE LD . CIT (A)-19, NEW DELHI FOR ASSESSMENT YEAR 2007-08. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THE APPEAL :- 1. BASED ON THE FACTS AND CIRCUMSTANCES OF THE CA SE, TELSTRA INDIA PRIVATE LIMITED (HEREINAFTER REFERRED TO AS THE APPELLANT), RESPECTFULLY SUBMITS IN RESPECT O F THE ITA NO. 265/DEL/2014 ASSESSMENT YEAR 2007-08 2 ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS)-XIX (CIT(A)), NEW DELHI UNDER SECTION 2 50 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED, IN CONFIRMING DISALLOWANCE OF INFORMATION TECHNOLOGY EXPENSE OF R S 1,979,914 BY HOLDING THAT IT IS NOT A GENUINE BUSIN ESS EXPENSE OF THE APPELLANT; 2. WHILE CONFIRMING THE ABOVE DISALLOWANCE, THE LD . CIT (A) HAS ERRED IN HOLDING THAT THE CLAIM OF EXPENSE BY THE ASSESSEE IS NOT RELIABLE AND THERE IS NO CONSISTENC Y IN THE MONTHLY EXPENSE INCURRED BY THE ASSESSEE; 3. WHILE CONFIRMING THE ABOVE DISALLOWANCE, THE LD . CIT (A) HAS NOT APPRECIATED THAT ASSESSEE HAS INCURRED THIS EXPENSE WHOLLY AND EXCLUSIVELY FOR ITS BUSINESS IN INDIA; 4. WHILE CONFIRMING THE ABOVE DISALLOWANCE, THE LD . CIT(A) HAS ERRED IN STATING THAT THE APPELLANT HAS NOT OFFERED AN EXPLANATION ON THE EXPENDITURE INCURRED BY THE APPELLANT WHEREAS COMPLETE DETAILS REGARDING TH E EXPENDITURE AND EXPLANATION REGARDING ALLOWABILITY OF SUCH EXPENDITURE WAS OFFERED TO THE ID CIT(A); 5. WHILE CONFIRMING THE ABOVE DISALLOWANCE, THE LD CIT(A) HAS NOT APPRECIATED THAT THE ABOVE EXPENSE REPRESENTS PAYMENTS FOR INFORMATION TECHNOLOGY SERV ICES MADE TO UNRELATED THIRD PARTIES ON NORMAL COMMERCIA L TERMS; 6. THAT THE LD CIT(A) HAS ERRED IN LAW ON THE FACT S AND IN LAW IN NOT GIVING THE CREDIT FOR PREPAID TAXES AMOUNTING TO INR 1,244,490 AND 101,645; 7. THAT THE LD CIT (A) HAS ERRED IN LAW ON THE FAC TS AND IN LAW IN NOT ADJUDICATING ON WITHDRAWAL OF INTERES T UNDER SECTION 244A OF THE ACT; 8. THAT THE LD CIT(A) HAS ERRED, ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IN NOT ADJUDI CATING ON LEVY OF INTEREST UNDER SECTION 234D OF THE ACT; ITA NO. 265/DEL/2014 ASSESSMENT YEAR 2007-08 3 THE ABOVE GROUNDS ARE INDEPENDENT AND WITHOUT PREJUDICE TO EACH OTHER. 3. BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF I NCOME WAS FILED DECLARING A TOTAL INCOME OF RS. 1,56,04,8 90/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIM ED AN AMOUNT OF RS. 19,79,914/- IN ITS PROFIT AND LOSS AC COUNT TOWARDS INFORMATION TECHNOLOGY COST AS COMPARED TO RS. 10,47,425/- CLAIMED IN THE PRECEDING ASSESSMENT YEA R. THE ASSESSEE WAS ASKED TO FURNISH A DETAILED LEDGER ACCOUNT OF THESE EXPENSES AND ALSO TO JUSTIFY THE S AME. THE ASSESSEE SUBMITTED THE DETAILS AND, FROM THE DE TAILS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD CLAIMED TELEPHONE EXPENSES FOR THE MONTH OF FEBRUAR Y 2007 AND MARCH 2007 TO BE PAID TO NET MAGIC AMOUNTI NG TO RS. 84,000/- AND FOR THE MONTH OF FEBRUARY 2007 TO YASH ENTERPRISE AMOUNTING TO RS. 1,50,000/-. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAD CLAIMED RS.1,92,000/- AS TECHNOLOGY COST EXPENSES F OR THE MONTH OF JANUARY 2007. THE ASSESSING OFFICER ITA NO. 265/DEL/2014 ASSESSMENT YEAR 2007-08 4 PROCEEDED TO HOLD THAT THE CLAIM OF AMOUNT OF THESE EXPENSES WAS NOT RELIABLE AND HE, THEREFORE, PROCEE DED TO DISALLOW THE AMOUNT OF RS. 19,79,914/- AND ADDED TH E SAME TO THE INCOME OF THE ASSESSEE. ON APPEAL BY THE ASSESSEE BEFORE THE LD. COMMISSIONER OF INCOME TAX (A), THE LD. COMMISSIONER OF INCOME TAX (A) RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR VERI FICATION. AGAINST THIS ORDER, THE DEPARTMENT APPROACHED THE I TAT AND CHALLENGED THE ACTION OF THE LD. COMMISSIONER O F INCOME TAX (A) IN RESTORING THE ISSUE TO THE FILE O F THE ASSESSING OFFICER ON THE GROUND THAT THE POWER OF REMAND BY THE LD. COMMISSIONER OF INCOME TAX (A) HA D BEEN CURTAILED W.E.F. 1.6.2001. THE ITAT, VIDE ORD ER DATED 18.05.2012, ACCEPTED THE CONTENTION OF THE DEPARTMENT IN ITA NO.2014/DEL/2011 AND RESTORED THE ISSUE FOR ADJUDICATION TO THE FILE OF THE LD. COMMI SSIONER OF INCOME TAX (A) DIRECTING HIM TO CALL FOR A REMAN D REPORT FROM THE ASSESSING OFFICER BEFORE ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A OF THE IT RULES. THEREAFTER, ON THE DIRECTIONS OF THE ITAT, THE LD. COMMISSIONER OF INCOME TAX (A) CALLED FOR REMAND RE PORT ITA NO. 265/DEL/2014 ASSESSMENT YEAR 2007-08 5 AND NOTED THAT THE ASSESSEE COULD NOT SUBSTANTIATE AND JUSTIFY THE EXPENSES INCURRED UNDER INFORMATION TECHNOLOGY EXPENSES AND CONFIRMED THE DISALLOWANCE OF RS. 19,79,914/-. NOW, THE ASSESSEE HAS APPROACHED THE ITAT AND HAS CHALLENGED THE UPHOLDING OF DISALLOWAN CE BY THE LD. COMMISSIONER OF INCOME TAX (A). 4. LD. AR SUBMITTED THAT THE WHOLE LITIGATION AROSE BECAUSE OF WRONG NARRATION GIVEN TO THE ENTRIES IN THE BOOKS OF ACCOUNTS. IT WAS SUBMITTED THAT THE EXPE NSES WERE IN THE NATURE OF IT SUPPORT EXPENSES. OUR ATT ENTION WAS DRAWN TO COPIES OF INVOICES ISSUED BY YASH ENTERPRISES AND NET MAGIC PLACED IN THE PAPER BOOK AND IT WAS SUBMITTED THAT THE ASSESSEE SHOULD NOT BE PUNISHED FOR WRONG NARRATION IN THE BOOKS OF ACCOUN TS. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAD DULY DEDUCTED TAX AT SOURCE AND, THEREFORE, THE EXPENSES INCURRED WERE GENUINE. THE LD. AR ALSO SUBMITTED T HAT THE ASSESSING OFFICER HAD ACCEPTED THESE EXPENSES I N THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR I.E. 2008-09 AND A COPY OF THE SAME WAS PLACED ON RECORD IN SUPP ORT OF THE CONTENTION. RELIANCE WAS ALSO PLACED ON THE ITA NO. 265/DEL/2014 ASSESSMENT YEAR 2007-08 6 JUDGMENT OF HONBLE APEX COURT IN THE CASES OF KEDARNATH JUTE MANUFACTURING CO. LTD. VS. CIT REPOR TED IN (1972) 3SCC 252, TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. VS. COMMISSIONER OF INCOME TAX (19 77) REPORTED IN 6SCC 117. SUTLEJ COTTON MILLS VS. CIT REPORTED IN 1978 SCC 358 AND UNITED COMMERCIAL BANK VS. CIT REPORTED IN (1999) 8SCC 338 FOR THE PROPOSI TION THAT ACCOUNTS ARE NOT DETERMINATIVE AND CONCLUSIVE AND THE MATTER HAS TO BE EXAMINED ON THE TOUCHSTONE OF PROVISIONS CONTAINED IN THE ACT. 5. IN RESPONSE, THE LD. SR. DR PLACED RELIANCE ON T HE ORDERS OF THE AUTHORITIES BELOW AND VEHEMENTLY ARGU ED THAT THE ASSESSEE COULD NOT EXPLAIN AND SUBSTANTIAT E ENTRIES AND, THEREFORE, THE ADDITION HAD BEEN RIGHT LY MADE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AFTER GOING THROU GH THE ORDER OF ASSESSMENT AND THE TWO ORDERS PASSED BY TH E LD. COMMISSIONER OF INCOME TAX(A), IT IS APPARENT THAT THE IMPUGNED EXPENSES HAVE NEITHER BEEN PROPERLY EXAMIN ED BY THE ASSESSING OFFICER NOR BEEN PROPERLY EXPLAINE D BY ITA NO. 265/DEL/2014 ASSESSMENT YEAR 2007-08 7 THE ASSESSEE AT ANY LEVEL BEFORE THE AUTHORITIES BE LOW. ALTHOUGH, THE ASSESSEE HAS FILED VOLUMINOUS DOCUMEN TS IN THE FORM OF INVOICES, IT IS APPARENT THAT THE NA TURE OF THE PAYMENT HAS NOWHERE BEEN EXAMINED BY THE LOWER AUTHORITIES. IT IS THE ASSESSEES CLAIM THAT THE D ISPUTE HAS ARISEN DUE TO WRONG NARRATION IN THE ENTRIES IN THE BOOKS OF ACCOUNTS BUT THE SAME HAS NOT BEEN SUPPORT ED BY ANY EVIDENCE ON RECORD. ALTHOUGH, WE DO FEEL TH AT THE ASSESSEE HAS NOT BEEN ABLE TO DISCHARGE THE ONUS CA ST UPON IT TO EXPLAIN AND SUBSTANTIATE THE IMPUGNED EXPENSES, IT IS OUR CONSIDERED OPINION THAT IN THE INTEREST OF JUSTICE, THE ISSUE SHOULD BE EXAMINED IN DETAIL BY THE ASSESSING OFFICER. WE DULY TAKE NOTE OF THE ASSESS EES RELIANCE ON THE JUDGMENTS OF THE HONBLE APEX COURT AS REFERRED TO BY THE LD. AR THAT THE ASSESSEE SHOULD NOT BE MADE TO SUFFER DUE TO WRONG TREATMENT IN THE BOOKS OF ACCOUNTS. ACCORDINGLY, WE RESTORE THIS ISSUE TO TH E FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THE ISSUE DE NOVO AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE. WE ALSO DIRECT THE A SSESSEE TO CO-OPERATE WITH THE ASSESSING OFFICER AND SUBMIT ALL ITA NO. 265/DEL/2014 ASSESSMENT YEAR 2007-08 8 RELEVANT DOCUMENTS, EVIDENCES AND EXPLANATIONS WHEN CALLED UPON TO DO SO, FAILING WHICH THE ASSESSING O FFICER SHALL BE AT LIBERTY TO PROCEED EX PARTE QUA THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, THE ASSESSEES A PPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.0 2. 2018. SD/- SD/- (G.D. AGRAWAL) (SUDHANSHU SRIVASTAVA) PRESIDENT JUDICIAL MEMBER DATED: 20 TH FEBRUARY, 2018 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR