DCIT - 5(1), MUMBAI V. M/S INTER JEWEL (MUMBAI) PVT.LTD. (NOW KNOWN AS D.NAVICHANDRA GEMS PVT. LTD), MUMBAI

ITA 2755/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2636 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Bench Allotted: I
• Next Hearing Date: 03-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-04-2013
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN V P
• Assessee Lawyers: K A VAIDYALINGAM
• Keywords: Rule of consistency; Corroborative evidences; Revenue expenditure
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL I , BENCH MUMBAI , . . , BEFORE SHRI JOGINDER SINGH, JM & SHRI R.C.SHARMA, AM ./ ITA NO.2755/ MUM/201 3 ( / ASSESSMENT YEAR : 200 9 - 2010 ) DCIT - 5(1), MUMBAI VS. M/S INTER JEWEL (MUMBAI) PVT. LTD. (NOW KNOWN AS D.NAVICHANDRA GEMS PVT. LTD.), G - 15, PRASAD CHAMBERS, OPERA HOUSE, MUMBAI - 400004 ./ ./ PAN/G IR NO. : A ABC D 2787 R ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : SHRI ASGHAR ZAIN VP /ASSESSEE BY : SHRI K.A.VAIDYALINGAM / DATE OF HEARING : 3 RD AUGUST , 201 5 / DATE OF PRONOUNCEMENT 30 - 10 - 2015 / O R D E R PER R.C.SHARMA, AM TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) , MUMBAI, DATED 17 - 1 - 2013, FOR THE ASSESSMENT YEAR 2009 - 2010, IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT, WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE : - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEF FE RED REVENUE EXPENDITURE AT RS. 1,12,28,405/ - W ITHOUT APPRECIATING THE FACTS THAT THE ITA NO.2755/M/13 2 ASSESSEE COULD NOT JUSTIFY THE CLAIM WITH THE HELP OF SUPPORTING EVIDENCES? WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE DEFFERED THE REVENUE EXPENDITURE AT RS.1,12,28,405/ - WITHOUT APPRECIATING THE FACT THAT IT IS EVIDENT FROM THE RECORDS OF THE CASE THAT THERE WAS NO ADJUSTMENT LEFT POST AMALGAMATION AND ALL THE ADJUSTMENTS HAVE ALREADY BEEN ADJUSTED IN A.Y.2008 - 09? 2. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FROM THE RECORD WE FOUND THAT THE ASSESSEE HAD CLAIMED DEFERRED REVENUE EXPENDITURE WRITTEN OFF OF RS. 1,53,65,032/- IN THE PROFIT AND LOSS ACCOUNT. THE ASSESSEE WAS ASKED AS TO WHY THE SAME SHOULD NOT BE DISALLOWED. THE ASSESSEE MENTIONED VIDE LETTER DATED 13.10.2011 THAT THE AMOUNT RELATED TO IRA DIAMOND JEWELLERY P. LTD. AFTER AMALGAMATION, THE SAID COMPANY IS NOW D. NAVINCHANDRA GEMS P. LTD AND THE WHOLE AMOUNT HAS BEEN WRITTEN OFF DURING THE YEA R AS BUSINESS EXPENSE EXCEPT FOR RS. 41,36,626/ - , WHICH HAS BEEN DISALLOWED IN THE COMPUTATION. THE AO REJECTED THE SUBMISSIONS MADE BY THE ASSESSEE AS DURING THE SCRUTINY ASSESSMENT FOR AY. 2008 - 09, ALL THE ADJUSTMENTS MADE WITH REFERENCE TO THE AMALGAMAT ION WERE CONSIDERED IN AY. 2008 - 09. THEREFORE, THERE IS NO ADJUSTMENT LEFT TO BE MADE IN AY. 2009 - 10. THEREFORE, THE AO DISALLOWED THE BALANCE AMOUNT OF RS.1,12,28,4061 - IN THE ASSESSMENT. 3. BY THE IMPUGNED ORDER THE CIT(A) ALLOWED ASSESSEES CLAIM AFTER HAVING THE FOLLOWING OBSERVATIONS : - 6.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE ORDER OF THE AO. THE EXPENSE OF RS. 4,49,13,622/ - WAS INCURRED BY THE IRA DIAMOND JEWELLERY, THE FIRM WHICH WAS LATER CONVERTED INTO A PRIVATE LIMITED COM PANY NAMED IRA DIAMOND JEWELLERY P. LTD. THE EXPENDITURE OF RS. 4,49,13,622/ - WAS INCURRED BY THE COMPANY FOR CREATING A BRAND 'IRA' IN NATIONAL AND INTERNATIONAL MARKET AND WAS ITA NO.2755/M/13 3 FOR THE PURPOSE OF BUSINESS. THIS COMPANY WAS AMALGAMATED WITH THE APPELLANT A ND SUBSEQUENTLY RENAMED AS D. NAVINCHANDRA GEMS P. LTD. THE ABOVE AMALGAMATION WAS APPROVED BY THE HON'BLE HIGH COURT OF BOMBAY WITH EFFECT FROM 1.1.2008 HOWEVER, THE AMOUNT OF RS. 2,95,48,589/ - WAS CLAIMED AND ALLOWED IN ASSESSMENT U/S. 143(3) FOR THE FO LLOWING YEARS AS UNDER : - A.Y . AMOUNT (RS.) 2006 - 07 70,91,779 2007 - 08 1,12,28,405 2008 - 09 1,12,28,405 6.3 HENCE, THE BALANCE AMOUNT OF RS.1,53,65,033/ - REMAINED TO BE CLAIMED, WHICH WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT AND OUT OF WHIC H RS. 41,36,628/ - WAS DISALLOWED BY THE APPELLANT AND THE BALANCE AMOUNT OF RS.1,12,28,405/ - WAS CLAIMED. THIS IS THE AMOUNT WHICH WAS DISALLOWED BY THE AO. 6.4 THE AO HAS HIMSELF IN THE EARLIER YEARS ALREADY ALLOWED THE CLAIM OF THE APPELLANT REGARDING THE DEFERRED REVENUE EXPENDITURE. THE CLAIM OF THE APPELLANT AND THE WAY IT WAS DEALT IS AS UNDER : - DETAILS OF DEFERRED REVENUE EXPENDITURE AY 2006 - 07 AY 2007 - 08 AY 2008 - 09 AY 2009 - 10 OPENING BALANCE ADD: ADDITION DURING THE YEAR - 28,367,115 21, 275,336 16,546,507 26,593,4378 - 15,365,033 LESS : CLAIM IN P/LOS A/C (1/4 OF THE EXPENSES) 7,091,779 7,091,779 4,136,626 7,091,779 4,136,626 7,091,779 4,136,626 CLOSING BALANCE ALLOWED IN ASSESSMEN T 21,275,336 70,91,179 26,593,438 1,12,2 8,405 15,365,033 1,12,28,405 4,136,628 6.5 IT CAN BE SEEN FROM THE ABOVE CHART THAT THE DEFERRED REVENUE EXPENDITURE WERE DIVIDED AND 1/4TH OF THE EXPENSE WAS CLAIMED EVERY YEAR AND NOW ONLY BALANCE OF R S. 41,36,628/ - REMAINS TO BE CLAIMED AFTER COMPLET ION OF ASSESSMENT YEAR 2009 - 10. IN ALL THE EARLIER YEARS THE CLAIM HAS BEEN EXAMINED AND ALL OWED. THOUGH THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO TAXATION LAW BUT FOLLOWING THE PRINCIPLES OF CONSISTENCY THE AO HAS NOT DOUBTED THE GENUINENESS OF THE SAID EXPENSES BUT IS ONLY ON THE TECHNICAL ISSUE THAT THE DEFERRED REVENUE EXPENDITURE HAS BEEN DISALLOWED. HENCE, THE CLAIM OF THE APPELLANT IS ALLOWED AND GROUND OF APPEAL OF THE APPELLANT IS ALLOWED. ITA NO.2755/M/13 4 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT EQUAL AMOUNT OF DEFERRED REVENUE EXPENSES WAS ALLOWED BY THE AO I N THE SCRUTINY ASSESSMENT IN AL L THE EARLIER YEARS UNDER CONSIDERATION . B Y OBSERVING THAT GENUINENESS OF THE EXPENDITURE IS NOT IN DOUBT AND FOLLOWING THE PRINCIPLE OF CONSISTENCY, THE C IT(A) HAS ALLOWED THE ASSESSEES CLAIM DURING THE YEAR UNDER CONSIDERATION AS WAS ALLOWED IN EARLIER YEARS. THE DETAILED FINDING RECORDED BY THE CIT(A) AT PARA 6.2 HAS NOT BEEN CONTROVERTED BY THE DEPARTMENT BY BRINING ANY POSITIVE MATERIAL ON RECORD. ACCO RDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). 5 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 /10 /2015 . 30 /10 /2015 SD/ - SD/ - ( ) ( JOGINDER SINGH ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / AC COUNTANT MEMBER MUMBAI ; DATED 30 /10 /201 5 . . /PKM , . / PS / 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. //TRUE COPY//