GIVAUDAN FLAVOURS (I) P. LTD, MUMBAI V. ACIT RG 1(3), MUMBAI

ITA 3025/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55680 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 13-10-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 16-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REENA JHA TRIPATHI
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHE F, MUMBAI. BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER. ITA NO. 3025/MUM/2010 ASSESSMENT YEAR : 2001-02 GIVAUDAN FLAVOURS (I) PVT. LTD., ASSTT. COMMISSIONER OF UNILEVER HOUSE, B.D. SAWANT MARG, VS. INCOME-TAX, RANGE-3, CHAKALA, ANDHERI (EAST), MUMBAI. MUMBAI 400099. PAN AAACL 1013D. APPELLANT BY : SHRI NISHANT THAKKAR. RESPONDENT BY : SMT. REENA JHA TRIPATHI. DA TE OF HEARING : 13-10-2011. DATE O F PRONOUNCEMENT : 21-10-2011. O R D E R PER SHRI. P.M.JAGATA. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED CIT(APPEALS)-2, MUMBAI DATED 15-01-2010 AND THE SOL ITARY ISSUE ARISING OUT OF THE SAME RELATES TO THE DISALLOWANCE MADE BY THE AO AND SUSTAINED BY THE LEARNED CIT(APPEALS) ON ACCOUNT OF POWER AND FUEL EXPENSES TO THE EXTENT OF RS.21.72 LAKHS. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF DEALING IN COSMETICS, PERFUMERY AND TO ILETRY PRODUCTS. IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE AN ORDER DATED 27-02-2004, THE TOTAL INCOME 2 ITA NO.3025/MUM/2010 ASSESSMENT YEAR:2001-02 OF THE ASSESSEE WAS DETERMINED BY THE AO AT RS.23,0 6,79,272/- AS AGAINST THE RETURNED INCOME OF RS.22,61,16,272/- AFTER MAKING A DDITION, INTER ALIA, ON ACCOUNT OF DISALLOWANCE OF POWER AND FUEL EXPENSES OF RS.45 .63 LAKHS. WHEN THE MATTER REACHED TO THE TRIBUNAL, THE TRIBUNAL VIDE ITS ORDE R DATED 26-07-2007 PASSED IN ITA NO. 3750/MUM/2005 RESTORED THE ISSUE RELATING T O DISALLOWANCE OF POWER AND FUEL EXPENSES TO THE FILE OF THE AO WITH A DIRECTIO N TO DECIDE THE SAME AFRESH AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . DURING THE COURSE OF SET ASIDE PROCEEDINGS, THE ASSESSEE PRODUCED CERTAIN BILLS IN SUPPORT OF ITS CLAIM FOR POWER AND FUEL EXPENSES. HOWEVER, IN THE ABSENCE OF ANY M ANUFACTURING ACTIVITY CARRIED ON BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERAT ION, THE CLAIM OF THE ASSESSEE FOR POWER AND FUEL EXPENSES WAS DISALLOWED BY THE A O IN THE FRESH ASSESSMENT COMPLETED VIDE AN ORDER DATED 29-12-2008 PASSED U/S 143(3) READ WITH SECTION 254. ON APPEAL, THE LEARNED CIT(APPEALS) HELD THAT THE R EASON GIVEN BY THE AO FOR DISALLOWING THE POWER AND FUEL EXPENSES THAT THERE WAS NO MANUFACTURING ACTIVITY CARRIED ON BY THE ASSESSEE DURING THE YEAR UNDER CO NSIDERATION WAS NOT TENABLE SINCE THE SAID EXPENSES INCURRED BY THE ASSESSEE WE RE NOT IN RELATION TO MANUFACTURING ACTIVITY BUT THE SAME WERE IN RELATIO N TO ESTABLISHMENT SET UP BY THE ASSESSEE ACROSS THE COUNTRY. HE ALSO ACCEPTED THE C ONTENTION OF THE ASSESSEE THAT THE SUPPORTING BILLS PRODUCED WERE NOT IN ITS NAME BECAUSE OF MERGERS THAT HAD TAKEN PLACE. HE, HOWEVER, FOUND THAT THE BILLS SO P RODUCED BY THE ASSESSEE IN SUPPORT OF ITS CLAIM FOR POWER AND FUEL EXPENSES WE RE ONLY TO THE EXTENT OF RS.23.91 LAKHS AND ACCORDINGLY THE CLAIM OF THE ASS ESSEE FOR POWER AND FUEL EXPENSES WAS ALLOWED BY HIM TO THAT EXTENT SUSTAINI NG THE DISALLOWANCE MADE BY THE AO ON THIS ISSUE TO THE EXTENT OF RS.21.72 LAKH S. AGGRIEVED BY THE ORDER OF THE LEARNED CIT(APPEALS), THE ASSESSEE HAS PREFERRED TH IS APPEAL BEFORE THE TRIBUNAL. 3 ITA NO.3025/MUM/2010 ASSESSMENT YEAR:2001-02 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED COUNSEL FOR THE ASS ESSEE HAS SUBMITTED THAT THE ASSESSEE COMPANY HAD FOUR SALES OFFICERS AT MUMBAI, CALCUTTA, DELHI AND MADRAS BESIDES HEAD OFFICE AT MUMBAI. HE HAS SUBMITTED TH AT THE ASSESSEE COMPANY ALSO HAD DURING THE YEAR UNDER CONSIDERATION BEAUTY SALO ONS AT BOMBAY, DELHI, MADRAS AND BANGALORE BESIDES DEPOT UNIT AT GOA. HE HAS SUB MITTED THAT ALTHOUGH POWER AND FUEL EXPENSES CLAIMED BY THE ASSESSEE WERE INCU RRED IN RELATION TO ALL THESE ESTABLISHMENTS, THE SUPPORTING BILLS COULD BE PRODU CED ONLY IN RESPECT OF SOME OF THESE ESTABLISHMENTS. HE HAS CONTENDED THAT EVEN TH OUGH THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE THE BILLS FOR POWER AND FUEL EXPENS ES INCURRED IN RELATION TO OTHER ESTABLISHMENTS, THE FACT REMAINS THAT THE SAID ESTA BLISHMENTS WERE MAINTAINED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WH ICH REQUIRED INCURRING OF EXPENSES ON POWER AND FUEL. HE HAS CONTENDED THAT THE POWER AND FUEL EXPENSES INCURRED IN RELATION TO THE SAID ESTABLISHMENTS THU S ARE REQUIRED TO BE ALLOWED ON SOME REASONABLE BASIS EVEN IN THE ABSENCE OF ANY SU PPORTING BILLS. THE LEARNED DR HAS NOT BEEN ABLE TO DISPUTE THIS POSITION. HE, HOW EVER, HAS CONTENDED THAT THIS ISSUE MAY BE RESTORED TO THE FILE OF THE AO FOR EST IMATING SUCH REASONABLE EXPENDITURE WHICH IS TO BE ALLOWED AFTER VERIFYING THE RELEVANT FACTS INCLUDING THE PAST HISTORY FROM RECORD. WE FIND MERIT IN THIS CON TENTION OF THE LEARNED DR. ACCORDINGLY THE ISSUE INVOLVED IN THE PRESENT APPEA L RELATING TO DISALLOWANCE OF POWER AND FUEL EXPENSES TO THE EXTENT OF RS.21.72 L AKHS IS RESTORED TO THE FILE OF THE AO WITH A DIRECTION TO ALLOW THE SAME ON ESTIMATED BASIS TO THE REASONABLE EXTENT AFTER VERIFYING THE RELEVANT FACTS INCLUDING PAST H ISTORY OF THE ASSESSEES CASE FROM RECORD AND AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 4 ITA NO.3025/MUM/2010 ASSESSMENT YEAR:2001-02 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. 1. ORDER PRONOUNCED ON 21 ST OCTOBER, 2010. SD/- SD/ - (V. DURGA RAO) (P.M. JAGTAP) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI, 21 ST OCTOBER, 2010. WAKODE COPY TO: 1.THE APPELLANT 2 THE RESPONDENT 3. THE CIT(A) CONCERNED - MUMBAI 4. THE CIT, CONCERNED, MUMBAI 5. THE DR BENCH, B 6. MASTER FILE // TUE COPY// BY ORDER ASSTT. REGISTRAR ITAT, MUMBAI.