BATLIBOI INTERNATIONAL LTD, MUMBAI V. ITO 2(1)(1), MUMBAI

ITA 303/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8947 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2002-2003
• Appeal Filed On: 19-01-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MISHRA
• Assessee Lawyers: V MOHAN
• Section: 37(1); 147

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -IBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./I.T.A./303/MUM/2016, / ASSESSMENT YEAR: 2002-03 ./I.T.A./302/MUM/2016, / ASSESSMENT YEAR: 2004-05 M/S. BATLIBOI INTERNATIONAL LIMITED 15, J.N. HEREDIA MARG, BALLARD ESTATE MUMBAI-400 001. PAN:AAACB 4407 F VS. THE DY. CIT 2(1) 5 TH FLOOR, AAYAKAR BHAVAN MUMBAI-400 020. ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: SHRI S.K. MISHRA-CIT-DR /ASSESSEE BY: SHRI V. MOHAN / DATE OF HEARING: 08/11/2016 / DATE OF PRONOUNCEMENT:11.01.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA A.M. - CHALLENGING THE ORDERS DATED 17/11/2015 OF THE CIT (A)-4,MUMBAI, THE ASSESSEE HAS FILED THE APPEALS FOR THE ABOVE-MENTIONED TWO ASSESSMENT YEAR S.ASSESSEE- COMPANY IS ENGAGED IN THE BUSINESS OF EXPORT TRADING.THE DETAILS OF FILING OF RETURNS OF INCOME,DATES OF ORDER U/S. 147 OF THE ACT,ASSESSED INCOMES IN THE RE-ASSESSMENT PROCE EDINGS CAN BE SUMMARISED AS UNDER: AY. ROI FILED ON RETURNED INCOME 143/147 ORDER DT. INCOME U/S. 143/147 2002-03 21.10.2002 19,97,790/- 24.12.2007 25,34,230 /- 2004-05 27.10.2004 46,87,220/- 24.12.2007 60,66,700 /- FACTS OF THE CASE: 2. THE ORIGINAL ASSESSMENTS WERE COMPLETED U/S. 143 (1 ) OF THE ACT.SUBSEQUENTLY,THE ASSESSMENTS WERE REOPENED ON THE BASIS OF THE INFOR MATION RECEIVED FROM THE CENTRAL BOARD OF DIRECT TAXES, DATED 18/11/2005 REGARDING ILLICIT PAYMENT MADE BY VARIOUS SUPPLIES TO GOVERNMENT OF IRAQ AS ELABORATELY REPORTED IN VOLCK ER COMMITTEE REPORT (VCR) WHICH GAVE DETAILS OF MANIPULATION COMMITTED IN THE OIL FOR F OOD PROGRAM.ON THE BASIS OF THE REPORT, IN THE ASSESSMENT MADE U/S.143 (3)R.W.S.147,THE ASSESS ING OFFICER(AO)DISALLOWED OVERSEAS COMMISSION (RS.5,36,440/-FOR THE AY.2002-03 AND RS. 13,79,475/-FOR THE AY.2004-05),PAID BY THE ASSESSEE TO M/S. DOME INTERNATIONAL,ABU DHAB I,UAE (DI). 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER TH E ASSESSEE PREFERRED APPEALS BEFORE THE FIRST APPELLATE AUTHORITY(FAA),WHO SUSTAINED THE AD DITIONS MADE BY THE ASSESSING 302&303/MUM/16 M/S. BATLIBOI INTL. LTD. 2 OFFICER.WHILE DECIDING THE APPEAL,FILED BY THE ASS ESSEE,THE TRIBUNAL RESTORED BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER(ITA/64-65/M/20 10,DTD.27.04.2011).THE WHILE GIVING EFFECT TO THE ORDER OF THE TRIBUNAL MADE THE SAME A DDITIONS AND SAME WERE AGAIN UPHELD BY THE FAA. 4. DURING THE COURSE OF HEARING THE AUTHORISED REPRESE NTATIVE(AR)STATED THAT THE TRIBUNAL HAD ASKED THE AO TO VERIFY THE AMOUNT WITH REGARD TO AF TER SALES SERVICE FEES (ASSF), THAT THE AO AND THE FAA TREATED IT AS COMMISSION PAYMENT,THAT B OTH THE AUTHORITIES HAD NOT FOLLOWED THE DIRECTIONS OF THE TRIBUNAL,THAT IF THE PAYMENT WAS MORE THAN US $ 14832 SAME SHOULD BE DISALLOWED,THAT THE ASSESSEE HAD PAID COMMISSION TO DI.HE REFERRED TO PAGES 18,24,28-39 OF THE PAPER BOOK.THE DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT WHILE DECIDING THE APPEAL ON EARLIER OCCASION THE TRIBUNA L HAD PASSED THE FOLLOWING ORDER: 24.WE HAVE GONE THROUGH THE RECORDS AND PERUSED TH E RELEVANT MATERAIL.SIMILAR ISSUE HAS BEEN DECIDED BY THE CO-ORDINATE BENCH IN M/S. CIPLA LTD. IN ITA NO.S. 7248 TO 7286/M/07.HOWEVER, IT WAS POINTED OUT THAT IN TABLE 7 & 8 OF THE REPORT THE AMOUNT PAID AS ASFF IS ONLY USD 14823. EVEN THE VOL CKER COMMITTEE REPORT SHOWS AN AMOUNT OF USD 14823 AS ASFF REMITTED. 25.IN THESE CIRCUMSTANCES,WE REMIT THE ISSUE TO THE ASSESSING OFFICER TO VERIFY THE EXACT AMOUNT OF ASFF REMITTANCE AND DECIDE THE MATT ER IN LIGHT OF THE DECISION OF THE CO-ORDINATE BENCH IN M/S.CIPLA LTD. VS ACIT IN ITA NO.S.7248 TO 7286/M/07. FROM THE PERUSAL OF THE ABOVE ORDER IT IS CLEAR THA T THE TRIBUNAL HAD ASKED THE AO TO VERIFY THE EXACT AMOUNT OF ASSF REMITTANCE.BESIDES IN TH E ORDER IT WAS SPECIFICALLY MENTIONED THAT IN THE VCR THE AMOUNT MENTIONED WAS USD 14823.CONSI DERING THE ABOVE WE ARE OF THE OPINION THAT THE AO AND THE FAA HAD TRAVELLED BEYON D THE DIRECTIONS OF THE TRIBUNAL.THEREFORE,REVERSING THE ORDERS OF THE FAA WE DIRECT THE AO TO RESTRICT THE ADDITION TO US$ 14823 ONLY. WE FURTHER UPHOLD THAT THE FAA WAS NOT JUSTIFIED IN HOLDING THAT COMMISSION PAYMENT TO DI HAD ULTIMATELY PASSED ON TO IRAQ GOVERNMENT AND THA T THE EXPENDITURE WAS NOT ALLOWABLE U/S. 37(1) OF THE ACT. IN SHORT THE DISALLOWANCE SHOULD BE RESTRICTED TO USD 14823 AS STATED EARLIER. 302&303/MUM/16 M/S. BATLIBOI INTL. LTD. 3 AS A RESULT APPEALS FILED BY THE ASSESSEE FOR BOTH THE YEARS STAND PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JANUARY, 2017. 11 , 2017 SD/- SD /- ( / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 11.01.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.