KARMA ENERGY LTD, MUMBAI V. ACIT 42), MUMBAI

ITA 3074/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 56159 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 01-12-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence
• Section: 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI P.M. JAGTAP, A.M. AND SHRI V. DURGA RA O, J.M. ITA NO. 3074/MUM/2010 ASSESSMENT YEAR: 2005-06 KARMA ENERGY LTD., APPELLANT EMPIRE HOUSE, 214, DR. D.N. ROAD, ENT. A.K. NAYAK MARG, FORT, MUMBAI 400 001. (PAN AACC6003E) VS. DY. COMMISSIONER OF INCOME-TAX, RESPONDENT CIRCLE 4(2), MUMBAI. APPELLANT BY : MR. VIJAY MEHTA RESPONDENT BY : MR. SANDEEP GOEL DATE OF HEARING : 01/12/2011 DATE OF PRONOUNCEMENT : 23/12/2011 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-8, MUMBAI, PASSED ON 08/02/2010 FOR THE ASSE SSMENT YEAR 2005-06. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) GROSSLY ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF MEMBERSHIP AND SUBSCRI PTION FEE PAID TO WORLD INSTITUTE OF SUSTAINABLE ENERGY AT RS . 1 CRORE. THE APPELLANT COMPANY PRAYS THAT THE SAID DISALLOWANCE MAY PLEASE BE DELETED. 2. WITHOUT PREJUDICE TO GROUND NO.1, IF THE MEMBERS HIP AND SUBSCRIPTION FEES PAID TO WORLD INSTITUTE OF SUSTAI NABLE ENERGY IS ITA NO. 3074/MUM/10 KARMA ENERGY LTD. 2 NOT ALLOWED AS EXPENSE, DEDUCTION U/S 80G OF THE AC T MAY PLEASE BE GRANTED ON THE SAME. 2. THE FACTS ARE IN BRIEF THAT THE DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD DEBITED RS. 1.00 CR ORE AS MEMBERSHIP FEES TO WORLD INSTITUTE OF SUSTAINABLE ENERGY (WISE ). AS EXPLAINED BY THE ASSESSEE, WISE IS A PREMIER CENTRE FOR RESEARCH & POLICY FORMULATIONS TO ALTERNATIVE SOURCES OF RENEWAL ENER GY. ON BEING ASKED BY THE AO TO THE ASSESSEE TO FURNISH THE I) COPY OF THE MEMBERSHIP LETTER, II) THE NATURE OF ACTIVITY OF THE ORGANIZAT ION AND THE SERVICES RECEIVED, AND III) THE ADDRESS OF THE CONCERN, THE ASSESSEE HAD FURNISHED THE ADDRESS OF THE CONCERN AND ALSO STATE D THE ACTIVITIES OF THE CONCERN. BUT THE COPY OF THE MEMBERSHIP ALLOTME NT LETTER HAD NOT BEEN FILED ON THE GROUND THAT THE SAME HAD BEEN MIS PLACED. THE AO WAS OF THE VIEW THAT THE DOCUMENT OF ALLOTMENT LETT ER IS OF CRUCIAL IMPORTANCE SINCE FROM THE RECORDS, AS IT IS SEEN TH AT THE INITIAL PROPOSAL FOR THE MEMBERSHIP WAS MADE BY THE WEIZMAN N LTD. THE AO NOTED THAT THE ASSESSEE HAD MERELY REIMBURSED THE C OST OF THIS MEMBERSHIP TO ITS PARENT COMPANY. HE FURTHER NOTED THAT IT APPEARS THAT THE MEMBERSHIP IS PRIMARILY TAKEN BY THE PAREN T COMPANY AND FROM THE INVITATION LETTERS FOR VARIOUS CONFERENCES FILED WITH THE DEPARTMENT, IT IS SEEN THAT THEY HAD BEEN ADDRESSED TO SHRI CHETAN MEHRA AS A CHAIRMAN TO WEIZMANN LTD. IN VIEW OF THE ABOVE FACTS, THE AO OBSERVED THAT THE CIRCUMSTANTIAL EVIDENCE SUGGES TS THAT EITHER THE MEMBERSHIP IS IN THE NAME OF THE INDIVIDUAL I.E. SH RI CHETAN MEHTRA WHO IS THE MANAGING DIRECTOR OF THE WEIZMANN LTD. O R IT IS A MEMBERSHIP OF WEIZMANN LTD. AND LATER IT WAS REALIZ ED THAT SINCE THE ASSESSEE COMPANY HAD HUGE PROFITS DURING THE YEAR A ND THE EXPENDITURE WAS TRANSFERRED TO THIS COMPANY. THE AO HELD THAT THE COURTS HAVE TIME AND AGAIN HELD THAT IT IS THE ONUS OF THE ASSESSEE THAT THE PARTICULAR EXPENDITURE CLAIMED GENUINELY B ELONGS TO HIS BUSINESS ACTIVITY AND IS BENEFICIAL FOR THE RUNNING OF BUSINESS. ANY ITA NO. 3074/MUM/10 KARMA ENERGY LTD. 3 EXPENDITURE WHOSE BENEFITS ARE REMOTE AND ILLUSIONA RY ARE NOT ALLOWABLE AS DEDUCTION. SINCE THE MEMBERSHIP DID NO T BELONG TO THE ASSESSEE, THE AO DISALLOWED THE ENTIRE EXPENDITURE INCURRED FOR THE PURCHASE OF MACHINERY. ON APPEAL, THE CIT(A) CONFIR MED THE DISALLOWANCE MADE BY THE AO. AGGRIEVED, THE ASSESSE E IS IN APPEAL BEFORE US. 3. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASESSEE REQUESTED THE BENCH TO ADMIT THE ADDITIONAL EVIDENC E, WHICH IS IN SUPPORT OF THE EXPENDITURE OF RS. 1 CRORE UNDER CON SIDERATION, AS THE ASSESSEE HAD RECEIVED THE DUPLICATE RECEIPTS FOR PA YMENT OF 1 CRORE MADE TO WISE AND THE CERTIFICATE OF MEMBERSHIP OF W ISE. THE LEARNED COUNSEL SUBMITTED THAT SINCE THE AO HAS DOUBTED THE VERY FACTUM OF ASSESSEES MEMBERSHIP, ON THE GROUND THAT THE ASSES SEE FAILED TO FILE THE RELEVANT RECEIPTS. IT IS SUBMITTED THAT THE ASS ESSEE HAS EXPLAINED BEFORE THE AO THAT THE RECEIPTS WERE NOT TRACEABLE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD OBTAINED THE RELEVA NT RECEIPTS FROM THE WISE ON 06/05/04 AND THE SAME WERE FILED AS AD DITIONAL EVIDENCE BEFORE US. IT IS FURTHER SUBMITTED THAT TH ESE DOCUMENTS ARE VERY VITAL FOR DECIDING THE ISSUE WHICH ARE PRODUCE D BEFORE THE BENCH UNDER RULE 29 OF THE ACT. THE LEARNED COUNSEL FOR T HE ASSESSEE FURTHER SUBMITTED THAT THE ADMISSION OF THE ADDITIONAL EVID ENCES WOULD NOT IN ANY WAY PREJUDICE THE REVENUE RATHER IT WOULD RENDE R ASSISTANCE TO THE BENCH TO DISPOSE OF THE MATTER IN ACCORDANCE WI TH LAW. THE LEARNED COUNSEL FINALLY SUBMITTED THAT THE MATTER M AY BE REMITTED BACK TO THE FILE OF THE AO FOR DECIDING THE ISSUE A FRESH. 4. THE LEARNED DR, ON THE OTHER HAND, DOUBTED THE A DDITIONAL EVIDENCE FILED BY THE ASSESSEE. ITA NO. 3074/MUM/10 KARMA ENERGY LTD. 4 5. AFTER HEARING THE PARTIES AND GOING THROUGH THE PAPERS FILED PERTAINING TO THE ADDITIONAL EVIDENCE, WE FIND THAT THE ASSESSEE HAS FILED 4 DUPLICATE RECEIPTS DATED 06/05/2004 AND CER TIFICATE FROM WORLD INSTITUTE OF SUSTAINABLE ENERGY, PUNE, AS ADD ITIONAL EVIDENCE. THE AFORESAID ADDITIONAL EVIDENCE FILED BY THE ASSE SSEE IS MATERIAL TO DECIDE THE REAL QUESTION IN CONTROVERSY INVOLVED BE TWEEN THE ASSESSEE AND THE REVENUE, THEREFORE, WE ADMIT THE SAME UNDER RULE 29 OF THE ACT. SINCE THE ASSESSEE FILED THE ADDITIONAL EVIDEN CE BEFORE US FOR THE FIRST TIME, THE AO HAD NO OCCASION TO EXAMINE THE S AME, AND THEREFORE, WE RESTORE THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THE GENUINENESS OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LA W AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. THUS, THE GROUNDS RAISED BY THE ASSESSEE ARE TREATED AS ALLOW ED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF NOVEMBER, 2011. SD/- SD/- (P.M. JAGTAP) (V. DURGA R AO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 23 RD DECEMBER, 2011. KV ITA NO. 3074/MUM/10 KARMA ENERGY LTD. 5 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, G BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.