ICICI Venture Funds Management Company Limited, Bangalore V. DCIT, Bangalore

ITA 321/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0400 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-04-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNIL KUMAR AGARWALA JT
• Assessee Lawyers: H N KHINCHA
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.321/BANG/2015 ASSESSMENT YEAR : 2010-11 M/S. ICICI VENTURE FUNDS MANAGEMENT COMPANY LTD., PRESTIGE OBELISK, 10 TH FLOOR, NO.3, KASTURBA ROAD, BANGALORE 560 001. PAN: AAACT 8212A VS. THE DEPUTY COMMISSIONER OF INCOME TAX, LTU, BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA, CA RESPONDENT BY : SHRI SUNIL KUMAR AGARWALA, JT. CIT(DR) DATE OF HEARING : 27.04.2016 DATE OF PRONOUNCEMENT : 20.05.2016 O R D E R PER INTURI RAMA RAO, ACCOUNTANT MEMBER THIS APPEAL WAS RECALLED BY THIS TRIBUNAL IN M.P. NO.98/BANG/2015 BY ORDER DATED 06.11.2015 ON ACCOUNT OF NON-ADJUDIC ATION OF GROUND NO.6 RAISED IN THE ORIGINAL MEMO OF APPEAL. GROUND NO.6 RAISED IN THE ORIGINAL MEMO OF APPEAL READS AS UNDER:- ITA NO.321/BANG/2015 PAGE 2 OF 4 6. THE LEARNED ASSESSING OFFICER HAD ERRED IN DISA LLOWING THE MISCELLANEOUS EXPENDITURE INCURRED TO THE EXTENT OF RS.4,83,600/- AND THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE SAME. ON PROPER APPRECIATION OF FACTS AND EVIDENCE AVAILABLE , THE EXPENDITURE INCURRED EXCLUSIVELY FOR BUSINESS PURPO SE AND SAME IS TO BE ALLOWED AS SUCH AND DISALLOWANCE AS DONE/C ONFIRMED IS TO BE DELETED. 2. GROUND NO.6 CHALLENGES THE CONFIRMATION OF DISAL LOWANCE OF MISCELLANEOUS EXPENDITURE OF RS.4,83,600 BY THE CIT (APPEALS). THE ASSESSING OFFICER DISALLOWED THE ABOVE EXPENDITURE ON THE GROUND THAT THE PROVISIONS MADE ARE CONTINGENT IN NATURE. THE DETA ILS OF EXPENDITURE ARE AS UNDER:- SL. NO. DATE LEDGER DESCRIPTION AMOUNT 1. 09.06.2009 MISCELLANEOUS EXPENSES INCURRED BY ANANDJIT SUNDER RAJ TOWARDS GIFT FOR A RANGA RAJUS DAUGHTER MARRIAGE, NAGARJUNA CONSTRUCTIONS DATED 01.06.2009 8,600-00 2. 31.03.2010 MISCELLANEOUS PROVISION ACCOUNTED FOR THE MONTH MARCH 2010 (NET OF TDS) 75,000-00 3. 31.03.2010 MISCELLANEOUS PROVISION ACCOUNTED FOR THE MONTH MARCH 2010 (NET OF TDS) 1,00,000-00 4. 01.06.2009 PROFESSIONAL CHARGES VISITING PROPERTY AT MUMBAI FOR VAASTU INSPECTION. PAYMENT MADE TO N.S. MURTHY TOWARDS VAASTU INSPECTION 50,000-00 5. 31.03.2010 TRAVEL JOURNAL MONTHLY CLOSURE 1,50,000-00 6. 31.03.2010 MISCELLANEOUS PROVISION FOR GIFTS FOR YEAR ENDING 31.03.2010 1,00,000-00 TOTAL 4,83,600-00 ITA NO.321/BANG/2015 PAGE 3 OF 4 3. THE CIT(APPEALS) CONFIRMED THE DISALLOWANCE OF P ROVISIONS HOLDING THAT THE APPELLANT HAD FAILED TO ESTABLISH CRYSTALL IZATION OF LIABILITY DURING THE PREVIOUS RELEVANT TO ASSESSMENT YEAR UNDER CONSIDER ATION BY PRODUCING DOCUMENTARY EVIDENCE IN RESPECT OF THE ABOVE PROVIS IONS. THE CIT(A) FURTHER HELD THAT SUBSTANTIAL AMOUNT OF PROVISIONS WAS REVERSED IN THE SUBSEQUENT YEAR INDICATING THAT THERE WAS NO PROPER BASIS FOR MAKING SUCH PROVISIONS. 4. BEING AGGRIEVED, THE ISSUE WAS AGITATED BEFORE T HIS TRIBUNAL VIDE GROUND NO.6. 5. THE LD. AR SUBMITTED THAT THE PROVISIONS WERE MA DE BASED ON THE CLAIMS SUBMITTED TO THE APPELLANT COMPANY. THEREFO RE, THE LIABILITY HAS CRYSTALLIZED DURING THE PREVIOUS YEAR RELEVANT TO A SSESSMENT YEAR UNDER CONSIDERATION AND IN THIS CONNECTION HE RELIED ON T HE FOLLOWING DECISIONS:- (1) BHARATH EARTH MOVERS V. CIT, 254 ITR 428 (SC) (2) CIT V. OSWAL WOOLLEN MILLS LTD. (2002) 254 IT R 66 (P&H) (3) ESCORTS MAHLE LTD. V. DCIT, 309 ITR (AT) 181 (DEL) 6. ON THE OTHER HAND, THE LD. SR. DR RELIED ON THE ORDERS OF LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM A PERUSAL OF THE DETAILS SUBMITTED, I T IS CLEAR THAT PROVISIONS ARE MADE BASED ON THE CLAIM SUBMITTED BY THE RESPEC TIVE PARTIES. IT IS ALSO AN UNDISPUTED FACT THAT THE SERVICES WERE RENDERED BY THE RESPECTIVE ITA NO.321/BANG/2015 PAGE 4 OF 4 PARTIES DURING THE PREVIOUS YEAR RELEVANT TO ASSESS MENT YEAR UNDER CONSIDERATION. THE MERE FACT THAT THE PAYMENT HAS BEEN POSTPONED CANNOT COME IN THE WAY OF ALLOWABILITY OF THE EXPENDITURE, EVEN THOUGH SOME PORTION OF THE PROVISION HAS BEEN REVERSED IN THE S UBSEQUENT ASSESSMENT YEAR. THE RATIO LAID DOWN BY THE HONBLE SUPREME C OURT IN THE CASE OF BHARATH EARTH MOVERS V. CIT, 254 ITR 428 (SC) IS SQUARELY APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. THEREFORE, WE A LLOW THIS GROUND OF APPEAL. PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF MAY, 2016. SD/- SD/- (VIJAY PAL RAO ) ( INTURI RAMA RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 20 TH MAY, 2016. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.