JSM CORPORATION P. LTD, MUMBAI V. ASST CIT 6(3), MUMBAI

ITA 3236/MUM/2015

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4294 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 28-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAUDHARY ARUN KUMAR SINGH LD
• Section: 143(3); 37

Judgement Text

ITA NO.3236/MUM/2015 JSM CORPORATION PVT.LTD. ASSESSMENT YEAR-2010-11 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.3236/MUM/2015 ( / ASSESSMENT YEAR: 2010-11) JSM CORPORATION PRIVATE LIMITED TODI ESTATE, A WING 3 RD FLOOR, SUNMILL COMPOUND SITARAM JADHAV MARG LOWER PAREL, MUMBAI-400 013 / VS. ASSISTANT COMMISSIONER OF INCOME TAX-6(3) MUMBAI ! ./ ./PAN/GIR NO. AABCJ-4903-B ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) A SSESSEE BY : NONE RE VENUE BY : CHAUDHARY ARUN KUMAR SINGH, LD. DR / DATE OF HEARING : 01/10/2018 / DATE OF PRONOUNCEMENT : 10/10/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2010-11 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-15, MUMBAI, [CIT(A)], APPEAL NO.CIT(A)-15/IT-20/12-13 DATED 10/03/2015 QUA CONFIRMATION OF DISALLOWANCES OF EXPENDITURE FOR RS .192.30 LACS. ITA NO.3236/MUM/2015 JSM CORPORATION PVT.LTD. ASSESSMENT YEAR-2010-11 2 THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-6(3), MUMBAI [AO ] U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 23/01/2013 WHEREIN THE INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.493.13 LACS AFTE R CERTAIN DISALLOWANCES AS AGAINST RETURNED INCOME OF RS.300. 83 LACS E-FILED BY THE ASSESSEE ON 29/09/2010. 2. NONE HAS APPEARED FOR ASSESSEE AND NO VALID ADJO URNMENT APPLICATION IS ON RECORD DESPITE SERVICE OF NOTICE. THE PERUSAL OF ORDER SHEET ENTRIES REVEALS THAT THE ASSESSEE HAS REMAINE D NEGLIGENT IN ATTENDING THE HEARING ON SEVERAL OCCASIONS. IT ALSO APPEARS FROM THE RECORD THAT THE NAME OF THE ASSESSEE HAS UNDERGONE A CHANGE FROM HR CAF INDIA P. LTD. TO JSM CORPORATION PRIVATE LIMITED. HOWEVER, THE CHANGE HAS NEITHER BEEN INTIMATED NOR ANY EVIDENCES IN THAT RESPECT HAVE BEEN FILED BEFORE US. LEFT WITH NO OPTION, WE PROCEED TO DISPOSE-OFF THE SAME IN TERMS OF RULE 24 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 ON THE BASIS OF MATERIAL AVAILABLE ON RECORD AND AF TER HEARING LD. DEPARTMENTAL REPRESENTATIVE, SHRI ARUN KUMAR SINGH CHAUDHARY WHO HAS JUSTIFIED THE STAND OF LOWER AUTHORITIES IN MAKING IMPUGNED ADDITIONS / DISALLOWANCES. 3. THE FACT ON RECORD REVEALS THAT THE ASSESSEE BEI NG RESIDENT CORPORATE ENTITY WAS ENGAGED IN THE BUSINESS OF RESTAURANT & HOSPITALITY SERVICES DURING IMPUGNED AY. DURING ASSESSMENT PROCEEDINGS, UPON PERUSAL OF FINANCIAL STATEMENTS, IT WAS NOTED THAT THE ASSESSEE INCURRED UNIT PRE-OPERATIVE EXPENSES AMOUNT TO RS.255.03 LACS AND WROTE-OFF AN AMOUNT OF RS.62.77 LACS IN THE BOOKS OF ACCOUNTS AN D CARRIED THE BALANCE AMOUNT IN THE BOOKS OF ACCOUNTS UNDER THE H EAD MISCELLANEOUS ITA NO.3236/MUM/2015 JSM CORPORATION PVT.LTD. ASSESSMENT YEAR-2010-11 3 EXPENDITURE AS PRELIMINARY & PRE-OPERATIVE EXPENSES . THE DETAILS OF THE SAME HAVE ALREADY BEEN EXTRACTED IN PARA-4.1 OF THE QUANTUM ASSESSMENT ORDER. HOWEVER, THE ASSESSEE CLAIMED THE EXPENDITURE IN FULL IN ITS COMPUTATION OF INCOME. THE LD. AO, TREA TING THE SAME AS PRE- OPERATIVE EXPENDITURE, DISALLOWED THE SAME. 4. AGGRIEVED, THE ASSESSEE AGITATED THE SAME BEFORE LD. CIT (A) VIDE IMPUGNED ORDER DATED 10/03/2015 WHEREIN LD. CIT(A), AFTER DUE CONSIDERATION OF FACTUAL MATRIX, CONFIRMED THE STAN D OF LD. AO BY OBSERVING AS UNDER:- 3.8 ON THESE FACTS, I FIND THAT THE APPELLANT THOUG H HAVE RIGHTLY CONSIDERED ALL THESE EXPENSES INCURRED FOR THE PROCESS OF SET UP OF UNIT HYDERABAD, NEW DELHI AS PRE- OPERATIVE EXPENSES IN THEIR BOOKS OF ACCOUNTS, BUT WRONGLY CLAIMED IN TOTO IN P& L A/C IN A.Y.10-11, THE SUBJECT MATTER OF THIS APPEAL . THUS IN THIS CASE FOLLOWING THE PRACTICE OF TAKING SUCH PRE-OPERATIVE EXPENSES BY F IRST CAPITALIZING AND THEN WRITING OFF PROPORTION EXPENDITURE BASED ON EXPECTED LIFE O F THESE BENEFITS WAS RIGHTLY DONE IN THE BOOKS BY APPELLANT. HENCE, NOW SUBMISSION MA DE BY THE APPELLANT THAT THE METHOD FOLLOWED BY THEM IS NOT SACROSANCT, AND THE AO IS NOT BOUND BY THAT, IS NOT SUPPORTED BY GIVEN FACTS AND NATURE OF EXPENSES INC URRED IN THEIR CASE. THE ONLY OBVIOUS REASON I CAN FIND FOR SUCH A CLAIM MADE BY THE APPELLANT I.E. DEVIATING FROM THE METHOD OF ALREADY FOLLOWED IN THE BOOKS OF ACCO UNT WHILE COMPUTING THE INCOME IS THAT THE APPELLANT COMPANY HAVE GOT AMALGAMATED WITH EFFECT FROM 1/4/2010 AND NOW KNOWN AS JSM CORPORATION PVT.LTD AND UNDER THE SCHEME OF MERGER, THE PRE- OPERATIVE EXPENSES INCURRED BY PRE-EXISTING UNIT TH EN, AFTER AMALGAMATION BEING NOT IN EXISTENCE ANY MORE AFTER THAT YEAR I.E. STARTING OF A.Y. 2010-11, CANNOT BE GIVEN EFFECT TO AND THUS WILL NOT BE DEDUCTIBLE. HENCE TH E APPELLANT HAVE TRIED TO DEBIT SUCH PRE-OPERATIVE EXPENSES UNDER THE U/S 37 AS BUSINESS REVENUE EXPENSES IN THIS LAST YEAR OF BUSINESS OF PRE-EXISTING ENTITY, WHICH IS I NCIDENTALLY FIRST YEAR OF UNITS AT HYDERABAD AND PUNE. AS THIS IS SETTLED PRINCIPLE TH AT WHEN SPECIFIC PROVISIONS ARE AVAILABLE IN THE STATUTE FOR CERTAIN CLAIMS, SAME C ANNOT BE ENTERTAINED UNDER GENERAL PROVISIONS OF THE STATUTE. IN THE CASE OF THE APPEL LANT WHERE SECTION 35D IS IN EXISTENCE TO DEAL WITH CLAIM OF EXPENSES WHICH ARE PRE-OPERATIVE EXPENSES; IN THE MANNER PROVIDED, NOW THE APPELLANT CANNOT CLAIM THE M IN TOTO U/S 37 OF THE ACT. HENCE THE ACTION OF THE AO TO DISALLOW PRE-OPERATIV E EXPENSES DEBITED FOR AN AMOUNT OF RS.1,92,30,263/- INSTEAD OF DEBITING THEM AS PER PROVISIONS U/S 35D OF THE ACT, BEING IN ORDER HAS TO BE UPHELD AND HENCE DISA LLOWANCE MADE BY A.O. ARE UPHELD. GROUND NO.1 TAKEN BY THE APPELLANT IS DISMI SSED. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA NO.3236/MUM/2015 JSM CORPORATION PVT.LTD. ASSESSMENT YEAR-2010-11 4 5. AFTER DUE CONSIDERATION, WE FIND NOTHING ON RECO RD WHICH CONTROVERT THE FINDINGS OF BOTH THE LOWER AUTHORITIES. THE PRE -OPERATIVE EXPENDITURE COULD NOT BE ALLOWED TO THE ASSESSEE SINCE IT HAS B EEN NOTED THAT THE BUSINESS WAS NOT SET UP BY THE ASSESSEE DURING IMPU GNED AY. THEREFORE, WE FIND NOTHING PERVERSE IN THE FINDINGS OF LOWER AUTHORITIES. 6. THE APPEAL STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH OCTOBER, 2018. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED :10.10.2018 SR.PS:-THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. + ,$ - , - , / DR, ITAT, MUMBAI 6. , ./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI