NIRMAL ENTERPRISES, MUMBAI V. ITO WD 20(2)(3), MUMBAI

ITA 3257/MUM/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2387 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 09-05-2016
• Court: TRIBUNAL
• Assessee Lawyers: LALCHAND CHOUDHURY
• Keywords: Reopening of assessment

Judgement Text

, . . , IN THE INCOME TAX APPELLATE TRIBUNAL SMC , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, ACCOUNTANT MEMBER ./ ITA NO. 3257 / MUM/20 1 6 ( / ASSESSMENT YEAR : 20 10 - 20 11 M/S NIRMAL ENTER PRISES, 1103 - B, MAHINDRA EMINENTE, S.V.ROAD, NEAR PATKAR COLLAGE, GOREGAON (W), MUMBAI - 400062 VS. THE ITO - WARD - 20(2)(3), MUMBAI - 400012 ./ ./ PAN/GIR NO. : A AAFN 4601 N ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI LALCHAND CHOUDHURY /REVENUE BY : SHRI ABHISHEK SHARMA / DATE OF HEARING : 28/07/2016 / DATE OF PRONOUNCEMENT 29 / 07 /201 6 / O R D E R THIS IS AN APPEAL FILED B Y THE ASSESSEE AGAINST THE ORDER OF CIT(A) - MUMBAI, FOR THE ASSESSMENT YEAR 20 10 - 20 11 , IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S.147 OF I.T.ACT. 2. IN THIS APPEAL, THE ASSESSEE IS AGGRIEVED FOR REOPENING OF ASSESSMENT AND FOR NOT SUPPLYING THE REASONS RE CORDED FOR ISSUE OF NOTICE U/S.148. 3. ON MERIT ALSO THE ASSESSEE IS AGGRIEVED FOR ADDITION OF RS.1,50,000/ - . 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT VIDE LETTER DATED 24 - 4 - 2013 THE ASSESSEE HAS ASKED FOR REASONS OF REOPENING, HOWEVER, NO RE ASONS WERE SUPPLIED FOR REOPENING. 5. WITH REGARD TO THE ADDITION, WE FOUND THAT ASSESSEE HAS ENTERED INTO AN AGREEMENT DATED 28/09/2008 WITH CHINA NATIONAL MACHINERY & ITA NO. 3257 /1 2 EQUIPMENT IMPORT & EXPORT CORPORATION FOR PROVIDING CONSULTANCY SERVICES. AS PER TERMS OF PAYMENT, THE ASSESSEE FIRM WAS TO RECEIVE RS. 900000 AS CONSULTANCY CHARGES AND RS. 250000 TOWARDS REIMBURSEMENTS OF TRAVEL AND OTHER INCIDENTAL EXPENSES, AGGREGATING TO RS. 1150000. A COPY OF AGREEMENT WAS PLACED BEFORE LOWER AUTHORITIES . THE ASSESSEE FI RM HAS RAISED FOUR DEBIT NOTES DATED 10/04/2009 FOR RS. 300000; DATED 27/04/2009 OF RS. 250000; DATED 30/06/2009 OF RS. 350000 AND DATED 30/06/2009 OF RS. 250000 TOWARDS INCIDENTAL EXPENSES AS AGREED UP ON. AS AGAINST THE TOTAL REIMBURSEMENTS OF EXPENSES OF RS. 250000 RECEIVED, THE ASSESSEE FIRM HAD IN FACT INCURRED EXPENDITURES OF ONLY RS. 150000 AND THE SURPLUS OF RS. 100000 IN REIMBURSEMENTS ACCOUNT HAS ALSO BEEN CREDITED TO PROFIT & LOSS ACCOUNT UNDER THE HEADING CONSULTING FEES ACCOUNT AGGREGATING THAT TO RS. 1 000000 (I.E. RS. 900000 AS PER AGREEMENT AND RS. 100000 SURPLUS IN REIMBURSEMENT ACCOUNT). THUS, THE ASSESSEE FIRM HAS PROPERLY ACCOUNTED FOR CONSULTING FEES INCLUDING THE AMOUNT OF SURPLUS IN REIMBURSEMENT OF EXPENSES. A MOUNT RECEIVED TOWARDS REIMBURSEMENT OF EXPENSES HAS ONLY TO BE CREDITED IN THE ACCOUNT CONCERNED AND ONLY SURPLUS/ DEFICIT IN THAT ACCOUNT IS TO BE TAKEN TO THE PROFIT & LOSS ACCOUNT AND THE FIRM BY EMPLOYING THIS SYSTEM HAS PERFECTLY COMPLIED WITH THE ACCOUNTING SYSTEMS PREVENT IN INDIA. TH US, THE AMOUNT OF CONSULTING FEES ACCOUNTED FOR RS. 1000000 BY THE FIRM INCLUDES RS. 900000 TOWARDS CONSULTING FEES AND RS. 100000 TOWARDS SURPLUS IN REIMBURSEMENTS OF INCIDENTAL EXPENSES IS CORRECTLY CORRECTED TO THE PROFIT & LOSS ACCOUNT . ITA NO. 3257 /1 3 6. IN VIEW OF THE ABOVE DISCUSSION, WE DO NOT FIND ANY MERIT FOR THE ADDITION OF RS.1,50,000/ - MADE BY THE AO. 7 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 29 /07 / 201 6 . SD/ - ( R.C.SHARMA ) / ACCOUNTANT MEMBER MUMBAI ; DATED 29 /07 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CI T(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//