INDIA FACTORING & FINANCE SOLUTIONS P.LTD, MUMBAI V. DCIT 14(2)(1), MUMBAI

ITA 3404/MUM/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9744 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2012-2013
• Appeal Filed On: 09-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Corroborative evidences; Revenue expenditure
• Section: 13; 22; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES K , MUMBAI BEFORE SHRI PRAMOD KUMAR , VICE PRESIDENT AND SHRI SAKTIJIT DEY , JUDICIAL MEMBER IT(TP)A NO. 3404/MUM/2017 ASSESSMENT Y EAR: 2012 - 13 INDIA FACTORING & FINANCE SOLUTIONS PVT. LTD., UNIT NO. 20 1, 2 ND FLOOR, VIBGYOR TOWER, PLOT NO. C - 62, NEAR CITI BANK, BANDRA KURLA COMPLEX, MUMBAI - 400051 PAN: AACCI1918C VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 14(2)(1), AAYKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSE SSEE BY : SHRI GIRISH DAVE (AR ) REVENUE BY : SHRI SUSH IL KUMAR MISHRA (DR) DATE OF HEARING: 08 /07 /20 21 DATE OF PRONOUNCEMENT: 20 / 07 /202 1 O R D E R PER SAKTIJIT DEY , JM THIS IS AN APPEAL BY THE AS S ESSEE AGAINST ASSESSMENT ORDER DATED 31.01.2017 PAS SED FOR THE ASSESSMENT YEAR 2012 - 13 I N PURSUA NCE TO THE DIRECTIONS OF LEARNED DISPUTE RESOLUTION PANEL (DRP). 2. IN GROUND N O. 1 TO 5, ASSESSEE HAS CHALLENGED THE T RANSFER PRICING ADJUSTMENT OF RS. 8,41,61 6/ - . 3. BRIEFLY THE FACTS ARE, THE ASSESSEE IS A RESIDENT COMPANY . A S STATED BY THE TRANSFER PRICING OFFICER (TPO), THE OBJECT O F THE ASSESSEE IS TO PROVIDE FACTORING AND FORFEITING SERVICES , ENCOMPASSING FINANCE AND VALUE ADDED SERVICES TO BUSINESS ENTIT IES IN INDIA. AS STATED , CURRENTLY THE FACTORING SERVICES OFFERED BY THE ASSESSEE ARE DOMESTIC FACTORING . THE KEY GOAL OF THE ASSESSEE IS TO PROVIDE RECEIVABLES FINANCE AND MANAGEMENT SOLUTIONS FOR ITS CLIENTS. AS 2 IT(TP)A NO. 3404 / MUM/2017 ASSESSMENT YEAR: 20 12 - 1 3 OBSERVED BY TPO , ASSESSEES CURRENT CLIENT ELE INCLUDE SMALL AND MEDIUM E NTERPRISES (SMES) IN PHARMACEUTICALS, TEXTILES, AUTOMOTIVE PARTS AND ANCILLARY, INFORMATION TECHNOLOGY AND STEEL SECTORS. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE HAD ENTERED INTO CERTAIN INTERNATIONAL TRANSACTION S WITH ITS OVERSEAS ASSOCIATED ENTERPRIS ES (AE), FIM BUSINESS SOLUTION LTD., MALTA . PRECISELY, THE ASSESSEE PAID AN AMOUNT OF RS. 38,38,741/ - AS SOFTWARE LEA SE EXPENSES TO THE AE FOR LEASING A SOFTWARE VIZ. KASTLE FACTORING SYSTEM FOR A TERM OF SEVEN YEARS , SUBJECT TO , RENEWAL FOR A PERIOD OF ONE YEAR AT A TIME. AS PER THE TERMS OF THE AGREEMENT, THE AE WOULD ALSO PROVIDE SOFTWARE MAINTENANCE AND SUPPORT SERVICES, IMPLEMENTATION AND CONFIGURATION SERVICE, CUSTOMIZATION SERVICES, TECHNICAL CONSULTANCY AND TRA INING SERVICES AND DISASTER RECOVERY SERVICES. HE FOUND THAT THE ASSESSEE HAD BENCH MARKED THE TRANSACTION WITH THE AE B Y APPLYING OTHER METHOD AS PROVIDED UNDER RULE 10AB. WHILE DOING SO, ASSESSEE HAS RELIED UPON QUOTATIONS OBTAINED FROM TWO INDEPENDENT SOFTWARE SERVICE PROVIDER S VIZ. ADITYA BIRLA MINACS IT SERVICES AND VIYANA SOFTWARE. ULTIMATELY, THE ASSESSEE HAD CLAIMED THE PAYMENT MADE FOR LEASING SOFTWARE TO BE AT ARMS LENGTH. ON PERUSAL OF THE LEASE AGREEMENT WITH THE AE, THE TPO NOTICED THAT THOUG H AS PER THE TERMS OF THE AGREEMENT, THE ASSESSEE WAS REQUIRED TO UNDERTAKE LIABILITY TO BEAR THE APPLICABLE VAT ON THE LEASE D SOFTWARE, H OWEVER, THE ASSESSEE HAS ALSO TAKEN UP THE ADDITIONAL RESPONSIBILITY OF PAYING WITHHOLDING TAX AND SERVICE TAX AMOUNTI NG TO RS. 5,82,151/ - AND RS. 2,59,465/ - RESPECTIVELY . BEING OF THE VIEW THAT BOTH WITHHOLDING TAX AND SERVICE TAX SHOULD HAVE BEEN PAID BY THE AE, T HE TPO HELD THAT THE AMOUNT PAID TOWARDS SERVICE TAX AND WITHHOLDING TAX AGGREGATING TO RS. 8,41,616/ - BEING IN EXCESS OF THE ARMS LENGTH PRICE HAS TO BE ADJUSTED. ACCORDINGLY, HE PROPOSED ADJUST MENT OF THE SAID AMOUNT. LEARNED DRP ALSO SUSTAINED THE ADJUSTMENT PROPOSED BY THE TPO. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED, AS PER THE TERMS OF THE AGRE EMENT THE ASSESEE WAS ALSO REQUIRED TO PAY WITHHOLDING TAX AND SERVICE TAX TO THE AE. WHEREAS, THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE OBSERVATIONS OF THE TPO AND LEARNED DRP . 3 IT(TP)A NO. 3404 / MUM/2017 ASSESSMENT YEAR: 20 12 - 1 3 5. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL ON RECORD. ON A PERUSAL OF MASTER SERVICES AGREEMENT BETWEEN THE ASSESSEE AND AE, A COPY OF WHICH IS AT PAGE 91 OF THE PAPER BOOK, WE FIND THE FOLLOWING CLAUSE ANY CHARGES PAYABLE UNDER THIS AGREEMENT ARE EXCLUSIVE OF VALUE ADDED TAX OR ANY EQ UIVALENT WHICH SHALL BE PAID BY THE CLIENT ADDITIONALLY IN ACCORDANCE WITH THE PREVAILING LEGISLAT ION AT THE TAX POINT DATE , IF APPLICABLE AS WELL AS ANY BANK CHARGES AS MIGHT BE APPL ICABLE . THUS, THE CRUCIAL WORDS WHICH NEEDS TO BE TAKE N NOTE OF ARE VAL UE ADDED TAX OR ANY EQUIVALENT . ON SPECIFIC QUERY FROM THE BENCH AS TO WHETHER WITHHOLDING TAX AND SERVICE TAX AR E EQUIVALENT TO VALUE ADDED TAX, LEARNED COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT THEY CANNOT BE EQUATED. IN OUR CONSIDERED OPINION, VAL UE ADDED TAX ON ONE HAND AND WITHHOLDING TAX AS WELL AS SERVICE TAX ON THE OTHER, ARE OF DISTINCT AND DIFFERENT GENRE, HENCE , CANNOT BE EQUATED. THEREFORE, THE TERMS OF THE AGREEMENT DO NOT PROVIDE FOR PAYMENT OF WITHHOLDING TAX AND SERVICE TAX TO THE AE. THAT BEING THE CASE , IN OUR OPINION, THE TPO WAS JUSTIFIED IN MAKING THE ADJUSTMENT OF RS. 8,41,616/ - , BEING THE AMOUNT OF SERVICE TAX AND WITHHOLDING TAX PAID ADDITIONALLY BY THE ASSESSEE OVER AND ABOVE THE PAYMENT TO BE MADE IN TERMS OF THE AGREEMENT. TH ESE GROUNDS ARE DISMISSED. 6. IN GROUND N O. 6, ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF SOFTWARE LEAS E PAYMENT OF RS. 29,96,384/ - UNDER SECTION 37 (1) OF THE INCOME TAX ACT , 1961 . 7. BRIEFLY THE FACTS ARE, IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSES SING OFFICER ( AO ) CALLED UPON THE ASSESSEE TO PROVE THAT THE SOFTWARE LEASE EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS . A LLEGING THAT THE ASSESSEE FAILED TO FURNISH THE REQUIRED DETAILS AND EVIDEN CES TO SUBSTANTIATE ITS CLAIM , T HE AO DISALLOWED THE EXPENSES . O N THE VERY SAME REASONING THAT THE ASSESSEE DID NOT PRODUCE DOCUMENTARY EVIDENCES TO SUBSTANTIATE ITS CLAIM, LEARNED DRP ALSO SUSTAINED THE DISALLOWANCE. 8. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , THE ALLEGATIONS OF THE DEPARTMENTAL AUTHORITIES THAT THE ASSESSEE DID NOT FURNISH THE DETAILS AND DOCUMENTARY EVIDENCES TO SUBSTANTIATE ITS CLAIM IS BASELESS AND NOT BORNE OUT 4 IT(TP)A NO. 3404 / MUM/2017 ASSESSMENT YEAR: 20 12 - 1 3 FROM RECORD. HE SUBMITTED , NOT ONLY B EFORE THE AO BUT EVEN BEFORE LEARNED DRP, THE ASSESSEE HAD FUR NISHED ALL THE DETAILS RELATING TO THE SOFTWARE LEASE EXPENSES. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE DOCUMENTARY EVIDENCE S PLACED IN THE PAPER BOOK RELATING TO THE DETAILS OF SOFTWARE LEASE. FURTHER, HE SUBMITTED , THE AFORESAID TRANSACTION RELATIN G TO LEASING OF THE SOFTWARE WAS SUBJ ECT MATTER OF PROCEEDINGS BEFORE THE TPO AND THE TPO HAS ACCEPTED THE TRANSACTION AS GENUINE AND DET ERMINED THE ARMS LENGTH PRICE. THUS, HE SUBMITTED , THE EXPENDITURE INCURRED BEING WHOLLY AND EXCLUSIVELY FOR TH E PURPO SE OF BUSINESS SHOULD BE ALLOWED. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON TH E OBSERVATIONS OF THE AO AND LEARNED DRP. 10 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. IT IS EVIDENT , THE ASSESSEE HAS EN TERED INTO A MASTER SERVICES AGREEMENT WITH ITS AE, FIM BUSINESS SOLUTION LTD. ON 10.12.2010 FOR TAKING ON LEASE SOFTWARE VIZ. KASTLE FACTORING FOR A PERIOD OF SEVEN YEARS. IN FACT, THE AFORESAID SOFTWARE WAS TAKEN ON LEASE IN THE PRECEDING ASSESSMENT YEAR , WHEREIN , THE ASSESSEE HAS ALSO MADE SOME PAYMENT TOWARDS LEASING THE SOFTWARE. THUS, THIS IS NOT THE FIRST TIME THE ASSESSEE IS MAKING PAYMENT TOWARDS SOFTWARE LEASE EXPENSES. ON A READING OF THE MASTER SERVICES AGREEMENT, IT IS EVIDENT , THE ASSESSEE REQ UIRES THE SOFTWARE FOR ITS BUSINESS ACTIVITIES. IN FACT, WHILE EXAMINING THE ARMS LENGTH NATURE OF SOFTWAR E LEASE EXPENSES PAID TO THE AE, THE TPO HAS GONE THROUGH ALL THE EVIDENCES INCLUDING THE MASTER SER VICES AGREEMENT. HOWEVER, EXCEPT THE ADDITIONAL A MOUNT PAID ON ACCOUNT OF WITHHOLDING TAX AND SERVICE TAX, THE TPO HAS NOT FOUND ANY WRONG DOING BY THE ASSESSEE IN RESPECT OF SOFTWARE LEASE EXPENSES. FURTHER, ON PERUSING THE MATERIALS PLA CED BEFORE US IN THE PAPER BOOK, W E ARE ALSO CONVINCED THAT THE ALL EGATION OF THE DEPARTMENTAL AUTHORITIES THAT THE ASSESSEE FAILED TO FURNISH DETAILS AND DOCUMENTARY EVIDENCES TO ESTABLISH ITS CLAIM IS NOT BORNE OUT FROM RECORD. IN VIEW OF THE AFORESAID, WE DELETE T HE DISALLOWANCE. THIS GROUND IS ALLOWED. 5 IT(TP)A NO. 3404 / MUM/2017 ASSESSMENT YEAR: 20 12 - 1 3 11 . IN G ROUND N O. 7 , THE ASSESSEE CHALLENGED THE DISALLOWANCE OF REFERRAL FEE OF RS. 23,67,000/ - PAID TO M/S BLEND FINANCIAL SERVICES LTD. 12 . BRIEFLY THE FACTS ARE , IN COURSE OF ASSESSMENT PROCEEDINGS, THE AO WHILE VERIFYING THE ACCOUNTS OF THE ASSESSEE NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 23,67,000/ - TOWARDS REFERRAL FEE. AS OBSERVED BY THE AO , VIDE ORDER SHEET NOTING DATED 09.02.2016, HE CALLED UPON THE ASSESSEE TO FURNISH THE DE TAILS REGARDING THE EXPENSES WITH SUPPORTING EVIDENCES. A LLEGING THAT THE ASSESSEE FAILED TO FURNISH THE DETAILS OF REFERRAL EXPENSES WHICH SUPPORTING EVIDENCES T O DEMONSTRATE THAT SUCH EXPENSE WAS INCURRED WHOLLY AND EXCLUSIV ELY FOR THE PURPOSE OF BUSINESS, T HE AO DISALLOWED THE EXPENSES. O BJECTION RAISED BY THE ASSESSEE CHALL ENGING THE AFORESAID DISALLOWA NCE WAS ALSO REJECTED BY THE LEARNED DRP. 13 . LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , THE ALLEGATION OF THE DEPARTMENTAL AUTHORITIES THAT THE ASSESSEE DID NOT FURNISH DOCUMENTARY EVIDENCE TO JUSTIFY ITS CLAIM IS COMPLETEL Y BASELESS AND CONTRARY TO FACT S ON RECORD. DRAWING OUR ATTENTION TO REFERRAL AGREEMENT DATED 01.02.2011 ENTERED WITH BLEND FINANCIAL SERVICES LTD., A COPY OF WHIC H AT PAGE 217 OF THE PAPER BOOK, LEARNED COUNSEL SUBMITTED , THE REFERRAL AGREEMENT WAS ENTERE D INTO FOR THE GROWTH O F THE ASSESSEE AND ENTIRELY FOR ITS BUSINESS INTEREST. IN THIS CONTEXT, HE DREW OUR ATTENTION TO VARIOUS CLAUSES OF THE AGREEMENT. FURTHER, HE SUBMITTED , IN COURSE OF PROCEEDINGS BEFORE THE DEPARTMENTAL AUTHORITIES NOT ONLY THE REFER RAL AGREEMENT WAS FURN ISHED BUT VARIOUS OTHER DOCUMENTA RY EVIDENCES INCLUDING THE LIST OF CLIENTS REFERRED BY BLEND FINANCIAL SERVICES LTD AND THE INCOME EARNED FROM SUCH CLIENT S , INVOICES RAISED , CERTIFICATES ISSUED IN FORM 16 - A FOR DEDUCTION OF TAX AT SO URCE ETC. WERE FURNISHED. HE SUBMITTED , IGNORING ALL THESE DOCUMENTARY EVIDENCES PLACE D ON RECORD, BOTH THE AO AND LEARNED DRP HAVE DISALLOWED THE EXPENDITURE BY MAKING GENERAL OBSERVATION THAT SUPPORTING EVIDENCES WERE NOT FILED. THUS, HE SUBMITTED , THE D ISALLOWANCE MADE SHOULD BE DELETED . 14 . LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED UPON THE OBSERVATIONS OF THE AO AND DRP. 6 IT(TP)A NO. 3404 / MUM/2017 ASSESSMENT YEAR: 20 12 - 1 3 1 5 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. U NDISPUTEDLY, BOTH THE AO AND LEARNED DRP HAV E DISALLOWED ASSESSEES CLAIM ON THE REASONING THAT DETAILS WITH SUPPORTING EVIDENCES TO ESTABLISH THE BUSINESS EXPEDIENCY OF REFERRAL FEE WERE NOT SUBMITTE D BY THE ASSESSEE. HOWEVER, ON PERUSAL OF DOCUMENTARY EVIDENCES PLACED IN THE PAPER BOOK FILED BEFOR E US, W E FIND THAT NOT ONLY THE REFERRAL AGREEMENT WITH BLEND FINANCIAL LTD. HAS BEEN FURNISHED BEFORE THE DEPARTMENTAL AUTHORITIES BUT VARIOUS OTHER DOCUMENT S, SUCH AS, STATEMENTS SHOWING THE LIST OF CLIENTS REFERRED BY BLEND FINANCIAL AND INCOME RECEIVED FROM THEM , INVOICES RAISED TO THE CLIENTS AND FORM 16 - A WERE FURNISHED. A REFERENCE TO CLAUSE 2.1 OF THE REFERRAL AGREEMENT SHOWS THAT AS PER THE TERMS OF THE AGREEMENT, BLEND FINANCIAL IS REQUIRED TO INT RODUCE AND REFER POTENTIAL CLIENT S TO THE ASSESSEE AND CREATE BUS INESS OPPORTUNITIES TO ENABLE THE ASSESSEE TO DEVELOP RELATIONSHIP AND G ENERAL BUSINESS . IT APPEARS FROM THE FACTS AND EVIDENCES PLACED ON RECORD , BY ENTERING INTO THE REFERRAL AGREEMENT WITH BLEND FINANCIA L LTD. BUSINESS OPPORTUNITY HAS GROW N AS ASSESSEE HAS INCREASED I TS CLIENT BASE RESULTING IN SUBSTANTIAL INCREASE IN REVENUE . 16 . THUS, THE FACTS AND EVIDE NCES ON RECORD CLEARLY DEMONSTRATE THAT THE REFERRAL FEES PAID BY THE ASSESSEE IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS . IN ANY CASE OF THE MATTER, IT IS FOR THE ASSESSEE TO DECIDED HOW TO CONDUCT ITS BUSINESS. SO LONG AS THE EXPENDITURE INCURRED IS FOR THE PURPOSE OF THE BUSINESS, IT HAS TO BE ALLOWE D AS REVENUE EXPENDITURE IRRESPECTIVE OF THE FACT, WHETHER IT ULTIMATELY TRANSLATE S INTO EARNING OF INCOME. CERTAINLY, THE DEPARTMENTAL A U THORITIES CANNOT STEP INTO SHOES OF THE ASSESSEE TO QUESTION A PRUDENT BUSINESS DECISION. IN ANY CASE OF THE MATTER , THE AL LEGATION OF THE DEPARTMENTAL AUTHORITIES THAT THE ASSESSEE FAILED TO FURNISH SUPPORTING EVIDENCE TO DEMONSTRATE THAT THE EXPENDITURE INCURRED IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS IS CONTRARY TO THE FACTS ON RECORD. IN VIEW OF THE AFORESAID, WE DELETE THE DISALLOWANCE. THIS GROUND IS ALLOWED. 7 IT(TP)A NO. 3404 / MUM/2017 ASSESSMENT YEAR: 20 12 - 1 3 1 7 . IN G ROUND N O S . 8 AND 9 ASSESSEE HAS CHALLENGED DISALLOWANCE OF RS. 42,69,567/ - , BEING EXPENDITURE INCURRED TOWARDS IMPROVEMENT OF THE LEASE HOLD PREMISES. 1 8 . BRIEFLY THE FACTS ARE , IN C OURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 42,69,567 / - TOWARDS LEASE HOLD PREMISE IMPROVEMENT EXPENSES . THEREFORE, HE CALLED FOR THE NECESSARY DETAILS. IN RESPONSE TO THE QUERY RAISED BY THE AO, THE ASSESSEE FURNISHED ITS EXPLANATION STATING THAT THE EXPENDITURE INCURRED MAINLY RELAT E TO IN TERIOR WORK AND INSTALLATION OF WORK STATION. HOWEVER, THE AO OBSERVED THAT THE ASSESSEE DID NOT SUBMIT THE DETAILS OF WORK CARRIED OUT FOR WHICH EXPENDITURE WAS INCURRED. BEING OF THE VIEW THAT THE EXPENDITURE INCURRED IS FOR FUTURE BENEFIT FROM TH E EXISTING ASSET AND DUE TO WHICH CAP ITAL VALUE OF THE ASSET HAS INCREASE D, T HE AO TREATED THE EXPENDITURE TO BE OF CA PITAL NATURE AND DISALLOWED. LEARNED DRP ALSO SUSTAINED THE DISALLOWANCE ACCEPTING THE REASONING OF THE AO. 19 . LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED , IN COUR SE OF PROCEEDINGS BEFORE DEPARTMENTAL AUTHORITIES, T HE ASSESSEE HAS FURNISHED ALL DETAILS RELATING TO THE EXPENDITURE CLAIMED. HE SUBMITTED, WITHOUT PROPERLY EXAMINING THE DOCUMENTA RY EVIDENCES BOTH THE AO AND LEARNED DRP HAVE DIS ALLOWED THE EXPENDITURE BY TR EATING IT AS CAPITAL IN NATURE . FURTHER, HE SUBMITTED , THE EXPENDITURE INC URRED IS FOR INTERIOR WORK , REPAIRS AND MAKING WOODEN PARTITION ETC. WHICH ARE OF TEMPORARY NATURE. HE SUBMITTED , BY MAKING SUCH EXPENDITURE ASSESSEE HAS NOT CREATED ANY ASSET OF ENDURING NATURE. THEREFORE, THE EXPENDITURE INCURRED SHOULD BE ALLOWED AS REVENUE EXPENDITURE . IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON A DECISION OF THE HONBLE KERALA HIGH COURT IN CASE OF JOY ALUKKAS INDIA (P.) LTD. VS. AC IT (2014) 49 TAXMANN.COM 437 (KERALA). 20 . THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON TH E OBSERVATIONS OF THE AO AND LEARNED DRP SUBMITTED , THE ASSESSEE DID NOT FURNISH ANY DOCUMENTARY EVIDENCE TO ESTABLISH THAT THE EXPENDITURE INCURRED 8 IT(TP)A NO. 3404 / MUM/2017 ASSESSMENT YEAR: 20 12 - 1 3 DID NOT CREATE ANY ASSET OF ENDURING BENEFIT. THEREFORE, THE DISALLOWANCE IS JUSTIFIED. 21 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. AS COULD BE SEEN, THE AO WHILE DEALING WITH THE ISSUE IN THE ASSESSMENT ORDER HAS OBSERV ED THAT I N RESPONSE TO QUERY RAISED REGARDING THE NATURE OF EXPENDITURE, THE ASSESSEE HAS SIMPLY FURNISHED THE HEADS UNDER WHICH THE EXPENSES WERE INCURRED AND HAS FURTHER STATED THAT THEY WERE MAINLY ON ACCOUNT OF INTERIOR WORK AND INSTALLATION OF WORK ST ATION . T HE ALLEGATION OF THE DEPARTMENTAL AUTHORITIES THAT THE ASSESSEE DI D NOT FURNISH THE DETAILS OF EXPENDITURE MAY NOT BE FULLY CORRECT . ON A PERUSAL OF DOCUMENTS FURNISHED BEFORE U S AND PARTICULARLY THE INVOICES, W E FIND THAT THE EXPENDITURE INCURRED ARE FOR VARIETY OF WORK , SUCH AS , DEMOLISHING AND REMOVING CERTAIN CIVIL CONSTRUCTION , INSTALLATION OF CERTAIN FURNITURE AND FIXTURES INCLUDING CH AIRS, TABLES, WORK STATION, PLUMBING, WOODEN PARTITION, LIGHT FITTING, CIVIL CONSTRUCTION ETC . THUS, AS IT APP EARS , THOUGH, MAJOR PART OF THE EXPENDITURE MAY BE OF TEMPORARY NATURE, HOWEVER, SOME OF THE WORK COULD BE OF ENDURING NATURE. FURTHER, IT CAN ALSO BE A FACT THAT THE ASSESSEE MAY NOT BE HAVING ALL SUPPORTING EVIDENCES TO PROVE THE EXPENDITURE. THUS, THERE IS POSSIBILITY OF INFLATION OF EXPENDITURE TO SOME EXTENT. FURTHER , AT THIS LATE STAGE IT WOULD BE DIFFICULT TO EXAMINE THE NATURE OF EACH ITEM OF EXPENDITURE TO FIND OUT WHETHER IT IS CAPITAL OR REVENUE. CONSIDERING ALL THESE FACTORS, WE ARE OF THE VIEW THAT 25% OF THE EXPENDITURE CLAIME D SHOULD BE DISALLOWED TO TAKE CARE OF THE REVENUE LEAKAGE, IF ANY, ARISING DUE TO LACK OF SUPPORTING EVIDENCE AND POSSIBLE INFLATION IN EXPENDITURE. T HESE GROUNDS ARE PARTLY ALLOWED . 22 . IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JULY , 2021 . SD/ - SD/ - ( PRAMOD KUMAR ) VICE PRESIDENT ( SAKTIJIT DEY ) JUDICIAL MEMBER MUMBAI ; DATED: 20.07.2021 ALINDRA, PS 9 IT(TP)A NO. 3404 / MUM/2017 ASSESSMENT YEAR: 20 12 - 1 3 / CO PY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI