M/s. VALIA IMPEX P. LTD., MUMBAI V. ACIT Rg. - 8(3), MUMBAI

ITA 4213/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7476 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 09-03-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 13-06-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Keywords: Additional evidence; Set aside
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI T.R. SOOD, AM AND SMT. ASHA VIJAYARAGH AVAN, JM I.T.A.NO.4812/MUM/2008 ASSESSMENT YEAR :2005-06 ASST. COMMISSIONER OF INCOME-TAX, RANGE 8(3), AAYAKAR BHAVAN, 2 ND FLOOR, R.NO.204, M.K. ROAD, MUMBAI 400 020. VS. M/S. VALIA IMPEX PVT. LTD., 104/105, A WING, KILASH TOWER, WESTERN EXPRESS ROAD, ANDHERI (E), MUMBAI 400 069 PAN : AAACV 1301 L (APPELLANT) (RESPONDENT) I.T.A.NO.4213/MUM/2008 ASSESSMENT YEAR :2005-06 M/S. VALIA IMPEX PVT. LTD., 104/105, A WING, KILASH TOWER, WESTERN EXPRESS ROAD, ANDHERI (E), MUMBAI 400 069 PAN : AAACV 1301 L VS. ASST. COMMISSIONER OF INCOME-TAX, RANGE 8(3), AAYAKAR BHAVAN, 2 ND FLOOR, R.NO.204, M.K. ROAD, MUMBAI 400 020. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HIRO RAI DEPARTMENT BY : SHRI VIRENDRA OJHA O R D E R PER T.R. SOOD, AM: THESE CROSS APPEALS BY THE REVENUE AND THE ASSESSE E ARE DIRECTED AGAINST THE ORDER DATED 01.05.2008 OF THE LEARNED COMMISSIO NER OF INCOME-TAX (APPEALS)- XXIX, MUMBAI AND PERTAIN TO THE ASSESSMENT YEAR 20 05-06. ITA NO.4812/M/08 (REVENUES APPEAL) 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS .8,99,539/- PAID AS RETAINERSHIP FEES FOR WHICH NO SERVICES WERE REN DERED AS HELD BY THE A.O. 3. AT THE OUTSET THE LEARNED COUNSEL FOR THE ASSESS EE SUBMITTED THAT THIS ISSUE CAME UP BEFORE THE TRIBUNAL IN THE ASSESSMENT YEARS 20033-04 AND 2004-05 AND THE MATTER WAS ULTIMATELY SET ASIDE TO THE FILE OF THE ASSESSING OFFICER IN ITA ITA NOS.4812 & 4213/M/08 M/S.VALIA IMPEX PVT.LTD.. 2 NO. 2294 AND 7028/MUM/2007 AS AMENDED BY M.A.NO. 77 0/MUM2009 DATED 8 TH FEBRUARY, 2010. 4. ON OTHER HAND, THE LEARNED DEPARTMENTAL REPRESEN TATIVE HAD NO OBJECTION IF THE SAME ORDERS ARE FOLLOWED. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIND THAT ORIGINALLY THE ISSUE WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER VIDE PARAS 12 AND 13 OF THE ORDER WHICH READ AS UNDER: A. REGARDING THE GENUINENESS OF THE TRANSACTIONS, RELEVANT FACTS ARE THAT THE PAYMENTS ARE INCURRED BY WAY OF CHEQUES AN D THE PAYEES CONFIRMED THE TRANSACTIONS. THERE ARE NO INFORMATIO N IN THE FILE THAT THE AO EXAMINED THE BANK ACCOUNTS O THE PAYEES TO M AKE OUT THAT THE AMOUNTS ARE FINALLY WITHDRAWN IN CASH. B. REGAR DING THE ISSUE OF BUSINESS PURPOSES OF THE EXPENDITURE, IT IS AN ESTA BLISHED FACT THAT THE ONUS IS ON THE ASSESSEE TO DEMONSTRATE WITH EVI DENCE THAT THE CLAIM IS ALLOWABLE U/S.37 OF THE ACT. C. REGARDING THE ISSUE OF NATURE OF SERVICES RENDERED BY THE PAYEES, THIS IS RELEVAN T TO THOSE PAYEES, WHO INTRODUCED THE THIRD PARTIES, GROUP CONCERNS AN D SATELLITE CONCERNS AND NOT THOSE WHO MADE PURCHASES DIRECTLY FROM THE RIL/IPCL. THIS IS MATTER OF EVIDENCE FOR PROVING T HAT THE SERVICES ARE RENDERED AND ONUS IS ENTIRELY ON THE ASSESSEE T O DISCHARGE TO THE SATISFACTION OF THE AO. IN THIS REGARD, THE ASS ESSEE NEED TO DEMONSTRATE THAT THE PARTIES AT SL.1 TO 3 FULLY AND 4 TO 8 PARTY (OF THE TABLE) RENDERED SERVICES FOR ENTITLED TO THE RE TAINERSHIP CHARGES. THE CIT(A) WHILE CALLING FOR A REMAND REPORT FROM T HE AO ON THE ADDITIONAL EVIDENCE IN THE FORM OF CONFIRMATION FRO M THE RECEIPTS OF THE PAYMENT FROM THE ASSESSEE HAS NOT DIRECTED THE AO TO EXAMINE THEM. UNLESS THE AO EXAMINE THESE PERSONS, HE WILL NOT BE IN A POSITION TO COME TO ANY CONCLUSION REGARDING GENUIN ENESS OF THE TRANSACTION, BUSINESS PURPOSE OF THE EXPENDITURE AN D THE NATURE OF THE SERVICES RENDERED. WE ARE OF THE VIEW THAT THE MATTER SHOULD BE REMANDED TO THE FILES OF THE AO FOR FRESH EXAMINATI ON OF THE ISSUE. ACCORDINGLY, THE MATTER IS SET ASIDE. THE AO IS DI RECTED TO EXAMINE THE RECEIPT OF THE COMMISSION AND ESTABLISH THE CAS E REGARDING GENUINENESS TRANSACTIONS, BUSINESS PURPOSE OF THE P AYMENT AND NATURE OF SERVICES. ACCORDINGLY, GROUND OF THE REVE NUE IN BOTH THE AYS IS SET ASIDE. 6. FURTHER, THE DIRECTIONS WERE AMENDED IN THE MISCELL ANEOUS APPLICATION NO. 770/MUM/2009 VIDE PARA 7 WHICH READS AS UNDER: WE HAVE CONSIDERED THE CONTENTIONS ON BEHALF OF TH E ASSESSEE. WE ARE OF THE VIEW THAT DIRECTIONS CONTAINED IN PARA 1 3 OF THE ORDER OF THE TRIBUNAL I9N SO FAR AS IT CALLED UPON THE ASSES SING OFFICER TO EXAMINE THE RETURNS OF SERVICES RENDERED WITH REGAR D TO CATEGORY (A) & (B) OF PERSONS TO WHOM RETAINERSHIP FEE WAS PAID BY THE ASSESSEE ITA NOS.4812 & 4213/M/08 M/S.VALIA IMPEX PVT.LTD.. 3 IS ERRONEOUS. AFORESAID DIRECTION WILL BE VALID ONL Y WITH REGARD TO PAYMENT OF RETAINERSHIP FEES TO THIRD PARTY CONCERN ED CATEGORIZES IN CATEGORY (C) ABOVE. TO THIS EXTENT, DIRECTIONS CONT AINED IN PARA 13 OF THE TRIBUNAL SHALL BE DEEMED TO HAVE BEEN MODIFIED. THE OTHER DIRECTIONS OF THE TRIBUNAL WILL REMAIN THE SAME . 7. FOLLOWING THE AFORESAID DIRECTIONS OF THE TRIBUNAL , WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) AND REMIT THE ISSUE BACK TO T HE FILE OF THE ASSESSING OFFICER WITH IDENTICAL DIRECTIONS CONTAINED IN ABOVE PARAS OF THE TRIBUNAL ORDER IN THE CASE OF APPEALS AS WELL AS THE MISCELLANEOUS APPLICATION . 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICA L PURPOSES. ITA NO. 4213/MUM/08 (ASSESSEES APPEAL) 9. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUND: THE LEARNED CIT(A) HAS ERRED IN REJECTING THE GROU ND NO.1 OF THE APPEAL FILED AGAINST THE ORDER U/S.154 PASSED BY AC IT-8(3) I.E. THE LEARNED ACIT HAS ERRED IN MAKING DISALLOWANCE OF RE TAINERSHIP FEES AMOUNTING TO RS.36,14,579/- (IN ORDER U/S.1453(3) D ATED 31.10.2007 RETAINERSHIP CHARGES INADVERTENTLY TAKEN AT RS.8,99,539/- AGAINST WHICH APPEAL HAS BEEN FILED S IMULTANEOUSLY) ON THE GROUND THAT EXPENDITURE INCURRED ARE NOT FOR BUSINESS PURPOSE WITHOUT APPRECIATING THE FACT THAT IN ORIG INAL ORDER DISALLOWANCE WAS OF RS.8,99,539/- AND THE SAME WAS APPEALED AGAINST BY THE ASSESSEE AND HENCE THIS APPEAL IS AL SO AGAINST THE ADDITIONAL QUANTUM OF DISALLOWANCE OF RS. 27,15,040 /- ONLY AND NOT AGAINST THE VALIDITY OF PROCEEDINGS U/S.154 OF THE INCOME TAX ACT. 10. AFTER HEARING BOTH THE PARTIES, WE FOUND THAT O RIGINALLY THE ASSESSING OFFICER HAD MADE DISALLOWANCE OF RS. 8,99,539/- ON ACCOUNT OF RETAINERSHIP FEES, WHICH WAS LATER ON INCREASED TO RS. 36,14,579/- BY PASSING ORDER UNDER SECTION 154 OF THE ACT. SINCE THE ISSUE HAS BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFICER WHILE ADJUDICATING THE REVENUES APPEAL. SI NCE IN THE ASSESSEES APPEAL THE ISSUE IS SAME ONLY THE AMOUNT OF DISALLOWANCE HAS B EEN ENHANCED U/S.154. THEREFORE, THE SAME IS ALSO SET ASIDE AND REMIT BAC K THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH IDENTICAL DIRECTIONS AS GIVEN IN THE REVENUES APPEAL. ITA NOS.4812 & 4213/M/08 M/S.VALIA IMPEX PVT.LTD.. 4 11. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. O RDER PRONOUNCED ON THIS 17 TH DAY OF MARCH 2010. SD. SD. (ASHA VIJAYARAGHAVAN) (T. R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMB ER MUMBAI DATED THE 17 TH MARCH, 2010. KN COPY TO: 1. 2. THE ASSESSEE 3. THE REVENUE 4. THE CIT-VIII, MUMBAI. 5. THE CIT(A)-XXIX, MUMBAI 6. THE DR F BENCH, MUMBAI BY ORDER /TRUE COPY/ ASST. REGISTRAR, ITAT, MUMBAI ITA NOS.4812 & 4213/M/08 M/S.VALIA IMPEX PVT.LTD.. 5