DCIT 1(3), MUMBAI V. RABO INDIA FINANCE LTD, MUMBAI

ITA 4343/MUM/2014

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 3949 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANPREET S DUGGLE
• Keywords: Unexplained investment
• Section: 143(3)

Judgement Text

ITA NO. 4343/MUM/2014, AND 1569/MUM/14 ASSESSMENT YEARS: 2008 - 09 AND 2009 - 10 PAGE 1 OF 4 INCOME TAX APPELLATE TRIBUNAL MUMBAI J BENCH, MUMBAI [CORAM: PRAMOD KUMAR (VICE PRESIDENT) AND AMARJIT SINGH (JUDICIAL MEMBER)] ITA NO. 4343 /MUM/201 4, AND 1569/MUM/14 ASSESSMENT YEARS: 2008 - 09 AND 2009 - 10 DEPUTY COMMISSIONER OF INCOME - TAX CIRCLE 1(3), MUMBAI .. .. APPELLANT VS. RABO INDIA FINANCE LIMITED ..... RESPONDENT 20 TH FLOOR, TOWER - A, PENINSULA BUSINESS PARK, LOWER PAREL, MUMBAI 400013 [PAN: AAACR6065R] APPEARANCES: PARCY PARDIWALA FOR THE APPELLANT MANPREET S. DUGGLE FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING: : JUNE 9, 2021 DATE OF PRONOUNCEMENT : SEPT 7 , 2021 O R D E R PER PRAMOD KUMAR VP: ITA NO. 4343/MUM/2014 ASSESSMENT YEAR: 2008 - 09 1. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED THE CORRECTNESS OF THE ORDER DATED 26 TH MARCH 2014 , PASSED BY THE LEARNED CIT(A) IN THE MATTER OF ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 20 08 - 09. 2. IN THE FIRST GROUND OF A PPEAL, THE ASSESSING OFFICER HAS RAISED, BY WAY OF A QUESTION REQUIRING OUR ADJUDICATION THOUGH, THE FOLLOWING GRIEVANCE: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE INTEREST CHARGED ON LOAN STATING ITA NO. 4343/MUM/2014, AND 1569/MUM/14 ASSESSMENT YEARS: 2008 - 09 AND 2009 - 10 PAGE 2 OF 4 THAT THAT THE ALLEGED UNEXPLAINED INVESTMENT ON WHICH INTEREST IS CALCULATED AND TAXED HAVE BE EN DELETED BY THE DRP FOR THE ASSESSMENT YEAR 2006 - 07, EVEN THOUGH THE ISSUE OF ALLEGED UNEXPLAINED INVESTMENT IS STILL SUB JUDICE ? 3. TO ADJUDICATE ON THIS PLEA, IT IS SUFFICIENT TO TAKE NOTE OF THE FACT THAT THE CIT(A) HAS GIVEN A LIMITED DIRECTION TO THE ASSESSING OFFICER TO DELETE THE INTEREST ON NPAS ONLY TO THE TAXED IT HAS ALREADY BEEN TAXED ON ACCRUAL BASIS, ON THE PLEA THAT THE SAME INTEREST CANNOT BE TAXED IN THE HANDS OF THE ASSESSEE TWICE - ONCE ON ACCRUAL, AND SECOND TIME ON RECEIPT. IT IS D IFFICULT TO UNDERSTAND WHAT IS WRONG IN THIS DIRECTION. IF THE AMOUNT HAS BEEN TAXED ALREADY, IT CANNOT BE TAXED AGAIN. IF IT HAS NOT BEEN TAXED IN THE EARLIER PERIOD, OR THE ADDITION STANDS DELETED BY THE DRP OR AN APPELLATE AUTHORITY, THE ASSESSEE WILL NOT GET ANY RELIEF AS A RESULT OF THE SAID DIRECTION. LEARNED REPRESENTATIVES ALSO DO NOT DISPUTE THIS POSITION. IN THIS VIEW OF THE MATTER, WE SEE NO REASONS TO INTERFERE IN THE MATTER, AND WE CONFIRM THE ORDER OF THE CIT(A) ON THIS POINT AND IN THE MANN ER INDICATED ABOVE. 4. GROUND NO. 1 IS THUS DISMISSED. 5. IN THE SECOND GROUND OF APPEAL, THE ASSESSING OFFICER HAS RAISED, THIS TIME ALSO BY WAY OF A QUESTION REQUIRING OUR ADJUDICATION THOUGH, THE FOLLOWING GRIEVANCE: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DIRECTING TO DELETE THE ADDITION MADE ON ACCOUNT OF ALLOCATION OF COST OF SALARY ON THE BASIS OF DIRECTIONS GIVEN BY THE DRP FOR THE AY 2009 - 10, EVEN THOUGH THE ISSUE OF ALLOCATION OF COST O F SALARY FOR AY 2009 - 10 IS SUB JUDICE? 6. SO FAR AS THIS GRIEVANCE OF THE ASSESSING OFFICER IS CONCERNED, THE MATERIAL FACTS ARE LIKE THIS. AN ALP ADJUSTMENT OF RS 50,00,860 WAS MADE ON THE GROUND THAT CROSS CHARGE OF 10% SALARY OF AN EMPLOYEE BY THE NAME OF RAJESH SRIVASTAVA TO RABO - SINGAPORE WAS UNJUSTIFIED, AND THAT THE CROSS CHARGE OUGHT TO HAVE BEEN MADE @ 40% OF HIS SALARY. THE BASIS OF THIS ALP ADJUSTMENT WAS SAID TO BE THAT IN THE CASE OF ANOTHER EMPLOYEE GREET EMBRECHTS WAS MADE @40%. THE PLEA THAT THEIR FUNCTIONS AND ROLES WERE DIFFERENT WAS IGNORED. IN APPEAL, LEARNED CIT(A) DELETED THE ADDITION AS S IMILAR ADDITION FOR THE ASSESSMENT YEAR 2009 - 10 WAS DELETED BY THE DRP AND AS THE CIT(A) ACCEPTED THE PLEA OF THE ASSESSEE TO THE EFFECT THAT THE ASSESSEE HAS FILED A CERTIFICATE FROM THE CONCERNED EMPLOYEE SPECIFYING THE NATURE OF SERVICES PERFORMED BY H IM FOR RABOBANK SINGAPORE AND THE PROPORTION OF HIS SALARY COST THAT COULD BE ATTRIBUTED TO THE SERVICES RENDERED TO THE AE. THE ADDITION WAS THUS DELETED. THE ASSESSING OFFICER IS AGGRIEVED AND IS IN APPEAL BEFORE US. 7. HAVING HEARD THE RIVAL CONTENTI ONS AND HAVING PERUSED THE MATERIAL ON RECORD, WE SEE NO NEED TO INTERFERE IN THE MATTER - FOR THE SIMPLE REASON THAT THE ASSESSING OFFICER HAS NOT PLACED ON RECORD ANY SPECIFIC JUSTIFICATION, BEFORE THE CIT(A) OR BEFORE US, FOR COST RECHARGE AT 40%. THERE IS NO MATERIAL ON RECORD TO DISLODGE THE COST ALLOCATION AT 10%. THE ADDITION HAS BEEN DELETED NOT ONLY BY TAKING NOTE OF THE STAND OF THE DRP FOR THE ASSESSMENT YEAR 2009 - 10 BUT ENTIRELY ON MERITS AS WELL - WHICH ARE NOT EVEN CHALLENGED BEFORE US. ONCE A VARIATION IS MADE IN THE COST ALLOCATION OR COST RECHARGE, A SPECIFIC REASON HAS TO BE ASSIGNED ITA NO. 4343/MUM/2014, AND 1569/MUM/14 ASSESSMENT YEARS: 2008 - 09 AND 2009 - 10 PAGE 3 OF 4 FOR THE SAME OR A SPECIFIC DEFECT IS TO BE POINTED OUT IN THE ALLOCATION ASSIGNED BY THE ASSESSEE. THAT EXERCISE HAS NOT EVEN BEEN CARRIED OUT IN THIS CASE. I N VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE LEARNED CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 8. GROUND NO. 2 IS THUS ALSO DISMISSED. 9. IN THE RESULT, THE APPEAL FOR THE AS SESSMENT YEAR 2008 - 09 IS DISMISSED. ITA NO. 1569/MUM/2014 ASSESSMENT YEAR: 200 9 - 10 10. BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED THE CORRECTNESS OF THE ORDER DATED 30 TH DECEMBER 2013, PASSED BY THE LEARNED DISPUTE RESOLUTION PANEL IN THE MATTER OF ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2009 - 10. 11 . IN THE GROUND OF APPEAL, THE ASSESSING OFFICER HAS RAISED, BY WAY OF A QUESTION REQUIRING OUR ADJUDICATION THOUGH, THE FOLLOWING GRIEVANCE: WHETH ER IN THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED DRP ERRED IN DELETING THE TP ADJUSTMENT IN RESPECT OF THE COST AMOUNTING TO RS 43,34,796 AND INTEREST ACCRUED ON LOAN GIVEN TO AE AMOUNTING TO RS 46,68,13,200? 12. SO FAR AS COST ALLOCATION ADJUSTMENT OF RS 43,34,796 IS CONCERNED, IT IS IN RESPECT OF INCREASE IN ALLOCATION OF 40% AS AGAINST 10% MADE BY THE ASSESSEE TO ITS SINGAPORE BASED ENTITY. VIDE OUR ORDER FOR THE ASSESSMENT YEAR 2008 - 09 ABOVE, ON THE SAME SET OF FACTS, WE HAV E UPHELD THE DELETION OF SIMILAR VARIATION IN COST ALLOCATION AND CHARGE IN RESPECT OF THE EMPLOYEE. 13. HAVING HEARD THE RIVAL CONTENTIONS AND HAVING PERUSED THE MATERIAL ON RECORD, WE SEE NO REASONS TO TAKE ANY OTHER VIEW OF THE MATTER FOR THE PRESENT Y EAR. WE, THEREFOR, UPHOLD THE STAND OF THE DRP ON THIS POINT AND DECLINE TO INTERFERE IN THE MATTER. 14. AS FOR THE INTEREST ACCRUED ON LOAN OF RS 46,68,13,200 GIVEN TO THE AE, WE FIND THAT, VIDE ORDER DATED 26 TH MARCH 2021 IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006 - 07, A COORDINATE BENCH HAS CATEGORICALLY HELD THAT THE ASSESSEE HAD NOT PARTICIPATED IN EXTENDING LOAN FACILITY THOUGH THE CONSORTIUM IN ANY MANNER AND, AS ON NOW, MATER RESTS THERE, THE VER Y JUSTIFICATION OF INTEREST CEASES TO HAVE ANY LEGALLY SUSTAINABLE FOUNDATION. THE DRP HAS ALSO DELETED THE INTEREST ADJUSTMENT FOR THE REASON THAT THE LOAN ITSELF HAS BEEN FOUND TO NOT HAVE BEEN EXTENDED BY THE ASSESSEE TO ITS AE. LEARNED REPRESENTATIVES DO NOT DISPUTE THIS FACTUAL POSITION. 15. IN VIEW OF THE ABOVE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, WE SEE NO REASONS TO INTERFERE IN THE ORDER OF THE DRP ON THIS POINT EITHER. THE ACTION OF THE DRP IS CONFIRMED ON THIS ASPECT AS WELL . ITA NO. 4343/MUM/2014, AND 1569/MUM/14 ASSESSMENT YEARS: 2008 - 09 AND 2009 - 10 PAGE 4 OF 4 16. IN THE RESULT THE APPAL FOR THE ASSESSMENT YEAR 2009 - 10 IS DISMISSED 17. TO SUM UP, BOTH THE APPEALS ARE DISMISSED. PRONOUNCED I N THE OPEN COURT TODAY ON THE 7 TH DAY OF SEPTEMBER, 2021. S D / - S D / - AMARJIT SINGH PRAMOD KUMAR (JUDICIAL MEMBER) (VICE PRESIDENT) MUMBAI, DATED THE 7 TH DAY OF S E P T E M B E R 2021. COPIES TO: (1) THE APPLICANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, MUMBAI