DCIT, New Delhi V. M/s. Aspentech India Pvt. Ltd., New Delhi

ITA 437/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4214 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 01-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Assessee Lawyers: SUR ESH MALIK; R SANTHANAN
• Keywords: Revised return
• Section: 43B; 143(3); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A NO. 436,437/DEL/10 ASSTT. YEAR : 2004-05, 2005-06 DCIT, CIRCLE 2 (1), ROOM NO. 398D, C.R. BUILDING, NEW DELHI. VS. ASPENTECH INDIA PVT. LTD. 303, MANSAROVAR BUILDING, 90, NEHRU PLACE, NEW DELHI. AADCA0856C (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI A.K. MONGA, SR. DR RESPONDENT BY: SHRI R. SANTHANAN, ADVOCATE AND SHRI S URESH MALIK, CA ORDER PER RAJPAL YADAV : JM THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTAN CE OF REVENUE AGAINST THE SEPARATE ORDERS OF EVEN DATE I.E. 9.11 .2009 PASSED BY LD. CIT(A) IN ASSTT. YEARS 2004-05 AND 2005-06. THE GR IEVANCE OF THE REVENUE IN ASSTTT. YEAR 2004-05 IS THAT LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF ` 20,66,685/- WHICH WAS DISALLOWED BY THE AO ON THE GROUND THAT ASSESSEE FAILED TO PAY THE COMMISSI ON TO THE EMPLOYEES ITA NOS. 436/437/DEL/10 ASSTT. YEARS 2004-05, 2005-06 2 BEFORE DUE DATE OF FILING OF THE RETURN AND FAILED TO DEDUCT THE TDS ON SUCH COMMISSION. IN ASSTT. YEAR 2005-06, THE GRIEVA NCE OF THE REVENUE IS THAT LD. CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF COMMISSION PAID AT ` 64,89,383/-. 2. THE FACTS AND CIRCUMSTANCES IN BOTH THE ASSTT. Y EARS ARE COMMON. THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 1 ST NOVEMBER, 2004 IN ASSTT. YEAR 2004-05, WHEREAS IN ASSTT. YEAR 2005-06 , IT HAS FILED THE RETURN ON 30 TH OCTOBER, 2005. IN ASSTT. YEAR 2004-05, THE INCOME WAS DECLARED AT NIL AFTER CLAIMING BROUGHT FORWARD LOSS ES TO THE EXTENT OF ` 1,66,80,033/-. ASSESSEE HAS SHOWN BOOK PROFIT U/S 1 15JB AT ` 1,61,60,615/-. IN ASSTT. YEAR 2005-06, IT HAS DECLA RED AN INCOME OF ` 87,36,931/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE NOTICE U/S 143(2) WAS ISSUED ON 26.5.2005 IN ASSTT. YEAR 2004-05, WHEREAS IT WAS ISSUED ON 13.10.2006 IN ASSTT. YEAR 2005-06. ACCORDING TO THE AO, IT REVEALED FROM THE TAX AUDIT REPORT IN ASSTT. YEAR 2004-05 AT S. NO. 21 THAT ASSESSEE HAS NOT MADE THE PAYMENT OF COMMISSION OF ` 61,16,826/-. HENCE THE DISALLOWANCE U/S 43B OF THE ACT HAS TO BE MADE. HE DISALLOWED THIS AMOUNT AND MADE AN ADDITION OF ` 61,27,864/-. THE ASSESSEE FILED AN APPLICATION U/S 54 OF THE INCOME TAX ACT WHEREIN IT CONTENDED THAT IT HAS ACTUALLY PAID ` 20,66,685/- BEFORE THE DUE DATE OF FILING OF THE RETURN. THE ASSESSEE CONTENDED THAT I T HAS DEDUCTED TDS ON ITA NOS. 436/437/DEL/10 ASSTT. YEARS 2004-05, 2005-06 3 THIS AMOUNT. THEREFORE A DEDUCTION OF THIS AMOUNT B E GRANTED TO THE ASSESSEE. THE ASSESSEE HAS SUBMITTED THE SUPPORTING DOCUMENTS BUT LD. AO REJECTED ITS APPLICATION VIDE ORDER DATED 5 TH AUGUST, 2008 IN ASSTT. YEAR 2004-05. 3. DISSATISFIED WITH THIS ORDER, ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A). IT HAS PRODUCED ALL THE EVIDENCE EXHIBITING THE PAYMENT OF COMMISSION TO THE EXTENT OF ` 20,66,685/-. THE LD. CIT(A) HAS GONE THROUGH THE RECORD. HE HAS ALSO GONE THROUGH THE CB DT CIRCULAR BEARING NO. 669 DATED 25.10.93 AND OBSERVED THAT DEDUCTION IS ADMISSIBLE TO THE ASSESSEE. THE OBSERVATION MADE BY THE LD. CIT(A) IN PARAGRAPH 4 FOR ASSTT. YEAR 2004-05 READ AS UNDER :- 4. I HAVE PERUSED THE ASSESSMENT ORDER, WRITTEN SU BMISSION OF AR AND DISCUSSED THE MATTER WITH AR. THE SECTION 43-B HAS BEEN AMENDED FROM 1.4.2004, WHERE ALL EXPENDITURES CONTAINED IN THAT SECTION, OTHERWISE ALLOWABLE UNDER ANY PROVISIONS OF I.T. AC T, CAN BE ALLOWED TO THE EXTENT OF AMOUNT PAID BEFORE THE DUE DATE OF FI LING OF RETURN, AND BALANCE WILL BE ALLOWED IN SUBSEQUENT ASSESSMENT YE ARS DEPENDING ON AMOUNT PAID BEFORE DUE DATE OF FILING OF RETURN FOR THOSE A.Y.S. IN THIS PARTICULAR CASE THE ASSESSEE HAD PAID RS. 20,66,685 /- BEFORE DUE DATE OF FILING OF RETURN (AS PER ABOVE TABLE)S AND MADE TDS ON SUCH COMMISSION PAID TO EMPLOYEES. HENCE, THE ABOVE AMOU NT IS ALLOWED AS DEDUCTION U/S 43-B AND BALANCE AMOUNT WILL BE CO NSIDERED IN SUBSEQUENT A.Y.S THE AO IS DIRECTED TO MODIFY THE RETURN ACCORDINGLY. 4. IN ASSTT. YEAR 2005-06, ASSESSEE HAS MADE THE CL AIM VIDE REVISED COMPUTATION DURING THE SCRUTINY ASSESSMENT . LD. AO DID NOT ALLOW THIS PLEA OF THE ASSESSEE ON THE GROUND THAT IT OUGHT T O HAVE REVISED ORIGINAL RETURN. HE RELIED UPON THE JUDGMENT OF HONBLE SUPR EME COURT IN THE ITA NOS. 436/437/DEL/10 ASSTT. YEARS 2004-05, 2005-06 4 CASE OF GOETZ (INDIA) LTD. VS. CIT REPORTED IN 284 ITR 323. ON APPEAL, LD. CIT(A) FOUND THAT ASSESSEE HAS MADE ACTUAL PAYM ENT TO THE EMPLOYEES AND THEREFORE IT IS ENTITLED FOR DEDUCTIO N. HE DIRECTED THE AO TO VERIFY CORRECTNESS OF THE PAYMENT AND THEN ALLOW THE EXPENDITURE TO THE ASSESSEE. HIS FINDING FROM PARAGRAPH 4 READ AS UNDER :- 4. I HAVE PERUSED THE ASSESSMENT ORDER, THE WRITTEN S UBMISSIONS OF THE AR, THE GROUNDS OF APPEAL AND OTHER RELEVANT MATERI AL AVAILABLE ON RECORD CAREFULLY. THE CASE IS ALSO DISCUSSED WITH T HE AR ON ALL ASPECTS OF FACT AND LAW. AS PER SEC. 43B OF THE I.T. ACT ANY PAYMENT MADE AS COMMISSION TO EMPLOYEE AS BONUS OR COMMISSION FO R SERVICES RENDERED U/S 36(1)(II) IS ALLOWABLE TO THE ASSESSEE IF SUCH PAYMENT IS MADE BEFORE THE DUE DATE OF FILING OF THE RETURN FO R THE PAID/PAYABLE AMOUNT MADE IN THE P & L A/C AND B/SHEET AS ONE END OF THE ACCOUNTING PERIOD. IN THIS PRESENT CASE, THE AR HAS EXPLAINED THE POSITION VERY CLEARLY WITH FACTS, FIGURES AND LAW P OINT ALSO. THOUGH, HE HAS CLAIMED RS. 38,14,019 IN THE P & L A/C WHICH CO MPUTATION OF INCOME CANNOT BE BRUSHED ASIDE WHILE CONSIDERING TH E MATTER IN SCRUTINY ASSESSMENT. THE AO SHOULD HAVE CONSIDERED THE FACT WHILE COMPLETING THE ASSESSMENT U/S 143(3) . 5. THE AO HAS CITED THE CASE LAW GOETZ INDIA V/S CI T 284 ITR 323(SC), WHEREIN THE ISSUE IS POWER VESTED IN THE ASSESSING AUTHORITY TO ENTERTAIN THE CLAIM MADE OTHERWISE THAN BY WAY OF R EVISED RETURN HAS BEEN DISCUSSED BY THE HONBLE SUPREME COURT. THE AR OF THE ASSESSEE ALSO CITED THE ABOVE DECISION OF THE SUPRE ME COURT AND PLEADED THAT THE POWER OF THE TRIBUNAL U/S 254 OF T HE I.T. ACT IS TO ENTERTAIN FOR THE FIRST TIME A POINT OF LAW PROVIDE D THE FACT ON THE BASIS OF WHICH THE ISSUE OF LAW CAN BE RAISED BEFORE THE TRIBUNAL. THE DECISION DOES NOT IN ANY WAY RELATE TO THE POWER OF THE AO OTHERWISE THAN WHEN FILING A REVISED RETURN. THE AR PLEADED T HAT THE APPELLATE AUTHORITY WOULD TAKE A RIGHT DECISION ON THE FACTS AVAILABLE ON RECORD AS PER LAW. . 6. THOUGH, THE ACCOUNTS OF THE ASSESSEE COMPANY ARE COMPUTERIZED THE RETURN WAS FILED MANUALLY. THEREFORE, THE AR PLEADE D THAT THEY COULD NOT PUT THE CORRECT FIGURE IN THE P & L A/C BUT IN THE STATEMENT OF INCOME, THE CORRECT FIGURE IS INCORPORATED. FROM T HE ABOVE TABLE, THE DETAILS OF PAYMENTS TO THE EMPLOYEES FOR DIFFERENT MONTHS ARE ENCLOSED WHICH SHOWS THAT ACTUAL PAYMENT OF RS. 84,54,631/- HAS BEEN PAID TO THE EMPLOYEES AS COMMISSION. THEREFORE, THE AO IS H EREBY DIRECTED TO VERIFY THE CORRECTNESS OF THE ABOVE PAYMENT FROM TH E BOOKS OF A/C OF ITA NOS. 436/437/DEL/10 ASSTT. YEARS 2004-05, 2005-06 5 THE ASSESSEE AND ALLOW THE EXPENDITURE PAID BY THE ASSESSEE BEFORE DUE DATE OF THE FILING OF THE RETURN U/S 43B OF TH E I.T. ACT ACCORDINGLY. THE ADDITION OF RS. 84,54,631/- IS HEREBY DELETED. 5. WITH THE ASSISTANCE OF LD. REPRESENTATIVE, WE HA VE GONE THROUGH THE RECORD CAREFULLY. LD. COUNSEL FOR THE ASSESSEE PLACED ON RECORD COPY OF THE REVISED COMPUTATION. HE ALSO PLACED ON RECORD COPY OF THE ORDER PASSED BY THE LD. AO ON 17.2.2011 WHEREBY HE HAS GIVEN EFFECT TO THE LD. CIT (A)S ORDER IN ASSTT. YEAR 2004-05. SIM ILARLY, LD. AO HAS GIVEN EFFECT IN 2005-06 VIDE HIS ORDER DATED 25 TH FEBRUARY, 2011. LD. COUNSEL FOR THE ASSESSEE PLACED ON RECORD COPY OF T HIS ORDER ALSO. FROM THE FINDING OF LD. CIT(A) EXTRACTED SUPRA, WE FIND THAT LD. FIRST APPELLATE AUTHORITY HAS ALREADY DIRECTED THE AO IN ASSTT. YEA R 2005-06 TO VERIFY THE ACTUAL PAYMENT AND THEN ALLOW THE CLAIM OF ASSESSEE . THERE IS NO DISPUTE WITH REGARD TO THE PREPOSITION THAT IF ASSE SSEE HAS MADE ACTUAL PAYMENT TO ITS EMPLOYEES BEFORE THE DUE DATE OF FIL ING OF RETURN, THEN DISALLOWANCE U/S 43B OF THOSE AMOUNTS WOULD NOT BE MADE. THE EXPENSES ARE OTHERWISE ADMISSIBLE TO THE ASSESSEE. THE OBJECTION OF THE AO WAS THAT THESE HAVE NOT BEEN PAID BY THE ASSESSE E. THE ASSESSEE HAS PRODUCED DEMONSTRATIVE PROOF OF PAYMENT BEFORE THE LD. FIRST APPELLATE AUTHORITY. IT ALSO EMERGES OUT THAT THOSE EVIDENCE WAS FURNISHED BEFORE THE AO ALSO BUT HE REFUSED TO GO I NTO THOSE ASPECT. LD. CIT(A) WHILE ALLOWING THE CLAIM OF ASSESSEE AGA IN OBSERVED THAT AO ITA NOS. 436/437/DEL/10 ASSTT. YEARS 2004-05, 2005-06 6 SHALL EXAMINE THE PAYMENT AND ALLOW THE DEDUCTION. THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD WHICH CAN SUGGES T THAT FINDING OF LD. CIT(A) IS FACTUALLY INCORRECT. ADMISSIBILITY OF THE EXPENSES IN LAW OTHERWISE IS NOT IN DISPUTE. THE ONLY DISPUTE WAS W HETHER IT WAS ACTUALLY PAID BEFORE THE DUE DATE OR NOT. LD. FIRST APPELLAT E AUTHORITY HAS HELD THAT IT IS PAID BEFORE DUE DATE OF FILING OF RETURN . THEREFORE, NO DISALLOWANCE U/S 43B CAN BE MADE. THIS ASPECT WAS S UBJECT TO VERIFICATION OF AO WHILE GIVING EFFECT TO THE LD. C IT(A)S ORDER AND HE HAS NOT POINTED OUT ANY ADVERSE FACT IN HIS ORDERS. TH EREFORE, WE DO NOT FIND ANY MERIT IN THESE APPEALS OF THE REVENUE. THEY ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21.4.2011. SD/- SD/- [G.E.VEERABHADRAPPA] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER DATED: 21.4.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BEN CHES