DCIT CIR 3(1), MUMBAI V. CREDIT SUISSE CONSULTING INDIA P.LTD, MUMBAI

ITA 4398/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9942 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 23-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: F V IRANI A R MS BHAVNA WARANG
• Keywords: Additional evidence; Reasonable cause; Corroborative evidences
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C, MUMBAI BEFORE D.T. GARASIA, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO.4398/M/2014 ASSESSMENT YEAR: 2008-09 DCIT, CIRCLE 3(1), ROOM NO.607, 6 TH FLOOR, AAYAKAR BHAVAN, MUMBAI - 400020 VS. M/S. CREDIT SUISSE CONSULTING INDIA PVT. LTD., UNIT NO.94, 9 TH FLOOR, FREE PRESS JOURNAL HOUSE, NARIMAN POINT, MUMBAI - 21 PAN: AACCC5398J (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI F.V. IRANI, A.R. MS. BHAVNA WARANG, A.R. REVENUE BY : SHRI RAJAT MITTAL, D.R. DATE OF HEARING : 27.06.2017 DATE OF PRONOUNCEMENT : 06.07.2017 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 20.03.2014 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] RELEVANT TO ASSESSMENT Y EAR 2008-09. GROUND NO.1 2. GROUND NO.1 IS RELATING TO THE DELETION OF DISAL LOWANCE MADE BY THE AO IN RESPECT OF TRAVEL AND ENTERTAINMENT EXPENSES AMO UNTING TO RS.22,42,266/-. 3. THE SHORT FACTS OF THE CASE ARE AS UNDER: DURING THE YEAR, THE ASSESSEE HAS INCURRED TRAVELL ING AND ENTERTAINMENT EXPENSES AMOUNTING TO RS.1,17,51,409/-. THE ASSESS EE CLAIMED A DEDUCTION FOR ITA NO.4398/M/2014 M/S. CREDIT SUISSE CONSULTING INDIA PVT. LTD. 2 THE SAME UNDER SECTION 37(1) OF THE ACT. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SUBMITTED THE EVIDENC E ONLY FOR EXPENSES AMOUNTING TO RS.95,09,143/- I.E. TO THE EXTENT OF 8 1% OF THE EXPENSES CLAIMED. THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS T HE AO) DISALLOWED TRAVEL AND ENTERTAINMENT EXPENSES AMOUNTING TO RS.22,42,2 66/- IN RESPECT OF WHICH THE DETAILS WERE NOT FURNISHED BY THE ASSESSEE. TH EREFORE, AO HAS DISALLOWED THE SAME. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT(A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER: 4.5 I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE APPELLANT AS WELL AS THE FACTS AND CIRCUMSTANCES OF THE CASE. IN MY OPINION, THE APPELLANT HAD REASONABLE CAUSE IN NOT BEING ABLE TO SUBMIT THE DETAILS OF BA LANCE EXPENSES AMOUNTING TO RS.22,42,266/-. HENCE, RESPECTFULLY FO LLOWING THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASES OF JUTE CORPORAT ION OF INDIA, 187 ITR 688 (SC) AND NTFC LTD V CIT 229 ITR 383 (SC) AND THAT O F THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT V PRABHAVATI SHAH 231 ITR 1 (BOM), ADDITIONAL EVIDENCES ARE ADMITTED UNDER RULE 46A OF THE I.T. RULES. 4.6 THE APPELLANT HAS FURNISHED PLAUSIBLE REASONS F OR NOT BEING ABLE TO FURNISH THE SUPPORTING EVIDENCES RELATING TO THE EXPENSES CLAIM ED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. THESE HAVE BEEN SUBSEQUENTL Y SUBMITTED DURING THE COURSE OF APPELLATE PROCEEDINGS WHEN THEY WERE AVAILABLE WITH THE APPELLANT. ALSO, THE AO HAS NOT RECORDED ANY ADVERSE INFERENCE S, SO FAR AS THE MERITS OF THE EXPENSES CLAIMED AND DETAILS SUBMITTED BY THE APPEL LANT IN THIS REGARD ARE CONCERNED. THE APPELLANT, DURING THE COURSE OF ASS ESSMENT AS WELL AS REMAND PROCEEDINGS HAS SUBMITTED ALL THE DETAILS OF TRAVEL LING AND ENTERTAINMENT EXPENSES. HENCE, IN MY OPINION, THE AO WAS NOT JUS TIFIED IN DISALLOWING THE AMOUNT OF RS.22,42,266/-. THE DISALLOWANCE IS THER EFORE DELETED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. WE HAVE GONE THROUGH THE ORDER OF LD. CIT(A) AND LD. CIT(A) HAS ADMITTED THE ADDITIONAL EVIDENCE UNDER RULE 46A OF THE IT RULES. WE FIND T HAT LD. CIT(A) HAS DELETED THE ADDITION ON THE GROUND THAT ASSESSEE HAS FURNIS HED THE SUPPORTING EVIDENCE RELATING TO EXPENSES DURING REMAND PROCEEDINGS. HE NCE, LD. CIT(A) HAS DELETED THE ADDITIONS. ITA NO.4398/M/2014 M/S. CREDIT SUISSE CONSULTING INDIA PVT. LTD. 3 6. WE ALSO FIND THAT IN THE CASE OF EMPIRE INDUSTRI ES LTD. IN ITA NO.4065/M/2013 WHEREIN THE SIMILAR DISALLOWANCE WAS MADE AND THE TRIBUNAL DELETED THE SAME BY NOTING THAT FRINGE BENEFIT TAX WAS PAID ON THESE EXPENSES. THEREFORE, WE RESTORE THIS MATTER BACK TO THE FILE OF THE AO FOR LIMITED PURPOSE OF VERIFYING THE FACT THAT FBT HAVE BEEN PAID ON TH ESE EXPENSES, IF SO, THE IMPUGNED ADDITION STANDS DELETED. THEREFORE, GR OUND NO.1 OF THE REVENUE IS DISMISSED. GROUND NO.2 7. GROUND NO.2 IS RELATING TO DELETION OF DISALLOWA NCE MADE BY THE AO IN RESPECT OF TRAVEL AND ENTERTAINMENT EXPENSES AMOUNT ING TO RS.19,01,829/-. THE SHORT FACTS OF THE CASE ARE THAT THE AO HAS DI SALLOWED TRAVEL AND ENTERTAINMENT EXPENSES AMOUNTING TO RS.19,01,829/- (BEING 20% OF RS.95,09,143/- IN RESPECT OF WHICH RELEVANT DETAILS HAVE BEEN PROVIDED), ON THE BASIS THAT THE SUPPORTING DOCUMENTS EXPLAINING THE PURPOSE FOR INCURRING THESE EXPENSES WERE NOT FURNISHED AND PAYMENTS MADE BY A CORPORATE CREDIT CARD DID NOT JUSTIFY THAT IT WAS INCURRED SOLELY FOR BUSINES S PURPOSES. THE AO ALSO OBSERVED THAT THE DOCUMENTS ARE SELF GENERATED EVID ENCE AND THIRD PARTY EVIDENCES ARE NOT AVAILABLE AND ACCORDINGLY, SAME A RE NON-VERIFIABLE IN NATURE. 8. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING AS UNDER: 54 I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE A PPELLANT AS WELL AS THE FACTS OF THE CASE. IT IS SEEN THAT THE APPELLANT, VIDE IT S LETTERS DATED 13 SEPTEMBER 2010, HAS SUBMITTED COPIES OF TICKETS/ BILLS/ INVOICE ETC ALONG WITH THE ORIGINALS ISSUED BY THIRD PARTIES AND ALSO INTERNAL PAYMENT V OUCHERS DURING THE ASSESSMENT PROCEEDINGS BEFORE THE AO. THE AO HAS VERIFIED THE DOCUMENTS VIS--VIS THE ORIGINALS EVIDENCING THE EXPENDITURE OF RS 95,09,14 3/- TOWARDS TRAVEL AND ENTERTAINMENT AND NOT A SINGLE SPECIFIC ADVERSE INF ERENCE HAS BEEN DRAWN BY THE AO IN RELATION TO THE SAME. THE CONCLUSIONS MADE BY THE AO FOR DISALLOWANCE ARE PURELY ON THE BASIS OF ASSUMPTIONS. THE AO HAS NOT NOTED THE FACT THAT THE APPELLANT INVOICES ITS FEES TO ITS CLIENTS ON A COS T PLUS BASIS AND ACCORDINGLY, ITA NO.4398/M/2014 M/S. CREDIT SUISSE CONSULTING INDIA PVT. LTD. 4 THERE IS NO INCENTIVE TO THE APPELLANT BY CLAIMING ADDITIONAL EXPENSES. IN FACT, A LARGER CLAIM OF EXPENSES WOULD RESULT IN AD DITIONAL INCOME BEING EARNED BY THE APPELLANT. THEREFORE, IN MY OPINION, THE DIS ALLOWANCE MADE BY THE AO IS BASED ON MERE CONJECTURES AND SURMISES. HENCE, THER E COULD BE NO JUSTIFICATION FOR THE SAID DISALLOWANCE ON THE GROUND OF PERSONAL OR NON-BUSINESS PURPOSE, IN RESPECT OF THE EXPENSES CLAIMED. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE SIDES. LOOKING INTO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT L D. CIT(A) HELD THAT THE ASSESSEE INVOICES ITS FEES TO ITS CLIENTS ON A COST PLUS BASIS AND ACCORDINGLY, THERE IS NO INCENTIVE TO THE ASSESSEE BY CLAIMING A DDITIONAL EXPENSES. HE ALSO OBSERVED THAT A LARGER CLAIM OF EXPENSES WOULD RESU LT IN ADDITIONAL INCOME BEING EARNED BY THE ASSESSEE, THEREFORE, THE DISALL OWANCE MADE BY THE AO IS BASED ON MERE CONJECTURES AND SURMISES. HENCE, HE H ELD THAT THERE COULD BE NO JUSTIFICATION FOR THE SAID DISALLOWANCE ON THE GROU ND OF PERSONAL OR NON- BUSINESS PURPOSE, IN RESPECT OF THE EXPENSES CLAIME D AND ACCORDINGLY HE DELETED THE ADDITIONS AND OUR INTERFERENCE IS NOT R EQUIRED. MOREOVER, LD. A.R. HAS POINTED OUT THAT FBT HAS BEEN PAID ON THESE EXP ENSES. THEREFORE, THE MATTER IS RESTORED BACK TO THE FILE OF THE AO FOR V ERIFICATION OF THIS FACT. IF SO, THE IMPUGNED ADDITIONS SHALL STAND DELETED. HENCE, THIS GROUND OF THE REVENUE IS DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.07.2017. SD/- SD/- (MANOJ KUMAR AGGARWAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 06.07.2017. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH ITA NO.4398/M/2014 M/S. CREDIT SUISSE CONSULTING INDIA PVT. LTD. 5 //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.