ZANDU REALTY LTD, MUMBAI V. DCIT 7(3), MUMBAI

ITA 445/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0663 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 29-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMARDR
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.445/MUM/2016 ASSESSMENT YEAR: 2011-12 ZANDU REALTY LIMITED, A-701, WING EXPRESS ZONE, WESTERN EXPRESS HIGHWAY, GOREGAON (EAST), MUMBAI-400063 / VS. DCIT-8(3)(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-40001 ( ! ' # /ASSESSEE) ( $ / REVENUE) PAN. NO.AAACZ0210G $% & # ' / DATE OF HEARING : 17/01/2018 & # ' / DATE OF ORDER: 17/01/2018 !' # ! / ASSESSEE BY MS. AARTI VISSANJI $ ! / REVENUE BY SHRI SUMAN KUMAR-DR ITA NO. 445/MUM/2016 M/S. ZANDU REALITY LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DATED 30/11/2015 OF THE LD. FIRST APPELLATE AUTHORI TY, MUMBAI, CONFIRMING THE DISALLOWANCE OF ENTIRE EXPEN SES OF RS.63,75,690/- TREATING THE SAME AS NON-BUSINESS EXPENSES. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSEE , MS. AARTI VISSANJI, DID NOT PRESS GROUNDS NO. 2 TO 7, T HEREFORE, DISMISSED AS NOT PRESSED. THE ONLY GROUND AGITATED BY THE LD. COUNSEL IS WITH RESPECT TO CONFIRMING THE DISAL LOWANCE OF RS.63,75,690/-. THE LD. COUNSEL FOR THE ASSESSEE RE LIED UPON THE DECISION OF THE TRIBUNAL FOR ASSESSMENT YE AR 2010-11, ORDER DATED 30/11/2015 BY CONTENDING THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT SUSTA INABLE. ON THE OTHER HAND, THE LD. DR, SHRI SUMAN KUMAR, CONTENDED THAT IN VIEW OF THE ORDER OF THE TRIBUNAL DATED 30/11/2015, THE PRESENT APPEAL ALSO MAY BE SENT TO THE FILE OF THE LD. ASSESSING OFFICER FOR EXAMINATION. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ITA NO. 445/MUM/2016 M/S. ZANDU REALITY LTD. 3 ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE ORDER OF THE TRIBUNAL DATED 30/11/2015 FOR READY REFERENCE AND ANALYSIS:- THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-1 3, MUMBAI (IN SHORT LD. CIT (APPEAL), DATED 18.08.2013 FOR THE ASSESSMENT YEAR 2010-11, DECIDED AGAINST THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (I N SHORT AO) U/S 143(3) OF THE ACT, ON THE FOLLOWING GROUN DS OF APPEAL: 1.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED I N CONFIRMING THE DISALLOWANCE OF ENTIRE BUSINESS EXPENDITURE OF RS. 62,43,863/- AND TREATING IT AS NONBUSINESS EXPENDITURE AND WRONGLY TREATED AS EXPENSES OF EMAMI LIMITED. 2.COMMISSIONER OF INCOME TAX (APPEALS) OUGHT NOT TO HAVE CONFIRMED THE DISALLOWANCE OF BUSINESS EXPENDITURE OF RS. 62, 43,863/- MADE BY THE ASSESSING OFFICER AS THE EXPENSES INCURRED FOR PETITIONER COMPANY AND WRONGLY TREATED AND CONFIRMED AS EXPENSES OF EM AMI LIMITED. 3.THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UNDERSTANDING THAT THE EXPENSES OF RS. 62,43,863/- UNDER QUESTION WERE NOT INCURRED FOR THE PETITIONER COMPANY BUT FOR OTHER COMPANY I. E. EMAMI LIMITED. 4. THE PETITIONER COMPANY RESERVES ITS RIGHTS TO AD D, AMEND AND DELETE ANY OF THE ABOVE. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MAD E BY MST. AARTI VISSANJI (LD COUNSEL) ON BEHALF OF THE A SSESSEE AND SHRI S. SENTHIL KUMARAN, DEPARTMENTAL REPRESENT ATIVE (LD. DR) ON BEHALF OF THE REVENUE. 3. ALL THE GROUNDS ADDRESS THE COMMON ISSUE OF DISALLOWANCE OF ENTIRE BUSINESS EXPENSES OF RS.62,4 3,863/- BY TREATING IT AS NON BUSINESS EXPENDITURE AND WRO NGLY TREATED AS EXPENSES OF EMAMI LIMITED. ITA NO. 445/MUM/2016 M/S. ZANDU REALITY LTD. 4 3.1. DURING THE COURSE OF HEARING IT HAS BEEN ARGUE D BY LD. COUNSEL OF THE ASSESSEE THAT IN THIS CASE FMCG BUSI NESS WAS DEMERGED WITH ONE COMPANY NAMELY EMAMI LTD. W ITH ALL ASSETS AND LIABILITIES. EXPENSES PERTAINING TO TRANSFER TO THE SAID COMPANY AND EXPENSES WHICH WERE NOT ACCEPT ED BY THE SAID COMPANY WERE DEBITED BY THE ASSESSEE COMPA NY IN ITS BOOKS OF ACCOUNTS. THE ASSESSEE COMPANY RETAINE D THE NONCORE BUSINESS AND ALSO STARTED THE BUSINESS OF R EAL ESTATE DEVELOPMENT. BUT THE AO HOLD IN THE ASSESSMENT ORDE R THAT THE EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT WERE PERTAINING TO THE SAID COMPANY AND WERE NOT DELETED TO THE BUSINESS OF THE ASSESSEE, AND WERE THEREFORE DISALL OWED IN THE ASSESSMENT ORDER. LD. COUNSEL TOOK US THROUGH V ARIOUS PAGES OF THE PAPER BOOK TO SHOW THAT EXPENSES PERTA INING TO THE ASSESSEE ONLY HAVE BEEN DEBITED IN THE P & L A/ C. IN SUPPORT OF HER CLAIM, SHE HAS ALSO FILED BEFORE US CERTIFICATE FROM M/S. EMAMI LTD. SHE ALSO DREW OUR ATTENTION ON NOTES TO THE ACCOUNTS GIVEN IN THE ANNUAL REPORT, SHOWING THAT BUSINESS OF THE COMPANY WAS NOT TOTAL DISCONTI NUED AND THAT THE ASSESSEE COMPANY HAD STARTED THE BUSINESS OF REAL ESTATE DEVELOPMENT. SHE ALSO SUBMITTED COPY OF ASSE SSMENT ORDER PASSED IN THE ASSESSEES OWN CASE BY THE AO F OR A.Y.2012-13 WHEREIN THESE FACTS HAVE BEEN MENTIONED BY THE AO THAT THE ASSESSEE COMPANY HAD STARTED REAL ESTAT E BUSINESS, AND THEREFORE, ALL THE EXPENSES CLAIMED B Y THE ASSESSEE WERE ALLOWED BY THE AO IN THE ASSESSMENT ORDER. SHE PLACED RELIANCE ON THE JUDGMENTS IN THE CASE OF HINDUSTAN CHEMICAL WORKS LTD 124 ITR 560 (BOM) AND CIT V. RAMAPUR TIMBER AND TURNERY CO. LTD. AS REPORTED IN 129 ITR 58 (ALLD.). LASTLY, SHE SUBMITTED, WITHOUT PREJ UDICE, THAT UNDER SOME CONFUSION OF LOWER AUTHORITIES HAD DISAL LOWED THESE EXPENSES UNDER THE BELIEF THAT THESE EXPENSES PERTAINING TO M/S. EMAMI LTD., WHEREAS THE CORRECT FACTS ARE THAT ONLY THOSE EXPENSES HAVE BEEN DEBITED BY THE A SSESSEE WHICH WERE NOT ACCEPTED BY THE M/S. EMAMI LTD. SHE FAIRLY SUBMITTED THAT FOR THIS PURPOSE THIS ISSUE CAN BE S ENT BACK TO THE FILE OF THE AO FOR EXAMINING ALL THESE FACTS AS WELL AS ITA NO. 445/MUM/2016 M/S. ZANDU REALITY LTD. 5 CERTIFICATE OF EMAMI LTD. AND THEN ALLOWING THE EXP ENSES IF THESE WERE FOUND RELATED TO THE ASSESSEE AND NOT TO M/S. EMAMI LTD. 3.2. ON THE OTHER HAND, LD. DR HAS RELIED UPON THE FINDINGS OF THE LD. CIT(A), HOWEVER, IN RESPONSE TO THE DOCU MENTS SHOWN BY THE LD. COUNSEL IN SUPPORT OF HER CONTENTI ON THAT THESE EXPENSES DID NOT PERTAIN TO M/S. EMAMI LTD, I T WAS FAIRLY SUBMITTED BY THE LD. DR THAT HE WOULD HAVE N O OBJECTION IF THIS ISSUE WOULD BE SENT BACK TO THE F ILE OF THE AO FOR DECIDING THE SAME AFRESH. 3.3. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AS WELL AS PLACED M ATERIAL BEFORE US FOR OUR CONSIDERATION. DURING THE COURSE OF HEARING OUT ATTENTION WAS DRAWN BY THE LD. COUNSEL TO CERTIFICATE SUBMITTED ON BEHALF OF THE M/S. EMAMI L TD. WE HAVE GONE THROUGH THE CONTENTS OF THESE DOCUMENTS A ND FIND THAT THE FACTS NARRATED IN THIS CERTIFICATE ARE VER Y CRUCIAL AND HAVE DIRECT BEARING ON THE ISSUE BEFORE US. 3.4 FROM THE PERUSAL OF THIS CERTIFICATE, IT IS CLE AR THAT THE EXPENSES WHICH HAVE BEEN CLAIMED BY THE ASSESSEE CO MPANY DO NOT ACTUALLY BELONG TO M/S.EMAMI LTD. IT APPEARS THAT EITHER THESE EVIDENCES WERE NOT SUBMITTED PROPERLY BEFORE LOWER AUTHORITIES OR THESE HAVE JUST BEEN OVER LOOK ED WHILE DECIDING THIS ISSUE. WE HAVE NOTED THAT FROM THE AN NUAL REPORT OF THE ASSESSEE COMPANY FOR ASSESSMENT YEAR 2010- 11,THAT AS PER NOTES TO THE BALANCE SHEET IT IS C LEARLY MENTIONED THAT THE ASSESSEE COMPANY HAS RETAINED NO N-CORE BUSINESS I.E. OTHER THAN THE BUSINESS OF FMCG UNDER TAKING IN OTHER WORDS IT CANNOT BE SAID THAT THE ASSESSEE COMPANY WAS NOT HAVING BUSINESS AND HAD TOTAL DISCONTINUED ITS BUSINESS. IT IS FURTHER BROUGHT TO OUR NOTICE THAT THE AO HIMSELF PASSED THE ASSESSMENT ORDER FOR A.Y.2012-13 IN THE CASE OF ASSESSEE COMPANY, WHEREIN IT HAS BEEN MENTI ONED THAT ASSESSEE STARTED THE REAL ESTATE BUSINESS, AND THEN ALLOWED THE EXPENSES CLAIMED BY THE ASSESSEE COMPAN Y. ITA NO. 445/MUM/2016 M/S. ZANDU REALITY LTD. 6 THUS, TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMS TANCES OF THE CASE WE FIND IT APPROPRIATE TO SEND THIS ISSUE BACK TO THE FILE OF AO FOR DECIDING IT AFRESH AFTER AFFORDING P ROPER OPPORTUNITY OF HEARING TO THE ASSESSEE FOR SUBMITTI NG REQUIRED DETAILS AND DOCUMENTS, AS PER LAW. THE ASS ESSEE SHALL ALSO EXTENT REQUISITE COOPERATION TO THE AO I N THIS REGARD. THE AO SHALL MAKE VERIFICATION OF FACTS ON THE BASIS OF EVIDENCES AS MAY BE SUBMITTED BY THE ASSESSEE, A ND AS MAY BE GATHERS BY AO HIMSELF. THE AO SHALL KEEP IN MIND OUR GUIDELINES AND OBSERVATIONS AS DISCUSSED IN PAA 3.3 AND 3.4 ABOVE, WHILE DECIDING THIS ISSUE AFRESH. THUS, THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 2.2. WE FIND THAT IN THE AFORESAID ORDER ALSO, THE LD. ASSESSING OFFICER DISALLOWED THE CLAIMED DISALLOWAN CE OF BUSINESS EXPENDITURE OF RS.62,43,863/- TREATING THE SAME AS NON-BUSINESS EXPENDITURE. IN THE PRESENT APPEAL ALSO, IDENTICAL IS THE SITUATION, THEREFORE, CONSIDERING THE FACTUAL MATRIX ON IDENTICAL LINES, WE REMAND THIS APPEAL TO THE FILE OF THE LD. ASSESSING OFFICER TO EXAMINE THE EXPENSE S WHETHER IT PERTAINS TO M/S EMAMI LTD. OR NOT. THE L D. ASSESSING OFFICER IS ALSO PROVIDED REASONABLE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECT ED TO FURNISH NECESSARY DETAILS, DOCUMENTS BEFORE THE ASS ESSING OFFICER TO SUBSTANTIATE ITS CLAIM. THE LD. ASSESSIN G OFFICER SHALL EXAMINE THE EVIDENCES, IF ANY, TO BE FILED BE FORE HIM. ITA NO. 445/MUM/2016 M/S. ZANDU REALITY LTD. 7 THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STA TISTICAL PURPOSES ONLY. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES ONLY. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 17/01/2018. SD/- SD/- ( RAJESH KUMAR ) (JOGINDER SIN GH) '!# / ACCOUNTANT MEMBER $!# /JUDICIAL MEMBER % MUMBAI; ( DATED : 17/01/2018 F{X~{T? P.S / /. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. *+,- / THE APPELLANT (RESPECTIVE ASSESSEE) 2. ./ ,- / THE RESPONDENT. 3. 0 0 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 1# / CIT(A)- , MUMBAI, 5. 3$4 .# , 0 *+' * 5 , % / DR, ITAT, MUMBAI 6. 6! 7% / GUARD FILE. ! / BY ORDER, /! (DY./ASSTT. REGISTRAR) , % / ITAT, MUMBAI