DCIT, New Delhi V. M/s ICRA Ltd., New Delhi

ITA 4508/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65821 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 23-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIS GILL
• Assessee Lawyers: SYED NAWAZISH HUSAIN ZAIDI TA
• Keywords: Business expenditure; Revenue expenditure
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI U.B.S.BEDI, JUDICIAL MEMBER AND SHRI J.S.REDDY, ACCOUNTANT MEMBER I.T.A .NOS-4508/DEL./2012 (ASSESSMENT YEAR -2008-09) DCIT, VS ICRA LTD., CIRCLE-11(1), 1105, 11 TH FLOOR, NEW DELHI KAILASH BLDG, K.G.MARG, NEW DELHI. PAN-AAACI02188 (APPELLANT) (RESPONDENT) APPELLANT BY: SH. RIS GILL, CIT DR RESPONDENT BY: SH. SYED NAWAZISH HUSAIN ZAIDI, TA ORDER PER U.B.S.BEDI, JM THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A)-XV, NEW DELHI DATED 08.06.2012 RELEVANT TO A Y 2008-09 WHEREBY DELETION OF ADDITION OF RS.21,22,245/- MADE ON ACCO UNT OF TECHNICAL KNOWHOW FEE HAS BEEN CHALLENGED. 2. THE ASSESSEE COMPANY IS IN THE BUSINESS OF CREDI T RATING, INVESTMENT INFORMATION ETC. DURING THE YEAR UNDER CONSIDERATIO N AND HAD PAID TECHNICAL KNOWHOW FEES TO M/S MOODYS. THE AO DISALLOWED THE SAID EXPENDITURE AFTER OBSERVING THAT THE SAID AMOUNT HAS BEEN SPENT FOR A HUMAN RESOURCES OF THE COMPANY. I.T.A .NO-4508/DEL./2012 2 3. AGGRIEVED BY THE ACTION OF THE AO, THE ASSESSEE FILED AN APPEAL AND SUBMITTED BEFORE FIRST APPELLATE AUTHORITY THAT ASS ESSEE COMPANY IS IN THE BUSINESS OF FINANCIAL FIELD INCLUDING INVESTMENT INFORMATION , ADVISORY AND CREDIT RATING AGENCY. THE ASSESSEE PAID TECHNICAL KNOWHOW FEES T O M/S MOODYS, WHO IS ONE OF THE SHAREHOLDERS OF THE ASSESSEE COMPANY. M/S MOOD YS HAS BEEN GIVING PROFESSIONAL SERVICES TO THE ASSESSEE FROM THE YEAR 1999 ONWARDS. BY ANNEXING DETAIL OF TECHNICAL KNOWHOW FEES FOR THE AY 2008-09 IT WAS PLEADED THAT ASSESSEE COMPANY HAS BEEN PAYING TECHNICAL FEES FROM THE FIN ANCIAL YEAR ENDING 31 ST MARCH 2000 TO 31 ST MARCH 2011. BY ENCLOSING TOTAL TECHNICAL FEES PAI D FROM FINANCIAL YEAR 1999-2000 ONWARDS, IT WAS SUBMITTED THAT ASSES SEE HAS CLAIMED IT AS A BUSINESS EXPENDITURE AND HAS ALWAYS BEEN ALLOWED AN D THE SAME HAS BEEN PAID FROM THE FINANCIAL YEAR 1999-2000. HOWEVER, THE AY 2003-04 & 2004-05 WAS REOPENED U/S 148 OF THE INCOME TAX ACT ON THE BASI S OF AUDIT PARA AND DISALLOWANCE WAS MADE FOR TECHNICAL KNOWHOW FEE PAI D TO MOODYS. FURTHER, THE SUBSEQUENT ASSESSMENTS FROM 2005-06 TO AY 2007-08 H AD ALREADY BEEN COMPLETED U/S 143(3) AND NO DISALLOWANCE TO THAT ACCOUNT HAVE BEEN MADE. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAD GONE IN APPEAL BEFORE T HE CIT(A) FOR BOTH THE YEARS I.E 2003-04 & 2004-05. WHILE ALLOWING THE APPEAL, CIT( A) HAS VERIFIED THE RECORD OF THE AO AND HAS DELETED THE IMPUGNED ADDITION AS PER PARA 5 OF HIS ORDER AS UNDER :- I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT COMPANY AND HAVE ALSO GONE THROUGH THE ORDER OF CIT(A) XXX, WHERE THE SAME ISSUE WAS INVOLVED IN ASSESSMENT YEAR 2003-04 AND 2 004-05 BEFORE I.T.A .NO-4508/DEL./2012 3 HIM. IT IS SEEN THAT M/S MOODYS ARE RENDERING SER VICES WHICH ARE IN THE NATURE OF TRAINING, ADVISING, HOLDING SEMINARS ON VARIOUS MATTERS RELATING TO BUSINESS OF THE APPLICANT COMPANY. FUR THER, THE SAID EXPENDITURE HAS BEEN CLAIMED SINCE ASSESSMENT YEAR 2000-2001 AND FULLY ALLOWED EXCEPT IN THE ASSESSMENT YEAR 2003-04 AND 2004-05, IN WHICH THE SAID EXPENDITURE WAS DISALLOWED UNDER SEC TION 148 OF THE INCOME TAX ACT. HOWEVER, FOR THE SAID DISALLOWANCE FOR THE BOTH THE YEARS, FULL RELIEF WAS GIVEN BY THE CIT(A) XXX, VID E ORDERS DATED 14.01.2011. AS OBSERVED BY THE CIT (APPEALS) XXX, THE SAID EXPENDITURE DOES NOT GIVE ADVANTAGE OF AN ENDURING NATURE AND I FULLY AGREE WITH THE DECISION OF CIT(A) XXX AND ACCORDING LY, I AM ALSO OF THE VIEW THAT THE SAID EXPENDITURE IS OF THE NATURE OF REVENUE EXPENDITURE AND IS TO BE ALLOWED AS A BUSINESS EXPE NDITURE. IN VIEW OF THE ABOVE, THE DISALLOWANCE OF RS.21,22, 245 IN RESPECT OF TECHNICAL KNOWHOW IS DELETED. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), DEPARTMENT HAS COME UP IN APPEAL AND WHILE RELYING UPON THE ORDER OF THE AO, IT WAS PLEADED FOR SETTING ASIDE THE ORDER OF LD. CIT(A) AND RESTORING THAT OF THE AO. 5. LD. DR, AT THIS STAGE, WAS ASKED TO COMMENT THAT SINCE ORDER OF LD. CIT(A) IS BASED ON EARLIER ORDER IN THE CASE OF THE ASSESS EE FOR 2003-04 & 2004-05, WHETHER ANY APPEAL HAS BEEN FILED BY DEPARTMENT AGA INST SUCH ORDER IN THE TRIBUNAL OR IN HIGHER FORM. LD. DR VERY FAIRLY SUBMITTED T HAT AS PER THE INFORMATION AVAILABLE WITH HIM, SUCH ORDER HAS NOT BEEN FURTHER CHALLENGED. BUT HE RELIED UPON THE ORDER OF THE AO. I.T.A .NO-4508/DEL./2012 4 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ISSU E IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY EARLIER DECISIONS OF CIT( A) AGAINST WHICH DEPARTMENT HAS NOT FILED ANY APPEAL. THEREFORE, APPEAL OF THE REV ENUE NEEDS TO BE DISMISSED WHICH MAY BE DISMISSED. 7. WE HAVE HEARD BOTH THE SIDES, CONSIDERED THE MAT ERIAL ON RECORD AND FIND THAT SIMILAR ISSUE AROSE IN THE CASE OF THE ASSESSE E FOR AYS 2003-04 & 2004-05 AND LD. CIT(A) IN APPEAL BEFORE IT, HAS ALLOWED THE CLA IM OF THE ASSESSEE AGAINST WHICH NO APPEAL HAS BEEN FILED BY THE DEPARTMENT. MOREOV ER, FOR EARLIER AND SUBSEQUENT YEARS, SIMILAR TYPE OF CLAIM WAS MADE BY THE ASSESS EE FROM AY 1999-2000 ONWARDS AND NONE OF THESE YEARS SUCH DISALLOWANCE H AS BEEN MADE. KEEPING ENTIRETY OF FACTS AND CIRCUMSTANCES, PAST HISTORY A ND OTHER RELEVANT CONSIDERATION, WE ARE OF THE VIEW THAT ADDITION MADE BY THE AO WAS NOT CALLED FOR WHICH HAS RIGHTLY BEEN DELETED BY LD. CIT(A). THEREFORE, WHI LE UPHOLDING THE ORDER OF LD. CIT(A) IN THIS REGARD, WE DISMISS THE APPEAL OF THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2012. SD/- SD/- (J.S.REDDY) (U.B.S.BEDI) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 31/10/2012 *AMIT KUMAR* I.T.A .NO-4508/DEL./2012 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI