M/s. Mahajan Industries Pvt. Ltd., New Delhi V. ITO, New Delhi

ITA 4577/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65820 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 28-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Assessee Lawyers: A MALIK
• Keywords: Depreciation; Opportunity of being heard; Revised return
• Section: 143(3); 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A .NO-4577/DEL./2012 ASSESSMENT YEAR -2008-09 M/S MAHAJAN INDUSTRIES PVT. LTD., VS ITO, NDSE, PART-II, WARD-6(41, SOUTH EXTENSION, NEW DELHI. NEW DELHI. PAN-AAACM0878R (APPELLANT) (RESPONDENT) APPELLANT BY: SH. A.MALIK, CA RESPONDENT BY: MS.Y.KAKKAR, DR DATE OF HEARING:-30.10.2012 DATE OF PRONOUNCEMENT:-31.10.2012 ORDER THIS APPEAL OF THE ASSESSEE FOR AY 2008-09 IS DIRE CTED AGAINST THE ORDER OF LD. CIT(A)-IX, NEW DELHI DATED 31.05.2012. 2. THE APPELLANT HAS RAISED FOLLOWING GROUNDS OF AP PEAL:- (1) THE LEARNED CIT(A) HAS GROSSLY ERRED ON THE FACTS OF THE CASE AND IN LAW UPHOLDING DISALLOWANCE OF ACTUAL INCURRE D EXPENDITURE OF RS.3,20,514/- BEING THE MANAGEMENT F EE PAID TO ICICI PRUDENTIAL ASSET MANAGEMENT PVT. LTD. DURING THE YEAR ON THE ARBITRARY GROUND. (2) THE LEARNED CIT(A) HAS GROSSLY ERRED ON THE FACTS O F THE CASE AND IN LAW IN UPHOLDING DISALLOWANCE THE ACTUAL INCURRE D EXPENDITURE OF RS.5,00,000/- PAID TO M/S KOTAK MAHINDRA CAPITAL COMPANY LTD. ON THE ARBITRARY GROUND. I.T.A .NO-4577/DEL./2012 2 (3) THE APPELLANT SEEKS LEAVE TO ADD OR TO AMEND THE FO REGOING GROUNDS OF APPEAL, IF IT BECOMES NECESSARY TO DO SO IN THE INTEREST OF JUSTICE. 3. THE FACTS RELATING TO 1 ST & 2 ND GROUNDS ARE THAT DURING THE YEAR RELEVANT TO THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAD CARRIED ON THE BUSINESS OF REAL ESTATE AND ALSO TRANSACTED IN SHARES AND FILED ITS RETURN OF INCOME ON 27.09.2008 DECLARING NIL INCOME. THE ASSESSMENT WAS COMPLET ED U/S 143(3) VIDE ORDER DATED 28.12.2010 AT A TOTAL INCOME OF RS.3,56.250/- IN WHICH FOLLOWING ADDITIONS WERE MADE :- I) PLACEMENT FEE RS.5,00,000/- II) DISALLOWANCE U/S 14A RS.4,35,969/- III) DEPRECIATION ON BUILDING RS.4,39,266/- IV) MISC. INCOME RS. 1,668/- 4. AGGRIEVED, THE ASSESSEE FILED FIRST APPEAL AND W AS NOT SUCCESSFUL IN GETTING ANY OF THE ABOVE ADDITIONS DELETED. THE ASSESSEE IS FURTHER AGGRIEVED AND HAS FILED THIS SECOND APPEAL. THE AO EXAMINED THE DETAILS OF LEGAL AND PROFESSIONAL CHARGES PAID BY THE COMPANY AND NOTICED THAT THE CLAIM OF R S.5 LACS PAID TO M/S KOTAK MAHINDRA CAPITAL COMPANY LTD TOWARDS PLACEMENT FEE S AND EARNED DIVIDEND INCOME WHICH WAS CLAIMED EXEMPT U/S 10(34) OF THE A CT. THE COMPANY DID NOT MAKE ANY DISALLOWANCE FOR THE PURPOSES OF SECTION 1 4A OF THE ACT. A REVISED COMPUTATION OF INCOME WAS FILED DURING ASSESSMENT P ROCEEDINGS HAS CLAIMING FURTHER DEDUCTION OF RS.3,20,514/- PAID AS MANAGEME NT FEE TO ICICI PRUDENTIAL ASSET MANAGEMENT COMPANY LIMITED. THE AO DISALLOWE D EXPENSE OF RS. 5 LACS, ALLEGEDLY PAID TO KOTAK MAHINDRA CAPITAL COMPANY LI MITED, ON THE GROUND THAT I.T.A .NO-4577/DEL./2012 3 THIS EXPENDITURE IS NOT INCURRED IN RESPECT OF THE BUSINESS OF THE ASSESSEE COMPANY. HE DID NOT ENTERTAIN THE CLAIM OF EXPENSE OF RS.3,2 0,514/- ALLEGEDLY PAID AS MANAGEMENT FEES TO ICICI PRUDENTIAL ASSET MANAGEMEN T PVT. LTD. ON THE GROUND THAT LIMIT FOR FILING REVISED RETURN HAD ALREADY L APSED AND, THEREFORE SUCH A BELATED CLAIM WAS IS MAINTAINABLE. HE HAS HELD THAT EVEN O N MERITS, THIS CLAIM IS NOT ALLOWABLE BECAUSE IT IS NOT RELATED TO BUSINESS OF THE ASSESSEE. THE CASE OF THE ASSESSEE IS THAT THE AO, IN THE BODY OF THE ASSESSM ENT ORDER, HAS HIMSELF ADMITTED THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINES S OF SALE AND PURCHASE OF SHARES AND AS SUCH BY HOLDING THAT THESE EXPENSES ARE NOT RELATED TO ASSESSEES BUSINESS IS CONTRARY TO THE FACTS OF THE CASE. REGARDING ICIC I PRUDENTIAL ASSET MANAGEMENT PVT. LTD. COMPANY TO WHOM, A PAYMENT OF RS.3,20,514 /- WAS MADE IS CONCERNED, IT WAS SUBMITTED THAT THIS CLAIM FILED IN REVISED RETU RN ALONG WITH REVISED STATEMENT OF STATUTORY INCOME IN WHICH THE ASSESSEE SURRENDERED DEPRECIATION OF BUILDING WHICH WAS WRONGLY CLAIMED, HAS BEEN ACCEPTED BUT HE HAS NOT CONSIDERED THE CLAIM OF PAYMENTS, SO THIS IS A PARADOXICAL AND UNFAIR ACTIO N OF THE AO. BUT THE AO DID NOT AGREEABLE AND HAS MADE BOTH THESE ADDITIONS. BEFOR E LD. CIT(A), IT WAS ARGUED THAT WHEN ELIGIBLE CLAIM COULD NOT BE MADE WITHIN P ERMITTED TIME, THE APPELLATE AUTHORITY HAS A POWER TO ENTERTAIN A VALID CLAIM IN VIEW OF HON'BLE SUPREME COURTS DECISION RENDERED IN THE CASE OF GOETZE IND IA PVT. LTD. VS CIT REPORTED IN 284 ITR 323. BUT EVEN LD. CIT(A) HAS NOT AGREE D WITH THIS CONTENTION OF THE ASSESSEE AND HAS APPROVED AOS ACTION.. I.T.A .NO-4577/DEL./2012 4 5. AFTER HEARING BOTH SIDES IN THE LIGHT OF THE AVA ILABLE RECORDS, I HAVE FOUND THAT THE LD. CIT(A) HAS NOT PASSED A SPEAKING ORDER REGARDING THE GROUNDS RAISED BEFORE HIM. THE ORDER OF LD. CIT(A), INSOFAR AS HE R FINDINGS ARE CONCERNED, FALLS IN THE DEFINITION OF NON-SPEAKING ORDER, THEREFORE IT BECOMES IMPERATIVE AND ALSO JUSTIFIED, TO RESTORE THE ENTIRE APPEAL TO THE FILE OF LD. CIT(A), SO THAT SHE CAN DECIDE THE ISSUES AFRESH. THE CLAIM MADE THROUGH IN VALID REVISED RETURN CAN ALSO BE CONSIDERED IN THE LIGHT OF GOETZE INDIA PVT. LTD. ( SUPRA). 6. ACCORDINGLY, I SET ASIDE THE FINDING OF LD. CIT( A) ON THE ABOVE SAID TWO ISSUES WITH A DIRECTION THAT THE APPELLATE COMMISSI ONER SHALL GIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I SET ASIDE THE ISSUE S RAISED ON MERITS WITHOUT GOING INTO PEDANTIC REASONS. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2012. SD/- (HARI OM MARATHA) JUDICIAL MEM BER DATED: 31/10/2012 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI