M/s. KPMG, MUMBAI V. ACIT 11(2), MUMBAI

ITA 4600/MUM/2005

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55732 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: L
• Next Hearing Date: 05-10-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 21-06-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBACHAN RAM
• Assessee Lawyers: ARVIND SONDE
• Keywords: Depreciation; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHE L, MUMBAI. BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI N.V. VASUDEVAN, JUDICIAL MEMBER. S.NO. ITA NO. ASSTT. YEAR 1. 4600/MUM/2005 1999-2000. 2. 4601/MUM/2005 2001-02. 3. 6479/MUM/2007 2001-02 KPMG, ASSTT. COMMISSIONER OF INCOME-TAX, LODHA EXCELLUS, 1 ST FLOOR, VS. 11(2), MUMBAI. APOLLO MILLS COMPOUND, N.M.JOSHI MARG, MAHALASMI, MUMBAI 400011. PAN AAAFK1415H. APPELLANT. RESPONDENT. S.NO. ITA NO. ASSTT. YEAR 4. 4166/MUM/2005 2 001-02. 5. 7062 /MUM/2007 2001-02. ASSTT. COMMISSIONER OF INCOME-TAX, KPMG, MUMBAI. VS. MUMBAI. APPELLANT. RESPONDENT. ASSESSEE BY : SHRI ARVIND SONDE. DEPARTMENT BY : SHRI SUBACHAN RAM. DA TE OF HEARING : 05-10-2011. DATE O F PRONOUNCEMENT : 31-10-2011. O R D E R PER P.M. JAGTAP, A.M.. THESE FIVE APPEALS FILED IN THE CASE OF ONE ASSESS EE INVOLVE SOME COMMON AND INTER-LINKED ISSUES AND THE SAME, THEREFORE, HA VE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS SINGLE COMPOSITE ORDER FO R THE SAKE OF CONVENIENCE. 2 ITA NOS.4600,4601,4166/MUM/2005, 6479 AND 7062/MUM/2007. 2. FIRST WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E FOR ASSESSMENT YEAR 1999- 2000 BEING ITA NO. 4600/MUM/2005 WHICH IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS)-XI, MUMBAI DATED 30-03-2005. 3. THE ISSUE INVOLVED IN GROUND NO. 1(I) TO (IV) RE LATES TO THE DISALLOWANCE OF RS.51,67,822/- MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) ON ACCOUNT OF PAYMENTS MADE BY THE ASSESSEE TO KPMG IN TERNATIONAL HEADQUARTERS AT NETHERLANDS AND KPMG ASIA PACIFIC, TIAWAN ON ACCOUN T OF REIMBURSEMENT OF VARIOUS COSTS. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHIP FIRM WHICH IS CARRYING ON THE PROFESSION OF PROVIDING BUSINESS AD VISORY, TAXATION AND AUDIT RELATED SERVICES. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 31-12-1999 DECLARING A LOSS OF RS.3,03,92,780 /- WHICH WAS SUBSEQUENTLY REVISED CLAIMING ADDITIONAL EXPENSES OF RS.24,20,09 6. IN THE TAX AUDIT REPORT FILED ALONG WITH THE SAID RETURN, THE FOLLOWING AMOUNTS W ERE STATED AS INADMISSIBLE U/S 40(A)(I) : I) RS.37,99,110/- PAYABLE TO KPMG INTERNATIONAL HE ADQUARTERS, THE NETHERLANDS AS CONTRIBUTION OF SHARE TOWARDS REIM BURSEMENT OF COSTS. II) RS.5,61,249/- PAYABLE TO KPMG INTERNATIONAL HEA DQUARTERS, THE NETHERLANDS AS CONTRIBUTION OF SHARE TOWARDS REIMBU RSEMENT OF COSTS OF GLOBAL IT AGREEMENT. III) RS.7,22,903/- PAYABLE TO KPMG ASIA PACIFIC, TA IWAN AS CONTRIBUTION OF SHARE TOWARDS REIMBURSEMENT OF COSTS OF STAFF AT TITUDE SURVEY. IV) RS.84,560/- PAYABLE TO KPMG ASIA PACIFIC, TAIWA N AS CONTRIBUTION TOWARDS SHARE OF COSTS OF INTUITION COMPUTER BASED BANKING FACILITIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE AO THAT THE ABOVE PAYMENTS BEIN G ON ACCOUNT OF REIMBURSEMENT OF ITS SHARE IN THE COMMON COST MADE TO NON RESIDENT PARTIES OUTSIDE 3 ITA NOS.4600,4601,4166/MUM/2005, 6479 AND 7062/MUM/2007. INDIA, NO TAX WAS DEDUCTIBLE FROM THE SAID PAYMENTS AND THERE WAS NO QUESTION OF DISALLOWANCE OF THE SAID PAYMENTS U/S 40(A)(I). IT WAS ALSO CONTENDED THAT THE SAID PAYMENTS MADE TO THE PARTIES OUTSIDE INDIA WERE NOT IN THE NATURE OF ROYALTY OR FEES FOR TECHNICAL SERVICES, BUT WERE REIMBURSEMENT OF A SSESSEES SHARE OF EXPENSES AS A MEMBERSHIP FEES WHICH WERE NOT CHARGEABLE TO TAX IN INDIA AND THE SAME, THEREFORE, COULD NOT BE DISALLOWED U/S 40(A)(I). TH E AO DID NOT FIND MERIT IN THESE CONTENTIONS RAISED BY THE ASSESSEE. ACCORDING TO HI M, TAX AT SOURCE WAS DEDUCTIBLE FROM THE RELEVANT PAYMENTS MADE BY THE ASSESSEE AS REQUIRED BY THE PROVISIONS OF SECTION 195 AND THE ASSESSEE HAVING FAILED TO COMPL Y WITH THE SAID REQUIREMENT, HE MADE A DISALLOWANCE OF RS.51,67,822/- U/S 40(A)(I). ON APPEAL, THE LEARNED CIT(APPEALS) CONFIRMED THE SAID DISALLOWANCE MADE B Y THE AO ON THE GROUND THAT THE ASSESSEE WAS HELD TO BE LIABLE TO DEDUCT THE TA X AT SOURCE FROM THE PAYMENTS IN QUESTION IN ASSESSMENT YEAR 2001-02. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE ORDER O F THE AO PASSED IN ASSESSEES CASE FOR ASSESSMENT YEAR 2001-02 HOLDING IT TO BE LIABLE TO DEDUCT TAX AT SOURCE FROM THE SIMILAR PAYMENTS, WHICH HAS BEEN RELIED UPON BY THE LEARNED CIT(APPEALS) IN HIS IMPUGNED ORDER TO CONFIRM THE DISALLOWANCE MADE BY THE AO ON THIS ISSUE, WAS THE SUBJECT MATTER OF APPEAL BEFORE THE TRIBUNAL AND TH E COORDINATE BENCH OF THIS TRIBUNAL VIDE ITS ORDER DATED 27 TH OCT., 2010 PASSED IN ITA NO. 1823 AND 1959/MUM/2007 REMANDED THE MATTER BACK TO THE LEARN ED CIT(APPEALS) WITH A DIRECTION TO ADJUDICATE THE ISSUE RAISED BY THE ASS ESSEE RELATING TO CHARGEABILITY OF PAYMENTS MADE TO KPMG INTERNATIONAL AND OTHERS TO I NCOME-TAX IN INDIA FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH 9 OF ITS ORD ER : 9. THE ASSESSEE HAS RAISED A LEGAL ARGUMENT THAT THE PAYMENT MADE TO M/S KPMG INTERNATIONAL IS NOT CHARGEABLE UNDER T HE PROVISIONS OF THE ACT, FOR THE REASON THAT M/S KPMG INTERNATIONAL IS A MUTUAL ORGANIZATION 4 ITA NOS.4600,4601,4166/MUM/2005, 6479 AND 7062/MUM/2007. AND THE ASSESSEE IS A MEMBER OF SUCH MUTUAL ORGANIZ ATION. THIS ARGUMENT HAS NOT BEEN ADJUDICATED UPON BY THE FIRST APPELLAT E AUTHORITY FOR THE REASONS GIVEN AT PARA 5.5 AT PAGE 15 OF HIS ORDER, WHICH IS ALREADY EXTRACTED BY US HEREIN ABOVE. IN OUR CONSIDERED VIEW THE FIRST APPE LLATE AUTHORITY WAS IN ERROR IN NOT ADJUDICATING THE ISSUE. THE ASSESSEE H AS A RIGHT TO ARGUE THAT, THE AMOUNT PAID BY IT TO M/S KPMG INTERNATIONAL, DOES N OT GIVE RISE TO ANY INCOME CHARGEABLE TO TAX IN INDIA AND THUS THE ASSE SSEE NEED NOT DEDUCT ANY TAX AT SOURCE. THE ISSUE WHETHER THE ASSESSEE CAN T AKE SUCH AN ARGUMENT HAS ATTAINED FINALITY BY THE DECISION OF THE HONBLE SU PREME COURT OF INDIA IN THE CASE OF G.E. INDIA TECHNOLOGY CENTER PVT. LTD. VS. CIT AND OTHERS, CIVIL APPEAL NOS. 7541 7542 OF 2010 JUDGMENT DATED 9 TH SEPT., 2010. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION, THAT THE FIRST AP PELLATE AUTHORITY SHOULD HAVE ADJUDICATED ON THE ISSUE WHETHER THE PAYMENT M ADE BY THE ASSESSEE IS CHARGEABLE TO TAX UNDER THE ACT. THE APPREHENSION O F THE LEARNED DR, THAT A DECISION ON THIS MATTER WOULD HAVE RAMIFICATION IN THE OTHER CASES AND ALSO THE ARGUMENT THAT, THE ISSUE WHETHER M/S KPMG INTER NATIONAL IS A MUTUAL CONCERN OR NOT, CANNOT BE DECIDED IN THIS CASE, IS DEVOID OF MERIT. THE ASSESSEE IS A MEMBER OF KPMG INTERNATIONAL AND IT I S FOR THE ASSESSEE TO SATISFY THE ADJUDICATOR, WITH ALL POSSIBLE EVIDENCE S, THAT M/S KPMG INTERNATIONAL IS A MUTUAL CONCERN. WHEN THE ASSESSE E IS MAKING A CLAIM IT IS FOR THE ASSESSEE TO PROVE ITS CASE. THUS WE REJECT THIS ARGUMENT OF THE LEARNED DR. 5. AT THE TIME OF HEARING BEFORE US, THE LEARNED RE PRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT KEEPING IN VIEW THE DECISION RENDE RED BY THE TRIBUNAL IN ASSESSMENT YEAR 2001-02 VIDE ORDER DATED 27 TH OCT., 2010 (SUPRA), THE SIMILAR ISSUE INVOLVED IN THE YEAR UNDER CONSIDERATION MAY ALSO B E SENT BACK TO THE LEARNED CIT(APPEALS). ACCORDINGLY WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND REMIT THE MATTER BAC K TO HIM FOR DECIDING THE SAME AFRESH AS PER THE SAME DIRECTIONS AS GIVEN BY THE T RIBUNAL IN ASSESSMENT YEAR 2001- 02. GROUND NOS. 1(I) TO (IV) OF THE ASSESSEES APPE AL ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 6. AS REGARDS GROUND NO. 1(V) RAISED BY THE ASSESSE E IN THIS APPEAL, THE LEARNED REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE INVOLVED THEREIN 5 ITA NOS.4600,4601,4166/MUM/2005, 6479 AND 7062/MUM/2007. RELATING TO DISALLOWANCE MADE ON ACCOUNT OF PROFESS IONAL FEES OF RS.2,06,836/- PAID BY THE ASSESSEE TO KPMG CERTIFICATION U/S 40(A)(I) IS ALSO REQUIRED TO BE SENT BACK TO THE LEARNED CIT(APPEALS) AS HE HAS NOT DECIDED T HE EXACT NATURE OF AMOUNT PAID BY THE ASSESSEE WHETHER IT IS ROYALTY OR FEES FOR T ECHNICAL SERVICES. SINCE THIS ASPECT OF THE MATTER HAS A DIRECT BEARING ON THE ISSUE UND ER CONSIDERATION, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND REMIT THE MATTER BACK TO HIM FOR DECIDING THE SAME AFRESH AFTER ASCE RTAINING AS TO WHETHER THE PAYMENT IN QUESTION MADE BY THE ASSESSEE IS IN THE NATURE OF ROYALTY OR FEES FOR TECHNICAL SERVICES. GROUND NO. 1(V) OF THE ASSESSEE S APPEAL IS ACCORDINGLY ALLOWED. 7. AS REGARDS THE ISSUE RAISED IN GROUND NO. 2 OF T HE ASSESSEES APPEAL RELATING TO DISALLOWANCE OF BAD DEBTS AMOUNTING TO RS.17,18, 472/- MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS), IT IS OBSERV ED THAT THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF BAD DEBTS WRIT TEN OFF WAS NOT ALLOWED BY THE AO AS WELL AS BY THE LEARNED CIT(APPEALS) ON THE GR OUND THAT THE ASSESSEE COULD NOT ESTABLISH THAT THE DEBTS WRITTEN OFF HAD ACTUA LLY BECOME BAD DURING THE YEAR UNDER CONSIDERATION. AS AGREED BY THE LEARNED REPRE SENTATIVES OF BOTH THE SIDES, THIS ISSUE NOW STANDS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF T.R.F. LTD. VS . CIT 323 ITR 397 WHEREIN IT WAS HELD THAT EVERY ASSESSEE PRIOR TO 1.4.1989 HAD TO ESTABLISH, AS A MATTER OF FACT, THAT THE DEBT ADVANCED BY HIM HAD IN FACT BECOME IR RECOVERABLE. AS FURTHER HELD BY THE HONBLE SUPREME COURT, THIS POSITION, HOWEVER, GOT ALTERED BY THE DELETION OF THE WORD ESTABLISHED WHICH EARLIER EXISTED IN SEC TION 36(1)(VII). THE HONBLE SUPREME COURT HAS HELD THAT IT IS, THEREFORE, NOT NECESSARY FOR THE ASSESSEE WITH EFFECT FROM 1.4.1989 TO ESTABLISH THAT THE DEBT IN FACT HAS BECOME IRRECOVERABLE AND IT IS ENOUGH IF THE BAD DEBT IS WRITTEN OFF AS IRRE COVERABLE IN THE ACCOUNTS OF THE 6 ITA NOS.4600,4601,4166/MUM/2005, 6479 AND 7062/MUM/2007. ASSESSEE. RESPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE SUPREME COURT, WE DELETE THE DISALLOWANCE MADE BY THE AO AND CONFIRME D BY THE LEARNED CIT(APPEALS) ON ACCOUNT OF BAD DEBTS WRITTEN OFF AN D ALLOW GROUND NO.2 OF THE ASSESSEES APPEAL. 8. AS REGARDS THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE AS GROUND NOS. 3(A) AND 3(B) AND ADMITTED BY US, THE LEARNED REPRESENTA TIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUES RAISED THEREIN RELATING TO D ISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) ON ACCOUNT OF BELATED PAYMENTS OF EMPLOYERS AND EMPLOYEES CONTRIBUTION TOWARDS PROVID ENT FUND AFTER THE GRACE PERIOD BUT BEFORE THE DUE DATE OF FILING OF THE RET URN OF INCOME ARE SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS REPORTED IN 319 ITR 306. RE SPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE APEX COURT, WE DELETE THE DISAL LOWANCE MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) ON ACCOUNT OF BELATED PAYMENTS OF EMPLOYER AND EMPLOYEES CONTRIBUTION TOWARDS PROVIDE NT FUND AND ALLOW GROUND NO. 3(A) AND 3(B) OF THE ASSESSEES APPEAL. 9. NOW WE SHALL TAKE UP THE CROSS APPEALS FILED FOR ASSESSMENT YEAR 2001-02 BEING ITA NO. 4601/MUM/2005 WHICH IS THE ASSESSEES APPEAL AND 4166/MUM/2005 WHICH IS REVENUES APPEAL. THESE APPE ALS ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS)-XI DATED 30-03-2005. 10. THE ISSUE RAISED IN GROUND NO.1 OF THE ASSESSEE S APPEAL RELATES TO THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LE ARNED CIT(APPEALS) ON ACCOUNT OF ASSESSEES CLAIM FOR DEPRECIATION AT HIG HER RATE ON ELECTRICAL FITTINGS. 11. DEPRECIATION ON ELECTRICAL FITTINGS WAS CLAIMED BY THE ASSESSEE AT 25% TREATING THE SAME AS PLANT AND MACHINERY. THE AO AS WELL AS THE LEARNED 7 ITA NOS.4600,4601,4166/MUM/2005, 6479 AND 7062/MUM/2007. CIT(APPEALS), HOWEVER, ALLOWED DEPRECIATION ON ELEC TRICAL FITTINGS AT A LOWER RATE OF 10% WHICH WAS APPLICABLE TO FURNITURE AND FITTIN GS FOR THE YEAR UNDER CONSIDERATION. AS POINTED OUT BY THE LEARNED COUNSE L FOR THE ASSESSEE FROM THE SCHEDULE OF DEPRECIATION GIVEN IN APPENDIX I, ELEC TRICAL FITTINGS HAVE BEEN INCLUDED IN FURNITURE AND FITTINGS IN THE SAID SCHE DULE WITH EFFECT FROM 01-04-2003 AND THIS POSITION HAS NOT BEEN DISPUTED EVEN BY THE LEARNED DR. PRIOR TO 01-04- 2003, THE ELECTRICAL FITTINGS WERE BEING TREATED AS PLANT AND MACHINERY FOR THE PURPOSE OF ALLOWING DEPRECIATION AND THE DEPRECIATI ON CLAIMED BY THE ASSESSEE ON ELECTRICAL FITTINGS AT A HIGHER RATE WHICH WAS APPL ICABLE TO PLANT AND MACHINERY, IN OUR OPINION, WAS FULLY JUSTIFIED. WE, THEREFORE, SE T ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND DIRECT THE A O TO ALLOW DEPRECIATION ON ELECTRICAL FITTINGS AT A HIGHER RATE AS CLAIMED BY THE ASSESSEE. GROUND NO. 1 OF THE ASSESSEES APPEAL IS ACCORDINGLY ALLOWED. 12. AS REGARDS GROUND NOS. 2(A) AND 2(B) OF THE ASS ESSEES APPEAL, IT IS OBSERVED THAT THE ISSUE INVOLVED THEREIN RELATING TO DISALLO WANCE MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) ON ACCOUNT OF REIMBURSEMENT OF COST BY THE ASSESSEE TO KPMG INTERNATIONAL U/S 40(A)(A) IS SIMILAR TO THE ONE INVOLVED IN GROUND NOS. 1(I) TO (IV) OF THE ASSESSEES APPEAL F OR ASSESSMENT YEAR 1999-2000 WHICH HAS ALREADY BEEN REMITTED BACK BY US TO THE F ILE OF THE LEARNED CIT(APPEALS) WITH A DIRECTION TO DECIDE THE SAME AFRESH. FOLLOWI NG OUR CONCLUSION DRAWN IN ASSESSMENT YEAR 1999-2000, WE REMIT THIS ISSUE ALSO BACK TO THE LEARNED CIT(APPEALS) FOR DECIDING THE SAME AFRESH AS PER TH E SAME DIRECTION AS GIVEN IN ASSESSMENT YEAR 1999-2000. GROUND NOS. 2(A) AND 2(B ) OF THE ASSESSEES APPEAL ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSES. 13. AS REGARDS GROUND NOS. 3(A) TO 3(D) OF THE ASSE SSEES APPEAL, THE LEARNED REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE INVOLVED THEREIN 8 ITA NOS.4600,4601,4166/MUM/2005, 6479 AND 7062/MUM/2007. RELATING TO DISALLOWANCE MADE ON ACCOUNT OF PROFESS IONAL FEES PAID BY THE ASSESSEE TO OTHER ENTITIES BELONGING TO KPMG GROUP OUTSIDE I NDIA U/S 40(A)(I) HAS BEEN DECIDED BY THE LEARNED CIT(APPEALS) WITHOUT GIVING ANY FINDING IN RESPECT OF THE EXACT NATURE OF THE AMOUNTS PAID BY THE ASSESSEE. S INCE THIS ASPECT IS VERY RELEVANT AND HAS A DIRECT BEARING ON THE ISSUE UNDER CONSID ERATION, WE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND REMIT THE MATTER BACK TO HIM FOR DECIDING THE SAME AFRESH AFTER EXAM INING THE EXACT NATURE OF AMOUNTS PAID BY THE ASSESSEE TO OTHER GROUP ENTITIE S SITUATED OUTSIDE INDIA. GROUND NOS. 3(A)TO 3(D) ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 14. AS REGARDS GROUND NOS. 4(A) AND 4(B) OF THE ASS ESSEES APPEAL, THE LEARNED REPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUES RAISED THEREIN RELATING TO DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) ON ACCOUNT OF BELATED PAYMENTS OF EMPLOYER AND EMPLOYE ES CONTRIBUTION TOWARDS PROVIDENT FUND AFTER THE GRACE PERIOD BUT BEFORE TH E DUE DATE OF FILING OF THE RETURN OF INCOME, ARE SQUARELY COVERED IN FAVOUR OF THE AS SESSEE BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION S REPORTED IN 319 ITR 306. RESPECTFULLY FOLLOWING THE SAID DECISION OF HONBLE APEX COURT, WE DELETE THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LE ARNED CIT(APPEALS) ON ACCOUNT OF BELATED PAYMENTS OF EMPLOYER AND EMPLOYE ES CONTRIBUTION TOWARDS PROVIDENT FUND AND ALLOW GROUND NO. 4(A) AND 4(B) O F THE ASSESSEES APPEAL. 15. NOW WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR ASSESSMENT YEAR 2000- 01 WHICH INVOLVES A SOLITARY ISSUE RELATING TO DISA LLOWANCE MADE BY THE AO ON ACCOUNT OF BELATED PAYMENT OF CONTRIBUTION TO PROVI DENT FUND MADE AFTER THE DUE DATE BUT WITHIN THE GRACE PERIOD WHICH HAS BEEN DEL ETED BY THE LEARNED CIT(APPEALS). 9 ITA NOS.4600,4601,4166/MUM/2005, 6479 AND 7062/MUM/2007. 16. AT THE TIME OF HEARING BEFORE US, THE LEARNED R EPRESENTATIVES OF BOTH THE SIDES HAVE AGREED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE, INTER ALIA, BY THE DECISION OF HONBLE SUPREME COURT IN THE CAS E OF ALOM EXTRUSIONS REPORTED IN 319 ITR 306. RESPECTFULLY FOLLOWING THE SAID DEC ISION OF THE HONBLE APEX COURT, WE UPHOLD THE IMPUGNED ORDER OF THE LEARNES CIT(APPEALS) DELETING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF CONTRIBUT ION TO PROVIDENT FUND MADE AFTER THE DUE DATE BUT WITHIN THE GRACE PERIOD AND DISMISS THIS APPEAL OF THE REVENUE. 17. NOW WE SHALL TAKE UP THE APPEAL OF THE ASSESSEE BEING ITA NO.6479/MUM/2007 AND REVENUES APPEAL BEING ITA NO. 7062/MUM/2007 WHICH ARE CROSS APPEALS AND ARE DIRECTED AGAINST THE ORDE R OF LEARNED CIT(APPEALS)-XI, MUMBAI WHEREBY HE PARTLY SUSTAINED THE PENALTY IMP OSED BY THE AO U/S 271(1)(C) FOR ASSESSMENT YEAR 2001-02. 18. THE APPEAL OF THE ASSESSEE CHALLENGES THE PENAL TY IMPOSED BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) IN RESPECT OF ADDITION MADE BY WAY OF DISALLOWANCE OF REIMBURSEMENT OF COST MADE BY THE A SSESSEE TO KPMG INTERNATIONAL WHEREAS THE REVENUES APPEAL CHALLENG ES THE ACTION OF THE LEARNED CIT(APPEALS) IN CANCELLING THE PENALTY IMPOSED BY T HE AO IN RESPECT OF DISALLOWANCE OF HIGHER DEPRECIATION CLAIMED BY THE ASSESSEE ON ELECTRICAL FITTINGS AND IN RESPECT OF DISALLOWANCE OF PROFESSIONAL FEES PAID BY THE ASSESSEE TO OTHER GROUP ENTITIES SITUATED ABROAD. 19. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT WHILE DISPO SING OF THE QUANTUM APPEALS FILED FOR ASSESSMENT YEAR 2001-02, WE HAVE ALREADY DELETE D THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LEARNED CIT(APPEALS) ON ACCOUNT OF DEPRECIATION 10 ITA NOS.4600,4601,4166/MUM/2005, 6479 AND 7062/MUM/2007. ALLEGEDLY CLAIMED BY THE ASSESSEE ON ELECTRICAL FIT TINGS AT HIGHER RATE. CONSEQUENTLY, THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) IN RESP ECT OF THE SAID DISALLOWANCE CANNOT BE SUSTAINED AND WE UPHOLD THE IMPUGNED ORDE R OF THE LEARNED CIT(APPEALS) CANCELLING THE PENALTY IMPOSED BY THE AO IN RESPECT OF THE SAID DISALLOWANCE. GROUND NO. 1 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 20. AS REGARDS THE REMAINING TWO ADDITIONS IN RESPE CT OF WHICH PENALTY U/S 271(1)(C) WAS IMPOSED BY THE AO, IT IS OBSERVED THA T THE ISSUES RELATING TO THE SAID ADDITIONS HAVE BEEN REMITTED BY US TO THE LEARNED C IT(APPEALS) FOR FRESH ADJUDICATION WHILE DISPOSING OF THE QUANTUM APPEALS IN THE FOREGOING PORTION OF THIS ORDER. WE, THEREFORE, SEND BACK THE CONSEQUENT IAL ISSUES RELATING TO LEVY OF PENALTY U/S 271(1)(C) IN RESPECT OF THE SAID TWO AD DITIONS TO THE LEARNED CIT(APPEALS) FOR DECIDING THE SAME AFRESH DEPENDING ON HIS DECISION ON THE QUANTUM APPEAL IN THE SET ASIDE PROCEEDINGS. THE SO LITARY GROUND RAISED IN THE ASSESSEES APPEAL AS WELL AS GROUND NO. 2 RAISED IN REVENUES APPEAL ARE ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSES. 21. IN THE RESULT, ALL THE THREE APPEALS OF THE ASS ESSEE ARE TREATED AS ALLOWED AS INDICATED ABOVE WHEREAS THE REVENUES APPEAL BEING ITA NO. 4166/MUM/2005 IS DISMISSED AND THAT BEING ITA NO. 7062/MUM/2007 IS T REATED AS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF OCTOBER, 2011. SD/- SD/- (N.V. VASUDEVAN) (P.M. JAGTAP) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI, 31 ST OCTOBER, 2011. WAKODE 11 ITA NOS.4600,4601,4166/MUM/2005, 6479 AND 7062/MUM/2007. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED - MUMBAI 4. THE CIT, CONCERNED, MUMBAI 5. THE DR BENCH, L 6. MASTER FILE // TUE COPY// BY ORDER ASSTT. REGISTRAR ITAT, MUMBAI