IL & FS SECURITIES SERVICES LTD, MUMBAI V. ASST CIT 10(1), MUMBAI

ITA 4719/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0278 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 12-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HAS ERRED IN
• Keywords: Reason to believe
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI RAJENDRA , AM AND SHRI AMARJIT SINGH , JM / I .T.A. NO. 4719 / M/ 20 1 6 ( / ASSESSMENT YEAR: 20 08 - 09 ) IL &FS SECURITIES SERVICES LTD. HOUSE, PLOT NO. 14, RAHEJA VIHAR, CHANDIVLI, ANDHERI (E), MUMBAI - 400072 / VS. ACIT - 10(1) 1,MUMBAI ERSTSHILE DY. COMMISSIONER OF INCOME TAX (OSD) - 8(2), MUMBAI R. NO. 209, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 ./ ./ PAN/GIR NO. : AABC 15580 K ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 06.02.2018 / DATE OF PRONOUNCEMENT : . 14. 0 2 .2018 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 18 .0 4 .201 5 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 17 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 2008 - 09 . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROU NDS: - ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN INVOKING THE PROVISIONS OF SECTION 40(A)(IA) IN RESPECT OF THE AUDIT FEES TO THE EXTENT OF RS.5,00,000/ - AND HAS ERRED IN ASSESSEE BY: SHRI D. V. LAKHANI (AR) DEPARTMENT BY: SHRI RAJAT MITTAL (DR) ITA. NO.4719 /M/2016 A.Y. 2008 - 09 2 CONFIRMING DISALLOWANCE OF THE CLAIM OF EXPENDITURE OF AUDIT FEES OF RS.5,00,000/ - . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE APPELLANT PAYS THAT THE RECIPIENT OF THE INCOME DELOITTE HASKINS & SELLS, A FIRM OF CHARTERED ACCOUNT A FIRM OF CHARTERED ACCOUNTANT SHAS PAID THE TAX ON THE SUM OF RS.5,00,000/ - BEING THE AUDIT FEES PAID TO THEM AND IN VIEW OF THIS THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE AND THE DISALLOWANCE MADE BY THE LD. ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) IS NOT JUSTIFIED. 3. ON THE FACTS & CIRCUMSTAN CES OF THE CASE THE APPELLANT PRAYS THAT THE DISALLOWANCE OF RS.5,00,000/ - IS NOT JUSTIFIED AND BE DELETED. 3 . THE BRIEF FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME ON 29.09.2008 DECLARING TOTAL INCOME TO THE TUNE OF RS.45,03,05,789/ - FOR THE A.Y. 2008 - 09. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 143(2) OF THE ACT DATED 04.08.2009 WAS ISSUED AND SERVED UPON THE ASSESSEE. THEREAFTER, THE ASSESSING OFFICER COMPLETE D THE ASSESSMENT U/S 143(3) OF THE ACT ON 30.09.2010 DETERMINING TOTAL INCOME OF THE ASSESSEE TO THE TUNE OF RS.45,03,65,790/ - . THEREAFTER, THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT . N OTICE U/S 148 OF THE ACT DATED 26.03.2013 WAS ISSUED AND SERVED UPO N THE ASSESSEE. IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT, THE ASSESSEE FILED RETURN OF INCOME ON 24 . 04.2013 DECLARING TOTAL INCOME T O THE TUNE OF RS.45,03,65,789/ - WHICH WAS THE RETURNED INCOME. THE ASSESSMENT WAS REOPENED ON FOLLOWING GROUNDS: - 3. 0 THE REASONS FOR REOPENING OF THE ASSESSMENT ARE AS UNDER : - 'AS PER ANNEXURE 6 TO LETTER DATED 17.08.2010. THE ASSESSES HAS GIVEN DETAILS OF TDS CERTIFICATES CLAIMED. A PERUSAL OF THE SAME ITA. NO.4719 /M/2016 A.Y. 2008 - 09 3 REVEALS THAT TDS OF RS.11,82,655/ - IS CLAIMED U/S.194I FOR A TOTE/ RECEIPT OF RS. 40,21,5Q8/~ FROM IL & FS INVESTMENT COMMODITIES LW AND B.N OIL PVT. LTD THE ASSESSES HAS NOT SHOWN RENT RECEIVED OF R$. 40,21,5Q8S - EITHER IN PROFIT AND LOSS ACCOUNT OF ITS COMPUTATION OF INCOME THIS HAS RESULTED IN UNDERASSESSMENT OF RS 40.2 1.508/ - IN THE COMPUTATION OF INCOME, THE ASSESSES HAS CLAIMED LOAN TEASE PAYMENT OF RS. 13,73, 3Q2/ - . THIS EXPENSE IS NOT CLAIMED ITS PROFIT AND LOSS ACCOUNT NO DETAILS ARE ON RECORD TO SHOW WHAT IS THE NATURE OF EXPENSES OF LOAN LEASE PAYMENT AND HOW IT IS CLAIMED AND ALLOWED AS N ALLOWABLY EXPENDITURE. THIS HAS RESULTED IN UNDERASSESSMENT OF RS.13,13.302/ - . A PERUSAL OF MISCELLANEOUS EXPENSES REVEAL THAT DATA ENTRY CHARGES OF RS.53,79,439/ - ARE CLAIMED OUT OF WHICH PROVISION OF R S 8,79000/ - IS MADS SIMILARLY, IN THE AUDITORS REMUNERATION OF RS.18.75,000/ - IS SHOWN AS PER PROVISION FOR F. Y. ENDED 31*' MARCH. 2008. SINCE ANY PROVISION MADE IS NO! AN ALLOWABLE EXPENDITURE, THERE IS AN UNDERASSESSMENT OF RS 27. 54,000/ - HENCE. I HAVE REASON TO BELIEVE - THAT RS.80,88.810/ - OF INCOME CHARGEABLE TO TAN H AS ESCAPED ASSESSMENT FOR SHE A. Y 2003 - 09 WITHIN THE MEANING OF SUB - CLAUSE (III) OI CLAUSE (C) OF EXPLANATION 2 OF SECTION 14? OF THE INCOME TAX ACT, 1961 THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT IS MORE THAN RS.1 LAKH.' 4. THEREAFTER, THE ASSESSING OFFICER RAISED VARIOUS ADDITION . O N VERIFICATION , IT WAS FOUND THAT THE ASSESSEE PAID THE FEES TO THE TUNE OF RS.15,00,000/ - FOR THE AUDIT OF THE FINANCIAL STATE MENT OF THE COMPANY FOR THE ASSESSMENT YEA R ENDED ON 31.03.2008 TO DELOITTE HASKINS & SELLS AGAINST WHICH THE ASSESSEE MADE THE PROVISION . THE ASSESSEE DEDUCTED THE TDS ON THE AMOUNT OF 10,00,000/ - BUT DID NOT DEDUCT THE TAX ON THE REMAINING AMOUNT 5,00,000/ - . THEREFORE, THE SAID AMOUNT WAS ADDED TO THE INCOME OF THE ASSESSEE. THE TOTAL INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS. 45,18,50,270/ - . FEELING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO ITA. NO.4719 /M/2016 A.Y. 2008 - 09 4 CONFIRMED THE ORDER OF THE AO, THERE FORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO. 1 TO 3 : - 5 . UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED THE INVOKING THE PROVISION OF SECTION 40(A)(IA) OF THE ACT IN RESPECT OF THE AUDIT FEES TO THE EXTENT OF 5,00,000/ - . THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE PAID THE FEES TO THE TUNE OF RS.15,00,000/ - TO DELOITTE HASKINS & SELLS FOR THE AUDIT OF THE FINANCIAL STATE MENT OF THE COMPANY FOR THE YEAR ENDED ON 31.03.2008 . THE ASSESSEE DEDUCTED THE THE TDS ON THE P AYMENT OF THE 10,00,000/ - BUT DID NOT DEDUCT THE TAX ON REMAINING PAYMENT OF RS 5 LACS , HOWEVER, THE PAYEE HAS PAID THE TAX THEREFORE NO ADDITION IS LIABLE TO BE RAISED AND THE AMENDED PROVISION OF 40(A)(IA) IS LIABLE APPLICABLE RETROSPECTIVELY. IN SUPPOR T OF THESE CONTENTIONS THE LD. REPRESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN DECISION OF THE JURISDICTIONAL HIGH COURT IN ITA. NO. 1712 OF 2014 TITLE AS CIT VS. SHRADDHA & S S KALE, JOINT VENTURE. HOWEVER. O N THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTIONS. THE FACTUAL POSITION IS NOT IN DISPUTE. THE PAYEE HAS PAID THE TAX ON THE AMOUNT I.E., OF RS.5,00,000/ - ON WHICH THE TDS WAS NOT DEDUCTED AT SOURCE . IN THIS REGARD, T HE COPY OF FORM NO. 26A IS ON THE FILE. THE LEGAL POSITION HAS BEEN DESCRIBED BY BOMBAY HIGH COURT IN ITA. NO. 1712 OF 2014 TITLE AS CIT VS. SHRADDHA & S S KALE, JOINT ITA. NO.4719 /M/2016 A.Y. 2008 - 09 5 VENTURE . IT IS SPECIFICALLY HELD THAT THE PROVISION OF SECTION 4 0 (A)(IA) OF THE ACT WOULD BE APPLICABLE R ETROSPECTIVELY. SINCE THE POSITION OF LAW AND FACTS IS NOT DISPUTE, THEREFORE, IN THE SAID CIRCUMSTANCES, WHEN THE TAX HAS ALREADY BEEN PAID B Y PAYEE THEN NO ADDITION OF RS. 5,00,000/ - U/S 40 (A)(IA) OF THE ACT IS LIABLE TO BE MADE . A CCORDINGLY, WE DELETE TH E ADDITION AND ALLOWED THE CLAIM OF THE ASSESSEE AND ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14. 02 . 2018 SD/ - SD/ - ( RAJENDRA ) ( AMARJIT SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 14 . 0 2 . 201 8 VIJAY ITA. NO.4719 /M/2016 A.Y. 2008 - 09 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI