ITO, New Delhi V. M/s KL Malik & Sons Pvt. Ltd., Delhi

ITA 4778/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6390 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 02-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N BHATIA
• Assessee Lawyers: P N MEHTA
• Keywords: Non passing of speaking order; Revenue expenditure
• Section: 143(3); 263

Judgement Text

ITA NO. 4778/DEL/2012 ASSTT. YEAR: 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 4778/DEL/2012 ASSESSMENT Y EAR: 2006-07 ITO, WARD 5(1) VS M/S. K.L. MALIK & SONS PVT. LTD. NEW DELHI 110 002. 2/35, A NSARI ROAD, DARYA GANJ, DELHI. (APPELLANT) (RESPOND ENT) APPELLANT BY: SHRI S.N. BHATIA, DR RESPONDENT BY: SHRI P .N. MEHTA, CA O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -VIII, DELHI D ATED 25/06/2012 IN APPEAL NO. 603/2011-12 FOR AY 2006-07. 2. THE SOLE GROUND RAISED BY THE REVENUE READS AS U NDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 26 ,66,184/- AND RS. 13,100/- RESPECTIVELY MADE BY THE AO ON ACC OUNT OF ROYALTY AND COPY RIGHT EXPENSES. 3. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE P ARTIES AND CAREFULLY PERUSED THE RECORD, RELEVANT MATERIAL PLACED BEFORE US. ITA NO. 4778/DEL/2012 ASSTT. YEAR: 2006-07 2 4. AT THE OUTSET THE ASSESSEES REPRESENTA TIVE (AR) SUBMITTED THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX DELHI-II NE W DELHI DATED 28.3.2011 PASSED U/S 263 OF THE INCOME TAX ACT 1961 (FOR SHORT THE ACT) HAS BEEN SET ASIDE BY THE ITAT DELHI BENCHES IN ASSESSE ES APPEAL I.E. ITA NO. 2531/DEL/2011 DATED 31.1.2012. THE LD. AR FURTHER P OINTED OUT THAT THE CIT(A) RELYING ON THE ABOVE DECISION OF THE TRIBUNA L HAS GRANTED RELIEF FOR THE ASSESEE BY PASSING THE IMPUGNED ORDER AND THIS APPEAL OF THE REVENUE IS BEING DEVOID OF MERIT. 5. THE DEPARTMENTAL REPRESENTATIVE (DR) FA IRLY ACCEPTED THAT THE ORDER OF THE CIT(A) PASSED U/S 263 OF THE ACT DATED 28.3. 2011 HAS BEEN SET ASIDE BY RESTORING THAT OF THE AO PASSED U/S 143(3) OF TH E ACT. THE DR FORMALLY SUPPORTED THE IMPUGNED ORDER AND SUBMITTED THAT HE HAS NOTHING TO SAY FURTHER IN THIS REGARD. 6. FROM THE BARE READING OF THE COPY OF T HE DECISION OF THE TRIBUNAL DATED 3.11.2012 (SUPRA) WE OBSERVED THAT THE ORDER OF COMMISSIONER OF INCOME TAX PASSED U/S 263 OF THE ACT HAS BEEN SET A SIDE BY RESTORING THE ASSTT. ORDER PASSED U/S 143(3) OF THE ACT. FROM BAR E READING OF THE IMPUGNED ORDER WE OBSERVED THAT THE CIT(A) HAS GRANTED RELIE F FOR THE ASSESEE BY FOLLOWING ABOVE ORDER OF THE TRIBUNAL WITH FOLLOWIN G OBSERVATIONS AND CONCLUSION: I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT FINDINGS OF THE AO AND THE FACTS ON RECORD. BRIEF FACTS OF THE CASE AR E THAT ORIGINAL ASSESSMENT U/S 143(3) WAS COMPLETED VIDE ORDER DATE D 12.12.2008. SUBSEQUENTLY, THE LD. CIT DELHI-II, VIDE ORDER DATE D 28.3.2011 U/S 263 CANCELLED THE ORDER U/S 143(3) WITH THE DIRECT IONS TO FRAME FRESH ASSESSMENT ORDER, AFTER PROVIDING OPPORTUNITY TO TH E APPELLANT, ON THE ISSUE OF ROYALTY AND COPYRIGHT EXPENSES WHICH HAD N OT BEEN CAPITALILZED BY THE AO. THE APPELLANT PREFERRED AN APPEAL BEFORE THE HONBLE ITAT AGAINST THE ORDER U/S 263 PASSED BY T HE LD. CIT, DELHI- II. THE HONBLE ITAT VIDE ORDER DATED 31.1.2012 IN ITA NO. ITA NO. 4778/DEL/2012 ASSTT. YEAR: 2006-07 3 2531(DEL) OF 2011 FOR AY 2006-07 IN THE APPELLANTS CASE HAS HELD AS UNDER :- 6. IN THE CASE OF THE ASSESEE THE ROYA LTY PAYMENTS HAVE BEEN MADE ON SALES OF BOOKS AT FIXED RATES AS AGREED BET WEEN THE ASSESSEE AND THE AUTHORS AND HENCE SQUARELY COVERED BY THE D ECISION OF HONBLE DELHI HIGH COURT IN THE CASE CLIMATE SYSTE MS INDIA LTD. (SUPRA). IN VIEW OF ABOVE WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSMENT ORDER THOUGH, NON-SPEAKING YET IT CANNOT BE TREATED ERRONEOUS IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE. EVERY NON SPEAKING ORDER MAY NOT SUFFER FROM LACK OF INQUIRY PARTICULARLY WHEN ISSUE INVOLVED IS REPEATED YEAR AFTER WHICH HAS BEE N SET AT REST ON PRINCIPLES OF CONSISTENCY AND SUCH ALLOWANCE OF EXP ENDITURE IS NOT AGAINST LAW. WE, THEREFORE, SET ASIDE ORDER OF CIT AND RESTORE THE ORDER OF AO. PERUSAL OF THE ORDER OF THE HONBLE ITAT SHOWS THAT IT HAS BEEN HELD THAT THE ROYALTY PAYMENTS MADE OF THE SAL ES OF BOOKS HAVE BEEN HELD TO BE REVENUE EXPENDITURE. MOREOVER, THE HONBLE ITAT HAS SET ASIDE THE ORDER U/S 263 AND RESTORED THE ORIGIN AL ORDER OF THE AO U/S 143(3). SINCE THE ORIGINAL ORDER OF ASSESSMENT HAS BEEN RESTORED AND THE PROCEEDINGS U/S 263 HAVE BEEN SET ASIDE, TH EREFORE, THE ADDITION MADE BY THE AO IN THE ORDER U/S 143(3) REA D WITH SECTION 263 DOES NOT HOLD GOOD. IN VIEW OF THE FINDINGS ABOVE, THE ADDITION MADE BY THE AO OF RS. 29,19,214/- ON ACCOUNT OF ROYALTY AND COPYRIGHT EXPENSES IS DELETED. 7. IN VIEW OF ABOVE WE INCLINED TO HOLD THAT THE CIT(A) RIGHTLY HOLD THAT WHEN THE ORDER U/S 263 OF THE ACT HAS BEEN SET ASID E BY THE TRIBUNAL AND ORDER OF THE AO PASSED U/S 143(3) OF THE ACT HAS BE EN RESTORED THEN THE ADDITION MADE BY THE AO IN THE ORDER PASSED IN PURS UANCE TO THE ORDER OF THE CIT (A) U/S 263 OF THE ACT DOES NOT HOLD GOOD AND T HE SAME IS NOT SUSTAINABLE. ACCORDINGLY WE COME TO THE CONCLUSION THAT THE CIT(A) WAS RIGHT IN GRANTING RELIEF FOR THE ASSESSEE BY FOLLOW ING DECISION OF THE TRIBUNAL DATED 31.1.2012 (SUPRA). IN ABOVE SITUATION AND FAC TUAL MATRIX THE SOLE GROUND OF THE REVENUE BEING DEVOID OF MERIT IS DISM ISSED. ITA NO. 4778/DEL/2012 ASSTT. YEAR: 2006-07 4 8. IN THE RESULT APPEAL OF THE REVENUE IS D ISMISSED. 9. THE ORDER WAS PRONOUNCED ON CONCLUSION OF THE HEARING ON 4 TH JULY, 2014. SD/- SD/- (R.S. SYAL) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED 4 TH JULY, 2014 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT REGISTRAR, ITAT