HBS REALTORS P.LTD, MUMBAI V. ACIT (5)1, MUMBAI

ITA 4805/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4991 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 20-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation
• Section: 37(1); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 4805/MUM/2012 ASSESSMENT YEAR: 2009-10 M/S. HBS REALTORS P. LTD 505, CEEJAY HOUSE, DR. ANNIE BESANT ROAD, WORLI, MUMBAI-. 400 018 PAN :AAACC 1641 C VS. ACIT (5)1 AAYAKAR BHAVAN, 5 TH FLOOR MUMBAI. 400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANDAR VAIDYA RESPONDENT BY : SHRI SANJEEV JAIN DATE OF HEARING : 02.09.2013 DATE OF PRONOUNCEMENT : 13.09.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD.CIT(A) -9, MUMBAI DATED 30.11.2011 FOR THE ASSES SMENT YEAR 2009-10. 2. GROUND NO. 1 RELATES TO THE DISALLOWANCE OF RS.6 ,74,908/- MADE BY THE AO U/S 37(1) OF THE ACT AND THE SAME CONFIRMED BY THE LD.C IT(A) ON ACCOUNT OF FOREIGN TRAVEL. 2.1 THE RELEVANT FACTS ARE THAT THE ASSESSEE, A COM PANY ENGAGED IN THE BUSINESS OF SERVICES IN CONSTRUCTION BUSINESS HAD CLAIMED RS .11,60,844/- TOWARDS TRAVELLING AND CONVEYANCE EXPENSES INCLUDING RS.6,74,908/- INC URRED TOWARDS FOREIGN TRAVEL BY THE DIRECTORS SHRI SANDEEP SHAH & SMT.SHIRIN SHAH F OR THE PURPOSE OF MEETINGS THE FUND MANAGERS FOR RAISING FUNDS AND FINANCES. HOWEV ER, IN THE ASSESSMENT FRAMED U/S 143(3), THE AO DISALLOWED THE EXPENSES AS THE E XPENSES INCURRED TOWARDS ITA NO. 4805/MUM/2012 M/S. HBS REALTORS P. LTD ASSESSMENT YEAR: 2009-10 2 RAISING CAPITAL SHOULD BE CAPITALISED AND THE FOREI GN TRAVEL EXPENSES WERE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE COMPANY BUT FOR AN ASSOCIATE COMPANY. ON APPEAL THE LD.CIT( A) CONFIRMED THE ACTION OF THE AO. AGGRIEVED BY THE IMPUGNED ORDER, THE ASSESSEE I S IN APPEAL BEFORE US. 2.2 BEFORE US, THE LD. AR HAS PLACED THE SAME ARGUM ENTS AS TAKEN BEFORE THE LOWER AUTHORITIES. IN ADDITION, THE LD. AR HAS DRAW N OUR ATTENTION TO VARIOUS PROVISIONS OF THE PROJECT MANAGEMENT AGREEMENT ENTE RED INTO BETWEEN THE ASSESSEE COMPANY AND THE ASSOCIATE COMPANY TO ESTABLISH THAT THE EXPENSES INCURRED WERE FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE COM PANY. TO COUNTER THIS, THE LD. DR HAS STATED THAT THE SAID AGREEMENT IS ENTERED SU BSEQUENT TO THE TRAVEL AND CANT BE TAKEN INTO ACCOUNT AS A RELEVANT FACTOR. 2.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IT IS PERTINENT TO NOTE THAT SHRI SANDEEP SHAN AND SMT. S HIRIN SHAN, HAVE TRAVELLED ON 10.06.08 AND THEY ARE DIRECTORS IN J.B.SEZ PVT. LTD ALSO. IT HAS BEEN BROUGHT ON RECORD THAT THE SAID J.B.SEZ PVT. LTD RECEIVED FORE IGN FUNDING WORTH RS.59,03,22,620/- DURING THE YEAR FOR A NEW PROJECT . IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE WHETHER THE IMPUGNED FOREIGN TRAVEL EXPENSES HAVE BEEN INCURRED BY THEM IN THE INDIVIDU AL CAPACITY, PRIVATE CAPACITY OR IN THE CAPACITY OF DIRECTORS OF J.B.SEZ PVT. LTD OR IN THE CAPACITY OF DIRECTORS OF THE PRESENT ASSESSEE COMPANY. THUS, THERE ARE REASONS T O BELIEVE THAT THE STATED PURPOSE OF SUCH VISIT HAS BEEN FOR THE FUND RAISING OF J.B.SEZ PVT LTD. AS REGARDS THE CONTENTION OF THE LD.AR BASED ON THE PROJECT MANAGE MENT AGREEMENT BETWEEN THE ASSESSEE AND J.B.SEZ PVT LTD, WE ARE OF THE VIEW TH AT THE SAID AGREEMENT IS ENTERED INTO BETWEEN THE ASSESSEE AND J.B.SEZ PVT LTD ON 12 .09.2008 I.E., SUBSEQUENT TO THE DATE OF TRAVEL BY THE DIRECTORS WHICH IS OF NO HELP TO THE ASSESSEE TO PROVE/ESTABLISH THAT THE DIRECTORS HAVE UNDERTAKEN THE TRAVEL FOR T HE ASSESSEES COMPANY FOR ITS BUSINESS PURPOSE. IN VIEW OF THE FACT THAT THE ASSE SSEE HAS NOT PROVED THAT THE TRAVEL HAS BEEN UNDERTAKEN BY THE DIRECTORS FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE COMPANY, WE DEEM IT NOT NECESSARY TO ADJUD ICATE THE ISSUE WHETHER THE EXPENSES HAVE TO BE CAPITALIZED OR NOT. IN VIEW OF THAT MATTER, WE DO NOT FIND ANY ITA NO. 4805/MUM/2012 M/S. HBS REALTORS P. LTD ASSESSMENT YEAR: 2009-10 3 JUSTIFIABLE REASON TO INTERFERE WITH THE DECISION O F THE LD.CIT(A) CONFIRMING THE DISALLOWANCE MADE BY THE AO AND THE SAME IS UPHELD. GROUND NO. 1 IS DISMISSED. 3. GROUND NO. 2 RELATES TO DISALLOWANCE OF DEPRECIA TION OF RS.3,038/- ON CASH PURCHASE OF MOBILE. IT IS OBSERVED THAT THE ASSESSE E HAS CLAIMED DEPRECIATION U/S 32 ON MOBILE OF RS.20,250/-. THE PERUSAL OF THE CORRES PONDING PURCHASE INVOICE OF THE MOBILE REVEALS THAT THE SAME HAS NOT BEEN ISSUED IN THE NAME OF ASSESSEE COMPANY. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDE R OF THE LD.CIT(A) CONFIRMING THE IMPUGNED DISALLOWANCE MADE BY THE AO AND THE SAME I S UPHELD. GROUND NO.2 IS DISMISSED. 4. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF SEPTEMBER, 2013. SD/- SD/- (B. RAMAKOTAIAH) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 13.09.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR H BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.