AXIS SALES LTD ( NOW KNOWN AS AXIS SECURITIES AND SALE LTD), MUMBAI V. DCIT CIR 3(1), MUMBAI

ITA 4812/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4197 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-04-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 30-03-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 23-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RADHA KATYAL NARAN G
• Assessee Lawyers: VIPUL K MODY
• Keywords: Retrospective amendment; Tax effect

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.4812/MUM /2012 ASSESSMENT YEAR-2007-08 M/S AXIS SALES LIMITED (LATER KNOWN AS AXIS SECURITIES AND SALE LIMITED) (AND NOW KNOWN AS AXIS CAPITAL LIMITED), AXIS HOUSE, 8 TH FLOOR, WADIA INTERNATIONAL CENTRE, PANDURANG BUDHKAR MARG, WORLI, MUMBAI-400025 / VS. DCIT, CIRCLE-3(1), ROOM NO.607 AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 PAN NO.AAACU8367M ( / ASSESSEE) ( / REVENUE) ITA NO.4812 & 5190/MUM/2012 M/S AXIS SALES LIMITED (LATER KNOWN AS AXIS SECURITIES AND SALE LIMITED) (AND NOW KNOWN AS AXIS CAPITAL LIMITED), 2 ITA NO.5190/MUM /2012 ASSESSMENT YEAR-2007-08 DCIT, CIRCLE-3(1), ROOM NO.607 AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/S AXIS SALES LIMITED (LATER KNOWN AS AXIS SECURITIES AND SALE LIMITED) (AND NOW KNOWN AS AXIS CAPITAL LIMITED), AXIS HOUSE, 8 TH FLOOR, WADIA INTERNATIONAL CENTRE, PANDURANG BUDHKAR MARG, WORLI, MUMBAI-400025 PAN NO.AAAC U8367M ( / REVENUE) ( / ASSESSEE) / REVENUE BY MS. RADHA KATYAL NARANG- DR / ASSESSEE BY SHRI NITESH JOSHI & SHRI VIPUL K. MODY / DATE OF HEARING : 07/04/2016 / DATE OF ORDER: 07/04/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE AS WELL AS REVENUE IS IN CROSS APPEAL AGAINST THE IMPUGNED ORDER DATED 12/06/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. FIRST, WE SHALL TAKE UP APPEAL OF THE REVENUE (ITA NO.5190/MUM/2012). ITA NO.4812 & 5190/MUM/2012 M/S AXIS SALES LIMITED (LATER KNOWN AS AXIS SECURITIES AND SALE LIMITED) (AND NOW KNOWN AS AXIS CAPITAL LIMITED), 3 2. DURING HEARING, AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE, SHRI HITESH JOSHI ALONGWITH SHRI VIPU L K. MODY, CONTENDED THAT THE APPEAL OF THE REVENUE IS N OT MAINTAINABLE BEING THE TAX INVOLVED IS BELOW PRESCR IBED MONETARY LIMIT AND ALSO ON MERIT BY PLACING RELIANC E UPON THE DECISION IN 368 ITR 749 (BOM.). THIS FACTUAL MA TRIX WAS NOT CONTROVERTED BY THE LD. DR, MS. RADHA KATYAL NA RANG. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW OF THE FACT, THAT THE TAX EFFECT IN THE PRESENT APPEAL IS BELOW PRESCRIBED MONETARY LIMIT, AS CONTAINED IN CBDT INSTRUCTION NO.21 OF 2015, DATED 10/12/2015 (F NO.279/MISC./142/2007-IT(PT), APPLICABLE WITH RETROSPECTIVE EFFECT, WHEREIN, THE DEPARTMENT WAS ADVISED/DIRECTED BY THE BOARD NOT TO FILE APPEAL I N THE CASES WHERE THE TAX EFFECT IS BELOW PRESCRIBED MONE TARY LIMIT, THUS, THE APPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE. 3. NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E (ITA NO.4812/MUM/2012), WHEREIN, THE GROUND RAISED PERTAINS TO UPHOLDING THE DISALLOWANCE OF SUM OF RS.11,06,691/-, BEING EXPENSES INCURRED AFTER COMMENCEMENT OF BUSINESS BUT BEFORE GENERATION OF REVENUE. THE ASSESSEE HAS TAKE ALTERNATE GROUND TH AT THE ASSESSING OFFICER OUGHT TO HAVE ALLOWED DEDUCTION U /S 35D ITA NO.4812 & 5190/MUM/2012 M/S AXIS SALES LIMITED (LATER KNOWN AS AXIS SECURITIES AND SALE LIMITED) (AND NOW KNOWN AS AXIS CAPITAL LIMITED), 4 OF THE ACT, IN RESPECT OF EXPENDITURE TREATED AS P REOPERATIVE EXPENSES. THE LD. DR, DEFENDED THE ADDITION. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS SUBSIDIARY OF AXI S BANK LTD. WAS INCORPORATED ON 06/12/2005. AS PER THE ASS ESSEE, THE MD WAS APPOINTED ON 05/04/2006 AND THE CERTIFIC ATE OF COMMENCEMENT WAS RECEIVED ON 02/05/2006. THE EMPLOYEES WERE HIRED BY THE ASSESSEE AT LATER DATE. THE CLAIM OF THE ASSESSEE IS THAT INFRASTRUCTURE WAS PU T TO USE AS ON THE DATE OF APPOINTMENT OF MD ON 05/04/2006. HOWEVER, THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT THE BUSINESS WAS SET UP ON AUGUST 2006, THEREFORE, THE EXPENSES OF RS.11,06,681/-, CLAIMED AS DEDUCTION FO R THE PERIOD UPTO JULY 2006 IS TO BE DISALLOWED. THE COMMISSIONER OF INCOME TAX (APPEAL) AFFIRMED THE S TAND OF THE LD. ASSESSING OFFICER. CONSIDERING THE TOTALITY OF FACTS AND THE CIRCUMSTANCES NARRATED BEFORE US, IN PRINCI PLE, WE AFFIRM THE STAND OF THE COMMISSIONER OF INCOME TAX (APPEAL). 3.2. HOWEVER, SO FAR AS, THE ALTERNATIVE CLAIMS OF THE ASSESSEE THAT THE DEDUCTION U/S 35D IN RESPECT OF EXPENDITURE TREATED AS PREOPERATIVE EXPENSES SHOULD HAVE BEEN ALLOWED, IS CONCERNED, WE FIND MERIT IN THE AL TERNATIVE CLAIM OF THE ASSESSEE. SECTION 35D SPEAKS ABOUT AMORTIZATION OF CERTAIN PRELIMINARY EXPENSES, WHERE THE ITA NO.4812 & 5190/MUM/2012 M/S AXIS SALES LIMITED (LATER KNOWN AS AXIS SECURITIES AND SALE LIMITED) (AND NOW KNOWN AS AXIS CAPITAL LIMITED), 5 ASSESSEE INCURS ANY EXPENDITURE SPECIFIED IN SUB-SE CTION (2) BEFORE THE COMMENCEMENT OF HIS BUSINESS OR AFTER TH E COMMENCEMENT OF HIS BUSINESS (IN CONNECTION WITH TH E EXTENSION OR WITH SETTING UP A NEW UNIT). THE ASSES SEE IS DIRECTED TO FILE THE NECESSARY EVIDENCE BEFORE THE ASSESSING OFFICER FOR ITS CLAIM AND THE LD. ASSESSING OFFICER IS DIRECTED TO EXAMINE THE CLAIM OF THE ASSESSEE AND DECIDE/ALL OW IN ACCORDANCE WITH LAW, THUS, THE ALTERNATE CLAIM OF T HE ASSESSEE IS SENT TO THE FILE OF THE ASSESSING OFFIC ER. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED AS NOT MAINTAINABLE, WHEREAS, THE APPEAL OF THE ASSESSEE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 07/04/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; # DATED : 07/04/2016 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. %& '( / THE APPELLANT (RESPECTIVE ASSESSEE) 2. )*'( / THE RESPONDENT. 3. + + , ( %& ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI, 5. /01 )2 , + %& %23 , / DR, ITA NO.4812 & 5190/MUM/2012 M/S AXIS SALES LIMITED (LATER KNOWN AS AXIS SECURITIES AND SALE LIMITED) (AND NOW KNOWN AS AXIS CAPITAL LIMITED), 6 ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, */& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI