Appeal Details
Counselvise Citation
483519914 RSA 2005
Assessee PAN
Bench
Appeal Number
Duration Of Justice
6 year(s) 25 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
29-07-2011
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
J
Next Hearing Date
27-07-2011
Assessment Year
1998-1999
Appeal Filed On
04-07-2005
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.4835/MUM /2005 (ASSESSMENT YEAR: 1998-99) AVAYA GLOBAL CONNECT LTD., (FORMERLY KNOWN AS TATA TELECOM LTD.), MATULYA CENTRE A BLOCK, 249, SENAPATI BAPAT MARG, LOWER PAREL (W), MUMBAI -400 013 ....... APPELLANT VS THE ADDL. COMMISSIONER OF INCOME TAX, SPECIAL RANGE 7(3), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI -400 013 ..... RESPONDENT PAN: AAACT 3992 M APPELLANT BY: SHRI P.J. PARDIWALLA & NITESH JOSHI RESPONDENT BY: SHRI D.S. SUNDER SINGH DATE OF HEARING: 27.07.2011 DATE OF PRONOUNCEMENT: 29.07.2011 O R D E R PER R.S. PADVEKAR, JM IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-23, MUMBAI DATED 30TH MARCH, 200 5 FOR THE A.Y. 1998-99. GROUND NO.1 IS IN RESPECT OF SET OFF LOSS ES U/S.72A OF THE ACT. 2. THE LD. COUNSEL SUBMITTED THAT THE SAID GROUND I S NOT PRESSED BY THE ASSESSEE AS NOW THE ISSUE HAS BEEN CLARIFIED BY THE LD. CIT (A). AS GROUND NO.1 IS NOT PRESSED THE SAME IS DISMISSED AS NOT PRESSED. ITA 4835/MUM/2005 AVAYA GLOBAL CONNECT LTD. 2 3. GROUND NO.2 IS IN RESPECT OF DEDUCTION OF NON-CO MPETE FEES OF ` 57.60 LACS, BEING 1/5TH OF THE TOTAL NON-COMPETE FE ES OF ` 2.88 CRORES PAID BY THE ASSESSEE TO THE NATIONAL RADIO AND ELEC TRONICS CO. LIMITED (NELCO) AND GROUND NO.3 IS IN RESPECT OF REFUSING T O GRANT THE DEDUCTION OF ` 72 LAKHS, AMOUNT PAID TOWARD THE PURCHASE OF GOODW ILL FROM THE NELCO. 4. WE HAVE HEARD THE PARTIES. THE ASSESSEE HAS ENT ERED INTO AN AGREEMENT DATED 29.3.1997 WITH NELCO AND AS PER THE SAID AGREEMENT THE NELCO HAS TO WITHDRAW FROM SOME OF TH E MANUFACTURER AND SUPPLY SOME OF THE TELECOMMUNICATI ON EQUIPMENTS IN ORDER TO FACILITATE THE RE-ORGANISATION OF THE D AILY COMMUNICATIONS BUSINESS WITHIN THE TATA GROUP OF COMPANIES. THE A SSESSEE AGREED TO PAY ` 2.88 CRORES AS A CONSIDERATION. IN THE A.Y. 1997- 98, AT THE ASSESSMENT STAGE, THE ASSESSEE DID NOT CLAIM THE SA ID EXPENDITURE BUT BEFORE THE LD. CIT (A) TOOK THE GROUND THAT THE SAI D EXPENDITURE IS A REVENUE EXPENDITURE AND HENCE, THE SAME BE ALLOWED. WHILE DISPOSING THE APPEAL FOR THE A.Y. 1997-98, THE LD. CIT (A) DE CLINED TO ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE COMPANY. THE ASSESSEE CHALLENGED THE ORDER OF THE LD. CIT (A) BEFORE THE TRIBUNAL WHICH IS STILL PENDING. THE ASSESSEES APPEAL FOR THE A.Y. 2002-03 WAS HEARD BY THE TRIBUNAL- 122 TTJ (MUM) 300 (BEING ITA NO.83 2/M/2007) IN WHICH THE IDENTICAL ISSUE HAS BEEN CONSIDERED BY TH E TRIBUNAL AND THE SAME WAS RESTORED TO THE FILE OF THE LD. CIT (A). THE LD. COUNSEL SUBMITS THAT IN THIS YEAR ALSO THE MATTER MAY BE RE STORED BACK TO THE FILE OF THE LD. CIT (A) AFTER ADMITTING THE GROUND TAKEN BY THE ASSESSEE. WE HAVE ALSO HEARD THE LD. D.R. 5. IN THE ASSESSEES OWN CASE FOR THE A.Y. 2002-03, CITED SUPRA, THE TRIBUNAL HAS OBSERVED AND HELD AS UNDER:- 73. THE ASSESSEE PAID THE CONSIDERATION OF ` 2.88 CRORES TO THE NELCO FOR NOT ENGAGING IN THE ACTIVITY OF MANUFACTU RE, ITA 4835/MUM/2005 AVAYA GLOBAL CONNECT LTD. 3 SUPPLY OR MARKETING OF THE TELECOMMUNICATION EQUIPM ENT AS DISCUSSED IN THE AGREEMENT. ACCORDING TO THE ASSES SEE, THE CONSIDERATION PAID TO NELCO SHOULD HAVE BEEN ALLOWE D AS REVENUE EXPENDITURE IN THE ASST YR. 1997-98 ITSELF. HOWEVER, THE CLAIM OF THE ASSESSEE WAS NOT ALLOWED IN THE RELEVANT ASSESSMENT YEAR. WITHOUT PREJUDICE TO THE CLAIM THAT THE CONSIDERATION PAID TO NELCO MUST BE ALLOWE D AS DEDUCTION IN THE ASST. YR. 1997-98, THE ASSESSEE SU BMITTED THAT THE PERIOD OF THE AGREEMENT WAS 5 YEARS. ACCO RDINGLY, ONE-FIFTH OF THE CONSIDERATION MUST BE ALLOWED AS D EDUCTION IN THE CURRENT ASSESSMENT YEAR. IN THE NOTES OF COMPUTATION OF INCOME THE AFORESAID CLAIM WAS MADE BY THE ASSESSEE. THE AO DID NOT CONSIDER THE SAME. B EFORE LEARNED CIT (A), THE CLAIM FOR DEDUCTION OF 1/5TH O F THE EXPENDITURE WAS MADE IN THE FORM OF AN ADDITIONAL G ROUND, WHICH WAS NOT ENTERTAINED BY LEARNED CIT (A). WE A RE OF THE VIEW THAT THE ADDITIONAL GROUND HAS TO BE ADMIT TED FOR ADJUDICATION AS THE CLAIM WAS MADE IN THE RETURN OF INCOME FILED BY THE ASSESSEE. WE WERE INFORMED THAT THE C LAIM FOR DEDUCTION OF THE ENTIRE SUM IS STILL PENDING ADJUDI CATION IN ASSTT. YRS. 1997-98 AND 1998-99. IN THE CIRCUMSTAN CES, WE ADMIT THE ADDITIONAL GROUND FOR ADJUDICATION AND RE MAND THE MATTER TO LEARNED CIT (A) FOR DECIDING THE ISSU E IN ACCORDANCE WITH LAW AFTER TAKING INTO CONSIDERATION THE DECISION IF ANY, IN ASST. YRS. 1997-98 AND 1998-99. 6. IN THIS YEAR ALSO, WE RESTORE GROUND NOS.2 & 3 T O THE FILE OF THE LD. CIT (A) ON THE SAME DIRECTIONS, AS ARE GIVEN IN ASSESSEES OWN CASE FOR THE A.Y. 2002-03. 7. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOW ED FOR THE STATISTICAL PURPOSES. ITA 4835/MUM/2005 AVAYA GLOBAL CONNECT LTD. 4 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 9TH JULY 2011. SD/- SD/- ( B. RAMAKOTAIAH ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE : 29TH JULY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)23, MUMBAI. 4) THE CIT-CITY-7, MUMBAI. 5) THE D.R. J BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 4835/MUM/2005 AVAYA GLOBAL CONNECT LTD. 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 27.07.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 27.07.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER
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