DCIT CIR 6(2)(1), MUMBAI V. DELOITTE TOUCHE TOHMATSU INDIA P. LTD, MUMBAI

ITA 4897/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6604 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Appeal Filed On: 13-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARI SR AR
• Assessee Lawyers: NINAD P
• Keywords: Opportunity of being heard; Rule of consistency; Revenue expenditure; Capital expenditure; TDS
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI C.N. PRASAD, JM & SHRI M.BALAGANESH, AM ITA NO. 4 8 9 7 / MUM/20 1 7 ( ASSESSMENT YEAR : 20 08 - 2009 ) ACIT(CIR) - 6(2)(1), MUMBAI VS. M/S DELOITTE TOUCHE TOHMATSU INDIA PVT. LTD., 264 - 265, VA SWANI CHAMBERS, DR. ANNIE BESANT ROAD, WORLI, MUMBAI - 400013 PAN/GIR NO. AA BCD 1147 R ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY SHRI D.G. PANSARI , SR.AR CIT ASSESSEE BY SHRI P.J.PARDIWALA,AR SHRI NIRAJ SHETH, AR AND SHRI NINAD PATADE, AR DATE OF HEA RING 11 / 04 /201 9 DATE OF PRONOUNCEMENT 03/05 /201 9 / O R D E R PER M. BALAGANESH (A.M) : TH IS APPEAL IN ITA NO. 4897 /MUM/201 7 FOR A.Y. 20 08 - 2009 ARISE S OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 6 , MUMBAI IN APPEAL NO. CI T(A) - 6 /IT - 75/752/2016 - 17 DATED 21.04.2017 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3)OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 27.12.2010 BY THE LD. INCOME TAX OFFICER 2(2)(3), MUMBAI (HEREINAFTER REFE RRED TO AS LD. AO). ITA NO. 4 8 9 7 /MUM/201 7 M/S DELOITTE TOUCHE TOHMATSU INDIA PVT. LTD 2 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CIT ( A ) WAS JUSTIFIED IN DELETING THE ADDITION OF RS 46,00,000/ - IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. WE HAVE HEARD THE RIVAL SUBMISSIONS. BOTH THE PA RTIES BEFORE US AGREED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE FOR ASST YEAR 2007 - 08 BY THE ORDER OF THIS TRIBUNAL IN ITA NO. 6787 & 6489/MUM/2014 DATED 27.2.2019 EXCEPT WITH VARIANCE IN FIGURES, WHEREIN THE BASIC FACTS AND CONCLUSION DRAWN TH EREON ARE AS UNDER: - 2 . IN GROUND NO.1, THE REVENUE HAS CHALLENGED DELETION OF ADDITION OF ` 47,92,500. 3 . BRIEF FACTS ARE, THE ASSESSEE COMPANY, AS STATED BY THE ASSESSING OFFICER, IS ENGAGED IN THE BUSINESS OF PROVIDING CONSULTANCY SERVICES RELATING TO OPERAT IONS, FINANCE, HUMAN RESOURCE AND INFORMATION TECHNOLOGY. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS RETURN OF INCOME ON 6 TH NOVEMBER 2007, DECLARING NIL INCOME. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON VERIFYING THE AUDITED FINANCIAL STATEMENTS OF THE ASSESSEE NOTICED THAT AGAINST PROFESSIONAL FEES SHOWN OF ` 31,84,59,835, THE ASSESSEE HAS INCURRED SUBSTANTIAL EXPENSES ON ACCOUNT OF SALARY, BONUS, ETC., AMOUNTING TO ` 16,37,40,274, COMPARED TO PRECEDING YEARS EXPENDI TURE OF ` 8,55,96,230. BEING OF THE VIEW THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE IS DISPROPORTIONATE TO THE INCREASE IN INCOME, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLAIN THE DETAILS OF INCOME AND EXPENSES. ON VERIFYING THE DETAILS FURN ISHED BY THE ASSESSEE, THE ASSESSING OFFICER NOTICED THAT IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE HAD VARIOUS ON GOING PROJECTS, WHEREAS THE ASSESSEE HAS NOT SHOWN ANY WORK IN PROGRESS. ON CROSS VERIFYING THE BILL R EGISTER FOR THE PERIOD 1 ST APRIL 2007 TO 30 TH APRIL 2007, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RAISED BILLS OF ` 84,07,964, IN THE MONTH OF MARCH 2007, WHICH CONSISTS OF THE BILL FOR AN AMOUNT OF ` 47,92,500, RAISED ON DIAGEO INDIA PVT. LTD ., ON 13 TH APRIL 2007. IN VIEW OF THE AFORESAID FACTS, THE ASSESSING OFFICER WAS OF THE OPINION THAT THE UNBILLED PORTION OF THE WORK RELATING TO VARIOUS PROJECTS EXECUTED DURING THE RELEVANT PREVIOUS YEAR WAS REQUIRED TO BE ACCOUNTED FOR BY THE ASSESSEE A S WORK IN PROGRESS. SINCE, THE ASSESSEE HAS NOT DONE SO, THE ASSESSING OFFICER TREATED THE SALES OF ` 47,92,500, ACCOUNTED FOR BY THE ASSESSEE IN APRIL 2007, AS THE UNACCOUNTED VALUE OF WORK IN PROGRESS FOR THE IMPUGNED ASSESSMENT YEAR AND ACCORDINGLY, ADD ED BACK TO THE ITA NO. 4 8 9 7 /MUM/201 7 M/S DELOITTE TOUCHE TOHMATSU INDIA PVT. LTD 3 INCOME OF THE ASSESSEE. BEING AGGRIEVED WITH SUCH ADDITION, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4 . IN THE COURSE OF HEARING BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE FURNISHED VARIOUS DOCUMENTARY EVID ENCES TO DEMONSTRATE THAT THE AMOUNT OF ` 47,92,500 WAS NEITHER BILLED NOR ACCRUED AS INCOME IN THE IMPUGNED ASSESSMENT YEAR. ON THE BASIS OF SUBMISSIONS MADE AND EVIDENCES PRODUCED BY THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. AFTER CONSIDERING THE REMAND REPORT FURNISHED BY THE ASSESSING OFFICER AS WELL AS THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD, LEARNED COMMISSIONER (APPEALS) OBSERVED THAT NOT ONLY THE AMOUNT OF ` 47,92,500, WAS BILLED BY THE ASSESSEE IN APRIL 2007, I.E., FINANCIAL YEAR 2007 08, BUT THE ASSESSEE HAS ALSO OFFERED IT AS INCOME IN ASSESSMENT YEAR 2008 09. HE OBSERVED, THE SAID INCOME HAS ALSO BEEN ASSESSED AT THE HANDS OF THE ASSESSEE IN THE ASSES SMENT YEAR 2008 09. HE OBSERVED, SINCE THE RATE OF TAX ON THE INCOME ASSESSED AT THE HANDS OF THE ASSESSEE IS SAME BOTH FOR ASSESSMENT YEAR 2007 08 AND 2008 09, IT WILL NOT AFFECT THE INTEREST OF REVENUE. FURTHER, HE OBSERVED, IF THE INCOME OF ` 47,92,500, IS ASSESSED IN THE IMPUGNED ASSESSMENT YEAR, THE SAID AMOUNT HAS TO BE EXCLUDED FROM THE INCOME OF THE ASSESSEE IN ASSESSMENT YEAR 2008 09. THEREFORE, FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN CIT V/S EXCEL INDUSTRIES LTD., [2013] 358 ITR 295 (SC) AND THE DECISION OF THE HONBLE DELHI HIGH COURT IN CIT V/S VISHNU INDUSTRIAL GASSES PVT. LTD., ITR NO.229/1988, DAED 6 TH MAY 2008, AS WELL AS THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN CIT V/S NAGRI MILLS CO. LTD., [1958] 33 ITR 681, L EARNED COMMISSIONER (APPEALS) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELYING UPON THE OBSERVATIONS OF THE ASSESSING OFFICER SUBMITTED, SINCE THE MAJOR PORTION OF THE WORK WAS COMPLETED IN THE IMPUGNED A SSESSMENT YEAR, IT SHOULD HAVE BEEN SHOWN AS WORK IN PROGRESS IN THE ACCOUNTS OF THE ASSESSEE AND OFFERED AS INCOME. HE SUBMITTED, WITHOUT OFFERING THE INCOME IN THE ASSESSMENT YEAR WHEREIN IT ACCRUED, THE ASSESSEE HAS DEFERRED IT TO THE NEXT ASSESSMENT YE AR. THEREFORE, HE SUBMITTED, THE ASSESSING OFFICER WAS JUSTIFIED IN ADDING THE AMOUNT TO THE INCOME OF THE ASSESSEE. 6 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THE ASSESSEE IS PROVIDING CONSULTANCY SERVICES, HENCE, THERE CANNOT BE ANY WORK IN PROGR ESS. IN ANY CASE OF THE MATTER, HE SUBMITTED, THE BILL FOR THE SERVICES RENDERED WAS RAISED IN APRIL 2007, THE ASSESSEE HAS CORRECTLY OFFERED IT TO TAX IN ASSESSMENT YEAR 2008 09 AND THE ASSESSING OFFICER HAS ALSO ASSESSED IT AS INCOME IN ASSESSMENT YEAR 2 008 09. HE SUBMITTED, THE ASSESSING OFFICER HAS NOT DISPUTED THAT THE ASSESSEE HAS OFFERED THE UNBILLED AMOUNT OF ` 47,92,500, AS INCOME IN ASSESSMENT YEAR 2008 09. THAT BEING THE ITA NO. 4 8 9 7 /MUM/201 7 M/S DELOITTE TOUCHE TOHMATSU INDIA PVT. LTD 4 CASE, THE SAME AMOUNT CANNOT BE TAXED IN TWO ASSESSMENT YEARS SINCE IT AMOUN TS TO DOUBLE ASSESSMENT OF THE SAME INCOME. HE SUBMITTED, SINCE THE TAX RATE AT WHICH THE INCOME IS ASSESSED IN ASSESSMENT YEAR 2007 08 AND 2008 09 IS SAME, THERE IS NO PREJUDICE CAUSED TO THE REVENUE AND THERE IS ABSOLUTELY NO EFFECT ON THE REVENUE IF IT IS TAXED IN ASSESSMENT YEAR 2008 09 INSTEAD OF ASSESSMENT YEAR 2007 08. IN THIS CONTEXT, HE RELIED UPON THE DECISIONS OF THE HON'BLE SUPREME COURT IN CIT V/S EXCEL INDUSTRIES LTD. (SUPRA) AND OTHER DECISIONS REFERRED TO BY THE LEARNED COMMISSIONER (APPEALS ). THUS, HE SUBMITTED, THERE IS NO NEED TO DISTURB THE ORDER OF LEARNED COMMISSIONER (APPEALS) ON THIS ISSUE. 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON. IT IS EVIDENT FR OM THE FACTS AND MATERIAL ON RECORD THAT THE ASSESSING OFFICER HAS MADE THE IMPUGNED ADDITION PURELY ON THE REASONING THAT THE BILL DATED 18 TH APRIL 2007, RAISED BY THE ASSESSEE ON DIAGEO INDIA PVT. LTD., FOR THE AMOUNT OF ` 47,92,500, SHOULD HAVE BEEN ACC OUNTED FOR BY THE ASSESSEE AS WORK IN PROGRESS FOR THE IMPUGNED ASSESSMENT YEAR AND OFFERED TO TAX. HOWEVER, THE ASSESSING OFFICER HAS NOT DISPUTED THE FACT THAT THE AFORESAID AMOUNT REMAINED UNBILLED IN ASSESSMENT YEAR 2007 08 AND BILL FOR THE SAID AMOUNT WAS RAISED BY THE ASSESSEE ON 18 TH APRIL 2007, I.E., IN THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 2008 09. IT IS ALSO NOT DISPUTED BY THE DEPARTMENT THAT THE AMOUNT IN DISPUTE WAS NOT ONLY OFFERED AS INCOME BY THE ASSESSEE IN ASSESSMENT YEAR 2008 09, BUT IT WAS ALSO ASSESSED AT THE HANDS OF THE ASSESSEE IN THE SAID ASSESSMENT YEAR. THIS FACT HAS NOT ONLY BEEN VERIFIED BY THE LEARNED COMMISSIONER (APPEALS) IN COURSE OF PROCEEDINGS BEFORE HIM BUT ON A QUERY FROM THE BENCH, THE LEARNED AUTHORISED REPRESE NTATIVE HAS FURNISHED BEFORE US RELEVANT DOCUMENTARY EVIDENCES WHICH DEMONSTRATE THAT NOT ONLY THE ASSESSEE HAS OFFERED THE DISPUTED AMOUNT AS INCOME IN ASSESSMENT YEAR 2008 09, BUT HAS ALSO CLAIMED THE CORRESPONDING TDS IN THE SAID ASSESSMENT YEAR. IT IS ALSO A FACT ON RECORD THAT THE TAX RATE FOR ASSESSMENT YEAR 2007 08 AND 2008 09 ARE THE SAME. THAT BEING THE CASE, WHETHER THE AMOUNT IS TAXED IN THE IMPUGNED ASSESSMENT YEAR OR IN ASSESSMENT YEAR 2008 09, WILL HAVE NO EFFECT ON THE REVENUE. ON THE CONTRAR Y, IF THE AMOUNT IS TAXED IN THE IMPUGNED ASSESSMENT YEAR, IT HAS TO BE EXCLUDED FROM THE INCOME OF THE ASSESSEE IN ASSESSMENT YEAR 2008 09, SINCE, IT HAS ALREADY BEEN ASSESSED IN THAT ASSESSMENT YEAR. THIS IS DUE TO THE SETTLED LEGAL PRINCIPLE THAT THE SA ME INCOME CANNOT BE ASSESSED IN TWO ASSESSMENT YEARS. 8 . ONE MORE INTERESTING FACT RELATING TO THE IMPUGNED ADDITION WHICH HAS COME TO OUR NOTICE IS, AS PER THE FACTS NARRATED BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER, IN THE MONTH OF APRIL 2007, THE ASSESSEE HAD RAISED A NUMBER OF BILLS TOTALING TO ` 84,07,964=28. WHEREAS, OUT OF THOSE BILLS, THE ASSESSING OFFICER HAS PICKED UP ONLY ONE BILL RAISED ON 18 TH APRIL 2007, TO DIAGEO ITA NO. 4 8 9 7 /MUM/201 7 M/S DELOITTE TOUCHE TOHMATSU INDIA PVT. LTD 5 INDIA PVT. LTD. FOR THE AMOUNT OF ` 47,92,500, WHILE IGNORING RE ST OF THE BILLS RAISED IN APRIL 2007. EVEN TWO OTHER BILLS RAISED BY THE ASSESSEE ON DIAGEO INDIA PVT. LTD. ON 18 TH APRIL 2007 AND 23 RD APRIL 2007, HAVE BEEN IGNORED BY THE ASSESSING OFFICER. WE DO NOT FIND ANY RATIONALE / LOGIC BEHIND SUCH SELECTIVE APPRO ACH OF THE ASSESSING OFFICER. BE THAT AS IT MAY, SINCE THE AMOUNT IN DISPUTE HAS ALREADY BEEN OFFERED AS INCOME BY THE ASSESSEE IN ASSESSMENT YEAR 2008 09 AND ASSESSED TO TAX, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE DECISION OF THE FIRST APPELLATE AUTHORITY ON THE ISSUE. GROUND RAISED IS DISMISSED. RESPECTFULLY FOLLOWING THE SAME, THE GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 3. THE GROUND NOS. 2 & 3 RAISED BY THE REVENUE IS WITH REGARD TO THE ACTION OF THE LD CITA IN DELETING THE ADDITION O F RS 13,28,205/ - IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THE INTERCONNECTED ISSUE INVOLVED THEREIN RAISED BY THE REVENUE IS THAT THERE IS A VIOLATION OF PROVISIONS OF RULE 46A OF THE INCOME TAX RULES BY THE LD CITA WHEREIN FRESH EVIDENCES WERE ADMITTED AND CONSIDERED BY THE LD CITA WITHOUT GIVING OPPORTUNITY TO THE LD AO. 3.1. WE HAVE HEARD THE RIVAL SUBMISSIONS. BOTH THE PARTIES BEFORE US AGREED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE FOR ASST YEAR 2007 - 08 BY THE ORDER OF THIS TRIBUNAL I N ITA NO. 6787 & 6489/MUM/2014 DATED 27.2.2019 EXCEPT WITH VARIANCE IN FIGURES, WHEREIN THE BASIC FACTS AND CONCLUSION DRAWN THEREON ARE AS UNDER: - 9 . IN GROUND NO.2, THE REVENUE HAS CHALLENGED THE DELETION OF ADDITION OF ` 17,66,393, MADE BY THE ASSESSING OF FICER. 10 . BRIEF FACTS ARE, DURING THE ASSESSMENT PROCEEDINGS, ON VERIFYING THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE , THE ASSESSING OFFICER NOTICING THAT AN AMOUNT OF ` 31,84,59,835, HAS BEEN SHOWN AS PROFESSIONAL FEE RECEIVED, CALLED UPON THE ASSESSEE TO F URNISH THE DETAILS OF PROFESSIONAL FEE RECEIVED ALONG WITH ITS NATURE. ON VERIFYING THE INFORMATION FURNISHED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PASSED REVERSAL ENTRIES IN ITA NO. 4 8 9 7 /MUM/201 7 M/S DELOITTE TOUCHE TOHMATSU INDIA PVT. LTD 6 RESPECT OF INCOME ALREADY ACCOUNTED FOR ON EARLIE R DATES. HOWEVER, HE WAS OF THE VIEW THAT A NUMBER OF REVERSAL ENTRIES COULD NOT BE CO RELATED / RECONCILED BY THE ASSESSEE. ACCORDINGLY, HE CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE UN RECONCILED DIFFERENCE OF ` 80,94,715, SHOULD NOT BE ADDED AS INCOME. THOUGH, THE ASSESSEE OBJECTED TO THE PROPOSED DISALLOWANCE, HOWEVER, REJECTING THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER ADDED BACK THE AMOUNT OF ` 80,94,715. THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHO RITY. 11 . IN COURSE OF PROCEEDINGS BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE FURNISHED SOME MORE MATERIAL RECONCILING THE DIFFERENCES POINTED OUT BY THE ASSESSING OFFICER. ON THE BASIS OF SUBMISSIONS MADE AND EVIDENCES FILED, LEARNED COMMISSION ER (APPEALS) CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER. AFTER VERIFYING THE REMAND REPORT AND CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIALS ON RECORD, LEARNED COMMISSIONER (APPEALS) OBSERVED THAT OUT OF THE D IFFERENCE OF ` 80,94,715, POINTED OUT BY THE ASSESSING OFFICER, THE ASSESSEE COULD RECONCILE / CO RELATE THE DIFFERENCE OF ` 17,66,983 AND COULD NOT CO RELATE / RECONCILE THE REVERSAL OF ENTRIES FOR AN AMOUNT OF ` 54,00,000 IN RESPECT OF RUCHI SOYA INDUSTR IES LTD. THUS, HE SUSTAINED DISALLOWANCE TO THE EXTENT OF ` 63,28,322. 12 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED, SINCE THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCES POINTED OUT BY THE ASSESSING OFFICER, THE ADDITION MADE SHOULD HAVE BEEN SUSTA INED. IN THIS CONTEXT, HE RELIED UPON THE OBSERVATIONS OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT. 13 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, THE DEPARTMENT SHOULD NOT HAVE ANY GRIEVANCE SINCE LEARNED COMMISSIO NER (APPEALS) AFTER VERIFYING THE FACTUAL DETAILS HAS FOUND THAT THERE IS NO DIFFERENCE / DISCREPANCY WITH REGARD TO THE AMOUNT OF ` 17,66,393. FURTHER, HE SUBMITTED, SINCE THE ASSESSING OFFICER HAS NOT REJECTED THE BOOKS OF ACCOUNT OF THE ASSESSEE, NO DIS ALLOWANCE COULD BE MADE. 14 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THE ASSESSING OFFICER HAS DISALLOWED AN AMOUNT OF ` 80,74,715 DUE TO FAILURE ON THE PART OF THE ASSESSEE TO CO RELATE THE REVERSAL OF ENTRIES, HOWEVER, BEFORE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAS FILED FRESH MATERIAL RECONCILING THE DIFFERENCES POINTED OUT BY THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE OBSERVATIONS OF TH E ASSESSING OFFICER IN THE REMAND REPORT, THE SUBMISSIONS MADE BY THE ASSESSEE AND EVIDENCES FILED WAS SATISFIED THAT THE ASSESSEE HAS PROPERLY RECONCILED / CO RELATED THE REVERSAL OF ENTRIES FOR AN AMOUNT OF ` 17,66,393. THE LEARNED DEPARTMENTAL REPRESENT ATIVE HAS NOT BROUGHT BEFORE US ANY MATERIAL TO CONTROVERT THE FACTUAL ITA NO. 4 8 9 7 /MUM/201 7 M/S DELOITTE TOUCHE TOHMATSU INDIA PVT. LTD 7 FINDING OF THE LEARNED COMMISSIONER (APPEALS) INSOFAR AS IT RELATES TO THE AMOUNT OF ` 17,66,393. THEREFORE, TO THAT EXTENT WE UPHOLD THE DECISION OF LEARNED COMMISSIONER (APPEALS). GRO UND RAISED IS DISMISSED. 3.2 THE LD AR STATED THAT NO ADDITIONAL / FRESH EVIDENCES WERE SUBMITTED BEFORE THE LD CITA BY THE ASSESSEE. BEFORE US, THE LD DR WAS ALSO NOT ABLE TO POINT OUT THE FRESH EVIDENCES , IF ANY, THAT WERE FILED BEFORE THE LD CITA WHI CH HAD BEEN CONSIDERED BY THE LD CITA WITHOUT GIVING OPPORTUNITY OF BEING HEARD TO THE LD AO. HENCE THE GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. 3.3 RESPECTFULLY FOLLOWING THE SAID DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASST YEAR 20 07 - 08, THE GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 4. THE LAST GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS 11,60,000/ - ON ACCOUNT OF DELOITTE TOUCHE TOHMATSU (DTT) SUBSCRIPTIO N IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1. WE HAVE HEARD THE RIVAL SUBMISSIONS. BOTH THE PARTIES BEFORE US AGREED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE FOR ASST YEAR 2007 - 08 BY THE ORDER OF THIS TRIBUNAL IN ITA NO. 6787 & 6489/MUM/2 014 DATED 27.2.2019 EXCEPT WITH VARIANCE IN FIGURES, WHEREIN THE BASIC FACTS AND CONCLUSION DRAWN THEREON ARE AS UNDER: - 17. IN GROUND NO.4, THE REVENUE HAS CHALLENGED DELETION OF ADDITION OF ` 72,34,00 MADE ON ACCOUNT OF DISALLOWANCE OF DELOITTE TOUCHE TO HMATSU (DTT) SUBSCRIPTION. 18. BRIEF FACTS ARE, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF ` 72,34,000 TO THE PROFIT & LOSS ACCOUNT ON ACCOUNT OF ITA NO. 4 8 9 7 /MUM/201 7 M/S DELOITTE TOUCHE TOHMATSU INDIA PVT. LTD 8 PAYMENT TOWARDS DTT SUBSCRIPTION. WHEN THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO EXPLAIN THE NATURE OF EXPENDITURE AND JUSTIFY THE CLAIM OF DEDUCTION, IT WAS SUBMITTED BY THE ASSESSEE THAT THE SAID AMOUNT REPRESENTING DTT SUBSCRIPTION WAS ASSESSEES SHARE IN THE EXPENSES COMPRISING OF ` 55,75,396, BEING DTT SUBSCRIPTION AND ` 16,59,189, BEING DTT TECHNOLOGY SUBSCRIPTION. IT WAS SUBMITTED, THERE ARE SEVERAL ADVANTAGES IF ONE BECOMES MEMBER OF THE SAID SUBSCRIPTION AS IT CAN USE THE DELOITTE BRAND, HENCE, HELPS IN DEVELOPING IN GOOD BRAND IMAGE AND CONSEQUENTLY GETTING MORE BUSINESS. IT WAS SUBMITTED BY THE ASSESSEE THAT SINCE THE EXPENDITURE INCURRED WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS IT HAS TO BE ALLOWED AS EXPENDITURE UNDER SECTION 37(1) OF THE ACT. THE ASSESSING OFF ICER, HOWEVER, DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. HE OBSERVED, BY CONTRIBUTING TOWARDS DTT SUBSCRIPTION, THE ASSESSEE HAS DERIVED ENDURING BENEFIT, THEREFORE, THE EXPENDITURE IS OF CAPITAL NATURE. ACCORDINGLY, HE DISALLOWED ASSESSEES C LAIM. THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY. 19. THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD AS WELL AS THE REMAND RE PORT FURNISHED BY THE ASSESSING OFFICER OBSERVED THAT THE EXPENDITURE WAS INCURRED BY THE ASSESSEE FOR ENABLING THE PROFIT MAKING STRUCTURE TO WORK MORE EFFICIENTLY. HE OBSERVED, SUBSCRIPTION MADE BY THE ASSESSEE FOR FINE TUNING BUSINESS OPERATION TO ENABL E THE MANAGEMENT TO RUN ITS BUSINESS EFFECTIVELY, EFFICIENTLY AND PROFITABLY LEAVING THE FIXED ASSET UNTOUCHED, WOULD BE IN THE NATURE OF REVENUE EXPENDITURE. FURTHER, THE LEARNED COMMISSIONER (APPEALS) OBSERVED, SINCE SIMILAR PAYMENT MADE TOWARDS DTT SUBS CRIPTION WAS NOT DISALLOWED IN ANY OF THE EARLIER OR SUBSEQUENT ASSESSMENT YEARS, IT SHOULD NOT BE DISALLOWED IN THE IMPUGNED ASSESSMENT YEAR. ACCORDINGLY, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 20. THE LEARNED DEPARTMENTAL REPRESENTATIV E RELYING UPON THE OBSERVATIONS OF THE ASSESSING OFFICER SUBMITTED, SINCE THE ASSESSEE HAS PAID THE DTT SUBSCRIPTION FOR AVAILING A BRAND IT IS A CAPITAL EXPENDITURE AS THE ASSESSEE WOULD BE DERIVING ENDURING BENEFIT. THUS, HE SUBMITTED, THE DEDUCTION CLAI MED BY THE ASSESSEE CANNOT BE ALLOWED. 21. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, ASSESSEE MAKES THE DTT SUBSCRIPTION ANNUALLY ON THE BASIS OF TURNOVER ACHIEVED. HE SUBMITTED, NEITHER IN ANY EARLIER ASSESSMENT YEAR NOR IN THE SUBSEQUENT ASSESSM ENT YEAR SUCH DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER THOUGH THE ASSESSEE HAS BEEN CONTRIBUTING TOWARDS THE DTT SUBSCRIPTION. IN THIS CONTEXT, HE DREW OUR ATTENTION TO THE ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) OF THE ACT IN RESPECT OF ASSESS MENT YEARS 2006 07, 2009 ITA NO. 4 8 9 7 /MUM/201 7 M/S DELOITTE TOUCHE TOHMATSU INDIA PVT. LTD 9 10, 2010 11 AND 2011 12. HE SUBMITTED, THOUGH, THE ASSESSING OFFICER DISALLOWED THE DTT SUBSCRIPTION IN ASSESSMENT YEAR 2008 09 ALSO, HOWEVER, LEARNED COMMISSIONER (APPEALS) DELETED SUCH DISALLOWANCE. THUS, HE SUBMITTED, APPLYING R ULE OF CONSISTENCY ALSO, ASSESSEES CLAIM HAS TO BE ALLOWED. WITHOUT PREJUDICE TO THE AFORESAID SUBMISSIONS, LEARNED AUTHORISED REPRESENTATIVE SUBMITTED, IN ANY CASE OF THE MATTER, THE ASSESSEE HAS NOT ACQUIRED ANY BRAND BUT HAS MADE SUBSCRIPTION FOR UTILI ZING IT. THEREFORE, IT CANNOT BE SAID THAT THE AMOUNT PAID BY THE ASSESSEE IS A CAPITAL EXPENDITURE INCURRED FOR ACQUIRING A BRAND FOR GOODWILL. IN SUPPORT OF SUCH CONTENTION, HE RELIED UPON THE FOLLOWING DECISIONS: I ) DCIT, V/S HINDUSTAN ZINC LTD., [1972] 84 ITR 277 (SC); AND II ) HARRISONS MALAYALAM LTD. V/S ACIT, [2008] 19 SOT 363 (COCHIN) 22. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED MATERIAL ON RECORD. IT IS OBSERVED THAT THE ASSESSEE HAS BEEN PAYING THE DTT SUBSCRIPTION ANNUALLY FOR UTILIZING THE D ELOITTE BRAND ALONG WITH CERTAIN TECHNOLOGY. THERE IS NOTHING ON RECORD TO SUGGEST THAT ASSESSEE HAS ACQUIRED THE BRAND OR THE TECHNOLOGY FOR GOOD. THEREFORE, IT CANNOT BE SAID THAT THE ASSESSEE HAS INCURRED THE EXPENDITURE FOR ACQUIRING AN ASSET OF ENDURI NG BENEFIT. ON THE CONTRARY, AS RIGHTLY OBSERVED BY THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAS PAID THE SUBSCRIPTION TO RUN AND MANAGE ITS BUSINESS ACTIVITY MORE EFFECTIVELY, EFFICIENTLY AND PROFITABLY. MOREOVER, IT IS A FACT ON RECORD THAT SIMIL AR SUBSCRIPTION WAS PAID BY THE ASSESSEE IN THE PRECEDING AS WELL AS SUCCEEDING ASSESSMENT YEARS. NOTABLY, ON VERIFYING THE SCRUTINY ASSESSMENT ORDERS PASSED UNDER SECTION 143(3) OF THE ACT FOR THE ASSESSMENT YEARS 2006 07, 2009 10 AND 2010 11 AND 2011 12, COPIES OF WHICH HAVE BEEN SUBMITTED BEFOR US, IT IS OBSERVED THAT NO SUCH DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER IN THE AFORESAID ASSESSMENT YEARS. THERE BEING NO DIFFERENCE IN FACTS BROUGHT TO OUR NOTICE IN THE IMPUGNED ASSESSMENT YEAR, APPLYING THE RULE OF CONSISTENCY ALSO, THE EXPENDITURE CLAIMED BY THE ASSESSEE HAS TO BE ALLOWED, SINCE, THE NATURE OF EXPENDITURE AS REVENUE HAS BEEN ACCEPTED BY THE DEPARTMENT IN ALL OTHER ASSESSMENT YEARS EXCEPT THE IMPUGNED ASSESSMENT YEAR. THAT BEING THE CASE, WE UPHOLD THE DECISION OF THE LEARNED COMMISSIONER (APPEALS) ON THE ISSUE. GROUND RAISED IS DISMISSED. RESPECTFULLY FOLLOWING THE SAID DECISION OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR ASST YEAR 2007 - 08, THE GROUND NO. 4 RAISED BY THE REVENUE IS DISM ISSED. ITA NO. 4 8 9 7 /MUM/201 7 M/S DELOITTE TOUCHE TOHMATSU INDIA PVT. LTD 10 5. THE GROUND NOS. 5 & 6 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON 03/05 /201 9 S D/ - ( C.N. PRASAD ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 03/05 /201 9 PRAKASH KUMAR MISHRA, SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//