DCIT 5(2), MUMBAI V. OM SHIPPING AGENCIES P.LTD, MUMBAI

ITA 4931/MUM/2012

• Counselvise Citation: 493119914 RSA 2012
• Duration Of Justice: 2 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Business expenditure; Question of law
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . , , , BEFORE SHRI I.P. BANSAL , JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO .4931 / MUM./ 2012 ( / ASSESSMENT YEAR : 2009 10 ) DY. COMMISSIONER OF INCOME TAX RANGE - 5(2), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. / APPELLANT V/S M/S. OM SHIPPING AGENCIES PV T. LTD. AFFINWALA BUILDING, 3 RD FLOOR, FLAT NO.1 292, SHAHID BHAGAT SINGH ROAD, FORT MUMBAI 400 001 PAN AAACO0504A .... / RESPONDENT / REVENUE BY : SHRI PREMANAND J. / ASSESSEE BY : S HRI HARI S. R AHEJA / DATE OF HEARING 07.05.2015 / DATE OF ORDER 07.05.2015 O R D E R . / PER I.P. BANSAL, J.M. TH IS APPEAL IS FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER DATED 7 TH MAY 2012 , PASSED BY THE COMMISSIONER (APPEALS) - 9 , M/S. OM SHIPPING AGENCIES PVT. LTD. 2 MUMBAI, FOR THE ASSESSMENT YEAR 20 09 10 . FOLLOW ING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: - WHETHER ON FACTS, CIRCUMSTANCES AND IN THE LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITIO N OF ` 39,06,006 OUT OF VARIOUS EXPENSES LIKE CARGO, BROKERAGE AND COMMISSION, BUSINESS PROMOTION, INSURANCE AND LEGAL EXPENSES, ETC.? 2. AT THE OUTSET, IT WAS SUBMITTED BY THE LEARNED COUNSEL THAT THIS ISSUE IS COVERED BY THE EARLIER ORDER OF THE TRIBUNAL WHICH HAS BEEN FOLLOWED BY THE LEARNED CIT(A) AND THE RELIEF HAS BEEN GRANTED. REFERENCE WAS MADE TO THE ORDER OF THE TRIBUNAL WHICH IS DATED 15 TH JULY 2011, PASSED IN ITA NO.16/MUM./2009 AND ITA NO.952/MUM./ 2009, IN RESPECT OF THE ASSESSMENT YEAR 2005 06 AND A COPY OF WHICH IS FILED AT PAGE 1 TO 12 OF THE PAPER BOOK. THE SAME ORDER WAS FOLLOWED IN RESPECT OF THE ASSESSMENT YEAR 2007 09 VIDE ORDER DATED 22 ND FEBRUARY 2012 IN ITA NO.5765/MUM./2010 AND ITA NO.6202/MUM./ 2010 AND COPY OF THIS ORDER IS PLACED AT PAGE 13 AND 14 OF THE PAPER BOOK. IT WAS FURTHER SUBMITTED THAT THE AFOREMENTIONED ORDER OF THE TRIBUNAL WAS UPHELD BY THE HIGH COURT VIDE ORDER DATED 19 TH MARCH 2014 IN ITA NO.397/MUM.2012, A COPY OF THIS ORDER WAS PLACED ON OUR RECORD AND WAS ALSO GIV EN TO THE LEARNED DEPARTMENTAL REPRESENTATIVE. 3. IT WAS FURTHER SUBMITTED THAT IN RESPECT OF THE ASSESSMENT YEAR 2011 12, THE ASSESSING OFFICER HIMSELF HAS ACCEPTED SUCH CLAIM OF THE M/S. OM SHIPPING AGENCIES PVT. LTD. 3 ASSESSEE AND D ID NOT MAKE ANY ADDITION. REFERENCE IN THIS REGARD WAS MADE T O THE ASSESSMENT ORDER DATED 30 TH JANUARY 2014, PASSED UNDER SECTION 143(3) OF THE ACT. A COPY OF THE ORDER WAS PLACED ON OUR RECORD AND WAS ALSO GIVEN TO THE LEARNED DEPARTMENTAL REPRESENTATIVE. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT CONTROVERT TO THE AFOREMENTIONED POSITION EXPLAINED BY THE LEARNED COUNSEL. 5. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOTH THE PARTIES, WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFOREMENTIONED DECISION OF THE TRIBUNAL WHICH WAS APPROVED BY THE HON'BLE BOMBAY HIGH COURT AND THE ASSESSING OFFICER HIMSELF HAS ADMITTED THIS ISSUE IN FAVOUR OF THE ASSESSEE AS NO ADDITION HAS BEEN MADE BY HIM IN RESPECT OF THE ASSESSMENT YEAR 2011 12. FOR THE SAKE OF COMPLETENESS, PARA 10, 11 AND 12 OF THE AFOR EMENTIONED ORDER OF THE TRIBUNAL DATED 15 TH JULY 2011 IS REPRODUCED BELOW: 10. WE HEARD BOTH THE PARTIES. WE FIND THAT THE ASSESSEE HAS REGULARLY BEEN FOLLOWING THE METHOD OF ACCOUNTING FROM 1998 99 AND BY THE SCRUTINY ASSESSMENTS IN THE TWO ASSESSMENT YEARS IN THE PAST THE DEPARTMENT HAS ACCEPTED THE CLAIM OF THE ASSESSEE. WE ALSO FIND THAT THE EXPENSES OF CONCORD ARE FIXED AS PER THE MANIFEST SIGNED BETWEEN THE TWO PARTIES AND THEREFORE THE ASSESSEES SHARE OF EXPENSES IS ALSO BE TO DETERMINED BY THE T ERMS OF THE MANIFEST FROM WHICH IT CLEARLY SHOWS THAT OTHER EXPENSES ARE BORNE BY EACH PARTY INDEPENDENTLY. WE ALSO FIND THAT ALL SUPPORTING VOUCHERS HAVE BEEN PRODUCED AND COPIES HAVE BEEN FILED BY THE A.O. AND NO INCOME HAS BEEN ESTIMATED THOUGH BOOKS WE RE REJECTED WHICH SHOWS THAT THE ACCOUNTS OF THE ASSESSEE AND CONCORD HAVE BEEN ACCEPTED. FURTHER, THE LD. M/S. OM SHIPPING AGENCIES PVT. LTD. 4 CIT(A) ALLOWED THE PART OF THE EXPENSES TO THE EXTENT OF REIMBURSEMENT. 11. FURTHER MORE BOTH THE A.O. AND THE LD. CIT(A) HAVE NOT STATED THAT THE E XPENSES ARE NOT GENUINE AND THERE IS NO ALLEGATION AS TO ANY CASH RECEIPTS. ALL RECEIPTS ARE THROUGH PROPER BANKING CHANNELS. THE ACCOUNTS ARE AUDITED THE METHOD OF ACCOUNTING CERTIFIED AS PROPER AS PER ACCOUNTING STANDARD. THE ONLY POINT OF CONSIDERATION IS WHETHER WHILE INTERPRETING THE CLAUSES OF AGREEMENT IT SHOULD BE TAKEN AS ALL THE EXPENSES AND NOT ONLY THOSE EXPENSES AS PER THE MANIFEST. THE VERY FACT THAT THE ENTIRE EXPENSES HAVE NOT BEEN CLAIMED BY THE ASSESSEE WOULD SHOW THAT THE ASSESSEE HAS G ONE BY THE TERMS OF THE AGREEMENT AND CLAIMED AS REIMBURSEMENT ONLY EXPENSES OF ` 10830728/ . WITH RESPECT TO ALL OTHER EXPENSES WHICH THE ASSESSEE HAS TO BEAR IT BY HIMSELF, WE ARE OF THE OPINION THAT THEY ARE BUSINESS EXPENSES WHICH WOULD BE NECESSARY IN THE COURSE OF THE BUSINESS AND THEREFORE REVENUE IN NATURE AND IS ALLOWABLE. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED AND THE REVENUES APPEAL IS DISMISSED. 6. IT WILL BE ALSO RELEVANT TO REPRODUCE THE OBSERVATIONS OF T HEIR LORDSHIP S OF THE HON'BLE BOMBAY HIGH COURT IN THE AFOREMENTIONED DECISION DATED 19 TH MARCH 2014. THE COMMISSIONER OF INCOME TAX (APPEALS) HAD ALLOWED THE RESPONDENT ASSESSEES APPEAL IN PART. THE RESPONDENT ASSESSEE APPEALED TO THE TRIBUNAL AND URGED THAT THE EX PENSES ARE FIXED AS PER THE MANIFEST SIGNED BETWEEN THE TWO PARTIES. THEREFORE, THE ASSESSEES QUESTION OF EXPENDITURE IS ALSO TO BE DETERMINED BY THE TERMS OF THIS MANIFEST. THE OTHER EXPENSES ARE BORNE BY EACH PARTY INDEPENDENTLY. IT IS ONLY SUCH EXPENSE S WHICH HAVE BEEN INCURRED AND FOR WHICH REIMBURSEMENTS HAVE BEEN CLAIMED WITH SUPPORTING DOCUMENTS THAT THE ASSESSEE APPROACHED THE TRIBUNAL. FOR THE REASONS THAT ARE ASSIGNED BY THE TRIBUNAL AT PARAGRAPHS 10 AND 11 OF THE IMPUGNED ORDER AND RELYING ON TH E FACTUAL MATTERS, WE ARE OF THE OPINION THAT THIS APPEAL DOES NOT RAISE ANY SUBSTANTIAL QUESTION OF LAW. THE A PPEAL IS, THEREFORE, DISMISSED. M/S. OM SHIPPING AGENCIES PVT. LTD. 5 7. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT O N 07.05.2015 SD/ - RAJENDRA ACCOUNTANT MEMBER SD/ - . I.P. BANSAL JUDICIAL MEMBER MUMBAI, DATED : 07.05.2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE ; (2) THE REVENUE; (3) THE CIT(A ) ; (4) THE CIT, MU MBAI CITY CONCERNED ; (5) THE DR, ITAT, MUMBAI ; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASS ISTANT REGISTRAR ITAT, MUMBAI