ACIT, Circle-2(2), Bhubaneswar, Bhubaneswar V. M/s. SRB Consultancy Pvt. Ltd., Bhubaneswar

ITA 504/CTK/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3772 (ITAT-CUTTACK)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-06-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KUNAL SINGH
• Assessee Lawyers: D K MOHANTY
• Keywords: Capital asset; Gift; Business expenditure; Opportunity of being heard; Retrospective amendment; Non-deduction of tax; Reasonable cause
• Section: 201(1)

Judgement Text

1 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 504/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 ACIT, CIRCLE 2(2), BHUBANESWAR VS. M/S. SRB CONSULTANCY PRIVATE LIMITED,5 TH FLOOR, IDCO, TOWER, JANAPATH, BHUBANESWAR. PAN/GIR NO. AAHCS 4167 Q (APPELLANT ) .. ( RESPONDENT ) ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 M/S. SRB CONSULTANCY PRIVATE LIMITED,5 TH FLOOR, IDCO, TOWER, JANAPATH, BHUBANESWAR VS. ACIT, CIRCLE 2(2), BHUBANESWAR PAN/GIR NO. . AAHCS 4167 Q (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI D.K.MOHANTY, AR RE VENUE BY : SHRI KUNAL SINGH, CIT DR DATE OF HEARING : 15 /06 / 2017 DATE OF PRONOUNCEMENT : 16 /06 / 2017 O R D E R PER N.S.SAINI, AM THESE ARE CROSS APPEALS FILED BY THE REVENUE AND ASSESSEE AGA INST THE ORDER OF CIT(A) - II, BHUBANESWAR , DATED 27.8.2013 , FOR THE ASSESSMENT YEAR 2010 - 2011 . 2. FIRST, WE TAKE UP THE APPEAL OF THE REVENUE IN ITA NO.504 /CTK/2013. 2 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 3. IN GROUND NO.1 OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.13,24,16,282/ - MADE BY THE ASSESSING OFFICER BY ADDING BACK 20% OF THE RELEVANT PREVIOUS YEARS INCOME DEFERRED BY THE ASSESSEE TO THE SUBSEQUENT YEAR A ND NOT INCLUDED IN ITS TOTAL INCOME. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE GROSS RECEIPTS SHOWN IN THE INCOME TAX RETURN AND THAT SHO WN IN THE SERVICE TAX RETURN WAS NOT THE SAME. ON BEING ASKED TO EXPLAIN THE DIF FERENCE, THE ASSESSEE SUBMITTED THAT THE SERVICE TAX HAD NOT BEEN PAID SINCE FINANCIAL YEAR 2003 - 04 AS THERE WAS CONFUSION REGARDING THE NATURE OF RECEIPT AND THE CATEGORY IN WHICH IT WAS TO BE CONSIDERED - WHETHER THE ASSESSEE IS RECEIVING AGAINST SERVICES PROVIDED AS MANAGEMENT CONSULTANT OR NOT. THUS, THE SERVICE TAX PAID WAS BASED ON RECEIPTS SINCE FINANCIAL YEAR 2003 - 04. HOWEVER, IN THE CASE OF INCOME TAX, THE RECEIPTS COVERS ADVANCES RECEIVED IN FINANCIAL YEAR 2008 - 09 ALONGWITH RECEIPTS IN FINANCIAL YEAR 2009 - 2010. IT WAS SUBMITTED THAT IN SELECTED CASES, 80% OF THE RECEIPT IN FINANCIAL YEAR 2009 - 2010 WAS RECOGNISED AS REVENUE FOR THE YEAR AND THE BALANCE 20% OF THE RECEIPT WAS RECOGNISED THE NEXT YEAR I.E. FINANCIAL YEAR 2010 - 2011. THE ACCOUNTS OF THE RELATED PARTIES IN THE LEDGER WERE SUBMITTED IN SUPPORT OF THE DIVERSION OF REVENUE TO THE NEXT FINANCIAL YEAR. THE ASSESSING OFFICER OBSERVED THAT THE LEDGER ACCOUNTS OF THE PARTIES AND THE EXPENDITURE CLAIMED UNDER DIFFERENT HEADS SHOW THAT THEY DO NOT REFLECT PARTY WISE DETAILS OF EXPENDITURE . HE OBSERVED THAT T HOUGH IT 3 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 WAS SUBMI TTED THAT REVENUE RECOGNISATION OF 20 % OF THE RECEIPT WAS DEF ERRED TO THE NEXT YEAR BECAUSE SOME WORK WAS STILL PENDING IN THE SAID PROJECTS, IT COULD NOT BE REASONABLY SUBMITTED AS TO HOW THAT WAS DETERMINED AT 20% FOR ALL THE PROJECTS IN WHICH THE REVENUE RECOGNISATION WAS DEFERR ED . MOREOVER, ENTRIES IN THE LEDGER ACCOUNT SHOW THE PAYMENT IS AGAINST THE FIN AL BILL WHICH INDICATES THAT THE PAYMENT WAS NOT AGAINST ANY ADVANCE CLAIM AND IT WAS UNLIKELY THAT SOME WORK WAS STILL PENDING. THE TERMS OF THE CONTRACT INDICATES THAT BILLS ARE TO BE SUBMITTED ON REACHING SOME STAGE. THE BANK ACCOUNT/LEDGER SHOW THAT THE PAYMENTS RECEIVED ARE WELL BEFORE THE YEAR END AND , THEREFORE, EVEN IF SOME WORK WAS PENDING WHEN THE SERVICE FEES WAS RECEIVED, IT COULD NOT BE HELD GOOD FOR THE YEAR END ALSO. TAKING ALL THESE FACTS INTO CONSIDERATION, THE ASSESSING OFFICER HELD THAT IT WAS REASONABLE TO NOT TO ACCEPT THE SUBMISSION OF THE ASSESSEE REGARDING REVENUE RECOGNISA TION OF 20% OF ITS RECEIPT IS FINANCIAL YEAR 2010 - 11 AND ADDED THE SAID RECEIPT OF RS. 13,24,16,282 TO THE INCOME OF THE ASSESSEE. 5. ON APPEAL, THE CITA(A) ALL OW ED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: HAVING CAREFULLY ANALYSED THE FACTS WHICH HAVE EMERGED THROUGH THE APPEAL PROCEEDINGS, I AM INCLINED TO DECIDE THE CASE ON A PRIMARY ISSUE. I CLEARLY FIND THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS CONTRADICTED HIS OWN STAND. ON THE FIRST PAGE OF THE ORDER, HE HAS CLE ARLY NOTED THAT THE PROFESSIONAL FEES OF THE EARLIER YEAR WHICH WERE DEFERRED TO THE CURRENT YEAR AMOUNTING TO RS. 17,57,51,564/ - HAVE BEEN DUTIFULLY ADMITTED BY THE APPELLATE COMPANY IN ITS INCOME FOR THE CURRENT YEAR. THE ASSESSING OFFICER HAS SIMPLY NOT DISTURBED THIS INCLUSION. IN OTHER WORDS, IN PRINCIPLE, THE ASSESSING OFFICER HAS ACCEPTED THE DEFERMENT OF INCOME FROM F/Y. 2008 - 09 TO F/Y. 2009 - 10 WHEREAS HE IS NOT ACCEPTING THE DEFERMENT OF A SIMILAR PART FROM F/Y 2009 - 10 TO F/Y 2010 - 11. THIS IS A CLE AR CONTRADICTION 4 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 OF STAND BY ITSELF WHICH IS NOT ACCEPTABLE IN LAW. ALTHOUGH IN THE REMAND REPORT, THE AO HAS OPINED THAT THE ACCOUNTING POLICY/PRACTICE FOLLOWED BY AN ASSESSEE MUST HAVE A LEGAL SUPPORT, IN HIS ABOVE MENTIONED ACTION, HE DOES NOT SEEM TO H AVE FOLLOWED THE SAME. SECONDLY, IN THE SECOND PARAGRAPH OF PAGE 2 OF REMAND REPORT, THE AO SAYS THAT THE APPELLANT HAS CONSISTENTLY FOLLOWED A CASH SYSTEM. THIS DOES NOT SEEM TO BE CORRECT, BECAUSE THE EARLIER YEAR'S RECEIPT TO THE EXTENT OF ABOUT RS. 17 CRORE WHICH HAS BEEN ADMITTED BY THE APPELLANT DURING THE CURRENT YEAR AS INCOME, HAS BEEN ACCEPTED BY THE AO. THE APPELLANT HAS BEEN CONSISTENTLY INSISTING ON A 'MATCHING CONCEPT' OF RECOGNITION OF INCOME. THUS, IT IS BEING PLEADED THAT REVENUE SHOULD BE RECOGNIZED PROPORTIONATE TO THE PROGRESS OF A CON SULTANCY PROJECT. USUALLY, IN AS - 7, THE PRINCIPLE IS APPLIED TO MULTI - YEAR PROJECT DEVELOPMENTS. IN A WAY, WHERE BIG MANAGEMENT CONSULTING COMPANIES EXECUTE A SERVICE PROJECT SPREAD OVER MULTIPLE YEARS, IT IS FAIR TO ACCEPT THAT IRRESPECTIVE OF THE DATE OF BILLING OR DATE OF RECEIPT OR PAYMENTS, A SIMILAR CONCEPT FOR RECOGNITION OF REVENUE CAN BE ACCEPTED COMMENSURATE WITH THE STAGE OF THE SERVICE DELIV ERED. APPLIED TO THE INSTANT CASE, THE APPELLANT COMPANY INDEED CLAIMED THAT NOTWI THSTANDING THE BILLINGS ON A CLIENT ON CERTAIN DATES AND RECEIPT OF THE BILLED AMOUNT ON CERTAIN OTHER DATES, THE SERVICES DELIVERED COULD NOT BE COMPLETED STRICTLY BY THE LAST DATE OF BILLING OR RECEIPTS OF PAYMENTS. ACCORDINGLY, THE APPELLANT COMPANY CHOOSES TO FOLLOW A CONSISTENT SYSTEM FOR RECOGNIZING REVENUE ON MATCHING CONCEPT FOR RECOGNITION OF REVENUE. THIS PRINCIPLE HAS BEEN REGULARLY FOLLOWED AND CAN BE VIEWED AS AN ACCEPTED ACCOUNTING METHOD. WHEREAS ON THE PRINCIPLE ITSELF, I HAVE NO OBJECTION, IT WAS CLEAR TO ME THAT IT WAS INCUMBENT ON THE APPELLANT COMPANY TO PROVE TO THE AO THAT INDEED IN ALL THE CONCERNED CASES WHERE REVENUE IS DEFERRED, THE PRINCIPLE HAS BEEN ACTUALLY FOLLOWED. THE APPELLANT WAS THEREFORE DIRECTED TO FURNISH ALL RELEVANT EVIDENCES BEFORE THE AO AND THE AO WAS SPECIFICALLY DIRECTED TO EXAMINE APPELLANT'S CLAIM REGARDING THE CONSISTENCY OF THE METHOD FOLLOWED AND WHETHER A PRINCIPLE OF COMM ON THREAD EXISTED. IN MY VIEW, IN THE REMAND REPORT, THE AO HAS NOT BROUGHT OUT PROPER FACTUAL CONCLUSIONS STATING THAT THERE WAS NO BASIS ON WHICH DEFERMENTS OF INCOME HAD BEEN MADE. HOWEVER, BE THAT AS IT MAY, SINCE THE EARLIER YEAR'S DEFERRED INCOME OF ABOUT RS. 17 CRORE HAS BEEN ASSESSED BY THE AO AS THIS YEAR'S INCOME, HE IS NOT ALLOWED TO DENY THE DEFERMENT OF THIS YEAR'S INCOME OF RS. 13 CRORE TO THE NEXT YEAR. ACCORDINGLY, I DIRECT DELETION OF THE ADDITION OF RS. 13,24,16,282/ - . 6. LD D.R. RELIED ON THE ORDER OF THE ASSESSING OFFICER WHEREAS LD A.R. SUPPORTED THE ORDER OF THE CIT(A). 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS ON RECORD, WE FIND THAT LD D.R. COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE CIT(A). WE FIND THAT THE CIT(A) HAS HELD THAT THE ASSESSEE 5 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 HAS IN EARLIER YE A RS DEFERRED INCOME OF RS.17 CRORES WHICH HAS BEEN ASSESSED BY THE ASSESSING OFFICER, THERE WAS NO REASON FOR HIM TO DENY DEFERMENT OF THIS YEARS INCOME OF RS.13 CRORES. THUS, IF THE ASSESSING OFFICER DOES NOT ALLOW DEFERMENT OF INCOME OF RS.13 CRORES OF THIS YEAR, SIMULTANEOUSLY, HE SHOULD NOT TAX DEFERRED INCOME OF EARLIER YEAR OF RS.17 CRORES. WE ARE OF THE CONSIDERED VIEW THAT THE ASSESS E HAS BEEN FOLLOWING THIS METH OD OF SHOWING INCOME FOR INCOMPLETE SERVICE PROJECTS AND OVER A LONG PERIOD OF TIME, IT IS REVENUE NEUTRAL AND HENCE CAUSE NO LOSS OF REVENUE TO THE DEPARTMENT. HENCE, WE UPHOLD THE FINDINGS OF THE CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 8. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.6,58,488/ - ON ACCOUNT OF DISALLOWANCE OF LOSS ON SALE OF FIXED ASSETS. 9. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOU ND THAT THE ASSESSEE HAS CLAIMED LOSS ON SALE OF ASSETS OF RS.6,58,488/ - . HE OBSERVED THAT THE LOSS ON SALE OF DEPRECIABLE ASSETS IS NOT REVENUE IN NATURE, FOR WHICH EXPENSES CLAIMED BY THE ASSESSEE IS NOT ALLOWED U/S.37 OF THE ACT. HENCE, HE ADDED RS.6, 58,488/ - TO THE INCOME OF THE ASSESSEE. 10. ON APPEAL, THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING THAT WHEN THE LOSS PERTAINING TO DEPRECIABLE ASSETS, THE ASSESSING OFFICER SHOULD HAVE EXCLUDED RS.51,876/ - WHICH PERTAINED TO 6 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 ASSESSEES GAIN ON SALE OF ASSETS, WHICH WAS OFFERED FOR TAXATION UNDER THE HEAD OTHER INCOME. HE OBSERVED THAT THE ASSESSING OFFICER APPARENTLY MISSED TO SEE THAT A SUM OF RS.51,876/ - WAS REALLY INCLUDED AS A REVENUE INCOME. ACCORDINGLY, THE CIT(A) DIRECTED THE ASSES SING OFFICER TO EXCLUDE THE PROFIT AND LOSS PERTAINING TO TRANSACTIONS OF CAPITAL ASSETS SUBJECT TO PROVISIONS OF SECTION 41(2) OF THE ACT. 10. BEING AGGRIEVED BY THE SAID ORDER, THE REVENUE IS IN APPEAL BEFORE US. 11. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS ON RECORD, WE FIND THAT THE CIT(A) WHILE ADJUDICATING THIS ISSUE HAS NOT CONSIDERED THE PROVISIONS OF SECTION 43 (6) OF THE I.T.ACT, 1961 AND SECTION 50 OF THE I.T.ACT, 1961. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSU E REQUIRES TO BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATING THE SAME AFRESH CONSIDERING THE PROVISIONS OF SECTION 43(6) OF THE ACT AND SECTION 50 OF THE ACT. WE ORDER ACCORDINGLY. THUS, THIS GROUND OF THE REVENUE IS ALLOWED FOR STATIS TICAL PURPOSES. 12. IN GROUND NO.3 OF THE APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING 20% OF THE CLAIM OF RS.1,49,000/ - ADDED BY THE ASSESSING OFFICER ON ACCOUNT OF FILING FEES U/S.35D OF THE ACT. 13. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE AUTHORIZED SHARE CAPITAL OF THE ASSESSEE COMPANY IS ENHANCED FROM RS.2,00,000/ - TO RS.100,00,000/ - DURING THE RELEVANT PREVIOUS YEAR. 7 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 LEDGER ACCOUNT OF FEES AND SUBSCRIPTION SHOWS THAT THE ASSES SEE HAS CLAIMED DEDUCTION OF EXPENSES AT RS.1,49,000/ - TOWARDS ROC FILING EXPENSES WHICH RELATED TO SUCH ENHANCEMENT IN AUTHORIZED SHARE CAPITAL. THIS EXPENSE BEING CAPITAL IN NATURE IS NOT AN ALLOWABLE BUSINESS EXPENSE U/S.37 OF THE ACT AND HENCE, THE D EDUCTION OF RS.1,49,000/ - WAS DISALLOWED BY THE ASSESSING OFFICER. 13. ON APPEAL, THE CIT(A) OBSERVED THAT LD A.R. OF THE ASSESSEE HAS ARGUED BEFORE HIM THAT IF THE AMOUNT WAS NOT ALLOWED U/S.37 OF THE ACT, 20% OF THE CLAIM SHOULD BE ALLOWED U/S.35D OF T HE ACT AND, THEREFORE, DIRECTED THE ASSESSING OFFICER TO AMORTISE 20% OF THE CLAIM U/S.35D OF THE ACT. 14. BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 15. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS ON RECORD, WE FIND THAT AS PER SECTION 35D(1) OF THE ACT, WHERE AN ASSESSEE BEING AN INDIAN COMPANY OR A PERSON (OTHER THAN A COMPANY ) WHO IS RESIDENT IN INDIA, INCURS, AFTER THE 31 ST DAY OF MARCH, 1970, ANY EXPENDITURE SPECIFIED IN SUB - SECTION (2) BEFORE THE COMMENCEMENT OF HIS BUSINESS OR AFTER THE COMMENCEMENT OF HIS BUSINESS, IN CONNECTION WITH THE EXTENSION OF HIS UNDERTAKING OR IN CONNECTION WITH HIS SETTING UP A NEW UNIT, THE A SSESSEE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS 8 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 SECTION, BE ALLOWED A DEDUCTION OF AN AMOUNT EQUAL TO ONE - TENTH OF SUCH EXPENDITURE FOR EACH OF THE TEN SUCCESSIVE PREVIOUS YEARS BEGINNING WITH THE PREVIOUS YEAR IN WHICH THE BUSINESS COMMENCES OR, AS THE CASE MAY BE, THE PREVIOUS YEAR IN WHICH THE EXTENSION OF THE UNDERTAKING IS COMPLETED OR THE NEW UNIT CO MMENCES PRODUCTION OR OPERATION. WE FIND THAT THE CIT(A) HAS NOT EXAMINED THE ISSUE FROM THIS ANGLE AND BROUGHT RELEVANT MATERIAL ON RECORD. THEREFORE, W E ARE OF THE CONSIDERED VIEW THAT ISSUE NEEDS TO BE ADJUDICATED AFRESH BY THE CIT(A) CONSIDERING THE PROVISIONS OF SECTION 35 D (1) OF THE ACT AND 35D(2) OF THE ACT. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ISS UE BACK TO HIS FILE FOR ADJUDICATION OF THE ISSUE AFRESH IN THE LIGHT OF THE DISCUSSION MADE HEREINABOVE AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. HENCE, THIS GROUND IS AL LOWED FOR STATISTICAL PURPOSES. 16. GROUND NO.4 OF THE APPE AL READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) WAS NOT JUSTIFIED IN ACCEPTING THE CONTENTION OF THE ASSESSEE AND NOT ACCEPTING THE FINDINGS OF THE AO IN VIOLATION OF RULE 46A. 17. LD D.R. DID NOT PRESS THIS GROUND AND HENCE, THIS GROUND WAS NOT ADJUDICATED UPON. 18. GROUND NO.5 IS GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATION. 19. IN THE RESULT, APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 NOW, WE TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO.566/CTK/2013: 20. THE APPEAL FILED BY THE ASSESSEE IS BARRED BY LIMITATION BY 29 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. 21. THE ASSESSEE HAS FILED CONDONATION PETITION DATED 13.12.2013 SUPPORTED BY AFFIDAVIT FOR CONDONING THE DELAY IN FILING THE APPEAL. 22. AFTER GOING THROUGH THE CONDONATION PETITION, WE FIND THAT THE ASSESSEE HAD REASONABLE CAUSE FOR NOT FILING THE APPEAL WITHIN THE STIPULATED TIME. LD D.R. DID NOT HAVE ANY OBJECT ION FOR CONDONING THE DELAY. WE, THEREFORE, CONDONE THE DELAY OF 29 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL AND ADMIT THE APPEAL FOR HEARING. 23. GROUND NO.1 OF THE APPEAL IS GENERAL IN NATURE AND HENCE, REQUIRES NO SEPARATE ADJUDICATION BY US. 24. IN GROUND NO.2 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.7,87,040/ - MADE BY THE ASSESSING OFFICER. 25. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED TH A T DURING THE YEAR THE ASSESSEE HAS CLAIMED EXPENSES OF RS.7,87,040/ - TOWARDS FINANCE CHARGES TO TATA CAPITAL LIMITED. SINCE EXPENSES ARE NOT TO BE ALLOWED CONSIDERING THE ASSESSEES FAILURE TO DEDUCT TAX AT SOURCES FROM THE INTEREST PAYMENT./CREDIT AS PER PROVISIONS LAID DOWN IN SECTION 194A OF THE ACT, HE DISALLOWED DEDUCTION OF RS.7,87,040/. 10 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 26. ON APPEAL, THE CIT(A) OBSERVED THAT THE ASSESSEE HAS ARGUED THAT THE RECIPIENTS OF THE AMOUNT WERE REPUTED PUBLIC COMPANIES AND WERE ASSESSED TO INCOME TAX. THESE PAYMENTS WERE RECO GNIZED AS REVENUE IN THEIR ACCOUNTS AND DUE TAXES HAD BEEN PAID BY THEM INDEPENDENTLY IN THEIR HANDS AND, THEREFORE, THERE WAS NO NECESSITY OF DISALLOWING THESE PAYMENTS U/S.40(A)(IA) OF THE ACT. THE CIT(A) DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE ON THE GROUND THAT SECOND PROVI SO TO SECTION 201(1) R.W.S. 40(A)(IA) WERE APPLICABLE FROM ASSESSMENT YEAR 2013 - 14. 27. LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES WHEREAS LD A.R. SUBMITTED THAT HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. ANSAL LAND MARK TOWNSHIP (P ) L T D., 377 ITR 635 (DEL), HAS HELD THAT THE SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1ST APRIL 2005. 28. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE ORDERS OF LOWER AUTHORITIES, WE FIND FORCE IN THE SUBMISSIONS OF THE ASSESSEE THAT SECOND PROVISO TO SECTION 40(A)(IA) IS DECLARATORY AND CURATIVE IN NATURE AND HAS RETROSPECTIVE EFFECT FROM 1 ST APR IL 2005 . THEREFORE, RESPECTFULLY FOLLOWING THE SAME WE RESTORE THIS ISSUE BACK TO THE FILE OF THE CIT(A) FOR ADJUDICATION AFRESH AFTER VERIFYING WHETHER THE RECIPIENTS OF THE SAID AMOUNT HAS DISCLOSED THE SAME IN THE IR RETURN OF INCOME AND PAID DUE TAX TH EREON OR NOT. NEEDLESS TO SAY THAT THE CIT(A) SHALL ALLOW ADEQUATE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. HENCE, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 11 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 29. IN GROUND NO.3 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.2,50,000/ - UNDER THE HEAD ADVERTISEMENT EXPENSES. 30. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS PAID RS.2,50,000/ - TO BHUBANESWAR GOLF CLUB AS DONATION. THE CLAIM OF ADVERTISEMENT NATURE OF DONATION COULD NOT BE PROVED. IT COULD NOT BE EVIDENCED ALSO THAT THE DONATION IS AN ALLOWABLE ONE BECAUSE OF ITS BUSINESS NEXUS. THEREFORE, THE ASSESSING OFFICER DISALLOWED RS.2,5 0,000/ - PAID AS DONATION AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 31. ON APPEAL, THE CIT (A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO ESTABLISH THE ASPECT OF BUSINESS EXPEDIENCY OF THE AMO UNT SPENT. HE OBSERVED THAT THERE IS NO DOUBT THAT CORPORATE DONATIONS ARE GIVEN TO THE PRESTIGIOUS CLUBS EITHER DIRECTLY OR THROUGH SPONSORSHIP BUT THIS DONATION CANNOT BE CONNECTED TO ANY BUSINESS BENEFITS EVENTUALLY OBTAINED BY THE CORPORATES FROM SUCH DONATIONS AND BUSINESS EXPEDIENCY IS NOT PROVED. 32. LD A.R. SUBMITTED THAT THE EXPENDITURE WAS INCURRED ON CONSTRUCTION OF WATER FALL UNDER THE NAME OF SRB WATER FALL OF BHUBANESWAR GOLF CLUB AND THE SAID EXPENDITURE HELPS THE ASSESSEE IN ADVERTISEMENT OF ITS SERVICES BEFORE THE PERSONS WHO VISITS TO CLUB AND, THEREFORE, IT WAS IN THE NATURE OF ADVERTISEMENT AND THE ASSESSEE GETS FUTURE BENEFIT FROM THE SAME. 12 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 33. LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 34. AFTER CONSIDERING THE MATERIALS ON RECORD AND SUBMISSIONS OF BOTH THE PARTIES, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE HAS CLAIMED THIS AMOUNT UNDER THE HEAD ADVERTISEMENT EXPENSES. THE ASSESSEE CLAIMS THAT THIS AMOUNT WAS SPENT ON CONSTRUCTION OF SRB WATER FALL ON WHICH THE NAM E OF THE ASSESSEE IS WRITTEN AND THIS HELPS IN ADVERTISEMENT OF THE ASSESSEE COMPANY OF SERVICES RENDERED BY IT TO PERSONS VISITING THE CLUB AND THEREBY PROCURING NEW BUSINESS. IT IS NOT THE CLAIM OF THE ASSESSEE THAT IT HAS GIVEN DONATION TO THE CLUB. THEREFORE, THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN DISALLOWING DEDUCTION TO THE ASSESSEE. HENCE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND ALLOW RS.2,50,000/ - AS DEDUCTION TO THE ASSESSEE. 35. IN GROUND NO.4 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING RS.11,09,651/ - ON ACCOUNT OF BUSINESS PROMOTION EXPENSES.. 36. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS CLAIME D DEDUCTION FOR AN AMOUNT OF RS.11,09,651/ - UNDER THE HEAD BUSINESS PROMOTION EXPENSES. SINCE THE ASSESSEE FAILED TO EXPLAIN THE NATURE OF EXPENDITURE AND ESTABLISHED THE NEXUS BETWEEN THE PAYMENT AND ASSESSEES BUSINESS, THE ASSESSING OFFICER DISALLOWE D THE DEDUCTION FOR THE SAME. 13 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 37. ON APPEAL, BEFORE THE CIT(A), LD A.R. EXPLAINED THAT THE COMPANY HAD DISTRIBUTED GOLD AND SILVER COINS TO VARIOUS ASSOCIATES WHO WERE REGULARLY HELPING THE COMPANY FOR ARRANGING FINANCES AND OBTAINING VARIOUS APPROVALS. LD A.R. ARGUED THAT THE ASSESSING OFFICER HAS NEVER QUESTIONED THE GENUINENESS OF THE PAYMENTS AND PAYMENTS WERE FOR PERSONAL BENEFITS OF THE DIRECTORS. SINCE THE COINS WERE UNDER A DEFINITE SCHEME FOR PROMOTION OF ASSESSEES BUSINESS, IT SHOULD BE ACCEPT ED AS GENUINE BUSINESS EXPENDITURE. 38. THE CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE OBSERVED THAT THERE WAS NO MATERIAL EVIDENCE SUPPORTING THE CLAIM OF THE ASSESSEE ACTUALLY PURCHASED GOLD AND SILVER COINS WORTH RS.11,09,651/ - AND IF IT DI D, WHETHER AT ALL THE SAME WERE REALLY DISTRIBUTED AS CUSTOMARY GIFTS TO CONNECTED BUSINESS ASSOCIATES. HENCE, HE CONFIRMED THE DISALLOWANCE. 39. BEFORE US, LD A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. 40. LD D.R. RELIED ON THE OR DERS OF LOWER AUTHORITIES. 41. AFTER CONSIDERING THE MATERIALS AVAILABLE ON RECORD AND SUBMISSIONS OF BOTH THE PARTIES, WE FIND THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE LD A.R. OF THE ASSESSEE TO SHOW THAT GOLD AND SILVER COINS WERE DISTRIBUTED T O BUSINESS ASSOCIATES FOR THE BUSINESS PROMOTION OF THE ASSESSEE. IN ABSENCE OF THE SAME, WE FIND NO INFIRMITY IN THE ORDER OF THE 14 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 CIT(A), WHICH IS HEREBY CONFIRMED AND DISMISS GROUND OF APPEAL OF THE ASSESSEE. 42. IN GROUND NO.5 OF THE APPEAL, THE GRIEV ANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.26,000/ - ON ACCOUNT OF BUSINESS PROMOTION EXPENSES. 43. AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE DID NOT MAKE ANY SERIOUS ARGUMENT ON THIS GROUND OF APPEAL DUE TO THE SMA LLNESS OF THE AMOUNT. HENCE, WE DISMISS THIS GROUND OF APPEAL OF THE ASSESSEE. 44. IN GROUND NO.6 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 9,15,361/ - ON ACCOUNT OF EXPENDITURE ON ACCOUNT OF EXPENDITURE INCURRED ON MAINTENANCE AND REPAIR OF LIBRARY HALL OF ICAI. 45. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD INCURRED A SUM OF RS.9,15,361/ - FOR REPAIR AND MAINTENANCE OF LIBRARY HALL OF ICAI. THE ASSE SSING OFFICER OBSERVED THAT SINCE THIS EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE ASSESSEE, HE DISALLOWED DEDUCTION FOR THE SAME. 46. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 47. BEFORE US, LD A.R. RE ITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND LD D.R. RELIED ON THE ORDERS OF LOWER AUTHORITIES. 15 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 48. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THE ASSESSEE HAS SPENT THE AMOUNT OF RS.9 ,15,361/ - ON RENOVATION OF LIBRARY HALL OF ICAI AND HAS CLAIMED THE AMOUNT AS ADVERTISEMENT EXPENSES. LD A.R. EXPLAINED THAT ASSESSEES NAME IS DISPLAYED ON THE LIBRARY HALL WITH THE SERVICES PROVIDED BY THE ASSESSEE. THE CHARTERED ACCOUNTANTS VISITING T HE LIBRARY WHO D O THE PROJECT WORK, THIS SERVES AS AN ADVERTISEMENT OF THE SERVICES OF THE ASSESSEE COMPANY TO THEM AND IN THIS WAY, IT HELPS THE ASSESSEE TO PROCURE NEW BUSINESS. THE REVENUE HAS NOT DOUBTED THE GENUINENESS OF THE PAYMENT. THEREFORE, IN OUR CONSIDERED VIEW, THE EXPENDITURE HELPS THE ASSESSEE IN PROCURING NEW BUSINESS AND SERVES AS AN ADVERTISEMENT OF ITS BUSINESS AND, THEREFORE, INCURRED FOR THE PURPOSES OF BUSINESS OF THE ASSESSEE. HENCE, WE SET ASIDE THE ORDERS OF LOWER AUTHORITIES AND VACATE THE DISALLOWANCE OF R S.9,15,361/ - AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE. 49. IN GROUND NO.7 OF THE APPEAL, THE GRIEVANCE OF THE ASSESSEE IS THAT THE CIT (A) ERRED IN CONFIRMING THE ADDITION OF R S.11,97,000/ - ON ACCOUNT OF EXPENDITURE ON F OREIGN TRAVEL. 50. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS INCURRED RS.11,97,000/ - ON FOREIGN TOUR TO SINGAPORE. THE ASSESSEE EXPLAINED THAT A TEAM HAD GONE TO SINGAPORE ON AN EXPOSURE VISIT WHICH WAS A PROFESSIO NAL NECESSITY FOR THOSE WHO ARE MANAGING THE AFFAIRS OF THE COMPANY. SINCE NO DOCUMENTARY EVIDENCE WAS PROCURED, THE ASSESSING OFFICER DISALLOWED FOR THE SAME. 16 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 51. ON APPEAL, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER OBSERVING THAT IT WAS U NCLEAR WHO WERE THE TEAM MEMBERS, WHAT WERE THEIR ROLES IN THE ASSESSEE COMPANY, WHAT WERE THE EXACT VISIT ITINERARIES AND WHICH KNOWLEDGE CLARIFYING WORKSHOPS, SYMPOSIA AND MEETINGS THEY HAD ATTENDED. SIMILARLY, IT WAS ALSO NOT KNOWN AS TO HOW THIS TOUR WAS LINKED WITH THE SUBSEQUENT AWARD OF THE TOLL WAY PROJECTS TO THE ASSESSEE COMPANY. MERELY FILING THE LEDGER ACCOUNTS COPY OF THE TOUR EXPENSES WOULD NOT ESTABLISH THE BUSINESS EXPEDIENCY OF THE EXPENDITURE. 52. BEFORE US, LD A.R. REITERATED THE SUBMISS IONS MADE BEFORE THE LOWER AUTHORITIES AND LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 53. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT NO EVIDENCE WAS BROUGHT ON RECORD BY LD A.R. TO SHOW THAT THE EXPENDITURE INCURRED ON FOREIGN TOUR FOR THE PURPOSES OF BUSINESS. IN ABSENCE OF THE SAME WE FIND NO GOOD AND JUSTIFIABLE REASON TO INTERFERE WITH THE ORDER OF THE CIT(A), WHICH IS HEREBY CONFIRMED AND DISMISS GROUND OF APPEAL OF THE ASSESSEE. 54. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCE D IN THE OPEN COURT ON 16 /06 /2017 IN THE PRESENCE OF PARTIES. SD/ - SAD/ - ( PAVAN KUMAR GADALE) ( N.S SAINI) JUDICIALMEMBER A CCOUNTANT MEMBER CUTTACK; DATED 16 /06 /2017 17 ITA NO.504/CTK/2013 ITA NO.566/CTK/2013 ASSESSMENT YEAR : 2010 - 2011 B.K.PARIDA, SPS COPY OF THE ORDER FORWARDED TO : BY ORDER, SR.PRIVATE SECRETARY ITAT, CUTTACK 1. THE APPELLANT/REVENUE : ACIT, CIRCLE 2(2), BHUBANESWAR 2. THE RESPONDENT/ASSESSEE: M/S. SRB CONSULTANCY PRIVATE LIMITED,5 TH FLOOR, IDCO, TOWER, JANAPATH, BHUBANESWAR. 3. THE CIT(A) - II, BHUBANESWAR 4. PR.CIT - II, BHUBANESWAR. 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//