JSW INFRASTRUCTURE LTD, MUMBAI V. ADDL CIT RG 5(2), MUMBAI

ITA 5524/MUM/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1417 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 09-09-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV GUBGOTRA
• Keywords: Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5524/M/2016 ASSESSMENT YEAR: 2011-12 M/S. JSW INFRASTRUCTURE LTD., 5A JINDAL MANSION, DR. G. DESHMUKH MARG, MUMBAI 400 034 PAN: AABCJ 6712D VS. ADDL. CIT, RANGE-5(2), MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI GAURAV KABRA, A.R. REVENUE BY : SHRI RAJEEV GUBGOTRA, D.R. DATE OF HEARING : 01.10.2018 DATE OF PRONOUNCEMENT :14.11.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 19.07.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSES SING OFFICER IN NOT ALLOWING A SUM OF RS.26,11,197/- CLAIMED AS PRELIMINARY EXPEND ITURE U/S.35 OF THE INCOME TAX ACT'1961, WITHOUT CONSIDERING THE FACTS AND CIRCUMS TANCES OF THE CASE. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING THE LEARNED ASSESSING OFFICE R TO WITHDRAW THE TDS CREDIT CLAIMED BY THE APPELLANT ON RS.2.00 CRORES, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NO.5524/M/2016 M/S. JSW INFRASTRUCTURE LTD. 2 3) THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER OR DELETE THE SAID GROUND OF APPEAL. 3. IN THE FIRST GROUND OF APPEAL THE ASSESSEE HAS C HALLENGED THE CONFIRMATION OF ADDITION OF RS.26,11,197/- BY L D. CIT(A) AS MADE BY THE AO UNDER SECTION 35D TOWARDS PRELIMINAR Y EXPENSES. 4. THE FACTS IN BRIEF ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTICED THAT ASSESSEE HAS CLAIME D RS.26,11,197/- UNDER SECTION 35D OF THE ACT AND ACC ORDINGLY CALLED UPON THE ASSESSEE TO FURNISH THE DETAILS THE REOF. THE LD. A.R. VIDE LETTER DATED 24.02.14 STATED THAT EXPENSE S WERE IN THE NATURE OF PRELIMINARY EXPENSES AND INCURRED IN CONN ECTION WITH ISSUE OF SHARE CAPITAL AND CLAIMED IN TERMS OF TH E DECISION OF HONBLE SUPREME COURT IN THE CASE OF PUNJAB STATE I NDUSTRIAL DEVELOPMENT CORPORATION LTD. VS. CIT REPORTED IN 22 5 ITR 792 (SC) AND ALSO BROOK BOND INDIA LTD. VS. CIT. THE A O, HOWEVER, CAME TO THE CONCLUSION THAT EXPENDITURE INCURRED QU A ISSUE OF SHARE CAPITAL IS NOT ALLOWABLE AND ACCORDINGLY ADDE D THE SAME TO THE INCOME OF THE ASSESSEE. 5. THE LD. CIT(A) ALSO CONFIRMED THE SAME AFTER CON SIDERING THE SUBMISSIONS AND CONTENTIONS RAISED BY THE ASSES SEE DURING THE APPELLATE PROCEEDINGS. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RELEVANT MATERIAL ON RECORD INCLUDING THE IMPUGNED ORDER, WE FIND THAT THE EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE IN CONNECTION WITH EXPANSION OF BUSINESS IN CONNECTION WITH ISSUE OF FURTHER SHARE CAPITAL. WE ALSO FIND THAT IN THE EARLIER YE AR AND THE ITA NO.5524/M/2016 M/S. JSW INFRASTRUCTURE LTD. 3 SUBSEQUENT YEAR WHEREIN THE PROCEEDINGS OF ASSESSME NT WERE FINALIZED UNDER SECTION 143(3) OF THE ACT, NO SUCH DISALLOWANCE AS IS APPARENT FROM THE COPIES OF THE ASSESSMENT OR DERS FOR A.Y. 2012-13 AND 2013-14 BEFORE US. THE CASE OF THE ASS ESSEE IS ALSO SUPPORTED BY THE DECISIONS OF HONBLE GUJARAT HIGH COURT IN THE CASE OF PR. CIT(A) VS. DEEP INDUSTRIES LTD. (20 16) 67 TAXMANN.COM 6 (GUJ.) AND PRINCIPAL CIT(A) VS. M/S. QUEST INVESTMENT ADVISORS PVT. LTD. IN ITA NO.280 OF 2016 ORDER DATED 28.06.2018. IN THE CASE OF PR. CIT(A) VS. DEEP IND USTRIES LTD. (SUPRA) THE HONBLE HIGH COURT HAS HELD THAT SINCE THE CLAIM IN RESPECT OF EXPENSES INCURRED IN CONNECTION WITH SHA RE ASSESSEE HAS BEEN GRANTED BY THE AO IN THE PREVIOUS YEAR, SU CH CLAIM COULD NOT BE DISALLOWED SUBSEQUENTLY WITHOUT DISTUR BING THE DECISION IN THE INITIAL YEAR. SIMILARLY, THE JURIS DICTIONAL HIGH COURT IN THE CASE OF PRINCIPAL CIT(A) VS. M/S. QUES T INVESTMENT ADVISORS PVT. LTD. (SUPRA) HAS HELD THAT IF A CLAIM IS ALLOWED IN THE EARLIER YEARS AND THE ASSESSEE HAS CLAIMED IN T HE SIMILAR EXPENSES IN THE CURRENT YEAR, THE SAME CAN NOT BE D ISALLOWED IN THE CURRENT YEAR UNLESS THERE IS A CHANGE IN LAW OR CHANGE IN FACTS AS COMPARED TO THE FACTS IN THE EARLIER YEAR AND THEREFORE THE PRINCIPLE OF CONSISTENCY FOLLOWED BY THE TRIBUN AL IN ALLOWING THE RESPONDENTS APPEAL CAN NOT BE FAULTED WITH AS IT IS IN ACCORDANCE WITH APEX COURT DECISION IN THE CASE OF BHARAT SANCHAR NIGAM LTD. CONSIDERING ALL THE FACTS AS ST ATED HEREINABOVE, WE FIND THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE CURRENT YEAR AS CO MPARED TO THE PROCEEDING AND SUBSEQUENT YEARS, WE, THEREFORE, ARE INCLINED TO SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE DISALLOWANCE. ITA NO.5524/M/2016 M/S. JSW INFRASTRUCTURE LTD. 4 7. THE ISSUE RAISED IN GROUND NO.2 IS AGAINST THE O RDER OF LD. CIT(A) DIRECTING THE AO TO WITHDRAW THE TDS CREDIT CLAIMED BY THE ASSESSEE ON THE AMOUNT OF ADVANCE RECEIVED OF RS.2 CRORE. 8. THE FACTS IN BRIEF ARE THAT AO FOUND DURING THE ASSESSMENT PROCEEDINGS AFTER PERUSING THE AIR INFORMATION THAT A SUM OF RS.2,10,46,470/- WAS NOT OFFERED AS INCOME ON WHICH THE ASSESSEE HAS CLAIMED TDS. THE FACTS OF THE CASE AR E THAT THE ASSESSEE RECEIVED ADVANCE FROM A GROUP CONCERN JSW JAIGARH PORT LTD. WHICH WAS LATER REFUNDED TO THE SISTER CO NCERN AS THE WORK FOR WHICH IT WAS RECEIVED COULD NOT BE EXECUTE D. THE AO ADDED THE AMOUNT TO THE INCOME OF THE ASSESSEE ON T HE GROUND THAT SINCE THE ASSESSEE HAS CLAIMED CREDIT OF TDS I N HIS RETURN INCOME, THIS AMOUNT NEEDS TO BE ADDED TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER: 8.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE SUBMISSIONS OF THE LD. A.R. FROM THE FACTS IT IS EVIDENT THAT THE APP ELLANT HAS RECEIVED TRADE ADVANCE FROM JSW JAIGARH PORT LTD., THE GROUP CONCERN, AN A MOUNT OF RS.2,10,46,470/- ON VARIOUS DATES TILL 30.12.2010 AFTER THE AMOUNT BEIN G SUBJECTED TO TDS. THE APPELLANT HAS ALSO CLAIMED CREDIT FOR TDS ON THE SA ID AMOUNT. THIS AMOUNT SHOULD BE TAKEN AS INCOME OF THE APPELLANT FURTHER YEAR, A S WAS HELD BY THE AO - FIRSTLY, THE APPELLANT HAS AVAILED TDS CREDIT ON THE AMOUNT TAKE N AS ADVANCE; SECONDLY, NO DETAILS WITH REGARD TO THE EXACT REASONS FOR TAKING THE ADVANCE AND RETURNING THE SAME WAS GIVEN; THIRDLY, THE DETAILS SHOWING THAT T HE AMOUNT RECEIVED WAS TOWARDS TRADE ADVANCE OF FINAL SALE CONSIDERATION, WAS NOT FURNISHED BEFORE ME. HOWEVER, AS THE ADVANCE RECEIVED WAS PAID BACK TO THE EXTENT OF RS.2,00,00,000/- ON 19/1/2011 DUE TO ALLEGED NON-FULFILLMENT OF TRADE O BLIGATION, TO THAT EXTENT IT WILL NOT FORM PART OF INCOME OF THE APPELLANT COMPANY. T HEREFORE, THE AO IS DIRECTED TO REDUCE RS.2,00,00,000/- FROM RS.2,10,46,470/-. THE BALANCE OF RS.10,46,470/-, HOWEVER, SHOULD BE TAKEN AS INCOME FOR THE YEAR AS THE SAME WAS STILL RETAINED BY THE APPELLANT AND TDS CREDIT WAS AVAILED. FURTHER, AS THE APPELLANT HAS ALREADY AVAILED THE CREDIT FOR THE ENTIRE ADVANCE RECEIVED OF RS.2,10.46,470/-, THE AO IS DIRECTED TO WITHDRAW THE TDS CREDIT CLAIMED BY THE APPELLANT ON RS. 2.00 CRORES. THE GROUND IS PARTLY ALLOWED. 9. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL AS PLACED BEFORE US, WE OBSERVE THAT THE ADVANCE RECEI VED BY THE ITA NO.5524/M/2016 M/S. JSW INFRASTRUCTURE LTD. 5 ASSESSEE OF RS.2,10,46,470/- FROM SISTER CONCERN WA S REFUNDED ON ACCOUNT OF NON FULFILLMENT OF THE TRADE OBLIGATI ONS. THE ASSESSEE, HOWEVER, CLAIMED THE TDS DEDUCTED ON THE SAID ADVANCE AS CREDIT IN THE RETURN INCOME. WE ARE NOT IN AGREEMENT WITH THE FINDING OF THE LD. CIT(A) THAT T DS CREDIT PROPORTIONATE TO THE ADVANCE REFUNDED TO RS.2 CRORE SHOULD BE WITHDRAWN. IN OUR OPINION, THE ASSESSEE HAS TO BE GIVEN CREDIT FOR THAT ENTIRE TDS REGARDLESS OF THE FACT THAT ASS ESSEE HAS RETURNED RS.2 CRORE TO THE SISTER CONCERN. WE, THE REFORE, ARE NOT IN AGREEMENT WITH THE CONCLUSION DRAWN BY THE LD. C IT(A) ON THIS ISSUE AND ACCORDINGLY SET ASIDE THE ORDER OF L D. CIT(A) AND DIRECT THE AO TO ALLOW THE CREDIT OF FULL TDS TO T HE ASSESSEE ON THE AMOUNT OF RS.2 CRORE WHICH REPRESENTED THE ADVA NCE REFUNDED BY LD. CIT(A). HOWEVER NEEDLESS TO SAY THA T THE CORRESPONDING AMOUNT EQUAL TO TDS HAS O BE TREATED AS INCOME OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SPOSED OFF AS STATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 14.11.2018. SD/- SD/- (PAWAN SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14.11.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI ITA NO.5524/M/2016 M/S. JSW INFRASTRUCTURE LTD. 6 THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.