HEIDELBERG INDIA P. L;TD, CHENNAI V. DCIT CIR 8(2),

ITA 5549/MUM/2009

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 57767 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-01-2012
• Assessment Year: misc
• Appeal Filed On: 09-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI A BENCH, CHENNAI. BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER & SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 5549/MDS/2009 ASSESSMENT YEAR: 2004-05 M/S. HEIDELBERG INDIA PRIVATE LIMITED, 333, GST ROAD, JAMEEN PALLAVARAM, CHROMPET, CHENNAI 600 044. [PAN: AABCH0615E] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 8(2), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.P.CHIDAMBARAM, ADVOCATE REVENUE BY : SHRI SHAJI P. JACOB, SR. DR DATE OF HE ARING : 09 . 0 1 .201 2 DATE OF PRONOUNCEMENT : 13.01.2012 ORDER PER N.S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A) VIII, MUMBAI DATED 26.06.2009 PASSED IN ASSE SSMENT YEAR 2004-05. SHRI S.P. CHIDAMBARAM, ADVOCATE REPRESENTED ON BEHA LF OF THE ASSESSEE AND SHRI SHAJI P. JACOB, SR. DR REPRESENTED ON BEHA LF OF THE REVENUE. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF INCOME OF ` .43,05,170/- BY DISALLOWING THE AMOUNT FORFEITED BY THE LESSOR UNDER THE LEAVE AND LICENS E AGREEMENT. 3. THE ASSESSING OFFICER OBSERVED FROM NOTES TO AC COUNTS ANNEXED TO I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.5549 5549 5549 5549/M/09 /M/09 /M/09 /M/09 2 THE BALANCE SHEET THAT DURING THE YEAR THE ASSESSEE COMPANY HAD CLAIMED A SUM OF ` .43,07,170/- BEING DEPOSIT FORFEITED BY M/S. BLUE C HIP BUSINESS CENTRE (P) LTD. AFTER ALLOWING OPPORTUNITY TO THE A SSESSEE TO SUBMIT REASONS FOR THE ALLOWABILITY OF THE CLAIM, THE ASSESSING OF FICER HELD THAT THE ASSESSEE HAD ENTERED INTO A LEAVE AND LICENSE AGREEMENT WITH THE LESSOR FOR THE PURPOSE OF WIDENING OF THE BUSINESS, WHICH HAD ENDU RING EFFECT TO THE ASSESSEE AND HENCE DISALLOWED THE DEDUCTION TO THE ASSESSEE. 4. ON APPEAL BY THE ASSESSEE AGAINST THE SAID ORDE R OF THE ASSESSING OFFICER, THE LD. CIT(A) SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AS WELL AS RELIANCE PLACED BY T HE RIVAL SIDES. IN THE INSTANT CASE, THE ASSESSEE CLAIMED DEDUCTION OF ` .43,05,170/- ON ACCOUNT OF FORFEITURE OF PART OF ADVANCE RENT PAID BY THE ASSE SSEE UNDER A LEASE AND LICENSE AGREEMENT FOR AN OFFICIAL PREMISES AT MUMBA I. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE BY OBSERVING A S UNDER: 7.1. IN THE NOTES TO ACCOUNT, IT HAS BEEN MENTION ED THAT DURING THE YEAR THE ASSESSEE COMPANY HAS CLAIMED AN AMOUNT OF ` .43,07,150/- BEING DEPOSIT FORFEITED BY M/S. BLUE CHIP BUSINESS CENTRE (P) LTD. IN THIS REGARD VIDE ORDER SHEET NOTING DATED 26.07.2006, THE ASSES SEE WAS ASKED TO FURNISH THE REASON FOR THE ALLOWABILITY OF THE SAME . IN RESPONSE, THE ASSESSEE COMPANY SUBMITTED AS UND ER: THE COMPANY HAD OBTAINED OFFICE IN MUMBAI ON LEAVE AND LICENSE BASIS FROM M/S. BLUE CHIP BUSINESS CENTRE PVT. LTD, AND HAD PAID ADVANCE RENT OF ` .98,05,170/-. DURING THE LEAVE AND LICENSE PERIOD, THE AGREEMENT WAS CALLED OFF AND AN AMOUNT OF RS.43,05,170/- WAS FORFEITED AND THE REMAINING AMOU NT WAS REFUND BY THE LESSOR. THE ASSESSEE HAS WRITTEN OFF THIS AM OUNT IN ITS ACCOUNTS. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.5549 5549 5549 5549/M/09 /M/09 /M/09 /M/09 3 7.3. THE ASSESSEE COMPANY'S INTENTION BEHIND TAKING THE PROPERTY ON LEASE WAS FOR THE ENDURING BENEFIT OF THE COMPANY A S THE COMPANY HAD NO BRANCH/OFFICE IN MUMBAI AND FOR THE EXPANSION OF TH E COMPANY'S BUSINESS, IT WAS NECESSARY FOR IT TO HAVE AN OFFICE AT THE EC ONOMIC CAPITAL OF INDIA I.E., MUMBAI. FOR THIS VERY PURPOSE, THE ASSESSEE C OMPANY HAD ENTERED INTO AN AGREEMENT WITH M/S. BLUE CHIP BUSINESS CENT RE PVT . LTD., FOR THE LEAVE & LICENSE AND PAID ADVANCE RENT OF ` . 98,05,170/-. HOWEVER, LATER ON FOR THE REASON BEST KNOWN TO THE ASSESSEE, THE A GREEMENT WAS CALLED OFF AND AS SUBMITTED BY THE ASSESSEE COMPANY, ` .43,05,170/- WAS FORFEITED BY THE LESSOR. 7.4. THUS FROM THE ABOVE IT IS EVIDENT THAT THE ASSESSEE COMPANY HAD ENTERED INTO A LEAVE & LICENSE AGREEMENT WITH THE LESSOR FOR THE PURPOSE OF WIDENING OF ITS BUSINESS WHICH WOULD HAVE ENDURING EFFECT TO THE ASSESSEE. HENCE, THE AMOUNT OF ` .43,05,170/- IS HEREBY DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 6. ON APPEAL, THE LD. CIT(A) UPHELD THE DISALLOWAN CE BY OBSERVING AS UNDER: 4.5 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND THE ORDER OF THE AO. FROM THE FACTS OF THE CASE, IT IS NOTICED THAT THE APPELLANT HAS MADE AN AGREEMENT WITH ANOTHER COMPAN Y TO OPEN ITS OFFICE FOR THE EXTENSION OF ITS BUSINESS. DUE TO SOME DISPUTE, THIS AGREEMENT WAS NOT MATURED AND A COURT CASE WAS FILE D. IN THE MEANTIME, THE APPELLANT COMPANY HAS AGREED TO FORFE IT ` .43,05,170/- FOR FINAL SETTLEMENT AND CLAIMED THE D EDUCTION OF THIS AMOUNT IN THE YEAR UNDER CONSIDERATION. THE A.O. HAS DISALLOWED THIS AMOUNT BY HOLDING THAT THE APPELLANT COMPANY HAS EN TERED INTO THIS AGREEMENT FOR THE PURPOSE OF WIDENING OF ITS BUSINE SS WHICH HAD ENDURING EFFECT. THE APPELLANT COMPANY HAS ALSO TAKEN AN ALTERNATE ARGUMENT THAT IF IT IS NOT ALLOWED AS DEDUCTION THEN IT MAY BE TREATED AS BUSINESS LOSS. FROM THE PERUSAL OF THE FACTS OF THE CASE, IT IS NOTICED THAT THE APPELLANT COMPANY HAS CLAIMED TO F INALLY SETTLED THIS DISPUTE BY FORFEITING THE AMOUNT OF ` .43,05,170/- WITH THE LESSOR COMPANY BUT NO EVIDENCE TO PROVE THIS FACT HAS BEEN SUBMITTED BEFORE THE AO OR BEFORE ME. AS IT IS WELL ESTABLISH ED FACT THAT THE ONUS IS ALWAYS ON THE ASSESSEE TO PROVE THE GENUINE NESS OF CLAIM BY SUBMITTING DOCUMENTARY EVIDENCE BEFORE CLAIMING ANY DEDUCTION, HOWEVER, IN THIS CASE, THE APPELLANT HAS FAILED TO SUBMIT ANY EVIDENCE BEFORE THE A.O. OR BEFORE ME TO SUBSTANTIATE ITS CLAIM. THEREFORE, THE CLAIM OF THE APPELLANT COMPANY IS NO T ACCEPTABLE, HENCE, THE ADDITION MADE BY THE A.O. OF ` .43,05,170/- IS UPHELD AND I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.5549 5549 5549 5549/M/09 /M/09 /M/09 /M/09 4 THE GROUND OF APPEAL IS DISMISSED. 7. THE LD. AR SUBMITTED THAT THE LD. CIT(A) ERRED IN OBSERVING THAT THE ASSESSEE HAS NOT FURNISHED ANY EVIDENCE TO ESTABLIS H THE GENUINENESS OF THE FORFEITURE OF ` . 43,05,170/-, EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A). HE SUBMITTED THAT, IN FACT, THE ASS ESSING OFFICER NEVER ENTERTAINED ANY DOUBT ABOUT THE GENUINENESS OF FORF EITURE OF ` .43,05,170/- DURING THE YEAR UNDER CONSIDERATION. HE CONTENDED T HAT AT PAGE NO. 1 TO 3 OF THE PAPER BOOK IS A COPY OF CONSENT TERMS BETWEEN T HE ASSESSEE AND M/S. BLUECHIP BUSINESS PRIVATE LIMITED, WHICH EVIDE NCES FORFEITURE OF ` .43,05,170/-. FURTHER, THE LD. AR SUBMITTED THAT IN VIEW OF THE DECISION IN THE CASES OF IBM WORLD TRADE CORPORATION VS. CIT 186 IT R 412 (BOM) AND CIT VS. TEXTOOL CO. LTD. 135 ITR 200 (MAD), THE FORFEIT URE AMOUNT IS ALLOWABLE AS DEDUCTION TO THE ASSESSEE. 8. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE LOWER AUTHORITIES AND RELIED UPON THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF HASIMARA INDUSTRIES LTD. VS. CIT (230 ITR 9 27 (SC), CIT V. R. CHIDAMBARANATHA MUDALIAR 240 ITR 552 (MAD) AND COCH IN MALABAR ESTATES AND INDUSTRIES LTD. V. CIT [2010] 325 ITR 129 (KER) .. 9. WE FIND THAT THE LD. CIT(A) HAS PROCEEDED ON TH E ASSESSMENT HAT NO EVIDENCE OF THE GENUINENESS OF FORFEITURE AMOUNT OF ` .43,05,170/- WAS FILED BEFORE THE ASSESSING OFFICER. HOWEVER, FROM THE ORD ER OF THE ASSESSING OFFICER, WE FIND THAT THE ASSESSING OFFICER HAS NOT STATED ANYTHING ABOUT THE I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.5549 5549 5549 5549/M/09 /M/09 /M/09 /M/09 5 FILING OF EVIDENCE TO ESTABLISH GENUINENESS OF THE SAID CLAIM BEFORE HIM OR NOT. 10. FROM THE TENOR OF THE ORDER OF THE ASSESSING O FFICER, IT IS OBSERVED THAT THE GENUINENESS OF THE FORFEITURE WAS DOUBTED BY HI M. FURTHER, FROM THE RECORDS, IT IS OBSERVED THAT LEAVE AND LICENSE AGRE EMENT IN RESPECT OF THE OFFICE PREMISES IN QUESTION WAS ENTERED INTO ON 25. 05.1995. AFTER THAT FROM THE RECORDS, IT IS NOT CLEAR AS TO WHETHER POSSESSI ON OF THE OFFICE WAS RECEIVED BY THE ASSESSEE AT ANY TIME OR NOT AND WHE N THE POSSESSION OF THE OFFICE WAS AGAIN DELIVERED BACK AND WHAT WAS THE TR EATMENT OF THE RENT FOR THE PROPERTY FOR THE PERIOD FOR WHICH THE ASSESSEE USED THE PREMISES WAS GIVEN IN THE ACCOUNTS OF THE ASSESSEE. IN VIEW OF T HE ABOVE, NON-AVAILABILITY OF FULL FACTS ON RECORD, IN OUR CONSIDERED OPINION, IT SHALL BE IN THE INTEREST OF THE JUSTICE TO RESTORE BACK THE ISSUE TO THE FILE O F THE ASSESSING OFFICER FOR ADJUDICATION AFRESH AFTER VERIFICATION OF THE FULL FACTS AND AFTER BRINGING ALL RELEVANT DETAILS ON RECORD. FURTHER, THE DECISIONS RELIED UPON BY THE ASSESSEE IN SUPPORT OF ITS CLAIM WERE ALSO NOT CONS IDERED BY THE LOWER AUTHORITIES AND THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE SAME AND THEREAFTER PASS A SPEAKING ORDER. NEEDLESS TO MENTION THAT THE ASSESSING OFFICER SHALL ALLOW REASONABLE OPPORTUNIT Y OF HEARING TO THE ASSESSEE BEFORE ADJUDICATING THE ISSUE AFRESH. WE, THEREFORE SET ASIDE THE ORDERS OF LOWER AUTHORITIES ON THE ISSUE AND ALLOW THE GROUNDS OF THE APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSE. I.T.A. I.T.A. I.T.A. I.T.A. NO. NO. NO. NO.5549 5549 5549 5549/M/09 /M/09 /M/09 /M/09 6 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSE. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 13.01.2012. SD/ - SD/ - (GEORGE MATHAN) JUDICIAL MEMBER (N.S.SAINI) ACCOUNTANT MEMBER CHENNAI, DATED, THE 13.01.2012 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.