M/s Platinum Ventures Ltd., Chandigarh V. DCIT, Chandigarh

ITA 570/CHANDI/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7801 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 16-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Business income; Business expenditure; Corroborative evidences
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 570/CHD/2012 ASSESSMENT YEAR: 2007-08 M/S PLATINUM VENTURES LTD., VS THE DCIT, CHANDIGARH CIRCLE 1(1), CHANDIGARH PAN NO. AADCP6226H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SATISH BANSAL RESPONDENT BY : SHRI N.K. SAINI DATE OF HEARING : 03.07.2012 DATE OF PRONOUNCEMENT : 04.07.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), CHANDIGARH DATED 9.2.2012 RELATING TO ASSES SMENT YEAR 2007-08. 2. GROUND NOS. 1 & 2 OF THE APPEAL READ AS UNDER:- 1. THAT THE ORDER OF THE LD. CIT(A) IS BAD IN LAW AND AGAINST THE FACTS OF THE CASE. 2. (A) THAT THE LD. CIT(A) ERRED IN DISALLOWING LEGITIMATE AND BONAFIDE EXPENDITURE OF RS. 561200/- WHICH HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. 2 (B) THAT THE LD. CIT(A) ERRED IN DISALLOWING BUSINE SS EXPENDITURE OF RS. 561200/- IGNORING THE FACT THAT IT HAS BEEN DULY PAID BY THE ASSESSEE TOWARDS FEASIBILITY STUDY OF LAND THROUGH A/C PAYEE CHEQUE AFTER DUE DEDUCTIO N OF TAX DESPITE THE FACT THAT SUPPORTING EVIDENCE IN TH E FORM OF BILL RAISED BY THE PARTY MENTIONING THE NATURE O F WORK PERFORMED WERE SUBMITTED TO LOWER AUTHORITIES. C) THAT THE LD. CIT(A) HAS ERRED IN DISALLOWING THE EXPENDITURE SIMPLY ON THE BASIS THAT THE PAYMENT BY THE ASSESSEE WAS RECEIVED IN SUBSEQUENT ASSESSMENT YEAR IGNORING THE FACT THAT WHEN THE WORK HAS BEEN DONE, HOW THE PAYMENT CAN BE RECEIVED. HENCE THE DISALLOWANCE OF RS. 561200/- IS LIABLE TO BE DELETED. 3. THE DISPUTE IN THIS CASE RELATES TO DISALLOWANCE OF RS. 5,61,200/-. FOR THE ASSESSMENT YEAR 2007-08, THE ASSESSEE SUBMITTED ITS RETURN OF INCOME ON 19.10.2007 AT A TOTAL INCOME OF RS. 16,96,061/-. T HE RETURN WAS PROCESSED AT THE RETURNED INCOME. HOWEVER, THE CASE OF THE ASSE SSEE WAS SELECTED FOR SCRUTINY. NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 30.9.2008. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ESTATE AND HAS SHOWN BUSINESS INCOME AT RS. 5,22,705/- AND INCOME FROM OTHER SOUR CES AT RS. 11,73,356/-. WHILE EXAMINING THE BOOKS OF ACCOUNT OF THE ASSESSE E, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE PAYMENT OF RS. 5 ,61,200/- TO M/S DTZ INTERNATIONAL PROPERTY ADVISERS PVT. LTD (M/S DTZ) , FOR PROFESSIONAL FEE TOWARDS FEASIBILITY STUDY FOR A LAND PARCEL IN GREA TOR NOIDA. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH THE DETAIL S OF THE DOCUMENTS REGARDING THE WORK DONE BY M/S DTZ. IN RESPONSE TO THE ABOVE QUERY, THE ASSESSEE FURNISHED THE BILL RAISED BY M/S DTZ AGAIN ST WHICH PAYMENT WAS MADE. THE ASSESSING OFFICER ASKED THE ASSESSEE AS TO WHAT KIND OF SERVICES WERE RENDERED BY M/S DTZ AND WHAT INCOME WAS GENERA TED ON ACCOUNT OF SUCH ACTIVITIES. THE ASSESSING OFFICER ALSO ASKED T HE ASSESSEE TO FURNISH 3 SUPPORTING EVIDENCE REGARDING THE FEASIBILITY STUDY DONE BY M/S DTZ. THE ASSESSEE COULD NOT FURNISH ANY SUPPORTING DOCUMENTS . THE ASSESSING OFFICER, THEREFORE, TOOK A VIEW THAT THE PAYMENT MADE TO M/S DTZ WAS NOT A BONAFIDE BUSINESS EXPENSES. THE ASSESSING OFFICER DISALLOWE D RS. 5,61,200/- AND ADDED THE SAME TO THE RETURNED INCOME OF THE ASSESS EE. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE CIT(A). 5. THE MAIN CONTENTION OF THE ASSESSEE BEFORE THE C IT(A) WAS THAT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, IT HAD ENT ERED INTO AN AGREEMENT FOR PROVIDING REAL ESTATE CONSULTANCY TO A CORPORATE M/ S JASS DEVELOPERS PVT. LTD FOR A LUMP SUM CONSIDERATION OF RS. 12 LACS. AS PER THE AGREEMENT, THE ASSESSEE COMPANY WAS ENTRUSTED WITH VARIOUS TASKS R ELATING TO THE FEASIBILITY STUDY FOR LANDS AND ITS PROJECT PREPARATION ETC. T HE ASSESSEE COMPANY TOOK THE PROFESSIONAL SERVICES FROM A COMPANY M/S DTZ IN TERNATIONAL PROPERTY ADVISORS PVT LTD. WHICH RAISED A BILL OF RS. 5,61,2 00/- TO THE ASSESSEE COMPANY WHICH THE ASSESSEE COMPANY PAID AFTER DULY DEDUCTING AND DEPOSITED THE TDS ON THE SAME. IT WAS STATED BY THE ASSESSEE BEFORE THE CIT(A) THAT AGAINST THE REVENUE INCOME OF RS. 12 LACS, THE ASSE SSEE CLAIMED A SUM OF RS. 5,61,200/- AS BUSINESS EXPENDITURE. IT WAS ALSO SU BMITTED BY THE ASSESSEE BEFORE THE CIT(A) THAT THE RESPECTIVE COPIES OF AG REEMENT AND BILL OF THE SAID PROFESSIONAL FIRM ALONG WITH COPY OF FORM NO. 16A AND THE PROOF OF THE DEPOSITS OF THE TDS WAS FURNISHED BEFORE THE ASSESS ING OFFICER. THE ASSESSEE ALSO SUBMITTED BEFORE THE CIT(A) THAT IN THE INSTAN T CASE THE EXPENDITURE OF RS. 5,61,200/- MADE BY IT DULY FALLS WITHIN THE PRO VISIONS OF SECTION 37(1) OF 4 THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). THE ASSESSEE ALSO SUBMITTED THAT COPY OF BILL RAISED BY M/S DTZ CLEARLY MENTION ED THE NATURE OF WORK PERFORMED BY SAID CONSULTANCY FIRM. IT WAS ALSO SU BMITTED BY THE ASSESSEE BEFORE THE CIT(A) THAT THE PAYMENT TO THE SAID PART Y WAS MADE THROUGH ACCOUNT PAYEE CHEQUE AFTER DUE DEDUCTION OF TAX. 6. THE CIT(A) DID NOT FIND ANY MERIT IN THE ABOVE S UBMISSIONS OF THE ASSESSEE AND CONFIRMED THE DISALLOWANCE OBSERVING A S UNDER:- 3.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. C OUNSEL FOR THE APPELLANT. THE APPELLANT HAS ONLY SUBMITTED THAT THE PAYMENT OF RS.5,61,200/- WAS MADE TO M/S DTZ INTERNATIONAL PROPERTY ADVISORS PVT. LTD. (HEREINAF TER REFERRED TO AS 'DTZ') FOR PROFESSIONAL FEES TOWARDS FEASIBILITY STUDY BUT NO DOCUMENTS REGARDING WORK D ONE BY THIS COMPANY WERE FURNISHED BEFORE THE ASSESSING OF FICER. THE NATURE OF SERVICES RENDERED BY THIS COMPANY WAS NOT EXPLAINED TO THE ASSESSING OFFICER. BEFORE ME ALSO, A LENGTHY WRITTEN SUBMISSION IS FILED, WHICH HAS BEEN REPRODUCED ABOVE, BUT THE NATURE OF SERVICES RENDER ED BY DTZ AND DOCUMENTS RELATING TO WORK DONE BY THIS COM PANY HAVE NOT BEEN PRODUCED/EXPLAINED. IT IS NOT CLEAR A S TO WHAT KIND OF FEASIBILITY STUDY HAS BEEN DONE BY DTZ. FUR THER, THERE WAS NO AGREEMENT BETWEEN THE APPELLANT AND DT Z REGARDING THE WORK TO BE DONE BY DTZ FOR WHICH SUCH HUGE AMOUNT OF RS. 5,61,200/- HAS BEEN PAID. SINCE, THE PURPOSE FOR WHICH THE PAYMENT HAS BEEN MADE HAS NOT BEEN EXPLAINED, IT IS HELD THAT THE ASSESSING OFFICER HA S RIGHTLY MADE THE DISALLOWANCE OF PAYMENT MADE OF RS. 5,61,2 00/- TO DTZ AND THE SAME IS CONFIRMED. IN THE PASSING, IT M AY ALSO BE MENTIONED THAT THE PAYMENT TO BE RECEIVED FROM M /S JASS DEVELOPERS PVT. LTD. WAS NOT RECEIVED IN THIS ASSES SMENT 5 YEAR, BUT WAS RECEIVED IN OCTOBER AND DECEMBER, 200 7 PERTAINING TO A.Y. 2008-09, MEANING THEREBY THAT TH E PAYMENT TO DTZ HAS BEEN MADE MUCH BEFORE THE PAYMEN T WAS RECEIVED FROM M/S JASS DEVELOPERS PVT. LTD. GRO UNDS OF APPEAL NO. 2 TO 5 ARE DISMISSED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. SHRI SATISH BANSAL, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD ENTERED IN TO AN AGREEMENT FOR PROVIDING REAL ESTATE CONSULTANCY TO M/S JASS DEVEL OPERS PVT LTD FOR A CONSIDERATION OF RS. 12 LACS. TO PROVIDE CONSULTA NCY IN REAL ESTATE, M/S JASS DEVELOPERS PVT LTD, THE ASSESSEE COMPANY TOOK THE SERVICES OF M/S DTZ INTERNATIONAL PROPERTY ADVISORS PVT LTD (M/S DTZ) F OR WHICH SAID PARTY RAISED INVOICE OF RS. 5,61,200/- SHRI SATISH BANSA L, LD. COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE COMPANY P AID THIS AMOUNT TO M/S DTZ THROUGH CHEQUE AFTER DULY DEDUCTING OF TDS OF R S. 30,256/- . IN OUR CONSIDERED OPINION, IN THIS CASE THE ASSESSEE HAS M ISERABLY FAILED TO PROVE THE NATURE OF SERVICES RENDERED BY M/S DTZ TO THE ASSES SEE COMPANY. AT THIS STAGE ALSO, NO EVIDENCE WAS FILED OR PRODUCED BY TH E ASSESSEE COMPANY REGARDING THE NATURE OF SERVICES RENDERED BY M/S DT Z AND DOCUMENTS RELATING TO WORK DONE BY THIS COMPANY. THERE IS NO EVIDENCE ON RECORD TO DEMONSTRATE AS TO WHAT KIND OF FEASIBILITY STUDY HA S BEEN DONE BY M/S DTZ. IT IS ALSO AN ADMITTED FACT THAT THERE WAS NO AGREE MENT BETWEEN THE ASSESSEE AND M/S DTZ REGARDING THE WORK TO BE DONE BY M/S DT Z FOR WHICH SUCH HUGE AMOUNT OF RS. 5,61,200/- HAS BEEN PAID. IN THIS CA SE, THE ASSESSEE COULD NOT ESTABLISH THE PURPOSE FOR WHICH THE PAYMENT WAS MAD E. IN THE ABSENCE OF SUCH EVIDENCE, WE ARE OF THE OPINION, THAT THE CIT( A) HAS CORRECTLY CONFIRMED 6 THE DISALLOWANCE OF RS. 5,61,200/- MADE BY THE ASSE SSING OFFICER. WE MAY ALSO OBSERVE HERE THAT THE CIT(A) HAS CATEGORICALLY STATED THAT NO PAYMENT HAS BEEN RECEIVED BY THE ASSESSEE COMPANY FROM M/S JASS DEVELOPERS PVT LTD DURING THE YEAR UNDER CONSIDERATION. THUS THERE WA S NO JUSTIFICATION IN MAKING ANY PAYMENT TO M/S DTZ DURING THE YEAR UNDER CONSIDERATION. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE PRESENT CASE, WE ARE OF THE VIEW, THAT THE ORDER UNDER CHALLENGE REQUIRES N O INTERFERENCE AT OUR LEVEL AND, THEREFORE, WE UPHOLD THE ORDER OF CIT(A) AND D ISMISS THE APPEAL OF THE ASSESSEE. 8. IN THE RESULT, APPEAL IS DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF JULY, 2012 SD/- SD/- (T. R. SOOD) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 4 TH JULY, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR