DDIT(IT) 1(1), V. M/s. Booz Allen & Hamilton (India) Ltd. & Co.K.G.,

ITA 5706/MUM/2004

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70846 (ITAT-MUMBAI)
• Duration Of Justice: 9 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: L
• Next Hearing Date: 05-08-2013
• Assessment Year: 1998-1999
• Appeal Filed On: 06-08-2004
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S SRIVASTAVA IZRFKHZ DH LS
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 14A

Judgement Text

M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. - 1 - VK;DJ VIHYH; VF/KDJ.K ,Y U;K;IHB EQACBZ ESAA IN THE INCOME TAX APPELLATE TRIBUNAL L BENCH, MUM BAI JH JKTSUNZ FLAG YS[KK LNL; ,OA JH FOODS OEKZ U;KF;D LNL; DS LE{K BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND VIVEK VARMA JUDICIAL MEMBER VK;DJ VIHY LA[;K /ITA NO.2918/MUM/2005 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR:- 1997-98 DY. DIT(IT)-3(2), SCINDIA HOUSE, ROOM NO. 132, 1 ST FLOOR, N.M ROAD, BALLARD PIER, MUMBAI CUKE@ VS. M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. C/O K.S. AIYAR & CO. V.AS., 4 TH FLOOR, JANMBHOOMI BHAVAN, 24/26, JANMBHOOMI MARG, FORT, MUMBAI-1 VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VK;DJ VIHY LA[;K /ITA NO.5706/MUM/2004 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR:- 1998-99 DY. DIT(IT)-1(1), ROOM NO. 117, SCINDIA HOUSE,N.M ROAD, BALLARD PIER, MUMBAI CUKE@ VS. M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. C/O K.S. AIYAR & CO. V.AS., 4 TH FLOOR, JANMBHOOMI BHAVAN, 24/26, JANMBHOOMI MARG, FORT, MUMBAI-1 VIHYKFKHZ @ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA[;K /ITA NO.318/MUM/2005 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR:- 1999-2000 DY. DIT(IT)-3(2), SCINDIA HOUSE, ROOM NO. 132, 1 ST FLOOR, N.M ROAD, BALLARD PIER, MUMBAI CUKE@ VS. M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. C/O K.S. AIYAR & CO. V.AS., 4 TH FLOOR, JANMBHOOMI BHAVAN, 24/26, JANMBHOOMI MARG, FORT, MUMBAI-1 VIHYKFKHZ @ APPELLANT IZR;FKHZ@ RESPONDENT M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. - 2 - VK;DJ VIHY LA[;K /ITA NO.4969/MUM/2005 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR:- 2000-01 DY. DIT(IT)-3(2), SCINDIA HOUSE, ROOM NO. 132, 1 ST FLOOR, N.M ROAD, BALLARD PIER, MUMBAI CUKE@ VS. M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. C/O K.S. AIYAR & CO. V.AS., 4 TH FLOOR, JANMBHOOMI BHAVAN, 24/26, JANMBHOOMI MARG, FORT, MUMBAI-1 VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA[;K /ITA NO.396/MUM/2005 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR:- 1999-2000 M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. C/O K.S. AIYAR & CO. V.AS., 4 TH FLOOR, JANMBHOOMI BHAVAN, 24/26, JANMBHOOMI MARG, FORT, MUMBAI-1 CUKE@ VS. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2(6) MUMBAI. VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT VIHYKFKHZ DH VKSJ LS @ APPELLANT BY SHRI R.S. SRIVASTAVA IZR;FKHZ DH VKSJ LS @ RESPONDENT BY SHRI SUNIL LALA, MR. PRASHANT MAHESHWARI, MS. PRIYANKA GADA VKNS'K@ VKNS'K@ VKNS'K@ VKNS'K@ ORDER PER BENCH THESE APPEALS BY THE ASSESSEE AND THE CROSS APPEAL BY THE ASSESSEE FOR ASSESSMENT YEAR 1999-2000 ARE DIRECTED AGAINST THE DIFFERENT ORDERS DATED 31.12.2004, 30.03.2004, 12.10.2004, AND 18.3.2005 OF CIT(A) FOR ASSESSMENT YEAR 1997-98 TO 1999-2000. THE DISPUTES RAISED IN THIS APPEAL RELATE TO DISALLOWAN CE OF SOME EXPENSES AND TAXABILITY OF CERTAIN INCOME IN INDIA. LQUOKBZ DH RKJH[K@ DATE OF HEARING 05-08-2013 ?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT 14-8-2013 M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. - 3 - 2. WE FIRST TAKE UP THE APPEALS OF THE REVENUE. DIS PUTES HAVE BEEN RAISED ON FOUR DIFFERENT GROUNDS. THE FIRST GROUND IS REGARDING AD DITION ON ACCOUNT OF MODE OF INCOME RECOGNITION WHICH IS RELEVANT ONLY TO ASSESSMENT YE ARS 1998-99 TO 2000-01. AO NOTED DIFFERENCES IN THE AMOUNTS CREDITED IN THE P&L ACCO UNT AND THE AMOUNT MENTIONED IN THE INVOICES RAISED BY THE ASSESSEE. THE DIFFERENCE HAD BEEN ADDED TO THE TOTAL INCOME. THE ADDITION ON THIS ACCOUNT HAD BEEN MADE TO THE TUNE OF RS. 46,55,783/- IN ASSESSMENT YEAR 1998-99, RS. 5,56,16,815/- IN ASSESSMENT YEAR 99-2 000 AND RS. 3,22,34,776/- IN ASSESSMENT YEAR 2000-01. THE ADDITIONS MADE BY AO W ERE DELETED BY CIT(A) AGGRIEVED BY WHICH THE REVENUE FILED APPEALS BEFORE THE TRIBU NAL. 2.1 BEFORE US THE LEARNED AR FOR THE ASSESSEE SUBMI TTED THAT THE ASSESSEE HAD HUGE CARRY FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIA TION AND, THEREFORE THE ASSESSEE HAD NOTHING TO LOSE EVEN IF THE ADDITION MADE BY THE AO WAS. HOWEVER THE ASSESSEE WAS MAKING THIS CONCESSION TO AVOID PROTRACTED LITIGATI ON AND TO BUY PEACE OF MIND AS APPEALS WERE VERY OLD. THE LEARNED DR ON THE OTHER HAND STR ONGLY SUPPORTED THE ORDERS OF ASSESSING OFFICER. 2.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE AO HAD MADE ADDITION ON ACCOUNT OF DIFFERENCES IN THE AMOU NTS CREDITED IN THE P&L ACCOUNT AND THE AMOUNTS APPEARING IN THE INVOICES. THE ADDITION S HAVE BEEN DELETED BY THE CIT(A). IT HAS BEEN SUBMITTED ON BEHALF OF THE ASSESSEE THAT T HE ASSESSEE HAD HUGE CARRY FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION AND, THER EFORE THE ASSESSEE HAD NOTHING TO LOSE EVEN IF THE ADDITIONS MADE WERE CONFIRMED. HOWEVER THE CONCESSION HAS BEEN MADE ONLY TO AVOID PROTRACTED LITIGATION AND TO BUY PEACE OF MIND AS APPEALS ARE VERY OLD. WE THEREFORE SET ASIDE THE ORDER OF CIT (A) AND CONFIR M THE ADDITIONS MADE BY AO. 3. THE SECOND DISPUTE RAISED IN THE APPEALS BY THE REVENUE IS REGARDING ESTIMATED DISALLOWANCE OUT OF TRAVELLING EXPENSES WHICH IS RE LEVANT ONLY TO ASSESSMENT YEAR 1998- 99 TO 2000-01. THE ASSESSEE HAD CLAIMED TRAVELLING EXPENSES OF RS. 71.89 LAKH, 71.81 LAKH AND 1.31 CRORE IN ASSESSMENT YEARS 1998-99 TO 2000-01 RESPECTIVELY. M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. - 4 - 3.1 THE AO FOR WANT OF NECESSARY DETAILS HAD MADE A D-HOC ESTIMATED DISALLOWANCE OF RS. 10 LAKH IN EACH OF THE THREE YEARS UNDER REFERE NCE. CIT(A) HAD HOWEVER REDUCED THE DISALLOWANCE TO RS. 4 LAKH. 3.2 WE HAVE HEARD BOTH THE PARTIES PERUSED THE RECO RDS AND CONSIDERED MATTER CAREFULLY. THE ISSUE IS ONLY OF ESTIMATED DISALLOWA NCE OUT OF TRAVELLING EXPENSES. THE AO HAS MADE THE DISALLOWANCE OF RS. 10 LAKH WITHOUT GI VING ANY BASIS WHICH HAD BEEN REDUCED BY THE CIT(A) TO RS. 4 LAKH. CONSIDERING TH E FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THE ORDER OF CIT(A) REASONABLE AND THE SAME IS, THEREFORE UPHELD AND THE APPEALS OF THE REVENUE ON THIS POINT ARE DISMISSED. 4. THE THIRD DISPUTE RAISED BY THE REVENUE IS REGAR DING TAXABILITY OF SOLD SERVICES. THE GROUND HAS BEEN RAISED IN ALL THE FOUR YEARS UN DER APPEAL. 4.1 THE AO HAD HELD THE SERVICES TAXABLE AND MADE A DDITIONS OF RS. 62,40,043/-, RS. 18889600, RS. 1,37,23,947/- AND RS. 2,15,54,670/- F OR ASSESSMENT YEARS 1997-98 TO 2000- 01 RESPECTIVELY. THE ASSESSEE HAD RAISED ADDITIONAL GROUND BEFORE CIT(A) AND ARGUED THAT THESE SERVICES WERE NOT TAXABLE IN INDIA. CIT(A) AC CEPTED THE CLAIM OF THE ASSESSEE AND DELETED THE ADDITIONS MADE, AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFORE TRIBUNAL FOR ALL THE FOUR YEARS. 4.2 WE HAVE HEARD BOTH THE PARTIES IN THE MATTER. T HE LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS MAKING CONCESSION O N THIS GROUND TO AVOID PROTRACTED LITIGATION AND TO BUY A PEACE OF MIND AS IT HAD HUG E CARRY FORWARD BUSINESS LOSS AND UNABSORBED DEPRECIATION. THE LEARNED DR ON THE OTHE R HAND STRONGLY SUPPORTED THE ORDERS OF AO. THEREFORE, CONSIDERING THE FACTS AND CIRCUMS TANCES OF THE CASE AND ON CONCESSION MADE BY THE ASSESSEE, WE SET ASIDE THE ORDER OF CIT (A) AND CONFIRM THE DISALLOWANCES MADE BY AO IN ALL THE YEARS UNDER REFERENCE. M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. - 5 - 5. WE NOW TAKE UP THE APPEAL OF THE ASSESSEE. THE A SSESSEE HAS FILED APPEAL ONLY FOR ASSESSMENT YEAR 1999-2000 AND RAISED DISPUTES ON FO UR DIFFERENT GROUNDS. THE FIRST GROUND RAISED IS REGARDING DISALLOWANCE OF EXPENSES U/S 40 (A) (I) ON THE GROUND OF NON DEDUCTION OF TAX AT SOURCE IN CONNECTION WITH EXECU TION OF VARIOUS CONTRACTS ENTERED INTO WITH THE CLIENTS. 5.1 THE ASSESSEE HAD UTILIZED SERVICES OF PERSONNEL FROM BOOZ ALLEN GROUP OF ENTITIES WORLD WIDE AND IT HAD MADE TOTAL PAYMENTS OF RS. 84 ,84,824/- WHICH HAD BEEN CLAIMED AS DEDUCTION. AO HOWEVER, DISALLOWED THE CLAIM ON THE GROUND THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE FOR PURCHASE OF THE SERVICES . IN APPEAL CIT(A) FOLLOWING THE ASSESSMENT ORDER OF ASSESSMENT YEAR 1998-99 UPHELD THE ADDITION MADE BY AO, AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE TRIBUNAL. 5.2 BEFORE US LEARNED AR FOR THE ASSESSEE SUBMITTED THAT THE SAME ISSUE HAD ALREADY BEEN DECIDED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE IN EARLIER YEARS AS REPORTED IN 80 DTR 129 (TRIB.) IN WHICH IT WAS HELD THAT NO INCOME ON THIS ACCOUNT HAD ACCRUED TO THE GROUP ENTITIES AS THE RBI APPROVAL FOR THE PAYMENT HAD NOT BEEN RECEIVED DURING THE YEAR. IT WAS, THEREFORE, HELD THAT AMOUNTS WERE NOT TAXAB LE IN INDIA. SINCE THE AMOUNTS WERE NOT TAXABLE IN INDIA NO TAX WAS REQUIRED TO BE DEDUCTED AND, THEREFORE THE ADDITION MADE BY AO WAS NOT CORRECT. THE LEARNED DR ON THE OTHER HAN D PLACED RELIANCE ON THE ORDER OF AUTHORITIES BELOW. 5.3 WE HAVE PERUSED THE RECORDS AND CONSIDERED MATT ER CAREFULLY. THE DISPUTE IS REGARDING DISALLOWANCE OF CLAIM OF DEDUCTION MADE B Y THE ASSESSEE ON ACCOUNT OF PAYMENTS MADE TO OVERSEAS GROUP ENTITIES FOR USING SERVICES OF PERSONNEL BELONGING TO THOSE ENTITIES. THE DISALLOWANCE WAS MADE BY THE AO ON THE GROUND THAT NO TAX HAD BEEN DEDUCTED. LEARNED AR FOR THE ASSESSEE HAS HOWEVER S UBMITTED THAT AMOUNTS WERE NOT TAXABLE IN INDIA AS NO APPROVAL OF RBI HAD BEEN REC EIVED DURING THE YEAR. WE FIND THAT THE ISSUE RELATING TO TAXABILITY OF THE PAYMENT IN INDIA HAD BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEE OWN CASE IN THE EARLIER YEAR R EPORTED IN 80 DTR 129 (TRIB.) IN WHICH M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. - 6 - THE TRIBUNAL HELD THAT THE PAYMENTS COULD BE TAXABL E ONLY IN THE YEAR IN WHICH THE RBI APPROVAL HAD BEEN RECEIVED. SINCE NO APPROVAL HAD B EEN RECEIVED DURING THE YEAR, THE PAYMENTS WERE NOT TAXABLE IN INDIA AS NO INCOME HAD ACCRUED ON THIS ACCOUNT IN THE RELEVANT YEAR. SINCE THE PAYMENTS WERE NOT LIABLE F OR TAX IN INDIA DURING THE YEAR NO TAX WAS REQUIRED TO BE DEDUCTED. THE LEARNED DR SUBMITT ED THAT FACTS THIS YEAR WERE IDENTICAL, WE, THEREFORE, FOLLOWING THE DECISION OF TRIBUNAL I N ASSESSEES OWN CASE IN EARLIER YEAR (SUPRA), SET ASIDE THE ORDER OF CIT(A) AND DELETE THE ADDITION MADE. 6. THE SECOND DISPUTE RAISED BY THE ASSESSEE IS REG ARDING ADDITION ON ACCOUNT OF SYSTEM ALLOCATION. THE ASSESSEE HAD MADE CLAIM OF D EDUCTION ON ACCOUNT OF ALLOCATED COST OF USD 12336 ( RS. 525387) ON ACCOUNT OF SYSTEM ALL OCATION. 6.1 THE AO DISALLOWED THE CLAIM. IN APPEAL CIT(A) O BSERVED THAT THE ASSESSEE HAD NOT PRODUCED COPIES OF AGREEMENT BASED ON WHICH THE PAYMENT WAS PAYABLE AND THEREFORE, CONFIRMED THE ADDITION MADE BY AO, AGGRI EVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE TRIBUNAL. 6.3 THE LEARNED AR FOR THE ASSESSEE AT THE TIME OF HEARING OF THE APPEAL DID NOT PRESS THIS GROUND. WE, THEREFORE DISMISS THIS GROUND AS N OT PRESSED. 7. THE THIRD DISPUTE IS REGARDING ESTIMATED DISALLO WANCE OUT OF TRAVELLING EXPENSES. THE ASSESSEE HAD CLAIMED TRAVELLING EXPENSES OF RS. 71.81 LAKH. THE AO IN THE ASSESSMENT ORDER MADE ADHOC DISALLOWANCE OF RS. 10 LAKH FOR WANT OF DETAILS OUT OF WHICH A SUM OF RS. 4,00,000/- HAD BEEN CONFIRMED BY CIT(A) AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE TRIBUNAL. 7.2 WE HAVE ALREADY DEALT WITH THIS ISSUE WHILE DEA LING WITH THE APPEAL OF THE REVENUE AS REVENUE IS ALSO IN APPEAL ON THIS POINT AND HAVE CONFIRMED THE ORDER OF CIT(A). THE APPEAL FILED BY ASSESSEE IS THEREFORE, DISMISSED ON THIS POINT. M/S BOOZ ALLEN & HAMILTON (INDIA) LTD. & CO. K.G. - 7 - 8. THE FOURTH DISPUTE RAISED BY THE ASSESSEE IS REG ARDING DISALLOWANCE OF EXPENSES U/S 14A OF THE IT ACT. HOWEVER WE DO NOT FIND ANY SUCH GROUND EMERGING FROM THE ORDER OF CIT(A). THE LEARNED AR FOR THE ASSESSEE ALSO STA TED THAT THE GROUND WAS INFRUCTUOUS. WE THEREFORE DISMISS THIS GROUND AS INFRUCTUOUS. 9. IN THE RESULT APPEAL OF THE REVENUE IN ASSESSMEN T YEAR 1997-98 IS ALLOWED WHEREAS THOSE FOR ASSESSMENT YEAR 1998-99 TO 2000-01 ARE PA RTLY ALLOWED. THE APPEAL OF THE ASSESSEE FOR ASSESSMENT YEAR 1999-00 IS ALSO PARTLY ALLOWED. ORDER PRONOUNCED ON 14-8-2013 SD/- SD/- (VIVEK VARMA) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER SKS SR. P.S, MUMBAI DATED 14.8.2013 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, L BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI