ACIT, New Delhi V. M/s. Lumen Engineering Pvt. Ltd., New Delhi

ITA 5885/DEL/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8815 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 30-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P S JHUINGALENG
• Assessee Lawyers: V K AGGARWAL
• Keywords: TDS
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO. 5885/DEL/2015 [ASSESSMENT YEAR: 2011-12] ACIT, CIRCLE-15(2), ROOM NO.306, C.R. BUILDING, NEW DELHI M/S LUMEN ENGINEERING PVT. LTD. 616A(16A, 6 TH FLOOR), DEVIKA TOWER, NEHRU PLACE, NEW DELHI-110034 PAN - AAACL1468L APPELLANT RESPONDENT REVENUE BY SHRI P.S. JHUINGALENG, SR. DR ASSESSEE BY SHRI V.K. AGGARWAL DATE OF HEARING 11/09 / 2019 DATE OF PRONOUNCEMENT 16 /09 /2019 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF THE CIT(A)-5, DELHI, DATED 10/08/2015, PERTAINING TO ASSESSMENT YEAR 201 1-12. 2. THE FIRST GRIEVANCE OF THE REVENUE IS THAT THE C IT(A) ERRED IN DELETING THE ADDITIONS OF RS.1,27,58,058/- MADE UNDER THE HEAD C ONSULTANCY CHARGES. 3. THE SECOND GRIEVANCE OF THE REVENUE RELATES TO T HE DELETION OF THE ADDITION OF RS.50,22,139/- MADE BY THE AO ON ACCOUNT OF PRIOR P ERIOD LEGAL AND PROFESSIONAL CHARGES. 2 ITA NO.5885/DEL/2015 4. THE ASSESSEE COMPANY IS IN THE BUSINESS OF MININ G, RAISING, REFINING, DRESSING, PROCESSING, CUTTING, CRUSHING, TRADING, IMPORTING A ND EXPORTING AND OTHERWISE DEAL IN ALL TYPES OF COAL, MARBLE, GRANITE, SLATE SAND STONE AN D OTHER STONES CHIPS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF CONSULTANCY EXPENSES. THE AO NOTICED THAT THE ASSES SEE HAS CLAIMED CONSULTANCY EXPENSES OF RS.1,27,58,085/- TO M/S MOSER BAER PROJ ECTS PVT. LTD. (IN SHORT MBPPL) THE DETAIL OF THE EXPENDITURE INCURRED BY MBPPL IS SUMM ARIZED AS UNDER:- S. NO. DATE PARTICULARS CONSULTANCY CHARGES TDS U/S 194-J NET PAID 1 4 - 08 - 08 CRISIL RISK & INFRASTRUCTURE SOLUTIONS LTD. 4,21,350 43,399 3,77 ,951 2. 4-08-08 -DO- 4,21,350 43,399 3,77,951 3. 3 - 09 - 08 AXYKNO CAPITAL SERVICES LTD. 28,09,000 3,18,260 24,90,740 4. 18 - 09 - 08 AXYKNO CAPITAL SERVICES LTD. 6,74,160 76,382 5,97,778 5. 15 - 10 - 08 CRISIL RISK & INFRASTRUCTURE SOLUTIONS LTD. 14,04,500 1,59, 130 12,45,370 6. 14 - 11 - 08 AXYKNO CAPITAL SERVICES LTD. 28,09,000 3,18,260 24,90,740 7. 21 - 11 - 08 CRISIL RISK & INFRASTRUCTURE SOLUTIONS LTD. 16,85,400 1,90,956 14,94,44 8 21 - 11 - 08 CRISIL RISK & INFRASTRUCTURE SOLUTIONS LTD. 16,85,400 1,90,956 14,94,44 9. 11-12-08 DESAI & DIWANJI 8,47,927 96,070 7,51,857 1,27,58,087 14,36,812 1,13,21,275 5. THE AO WAS OF THE OPINION THAT ALL THE EXPENSES INCURRED ON THIS COUNT RELATES TO PRIOR PERIOD AND SINCE THE ASSESSEE IS FOLLOWING ME RCANTILE SYSTEM OF ACCOUNTING, THE AO DISALLOWED THE ENTIRE EXPENDITURE AND MADE ADDITION OF RS.1.27 CRORES. 6. PROCEEDING FURTHER, THE AO NOTICED THAT THE ASSE SSEE HAS PAID LEGAL PROFESSIONAL CHARGES TO M/S LUTHRA & LUTHRA AMOUNTING TO RS.50,2 2,139/-. THE AO WAS OF THE OPINION THAT THE ENTIRE EXPENDITURE PERTAINS TO EARLIER YEA R AND SINCE THE ASSESSEE IS FOLLOWING 3 ITA NO.5885/DEL/2015 MERCANTILE SYSTEM OF ACCOUNTING DISALLOWED THE ENTI RE AMOUNT AND MADE ADDITION OF RS.50,22,139/-. 7. THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(A ) AND EXPLAINED THAT THE CONSULTANCY EXPENSES OF RS.1.27 CRORES PAID TO MBPP L RELATED TO THE OUTSOURCE WORK WHICH WAS CARRIED OUT BY MBPPL THROUGH VARIOUS AGEN CIES. IT WAS BROUGHT TO THE NOTICE OF THE CIT(A) THAT THE DETAILS OF EXPENDITURE CONSI DERED BY THE AO RELATE TO THE DETAILS SUBMITTED BY VARIOUS PERSONS WHO DID WORK FOR MBPPL . IT WAS FURTHER EXPLAINED THAT MBPPL BY WAY OF A DEBIT NOTE CLAIMED THE AMOUNT FRO M THE ASSESSEE AND THE AMOUNT WAS ADJUSTED AGAINST SHARE APPLICATION MONEY. 8. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, THE CIT(A) WAS CONVINCED THAT THE DEBIT NOTE WAS RAISED ON 31/03/2011 WHICH PERTAINS TO THE YEAR UNDER CONSIDERATION AND SINCE THE LIABILITY OF THE ASSESSEE WAS CRYSTALLIZE D DURING THE YEAR UNDER CONSIDERATION, THE CIT(A) DELETED THE DISALLOWANCE OF RS.1.27 CROR ES. 9. IN SO FAR AS, THE LEGAL AND CONSULTANCY FEES OF RS.50.22 LAKHS IS CONCERNED, THE CIT(A) FOUND THAT THE BILLS WERE UNDER DISPUTE AND THE LIABILITY CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION AND THE ASSESSEE HAS DEDUCTED T AX AT SOURCE BEFORE DISCHARGING ITS LIABILITY AND HENCE THE EXPENDITURE PERTAINS TO YEA R UNDER CONSIDERATION AND DELETED THE SAME. 10. BEFORE US, THE LD. DR STRONGLY RELIED UPON THE FINDINGS OF THE ASSESSING OFFICER AND THE LD. COUNSEL REITERATED WHAT HAS BEEN STATED BEFORE THE FIRST APPELLATE AUTHORITY. 11. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDER OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE ASSESSEE COMPANY IS A SUBSIDIARY COMPANY OF MBPPL. IT IS 4 ITA NO.5885/DEL/2015 ALSO NOT IN DISPUTE THAT CERTAIN WORKS WERE OUTSOUR CED BY THE ASSESSEE TO ITS HOLDING COMPANY TO MBPPL. THE HOLDING COMPANY MBPPL CARRIED OUT THE WORK THROUGH THREE DIFFERENT AGENCIES AS PER THE DETAILS FURNISHED ELS EWHERE. THESE THREE AGENCIES SUBMITTED THEIR BILLS TO MBPPL WHICH THE AO MISCONS TRUED AS SUBMITTED TO THE ASSESSEE AND CAME TO THE CONCLUSION THAT THEY BELONG TO THE PRIOR PERIOD. THE FACT OF THE MATTER IS THAT THE BILLS WERE SUBMITTED BY THE AGENCIES TO MB PPL AND THE MBPPL RAISED DEBIT NOTE ON 31/03/2011 TO THE ASSESSEE. THIS MEANS THAT SO FAR AS THE ASSESSEE IS CONCERNED THE LIABILITY CRYSTALLIZED DURING THE YEA R UNDER CONSIDERATION AND THEREFORE, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE CIT(A). GROUND NO.1 IS ACCORDINGLY DISMISSED. 12. COMING TO THE LEGAL AND CONSULTANCY CHARGES OF RS.50.22 LAKHS, WE FIND THAT THE BILLS RAISED BY LUTHRA & LUTHRA WERE UNDER DISPUTE AND THEREFORE THE ASSESSEE DID NOT MAKE ANY PAYMENT. HOWEVER, WHEN THE DISPUTE WAS SET TLED, THE ASSESSEE MADE THE PAYMENT AFTER DEDUCTING TAX AT SOURCE. THIS CLEARLY SHOWS THAT THE LIABILITY CRYSTALLIZED DURING THE YEAR UNDER CONSIDERATION AND WE DO NOT F IND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE CIT(A). GROUND NO. 2 IS ACCORDINGLY DISMISSED. 13. THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 16/09/ 2019 SD/- SD/- [SUCHITRA KAMBLE] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI; DATED: 16/09/2019. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S 5 ITA NO.5885/DEL/2015 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI