RELIANCE TRENDS LTD, MUMBAI V. ASST CIT 7(2), MUMBAI

ITA 593/MUM/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 6808 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 25-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revenue expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 593 / MUM/20 1 7 ( ASSESSMENT YEAR : 2009 - 10 ) M/S. RELIANCE TRENDS LTD., NOW KNOWN AS RELIANCE TRADING LTD., 3 RD FLOOR, COURT HOUSE LOK MANYA TILAK MARG DHOBI TALAO MUMBAI 400 002 VS. ASST. CIT 7(2) MITTAL COURT, NARIMAN POINT MUMBAI 400 020 PAN/GIR NO. AADCR7079N ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI VIJAY MEHTA REVENUE BY SHRI MANOJ KUMAR SINGH DATE OF HEARING 0 7 / 12 /201 8 DATE OF PRONOUNCEMENT 27 / 12 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORDER OF CIT(A) - 14, MUMBAI DATED 22/11/2016 FOR A.Y.2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT AC T, 1961 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: - 1. GROUND NO. 1: (I) THE LEARNED COMMISSIONER OF INCOME TAX (HEREINAFTER REFERRED TO AS CIT(A)), WHILE DISPOSING OFF THE RECTIFICATION APPLICATION U/S154 OF THE ACT FILED BEFORE HIM, ERRED IN UPHOLDING THE VIEW TAKEN BY HIS PREDECESSOR CIT(A) IN HOLDING THAT THE REVENUE EXPENDITURE OF RS.31,16,85,997 / - INCURRED DURING THE YEAR DOES NOT PERTAIN TO THE APPELLANT AND DISALLOWED THE CLAIM FOR DEDUCTION U/S 37(1). ITA NO. 593/MUM/2017 M/S. RELIANCE TRENDS LTD., 2 (II) THE LEARNED CIT (A) ALSO ERRED IN OBSERVING THAT DOCUMENTS ASKED FOR BY THE EARLIER CIT(A) WERE NOT PRODUCED BEFORE THE PRESENT CIT(A). THE APPELLANT WOULD LIKE TO STATE THAT ALL THE REQUIRED DOCUMENTS WERE SUBMITTED BEFORE THE EARLIER CIT(A) DURING THE APPELLATE PROCEEDI NGS AND NO NEW DOCUMENTS WERE ASKED FOR BY THE PRESENT CIT(A). (III) THE LEARNED CIT{A) ERRED IN CONFIRMING THE DISALLOWANCE ON THE GROUND WHICH WAS DIFFERENT FROM THE GROUND ON WHICH THE A.O. HAD DISALLOWED THE ABOVE REVENUE EXPENDITURE. (IV) THE LEARNED CIT(A) ERRED IN CONFIRMING THE VIEW TAKEN BY HIS PREDECESSOR IN INADVERTENTLY MISINTERPRETING THE INFORMATION IN NOTE NO. 10 OF SCHEDULE L OF PRINTED ACCOUNTS OF THE COMPANY RELATING TO PURCHASE OF BUSINESS UNDER SLUMP SALE. HE FURTHER FAILED TO AP PRECIATE THAT THE TRANSFER OF BUSINESS UNDER SLUMP SALE HAD TAKEN PLACE ON 31.03.2009 AFTER THE CLOSURE OF BUSINESS AND ACCORDINGLY, NO EXPENDITURE WHICH WAS A PART OF TRANSFER OF BUSINESS HAD BEEN CLAIMED AS REVENUE EXPENDITURE U/S 37(1) BY THE APPELLANT. (V) HE FAILED TO APPRECIATE THAT THE EXPENDITURE AS CLAIMED IN THE RETURN OF INCOME WAS THE EXPENDITURE ACTUALLY INCURRED BY THE APPELLANT DURING THE YEAR AND WAS CLEARLY MENTIONED IN NOTE NO. 9 OF SCHEDULE L OF PRINTED ACCOUNTS AND IN RESPECT OF WHI CH APPROPRIATE TDS AS REQUIRED UNDER LAW WAS DEDUCTED. (VI) THE APPELLANT PRAYS THAT THE DEDUCTION OF RS. 31,16,85,997/ - AS CLAIMED BY IT BE ALLOWED. 2. THE APPELLANT CRAVES LEAVE TO ADD, TO AMEND, VARY OR ALTER INCLUDING BY SUBSTITUTION ANY OF THE GRO UNDS OF APPEAL AS THEY OR THEIR REPRESENTATIVES MAY THINK FIT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE A SSESSEE COMPANY IS IN THE BUSINESS OF TRADING AND MERCHANDISING OF GOODS AND SERVICES. DURING THE PREVIOU S YEAR RE LEVANT TO THE YEAR UNDER APPEAL. ASSESSEE FILED RETURN OF INCOME AT A LOSS OF RS.36,13,38,711/ - WHEREIN, A SUM OF RS. 31,16,85,996/ - WAS CLAIMED AS EXPENDITURE WHICH WERE INCURRED IN ORDER TO CARRY ON THE CURRENT BUSINESS ACTIVITY AS WELL TO EXPAN D THE LEVEL AND SIZE OF THE CURRENT BUSINESS ACTIVITY. HOWEVER, THE ABOVE CLAIM WAS DISALLOWED BY THE ASSESSING OFFICER AS, ACCORDING TO HIM, THE EXPENSES WERE CAPITAL IN NATURE, NOT ITA NO. 593/MUM/2017 M/S. RELIANCE TRENDS LTD., 3 ALLOWABLE UNDER SECTION 37(1) OF THE ACT ON THE BASIS THAT THE SAME WERE CLASSIFIED IN THE BOOKS OF ACCOUNTS UNDER THE HEAD PROJECT DEVELOPMENT EXPENDITURE. THE DISALLOWANCE WAS AFFIRMED BY THE ID. CIT(A) BUT O N A DIFFERENT GROUND. THE CI T(A) IN ITS APPELLATE ORDER OBSERVED THAT THE EXPENSES OF RS. 31,16,85,996 WERE REVENUE IN NATURE BUT DID NOT PERTAIN TO THE ASSESSEE COMPANY AND PERTAINED TO THE BUSINESS OF RELIANCE RETAIL LIMITED (IN SHORT RRL) WHICH WAS ACQUIRED IN SLUMP SALE BY ASSESSEE M/S. RELIANCE TRENDS LIMITED (IN SHORT RTL), WHICH HAS INCURRED THE EXPENSES FOR YEAR END ED 31 / 03 / 2010 AND SUBSEQUENTLY ITS BUSINESS HAS BEEN ACQUIRED BY THE ASSESSEE VIDE MEMORANDUM OF UNDERSTANDING (MOU) DATED 18/06/ 2009 UNDER SLUMP SALE. WHILE HOLDING ABOVE THE C1T (A) HAS RECORDED FOLLOWING FINDINGS : - I. EXPENDITURE OF RS.3 1 . 1 6 CRORES WAS NOT RE LATED TO THE ASSESSEE COMPANY BUT WAS RELATED TO ONE OF THE BUSINESSES OF RRL WHICH WAS ACQUIRED UNDER SLUMP SALE BY THE ASSESSEE W.E.F. 31 / 03 / 2009. THESE EXPENSES ARE PRIOR TO 31.03.2009 WHICH HAS BEEN CLAIMED AS DEDUCTION BY THE ASSESSEE . II. THE EXPENSES DEBITED TO BUSINESS DEVELOPMENT EXPENSES (I.E. SALARY AND WAGES OF RS. 19,80,43,811 / - CONTRIBUTION TO PROVIDENT FUND OF RS. 93 , 07 , 836/ - . EMPLOYEES WELFARE OF RS. 1,04,87,728 / - AND PROFESSIONAL FEES OF RS. 96,18.540/ - ) ARE ON ACCOUNT OF ACQUISITION OF BUSI NESS OF RRL AND PAID TO TWO EMPLOYEES ONLY I.E. MR. GOVIND LYER AND MS. RADHA RAMANJUA. ITA NO. 593/MUM/2017 M/S. RELIANCE TRENDS LTD., 4 4. AFTER GOING THROUGH THE DOCUMENTS PLACED ON RECORD WE FOUND THAT THE ABOVE OBSERVATIONS OF THE CIT(A) ARE FACTUALLY INCORRECT AND CONSTITUTE MISTAKE APPARENT FROM RE CORD. FROM THE RECORD WE FOUND THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN APPAREL, LUGGAGE AND ACCESSORIES. ADMITTEDLY, IT HAS ACQUIRED THE BUSINESS FROM RRL VIDE MOU DATED 18 / 06 / 2009 W .E.F 31 / 03 / 2009. ALL THE EXPENSES OF ACQUIRED BUSINESS ARE INCURRED AND RECORDED BY THE RRL TILL 3 1/ 03 /2009 AND EXPENSES AFTER 30/ 03 / 2009 ARE RECORDED IN THE BOOKS OF ASSESSEE COMPANY . IT IS CLEAR FROM RECORD THAT THESE EXPENSES OF RS. 31,16,85,997 / - CLAIMED AS DEDUCTION IN THE COMPUTATION OF INCOME ARE IN - FACT IN CURRED BY THE ASSESSEE COMPANY DURING THE PREVIOUS YEAR ENDED ON 31/03/2009 RELEVANT TO ASSESSMENT YEAR 2009 - 10 UNDER CONSIDERATION . THIS FACT IS DULY RECORDED IN THE AUDITED FINANCIAL STATEMENT OF THE ASSESSEE WHICH HAS BEEN FILED DURING THE ASSESSMENT PR OCEEDING BEFORE THE AO AS WELL AS BEFORE THE APPELLATE PROCEEDING BEFORE THE CIT(A). WE FOUND THAT NONE OF THE EXPENSES CLAIMED BY ASSESSEE , PERTAINS TO RRL PRIOR TO ITS ACQUISITION OF BUSINESS BY THE ASSESSEE . 5 . WE FURTHER OBSERVE THAT THE EMPLOYEES MENT IONED IN THE ORDER OF C1T(A) [I.E. MR. GOVIND LYER AND MS. RADHA RARQANJUA] AT PARAGRAPHS 3.5 AND 3.6 ARE EMPLOYEES OF THE ASSESSEE COMPANY. THE ASSESSEE HAD ALSO DEDUCTED TDS ON SALARY PAID TO THEM AND CREDITED TO THE GOVERNMENTS. DOCUMENTARY EVIDENCES OF TDS COMPLIANCES, PROFESSION TAX AND PROVIDENT FUND COMPLIANCES ARE ON RECORD WITH THE AO. ABOVE FACTS AR E EVIDENT FROM ITA NO. 593/MUM/2017 M/S. RELIANCE TRENDS LTD., 5 THE AGREEMENT FOR TRANSFER OF BUSINESS WHICH ARC DULY CONSIDERED BY THE CIT(A) WHILE PASSING THE ORDER. RELEVANT OBSERVATION OF CIT(A) ARE AS UNDER: - CIT(A) CONSIDERING THE AGREEMENT FOR TRANSFER OF BUSINESS IN HER ORDER AT PARAGRAPH 3.5 (V) HAS DULY RECORDED THAT THE SALES CONSIDERATION FOR ACQUISITION OF BUSINESS IS RS. 31.10 CRORES. AT PARAGRAPH 3.6, SHE HAS RECORDED THE BASIS FOR PAY ING THE CONSIDERATION OF RS. 31.10 CRORES [I.E. ASSETS OF RS. 31.95 CRORES -- LIABILITIES (SECURED LOAN) OF RS. 0.85 CRORE] WHICH PROVES THAT T HE ASSESSEE HAS NEITHER TAKEN OVER T HE LIABILITY OF PAYING SALARY NOR IT PAID ANY SALARY PERTAINING TO ANY EMPLOY EE OF RRL PRIOR TO 31.03.2009. CIT(A) AT PARAGRAPH 3.5(VII) HAS RECORDED CLAUSE 6.2 OF THE AGREEMENT FOR TRANSFER OF BUSINESS WHICH CATEGORICALLY STATES THAT THE TRANSFEROR (I.E. RRL) HAS DISCHARGED ALL THE LIABILITIES IN RESPECT OF EMPLOYEES TIL! THE DATE OF TRANSFER OF BUSINESS. THIS FACT RECORDED BY THE CIT(A) PROVES THE CONTENTION OF THE ASSESSEE THAT IT HAS NOT RECORDED ANY EXPENSES PERTAINING TO RRL PRIOR TO ACQUISITION AND THE EXPENSES PRIOR TO ACQUISITION AND INCURRED AND DISCHARGED BY THE RRL ONLY. 6 . FROM THE RECORD WE ALSO FOUND THAT D ETAILS OF PROJECT DEVELOPMENT EXPENSES HAVE BEEN FILED BEFORE THE C I T(A) WHICH INTER ALIA INCLUDE SALARY AND WAGES OF RS. 19.80 CRORES AND OTHER EMPLOYEES RELATED EXPENSES AS ITA NO. 593/MUM/2017 M/S. RELIANCE TRENDS LTD., 6 RECORDED BY THE CIT(A). HOWEVER, THESE EX PENSES ARE NOT PERTAINING TO ONLY MR. GOVIND LYER AND MS. RADHA RAMANJUA AS RECORDED BY THE C!T(A). THESE PERTAINS TO OTHER EMPLOYEES ALSO OF THE ASSESSEE COMPANY. 7 . FROM THE RECORD WE FOUND THAT AGAINST THE ORDER OF CIT(A) IN THE FIRST ROUND, THE ASSE SSEE APPROACHED TO THE TRIBUNAL WHEREIN VIDE ORDER DATED 19/08/2016, THE TRIBUNAL DIRECTED THE CIT(A) TO RECTIFY THE MISTAKE IN THE ORDER. ON DIRECTION OF THE HON'BLE ITAT, THE CIT(A) DISPOSED OFF THE APPLICATION OF RECTIFICATION FILED BY THE ASSESSEE VIDE HIS ORDER DATED 22/11/2016. IN HIS ORDER, AT PARAGRAPH 2.1. HE HAS REPRODUCED THE FINDINGS OF HIS PREDECESSOR WHEREIN HIS PREDECESSOR HAS RECORDED INCORRECT FACTS. SAID PARAGRAPH OF HIS PREDECESSOR IS DEALT WITH IN PARAGRAPH (II) OF HIS ORDER ABOVE. THERE AFTER, AT PARAGRAPH 3.1 OF HIS ORDER, CIT(A) HAS HELD THAT THERE IS NO MISTAKE APPARENT FROM THE RECORD; HENCE, THE APPLICATION FILED BY THE ASSESSEE WA S DISMISSED. ASSESSEE IS IN APPEAL BEFORE US AGAINST THE SAID ORDER OF CIT(A). 8 . WE HAVE CONSIDERED RIV AL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS ORDER PASSED BY TH E TRIBUNAL DATED 19/08/2016 IN ASSESSEES OWN CASE. WE HAD ALSO GONE THROUGH THE COPY OF ACCOUNTS OF THE ASSESSEE FOR THE YEAR ENDING 31/03/2009, BR EAK - UP OF REVENUE EXPENDITURE DEBITED TO CAPITAL WORK IN PROGRESS , AUDITORS CERTIFIED COPY OF SALARY LEDGER ACCOUNT FOR THE A.Y.2009 - 10. STATEMENT OF TDS DEDUCTED FROM SALARIES FOR ALL THE FOUR QUARTERS. ANNEXURE C & E OF TAX AUDIT REPORT OF A.Y.2009 - 10. DETAILS OF ITA NO. 593/MUM/2017 M/S. RELIANCE TRENDS LTD., 7 EMPLOYEE - WISE SALARY AND PROFESSIONAL TAX DEDUCTED. MONTHWISE DETAILS OF PROFESSIONAL TAX . WE HAD ALSO PERUSED THE TERMS AND CONDITIONS OF AGREEMENT ENTERED BETWEEN RELIANCE RETAIL LTD., (RRL) AND ASSESSEE M/S. RELIANCE TRENDS LTD., IN WHICH IT WAS STATED THAT RELIANCE TRENDS LTD., HAS ACQUIRED THE RETAIL BUSINESS OF APPAREL, LUGGAGE OF RELIANCE RETAIL LTD, THE HOLDING COMPANY ON ONGOIN G BASIS. WE ALSO FOUND THAT THE EXPENDITURE DISALLOWED BY AO HAS ALREADY BEEN AFFIRMED BY T HE TRIBUNAL AS R EVEN UE IN NATURE VIDE ORDER DATED 19/08/2016. WE HAD ALSO CAREFULLY GONE THROUGH THE ORDER OF THE ITAT IN CASE OF GROUP CONCERNS OF THE ASSESSEE M/S. RELIANCE FOOT PRINTS LTD., DATED 21/03/2013, WHEREIN ON THE VERY SIMILAR GROUND S THE TRIBUNAL HELD THE EXPENDI TURE TO BE REVENUE IN NATURE. 9. FROM THE RECORD WE FOUND THAT EXPENDITURE OF RS.31,16,85,997/ - WAS THE EXPENDITURE INCURRED BY THE ASSESSEE COMPANY ITSELF DURING THE YEAR ENDING OF 31/03/2009 AND IT WAS REFLECTED IN NOT E NO.9 OF SCHEDULE K OF NOTES TO AC COUNTS AS AN EXPENDITURE INCURRED DURING THE YEAR WHICH WAS CLAIMED AS REVENUE DEDUCTION U/S.37(1). HOWEVER, THE AO HAS DECLINED THE SAID EXPENDITURE ONLY ON THE GROUND THAT AFORESAID EXPENDITURE HAS NOT BEEN DEBITED TO P & L ACCOUNT BY THE ASSESSEE ITSELF . THE ASSESSEE HAS FILED EXHAUSTIVE RETURN SU BMISSION AND PAPER BOOK CONTAINING 1 2 2 PAGES ON THIS ISSUE GIVING ALL DETAILS OF EXPENDITURE IN DISPUTE AND ALSO FILED DETAILED SUBMISSION OF LEGALITY OF ALLOWANCE OF SUCH EXPENDITURE ON 13/08/2013. WE ALSO FOUN D THAT EVEN THOUGH CIT(A) HAS ITA NO. 593/MUM/2017 M/S. RELIANCE TRENDS LTD., 8 HELD THAT EXPENDITURE WAS REVENUE IN NATURE BUT DISALLOWED BY WRONGLY CONCLUDING THAT EXPENDITURE WAS RELATED TO RRL AND NOT TO THE ASSESSEE. WE FOUND THAT EVEN BEFORE CIT(A), THE ASSESSEE HAS FILED COPY OF AGREEMENT OF PURCHA SE OF BUSINESS FROM RELIANCE RETAIL LTD., (RRL) UNDER SLUMP SALES WHICH WAS REFERRED TO IN NOTE NO.10 TO SCHEDULE K OF NOTES OF PRINTED ACCOUNTS. AFTER GOING THROUGH THE SLUMP AGREEMENT WE OBSERVE THAT AS PER SLUMP SALE AGREEMENT ENTERED BY RELIANCE RETA IL LTD., WITH RELIANCE TRENDS LTD DT: 18/06/2009 , MEMORANDUM OF UNDERSTANDING DATE IS 1 ST SEPTEMBER 2008, AS MENTIONED IN PREAMBLE C ON PAGE 2 OF THE SALE AGREEMENT , ALL THE ASSETS INCLUDING FIXED ASSETS PROJECT DEVEL OPMENT EXPENDITURE INCLUDED IN F IXED A SSETS WAS TRANSFERRED AT BOOK VALUE AND SUCH ASSETS HAVE DIRECTLY BEEN TAKEN TO RESPECTIVE ASSET A/C AND HAS NOT PASSED THROUGH P & L A/C. SUCH EXPENDITURE WHICH HAS BEEN INCURRED BY THE SELLING COMPANY HAS DIRECTLY BEEN TAKEN INTO PROJECT DEVELOPMENT EXP ENDITURE IN ASSESSEES BOOKS AND HAS NOT BEEN CLAIMED BY ASSESSEE AS REVENUE EXPENDITURE DURING THE YEAR. FROM THE RECORD WE ALSO FOUND THAT THE EXPENDITURE AS CLAIMED IN THE RETURN OF INCOME OF RS. 31.16 CRORES IS THE ONE WHICH HAS BEEN INCURRED BY THE CO MPANY ON WHICH APPROPRIATE TDS HAS BEEN DEDUCTED BY THE COMPANY AN D NO EXPENDITURE INCURRED BY THE SELLER COMPANY UNDER SLUMP SALE HAS BEEN CLAIMED BY IT IN THE R ETURN OF INCOME. I N THE SLUMP SALE AGREEMENT, WHEREVER IT IS MENTIONED THAT THE EMPLOYEES WILL BE TRANSFERRED TO THE PURCHASER I.E. RELIANCE RETAIL LID. TO RELIANCE TRENDS LTD, I T IS ONLY REFERRING TO THE EMPLOYEES OF RELIANCE ITA NO. 593/MUM/2017 M/S. RELIANCE TRENDS LTD., 9 RETAIL LTD. WHICH ARE LOOKING AFTER THE BUSINESS WHICH HAS BEEN TRANSFERRED TO RELIANCE TRENDS LTD. AND THAT THE EXPENDITU RE INCURRED ON SUCH EMPLOYEES IN THE PREVIOUS YEAR HAD BEEN DEBITED TO PROJECT DEVELOPMENT EXPENDITURE OF RELIANCE RETAIL LTD, WHILE TRANSFERRING SUCH PROJECT DEVELOPMENT EXPENDITURE TO RELIANCE TRENDS LT D,, RELIANCE RETAIL LTD. HAS NOT CLAIMED SUCH EXP ENDITURE AS REVENUE EXPENDITURE. FURTHERMORE, AS PER AGREEMENT DT. 18.06.2009, THE ASSETS AND LIABILITIES UNDER SLUMP SALE HAVE BEEN TRA NSFERRED W.E.F. 31.03.2009 (AT CL OSING VALUES AS ON 31.03.2009) AND THERE IS NO REVENUE IMPLICATI ON ON THE P & L A/C AS ON 31.03. 2009 OF THAT EXPENDITURE IN THE BOOKS THE PURCHASER COMPANY. 10 . IT IS CLEAR FROM THE ORDER OF CIT(A) THAT ONLY ON INCORRECT ANALYSIS OF THE FACTS OF SLUMP SALE AGREEMENT ENTERED INTO BETWEEN RELIANCE RETAIL LTD. AND RELIANCE TRENDS LTD ., H E HAS DISALLOWED THE SAME BY STATING THAT EXPENDITURE WAS RELATED TO RELIANCE RETAIL LTD., HOWEVER THE FACT IS THAT SINCE THE EXPENDITURE AS CLAIMED IN THE RETURN OF INCOME OF RS. 31.16 CRORES IS THE ONE WHICH HAS BEEN INCURRED BY THE ASSESSEE COMPANY ON WHICH A PPROPRIATE TDS HAS BEEN DEDUCTED BY THE COMPANY AND NO EXPENDITURE INCURRED BY THE SELLER COMPANY UNDER S LUMP SALE HAS BEEN CLAIMED BY THE ASSESSEE COMPANY . IN THE RETURN OF INCOME . WE FOUND THAT THE CIT(A) HAS FAILED TO APPRECIATE THE A PPARENT MISTAKES CO MMITTED BY THE C1T(A) IN HER EARLIER ORDER DATED 23.12.2013 AND PASSED THE ORDER WITHOUT RECORDING THE CORRECT FINDING. B Y PLACING RELIANCE ON HIS ITA NO. 593/MUM/2017 M/S. RELIANCE TRENDS LTD., 10 PREDECESSOR'S ORDER AND INCORPORATING THE SAME FINDING, THE CIT (A) HAS RECORDED THE SAME INCORRECT FACTS WHI CH WAS INCORPORATED BY HIS PREDECESSOR. 1 1 . AS PER THE DETAILS PLACED ON RECORD WE FOUND THAT E XPENDITURE OF R.S.3 1 . 1 6 CRORES WAS RELATED TO THE ASSESSEE COMPANY , AND NOT RELATED TO ONE OF THE BUSINESSES OF RRL WHICH WAS ACQUIRED UNDER SLUMP SALE BY THE A SSESSEE W.E.F. 31 / 03 / 2009. THESE EXPENSES ARE PRIOR TO 31.03.2009 WHICH HAS BEEN CLAIMED AS DEDUCTION BY THE ASSESSEE . FURTHERMORE, THE EXPENSES DEBITED TO BUSINESS DEVELOPMENT EXPENSES (I.E. SALARY AND WAGES OF RS. 19,80,43,811, CONTRIBUTION TO PROVIDENT FUND OF RS. 93 , 07 , 836/ - . EMPLO YEES WELFARE OF RS. 1,04,87,728/ - AND PROFESSIONAL FEES OF RS. 96,18.540/ - ) ARE NOT ON ACCOUNT OF ACQUISITION OF BUSINESS OF RRL (AND PAID TO TWO EMPLOYEES ONLY I.E. MR. GOVIND LYER AND MS. RADHA RAMANJUA. SINCE THE ASSESSEE I S ENGAGED IN THE BUSINESS OF TRADING IN APPAREL, LUGGAGE AND ACCESSORIES , A DMITTEDLY, IT HAS ACQUIRED THE BUSINESS FROM RRL VIDE MOU DATED 18/ 06 / 2009 W .E.F 31 / 03 / 2009. ALL THE EXPENSES OF ACQUIRED BUSINESS ARE INCURRED AND RECORDED BY THE RRL TILL 30 / 03 /20 09 AND EXPENSES AFTER 30/ 03 / 2009 ARE RECORDED IN THE BOOKS OF ASSESSEE. IT IS CLEAR FROM RECORD AVAILABLE BEFORE US THAT THESE EXPENSES OF RS. 31,16,85,997 / - CLAIMED AS DEDUCTION IN THE COMPUTATION OF INCOME ARE IN - FACT INCURRED BY THE ASSESSEE COMPANY DUR ING THE PREVIOUS YEAR ENDED ON 31/03/2009 RELEVANT TO ASSESSMENT YEAR 2009 - 10 UNDER CONSIDERATION . THIS FACT IS DULY RECORDED IN THE AUDITED FINANCIAL STATEMENT OF THE ITA NO. 593/MUM/2017 M/S. RELIANCE TRENDS LTD., 11 ASSESSEE WHICH HAS BEEN FILED DURING THE ASSESSMENT PROCEEDING BEFORE THE AO AS WELL AS BEFORE THE APPELLATE PROCEEDING BEFORE THE CIT(A). WE FOUND THAT NONE OF THE EXPENSES CLAIMED BY ASSESSEE , PERTAINS TO RRL PRIOR TO ITS ACQUISITION OF BUSINESS BY THE ASSESSEE . 1 2 . IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE ACTION OF CIT(A) FOR DECLINING CLAIM OF DEDUCTI ON OF EXPENDITURE INCURRED BY ASSESSEE COMPANY FOR THE PURPOSE OF ITS BUSINESS AND WHICH ARE ESSENTIALLY REVENUE IN NATURE AS HELD BY THE TRIBUNAL IN ASSESSEES OWN C ASE VIDE ORDER DATED 19/08/2016 FOR THE VERY SAME ASSESSMENT YEA R 2009 - 10. 1 3 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 / 12 /201 8 SD/ - ( SANDEEP GOSAIN ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI ; DATED 27 / 12 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//