DCIT 10(3), MUMBAI V. CRISIL RISK & INFRASTRUCTURE SOLUITON LTD, MUMBAI

ITA 6207/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2794 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2008-2009
• Appeal Filed On: 23-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR SINGH
• Assessee Lawyers: ANUSHA SINGH
• Keywords: Non-deduction of tax; Bad and doubtful debts

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.6207/MUM/2013 ASSESSMENT YEAR- 2008-09 DCIT-10(3), ROOM NO.451, 4 TH FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI-400020 / VS. M/S CRISIL RISK & INFRASTRUCTURE SOLUTION LTD. CENTRAL AVENUE, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI-400076 ( /ASSESSEE) ( ! / REVENUE) PAN. NO. AABCC4655M ITA NO.6338/MUM/2013 ASSESSMENT YEAR- 2008-09 M/S CRISIL RISK & INFRASTRUCTURE SOLUTION LTD. CENTRAL AVENUE, HIRANANDANI BUSINESS PARK, POWAI, MUMBAI-400076 / VS. DCIT-10(3), ROOM NO.451, 4 TH FLOOR, AAYAKAR BHAVAN, MAHARSHI KARVE ROAD, MUMBAI-400020 ( /ASSESSEE) ( ! / REVENUE) PAN. NO.AABCC4655M / ASSESSEE BY SHRI DHANESH BAFNA AND MS. ANUSHA SINGH ! / REVENUE BY SHRI PRADEEP KUMAR SINGH- DR ' !# $ % / DATE OF HEARING : 02/11/2015 $ % / DATE OF ORDER: 06/11/2015 M/S CRISIL RISK & INFRASTRUCTURE SOLUTION LTD ITA NO.6207 & 6338/MUM/2013 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE AS WELL AS ASSESSEE IS IN CROSS APPEAL AGAINST THE IMPUGNED ORDER DATED 21/08/2013 OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. FIRST, WE SHALL TAKE UP APPEAL OF THE ASSESSEE (ITA NO.6338/MUM/2013), WHER EIN, FIRST GROUND RAISED PERTAINS TO CONFIRMING DISALLOW ANCE OF RS.1,37,76,928/- MADE IN RESPECT OF BAD DEBTS WRITT EN OFF BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS U/S 36(1)(VII ) R.W.S. 36(2) OF THE INCOME TAX ACT, 1961. 2. DURING HEARING, THE CRUX OF ARGUMENT ADVANCED B Y SHRI DHANESH BAFNA ALONG WITH MS. ANUSHA SINGH, ARE THAT THE IMPUGNED AMOUNT WAS WRITTEN OFF AS IRRECOVERABL E U/S 36(1)(VII) IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE , THEREFORE, THE SAME HAS TO BE ALLOWED. IT WAS CONTENDED THAT A LL ASSET AND LIABILITIES WERE TAKEN BY THE ASSESSEE INCLUDIN G THE IMPUGNED DEBTS BY FURTHER SUBMITTING THAT THE INCOM E WAS OFFERED IN THE PRINCIPLE COMPANY AND THIS FACTUM HA S BEEN ACCEPTED BY THE ASSESSING OFFICER IN THE REMAND REP ORT. RELIANCE WAS PLACED UPON THE DECISION IN 354 ITR 25 AND 22 TAXMAN 45 (SC). ON THE OTHER HAND, LD. DR, SHRI PRA DIP KUMAR SINGH, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY SUPPORTING THE OBSERVATION MADE I N THE ASSESSMENT ORDER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, M/S CRISIL RISK & INFRASTRUCTURE SOLUTION LTD ITA NO.6207 & 6338/MUM/2013 3 ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING ADVISORY SERVICES TO CORPORATE, BANKS, FINANCIAL IN STITUTION, STATE AND CENTRAL GOVERNMENT. IT ALSO PROVIDES RIS K MANAGEMENT SERVICES TO ASSIST BANK, FINANCIAL INSTI TUTION, FINANCIAL SERVICES COMPANIES, ETC TO DE-RISK PRICIN G AND LENDING DECISIONS, TO IMPROVE OPERATION EFFICIENCIE S THROUGH CREDIT RISK EVALUATION AND CREDIT MANAGEMENT. THE ASSESSEE DECLARED TOTAL INCOME OF RS.4,50,86,878/- IN ITS RE TURN FILED ON 27/09/2008. THE ASSESSMENT WAS FRAMED U/S143(3) OF THE ACT ON 26/11/2010 ASSESSING THE TOTAL INCOME AT RS.9,71,27,763/-. THE ASSESSEE WROTE OFF BAD DEBTS AMOUNTING TO RS.1,37,76,928/- AND CLAIMED THE SAME AS DEDUCTION U/S 36(1)(VII) R.W.S 36(2) OF THE ACT WHI LE COMPUTING ITS TOTAL INCOME. THE LD. ASSESSING OFFIC ER WHILE FRAMING THE ASSESSMENT DISALLOWED THE CLAIMED DEDUC TION OF BAD DEBT ON THE REASON (I) THAT SAID AMOUNT WAS NEV ER OFFERED AS INCOME AND MERELY IT IS REIMBURSEMENT OF EXPENSE INCURRED ON BEHALF OF THE CLIENTS, (II) NO DETAILS WERE SUBMITTED THAT SUCH EXPENSES WERE INCURRED, AND (II I) THE AMOUNT WRITTEN OFF DOES NOT REPRESENT DEBT AS THE S AME WAS NOT OFFERED TO TAX. DURING ASSESSMENT PROCEEDINGS ITSELF, THE ASSESSEE PROVIDED THE PARTY-WISE DETAILS OF BAD DEB TS WRITTEN OFF VIDE LETTER DATED 30/08/2010. HOWEVER, THE LD. ASSESSING OFFICER CONSIDERED THE ENTIRE AMOUNT OF BAD DEBT WR ITTEN OFF AS FORMING PART OF EXPENSES INCURRED ON BEHALF OF T HE CLIENTS. THE ASSESSEE OFFERED THE IMPUGNED AMOUNTS FOR TAXAT ION IN EARLIER YEARS, HOWEVER, SINCE THE SAME WERE NOT REC OVERED, THE SAME WERE WRITTEN OFF BY THE ASSESSEE. EVEN OTHERW ISE, IN M/S CRISIL RISK & INFRASTRUCTURE SOLUTION LTD ITA NO.6207 & 6338/MUM/2013 4 VIEW OF THE AMENDMENT IN THE TAXATION LAWS WITH EFF ECT FROM 01 ST APRIL, 1989, THE REQUIREMENT OF DEMONSTRATING THAT THE DEBTS HAS BECOME BAD HAS BEEN DISPENSED WITH AND ON LY REQUIREMENT REMAINS THAT IT SHOULD BE WRITTEN OFF I N BOOKS OF ACCOUNTS OF THE ASSESSEE. IT HAS BEEN FURTHER CLARI FIED BY CBDT CIRCULAR NO.551 DATED 23/01/1990. OUR VIEW FIN D SUPPORT FROM THE RATIO LAID DOWN IN CIT VS BRILLIAN T TUTORIALS PVT. LTD. 292 ITR 399 (MAD.), CIT VS MORGAN SECURIT IES AND CREDITS PVT. LTD. (210 CTR 336)(DEL.), DCIT VS OMAN INTERNATIONAL BANK SAOG. (313 ITR 128)(BOM.), CIT V S STAR CHEMICALS (BOM.) PVT. LTD. 220 CTR 319 (BOM.), CIT VS GLOBAL CAPITAL LTD. 201 TAXATION 210 (DEL.), CIT VS M/S EXCEL FASHION PVT. LTD. (201 TAXATION 216)(DEL), CIT VS A UTO METERS LTD. 292 ITR 345 (DEL.). IN VIEW OF THESE FACTS AN D THE JUDICIAL PRONOUNCEMENTS DISCUSSED HEREINABOVE, THIS GROUND OF THE ASSESSEE IS ALLOWED. 3. THE NEXT GROUND PERTAINS TO DISALLOWANCE OF RS.2,02,55,399/- MADE U/S 40(A)(IA) OF THE ACT ON A CCOUNT OF NON-DEDUCTION OF TAX AT SOURCE ON THE EXPENSES REIM BURSED BY THE ASSESSEE TO CRISIL LTD., ITS PARENT COMPANY. 3.1. THE CRUX OF ARGUMENT ADVANCED ON BEHALF OF TH E ASSESSEE IS THAT THE ASSESSEE USED TO SHARE COMMON FACILITIES/COMMON OFFICE AND THE HOLDING COMPANY DE DUCTED TAXES WHEREVER APPLICABLE. OUR ATTENTION WAS INVITE D TO PAGE 185 OF THE PAPER BOOK. IT WAS CONTENDED THAT CERTI FICATE OF THE HOLDING COMPANY IS AVAILABLE AT PAGE 181 OF THE PAPER BOOK. ON THE OTHER HAND, THE LD. DR, STRONGLY OBJEC TED TO THE M/S CRISIL RISK & INFRASTRUCTURE SOLUTION LTD ITA NO.6207 & 6338/MUM/2013 5 CLAIM OF THE ASSESSEE BY INVITING OUR ATTENTION TO TABLE A AT PAGE 185 OF THE PAPER BOOK. 3.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE BRAKE UP OF REIMBURSEMENT OF EXPENSES IS AVAILABLE AT TABLE-A (PAGE-185) OF THE PAPER BOOK, WHICH INCLUDES ADVERT ISEMENT EXPENSES, EQUIPMENT HIRE CHARGES, EQUIPMENT MAINTEN ANCE CHARGES (ADMIN), EQUIPMENT MAINTENANCE (IT), PROFES SIONAL FEE, PROFESSIONAL FEES (FEE INCLUDES OPE, RENT, ORS , RENT (STAFF), OTHER REPAIR AND MAINTENANCE, REPAIR AND MAINTENANC E (BUILDING). IF THE NATURE AND THE EXTENT OF THESE EXPENSES/CLAIMS ARE ANALYZED, IN OUR VIEW, MERELY A HUTCH POUCH HAS BEEN MADE BY THE ASSESSEE IN ITS CLAIM AN D FACTUALLY THE CLAIM IS NOT CLEAR, THEREFORE, THIS I SSUE IS SENT TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CL AIM OF THE ASSESSEE AT LENGTH IN ACCORDANCE WITH LAW. THE ASSE SSING OFFICER IS ALSO DIRECTED TO EXAMINE SUCH CLAIM IN H OLDING COMPANY/ASSESSEE. THE ASSESSEES ARE DIRECTED TO PRO DUCE THE DETAILS OF THE CLAIM FOR THE EXAMINATION/VERIFICATI ON BY THE LD. ASSESSING OFFICER. THUS, THIS GROUND OF THE ASSESSE E IS ALLOWED FOR STATISTICAL PURPOSES ONLY. THUS, THE APPEAL OF THE ASSESSEE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 4. NOW, WE SHALL TAKE UP APPEAL OF THE REVENUE (IT A NO.6207/MUM/2013), WHEREIN, THE FIRST GROUND PERTAI NS TO DELETING THE ADDITION OF RS.1,44,36,142/- ON ACCOUN T OF M/S CRISIL RISK & INFRASTRUCTURE SOLUTION LTD ITA NO.6207 & 6338/MUM/2013 6 DISALLOWANCE OF REIMBURSEMENT OF EXPENSES. DURING H EARING, LD. DR DEFENDED THE CONCLUSION ARRIVED AT IN THE AS SESSMENT ORDER, WHEREAS, THE LD. COUNSEL FOR THE ASSESSEE DE FENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 4.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE T HAT THE ASSESSEE MADE CLAIM OF RS.3,46,91,541/- TOWARDS REIMBURSEMENT OF EXPENSES BY THE ASSESSEE TO CRISIL LTD.. THE ASSESSING OFFICER HAS DISCUSSED THIS ISSUE IN P ARA 5.T O 5.3 OF THE ASSESSMENT ORDER. THE VIEW OF THE ASSESS ING OFFICER IS THAT THE MAJOR EXPENDITURES WERE TOWARDS REIMBUR SEMENT OF RENT AND FURTHER THE PREMISES WERE JOINTLY OCCUP IED BY BOTH. DURING FIRST APPELLATE STAGE, CERTAIN ADDITIO NAL EVIDENCES, THROUGH LETTER DATED 21/01/2011 WERE REC EIVED FROM CRISIL ALONG WITH BRAKE UP OF REIMBURSEMENT OF EXPENSES DIVIDED INTO THREE BASKETS. REMAND REPORT WAS SOUGHT FROM THE ASSESSING OFFICER, WHICH HAS BEEN D ISCUSSED AT PAGE-9 OF THE IMPUGNED ORDER ALONG WITH SUBMISSI ONS OF THE ASSESSEE DATED 27/05/2011 (PARA -3.3 OF THE ORD ER IN APPEAL). THE BRAKE UP OF THE EXPENDITURE IS AVAILAB LE IN THE TABLE AT PAGE 11 & 12 OF THE IMPUGNED ORDER, ON EXA MINATION OF THE BRAKE UP OF THE EXPENSES, IN THE LIGHT OF CE RTAIN CASE LAWS, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) UNCONTROVERTEDLY FOUND THAT THE CATEGORY OF EXPENSE S (A, B & C), THE TDS PROVISIONS WERE APPLICABLE. THE DETAILS WERE EXAMINED BY THE LD. COMMISSIONER OF INCOME TAX (APP EALS) AND SOME OF THE EXPENDITURE WARRANTS TDS. THE CONCL USION M/S CRISIL RISK & INFRASTRUCTURE SOLUTION LTD ITA NO.6207 & 6338/MUM/2013 7 ARRIVED BY THE LD. COMMISSIONER OF INCOME TAX (APPE ALS) WAS ARRIVED AT AFTER EXAMINATION OF FACTS AND THEN ONLY THE DISALLOWANCE WAS RESTRICTED TO RS.2,02,55,399/-. IN VIEW OF THIS UNCONTROVERTED FINDING, WE AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), THUS, WE FIND NO MERIT IN THE IMPUGNED GROUND OF THE REVENUE. 5. THE NEXT GROUND PERTAINS TO DELETING THE ADDITI ON OF RS.32,72,415/- ON ACCOUNT OF NON-RECONCILIATION OF AIR INFORMATION. THE CRUX OF ARGUMENTS ADVANCED ON BEHA LF OF THE REVENUE IS IDENTICAL TO THE GROUND RAISED, WHER EAS, THE LD. COUNSEL FOR THE ASSESSEE DEFENDED THE CONCLUSIO N ARRIVED AT IN THE IMPUGNED ORDER. 5.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IF THE OB SERVATION MADE IN THE ASSESSMENT ORDER, LEADING TO ADDITION M ADE TO THE TOTAL INCOME, CONCLUSION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTION MADE BY THE LD. RESPECTIVE COUNSELS, IF KEPT IN JUXTAPOSITION AND A NALYZED, SO FAR AS, ALLEGED UN-RECONCILED AMOUNT OF RS.24,50,34 4/- IS CONCERNED, CONFIRMATION LETTER, TO THIS EFFECT, WAS OBTAINED FROM KOTAK MAHINDRA BANK LTD. AND THE SAME WAS FILE D BY THE ASSESSEE VIDE LETTER DATED 15/03/2012 BEFORE TH E ASSESSING OFFICER. THUS, THE ENTRY IN RESPECT OF TH IS AMOUNT WAS NOT CORRECT IN AIR INFORMATION, CONSEQUENTLY, W E AFFIRM THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). SO FAR AS, THE SUM OF RS.29,495/- WITH RESPECT TO M /S BKC CONSTRUCTION PVT. LTD. WAS SHOWN TWICE IN ITS AT SE RIAL NO.19 M/S CRISIL RISK & INFRASTRUCTURE SOLUTION LTD ITA NO.6207 & 6338/MUM/2013 8 & 14, THUS, THIS AMOUNT WAS RIGHTLY DELETED. SO FAR AS, THE AMOUNT OF RS.7,41,576/- RELATED TO M/S LANCO INFRAT ECH LTD. IS CONCERNED, THE ASSESSEE FILED THE CONFIRMATION F ROM M/S LANCO INFRATECH LTD. AND INSTEAD OF ENTERING PAN OF M/S CRISIL, THE PAN OF THE ASSESSEE WAS WRONGLY ENTERED WHILE FILING THE QUARTERLY TDS STATEMENT. CONFIRMATION FR OM M/S CRISIL WAS ALSO OBTAINED TO THIS EFFECT, THEREFORE, TOTALITY OF FACTS, CLEARLY INDICATES THAT THERE IS NO INFIRMITY IN THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), TH EREFORE, THE STAND OF THE LD. FIRST APPELLATE AUTHORITY IS A FFIRMED. THE APPEAL OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES, WHEREAS THE APPEAL OF THE REV ENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 02/11/2015. SD/- SD/- ( ASHWANI TANEJA ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ' # MUMBAI; ' DATED : 06/11/2015 F{X~{T? P.S/. .. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / ' 0 ( )* ) / THE CIT, MUMBAI. 4. / / ' 0 / CIT(A)- , MUMBAI M/S CRISIL RISK & INFRASTRUCTURE SOLUTION LTD ITA NO.6207 & 6338/MUM/2013 9 5. 2!3 - , / )*% ) 4 , ' # / DR, ITAT, MUMBAI 6. 5 6# / GUARD FILE. / BY ORDER, .2* - //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' # / ITAT, MUMBAI.