ZANDU REALTY LTD, MUMBAI V. DCIT 7(3), MUMBAI

ITA 6226/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2124 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 24-06-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 24-10-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S SENT H IL KUMARAN
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI , , , BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.6226/MUM/2013 ASSESSMENT YEAR: 2010-11 ZANDU REALTY LIMITED, A-701, WING EXPRESS ZONE, WESTERN EXPRESS HIGHWAY, GOREGAON (E) MUMBAI -400063 / VS. D CIT 7(3) AAYAKAR BHAVAN M.K. RD. MUMBAI-400001 (ASSESSEE ) (REV ENUE) P.A. NO. AAACZ0210G / ASSESSEE BY SMT. AARTI VISSANJI (AR) / REVENUE BY SHRI S. SENTHIL KUMARAN (DR) ! ' # / DATE OF HEARING : 16/09/2015 ' # / DATE OF ORDER: 30/11/2015 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-1 3, MUMBAI {(IN SHORT LD. CIT(A)}, DATED 19.08.2013 FOR THE ZANDU REALTY LTD. 2 ASSESSMENT YEAR 2010-11, DECIDED AGAINST THE ASSESS MENT ORDER PASSED BY THE ASSESSING OFFICER (IN SHORT AO ) U/S 143(3) OF THE ACT, ON THE FOLLOWING GROUNDS OF APPEAL: 1.COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED I N CONFIRMING THE DISALLOWANCE OF ENTIRE BUSINESS EXPENDITURE OF RS. 62,43,863/- AND TREATING IT AS N ON- BUSINESS EXPENDITURE AND WRONGLY TREATED AS EXPENSE S OF EMAMI LIMITED. 2.COMMISSIONER OF INCOME TAX (APPEALS) OUGHT NOT TO HAVE CONFIRMED THE DISALLOWANCE OF BUSINESS EXPENDITURE OF RS. 62,43,863/- MADE BY THE ASSESSIN G OFFICER AS THE EXPENSES INCURRED FOR PETITIONER COM PANY AND WRONGLY TREATED AND CONFIRMED AS EXPENSES OF EMAMI LIMITED. 3.THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UNDERSTANDING THAT THE EXPENSES OF RS. 62,43,863/- UNDER QUESTION WERE NOT INCURRED FOR THE PETITIONER COMPANY BUT FOR OTHER COMPANY I.E. EMAMI LIMITED. 4. THE PETITIONER COMPANY RESERVES ITS RIGHTS TO AD D, AMEND AND DELETE ANY OF THE ABOVE. 2 . DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE BY MST. AARTI VISSANJI (LD COUNSEL) ON BEHALF OF THE ASSESSEE AND SHRI S. SENTHIL KUMARAN , DEPARTMENTAL REPRESENTATIVE (LD. DR) ON BEHALF OF THE REVENUE. 3 . ALL THE GROUNDS ADDRESS THE COMMON ISSUE OF DISAL LOWANCE OF ENTIRE BUSINESS EXPENSES OF RS.62,43,863/- BY TR EATING IT AS ZANDU REALTY LTD. 3 NON BUSINESS EXPENDITURE AND WRONGLY TREATED AS EXP ENSES OF EMAMI LIMITED. 3.1. DURING THE COURSE OF HEARING IT HAS BEEN ARGUED BY LD. COUNSEL OF THE ASSESSEE THAT IN THIS CASE FMCG BUSI NESS WAS DEMERGED WITH ONE COMPANY NAMELY EMAMI LTD. WITH ALL ASSETS AND LIABILITIES. EXPENSES PERTAINING TO TRAN SFER TO THE SAID COMPANY AND EXPENSES WHICH WERE NOT ACCEPTED B Y THE SAID COMPANY WERE DEBITED BY THE ASSESSEE COMPANY I N ITS BOOKS OF ACCOUNTS. THE ASSESSEE COMPANY RETAINED TH E NON- CORE BUSINESS AND ALSO STARTED THE BUSINESS OF REAL ESTATE DEVELOPMENT. BUT THE AO HOLD IN THE ASSESSMENT ORDE R THAT THE EXPENSES DEBITED IN THE PROFIT AND LOSS ACCOUNT WERE PERTAINING TO THE SAID COMPANY AND WERE NOT DELETED TO THE BUSINESS OF THE ASSESSEE, AND WERE THEREFORE DISALL OWED IN THE ASSESSMENT ORDER. LD. COUNSEL TOOK US THROUGH VARIO US PAGES OF THE PAPER BOOK TO SHOW THAT EXPENSES PERTAINING TO THE ASSESSEE ONLY HAVE BEEN DEBITED IN THE P & L A/C. I N SUPPORT OF HER CLAIM, SHE HAS ALSO FILED BEFORE US CERTIFIC ATE FROM M/S. EMAMI LTD. SHE ALSO DREW OUR ATTENTION ON NOTES T O THE ACCOUNTS GIVEN IN THE ANNUAL REPORT, SHOWING THAT B USINESS OF THE COMPANY WAS NOT TOTAL DISCONTINUED AND THAT THE ASSESSEE COMPANY HAD STARTED THE BUSINESS OF REAL ESTATE DEVELOPMENT. SHE ALSO SUBMITTED COPY OF ASSESSMENT ORDER PASSED IN THE ASSESSEES OWN CASE BY THE AO FOR A.Y .2012-13 WHEREIN THESE FACTS HAVE BEEN MENTIONED BY THE AO T HAT THE ASSESSEE COMPANY HAD STARTED REAL ESTATE BUSINESS, AND THEREFORE, ALL THE EXPENSES CLAIMED BY THE ASSESSEE WERE ZANDU REALTY LTD. 4 ALLOWED BY THE AO IN THE ASSESSMENT ORDER. SHE PLAC ED RELIANCE ON THE JUDGMENTS IN THE CASE OF HINDUSTAN CHEMICAL WORKS LTD 124 ITR 560 (BOM) AND CIT V. RAMAPUR TIMB ER AND TURNERY CO. LTD. AS REPORTED IN 129 ITR 58 (ALLD.). LASTLY, SHE SUBMITTED, WITHOUT PREJUDICE, THAT UNDER SOME CONFU SION OF LOWER AUTHORITIES HAD DISALLOWED THESE EXPENSES UND ER THE BELIEF THAT THESE EXPENSES PERTAINING TO M/S. EMAMI LTD., WHEREAS THE CORRECT FACTS ARE THAT ONLY THOSE EXPEN SES HAVE BEEN DEBITED BY THE ASSESSEE WHICH WERE NOT ACCEPTE D BY THE M/S. EMAMI LTD. SHE FAIRLY SUBMITTED THAT FOR THIS PURPOSE THIS ISSUE CAN BE SENT BACK TO THE FILE OF THE AO F OR EXAMINING ALL THESE FACTS AS WELL AS CERTIFICATE OF EMAMI LTD . AND THEN ALLOWING THE EXPENSES IF THESE WERE FOUND RELATED T O THE ASSESSEE AND NOT TO M/S. EMAMI LTD. 3.2. ON THE OTHER HAND, LD. DR HAS RELIED UPON THE FIND INGS OF THE LD. CIT(A), HOWEVER, IN RESPONSE TO THE DOCUMEN TS SHOWN BY THE LD. COUNSEL IN SUPPORT OF HER CONTENTION THA T THESE EXPENSES DID NOT PERTAIN TO M/S. EMAMI LTD, IT WAS FAIRLY SUBMITTED BY THE LD. DR THAT HE WOULD HAVE NO OBJEC TION IF THIS ISSUE WOULD BE SENT BACK TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH. 3.3. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES AS WELL AS PLACED M ATERIAL BEFORE US FOR OUR CONSIDERATION. DURING THE COURSE OF HEARING OUT ATTENTION WAS DRAWN BY THE LD. COUNSEL TO CERTI FICATE SUBMITTED ON BEHALF OF THE M/S. EMAMI LTD. WE HAVE GONE THROUGH THE CONTENTS OF THESE DOCUMENTS AND FIND TH AT THE ZANDU REALTY LTD. 5 FACTS NARRATED IN THIS CERTIFICATE ARE VERY CRUCIAL AND HAVE DIRECT BEARING ON THE ISSUE BEFORE US. 3.4 FROM THE PERUSAL OF THIS CERTIFICATE, IT IS CLEAR THAT THE EXPENSES WHICH HAVE BEEN CLAIMED BY THE ASSESSEE CO MPANY DO NOT ACTUALLY BELONG TO M/S.EMAMI LTD. IT APPEARS THAT EITHER THESE EVIDENCES WERE NOT SUBMITTED PROPERLY BEFORE LOWER AUTHORITIES OR THESE HAVE JUST BEEN OVER LOOK ED WHILE DECIDING THIS ISSUE. WE HAVE NOTED THAT FROM THE AN NUAL REPORT OF THE ASSESSEE COMPANY FOR ASSESSMENT YEAR 2010-11 ,THAT AS PER NOTES TO THE BALANCE SHEET IT IS CLEARLY MENT IONED THAT THE ASSESSEE COMPANY HAS RETAINED NON-CORE BUSINESS I.E . OTHER THAN THE BUSINESS OF FMCG UNDERTAKING IN OTHER WORD S IT CANNOT BE SAID THAT THE ASSESSEE COMPANY WAS NOT HA VING BUSINESS AND HAD TOTAL DISCONTINUED ITS BUSINESS. I T IS FURTHER BROUGHT TO OUR NOTICE THAT THE AO HIMSELF PASSED TH E ASSESSMENT ORDER FOR A.Y.2012-13 IN THE CASE OF ASS ESSEE COMPANY, WHEREIN IT HAS BEEN MENTIONED THAT ASSESSE E STARTED THE REAL ESTATE BUSINESS, AND THEN ALLOWED THE EXPE NSES CLAIMED BY THE ASSESSEE COMPANY. THUS, TAKING INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND IT APPROPRIATE TO SEND THIS ISSUE BACK TO THE FILE OF AO FOR DECIDING IT AFRESH AFTER AFFORDING PROPER OPPORTUNI TY OF HEARING TO THE ASSESSEE FOR SUBMITTING REQUIRED DETAILS AND DOCUMENTS, AS PER LAW. THE ASSESSEE SHALL ALSO EXTE NT REQUISITE COOPERATION TO THE AO IN THIS REGARD. THE AO SHALL MAKE VERIFICATION OF FACTS ON THE BASIS OF EVIDENCE S AS MAY BE SUBMITTED BY THE ASSESSEE, AND AS MAY BE GATHERS BY AO ZANDU REALTY LTD. 6 HIMSELF. THE AO SHALL KEEP IN MIND OUR GUIDELINES A ND OBSERVATIONS AS DISCUSSED IN PAA 3.3 AND 3.4 ABOVE, WHILE DECIDING THIS ISSUE AFRESH. THUS, THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 4 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER, 2015. SD/- SD/- (AMIT SHUKLA ) ( ASHWANI TANEJA ) '# / JUDICIAL MEMBER $# / ACCOUNTANT MEMBER ! MUMBAI; & DATED : 30/11/2015 CTX? P.S/. .. %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ( )* / THE APPELLANT 2. +,)* / THE RESPONDENT. 3. - - ( ( ) / THE CIT, MUMBAI. 4. - - / CIT(A)- , MUMBAI 5. 01 2 +3 , - ( # 3 4 , ! / DR, ITAT, MUMBAI 6. 2 5 6 ! / GUARD FILE. / BY ORDER, , 0( + //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ! / ITAT, MUMBAI