KOHINOOR TELEVIDIEO P.LTD, MUMBAI V. DCIT RG 5(1), MUMBAI

ITA 6469/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0046 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 6469/MUM/2014 : A.Y : 2010 - 11 M/S. KOHINOOR TELEVIDEO PVT. LTD. 182, HAJI HABIB BUILDING, DR. B.A. ROAD, DADAR (E), MUMBAI 400 014. PAN : AAACG1298B (APPELLANT) VS. DCIT, RANGE - 5(1), MUMBAI (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI SAURABH DESHPANDE DATE OF HEARING : 07/09/2017 DATE OF PRONOUNCEMENT : 07/09/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 9 , MUMBAI DATED 01.08.2014 , PERTAINING TO THE ASSESSMENT YEAR 2010 - 11 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 19.03.2013 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NO. 6469/MUM/2014 M/S. KOHINOOR TELEVIDEO PVT. LTD. 2 . AT THE TIME OF HEARING, IT WAS NOTICED THAT NONE APPEARED ON BEHALF OF THE APPELLANT - ASSESSEE INSPITE OF SERVICE OF NOTICE BY RPAD. ON THE OTHER HAND, THE LD. DR APPEARED ON BEHALF OF THE REVENUE. 3 . ACCORDINGLY, IN VIEW OF RULE 2 4 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963, THE APPEAL OF THE ASSESSEE IS BEING DISPOSED OFF EX - PARTE QUA THE APPELLANT - ASSESSEE AFTER HEARING THE RESPONDENT - REVENUE ON MERITS. 4. IN THIS APPEAL, THE ONLY GRIEVANCE OF THE ASSESSEE IS THAT THE CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OUT OF INCENTIVE PAID TO DIRECTORS TO 40% OF THE TOTAL EXPENSES OF RS.35,32,800/ - INSTEAD OF DELETING THE ENTIRE DISALLOWANCE. 5. ON THE BASIS OF THE DISCUSSION IN THE ORDERS OF THE AUTHORITIES BELOW, THE RELEVANT FACTS ARE AS FOLLOWS. ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956 AND IS, INTER - ALIA , ENGAGED IN THE BUSINESS OF TRADING OF ELECTRON IC ITEMS. THE ASSESSING OFFICER NOTED THAT IN ADDITION TO REMUNERATION, THE DIRECTORS WERE ALSO PAID INCENTIVE TO THE EXTENT OF RS.35,32,800/ - , WHICH WAS HIGHER THAN THE AMOUNT PAID IN THE IMMEDIATELY PRECEDING YEAR OF RS.29,77,000/ - . THE ASSESSING OFFIC ER NOTED THAT THERE WAS NO JUSTIFICATION TO PAY THE INCENTIVE TO THE DIRECTORS AS IT WAS NORMALLY PAID TO THE STAFF ENGAGED IN RETAILING. SECONDLY, AS PER THE ASSESSING OFFICER, PAYMENT OF INCENTIVE TO THE DIRECTORS IN ADDITION TO REMUNERATION WAS AKIN TO DISTRIBUTION OF PROFITS IN LIEU OF DIVIDEND, WHICH WAS A COLOURABLE TRANSACTION INTENDED TO AVOID DIVIDEND DISTRIBUTION TAX, AND AT THE 3 ITA NO. 6469/MUM/2014 M/S. KOHINOOR TELEVIDEO PVT. LTD. SAME TIME CLAIMING EXPENDITURE IN THE HANDS OF THE ASSESSEE - COMPANY. FOR THE SAID REASONS, HE DISALLOWED THE ENTIRE EX PENDITURE OF RS.35,32,800/ - . THEREAFTER, THE CIT(A) HAS RESTRICTED THE DISALLOWANCE TO 40% OF RS.35,32,800/ - , AND ALLOWED THE BALANCE OF THE EXPENDITURE CONSIDERING THAT A PORTION OF THE EXPENDITURE WAS REASONABLE AS THAT THERE WAS NO INCREASE IN THE REMU NERATION OF THE DIRECTORS FROM ASSESSMENT YEAR 2004 - 05 ONWARDS. NOT BEING SATISFIED WITH THE DECISION OF CIT(A), ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6. AT THE TIME OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE AND, THEREFORE, ON THE BASIS OF T HE DISCUSSION IN THE ORDER OF THE CIT(A) WE FIND NO REASON TO INTERFERE WITH HIS ULTIMATE CONCLUSION. THE CIT(A) HAS CONSIDERED THE LEVEL OF REMUNERATION PAID TO THE DIRECTORS IN THE PAST AS WELL AS THE LEVEL OF BUSINESS CARRIED OUT AND HAS THEREAFTER EST IMATE D THE ALLOWABILITY OF THE IMPUGNED EXPENDITURE. IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY, WE ARE INCLINED TO AFFIRM THE DECISION OF CIT(A). WE HOLD SO. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. THE ABOVE DECISION WAS PRONOUNCED IN THE COURT IN THE PRESENCE OF THE LD. DR AT THE CONCLUSION OF THE HEARING ON 7 TH SEPTEMBER, 2017. SD/ - SD/ - ( RAM LAL NEGI ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 7 T H SEPTEMBER , 201 7 *SSL* 4 ITA NO. 6469/MUM/2014 M/S. KOHINOOR TELEVIDEO PVT. LTD. COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI