ECL FINANCE LTD, MUMBAI V. DCIT RG 3(1), MUMBAI

ITA 6613/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3767 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 28-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ARVIND SONDE
• Keywords: Additional evidence

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./ITA/6613/MUM/2011, /ASSESSMENT YEARS: 2008-09 ECL FINANCE LTD. 14 TH FLOOR, EXPRESS TOWERS NARIMAN POINT,MUMBAI-400 021. PAN:AABCE 4916 D VS. DCIT, RG-3(1) AAYAKAR BHAVAN, MK RD. MUMBAI-400 004. ( /APPELLANT ) ( / RESPONDENT) REVENUE BY:S/ SHRI KAILASH GAIKWAD, MANJUNATH SWAMY-DR ASSESSEE BY: SHRI ARVIND SONDE / DATE OF HEARING: 12.07.2016 / DATE OF PRONOUNCEMENT: 03.08.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 07.07.11 OF CIT(A)-7 ,MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,ENGAGED I N THE BUSINESS OF FINANCING, MONEY LENDING AND CORPORATE LENDING FILE D ITS RETURN OF INCOME ON 28.9. 2008,DECLARING INCOME AT RS.62.39 CRORES.THE ASSESSING OFFICER(AO)COMPLETED THE ASSESSMENT ON,30.12.2010,U /S.143(3) OF THE ACT,DETERMINING THE INCOME OF THE ASSESSEE AT RS.6 2,66,08,920/-. 2. THE SOLITARY GROUND OF APPEAL,RAISED BY THE ASSESSE E,IS ABOUT DISALLOWING THE CLAIM OF DEDUCTION OF PROFESSIONAL FEES.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAS RAISED CAPITAL FROM VARIOUS SOURCES, INCLUDING RAISING OF FUNDS BY ISSUE OF SHARES, THAT IT HAD IN CURRED EXPENDITURE OF RS.15.02 LAKHS UNDER THE HEAD PROFESSIONAL FEE PAID TO AMARC HAND MANGALDAS IN RELATION TO THE ASSISTANCE PROVIDED FOR DOCUMENTATION-DRAFTI NG OF AGREEMENTS ETC. TO ENABLE LEHMAN BROTHERS TO INVEST IN THE COMPANY. HE OBSERVED THAT THE SAID EXPENDITURE WAS INCURRED FOR RAISING THE SHARE CAPI TAL AND NOT FOR THE BUSINESS PURPOSES. HE DIRECTED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE AFORESAID EXPENDITURE SHOULD NOT BE DISALLOWED.VIDE,ITS LETTE R DT.20.12.2010,THE ASSESSEE 6613/M/11 ECL FINANCE LTD. 2 ARGUED THAT THE PAYMENT MADE TO AMARCHAND MANGALDAS AS PROFESSIONAL FEE WAS FOR RAISING THOSE FUNDS THAT WERE USED FOR BUSINESS PURPOSES.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE,THE AO HELD THE PAYM ENT WAS MADE FOR WORK RELATED TO RAISING OF CAPITAL,THAT THE EXPENDITURE WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES.HE MADE A DIS ALLOWANCE OF RS.15.02 LAKHS. 3. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE PREFERRE D AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM,IT WAS A RGUED THAT THE PROFESSIONAL FEE WAS PAID FOR SERVICES IN DRAFTING OF DOCUMENTAT ION ETC. AS PER THE FAA,THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE BEFORE HIM I N THAT REGARD. THEREFORE, UPHOLDING THE ORDER OF THE AO,HE CONFIRMED THE ADDI TION. 4. BEFORE US,THE AUTHORISED REPRESENTATIVE (AR)STATED THAT ASSESSEE HAD FILED ADDITIONAL EVIDENCE IN THE FORM OF A LETTER FROM AM ARCHAND AND MANGALDAS AND SURESH A. SHROFF AND CO.,THAT THE DOCUMENT COULD NO T BE PRODUCED BEFORE THE AO/FAA,THAT ADDITIONAL EVIDENCE SUBMITTED WOULD AFF ECT THE OUTCOME OF THE APPEAL,THAT SAME SHOULD BE ADMITTED AS ADDITIONAL E VIDENCES AND BE CONSIDERED WHILE ADJUDICATING THE ISSUE.DEPARTMENTAL REPRESENT ATIVE ( DR) LEFT ISSUE TO THE DISCRETION OF THE BENCH. 5. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE MATERIAL BEFORE US.WE FIND THE DOCUMENT SUBMITTED BY THE ASSESSEE IS A VI TAL PIECE OF EVIDENCE TO DECIDE THE CONTROVERSY BEFORE US.THEREFORE, IN THE INTEREST OF JUSTICE, WE ARE RESTORING THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION. HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE A SSESSEE AND CONSIDER THE ADDITIONAL EVIDENCE.EFFECTIVE GROUND OF APPEAL,RAI SED BY THE ASSESSEE,IS DECIDED IN ITS FAVOUR,IN PART. 6613/M/11 ECL FINANCE LTD. 3 APPEAL BY THE ASSESSEE STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD AUGUST,2016. 3 , 2016 SD/- SD/- ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 03.08.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.