AKSHAT PUSHPAKANT KEDIA, MUMBAI V. ITO (IT) WARD- 3 (1)(2), MUMBAI

ITA 6922/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 2183 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2015-2016
• Appeal Filed On: 04-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HARSHAD VENGURLEKAR
• Section: 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I, BENCH MUM BAI BEFORE SHRI C.N.PRASAD, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.6922/MUM/2018 ( ASSESSMENT YEAR: 2015-16 ) AKSHAT PUSHPAKANT KEDIA 252/C, GRAND PARADI APT., KEMPS CORNER MUMBAI-400 036 VS. ITO(IT),WARD-3(1)(2) 16 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI-400 021 PAN/GIR NO.AAMPK9273H ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY SHRI. HARSHAD VENGURLEKAR, SR.DR ASSESSEE BY SHRI. HARI S.RAHEJA, AR DATE OF HEARING 2 7 /11 /2019 DATE OF PRONOUNCEME NT 27 /1 1 /2019 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 57 , MUMBAI, DATED 03/09/2018 AND IT PERTAINS TO AY 2015-16. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX APPEALS WAS NOT JUSTIFIE D IN CONFIRMING THE ORDER OF THE ASSESSING OFFICER, DISALLOWING THE CLA IM OF CONSULTANCY CHARGES PAID BY THE APPELLANT TO DR.PUSPKANT MADANL AL KEDIA, MERELY BECAUSE HE IS A DOCTOR BY QUALIFICATION, DOUBTING H IS PROFESSIONAL COMPETENCE, IGNORING HIS INDUSTRY EXPERIENCE AND BU SINESS ACUMEN. 2. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR V ARY THE GROUNDS OF APPEAL AT OR BEFORE THE HEARING OF THE APPEAL. ITA NO.6922/MUM/2018 AKSHAT PUSHPAKANT KEDIA 2 3. THE ASSESSEE IS A NON-RESIDENT ENGAGED IN THE BU SINESS OF SHARE TRADING, FILED HIS RETURN OF INCOME FOR AY 20 15-16 ON 26/09/2015 DECLARING TOTAL INCOME AT RS.2,77,13,46 0/-. THE CASE WAS SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO HAD MADE VARIOUS ADDITIONS, INCLUDING ADDITIONS TOWARDS DISALLOWANCES OF PAYMENT OF CONSU LTANCY CHARGES TO ASSESSEE FATHER AND HUF OF ASSESSEE FATHER, ON T HE GROUND THAT THERE IS NO NEXUS BETWEEN THE PAYMENT OF CONSULTANC Y CHARGES AND BUSINESS ACTIVITY OF THE ASSESSEE AD ALSO, THE ASSE SSEE HAS FAILED TO PROVIDE ANY DETAILS TO PROVE THAT THE PAYMENT OF CO NSULTANCY CHARGES IS COMMENCERATE WITH SERVICES RENDERED BY THE FATHE R OF THE ASSESSEE. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A), BUT COULD NOT SUCCEED, BECAUSE THE LD.CI T(A) REJECTED THE CLAIM OF THE ASSESEE, ON THE GROUND THAT THE AS SESSEE HAS FAILED TO EXPLAIN WITH NECESSARY EVIDENCES THAT THERE IS A LIVE NEXUS BETWEEN PAYMENT OF CONSULTANCY CHARGES AND SERVICES RENDERED BY THE CONSULTANT . THEREFORE, HE OPINED THAT THERE IS NO ERROR IN THE FINDINGS OF THE LD.AO IN DISALLOWANCES OF CONSULTAN CY CHARGES AND ACCORDINGLY, CONFIRMED ADDITIONS MADE BY THE AO. AG GRIEVED BY THE LD. CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. AR FOR THE ASSESEE SUBMITTED THAT THE LD .CIT(A) WAS ERRED IN CONFIRMED DISALLOWANCES OF CONSULTANCY CHA RGES MADE BY THE AO WITHOUT APPRECIATING THE FACT THAT THE ASSES SEE HAS EXPLAINED WITH EVIDENCES BEFORE THE LD. AO THAT THE FATHER OF THE ASSESSEE IS RENDERED SERVICES TO THE ASSESSEE IN CONNECTION WI TH SHARE TRADING BUSINESS AND WHICH RESULTED IN SUBSTANTIAL INCREASE IN DERIVATIVE PROFITS FROM SHARE TRADING ACTIVITY. THE LD. AR, FU RTHER SUBMITTED THAT THE SERVICES PROVIDER IS ALTHOUGH A DOCTOR BY PROFE SSION, BUT HE ITA NO.6922/MUM/2018 AKSHAT PUSHPAKANT KEDIA 3 NEVER PRACTICED MEDICINE. HE, FURTHER, SUBMITTED TH AT SERVICE PROVIDER WAS EMPLOYED WITH A COMPANY IN THE CAPACIT Y OF DIRECTOR, WHICH IS INVOLVED IN MANUFACTURING OF PHARMACEUTICA LS AND WITH HIS VAST EXPERIENCE HAS ADVISED THE ASSESEE IN HIS BUSI NESS, FOR WHICH NECESSARY PAYMENT HAS BEEN MADE. THEREFORE, THERE I S NO REASON FOR THE LD. AO TO DISALLOW SAID EXPENDITURE ONLY FO R THE REASONS THAT THE SERVICE PROVIDER DOES NOT HAVE REQUISITE MANAGE MENT QUALIFICATIONS TO RENDER SAID SERVICES. 5. THE LD. DR, ON THE OTHER HAND, STRONGLY SUPPORTI NG ORDER OF THE LD. AO, AS WELL AS LD.CIT (A) SUBMITTED THAT IT IS VERY CLEAR FROM THE ORDERS OF THE AUTHORITIES BELOW THAT THE ASSESSEE, NEITHER PRODUCED ANY DETAILS TO PROVE RENDERING OF SERVICES BY THE SERVICE PROVIDER, NOR FILED ANY EVIDENCES TO PROVE THERE IS A NEXUS B ETWEEN PAYMENT OF CONSULTANCY CHARGES AND BUSINESS ACTIVITY OF THE ASSESSE. THEREFORE, THE LD. AO, AS WELL AS THE LD.CIT(A) WAS VERY MUCH RIGHT IN REJECTION OF CLAIM OF THE ASSESSEE AND THEIR ORD ER SHOULD BE UPHELD. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. IT IS AN ADMITTED FACT THAT IN ORDER TO CLAIM, THE BENEFIT O F DEDUCTION OF ANY EXPENDITURE, THE ASSESSEE SHALL PROVE WITH NECESSAR Y EVIDENCES THAT SAID EXPENDITURE HAS BEEN EXPANDED WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF HIS BUSINESS. FURTHER, IT IS FOR THE A SSESSEE TO DISCHARGE THE ONUS CAST UPON HIM BY FILING NECESSARY EVIDENCE S, WHEN SAID PAYMENT HAS BEEN MADE TO A RELATED PARTY COVERED WI THIN THE AMBIT OF A PROVISION OF SECTION 40A(2)(B) OF THE I.T.ACT, 1961. IN LIGHT OF ABOVE LEGAL PROPOSITION, IF YOU EXAMINE THE CLAIM O F THE ASSESSEE ITA NO.6922/MUM/2018 AKSHAT PUSHPAKANT KEDIA 4 THAT THERE IS A NEXUS BETWEEN PAYMENT OF CONSULTANC Y CHARGES TO HIS FATHER AND HIS BUSINESS ACTIVITY, WE FIND THAT THE LOWER AUTHORITIES HAS REJECTED THE CLAIM OF THE ASSESEE, ON THE GROUN D THAT THE ASSESSEE, NEITHER FURNISHED ANY EVIDENCES TO PROVE THAT THE SERVICES PROVIDER HAS PROVIDED SERVICES TO THE ASSESSEE, N OR FILED ANY DETAILS TO PROVE THAT THERE IS A LIVE NEXUS BETWEEN EXPENSES INCURRED AND BUSINESS ACTIVITY OF THE ASSESSEE. FURTHER, IN THIS CASE, THE ASSESSEE IS INTO THE BUSINESS OF SHARE TRADING, WHE REAS THE PAYMENT HAS BEEN MADE TO HIS FATHER FOR RENDERING CONSULTAN CY SERVICES WITHOUT EXPLAINING, HOW THE SERVICES PROVIDED BY HI S FATHER IS BENEFITED HIS BUSINESS. FURTHER, AS PER FACTS BROUG HT OUT BY THE LOWER AUTHORITIES, THE SERVICE PROVIDER DOES NOT HAVE REQ UISITE MANAGEMENT SKILLS TO GIVE CONSULTANCY SERVICES TO T HE ASSESEE. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE A SSESEE HAS FAILED TO FILE NECESSARY EVIDENCES TO PROVE LIVE NEXUS BET WEEN PAYMENT OF CONSULTANCY CHARGES AND BUSINESS ACTIVITY OF THE AS SESSE AND ALSO RENDERING SERVICES BY THE SERVICE PROVIDER. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO ERROR IN THE FINDI NGS OF THE LD.CIT(A), WHILE CONFIRMING ADDITIONS MADE TOWARDS DISALLOWANCES OF CONSULTANCY CHARGES . HENCE, WE ARE INCLINED TO UPHOLD THE ORDER OF THE LD.CIT AND DISMISSED APPEAL FILED BY THE ASS ESEE. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 /11/ 2019 SD/- ( C.N.PRASAD) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO.6922/MUM/2018 AKSHAT PUSHPAKANT KEDIA 5 MUMBAI ; DATED 27 /11/2019 THIRUMALESH 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//