ASSISTANT COMMISSIONER OF INCOME TAX 21(2), MUMBAI V. PHE CONSULTANTS, MUMBAI

ITA 6943/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5355 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 07-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILLIP
• Assessee Lawyers: K GOPAL AW SHRI TANMAY PHADKE

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. 6943 / MUM . /2017 ( ASSESSMENT YEAR : 20 1 2 13 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 21(2) , MUMBAI . APPELLANT V/S PHE CONSULTANTS 201, OWNERS INDUSTRIAL ESTATE GABRIAL ROAD, MAHIM MUMBAI 400 0 16 PAN AAAFP7931K . RESPONDENT REVENU E BY : SHRI NEIL PHILLIP ASSESSEE BY : SHRI K. GOPAL A/W SHRI TANMAY PHADKE DATE OF HEARING 15.05.2019 DATE OF ORDER 24.05.2019 O R D E R PER SAKTIJIT DEY. J.M. THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE CHALLENGING THE ORDER DATED 15 TH SEPTEMBER 201 7 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 33 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2012 13 . 2 PHE CONSULTANTS 2 . THE SOLITARY ISSUE IN DISPUTE IS IN RELATION TO THE DELETION OF ADDITION OF ` 1,98,75,000. 3 . BRIEF FACTS ARE, THE ASSESSEE A PARTNERSHIP FIRM IS CARRYING ON BUSINESS OF PROVIDING CONSULTANCY SERVICE IN ENVIRONMENT SECTOR. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED ITS ORI ON 29 TH SEPTEMBER 2012, DECLARING TOTAL INCOME OF ` 10,66,930. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF ` 1,9 8,75,000, TO THE PROFIT & LOSS A CCOUNT TOWARDS FEES RECEIVABLE , CALLED UPON THE ASSESSEE TO FURNISH THE NECESSARY DETAILS AND EXPLA IN WHY THE DEDUCTION CLAIMED SHOULD NOT BE DISALLOWED, AS IT IS NOT IN THE NATURE OF EXPENDITURE. THOUGH , THE ASSESSEE FILED ITS EXPLANATION OBJECTING TO THE P ROPOSED DISALLOWANCE AND JUSTIFIED ITS CLAIM, HOWEVER, THE ASSESSING OFFICER DID NOT FIND MERIT I N THE SUBMISSIONS OF THE ASSESSEE. HE OBSERVED , THE AMOUNT RECEIVABLE CANNOT BE DEBITED AS EXPENDITURE SINCE IT IS NOT EXPENDITURE BUT A REVENUE RECEIPT WHICH SHOULD HAVE BEEN SHOWN ON THE CREDIT SIDE OF THE PROFIT & LOSS ACCOUNT. ACCORDINGLY, DISALLOWING ASSESSEES CLAIM HE TREATED THE AMOUNT OF ` 1,98,75,000, AS INCOME OF THE ASSESSEE. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION BEFORE THE FIRST APPELLATE AUTHORITY. 4 . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) FOUN D THAT THE ASSESSEE IS FOLLOWING A METHOD 3 PHE CONSULTANTS OF ACCOUNTING CONSISTENTLY UNDER WHICH IT OFFERS INCOME ON THE BASIS OF WORK COMPLETED AND AS PER THE SAID METHOD OF ACCOUNTING, THE ASSESSEE HAS OFFERED AN AMOUNT OF ` 1,98,75,000, IN THE ASSESSMENT YEAR 2011 12. HE FURTHER OBSERVED , THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE HAS ALSO BEEN APPROVED BY THE LEARNED COMMISSIONER (APPEALS) AND THE TRIBUNAL WHILE DECIDING SIMILAR ISSUE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008 09. ACCORDINGLY, HE DELETE D THE ADDITION MADE BY THE ASSESSING OFFICER. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELYING UPON THE OBSERVATIONS OF THE ASSESSING OFFICER SUBMITTED , THE AMOUNT RECEIVABLE C ANNOT BE CLAIMED AS EXPENDITURE. THEREFORE , HE JUSTIFIED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 6 . SHRI K. GOPAL, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED , THE ASSESSEE IS R ENDERING SERVICES TO THE BRIHANM UMBAI MUNICIPAL CORPORATION (BMC). HE SUBMITTED , AS PER THE SYSTEM OF ACCOUNTING FOLLOWED BY THE ASSESSEE, AT THE END OF EACH ACCOUNTING YEAR IT ESTIMATE S THE EXTENT OF WORK DONE AND MAKES A PROVISION FOR FEES RECEIVABLE IN THE BOOKS OF ACCOUNT WHICH IS OFFERED TO TAX. HE SUBMITTED , THE PROVISION IS REVERSED IN THE SUCCEEDING YEAR AND CLAIMED AS EXPENDITURE. HE SUBMITTED , TH E AFORESAID METHOD OF ACCOUNTING IS FOLLOWED BY THE ASSESSEE FROM THE VERY INCEPTION OF ITS BUSINESS. HE SUBMITTED , FOLLOWING THE SAME METHOD OF ACCOUNTING THE 4 PHE CONSULTANTS ASSESSEE OFFERED THE FEES RECEIVABLE AS INCOME IN THE ASSESSMENT YEAR 2011 12 AND IN THE ASSESSM ENT YEAR 2012 1 3 THE OPENING BALANCE OF FEES RECEIVABLE WAS CLAIMED AS EXPENDITURE. HE SUBMITTED , BY AGAIN BRINGING TO TAX THE AMOUNT OF ` 1,98,75,000, IN THE IMPUGNED ASSESSMENT YEAR, THE ASSESSING OFFICER IS ACTUALLY TAXING THE SAME INCOME TWICE. THUS, HE SUBMITTED , LEARNED COMMISSIONER (APPEALS) WAS JUSTIFIED IN DELETING THE ADDITION. IN SUPPORT OF HIS SUBMISSIONS, LEARNED AUTHORISED REPR ESENTATIVE RELIED UPON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN PCIT V/S C.U. INSPECTIONS INDIA PVT. LTD., [2018] 91 TAXMANN.COM 344 (BOM.). 7 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. FROM THE FACTS AND MATERI AL ON RECORD, IT IS EVIDENT THAT AS PER THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE , INCOME IS RECOGNIZED ON THE BASIS OF CONSULTING FEES ACTUALLY RECEIVED AND CONSULTANCY FEE RECEIVABLE TO THE EXTENT OF WORK DONE DURING THE YEAR. THUS, AS PER THE ME THOD OF ACCOUNTING, THE ASSESSEE HAD OFFERED THE AMOUNT OF ` 1,98,75,000, AS INCOME IN THE ASSESSMENT YEAR 2011 12 ON THE BASIS OF WORK DONE , THOUGH , THE AMOUNT WAS SHOWN AS RECEIVABLE IN THE BOOKS OF ACCOUNT. SINCE , THE INCOME WAS ALREADY OFFERED IN THE A SSESSMENT YEAR 2011 12, THE OPENING BALANCE OF THE AMOUNT RECEIVABLE WAS REVERSED IN THE IMPUGNED ASSESSMENT YEAR AND THE ASSESSEE CLAIMED IT AS EXPENDITURE IN THE PROFIT & LOSS ACCOUNT. THERE IS NO DISPUTE THAT THE ASSESSEE IS FOLLOWING THE AFORESAID METH OD 5 PHE CONSULTANTS OF ACCOUNTING CONSISTENTLY OVER THE YEARS. TH IS FACT HAS BEEN DISCUSSED BY LEARNED COMMISSIONER (APPEALS) WHILE REFERRING TO THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN THE ASSESSMENT YEAR 2008 09. IN ANY CASE OF THE MATTER, THERE IS NO DISPU TE THAT THE AMOUNT OF ` 1,98,75,000, HAS BEEN OFFERED TO TAX IN THE ASSESSMENT YEAR 2011 12. THEREFORE, BRINGING THE SAME AMOUNT TO TAX AGAIN IN THE IMPUGNED ASSESSMENT YEAR WOULD RESULT IN DOUBLE TAXATION OF THE SAME INCOME , WHICH IS NOT PERMISSIBLE IN LA W. IN VIEW OF THE AFORESAID, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED COMMISSIONER (APPEALS). GROUNDS ARE DISMISSED. 8 . I N THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 24.05.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 24.05.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI