ASST CIT CIRCLE-9 (3)(2), MUMBAI V. M/S FUTURE RETAIL LTD., MUMBAI

ITA 7014/MUM/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1466 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Appeal Filed On: 15-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTESHWAR SWAMILD
• Assessee Lawyers: DINKLE HARIYA LD

Judgement Text

ITA NO.7014 /MUM/2019 M/S. FUTURE RETAIL LTD. ASSESSMENT YEAR: 2014-15 1 IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI , , BEFORE HONBLE SHRI AMARJIT SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO.7014/MUM/2019 ( / ASSESSMENT YEAR: 2014-15) A CIT - CIRCLE - 9(3)(2) ROOM NO.418, 4 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020 / VS. M/S. FUTURE RETA IL LIMITED GF, KNOWLEDGE HOUSE OFF, JOGESHWARI VIKHROLI LINK RD. SHYAM NAGAR, JOGESHWARI (EAST) MUMBAI-400 064 '# ./ ./PAN/GIR NO. AADCB-1093-N ( !#% /APPELLANT ) : ( &'#% / RESPONDENT ) ASSESSEE BY : MS. DINKLE HARIYA-LD. AR RE VENUE BY : SHRI SHANTESHWAR SWAMI-LD. DR / DATE OF HEARING : 01/07/2021 / DATE OF PRONOUNCEMENT : 01/07/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR (AY) 2014-15 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-33, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. 507/17-18 DATED 27/08/2019 ON FOLLOWING GROUNDS: - ITA NO.7014 /MUM/2019 M/S. FUTURE RETAIL LTD. ASSESSMENT YEAR: 2014-15 2 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE EXPENSES ON ACCOUNT OF REAL ESTATE, RESEARCH, DUE DILIGENCE EXPENDITURES AND MARKETING RESEARCH EXPENDITURE AS REVENUE IN NATURE AND THEREBY DELETING THE DISALLOW ANCE BY IGNORING THE FACT THAT THE ASSESSEE WOULD BE DERIVING ENDURING BENEFIT FROM TH ESE EXPENSES AND HENCE THE SAME ARE CAPITAL IN NATURE? 2. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE , THE LD.CIT(A) OUGHT TO HAVE CONSIDERED THE EXPENSES IN THE NATURE OF PRELIMINAR Y EXPENSES AS PER SECTION 35D(2) OF THE ACT AND THEREFORE ALLOWABLE ONLY AS P ER PROVISION OF SECTION 35D(1). 2. HAVING HEARD RIVAL SUBMISSIONS, THE UNDISPUTED P OSITION THAT EMERGES BEFORE US IS THAT THE ISSUE RAISED BY THE R EVENUE IS COVERED IN ASSESSEES FAVOR BY THE EARLIER DECISIONS OF THIS T RIBUNAL IN ASSESSEES OWN CASE. IN FACT, LD. CIT(A) HAS RELIED UPON THE O RDERS OF TRIBUNAL FOR AYS 2010-11 AND 2011-12 WHILE ADJUDICATING THE APPE AL. NO CHANGE IN FACTS COULD BE DEMONSTRATED BEFORE US AND THERE IS NOTHING ON RECORD WHICH WOULD INDICATE THAT THE EARLIER DECISIONS OF TRIBUNAL ARE NOT APPLICABLE TO THE FACTS OF THIS YEAR. IN THE ABOVE BACKGROUND, OUR ADJUDICATION TO THE APPEAL WOULD BE AS GIVEN IN SUC CEEDING PARAGRAPHS. 3.1 THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENAGGED IN RETAIL TRADING OF HOUSEHOLD / CONSUMER PRODUCTS WAS ASSESSED FOR THE YEAR U/S 1 43(3) O N 19/12/2016. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT TRANSPIRED THAT THE ASSESSEE INCURRED CERTAIN EXPENSES AS DUE DILIGENCE EXPENDI TURE & MARKETING RESEARCH EXPENDITURE FOR RS.273.93 LACS. THE MARKE TING RESEARCH EXPENSES WERE STATED TO BE INCURRED TO CONDUCT SURV EY STUDIES AND WOULD INCLUDE HOUSEHOLD COUNT AND PROFILING STUDY, CATCHMENT AREA STUDY, DOOR TO DOOR INTERVIEW, STORE INTERVIEWS, PR ICE PERCEPTION STUDY ETC. THESE WERE STATED TO HAVE BEEN CONDUCTED TO FACILIT ATE IDENTIFYING APPROPRIATE LOCATION FOR EXPANSION OF EXISTING BUSI NESS. THE DUE ITA NO.7014 /MUM/2019 M/S. FUTURE RETAIL LTD. ASSESSMENT YEAR: 2014-15 3 DILIGENCE EXPENDITURE WAS STATED TO BE INCURRED IN CONNECTION WITH THE PROPOSED PROPERTIES TO BE TAKEN UP FOR STORE SITE B EFORE SETTING UP OF NEW STORES / OUTLET. THE ASSESSEE WOULD GET DUE DILIGEN CE OF THE PROPERTY FROM AN INDEPENDENT PARTY TO CHECK THE LEGALITY OF THE PROPERTY. THIS WOULD INVOLVE IDENTIFICATION OF LEGAL PROBLEMS ASSO CIATED WITH TITLE OF PROPERTY, SOLUTIONS AND SITE MEASUREMENT, DRAWING A ND DESIGN COST ETC. DEPENDING ON DUE DILIGENCE REPORT, THE ASSESSEE WOU LD DECIDE WHETHER TO OPEN STORE AT THE NEW SITE OR NOT. 3.2 THE ASSESSEE CLAIMED THAT ALL SUCH EXPENDITURE WAS LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS IN TERM S OF SEC.37(1) AND HENCE, REVENUE IN NATURE. HOWEVER, DISAGREEING WITH ASSESSEES SUBMISSIONS, LD. AO OPINED THAT THE NATURE OF EXPEN DITURE WAS SUCH THAT IT WOULD GIVE BENEFIT FOR LONGER DURATION AND THERE FORE, THE EXPENDITURE WOULD BE CAPITAL IN NATURE. SIMILAR VIEW WAS TAKEN IN ASSESSMENT ORDERS OF AYS 2010-11 TO 2013-14. FINALLY, THE EXPENDITURE WAS DISALLOWED. 4. THE LD. CIT(A) NOTED THAT SIMILAR DISALLOWANCE M ADE IN AYS 2010- 11 TO 2012-13 STOOD DELETED DURING APPELLATE PROCEE DINGS. IN FACT, THE REVENUES FURTHER APPEAL FOR AYS 2010-11 & 2011-12 WAS DISMISSED BY THE TRIBUNAL TAKING A VIEW THAT EXPENDITURE WAS NOT CAPITAL IN NATURE AND HENCE AN ALLOWABLE DEDUCTION. RELYING UPON THE SAME , THE DISALLOWANCE WAS DELETED. AGGRIEVED, THE REVENUE IS IN FURTHER A PPEAL BEFORE US. 5. WE FIND THAT THIS ISSUE STOOD COVERED IN ASSESSE ES FAVOR BY THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR AYS 2010-11 & 2011-12. WE FURTHER NOTE THAT REVENUES APPEAL FOR AY 2012-1 3 HAS ALSO BEEN DISMISSED BY COORDINATE BENCH OF THIS TRIBUNAL VIDE ITA NO.4060/MUM/2018 DATED 23/08/2019, A COPY OF WHICH IS ON RECORD. THIS ITA NO.7014 /MUM/2019 M/S. FUTURE RETAIL LTD. ASSESSMENT YEAR: 2014-15 4 ORDER FOLLOWS THE TRIBUNAL ORDER FOR AYS 2010-11 & 2011-12. THEREFORE, FACTS BEING PARI-MATERIA THE SAME, TAKING THE SAME VIEW, WE DISMISS THE APPEAL. 6. THE APPEAL STANDS DISMISSED. ORDER PRONOUNCED ON 01 ST JULY, 2021 SD/- SD/- (AMARJIT SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01/07/2021 S R.PS, JAISY VARGHESE ! / COPY OF THE ORDER FORWARDED TO : 1. !#% / THE APPELLANT 2. &'#% / THE RESPONDENT 3. - ( ! ) / THE CIT(A) 4. - / CIT CONCERNED 5. ./& 0 , ! 0 , / DR, ITAT, MUMBAI 6. /12 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.