ACE TELEVOICE & SERVICES P.LTD, MUMBAI V. ACIT 10(3), MUMBAI

ITA 713/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0972 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Keywords: Gift; Opportunity of being heard; Non-deduction of tax

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI . . , , , BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI RAJENDRA , ACCOUNTANT MEMBER ITA NO.713/MUM/2013(A.Y. 2009-10) ACE TELEVOICE & SERVICES PVT. LTD., A.C.I.T 10(3) , 302, SAI SMRUTI, LBS MARG, VS. AAYKAR BHAVAN, MK ROAD, MULUND(W), MUMBAI 400080 MUMBAI 400 020 PAN: AABCA8256A (APPELLANT ) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI ASGH AR ZAIN DATE OF HEARING 31/03/2015 DATE OF PRONOUNCEMENT 08/04/2015 ORDER PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE ASSESSEE AND IT IS DIRECTED AGAINST ORDER PASSED BY LD. CIT(A)-22 MUMBAI DATED 21/11/2012 FOR ASSESS MENT YEAR 2009-10. GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN JAW, THE LEARNED C.I T.(A) ERRED IN PARTLY SUSTAINING THE DISALLOWANCES MADE BY THE LE ARNED A.O. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED C.IT(A) ERRED IN PARTLY SUSTAINING THE DISALLOWANCES MADE BY THE LEA RNED A.O. AND THAT TOO WITHOUT GIVING FULL AND PROPER OPPORTUNITY OF BEING HEARD IN THE MATTER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED C.IT(A) ERRED IN PARTLY SUSTAINING THE DISALLOWANCES MADE BY THE LEA RNED A.O. AND THAT TOO WITHOUT APPRECIATING FULLY AND PROPERLY THE FACTS OF THE CASE. ITA NO.713/MUM/2013(A.Y. 2009-10) 2 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED C.IT(A) ERRED IN APPROVING THE ACTION OF THE LEARNED A.O. IN DISALLO WANCE AN AMOUNT OF RS. 60,41,0301- BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE I.T. ACT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED C.IT(A) ERRED IN APPROVING THE ACTION OF THE LEARNED A.O. IN DISALLO WANCE AN AMOUNT OF RS. 8,77,451/- BEING 15% OF THE SALES AND BUSINESS PROMOTION EXPENSES. 2. EARLIER THIS APPEAL WAS FIXED FOR HEARING ON 27/ 10/2014, WHEN NONE APPEARED ON BEHALF OF THE ASSESSEE. AS THE DATE WAS INTIMAT ED THROUGH NOTICE BOARD, THE MATTER WAS ADJOURNED TO 31/03/2015 WITH A DIRECTION TO ISSUE NOTICE THROUGH RPAD. ACCORDINGLY, NOTICE THROUGH RPAD WAS ISSUED ON 12/11/2014 FIXING THE DATE OF HEARING ON 31/3/2015. THE SAID NOTICE HAS NOT BEEN RECEIVED BACK, THEREFORE, PRESUMING SERVICE IS EFFECTED ON THE ASS ESSEE, WE PROCEED TO DECIDE THE APPEAL ON MERITS EX-PARTE QUA THE ASSESSEE AS NONE APPEARED ON BEHALF OF THE ASSESSEE ON THE FIXED DATE OF HEARING. 3. GROUND NO.1 IS GENERAL IN NATURE, NOT ASSAILING ANY SPECIFIC DISALLOWANCE SUSTAINED BY LD.CIT(A), THEREFORE, NEED NOT TO BE A DJUDICATED SEPARATELY. 4. APROPOS GROUND NO.2 & 3, IT IS THE CASE OF THE A SSESSEE THAT LD. CIT(A) HAS ERRED IN PARTLY SUSTAINING THE DISALLOWANCES MADE B Y AO AND THAT TOO WITHOUT GIVING FULL AND PROPER OPPORTUNITY OF BEING HEARD I N THE MATTER. IT IS SEEN FROM THE ORDER OF LD. CIT(A) THAT ASSESSEE HAS REPRESENTED BEFORE LD. CIT(A) THROUGH SHRI MUKUL S. PATNAKAR, CHARTERED ACCOUNTANT AND THE SUB MISSIONS OF THE ASSESSEE HAVE BEEN CONSIDERED BY LD. CIT(A) IN PARA 2.3, WHEREIN LD. CIT(A) HAS RECORDED THE SUBMISSIONS OF THE REPRESENTATIVE OF THE ASSESSEE. THUS, IT CANNOT BE SAID THAT LD. CIT(A) HAS NOT GIVEN FULL AND PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS DISMISSED. ITA NO.713/MUM/2013(A.Y. 2009-10) 3 5. APROPOS GROUND NO.4, THE ASSESSEE IS ASSAILING T HE DISALLOWANCE OF A SUM OF RS.60,41,030/-, WHICH REPRESENTS INTEREST PAID BY T HE ASSESSEE TO RELIANCE CAPITAL LTD. (NBFC) ON BORROWED AMOUNT OF RS.7.00 CORES. SINCE TAX WAS NOT DEDUCTED AT SOURCE, THE SAID AMOUNT WAS DISALLOWED. IN DEF ENSE OF DISALLOWANCE THE SUBMISSIONS OF THE ASSESSEE WERE TWO FOLD; THAT RE LIANCE CAPITAL BEING NBFC, THE ASSESSEE NEED NOT TO DEDUCT TAX AT SOURCE. THIS PLEA WAS ALSO PLACED BEFORE THE AO AND SUCH PLEA HAS BEEN REJECTED ON THE GROUND TH AT THERE IS NO EXCEPTION PROVIDED IN SECTION 194A, ACCORDING TO WHICH IT COU LD BE HELD THAT INTEREST PAYMENT TO NBFC IS NOT SUBJECT TO TDS. AS TDS WAS NOT DEDUCTED AND PAID TO THE GOVERNMENT DISALLOWANCE WAS MADE UNDER SECTION 40(A)(IA)OF THE INCOME TAX ACT,1961 (THE ACT). THE SECOND PLEA OF THE ASSESSE E IS THAT THERE IS AN AMENDMENT IN SECTION 40(A)(IA) BROUGHT INTO STATUTE BY FINANC E BILL 2012, ACCORDING TO WHICH A SECOND PROVISO IS ADDED TO SECTION 40(A)(IA) OF THE ACT AND IT HAS BEEN DESCRIBED THAT WHERE AN ASSESSEE FAILS TO DEDUCT TAX, THE WHO LE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF CHAPTER XVIIB ON ANY SUCH SUM BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO TO SUB-SECTION(1) OF SECTION 201 OF THE ACT, THEN FOR THE PURPOSE OF TH IS SUB-CLAUSE, IT SHALL BE DEEMED THAT ASSESSEE HAS DEDUCTED AND PAID THE TAX ON SUCH SUM ON THE DATE OF FURNISHING OF THE RETURN OF INCOME BY THE RECIPIENT PAYEE REFE RRED TO IN THE SAID PROVISO. SUCH CONTENTION OF THE ASSESSEE HAS BEEN REJECTED ON THE GROUND THAT THE SAME HAS BEEN BROUGHT ON STATUTE W.E.F. 1/4/2013 AND IS APPLICABL E TO ASSESSMENT YEAR 2012-13 BUT NOT APPLICABLE TO IMPUGNED ASSESSMENT YEAR 2009-10. THUS, LD. CIT(A) HAS UPHELD THE DISALLOWANCE, THE ASSESSEE IS AGGRIEVED, HENCE HAS FILED AFOREMENTIONED GROUND. 5.1 LD. DR RELIED UPON THE ORDER PASSED BY LD. CIT( A). ITA NO.713/MUM/2013(A.Y. 2009-10) 4 5.2 AFTER CAREFUL CONSIDERATION OF THE ASSESSMENT ORDER AND ORDER PASSED BY LD. CIT(A) AND ALSO FACTS MENTIONED IN THESE ORDERS, WE ARE OF THE OPINION THAT DISALLOWANCE HAS RIGHTLY BEEN SUSTAINED BY LD. CIT( A) AS ASSESSEE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUGGEST THAT FIRSTLY, NO TAX WAS LIABLE TO BE DEDUCTED IN RESPECT OF PAYMENT OF INTEREST TO NBFC FOR WHICH TH ERE IS NO EXCEPTION PROVIDED IN THE STATUTE; SECONDLY THAT THE SAID PROVISO ADDED B Y FINANCE BILL 2012 COULD ACT RETROSPECTIVELY AND ON THE BASIS OF THE SAID PROVIS O THE ASSESSEE DID NOT DEDUCT TAX. NON-DEDUCTION OF TAX WOULD INVITE DISALLOWANCE UNDE R SECTION 40(A)(IA). THEREFORE, WE UPHOLD THE ACTION OF LD. CIT(A) AND D ISMISS THIS GROUND. 6. APROPOS GROUND NO.5, THE FACTS ARE THAT AO HAS D ISALLOWED 15% OF SALE AND BUSINESS PROMOTION EXPENSES AS ON VERIFICATION OF BILLS AND VOUCHERS AND DETAILS FILED BY THE ASSESSEE IT WAS FOUND THAT THE SAID AM OUNT WAS INCURRED FOR PURCHASE OF LAPTOP, COMPUTER, GOLD JEWELLERY, GIFT ETC. THE A SSESSEE SUBMITTED THAT THESE ITEMS WERE PURCHASED FOR PROMOTING THE BUSINESS AND MAINLY GIFTED TO BUSINESS CLIENTS AND ASSOCIATES, BUT ASSESSEE DID NOT BRIN G ON RECORD ANY SUBSTANTIVE EVIDENCE TO SUPPORT ITS CLAIM THAT THOSE PURCHASES WERE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IT IS THEREFORE, THE AO HAS DISALLOWED A SUM OF RS.8,77,451/- BEING 15% OF THE TOTAL EXPENDITURE, C LAIMED AT RS.58,49,672/- 6.1 LD. CIT(A) HAS UPHELD THIS DISALLOWANCE ON THE GROUND THAT ASSESSEE COULD NOT PROVE THAT THESE PURCHASES WERE NOT IN PERSONAL NATURE. THE ASSESSEE IS AGGRIEVED, HENCE, FILED AFOREMENTIONED GROUND OF AP PEAL. 6.2 THE FINDINGS OF AO THAT THIS AMOUNT IS SPENT ON LAPTOP, COMPUTERS, GOLD JEWELLERY AND GIFT ITEMS HAS NOT BEEN DISPUTED BY THE ASSESSEE. IN THE ABSENCE OF ITA NO.713/MUM/2013(A.Y. 2009-10) 5 PROOF SUBMITTED BY THE ASSESSEE THE A.O HAS ONLY D ISALLOWED 15% OF THE TOTAL EXPENDITURE. EVEN IN THE APPEAL FILED BY THE ASSES SEE NO DETAILS HAVE BEEN FURNISHED. 6.3 IN THIS VIEW OF THE SITUATION, AFTER HEARING L D. DR AND CONSIDERING THE FACTS AVAILABLE ON RECORD, WE ARE OF THE OPINION THAT LD. CIT(A) DID NOT COMMIT ANY ERROR IN SUSTAINING THE DISALLOWANCE, WE DECLINE TO INTERFERE AND THIS GROUND OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/ 04/2015 08/04/2015 SD/- SD/- ( , /RAJENDRA ) ( . . / I.P. BANSAL ) /ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; $% DATED 08/04/2015 / COPY OF THE ORDER FORWARDED TO : 1. & '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. +, ( & ) / THE CIT(A)- 4. +, / CIT 5. -. ),%/0 , &1 &/0 , / DR, ITAT, MUMBAI 6. 2 / GUARD FILE. / BY ORDER, * -, ), //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . % . ./ VM , SR. PS