Shriram Chits Private Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-3(1), Hyderabad

ITA 718/Hyd/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7382 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 07-06-2021
• Assessment Year: 2016-2017
• Appeal Filed On: 08-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bad and doubtful debts; Commercial expediency
• Section: 143(3); 201; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD. BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L . P . SAHU, ACCOUNTANT MEMBER (THROUGH VIRTUAL HEARING) ITA NO. 718 /HYD/20 19 (ASSESSMENT YEAR : 20 16 - 17 ) M/S. SHRIRAM CHITS PVT. LTD., HYDERABAD. PAN AAFCS 4916D ..APPELLANT. VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(1), HYDERABAD. ..RESPONDENT. ITA NO.975/HYD/2019 (ASSESSMENT YEAR : 20016 - 17) (BY REVENUE ) ASSESSEE BY : SHRI K.C.DEVDAS. RE VENUE BY : SHRI B. BALAKRISHNA (D.R.) DATE OF HEARING : 07.06 . 2021. DATE OF PRONOUNCEMENT : 17 .0 8 .2021. O R D E R PER SHRI S.S. GODARA, J.M. : TH ESE ASSESSEE S AND REVENUE S CROSS APPEALS FOR ASST. YEAR 201 6 - 17 ARISE FROM THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 , HYDERABAD S ORDER DT. 20.03.2019 PASSED IN 2 ITA NO S . 718 & 975/HYD/2019 CASE NO. 10220/ DCIT - 3(1) / CIT(A) - 3 / 2018 - 19 IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 147 OF INCOME TAX ACT, 1961 (THE ACT ). HEARD BOTH THE PARTIES . C ASE FILE S PERUSED. 2. WE COME TO THE ASSESSEE'S APPEAL ITA NO. 718/HYD/2019 RAISING ITS SOLE SUBSTANTIVE GRIEVANCE THAT BOTH THE LOWER AUTHORITIES' HAVE ERRED IN LAW AND ON FACTS IN UPHOLDING TAXABILITY OF ITS FOREMAN DIVIDEND TO THE TUNE OF RS.15,28,60,606 IN THE COURSE OF ASSESSMENT DT.14.12.2018 AND UPHELD IN THE CIT(A)S ORDER AS UNDER : 3 ITA NO S . 718 & 975/HYD/2019 4 ITA NO S . 718 & 975/HYD/2019 3. SUFFICE TO SAY, IT HAS COME ON RECORD THAT THIS TRIBUNAL HAS ALREADY SETTLED THE VERY ISSUE AGAINST THE ASSESSEE AND THE REVENUES FAVOUR RIGHT FROM ASSESSMENT YEAR S 199 9 - 2000 TO 2014 - 15. NO DISTINCTION ON FACTS OR LAW HAS BEEN PIN POINTED AT THE ASSESSEE'S BEHEST. WE THUS ADOPT JUDICIAL CONSISTENCY TO AFFIRM THE IMPUGNED ADDITION PERTAINING TO THE TAXABILITY OF FOREMAN DIVIDEND AMOUNTING TO RS.15,28,60,606. THE ASSESSEE'S APPEAL 718/HYD/2019 RAISING THE INSTANT SOLE ISSUE FAILS THEREFORE . 5 ITA NO S . 718 & 975/HYD/2019 4. NEXT COMES THE REVENUES CROSS APPEAL ITA 975/HYD/2019 RAISING THE FOLLOWING THREE SUBSTANTIVE GROUNDS : 2. THE LEARNED CIT (APPEALS) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF BAD DEBTS RELATING TO RUNNING AND TERMINATED CHITS WHEN THE ASSESSEE FAILED TO SATISFY THE CONDITIONS LAID DOWN U/S. 36(2) OF THE IT ACT AMOUNTING TO RS.54,41,04,804/ - . 3. THE LEARNED CIT (APPEALS) ERRED IN UPHOLDING THE CLA IM OF THE ASSESSEE WITH REGARD TO THE COMMISSION ON CANCELLED CHITS AMOUNTING TO RS.1,88,32,411/ - . 4. THE LEARNED CIT (APPEALS) ERRED IN ALLOWING THE CLAIM OF THE ASSESSEE ON ROYALTY PAYMENT AMOUNTING TO RS.4,04,56,377/ - IGNORING THE FACT THAT THE PAREN T COMPANY IS NOT RENDERING ANY SERVICES TO ASSESSEE - COMPANY. 5. WE ADVERT TO THE REVENUES FIRST AND FOREMOST GRIEVANCE PERTAINING TO DISALLOWANCE OF BAD DEBT QUA RUNNING AND TERMINATED C HITS IN ALLEGED VIOLATION U/S.36(2) OF THE INCOME TAX ACT (IN SHORT 'THE ACT'). WE ARE TAKEN TO CIT(A)S DETAILED DISCUSSION DELETING THE IMPUGNED BAD DEBT DISALLOWANCE AS UNDER : 6 ITA NO S . 718 & 975/HYD/2019 -- SPACE LEFT INTENTIONALLY -- 7 ITA NO S . 718 & 975/HYD/2019 8 ITA NO S . 718 & 975/HYD/2019 9 ITA NO S . 718 & 975/HYD/2019 10 ITA NO S . 718 & 975/HYD/2019 11 ITA NO S . 718 & 975/HYD/2019 12 ITA NO S . 718 & 975/HYD/2019 13 ITA NO S . 718 & 975/HYD/2019 14 ITA NO S . 718 & 975/HYD/2019 15 ITA NO S . 718 & 975/HYD/2019 6. BOTH THE LEARNED REPRESENTATIVES ARE FAIR ENOUGH IN INFORMING US THAT THIS TRIBUNALS ORDER S HA VE ALREADY DECIDED THE VERY ISSUE IN ASSESSEE'S FAVOUR QUA ITS BAD DEBT CLAIM PERTAINING TO RUNNING AND TERMINATED CHEQUES. WE DO NOT NOTICE ANY DISTINCTION ON FACTS OR LAW QUA THE SAME. IT RATHER EMERGES THAT T HE CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE TO THE EXTENT OF 95% ONLY(SUPRA) THAN THAT ITS ENTIRETY. W E THEREFORE FOLLOW THE ABOVE DETAILED REASONING MUTATIS MUTANDIS TO AFFIRM THE CIT(A) FINDINGS ON TH E ISSUE OF RUNNING AND TERMINATED CHEQUES AS WELL . 16 ITA NO S . 718 & 975/HYD/2019 7. WE PROCEED FURTHER AND NOTICE THAT THE FACTUALPOSITION IS NO DIFFERENT QUA THE LATTER TWIN ISSUE S OF COMMISSION ON CANCELLED CH ITS AND RELATED PAYMENT S OF RS.1,88,32,411 AND RS.4,04,56,377; RESPECTI VELY WHEREIN THE TRIBUNALS ORDERS HAVE UPHELD THE ASSESSEE'S CLAIM ON BOTH THE COUN TS. LEARNED CIT(A)S DETAILED DISCUSSION QUA FOREGOING SECOND ISSUE READS AS UNDER : 17 ITA NO S . 718 & 975/HYD/2019 18 ITA NO S . 718 & 975/HYD/2019 19 ITA NO S . 718 & 975/HYD/2019 8 . THE FACTUAL POSITION IS NO DIFFERENT REGARDING R OYALTY ISSUE AS WELL READING AS UNDER : 20 ITA NO S . 718 & 975/HYD/2019 9 . L EARNED DEPARTMENTAL REPRESENTATIVES ONLY CASE IS THAT THE ASSESSEE'S PARENT COMPANY HAS NOT RENDERED ANY SERVICE SO AS TO BE ELIGIBLE FOR CLAIMING THE IMPUGNED DEDUCTION U/S.37 OF THE ACT. WE ARE INFORMED THAT THIS TRI BUNALS EARLIER CO - ORDINATE BENCH (SUPRA) HAS ALREADY SETTLED THE ISSUE IN ASSESSEE'S FAVOUR AND AGAINST THE DEPARTMENT ON THE ISSUE UNDER CONSIDERATION. MORE PARTICULARLY THAT OF COMMERCIAL EXPEDIENCY IN INCURRING A PARTICULAR HEAD OF EXPENDITURE. WE TH EREFORE SEE NO MERIT IN REVENUES INSTANT GROUNDS. THE SAME ARE REJECTED 21 ITA NO S . 718 & 975/HYD/2019 ACCORDINGLY. REVENUES APPEAL ITA NO.975/HYD/2019 ALSO FAILS. 10. BOTH THESE ASSESSEE'S AND REVENUES CROSS APPEALS 718 & 975/HYD/2019 ARE DISMISSED IN ABOVE TERMS. A COPY OF THIS COMMON ORDER BE PLACED IN THE RESPECTIVE FILES. ORDER PRONOUNCED IN THE OPEN COURT ON 17TH AUG. , 2021. SD/ - SD/ - (L .P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DT. 17. 0 8 .2021. * REDDY GP COPY TO : 1. SHRIRAM CHITS PRIVATE LIMITED, 3 - 6 - 478, IIIRD FLOOR, ANAND ESTATES, OPP. INDIAN BANK, LIBERTY ROAD, HYDERABAD. 2. DCIT, CIRCLE3(1), HYDERABAD. 3. PR. C I T - 3 , HYDERABAD. 4. CIT(APPEALS) - 3, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.