The ACIT, Circle-6, Ahmedabad V. Shri Himanshu V.Shah, Ahmedabad

ITA 726/AHD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63102 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 05-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGHSR
• Assessee Lawyers: URVASHUI SHODHAN

Judgement Text

ITA NO 726A HD/2010 A.YR.. 2007 -08 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AH MEDABAD (BEFORE SHRI D. K. TYAGI, JM & SHRI ANIL CHATURVED I A.M.) I.T.A. NO.726 /AHD/2010. (ASSESSMENT YEAR: 2007-08) ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-6 PRATYAKSHA KAR BHAVAN, NEAR PANJARA POLE, AMBAWADI, AHMEDABAD. (APPELLANT) VS. SHRI HIMANSHU V. SHAH, C-1, 1 ST FLOOR,SURYA COMPLEX, GURUKUL ROAD, MEMNAGAR, AHMEDABAD. (RESPONDENT) PAN: ACZPS3768E APPELLANT BY : MR.D.K.SINGH,SR. D.R. RESPONDENT BY : MS.URVASHUI SHODHAN ( )/ ORDER DATE OF HEARING : 26-9-20 12 DATE OF PRONOUNCEMENT : 30-11-2012 PER: SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSIN ESS OF TRAVEL AND TELECOMMUNICATION SERVICES. HE FILED HIS RETURN OF INCOME ELECTRONICALLY ON 30-10-2007 DECLARING TOTAL INCOME OF RS.29,87,669/- AFTER CLAIMING THE DEDUCTION OF RS.1,14,06,803/- UNDER SECTION 80IA. T HE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASSESSMENT WAS FRAM ED U/S.143(3) VIDE ORDER DATED 1-5-2009 AND THE TOTAL INCOME WAS DETER MINED AT RS.1,43,84,473/- AFTER MAKING THE DISALLOWANCE AND DENYING DEDUCTION U/S. 80IA. AGGRIEVED WITH THE ORDER OF A.O. ASSESSEE CAR RIED THE MATTER BEFORE THE CIT (A). ITA NO 726A HD/2010 A.YR.. 2007 -08 2 2. CIT (A) VIDE HIS ORDER DATED 7-12-2009 GRANTED P ARTIAL RELIEF TO THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF CIT (A) REVENUE IS NOW IN APPEAL BEFORE US. BEFORE US THE FIRST GROUND OF THE REVENUE READ S AS UNDER:- 1. THE LD. CIT (A)-XI AHMEDABAD HAS ERRED IN LAW A ND ON FACTS IN ALLOWING THE CLAIM MADE U/S. 80IA OF THE I.T. ACT O F RS.1,12,96,603/-. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S. 80IA TO THE TUNE OF RS.1,14,06,803/-.THE A.O. WAS OF THE VIEW THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION U/S. 80IA SINCE IT DID NOT QUALIFY THE BASIC CONDITIONS LAID DOWN U/S.80IA AND THE ASSESSEE WAS ONLY A LICENSEE OF TE LECOM AUTHORITY AND WAS PROVIDING BASIC TELECOM SERVICES TO THE PREMISE S AND BUILDINGS. HE ACCORDINGLY DENIED THE DEDUCTION OF SEC.80IA. ASSE SSEE CARRIED THE MATTER BEFORE THE CIT (A). 5. BEFORE CIT (A) THE ASSESSEE SUBMITTED FOR IDENTI CAL ISSUES INVOLVED IN EARLIER ASSESSMENT YEARS THE HONBLE TRIBUNAL HAD A LLOWED THE ASSESSEE DEDUCTION UNDER SECTION 80IA. IT WAS FURTHER SUBM ITTED THAT CIT (A) HAD ALSO ALLOWED THE DEDUCTION FOR A.Y. 2006-07. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CIT (A) ALLOWED THE DED UCTION U/S. 80IA BY HOLDING AS UNDER:- ITA NO 726A HD/2010 A.YR.. 2007 -08 3 3.1. IDENTICAL ISSUE AROSE IN APPELLANTS OWN CASE IN THE EARLIER YEARS. AS STATED THE APPELLANT IN THE WRITTEN SUBMI SSIONS, THIS ISSUE IS COVERED IN THEIR FAVOUR VIDE ITATS ORDERS DATED 30 -11-2004 IN ITA NOS. 830/A/2004 TO 832/A/2004, 1219/A/2004 & 1859/A /04; ITATS ORDER DATED 16-3-09 IN ITA NOS.155 TO 157/A/09 FOR A.YRS. 2002-03, 2004-05 & 2005-06 AND MY PREDECESSORS ORDER DATED 18-3-09 IN APPEAL NO. CIT (A)-XI/627/08-09 FOR A.Y. 2006-07. R ESPECTFULLY FOLLOWING THE ABOVE STATED DECISIONS, I HOLD THAT T HE APPELLANT IS ENTITLED TO DEDUCTION U/S. 80IA.THIS GROUND OF APPE AL STANDS ALLOWED. 6. AGGRIEVED BY THE ORDER OF CIT (A),REVENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US AT THE OUTSET THE LD. A.R. SUBMITTED T HAT ON IDENTICAL FACTS THE ASSESSEE HAS BEEN ALLOWED THE DEDUCTION U/S. 80 IA BY HONBLE TRIBUNAL IN ASSESSMENT YEARS 1997-98 ONWARDS. HE PLACED ON R ECORD THE COPY OF THE ASSESSMENT ORDERS FOR A.Y. 1997-98 TO 2001-02 ( ITA NO.830A/04, 832/A/04, 1219/A/04, 1859/A/04. HE ALSO PLACED ON R ECORD THE ORDERS OF THE TRIBUNAL FOR A.Y. 2002-03, 2004-05 AND 2005-06 IN ITA NO.155 TO 157/A/2009. HE FURTHER PLACED ON RECORD THE COPY OF ORDER FOR A.Y. 2006-07 INITA NO.1912/A/09. HE THEREFORE, SUBMITTED THAT SI NCE THE FACTS ARE IDENTICAL AND THE ISSUE IS COVERED IN HIS FAVOUR BY THE EARLIER DECISIONS OF THE HONBLE TRIBUNAL. 8. THE LD. D.R. ON THE OTHER HAND RELIED ON THE ORD ER OF A.O. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE MATERIAL PLACED WE FIND THAT ASSESSE E HAS BEEN ALLOWED A DEDUCTION U/S. 80IA BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN EARLIER ITA NO 726A HD/2010 A.YR.. 2007 -08 4 YEARS I.E. FROM A.Y. 1997-98 TO A.Y. 2006-07.FOR A. Y. 2006-07 THE CO- ORDINATE BENCH OF THE TRIBUNAL HAS ALLOWED THE DEDU CTION BY HOLDING AS UNDER:- 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. WE FIND THAT THE TRIBUNAL WHILE ADJUDICAT ING A SIMILAR CLAIM IN THE ASSESSEES OWN CASE IN ITA NO.155,156 & 157/ AHD/2009 VIDE THEIR ORDER DATED 16-3-2009 HELD AS UNDER:- 5. AFTER HEARING THE LEARNED REPRESENTATIVES OF BO TH THE SIDES WE FIND THAT THE ISSUE IS COVERED ION FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF THE TRIBUNAL DATED 30-11-2004 PASSED IN ASSESSEES OWN CASE IN ITA NO.830/AHD/2004 TO 832/AHD/2004, 1219/AHD/2004 AND 1859/AHD/2004 RELATING TO ASSESSMENT YEARS 1997-98, 1999- 2000, 2000-01, 1998-99 AND 2001-02. WHILE DECIDING A SIMILAR ISSUE THE TRIBUNAL HELD AS UNDER: FROM THE PERUSAL OF CLAUSE-1, IT IS EVIDENT THAT T HE EPABX OWNED BY THE ASSESSEE WILL PROVIDE DIRECT IN DIALING SERVICES THROUGH THE PSTN OF THE MTNL. THU S, THE SERVICES PROVIDED BY THE ASSESSEE WOULD COME WI THIN THE PURVIEW OF BASIC TELECOMMUNICATION SERVICES AS PER THE DEFINITION U/S. 2(C) OF THE TELECOMMUNICATION T ARRIF ORDER, 1999. FROM THE READING OF ABOVE CLAUSES OF T HE AGREEMENT, IT IS EVIDENT THAT THE ASSESSEE IS NOT P ROVIDING THE SERVICES AS A PCO. FROM CLAUSE 24 OF THE AGREEM ENT, IT IS EVIDENT THAT THE STD/PCO CAN BE PROVIDED BY T HE ASSESSEE I.E. ONE OF THE CUSTOMERS OF THE ASSESSEE, WHO CAN RUN THE STD/PCO AND TO SUCH STD/PCO COMMISSION WILL BE PAID BY THE ASSESSEE. SIMILARLY, IT IS CLE AR THAT THE SERVICES PROVIDED BY THE ASSESSEE ARE NOT ONLY THE NETWORK OF TRUNKING AS MENTIONED BY THE LD. CIT (A) . AS PER CLAUSE 3 OF THE AGREEMENT, THE ASSESSEE IS RESPONSIBLE FOR INSTALLATION, NETWORKING OPERATION AND MAINTENANCE OF EPABX EQUIPMENTS, USER TERMINAL EQUIPMENTS, CONNECTED CABLES ETC. AS PER CLAUSE 4, THE ASSESSEE IS ALSO RESPONSIBLE FOR TREATMENT OF ITA NO 726A HD/2010 A.YR.. 2007 -08 5 COMPLIANCES, ISSUE OF BILLS, COLLECTION OF BILLS ET C. THEREFORE, IN OUR OPINION THE ASSESSEE IS PROVIDING BASIC TELEPHONE SERVICES THROUGH IN ASSOCIATION WITH MTNL . HOWEVER, MERELY BECAUSE THE SERVICES ARE BEING PROVIDED IN ASSOCIATION WITH MTNL DOES NOT MEAN THE ASSESSEE IS NOT PROVIDING THE BASIC TELECOMMUNICATI ON SERVICES. IN VIEW OF THE ABOVE, WE HOLD THAT THE AS SESSEE IS PROVIDING THE BASIC TELECOMMUNICATION SERVICES A ND ACCORDINGLY, WE DIRECT THE A.O. TO ALLOW DEDUCTION U/S. 80IA. WE RESPECTFULLY FOLLOW THE ABOVE ORDER OF ITAT AND IN VIEW OF THAT THE CLAIM OF THE ASSESSEE IS ALLOWED. OTHER GR OUNDS ARE CONSEQUENT TO THE MAIN GROUND, THE A.O. IS DIRECTED ACCORDINGLY. 6. THE FACTS OF THE PRESENT CASE ARE SIMILAR AND THEREFORE, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL AHMEDABAD BENCH C DATED 30-11-2004 PASSED IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 1998-99 TO 2001-02 (SUPRA) WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT (A) AND ACCORDINGLY, WE UPHOLD THE O RDERS OF THE CIT (A) FOR THE ASSESSMENT YEARS 2002-03, 20 04-05 AND 2005-06. 6. IN THE LIGHT OF AFORESAID CONSISTENT VIEW TAKEN BY THE ITAT RIGHT SINCE THE A.Y. 1997-98 UNTIL THE A.Y. 2005-06 , WE HAVE NO ALTERNATIVE BUT TO UPHOLD THE FINDINGS OF THE LD. C IT (A).THEREFORE, GROUND NO.1 IN THE APPEAL IS DISMISS ED. 10. IN VIEW OF THE AFORESAID FACTS SINCE CONSISTENT VIEW HAS BEEN TAKEN BY THE ITAT IN EARLIER YEARS AND SINCE THE REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO DISTINGUISH THE FACTS OF EARL IER YEARS WITH THAT OF CURRENT YEAR. WE RESPECTFULLY FOLLOWING THE DECISI ON OF THE CO-ORDINATE BENCH OF TRIBUNAL WE FIND NO REASON TO INTERFERE WI TH THE ORDER OF THE CIT (A).THUS THIS GROUND OF THE REVENUE IS REJECTED. ITA NO 726A HD/2010 A.YR.. 2007 -08 6 GROUND NO.2 READS AS UNDER:- 2. THE LD. CIT (A)-XI, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE DISALLOWANCE OF RS.1,00,000/- TO RS .75,000/- MADE ON ACCOUNT OF TELEPHONE ETC., EXPENSES. 11. ON PERUSING THE PROFIT AND LOSS ACCOUNT OF M/S. ARVIND TRAVELS & ARVIND TELESYSTEMS A.O. NOTICED THAT THE ASSESSEE H AS CLAIMED EXPENSES TOWARDS TRAVELING AND TELEPHONE AMOUNTING TO RS.3,4 3,734/- AND OFFICE EXPENSES OF RS.73,428/-.THE ASSESSEE WAS ASKED TO P ROVE AND JUSTIFY THE EVIDENCE THAT THE EXPENDITURE WAS INCURRED FOR THE EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND NO SATISFACTORY REPLY WAS O FFERED AND CONSIDERING THE NATURE OF EXPENDITURE THE A.O. WAS OF THE VIEW THAT THE INVOLVEMENT OF PERSONAL USE CANNOT BE RULED OUT. HE THEREFORE RELY ING ON THE DECISION OF MADRAS HIGH COURT IN THE CASE OF SUNDARAM INDUSTRIE S VS. CIT (1999) 239 ITR 405 MADE A LUMP SUM DISALLOWANCE OUT OF TELEPHO NE AND TRAVEL EXPENSES. THE ASSESSEE CARRIED THE MATTER BEFORE T HE CIT (A). 12. BEFORE THE CIT(A) ASSESSEE SUBMITTED DETAILED E XPLANATION AND AFTER CONSIDERING THE EXPLANATION OFFERED BY THE ASSESSEE CIT (A) FOLLOWING HIS PREDECESSORS ORDER FOR A.Y. 2006-07 RESTRICTED THE DISALLOWANCE TO RS.75,000/-. AGGRIEVED BY THE AFORESAID ORDER OF C IT (A), THE REVENUE IS NOW IN APPEAL BEFORE US. 13. BEFORE US, THE LD. D.R. SUBMITTED THAT THE ASSE SSEE HAS NOT PROVED OR FURNISHED THE NECESSARY EXPLANATION AND PROVED T HAT IT HAS NOT INCURRED ANY PERSONAL EXPENDITURE. CONSIDERING THE NATURE OF EXPENSES, THE PERSONAL USE CANNOT BE RULED OUT. HE THUS SUPPORTED THE ORDER OF A.O. ITA NO 726A HD/2010 A.YR.. 2007 -08 7 14. ON THE OTHER HAND LD. A.R. RELIED ON THE ORDER OF CIT (A). 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE DISALLOWANCE WAS MADE BY T HE A.O. ON AN ADHOC BASIS WITHOUT POINTING OUT ANY SPECIFIC INSTANCES O F EXPENSES BEING PERSONAL IN NATURE. CONSIDERING THE TOTALITY OF FAC TS AND THE WRITTEN SUBMISSIONS CIT (A) RESTRICTED THE DISALLOWANCE TO RS.75,000/-. BEFORE US NOTHING HAS BEEN BROUGHT ON RECORD BY THE REVENUE T O PROVE THAT THE EXPENSES INCURRED CONSISTED OF EXPENSES WHICH ARES PERSONAL IN NATURE. IN VIEW OF THESE FACTS WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE CIT (A) AND THUS WE UPHOLD THE ORDER OF THE CIT (A). THUS, THIS GROUND OF REVENUE IS DISMISSED. 16. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON - - 2012. SD/- SD/- ( D. K. TYAGI) (ANIL CHATURVEDI) JUDICIAL MEMBER ACC OUNTANT MEMBER AHMEDABAD. S.A.PATKI. COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS)- 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHM EDABAD. ITA NO 726A HD/2010 A.YR.. 2007 -08 8 1.DATE OF DICTATION 23 - 11 -2012 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING 27 /11 / 2012 MEMBER.OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S - -2012. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT - -2012 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S - -2012 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK - -2012. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..