ACIT 3(2)(2), MUMBAI V. KORN FERRY INTERNATIONAL P. LTD, MUMBAI

ITA 748/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5631 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2012-2013
• Appeal Filed On: 02-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL LD DR
• Assessee Lawyers: MILIN THAKORE LD
• Section: 143(3); 14A

Judgement Text

ITA NO.748/MUM/2017 KORN FERRY INTERNATIONAL PRIVATE LIMITED ASSESSMENT YEAR-2012-13 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.748/MUM/2017 ( ASSESSMENT YEAR: 2012-13) ASSISTANT COMMISSIONER OF INCOME TAX 3(2)(2) ROOM NO.674, 6 TH FLOOR AAYKAR BHAVAN M.K.ROAD MUMBAI-400 020 VS. KORN FERRY INTERNATIONAL P VT. LTD. 2 ND FLOOR, PIRMAL TOWER PENINSULA CORPORATE PARK GANPAT RAO KADAM MARG LOWER PAREL (W) MUMBAI-400 013 ! PAN/GIR NO. AAACW-0577-B ( ' APPELLANT ) : ( #$ ' RESPONDENT ) A SSESSEE BY : MILIN THAKORE, LD.AR RE VENUE BY : RAJAT MITTAL, LD. DR %& DATE OF HEARING : 20/06/2018 '() & / DATE OF PRONOUNCEMENT : 04/07/2018 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY REVENUE FOR ASSESSMENT YEAR [AY] 2012-13 CONTEST THE ORDER OF THE LD. COMMISSIONER OF INCOME -TAX (APPEALS)-8 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-8/IT-200/15-16 DATED 14/10/2016 QUA CERTAIN RELIEF PROVIDED TO THE ASSESSEE. THE ASSESS MENT FOR ITA NO.748/MUM/2017 KORN FERRY INTERNATIONAL PRIVATE LIMITED ASSESSMENT YEAR-2012-13 2 IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX- 3(2)(2), MUMBAI [AO] U/S 143(3) OF THE INCOME TAX A CT,1961 ON 28/03/2015 WHEREIN THE INCOME OF THE ASSESSEE HAS B EEN ASSESSED AT RS. 14.41 CRORES AFTER CERTAIN DISALLOWANCE AS AGAI NST RETURNED INCOME OF RS.14.08 CRORES E-FILED BY THE ASSESSEE ON 29/11/2012. THE EFFECTIVE GROUNDS OF APPEAL READ AS UNDER:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS . 78,974/- U/S 14A R.W.S 8D WITHOUT APPRECIATING THE FACT THAT THE AMOUNT OF DI SALLOWANCE U/S 14A OF THE I.T.ACT, 1961 HAS TO BE COMPUTED AS PER RULE 8D OF I.T. RULE S, 1961 AS HELD IN THE ORDER OF THE HONBLE HIGH COURT IN THE CASE OF M/S. GODREJ & BOYCE MANUFACTURING CO .LTD. 2. WHETHER ON THE FACTS AND CIRCUMSTANCES AND IN LA W, THE LD. CIT(A) HAS ERRED IN DELETING THE CLAIM OF LOSS OF RS.32,02,850/- ON ALL OTMENT OF EMPLOYEES STOCK OPTION SCHEME (ESOP) WITHOUT APPRECIATING THE FACT THAT TH E ESOP WAS NOT ALLOTTED BY THE ASSESSEE BUT THE HOLDING COMPANY AND THEREFORE THE LOSS OF RS.32,02,850/- WAS WRONGLY CLAIMED BY THE ASSESSEE. 2.1 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.3.25 LACS AND M ADE SUO MOTO DISALLOWANCE OF RS.50,000/- U/S 14A, BEING PORTFOLIO MANAGEMENT FEES PAID BY THE ASSESSEE. HOWEVER, NOT CONVINCED, LD. A O, BY APPLYING RULE 8D, COMPUTED ADDITIONAL DISALLOWANCE OF RS.78,974/- WHICH COMPRISED- OFF OF INTEREST DISALLOWANCE U/R 8D(2)(II) FOR RS.4 ,115/- AND EXPENSE DISALLOWANCE U/R 8D(2)(III) FOR RS.74,859/-. 2.2 THE SECOND ADDITION PERTAINS TO EMPLOYEE STOCK OPTION SCHEME [ESOP] EXPENDITURE OF RS.32.02 LACS REIMBURSED BY THE ASS ESSEE TO ITS HOLDING COMPANY. THIS EXPENDITURE WAS NOTHING BUT T HE DIFFERENCE BETWEEN MARKET PRICE AND THE SHARE ALLOTMENT PRICE. THE ASSESSEE CONTENDED THAT THE SAID PAYMENT WAS IN THE NATURE O F COMPENSATION TO ITS EMPLOYEE WHICH WAS TAXABLE AS PERQUISITE U/S 17 (2) AND APPLICABLE TDS WAS DEDUCTED THEREUPON AT THE TIME OF VESTING O F THESE STOCKS. IT ITA NO.748/MUM/2017 KORN FERRY INTERNATIONAL PRIVATE LIMITED ASSESSMENT YEAR-2012-13 3 WAS FURTHER CONTENDED THAT THE SHARES WERE ISSUED B Y THE HOLDING COMPANY AND NOT BY THE ASSESSEE AND THEREFORE, THE EXPENDITURE WAS DEDUCTIBLE U/S 37(1). HOWEVER, LD. AO FOLLOWING THE EARLIER YEARS, DISALLOWED THE SAME AND ADDED THE SAME TO THE INCOM E OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME SUCCE SSFULLY BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 14/10/2016 WHE REIN LD. CIT(A) FOLLOWING THE ORDERS OF THIS TRIBUNAL IN ASSESSEES OWN CASE FOR AY 2008- 09, 2010-11 & 2011-12 ALLOWED THE CLAIMS OF THE ASS ESSEE. AGGRIEVED, THE REVENUE IS IN FURTHER APPEAL BEFORE US. 4. UPON DUE CONSIDERATION, IT IS NOTED THAT FIRST A PPELLATE AUTHORITY HAS FOLLOWED THE DECISION OF THIS TRIBUNAL IN EARLIER Y EARS WHEREIN THE CLAIMS OF THE ASSESSEE HAS BEEN ALLOWED BY THE TRIBUNAL AF TER CONSIDERING THE FACTUAL MATRIX. THE ORDERS OF THE TRIBUNAL FOR AYS 2008-09 TO 2011-12 HAS BEEN PLACED BEFORE US, A PERUSAL OF WHICH REVEA L THAT BOTH THE ISSUES HAVE BEEN DECIDED IN ASSESSEES FAVOR BY THI S TRIBUNAL. THE FIRST APPELLATE AUTHORITY, FOLLOWING THE SAME, HAS ALLOWE D THE CLAIMS OF THE ASSESSEE. THE REVENUE IS UNABLE TO POINT OUT ANY CH ANGE IN FACTS OR CIRCUMSTANCES WHICH NECESSITATE US TO TAKE A DIFFER ENT VIEW IN THE MATTER. NOTHING HAS BEEN BROUGHT ON RECORD TO SUGGEST THAT THE ABOVE DECISIONS HAVE BEEN OVERRULED BY HIGHER JUDICIAL AUTHORITIES IN ANY MANNER. THEREFORE, FACTUAL MATRIX BEING THE SAME, TAKING CO NSISTENT VIEW IN THE MATTER, WE DISMISS REVENUES APPEAL. 5. RESULTANTLY, THE REVENUES APPEAL STAND DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 04 TH JULY, 2018. ITA NO.748/MUM/2017 KORN FERRY INTERNATIONAL PRIVATE LIMITED ASSESSMENT YEAR-2012-13 4 SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER *% MUMBAI; DATED : 04.07.2018. SR.PS:-THIRUMALESH ! COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. + / THE CIT(A) 4. + / CIT CONCERNED 5. , #&- -) *% / DR, ITAT, MUMBAI 6. ./0 % GUARD FILE ' / BY ORDER, # '$% (DY./ASSTT.REGISTRAR) *% / ITAT, MUMBAI