REGUS SUBURBS CENTER P. LTD, MUMBAI V. DCIT 10(1), MUMBAI

ITA 7552/MUM/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71988 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 03-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./I.T.A. NO.7552/M/2010 (AY: 2007 - 2008) REGUS SUBURBS CENTER PRIVATE LTD., LEVEL 4, DYNASTY BUSINESS PARK, ANDHERI KURLA ROAD, ANDHERI (E), MUMBAI 400 069. / VS. DCIT - 10(1), MUMBAI. ./ PAN : AADCR 3590 G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI KETAN VED / RESPONDENT BY : SHRI SANJEEV JAIN, DR / DATE OF HEARING : 18.12.2013 / DATE OF PRONOUNCEMENT : 18.12.2013 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 3.11.2010 IS AGAINST THE ORDER OF CIT (A) - 21, MUMBAI DATED 22.7.2010 FOR THE ASSESSMENT YEAR 2007 - 2008. 2. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF MANAGEMENT FEES OF RS. 45,18,390/ - . 2. THE LD CIT (A) ERRED IN UPHOLDING THE AOS CONTENTION THAT THE APPELLANT HAS FAILED TO ESTABLISH A NEXUS BETWEEN MANAGEMENT FEES PAID TO FOREIGN GROUP ENTITIES AN D BUSINESS ACTIVITIES OF THE APPELLANT. 3. THE LD CIT (A) ERRED IN NOT APPRECIATING THE APPELLANTS SUBMISSIONS THAT BESIDES PROVIDING INTELLECTUAL PROPERTY RIGHTS , THE FOREIGN ENTITIES ARE ALSO PROVIDING NECESSARY KNOW - HOW AND BUSINESS PROCESSES TO THE APPELLANT, WHICH THE APPELLANT IS USING TO EFFECTIVELY OPERATE AND MANAGE ITS BUSINESS IN INDIA. 4. THE LD CIT (A) ERRED IN HOLDING THAT THE APPELLANT HAS FAILED TO EXPLAIN HOW THE REGUS SYSTEM , THE DISTINCTIVE REGUS BUSINESS FORMAT AND METHODS D EVELOPED BY THE LICENSOR , STANDARD OPERATIONAL PROCEDURES, ETC., HAVE FACILITATED THE EFFECTIVE CONDUCT OF THE APPELLANTS BUSINESS IN INDIA. 3. AT THE OUTSET, SHRI KETAN VED, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE PAPER BOOK DATED 12.1 2.2013 AND MENTIONED THAT THE SAME CONTAINS 13 PAGES WHICH CONSTITUTES ADDITIONAL EVIDENCES. HE LISTED OUT THE SAID ADDITIONAL 2 EVIDENCES BY MENTIONING THAT THEY ARE BASICALLY ( I ) STATEMENTS SHOWING THE MANAGEMENT FEES CHARGED BY THE REGUS SUBURB PVT. LTD (AUSTRALIA); (II) INTERCOMPANY SERVICES AGREEMENT BETWEEN THE ASSESSEE AND THE REGUS CENTRES PVT. LTD AND (III) A BRIEF NOTE EXPLAINING THE BUSINESS PROFILE OF THE ASSESSEE. IN THIS REGARD, LD COUNSEL MENTIONED THAT THESE THREE PAPERS ARE ESSENTIAL FOR TH E DEMONSTRATION OF THE FACTS AS THEY GO TO THE ROOT OF THE MATTER . HE FURTHER MENTIONED THAT THE SAME WERE NOT FILED BEFORE THE AO AS THE ASSESSING OFFICER DID NOT ENQUIRE INTO THESE ASPECTS DURING THE ASSESSMENT PROCEEDINGS AND DENIED THE CLAIM OF THE AS SESSEE FOR OTHER REASONS WHICH WERE NOT DISCUSSED DURING THE ASSESSMENT PROCEEDING S. THEREFORE, ASSESSEE MADE ELABORATE SUBMISSION TO MAKE OUT A CASE OF ADMITTANCE OF THE SAID ADDITIONAL EVIDENCES. 4. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND OPPOSED THE ADMISSION OF THE ADDITIONAL EVIDENCES. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELEVANT MATERIAL PLACED BEFORE US. ON HEARING THE SUBMISSIONS OF THE LD COUN SEL AS WELL AS THE LD DRS OPPOSITION OF THE ADMISSION OF THE ADDITIONAL EVIDENCES, WE FIND MERIT IN THE LD COUNSELS ARGUMENT. WE HAVE ALSO GONE THROUGH THE ORDER OF THE AO AND THE CIT (A) AND FIND THAT THE ISSUE WAS TAKEN U P BY THE AO ON THE DIFFERENT REAS ONS AND CIT (A) CONFIRMED THE OPINION OF THE AO W I T H O U T GOING I N TO THE RELEVANT FACTS / ISSUES RAISED BEFORE HIM. THEREFORE, AFTER HEARING THE PARTIES, WE ARE OF THE OPINION THAT THE ADDITIONAL EVIDENCES SHOULD BE ADMITTED AND THE MATTER SHOULD BE RESTOR ED TO THE FILES OF AO TO EXAMINE AND DECIDE THE ISSUE AFRESH AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH DECEMBER, 2013. S D / - S D / - (SANJAY GARG) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 18 .12 .2013 3 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI