ASST CIT CIR 6(1)(2), MUMBAI V. BHANDER POWER LTD, MUMBAI

ITA 7601/MUM/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3743 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 28-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N S JANG
• Assessee Lawyers: SHARAD DESAI
• Keywords: Business expenditure; Commercial expediency
• Section: 143(3); 80IA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.7601/M/2016 ASSESSMENT YEAR: 2012-13 ACIT (CIR.)-6(1)(2), ROOM NO.563, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400020 VS. M/S. BHANDAR POWER LTD., ESSAR HOUSE, 11, K.K. MARG, MAHALAXMI, MUMBAI 400 034 PAN: AAACB6693B (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI SHARAD DESAI, A.R. REVENUE BY : SHRI N.S. JANGPANGI, D.R. DATE OF HEARING : 09.05.2019 DATE OF PRONOUNCEMENT : 02.08.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 20.10.2016 RELEVANT TO ASSE SSMENT YEAR 2012-13 OF THE COMMISSIONER OF INCOME TAX (APPEALS) -12 [HEREINAFTER REFERRED TO AS THE CIT(A)]. 2. THE COMMON ISSUE RAISED BY THE REVENUE IN GROUND NO.1 & 2 IS AGAINST THE ORDER OF LD. CIT(A) DELETING THE D ISALLOWANCE OF DEDUCTION UNDER SECTION 80IA OF THE ACT WHICH WAS R EJECTED BY THE AO BY APPLYING THE PROVISIONS OF SECTION 80IA(1 0) OF THE ACT BY HOLDING THAT THE ASSESSEE IS NOT ELIGIBLE FOR CL AIMING DEDUCTION UNDER SECTION 80IA OF THE ACT AND ALSO CH ALLENGING THE ORDER OF LD. CIT(A) ON THE GROUND THAT THE DISALLOW ANCE OF ITA NO.7601/M/2016 M/S. BHANDAR POWER LTD. 2 DEDUCTION UNDER SECTION 80IA IS NOT JUSTIFIED IN VI EW OF THE FACT THAT EVERY ASSESSMENT IS A DIFFERENT YEAR. 3. THE LD. A.R. SUBMITTED THAT THE ISSUE INVOLVED I N THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CA SE IN ITA NOS.6061 & 6062/M/2016 IN ASSESSMENT YEARS: 2010-11 & 2011-12 VIDE ORDER DATED 31.05.2019. THE LD. A.R. THEREFORE SUBMITTED THAT THE FACTS BEING IDENTICAL IN THE CUR RENT YEAR , THEREFORE GROUNDS NO.1 & 2 RAISED BY THE REVENUE MA Y KINDLY BE DISMISSED. 4. THE LD. D.R., ON THE OTHER HAND, FAIRLY AGREED T O THE ARGUMENTS OF THE LD. A.R. THAT ISSUE IS DECIDED IN THE EARLIER YEAR IN FAVOUR OF THE ASSESSEE BY DISMISSING THE AP PEAL OF THE REVENUE, HOWEVER, THE LD. D.R. STRONGLY RELIED ON T HE GROUNDS OF APPEAL AND THE ORDER OF THE AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD AND OBSERVED THA T THE ISSUE IN THIS CASE IS AS REGARDS ALLOWING THE DEDUCTION U NDER SECTION 80IA OF THE ACT IN RESPECT OF PHASE 1 WHICH IS ELIG IBLE FOR DEDUCTION UNDER SECTION 80IA OF THE ACT. WE FIND T HAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS.6061 & 6062/M/201 6 IN ASSESSMENT YEARS: 2010-11 & 2011-12 (SUPRA). THE O PERATIVE PART WHEREOF IS REPRODUCED AS UNDER: 23. AFTER HEARING BOTH THE SIDES AND CAREFULLY PER USING THE MATERIALS AS PLACED BEFORE US INCLUDING THE CASE LAWS CITED BY THE RIVA L PARTIES, WE OBSERVE THAT THE ASSESSEE HAS HARDLY EMPLOYED ANY STAFF IN THE POW ER PLANT, STORE AND MAINTENANCE SECTION AND THUS WAS DEPENDENT ON M/S ESSAR INVESTM ENTS LTD FOR ALL THE ITA NO.7601/M/2016 M/S. BHANDAR POWER LTD. 3 MANAGERIAL SUPPORT SERVICES FOR WHICH THERE WAS AN AGREEMENT WITH THE SAID COMPANY. MOREOVER THE MONTHLY BILLS WERE RAISED ON THE ASSESSEE FOR THE SERVICES RENDERED AND THE PAYMENTS WERE ALSO MADE ACCORDINGL Y. WE FURTHER NOTE THAT THERE WAS HEAVY EMPLOYMENT OF STAFF IN THE VARIOUS SECTION IN ESSAR INVESTMENTS LTD AS STATED BY THE AR OF THE ASSESSEE AND THE SAID C OMPANY WAS PROVIDING SERVICES TO OTHER GROUP COMPANIES WHICH WERE ACCEPTED BY THE REVENUE EVEN IN THE SCRUTINY PROCEEDINGS WHERE ALL THE ASSESSMENTS WERE FRAMED U /S 143(3) OF THE ACT. FURTHER IT IS THE ASSESSEE WHO IS TO DECIDE WHAT TO DO AND WHEN TO DO AND BUT NOT TO DO AND THE DEPARTMENT CAN NOT DICTATE TO THE ASSESSEE. IN THE CASE OF CIT VS YUM RESTAURANT INDIA PVT. LTD.(SUPRA) THE HONBLE DELH I HIGH COURT HAS HELD THAT AS LONG AS THE PAYMENT IS MADE FOR THE PURPOSE OF BUSINESS, THE PAYMENT WOULD BE ALLOWABLE AS EXPENSES. WHETHER A PARTICULAR EXPENSE HAS TO BE INCURRED IS TO BE SEEN FROM THE BUSINESS POINT OF VIEW AND HAVE TO B E RESPECTED BY THE AUTHORITIES, REGARDLESS OF THE FACT THAT IT MAY APPEAR TO THE LA TTER THAT EXPENSES WERE INCURRED UNNECESSARILY. IN THE CASE OF S.A BUILDERS (SUPRA ), THE HONBLE APEX COURT HAS HELD THAT ANY PARTICULAR EXPENDITURE MAY NOT BE INCURRED UNDER ANY LEGAL OBLIGATION, YET IT IS ALLOWABLE AS BUSINESS EXPENDITURE AS IT IS IN CURRED ON THE GROUNDS OF COMMERCIAL EXPEDIENCY. THE REVENUE HAS NOT BROUGHT ANY MATERIALS BEFORE US TO CONTROVERT THE FINDINGS OF LD CIT(A) WHO HAS OTHERW ISE TAKEN A CORRECT VIEW OF THE ISSUE AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESS EE. ACCORDINGLY, WE ARE INCLINED TO UPHOLD THE ORDER OF CIT(A) ON THIS ISSUE BY DISM ISSING THE GROUND NO. 3 OF THE REVENUE. 6. SINCE THE FACTS OF THE PRESENT CASE BEFORE US AR E IDENTICAL TO ONE AS DECIDED BY THE CO-ORDINATE BENCH OF THE TRIB UNAL IN THE EARLIER YEAR, WE,THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL AFFIRM THE OR DER OF LD. CIT(A) BY DISMISSING THE GROUND NOS.1 & 2 RAISED BY THE REVENUE. 7. THE ISSUE RAISED IN GROUND NO.3 IS AGAINST THE D ELETION OF DISALLOWANCE BY LD. CIT(A) OF MANAGERIAL SUPPORTS S ERVICE CHARGES WHICH WERE DISALLOWED BY THE AO ON THE GROU ND THAT ASSESSEE HAS FAILED TO PROVE THE BENEFIT ARISING OU T OF THE SAID SERVICES OBTAINED FROM THE RELATED PARTIES. 8. THE FACTS IN BRIEF ARE THAT THE AO OBSERVED FROM THE PERUSAL OF ANNUAL AUDITED ACCOUNTS THAT ASSESSEE HAS INCURR ED AN ITA NO.7601/M/2016 M/S. BHANDAR POWER LTD. 4 EXPENDITURE OF RS.1,98,54,000/- TOWARDS PAYMENT TO M/S ESSAR INVESTMENTS LTD. TOWARDS AVAILING VARIOUS IN THE AR EA OF FINANCE AND TREASURY, ACCOUNTING STANDARD AND AUDITS, LEGAL MATTERS AND LITIGATION (BOTH IN INDIA AND ABROAD), ARBITRATION, DISPUTES, INTERNATIONAL BENCHMARKING NORMS AND PROJECT MANAG EMENT SYSTEMS, CORPORATIVE GOVERNANCE, PERSONNEL POLICIES , INVENTORY MANAGEMENT AND RISK AND INSURANCE MANAGEMENT ETC. (REFER PAGE 27) WHICH WERE DISALLOWED BY THE AO ON THE GRO UND THAT ASSESSEE HAS FAILED TO PROVE THE PROOF OF AVAILING OF SERVICES AND THE BENEFITS REALISED OUT OF THOSE SERVICES. 9. THE LD. A.R., AT THE OUTSET, POINTED OUT THAT IS SUE IS SQUARELY COVERED BY THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN ASSESSEES OW N CASE IN ITA NOS.6061 & 6062/M/2016 IN ASSESSMENT YEARS: 2010-11 & 2011-12 (SUPRA) AND HENCE THE LD. A.R. PRAYED THAT THE SAME MAY KINDLY BE FOLLOWED IN THIS CASE AS WELL AND DIS MISS THE GROUND RAISED BY THE REVENUE. 10. THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIE D ON THE GROUNDS OF APPEAL AND THE ORDER OF THE AO. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD AND OBSERVED THA T THE IDENTICAL ISSUE IN THIS CASE IS DECIDED IN FAVOUR O F THE ASSESSEE BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSE ES OWN CASE IN ITA NOS.6061 & 6062/M/2016 IN ASSESSMENT YEARS: 2010-11 & 2011-12 (SUPRA). SINCE THE FACTS INVOLVED IN THE PRESENT CASE IN THE PRESENT CASE ARE IDENTICAL VIS.-A-VIS. THE C ASE OF THE ASSESSEE AS DECIDED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL, ITA NO.7601/M/2016 M/S. BHANDAR POWER LTD. 5 WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO- ORDINATE BENCH OF THE TRIBUNAL AFFIRM THE ORDER OF LD. CIT(A) BY DISMISSING THE GROUND NO.3 RAISED BY THE REVENUE. 12. GROUND NOS.4 & 5 ARE GENERAL IN NATURE AND NEED NO ADJUDICATION. 13. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.08.2019 SD/- SD/- (SANDEEP GOSAIN) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 02.08.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.