YAGENDRA S. P PATHAK, NAVI MUMBAI V. ACIT 15(3), MUMBAI

ITA 805/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84038 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 13-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 06-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Assessee Lawyers: S ATISH CHANDAK

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) . . , , ./I.T.A. NO.805/MUM/2012 ( / ASSESSMENT YEAR : 2007-08) SHRI YAGENDRA S PATHAK, FLAT NO.3, PREM SAGAR CO-OP.HSG SOC. BLDG NO.F-39, SECTOR-29, VASHI, NAVI MUMBAI-400703. / VS. ASSISTANT COMMISSIONER OF INCOME TAX, 15(3), MUMBAI. ( !' / APPELLANT) .. ( #$!' / RESPONDENT) ! ./ % ./PAN/GIR NO. :AHOPP9831J !' & / APPELLANT BY SHRI SATISH CHANDAK #$!' ' & /RESPONDENT BY SHRI PAVAN KUMAR BEERLA ( ' ) / DATE OF HEARING : 13.10.2014 *+ ' ) /DATE OF PRONOUNCEMENT : 22.10.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 1.12.2011 PASSED BY LD CIT(A)-26, MUMBAI AND IT REL ATES TO THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CIT(A) IN CONFIRMING THE FOLLOWING TWO ADDITIONS MADE BY THE AO : A) CONSULTANCY CHARGES RS.17,59,070/-; AND B) TRAINING FEE PAID RS. 1,94,000/- 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. WE NOTICE THAT THE ASSESSEE IS AN INDIVIDUAL AND ENGAG ED IN THE BUSINESS OF PROVIDING CONSULTANCY SERVICES THROUGH HIS PROPRIE TARY CONCERN NAMELY M/S GEO ACOUSTICS INDIA. DURING THE YEAR UNDER CONSIDERA TION, THE ASSESSEE HAD AGREED I.T.A. NO.805/MUM/2012 2 TO PROVIDE SERVICES TO M/S DRIVES AND CONTROLS SERV ICES LTD. AND M/S CONVERTEAM LTD., BOTH ESTABLISHED UNDER THE LAWS O F THE UNITED KINGDOM. THE CONSULTANCY SERVICES WERE AGREED TO BE PROVIDED IN CONNECTION WITH THE TENDER FURNISHED BY THE ABOVE SAID TWO COMPANIES FOR THE S UPPLY OF POWER AND PROPULSION EQUIPMENTS TO ONGC FOR ITS SAGAR SAMIK SHA OFFSHORE SURVEY VESSEL. THE ASSESSEE DISCLOSED PROFESSIONAL RECEIP TS OF RS.64,74,718/- FROM THE ABOVE SAID SERVICES. THE AO NOTICED THAT THE A SSESSEE HAS CLAIMED A SUM OF RS.17,59,070/- AS CONSULTANCY CHARGES AND RS. 1,94,000/- AS TRAINING FEES. ON FURTHER INQUIRY, IT WAS NOTICED THAT CONSULTANCY CHARGES OF RS.17,59,070/- WAS PAID TO A CONCERN NAMELY M/S IMPEX SALES CORPORAT ION. FROM THE INVOICES RAISED BY M/S IMPEX SALES CORPORATION, THE AO NO TICED THAT THE SAID CONCERN IS ENGAGED IN SUPPLY OF SS PIPES FITTINGS/FORGED FITT INGS AND SEAMLESS TEE AND FLANGES. THE AO OBSERVED THAT THE SAID CONCERN DOES NOT BEAR ANY TESTIMONY TO THE TECHNICAL EXPERTISE OR PROFESSIONAL QUALIFICATI ON FOR ENABLING IT TO RENDER SERVICES OF SUCH INTENSE TECHNICALITIES RELATING TO THE OFFSHORE SERVICES EQUIPMENT. HENCE, THE AO SUSPECTED THE GENUINENESS OF THE TRANSACTIONS AND ACCORDINGLY ISSUED SUMMONS TO M/S IMPEX SALES CORPO RATION SEEKING FURTHER DETAILS. HOWEVER, THE SAID SUMMON WAS RETURNED BY THE POSTAL AUTHORITIES WITH THE REMARKS THE ADDRESSEE HAS LEFT PLACE. THE WAR D INSPECTOR ALSO COULD NOT TRACE THE PARTY AT THE GIVEN ADDRESS. HENCE, THE A O REQUESTED THE ASSESSEE TO PROVIDE PRESENT AND CORRECT ADDRESS OF THE ABOVE SA ID CONCERN. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THE ABOVE SAID PARTY OR HE COULD FURNISH THE DETAILS ITS WHEREABOUTS. ACCORDINGLY, THE AO CONCLUDED THAT THE PAYMENT OF CONSULTANCY CHARGES OF RS.17,59,070/-IS NOT GENUINE EXPENDITURE AND ACCORDINGLY, HE DISALLOWED THE SAME. THE AO FURTHER NOTICED THAT THE TRAINING EXPENDITURE OF RS.1,94,000/- WAS PAID TO ASSESSEES SON NAMELY MR . ANAND PATHAK FOR TAKING PROFESSIONAL COURSES AT NIIT AND WELLINGKAR INSTI TUTE OF MANAGEMENT. THE ASSESSEE SUBMITTED THAT HIS SON ANAND PATHAK IS A SSISTING HIM IN CARRYING ON THE BUSINESS AND THE EXPENDITURE INCURRED ON FURTHE R TRAINING WOULD ONLY HELP THE ASSESSEE IN CARRYING THE BUSINESS MORE EFFICIENTLY. HOWEVER, THE AO DID NOT AGREE WITH THE SAID CONTENTIONS OF THE ASSESSEE AND FURTHER, PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V/S HOSIERY INDUSTRIES (1994) 209 ITR 383 (BOM), DISALLOWED T HE SAID CLAIM. IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) CONFIRMED BOTH THE DISALLOWANCES AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. I.T.A. NO.805/MUM/2012 3 4. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE SUBMITTED THAT BOTH THE TAX AUTHORITIES HAS DISALLOWED THE P AYMENT OF CONSULTANCY CHARGES ONLY ON THE REASONING THAT M/S IMPEX SALES CORPORA TION COULD NOT BE LOCATED. HOWEVER, THEY HAVE NOT BROUGHT ANY MATERIAL ON RECO RD TO SHOW THAT M/S IMPEX SALES CORPORATION DID NOT PROVIDE THE IMPUGNED SERV ICE TO THE ASSESSEE. HOWEVER, WHEN THE BENCH PUT A SPECIFIC QUERY TO THE LD. AR AS TO WHETHER THE ASSESSEE COULD FURNISH ANY OTHER EVIDENCE TO SHOW T HAT M/S IMPEX SALES CORPORATION DID PROVIDE TECHNICAL SERVICES TO THE ASSESSEE, THE LD.AR SUBMITTED THAT M/S IMPEX SALES CORPORATION HAS PROVIDED TWO T ECHNICAL REPORTS AND THE SAME HAS BEEN FORWARDED TO THE UK BASED COMPANIES. ACCORDINGLY, HE SUBMITTED THAT THE ASSESSEE COULD SUBSTANTIATE THE CLAIM OF PAYMENT OF TECHNICAL SERVICES TO M/S IMPEX SALES CORPORATION, IF ONE MOR E OPPORTUNITY IS GIVEN TO THE ASSESSEE. THOUGH THE LD. DR STRONGLY OBJECTED TO T HE PLEA PUT-FORTH BY THE LD. AR, IN THE INTEREST OF JUSTICE, WE ARE OF THE VIEW THAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY TO SUBSTANTIATE THE CLAIM OF E XPENDITURE RELATING TO CONSULTANCY CHARGES. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF AO WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH AND TAKE APPROPRIATE DECISION IN ACCOR DANCE WITH LAW. THE ASSESSEE IS ALSO DIRECTED TO FURNISH ALL THE MATERI ALS TO PROVE THE GENUINENESS OF THE EXPENDITURE. 5. WITH REGARD TO THE PAYMENT OF TECHNICAL FEES OF RS.1,94,000/- THE AR PLACED RELIANCE ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF M/S KOSTUB INVESTMENT LTD V/S CIT IN ITA NO.10 OF 201 4, DATED 25.2.2014. THE LD. AR SUBMITTED THAT THE DECISION RENDERED BY THE HON BLE BOMBAY HIGH COURT IN THE CASE OF HOSIERY INDUSTRIES (SUPRA) IS NOT APPLI CABLE TO THE FACTS PREVAILING TO THE INSTANT CASE. 6. WE NOTICE THAT THE ISSUE BEFORE HONBLE BOMBAY H IGH COURT IN THE CASE OF HOSIERY INDUSTRIES (SUPRA) WAS RELATED TO THE EXPEN DITURE INCURRED ON ONE OF THE PARTNERS, WHEREAS IN THE INSTANT CASE, THE EXPENDIT URE HAS BEEN INCURRED ON THE SON OF THE ASSESSEE AND HE IS CLAIMED TO BE ASSISTI NG THE ASSESSEES BUSINESS. HENCE, WE AGREE WITH THE SUBMISSION OF THE ASSESSEE THAT THE DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT MAY NOT APPLY TO T HE FACTS PREVAILING IN THE INSTANT CASE. SINCE, THE EARLIER ISSUE HAS BEEN RESTORED TO THE FILE OF THE AO, WE ARE OF I.T.A. NO.805/MUM/2012 4 THE VIEW THAT THIS ISSUE MAY ALSO BE SET ASIDE TO T HE FILE OF AO IN ORDER TO ENABLE HIM TO EXAMINE THE SAME IN THE LIGHT OF THE DECISIO N RENDERED BY THE HONBLE DELHI HIGH COURT (SUPRA). ACCORDINGLY, WE SET ASID E THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF T HE AO FOR FRESH EXAMINATION IN THE LIGHT OF THE DISCUSSION MADE ABOVE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22ND OCT , 2014. *+ , -. 22ND OCT, 2014 + ' /( 0 SD SD ( / AMIT SHUKLA) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCOUNTANT MEMBER ( MUMBAI: 22ND OCT,2014. . . ./ SRL , SR. PS !'# $#%! / COPY OF THE ORDER FORWARDED TO : 1. !' / THE APPELLANT 2. #$!' / THE RESPONDENT. 3. ( ) / THE CIT(A)- CONCERNED 4. / CIT CONCERNED 5. 12/ #3 , ) 3 , ( / DR, ITAT, MUMBAI CONCERNED 6. /4 5( / GUARD FILE. / BY ORDER, TRUE COPY 6 (ASSTT. REGISTRAR) ) 3 , ( /ITAT, MUMBAI