Addl. CIT, Pune V. Jaya Hind Investments Pvt. Ltd., Pune

ITA 83/PUN/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7693 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 16-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VEENA RAJ JT

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 83/PN/09 (ASSTT. YEAR 2003-04) ADDL. CIT RANGE-9, PUNE .... APPELLANT VS. JAYA HIND INVESTMENTS PVT. LTD., MUMBAI PUNE ROAD, AKURDI, PUNE 411035 PAN NO. AAACJ4269R . RESPONDENT APPELLANT BY : SMT. VEENA RAJ (JT. CIT) RESPONDENT BY : SHRI C.H NANIWADEKAR ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A)-III, PUNE DATED 24-10-2008 FOR A.Y 2003-04. 2. THE ONLY ISSUE THAT IS CONTESTED BEFORE US RELATES TO THE ALLOWABILITY OF AMOUNT OF RS. 7.5 LAKHS, THE PAYMENTS MADE BY THE A SSESSEE TOWARDS CERTAIN SERVICES RENDERED TO THE COMPANY. DURING THE ASSESSMEN T PROCEEDINGS, THE A.O DISALLOWED THE SAID CLAIM OF THE COMPANY STATING TH AT THE AMOUNT IS PAID TO SHRI S.A. GUNDECHA AND IT IS NOT PROPORTIONATE TO THE SERVICES RE NDERED BY HIM. IN THE OPINION BY THE A.O, THE AMOUNT IS EXCESSIVE AND UNREASONABL E AND ACCORDINGLY, A.O INVOKED THE PROVISIONS OF SEC. 40A(2)(B) OF THE ACT. DURING THE FIRST APPELLATE PROCEEDINGS, ASSESSEE DEMONSTRATED THAT MR. GUNDECHA IS NOT A RELA TED PERSON SPECIFIED U/S. 40A(2)(B) OF THE ACT. ACCORDINGLY, CIT(A) GAVE A REL IEF TO THE ASSESSEE. AGGRIEVED WITH THE SAME THE REVENUE FILED THE PRESENT APPEAL. ITA NOS. 83/PN/09 A.Y. 2003-04 PAGE 2 OF 3 3. DURING THE PROCEEDINGS BEFORE US, BOTH THE PARTIES H AVE RELIED ON THE APPEAL PAPERS FILED BEFORE US TO ADVANCE THEIR RESPECTIVE POSI TIONS. AFTER HEARING, WE HAVE PERUSED THESE ORDERS OF THE REVENUE AND IN GENERAL THE IMPUGNED ORDER IN PARTICULAR. FOR THE SAKE OF COMPLETENESS THE DECISION OF THE CIT(A) AS MENTIONED IN PARA 4.7 OF THE IMPUGNED ORDER IS FOUND RELEVANT AND TH E SAME IS REPRODUCED AS UNDER:- 4.7 I HAVE CAREFULLY CONSIDERED THE ISSUE INVOLVE D IN THIS CASE IN THE LIGHT OF THE FACTS OF THE CASE, SUBMISSION OF THE APPELLA NT AND REPORT OF THE ASSESSING OFFICER, I FIND STRENGTH IN THE CONTENTI ON OF THE APPELLANT THAT SINCE SHRI S.A GUNDECHA IS NOT A RELATED PERSON IN TERMS OF THE PROVISIONS OF SECTION 40A (2)(B), THE ASSESSING OFFICER IS NOT JU STIFIED IN INVOKING THE PROVISIONS OF SECTION 40A(2)(B) OF THE I.T. ACT. F URTHER, CONSIDERING THE FACTS THAT (I) SHRI S.A. GUNDECHA IS COMPETENT ENOUGH TO GI VE ADVICE ON LEGAL MATTERS (II) IT HAS BEEN ADMITTED BY SHRI S.A. GUNDECHA T HAT HE HAS RENDERED SERVICES TO THE COMPANY. (III) THE AMOUNT OF RS. 7,50,000/- ALLEGEDLY RECE IVED BY SHRI S.A. GUNDECHA FROM THE COMPANY HAS BEEN OFFERED TO TAX B Y HIM BY DISCLOSING THE SAME IN THE RETURN OF INCOME AS FEES FROM THE APPELLANT COMPANY (IV) THE INCOME SO OFFERED BY SHRI S.A. GUNDECHA HAS BEEN ACCEPTED BY THE DEPARTMENT, THERE REMAINS LITTLE SCOPE FOR THE ASSESSING OFFICE R, WITHOUT BRINING ANY ADVERSE MATERIAL ON RECORD, TO HOLD THAT ACTUALLY NO SERVICES HAVE BEEN RENDERED BY SHRI S.A. GUNDECHA TO THE APPELLANT COMPANY. ON THE FACTS OF THE CASE, IT IS HELD THAT THE DISALLOWANCE OF RS. 7 ,50,000/- U/S. 40 A(2)(B) IS UNCALLED FOR AND THE SAME IS DIRECTED TO BE DELETED . 4. FROM THE ABOVE, IT IS AN SETTLED POSITION THAT SH RI S.A. GUNDECHA IS NOT SPECIFIED PERSON MENTIONED IN SEC. 40A(2) OF THE ACT . IT IS NOT THE CASE OF THE A.O. THAT SHRI S.A. GUNDECHA IS INCAPABLE OF RENDERING SERVI CES. AS STATED BY THE CIT(A), THERE IS MATERIAL GARNERED BY THE AO TO DEMONSTRATE THE CONTENTION AND CLAIM OF THE ASSESSEE. ONUS IS ON THE AO TO PROVE THAT THE CLAIM MADE BY THE ASSESSEE IS INCORRECT. AO ALSO FAILED TO BRING ANYTHING ON RECORD T O SUPPORT HIS FINDING THAT THE SAID AMOUNT OF RS. 7.5 LAKHS IS EXCESSIVE AND UNREAS ONABLE. HE HAS NOT BROUGHT ANY COMPARABLE CASE TO DEMONSTRATE THE SAME. IN ANY CASE , IN OUR OPINION, THE PROVISIONS OF SEC. 40A(2)(B) HAVE ANY ROLE TO PLAY TO THE IMPUGNED TRANSACTION INVOLVING PAYMENT OF RS. 7.5 LAKHS. IN SUCH CIRCUMST ANCES WE FIND NO REASON TO INTERFERE WITH THE FINDINGS GIVEN BY THE CIT(A) GIVEN IN PARA 4.7 OF THE IMPUGNED ORDER. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. ITA NOS. 83/PN/09 A.Y. 2003-04 PAGE 3 OF 3 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH JANUARY, 2011. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 07 TH JANUARY, 2011 R COPY OF THE ORDER IS FORWARDED TO : 1. ADDL. CIT, RANGE-9, PUNE 2. ASSESSEE 3. CIT(A)-III, PUNE 4. CIT-V, PUNE 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE