ASIT C. MEHTA INVESTMENT INTERMEDIATES LTD, MUMBAI V. CIT(A)-8, MUMBAI

ITA 863/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1261 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 06-02-2015
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Transactions in derivatives

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI DT GARASIA, JM AND SHRI MANOJ KUMAR AGG AR WAL, AM I.T.A. NO. 863/MUM/2015 ASSESSMENT YEAR: 2011 - 12 M/S ASIT C. MEHTA INVESTMENT INTERMEDIATES PVT. LTD., 5 TH FLOOR, NUCLEUS HOUSE, SAKI VIHAR ROAD, ANDHERI(E), MUMBAI - 400072 VS. CIT(A) - 8 AAYAKAR BHAVAN M.K. ROAD, MUMBAI - 400020 PAN: AAA CA5009N (APPELLANT) : (RESPONDENT) I.T.A. NO. 1920/MUM/2015 ASSESSMENT YEAR: 2011 - 12 DCIT4(1)(1) ROOM NO. 640, 6 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI - 400020 VS. M/S ASIT C. MEHTA INVESTMENT INTERMEDIATES PVT. LTD., 5 TH FLOOR, NUCLEUS HOUSE, SAKI VIHAR ROAD, ANDHERI(E), MUMBAI - 400072 PAN: AAA CA5009N (APPELLANT) : (RESPONDENT) ASSESSEE BY : SHRI SATISH MODY REVENUE BY : SHRI RAJESH KUMAR YADAV DATE OF HEARING : 16 /03/2017 DATE OF PRONOUNCEMENT : 21 /04 /2017 2 ASIT C. MEHTA ITA NO. 863 & 1920/M/2015 O R D E R PER D. T. GARASIA, JM: THESE ARE CROSS APPEAL AGAINST ORDER OF CIT(A) - 9 DATED 14/01/2015 FOR ASSESSMENT YEAR 2011 - 12. SINCE ISSUES RAISED IN THE APPEALS ARE CONNECTED TO EACH OTHER, WE DISPOSE FOR THE SAKE OF CONVENIENCE . W E DISPOSE THEM BY THIS COMMON ORDER. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: - THE ASSESSEE HAS FILED RE TURN OF INC OME FOR AY 2011 - 12 ON 22/09/2011 DECLARING TOTAL INCOME OF RS.51,79,175/ - . THE ASS ESSEE IS CORPORATE MEMBER OF NSE , BSE & MCX STOCK EXCHANGE AND ENGAGED IN THE BUSINESS OF TRADING & INVESTMENT IN SHARES & SECURITIES, DEALING IN CAPITAL MARKET AND F&O SEGME NT, CURRENCY DERIVATIVES AND DEPOSITORY PARTICIPANT OF CENTRAL DEPOSITORY SERVICES (INDIA) LTD., MERCHANT BANKING & PORTFOLIO MANAGEMENT SERVICES. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS DEBITED FOLLOWING EXPENSES UNDER ADMINISTRATION AND OPERATION: - S.NO. PARTICULARS AMOUNT IN RS. 1 OFFICE MAINTENANCE CHARGES 87,60,495 2 MARKETING EXPENSES 72,02,693 3 TRAVELLING AND CONVEYANCE EXPENSES 36,95,746 4 REPAIRS & MAINTENANCE 1,16,03,307 5 POSTAGE AND COURIER EXPENSES 1,01,43,957 5 MISCELLANEOUS EXPENSES 1,03,07,840 TOTAL: 5,17,14,038 / - THE LD. A.O., MADE THE FOLLOWING OBSERVATIONS: - 6.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, VIDE ORDER SHEET ENTRY DATED 20.12.2013, THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM AND ASKED TO SUBSTANTIATE THESE EXPENSES WITH PROOF OF SUPPORTING BILL/VOUCHERS AND ALSO TO EXPLAIN THAT THE SAME WERE EXPENDE D WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES. 3 ASIT C. MEHTA ITA NO. 863 & 1920/M/2015 6.2 . IN RESPONSE TO THE SAME, THE AR OF THE ASSESSEE HAS NOT PREFERRED TO SUBMIT ANY DETAILS IN SUPPORT OF ITS CLAIM. THEREFORE, THE SAME IS NOT FOUND TO BE ACCEPTABLE DUE TO THE REASON THAT THE SAME IS VERY GENERAL AND CASUAL IN NATURE AND IS NOT SUPPORTED BY ANY COGENT EVIDENCE OR STRONG NEXUS FOR INCLINATION TO SAY THAT THE EXPENSES HAS GOT A BUSINESS INCIDENCE. ON VERIFICATION OF DETAILS FILED, IT IS OBSERVED THAT TH ESE EXPENSES ARE NOT FULLY SUPPORTED BY PROPER BILLS / VOUCHERS AND CERTAIN EXPENSES ARE INCURRED THROUGH SELF MADE VOUCHERS IN CASH. FURTHER, THE JURISDICTIONAL HIGH COURT IN ITS JUDGMENT REPORTED IN 256 ITR 134 (BORN) HAS LAID DOWN THAT THE BURDEN OF PRO OF IS ON THE ASSESSEE TO ESTABLISH BEYOND DOUBT THAT THE EXPENDITURE HAS BEEN SOLELY INCURRED FOR THE PURPOSE OF BUSINESS. FURTHER, THE ASSESSEE HAS NOT MAINTAINED ANY LOG BOOK / RECORD FOR THE USE OF THESE EXPENSES FOR THE USE OF BUSINESS AS WELL AS NON - BUSINESS PURPOSES SEPARATELY. FURTHER, THE PERSONAL ELEMENT EMBEDDED IN THESE HEADS OF EXPENDITURE CANNOT BE RULED OUT FOR WANT OF ITINERARIES, LOG BOOK AND FINER DETAILS. THE ASSESSEE WAS ASKED TO JUSTIFY THE CLAIM AND SUBSTANTIATE EXPENSES SUPPO RTING BILLS/ VOUCHER AND ALSO EXPLAIN THAT THE SAME WERE WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE. THE ASSESSEE FILED THE DETAIL IN SUPPORT OF CLAIM AND ON V ERIFICATION OF THE DETAIL FILED, T HE ASSESSING OFFICER OF THE VIEW THAT THESE EXPENSES ARE NOT F ULLY SUPPORTED BY PROPER BILL/VOUCHERS AND CERTAIN EXPENSES WERE BOOKED THROUGH SELF - MADE VOUCHERS IN CAS H. THE ASSESSEE HAS FURNISHED S OME OF THE LEDGER ACCOUNT OF THE SAID EXPENSES . H OWEVER , THE ASSESSEE HAD NOT FURNISH ED SUFFICIENT DETAIL TO SUBSTANTIATE THE CLAIM OF THE EXPENSE INCURRED FOR BUSINESS AND NON - BUSINESS PURPOSE S . THEREFORE, THE A SSESSING OFFICER DISALLOWED 10% OF THE ENTIRE EXPENSES AND MADE THE ADDITION OF RS.51,71,403/ - . MATTER CARRIED TO CIT(A) AND CIT(A ) HAS PARTLY ALLOWED THE CLAIM BY OBSERVING AS UNDER: - 4 ASIT C. MEHTA ITA NO. 863 & 1920/M/2015 3.2 I HAVE CONSIDERED THE ASSESSMENT ORDER PASSED BY THE AO, WRITTEN SUBMISSIONS AND DETAILS FILED BY THE APPELLANT. IT IS SEEN THAT AO HAS DISALLOWED 10% OF ENTIRE ADMINISTRATION & OPERATION EXPENSES ON AD - HOC BASIS. THE DISALLOWANCE HAS BEEN MADE BY THE AO ON ACCOUNT OF THE FACT THAT AO WAS OF THE VIEW THAT CERTAIN EXPENSES WERE INCURRED IN CASH, THESE EXPENSES WERE NOT FULLY SUPPORTED BY THE BILLS/ VOUCHERS AND LEDGER ACCOUNT OF THE EXPENSES SUBMITTED BY THE APPELLANT WERE HUGE AND BULKY AND APPELLANT COULD NOT SUBSTANTIATE THE CLAIM OF THAT EXPENSES TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS. ON THE OTHER HAND, APPELLANT ARGUED THAT SI MILAR EXPENSES HAVE BEEN CLAIMED IN AYS 2008 - 09, 2009 - 10 AND 2010 - 11 AND NO DISALLOWANCE WAS MADE BY THE AO IN THESE YEARS. IT IS FURTHER SEEN THAT IN AY 2010 - 11, AN AMOUNT OF RS.4.68 CRORES WAS CLAIMED UNDER THE HEAD 'ADMINISTRATION & OPERATION EXPENSES' WHICH HAS INCREASED TO RS.5.17 CRORES DURING THIS YEAR. THE BROKERAGE INCOME FOR THE AY 2010 - 11 WAS OF RS.58.43 CRORES WHICH DURING THE PRESENT YEAR WAS SHOWN AT RS.49.64 CRORES. THE DISALLOWANCE MADE BY THE AO IS NOT SUPPORTED BY ANY MATERIAL OR EVIDENCE BROUGHT ON RECORD BY THE AO. HOWEVER, THE CLAIM OF THE ENTIRE EXPENSES COULD NOT BE SUBSTANTIATED BY THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. CONSIDERING ENTIRETY OF FACT, I AM OF VIEW THAT DISALLOWANCE MADE BY THE AO IS ON A HIGHER SIDE. TO BE JUST AND FAIR, THE AO IS DIRECTED TO RESTRICT THE DISALLOWANCE TO 10,00,000/ - AS AGAINST 51,71,403/ - MADE BY THE AO. THE APPELLANT GETS RELIEF OF RS.41,71,403/ - . WITH THESE OBSERVATIONS, THIS GROUND OF APPEAL IS TREATED AS PARTLY ALLOWED. AGGRIEVED, THE ASSESSEE AS WELL AS REVENUE IS IN APPEAL BEFORE US. THE ASSESSEE HAS CONTESTED THE ADDITION OF RS.10 LAKHS WHEREAS REVENUE HAS CONTESTED THE RELIEF PERMITTED BY LD. CIT(A). 3. WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE CIT(A) HAS OBSERVED THAT IN AY 2008 - 09, 2009 - 10 AND 2010 - 11 SUCH EXPENSES WERE NOT DISALLOWED AT 5 ASIT C. MEHTA ITA NO. 863 & 1920/M/2015 ALL. THE ASSESSEE IS A CORPORATE MEMBER OF NSE, BSE & MCX STOCK EXCHANGE ENGAGED IN THE BU SINESS OF TRADING & INVESTMENT IN SHARES & SECURITIES. THEREFORE, WHEN THE ASSESSEE IS HAVING OFFICES ALL OVER THE INDIA THESE EXPENSES HAVE TO BE INCURRED BY THE ASSESSEE. DURING THE COURSE OF HEARING, THE ASSESSEE CONTENDED THAT THE NUMBER OF VOUCHERS AR E HUGE BUT NEVERTHELESS THE ASSESSEE HAS SUFFICIENT EVIDENCE. T HEREFORE, WE ARE OF THE VIEW THAT THE CIT(A) WA S JUSTIFIED IN HIS ACTION AND OUR INTERFERENCE IS NOT REQUIRED. IN THE RESULT THE DEPARTMENTAL APPEAL IS DISMISSED. THE ASSESSEE HAS AGREED BEF ORE US THAT IF THE DEPARTMENTAL APPEAL IS DISMISSED THEN THE ASSESSEE DO NOT PRESS FOR ASSESSEES APPEAL . I N VIEW OF THIS THE ASSESSEE AS WELL AS DEPARTMENTAL BOTH ARE DISMISSED. JUDGMENT PRONOUNCED IN OPEN COURT ON 21 ST APRIL 2017. SD/ - SD/ - (MANOJ KUMAR AGG AR WAL) ACCOUNTANT MEMBER (D.T. GARASIA) JUDICIAL MEMBER MUMBAI, DATED: 21 ST APRIL 2017 *RAHUL SHARMA* COPY TO: 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI