Vishwakarma Developers Pvt. Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 872/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1037 (ITAT-PUNE)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 872 /PN/201 6 / ASSESSME NT YEAR : 20 0 7 - 0 8 VISHWAKARMA DEVELOPERS PVT. LTD., 28, VIJAYNAGAR COLONY, SADASHIV PETH, PUNE 411030 . / APPELLANT PAN: A AACV6128P VS. THE DY. COMMISSIONER OF INCOME TAX, CIRCLE - 7, PUNE . / RESPONDENT / APPELLANT BY : SHRI M.R. BHAGWAT / RESPONDENT BY : SHRI SUHAS KULKARNI, JCIT / DATE OF HEARING : 01 . 0 9 .201 6 / DATE OF PRONOUNCEMENT: 09 . 0 9 .201 6 / ORDER PER SUSHMA CHOWLA, J M : T H IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) , PUNE - 5, PUNE , DATED 12 . 0 1 .20 1 6 RELATING TO ASSESSMENT YEAR 20 0 7 - 0 8 AGAINST ORDER PASSED UNDER SECTION 1 4 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1) THE LEARNED COMMISSIONER (APPEALS) ERRED IN SUSTAINING THE DISALLOWANCE OF RS.1,34,688/ - OUT OF PROFESSIONAL FEES HOLDING THE SAME TO BE RELATING TO PRIOR PERIOD. 2) THE LEARNED COMMISSIONER (APPEALS) ERRED IN SUSTAINING T HE DISALLOWANCE OVERLOOKING THE FACT THAT THE EXPENSES HAD CRYSTALLIZED IN THE ACCOUNTING YEAR UNDER APPEAL ITSELF AND AS SUCH WELL ALLOWABLE. ITA NO. 872 /PN/20 1 6 VISHWAKARMA DEVELOPERS PVT. LTD. 2 3) THE ADDITION OF RS.1,34,688/ - BE DELETED AND THE INCOME OF THE ASSESSEE COMPANY BE REDUCED TO THAT EXTENT. 4 ) SUCH OTHER ORDERS BE PASSED AS DEEMED FIT AND PROPER. 3. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE DISALLOWANCE OF RS.1,34,688/ - MADE OUT OF PROFESSIONAL FEES HOLDING THE SAME RELATABLE TO PRIOR PERIOD. 4. BRIEFLY, IN THE FACTS OF TH E CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CONSTRUCTION AS CONTRACTOR. IT WAS ALSO ENGAGED IN THE BUSINESS OF GENERATION OF ELECTRICITY BY USING WIND TURBINE GENERATORS. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED LEGAL AND PROF ESSIONAL FEES OF RS.9,87,299/ - AS EXPENDITURE. THE ASSESSING OFFICER NOTED FROM THE DETAILS FILED THAT THE ASSESSEE HAD MADE PAYMENT OF RS.2,54,688/ - TO MR. G.H. INAMDAR AS PROFESSIONAL FEES. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE THE ASSESSEE WAS HAVING ALL THE CONSULTANTS SEPARATELY AND WHERE THE DETAILS OF ASSESSEE WAS HAVING ALL THE CONSULTANTS SEPARATELY AND WHERE THE DETAILS OF NATURE OF SERVICES PROVIDED BY MR. G.H. INAMDAR WERE NOT DISCLOSED BY THE ASSESSEE, THERE WAS NO JUSTIFICATION FOR THE SAID PAYMENT AND ACCORDINGLY, EXPENDITURE OF RS.2,54,688/ - WAS DISALLO WED BY THE ASSESSING OFFICER. 5. IN APPEAL, THE CIT(A) CONSIDERED THE S UBMISSION OF ASSESSEE THAT SUM OF RS. 1,34,688/ - WAS PAID TOWARDS RETAINERSHIP FEES FOR FINANCIAL YEAR 2005 - 06 AND FURTHER PROVISION WAS MADE FOR FINANCIAL YEAR 2006 - 07 AT RS.1,20,000/ - . THE ASSESSEE FURNISHED RELATED INVOICES AND POINTED OUT THAT THE SAID EXPENDITURE HAD CRYSTALLIZED DURING THE YEAR. THE CIT(A) ACCEPTED THE CONTENTION OF ASSESSEE THAT THE SUBMISSIONS WERE MADE BEFORE THE ASSESSING OFFICER, AGAINST WHICH NO ENQUIRY WAS CONDUCTED BY THE ASSESSING OFFICER AS TO THE NATURE OF SERVICES RENDERED BY MR. G.H. INAMDAR, WAS CORRECT AS THE ASSESSING OFFICER NEITHER DISCUSSED NOR EXAMINED AS TO HOW THE AMOUNT OF RS. 2,54,688/ - RELATED TO ITA NO. 872 /PN/20 1 6 VISHWAKARMA DEVELOPERS PVT. LTD. 3 TWO DIFFERENT FINANCIAL YEARS. THE CIT(A) A CCEPTED THE PLEA OF ASSESSEE THAT THE SAID EXPENDITURE WAS ATTRIBUTABLE TOWARDS PROFESSIONAL FEES. HOWEVER, THE EXPENDITURE TO THE EXTENT OF RS.1,20,000/ - PERTAINING TO THE YEAR WAS ALLOWED AND THE BALANCE EXPENDITURE PERTAINING TO THE EARLIER YEAR WAS DI SALLOWED. 6. THE ASSESSEE IS IN APPEAL AGAINST THE AFORESAID DISALLOWANCE OF RS.1,3 4 ,688/ - OUT OF PROFESSIONAL FEES. 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE PERUSAL OF BILL RAISED BY THE SAID PROFESSIONAL CLEARLY RE FLECTS THAT THE SAME WAS RAISED DURING THE YEAR UNDER CONSIDERATION AND HENCE, THE LIABILITY TO PAY AROSE IN THE YEAR AND WAS THUS, CLAIMED AS EXPENDITURE. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN SAUR ASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. VS. CIT (1995) 213 ITR 523 (GUJ). (GUJ). 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER OF CIT(A). 9. ON PERUSAL OF RECORD, THE ISSUE ARISING IN THE PRESENT A PPEAL IS AGAINST PART DISALLOWANCE OF PROFESSIONAL FEES AMOUNTING TO RS.1,34,688/ - . THE ASSESSEE HAD EXPLAINED THAT THE SAID SUM OF RS.1,34,688/ - WAS THE PROFESSIONA FEES DUE TO MR.G.H. INAMDAR AND CO., WHICH THOUGH RELATED TO FINANCIAL YEAR 2005 - 06 ON AC COUNT OF RETAINERSHIP FOR THAT YEAR, BUT HAD CRYSTALLIZED IN THE YEAR UNDER APPEAL BY WAY OF R AISING BILL DATED 09.08.2006. THE PERUSAL OF COPY OF BILL FILED BY THE ASSESSEE ON RECORD ESTABLISHES THE STAND OF ASSESSEE THAT THE BILL RAISED ON 09.08.2006 WA S FOR RETAINERSHIP FOR MUMBAI BRANCH AUDIT RELATING TO THE PERIOD 2005 - 06. SINCE THOUGH THE EXPENSES RELATABLE TO THE EARLIER ITA NO. 872 /PN/20 1 6 VISHWAKARMA DEVELOPERS PVT. LTD. 4 ACCOUNTING YEAR, HOWEVER, THE SAME WAS QUANTIFIED IN THE YEAR UNDER APPEAL AND CONSEQUENTLY, THE CLAIM OF ASSESSEE MERITS TO BE A LLOWED IN THE INSTANT ASSESSMENT YEAR. THOUGH THE ASSESSEE WAS MAINTAINING ITS BOOKS OF ACCOUNT ON MERCANTILE SYSTEM OF ACCOUNTING, HOWEVER, SINCE THE LIABILITY TO PAY THE SAID PROFESSIONAL FEE S HAD CRYSTALLIZED IN THE INSTANT ASSESSMENT YEAR, THE SAME ME RITS TO BE ALLOWED IN THE HANDS OF ASSESSEE. IN THIS REGARD, I FIND SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN SAURASHTRA CEMENT AND CHEMICAL INDUSTRIES LTD. VS. CIT (SUPRA) . ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO AL LOW THE EXPENDITURE OF RS.1,34,688/ - TO THE ASSESSEE. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 0 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 9 TH DAY OF SEPTEMBER , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 9 TH SEPTEMBER , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) , PUNE - 5 , PUNE ; 4. / THE PR. CIT - IV , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / B Y ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE