TULSI GLOBAL LOGISTICS P. LTD, MUMBAI V. ITO 1(2)(3), MUMBAI

ITA 8761/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4200 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 25-06-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 27-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI R K GUPTA, JUDICIAL MEMBER & SHRI N K BILLAIYA, ACCOUNTANT MEMBER ITA NO.8761/MUM/2011: ASST. YEAR 2007-08 TULSI GLOBAL LOGISTICS PRIVATE LTD. 602, PARAG, 27, PEDDAR ROAD, MUMBAI 400 026 PAN AABCN0633L VS. THE ITO 1(2)(3), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HITESH TRIVEDI RESPONDENT BY : MS JOTHILAKSHMI NAYAK DATE OF HEARING :25.06.2013 DATE OF PRONOUNCEMENT : 05.07.2013 O R D E R PER N.K.BILLAIYA (AM) : WITH THIS APPEAL THE ASSESSEE HAS CHALLENGED THE CO RRECTNESS OF THE ORDER OF THE CIT(A)-2, MUMBAI, DATED 3.10.2011, PERTAINING T O A.Y. 2007-08. THE ASSESSEE HAS RAISED TWO SUBSTANTIVE GROUNDS OF APPEAL. 2. GROUND NO.1 RELATES TO THE DISALLOWANCE OF INSUR ANCE CHARGES TO THE TUNE OF RS.7,37,730/-. THE ASSESSEE IS IN THE BUSINESS OF STORAGE AND WAREHOUSING. THE RETURN OF INCOME FOR THE YEAR WAS FILED ON 26.10.20 07 DECLARING TOTAL LOSS AT RS.2,50,047/-. THE RETURN WAS SELECTED FOR SCRUTIN Y ASSESSMENT AND, ACCORDINGLY, STATUTORY NOTICES WERE ISSUED AND SERVED UPON THE A SSESSEE. WHILE SCRUTINIZING THE RETURN AND THE DETAILS FILED BY THE ASSESSEE, THE A SSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAID RENT TO M/S. M/S. INDIAN DYNAMICS , PANVEL FOR HIRING WAREHOUSE. ON THE OTHER HAND THE ASSESSEE HAS RECEIVED INCOME FROM STORAGE AND WAREHOUSING 2 ITA NO.8761/MUM/2011 AY:2007-08 CHARGES FROM M/S. FLEMINGO DUTY FREE SHOP PVT. LTD. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS INCOME FROM WAREHOUS E AT RS.16,42,709/- AGAINST WHICH THE ASSESSEE HAS DEBITED RS.18,64,993/- UNDER THE HEAD WAREHOUSING EXPENSES WHICH, INTER ALIA, INCLUDED RENT OF RS.6,7 6,189/- AND INSURANCE OF RS.7,37,730/-. THE ASSESSING OFFICER SOUGHT EXPLAN ATION FROM THE ASSESSEE TO JUSTIFY THE CLAIM OF WAREHOUSING EXPENSES. THE ASSESSEE FI LED A DETAILED REPLY DATED 17.11.2009 AND EXPLAINED THAT THE ASSESSEE HAS TAKE N THE WAREHOUSE ON THE BASIS OF LEAVE AND LICENCE AGREEMENT FROM M/S. INDIAN DYNAMI CS, PANVEL. IT WAS EXPLAINED THAT THE ACTUAL OPERATIONS STARTED ONLY FROM NOV. 2 006 THOUGH THE COMPANY HAD STARTED PAYING RENT FROM 10.05.2006. IT WAS FURTHE R EXPLAINED THAT THE ASSESSEE HAD TO FURTHER INCUR EXPENSES FOR ELECTRICITY, SECURITY CHARGES, REPAIRS AND INSURANCE CHARGES OTHER THAN THE ABOVE RENT PAID TO THE OWNER S. THE ASSESSEE FURTHER EXPLAINED THAT RENTED WAREHOUSE TAKEN FROM M/S. IND IAN DYNAMICS WAS RENTED TO M/S. FLEMINGO DUTY FREE SHOP P. LTD. FROM WHICH IT HAS RECEIVED AN INCOME OF RS.16,42,709/-. ON GOING THROUGH THE INSURANCE REC EIPT THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD ACTUALLY PAID INSURAN CE CHARGES OF RS.7,11,832/- BUT HAS DEBITED THE PROFIT AND LOSS ACCOUNT AT RS.7,37, 730/-. THUS, ACCORDING TO THE ASSESSING OFFICER THE ASSESSEE DEBITED EXCESS AMOUN T OF RS.25,898/- ON FURTHER VERIFICATION FROM THE TENANT M/S. FLEMINGO DUTY FRE E SHOP P. LTD., THE ASSESSING OFFICER NOTICED THAT THE SAID PARTY HAS CONFIRMED O F HAVING PAID RENT TO THE ASSESSEE RS.18,36,727/- AND HAS ALSO DEBITED IN ITS ACCOUNT INSURANCE AMOUNT OF RS.9,86,030/-. THE ASSESSING OFFICER WAS OF THE FI RM BELIEF THAT SINCE THE INSURANCE CHARGES HAVE BEEN CLAIMED BY THE TENANT THEREFORE, INSURANCE CHARGES PAID BY THE ASSESSEE AT RS.7,37,730/- DESERVED TO BE DISALLOWED . AGGRIEVED BY THIS FINDING OF THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATT ER TO THE CIT(A). IT WAS EXPLAINED THAT THE ASSESSEE WAS REQUIRED TO KEEP GOODS IN THE WAREHOUSE UNDER PROPER CONDITION AS REQUIRED BY THE CUSTOMS AUTHORITY. FU RTHER, UNDER THE PERMISSION GRANTED BY COMMISSIONER OF CUSTOMS FOR PRIVATELY O WNED PUBLIC CUSTOMS BONDED WAREHOUSE THE ASSESSEE WAS REQUIRED TO OBTAIN ADEQ UATE INSURANCE COVER FOR THE 3 ITA NO.8761/MUM/2011 AY:2007-08 VALUE OF THE GOODS WHICH ARE STORED IN THE PRIVATEL Y OWNED PUBLIC CUSTOMS BONDED WAREHOUSE. IT WAS FURTHER EXPLAINED THAT THE INSUR ANCE COVER WAS REQUIRED TO BE OBTAINED FOR THE CUSTOMS DUTY PAYABLE ON THE GOODS STORED IN THE WAREHOUSE. THEREFORE, THE INSURANCE CHARGES CLAIMED BY THE ASS ESSEE WERE DIRECTLY IN RELATION TO THE EARNING OF INCOME. AFTER CONSIDERING THE SUBMI SSIONS OF THE ASSESSEE THE CIT(A) WAS OF THE OPINION THAT THE INSURANCE CHARGES PAID BY THE ASSESSEE WERE RECOVERABLE FROM THE TENANT M/S. FLEMINGO DUTY FREE SHOP P. LTD . THEREFORE, THE CLAIM OF THE ASSESSEE DESERVED TO BE DISALLOWED AND RIGHTLY DISA LLOWED BY THE ASSESSING OFFICER. AGGRIEVED BY HIS FINDING THE ASSESSEE IS BEFORE US. 3. BEFORE US THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT A SIMILAR ISSUE AROSE DURING THE ASSESSMENT YEAR 2008-09 WHEREIN THE ASSE SSING OFFICER HAS DISALLOWED INSURANCE EXPENDITURE OF RS.16,67,744/- AND THE CIT (A) ALLOWED THE ENTIRE INSURANCE CHARGES CLAIMED, WHICH ORDER HAS BEEN ACCEPTED BY T HE REVENUE. THE COUNSEL FURTHER SUBMITTED THAT THE TOTAL INSURANCE PREMIUM PAID DURING THE YEAR AMOUNTED TO RS.14,55,268/- AND SUBSEQUENTLY THE ASSESSEE RECEI VED REFUND OF INSURANCE AT RS.5,66,032/- WHICH WAS CREDITED TO THE INSURANCE A CCOUNT AND ONLY THE BALANCE OF RS.7,37,730/- HAS BEEN CHARGED TO THE PROFIT AND LO SS ACCOUNT. THE DR RELIED UPON THE FINDINGS OF THE ASSESSING OFFICER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL EVIDENCES BROUGH T ON RECORD. IT IS NOT IN DISPUTE THAT THE TOTAL INSURANCE PREMIUM WERE AT RS.14,55,2 68/- OUT OF WHICH THE ASSESSEE HAS CREDITED THE REFUND AMOUNT OF RS.5,66,032/- AND DEBITED THE PROFIT AND LOSS ACCOUNT ONLY WITH THE BALANCE OF RS.7,37,730/-. WE ALSO FIND FORCE IN THE CONTENTION OF THE AR THAT ON IDENTICAL FACTS, THE REVENUE HAS ACCEPTED THE ORDER OF THE CIT(A) FOR A.Y. 2008-09. WE HAVE PERUSED THE ORDER FOR A. Y. 2008-09 AND FIND THAT THE CIT(A) HAS CONSIDERED THIS ISSUE VIDE GROUND NO.3 O F THAT APPEAL AT PARA 5 PAGE 6 OF HIS ORDER. CONSIDERING ALL THESE FACTS IN TOTALITY , WE DIRECT THE ASSESSING OFFICER TO DELETE THE SUM OF RS.7,37,730/-. GROUND NO.1 WITH ALL ITS SUB GROUNDS IS ALLOWED. 4 ITA NO.8761/MUM/2011 AY:2007-08 5. GROUND NO.2 RELATES TO THE ADDITION OF RS.1,17,3 24/- BEING THE DIFFERENCE BETWEEN THE RENT AND INSURANCE CHARGES. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT M/S . FLEMINGO DUTY FREE SHOP HAD DEBITED RENT OF RS.18,36,727/- WHICH WAS PAID TO TH E ASSESSEE, WHEREAS THE ASSESSEE HAS SHOWN THE SAME AT RS.16,42,709/-. THU S, THERE WAS A DIFFERENCE OF RS.1,94,018 WHICH WAS ADDED BY THE ASSESSING OFFICE R BEING THE DIFFERENT IN RENT SHOWN BY THE ASSESSEE. THE ASSESSEE ARGUED BEFORE THE CIT(A) THAT THE ASSESSING OFFICER HAS NOT APPRECIATED THE FACTS PROPERLY. IT WAS EXPLAINED THAT THE DETAILS FILED BY TENANT M/S. FLEMINGO DUTY FREE SHOP P. LTD. RELA TED TO THE AMOUNT OF RENT PAID BY THEM AND CHARGED TO THEIR PROFIT AND LOSS ACCOUNT. THE SAID TOTAL DID NOT PERTAIN ONLY TO THE ASSESSEE AS M/S. FLEMINGO DUTY FREE SHOP P. LTD. HAD PAID RENT TO SEVERAL PARTIES OTHER THAN THE ASSESSEE. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) OBSERVED THAT THE TENANT M/S. FLEMINGO D UTY FREE SHOP P. LTD. HAS PAID A SUM OF RS. 17,60,033/- TO THE ASSESSEE AND THE ASSE SSEE HAS SHOWN AT RS.16,42,709/- AS ITS INCOME. THEREFORE, THE RECEI PTS HAVE BEEN UNDERSTATED TO THE EXTENT OF RS.1,17,324/-. THE CIT(A) DIRECTED TO RE STRICT THE DISALLOWANCE AT RS.1,17,324 ONLY. AGGRIEVED BY THIS THE ASSESSEE I S BEFORE US. 6. IT IS THE SAY OF THE COUNSEL THAT THE RENT SHOWN BY THE TENANT M/S. FLEMINGO DUTY FREE SHOP P. LTD. AT RS. 17,60,033/- COMPRISES OF RENT OF RS.16,16,444/- AND SERVICE TAX OF RS.1,43,589/-. THEREFORE, THERE IS NOT DISCREPANCY IN RESPECT OF RENT SHOWN BY THE TENANT AND THE ASSESSEE IF CONSIDERED IN THE LIGHT OF THE SERVICE TAX COMPONENT. IN OUR CONSIDERED VIEW THIS ISSUE HAS N OT BEEN CONSIDERED BY THE LOWER AUTHORITIES. WE ACCORDINGLY RESTORE THIS ISSUE BAC K TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSEE IS DIRECTED TO FILE RECONCIL IATION STATEMENT OF RENT RECEIVED FROM M/S. FLEMINGO DUTY FREE SHOP P. LTD. EXPLAININ G THE COMPONENT OF SERVICE TAX. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE DET AILS FILED BY THE ASSESSEE IN THIS RESPECT AFTER GIVING REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. GROUND NO.2 IS ALLOWED FOR STATISTICAL PURPOSES. 5 ITA NO.8761/MUM/2011 AY:2007-08 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED IN PART FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JULY 2013. SD/- SD/- (R.K.GUPTA) (N.K.BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 5 TH JULY, 2013 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T, MUMBAI 4. THE CIT (A)-2 MUMBAI 5. THE DR, E- BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI