FIRST ADVANTAGE P. LTD, MUMBAI V. ADDL CIT RG 9(1), MUMBAI

ITA 9088/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8952 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL S JHUNJHUNWALA
• Keywords: Capital asset; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F BENCH BEFORE SHRI I.P. BANSAL, (JUDICIAL MEMBER) AND SHRI B.RAMAKOTAIAH (ACCOUNTANT MEMBER) ITA NO.9088/MUM/2010 ASSESSMENT YEAR: 2007-08 M/S. FIRST ADVANTAGE P. LTD. INTERFACE. 1 ST FLOOR, BLOCK NO.7, NEXT TO GOREGAON SPORTS CLUB, LINK ROAD, MALAD (W) MUMBAI 400064. PAN NO. AAACO0706E VS. ADDL . COMMISSIONER OF INCOME TAX, RANGE 9(1), MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : M R. SUNIL S. JHUNJHUNWALA RESPONDENT BY : MR. RAJARSHI DWI VEDY DATE OF HEARING : 10.09.2012 DATE OF PRONOUNCEMENT : 21.09.2012 ORDER PER B.RAMAKOTAIAH, AM : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER OF THE CIT(A)-19, MUMBAI DATED 12.10.2010. 2 THE ASSESSEE HAS RAISED 6 GROUNDS ON 2 ISSUES. WE HAVE HEARD THE LD. COUNSEL AND LD.DR IN DETAIL. 4. THE GROUND NO. 1 IS DISALLOWANCE ON FOREIGN TRAVE L EXPENSES OF RS.1,08,655/-. AS PER THE ASSESSMENT ORDER THE A SSESSEE CLAIMED AN AMOUNT OF RS.2,17,311/- AS FOREIGN TRAVEL EXPENSES. THE ASSESSING OFFICER ON THE REASON THAT ELEMENT OF PERSONNEL NATURE CANNOT BE RULED OUT, HAS DISALLOWED 5%(SIC) OF THE TOTAL EXPENDITURE I.E. AT RS.1,08,655/-. ITA NO.9088/MUM/2010 M/S. FIRST ADVANTAGE P. LTD. 2 4.1 BEFORE THE CIT(A) THE ASSESSEE SUBMITTED THE TO TAL FOREIGN TRAVEL EXPENSES WAS AT RS.21,37,311/- AND THERE IS NO ELEMENT OF PERSONNEL NATURE BEING COMPANY AND FURTHER, THE AS SESSEE PAID FRINGE BENEFIT TAX ON FOREIGN TRAVEL EXPENSES. WITHOU T CONSIDERING THE SUBMISSIONS, THE CIT(A) CONFIRMED 5% OF TOTAL EXPENSES STATING THE TOTAL CLAIM AT RS.2,17,311/-. 5 AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE O F THE OPINION THAT THE ISSUE HAS NOT BEEN EXAMINED CORRECTLY BY T HE AUTHORITIES BELOW. FIRST OF ALL, THE AMOUNT TAKEN FOR CONSIDERA TION ITSELF WAS WRONG, WHICH INDICATES THAT ASSESSING OFFICER HAS N OT APPLIED HIS MIND PROPERLY. FURTHER, THE CONTENTION THAT FBT WAS P AID ON THE ABOVE AMOUNT HAS ALSO NOT BEEN EXAMINED. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR NECESSARY EXAMINATION OF THE FACTS AND ALSO THE CONTENTIONS OF THE ASSESSEE THAT THERE IS NO EL EMENT OF PERSONNEL NATURE INVOLVED IN FOREIGN TRAVEL EXPENSE S. ACCORDINGLY, THIS GROUND IS CONSIDERED AS ALLOWED. 6. THE NEXT ISSUE IN GROUND NO. 2 IS REGARDING THE CLAIM OF DEDUCTION OF RS.26,01,500/- ON ACCOUNT OF FOREIGN E XCHANGE GAIN BEING CAPITAL NATURE. 6.1 BRIEFLY STATED, ASSESSEE CREDITED TO THE PROFI T & LOSS A/C FOREIGN EXCHANGE GAIN OF RS.27,91,623/- (SCHEDULE J OF AUDITED ACCOUNTS) AND THE SAME WAS INCLUDED IN THE TOTAL IN COME. IT WAS THE CONTENTION THAT THE ABOVE FOREIGN EXCHANGE GAIN INCLUDE GAIN OF RS.26,01,500/- PERTAINING TO ECB (FOREIGN CURREN CY LOAN). THIS AMOUNT WAS UTILIZED FOR ACQUIRING BUILDING/OFFICE I NFRASTRUCTURE I.E. ALL CAPITAL IN NATURE AND THE AMOUNT HAS TO BE ADJU STED IN THE BLOCK OF ASSETS FOR THE PURPOSE OF INCOME TAX COMPU TATION. IT IS SUBMITTED THAT IN ASSESSMENT YEAR 2009-10, THE ENTI RE LOSS ON FOREIGN EXCHANGE LOAN AMOUNTING TO RS.1,74,88,000/- ON ACCOUNT OF RE-STATEMENT OF ECB LOAN WAS DISALLOWED AND ADDE D BACK THE SAME AS CAPITAL IN NATURE BY AO. AO DID NOT CONSIDE R THE CLAIM ON THE REASON THAT ASSESSEE DID NOT FILE REVISED RETUR N AND HE CAN NOT ACCEPT THE SAME. ITA NO.9088/MUM/2010 M/S. FIRST ADVANTAGE P. LTD. 3 6.2 THE LD.CIT(A) DID NOT CONSIDER THE MERITS OF TH E CLAIM ON THE REASON THAT ASSESSEE HAS NOT FILED THE REVISED RET URN AND THIS CLAIM CANNOT BE ENTERTAINED U/S 143(3), FOLLOWING T HE DECISION OF SUPREME COURT IN THE CASE OF M/S. GOETZE INDIA LTD. (157 TAXMANN 323). THE LD.CIT(A) AGREED WITH THE ASSESSING OFFIC ER STATING THAT THE ASSESSEE ITSELF CREDITED THE AMOUNT TO THE PROF IT & LOSS A/C AND WAS IN CONSONANCE WITH THE PROFIT & LOSS A/C AND BA LANCE SHEET AND ACCOMPANYING DOCUMENTS. IT IS SUBSEQUENT THAT T HE ASSESSEE HAPPENED TO TAKE A DIFFERENT VIEW AND THIS DOES NOT TANTAMOUNT TO A MISTAKE OR OMISSION IN THE ORIGINAL RETURN AS FIL ED. HE FURTHER, REFERRED TO CBDT CIRCULAR 549 DATED 31.10.1989 TO H OLD THAT ASSESSING OFFICER CANNOT ASSESS AT A LOWER FIGURE T HAN RETURNED RETURN. ACCORDINGLY, CIT(A) DISMISSED THE CLAIM. 4. BEFORE US THE LD. COUNSEL HAS SUBMITTED THAT THE ASSESSEES CLAIM WAS CONSISTENT WITH THE ACTION OF THE ASSESSI NG OFFICER TAKEN LATTER I.E. ASSESSMENT YEAR 2009-10 AND THE LOAN WA S TAKEN FOR ACQUISITION OF CAPITAL ASSET, GAIN OR LOSS HAS TO B E ADJUSTED IN THE BLOCK OF ASSETS. HE RELIED UPON THE DECISION OF HO NBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. M/S. PRUTHVI BROK ERS & SHAREHOLDERS PVT. LTD. IN ITA NO. 3908 OF 2010 DAT ED 21 ST JUNE, 2012 TO SUBMIT THAT ASSESSING OFFICER CANNOT REJECT THE CLAIM AND RELIED ON THE FOLLOWING PARAS FROM THE JUDGMENT TO SUBMIT THAT CLAIM CAN BE ALLOWED. IT IS CLEAR TO US THAT THE SUPREME COURT DID NOT HOL D ANYTHING CONTRARY TO WHAT WAS HELD IN THE PREVIOUS JUDGMENT TO THE EFFECT THAT EVEN IF A CLAIM IS NOT BEFORE THE ASSESSING OFFICER, IT CAN BE MADE BEFORE THE APPELL ATE AUTHORITIES. THE JURISDICTION OF THE APPELLATE AUTH ORITIES TO ENTERTAIN SUCH A CLAIM HAS NOT BEEN NEGATED BY THE SUPREME COURT IN THIS JUDGMENT. IN FACT, THE SUPREME COURT MADE IT CLEAR THAT THE ISSUE IN THE CASE WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND THAT THE JUDGMENT DOES NOT IMPINGE ON THE POWER OF THE TRIBU NAL UNDER SECTION 254. ITA NO.9088/MUM/2010 M/S. FIRST ADVANTAGE P. LTD. 4 A DIVISION BENCH OF THE DELHI HIGH COURT DEALT WITH A SIMILAR SUBMISSION IN COMMISSIONER OF INCOME-TAX V. JAI PARABOLIC SPRINGS LIMITED, (2008) 306 ITR 42. THE DI VISION BENCH, IN PARAGRAPH 17 OF THE JUDGMENT HELD THAT THE SUPREME COURT DISMISSED THE APPEAL MAKING IT CLEAR TH AT THE DECISION WAS LIMITED TO THE POWER OF THE ASSESSI NG AUTHORITY TO ENTERTAIN A CLAIM FOR DEDUCTION OTHERWIS E THAN BY A REVISED RETURN AND DID NOT IMPINGE ON THE POWERS OF THE TRIBUNAL. IN PARAGRAPH 19, THE DIVISION BENCH H ELD THAT THERE WAS NO PROHIBITION ON THE POWERS OF THE TRIBUNAL TO ENTERTAIN AN ADDITIONAL GROUND WHICH, ACCORDING TO THE TRIBUNAL, ARISES IN THE MATTER AND FOR THE JUST DECISION OF THE CASE. 5. WE HAVE CONSIDERED THE ISSUE AND EXAMINED THE RI VAL CONTENTIONS. IT IS TRUE THAT THE HONBLE BOMBAY HIG H COURT IN THE CASE OF PRUTHVI BROKERS & SHAREHOLDERS PVT. LTD. (S UPRA) FOLLOWED HONBLE SUPREME COURT JUDGMENT IN GOETZE INDIA( SUP RA) TO REITERATE THAT ASSESSING OFFICER CANNOT ENTERTAIN CLAIM IN THE ABSENCE OF REVISED RETURN. HOWEVER, RELYING ON THE CASE OF NATIONAL THERMAL POWER COMPANY LTD. VS. CIT (229 ITR 383) IT WAS HELD THAT APPELLATE AUTHORITIES HAVE JURISDICTION TO ENT ERTAIN THE NEW CLAIM PROVIDED THAT THE FACTS ARE AVAILABLE ON THE RECORD. IN THIS CASE, THE ASSESSEE MADE THE CLAIM BEFORE THE ASSESS ING OFFICER ABOUT THE TAXABILITY OF FOREIGN EXCHANGE GAIN ON LO AN OBTAINED FOR ACQUISITION OF CAPITAL ASSETS. THE ASSESSING OFFICE R IGNORED THE PROVISIONS OF SECTION 43A WHICH IS VERY SPECIFIC WI TH REFERENCE TO CHANGES IN RATE OF EXCHANGE OF CURRENCY WHEN AN ASS ESSEE HAS ACQUIRED ANY ASSETS. THUS, THERE IS MERIT IN THE AS SESSEES CONTENTIONS. HOWEVER, SINCE THE CLAIM WAS NOT EXAMI NED BY ASSESSING OFFICER IN ITS CORRECT PROSPECTIVE, WE DI RECT THE ASSESSING OFFICER TO CONSIDER THE CLAIM AFTER EXAMINING WHETH ER THE AMOUNT CAN BE CONSIDERED AS CAPITAL IN NATURE, SO AS TO AD JUST IN THE BLOCK OF ASSETS. HE WAS ALSO DIRECTED TO KEEP IN MIND THE STAND TAKEN BY THE ASSESSING OFFICER IN THE ASSESSMENT YEAR 2009-1 0 WHERE IT ITA NO.9088/MUM/2010 M/S. FIRST ADVANTAGE P. LTD. 5 SEEMS THE LOSS ON FOREIGN EXCHANGE LOAN WAS DISALLOW ED, IN ORDER TO HAVE CONSISTENCY ON THE ISSUE. THEREFORE, THE CL AIM IS ACCEPTED AND THE ISSUE IN THIS GROUND IS RESTORED THE FILE O F ASSESSING OFFICER TO CONSIDER ON ITS MERITS. 7. IN THE RESULT, APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 21 ST SEPTEMBER, 2012 SD/- (I.P. BANSAL) JUDICIAL MEMBER SD/- (B.RAMAKOTAIAH) ACCOUNTANT MEMBER MUMBAI, DATED 21 ST SEPTEMBER, 2012 RASIKA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME TAX 1, MUMBAI 4. THE COMMISSIONER OF INCOME TAX, MUMBAI 5. THE DEPARTMENTAL REPRESENTATIVE, BENCH F MUMB AI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI