CAPITAL COMMERCE PRIVATE LIMITED, MUMBAI V. INCOME TAX OFFICER 6(2)(1), MUMBAI

ITA 979/MUM/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0370 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 20-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA NO. 979 / MUM . /2018 ( ASSESSMENT YEAR : 20 06 07 ) CAPITAL COMMERCE PVT. LTD. 6/17, NEAR DARAK MOTORS KASHIPURI, BHILWARA 311 001 PAN AAACC3591K . APPELLANT V/S INCOME TAX OFFICER WARD 6 ( 2 )(1), MUMBAI . RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI S.K. BEPARI DATE OF HEARING 11 .09.2018 DATE OF ORDER 12.09.2018 O R D E R A FORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 20 TH DECEMBER 2017 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 1 2 , MUMBAI, FOR ASSESSMENT YEAR 20 06 07 . 2 . WHEN THE APPEAL WAS CALLED FOR HEARING, NO ONE WAS PRESENT FOR THE ASSESSEE. FURTHER, IT IS REVEALED FROM THE RECORD, THE NOTICE OF HEARING ISSUED TO THE ASSESSEE FOR REGISTERED POST AT THE ADDRESS MENTIONED IN COL. 10 OF FORM NO.36 AS RETURNED UNSERVED WI TH THE REMARK OF THE POSTAL AUTHORITY LEFT WITHOUT ADDRESS . IN VIEW OF THE 2 CAPITAL COMMERCE PVT. LTD. ABOVE, I PROCEED TO DISPOSE OFF THE APPEAL EX PARTE QUA THE ASSESSEE AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE AND ON THE BASIS OF MATERIAL ON RECORD. 3 . THE ONLY ISSUE CONTESTED BY THE ASSESSEE RELATES TO ADDITION OF ` 19,74,194 PAID AS LICENSE FEE TO M/S. ROOFIT INDUSTRIES LTD. 4 . BRIEF FACTS ARE, THE ASSESSEE A COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING CEMENT PIPES. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE AS SESSEE FILED ITS RETURN OF INCOME ON 28 TH NOVEMBER 2006, DECLARING LOSS OF ` 18,47,002. ASSESSMENT IN CASE OF THE ASSESSEE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 19 TH DECEMBER 2008, ACCEPTING THE LOSS. SUBSEQUENTLY, THE ASSESSING OFFICER NOTICING THAT THE LICENSE FEE OF 19,74,194 PAID BY THE ASSESSEE PERTAINED TO ASSESSMENT YEAR 2007 08 WHEREAS IT WAS ALLOWED IN THE IMPUGNED ASSESSMENT YEAR RE OPENED THE ASSESSMENT UNDER SECTION 147 OF THE ACT BY ISSUING A NOTICE UNDER SECTION 148 OF THE ACT. IN C OURSE OF THE ASSESSMENT PROCEEDINGS, WHEN THE ASSESSEE WAS CALLED UPON TO JUSTIFY ITS CLAIM OF DEDUCTION IN RESPECT OF PAYMENT OF LICENSE FEE OF ` 19,74,194, THE ASSESSEE SUBMITTED THAT THE TERMS OF THE AGREEMENT WAS SUBSEQUENTLY AMENDED BY LETTER DATED 4 T H JANUARY 2006, AND AS PER WHICH THE LICENSE FEE WAS REQUIRED TO BE PAID WITHIN 21 DAYS OF THE END OF THE MONTH AND IT SHALL START ACCRUING TWO MONTHS 3 CAPITAL COMMERCE PVT. LTD. AFTER THE DATE OF POSSESSION OF A/C PRESSURE PIPE UNIT. THUS, IT WAS SUBMITTED THE PAYMENT ACCRUED IN THE IMPUGNED ASSESSMENT YEAR. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE AND ADDED BACK THE AMOUNT OF ` 19,74,194 ON THE REASONING THAT SUCH EXPENDITURE HAS NOT ACCRUED IN THE IMPUGNED ASSESSMENT YEAR. BEING AGGRIEVED OF SU CH ADDITION, ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 5 . THE LEARNED COMMISSIONER (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE IN THE CONTEXT OF FACTS AND MATERIAL ON RECORD OBSERVED THAT AS PER CLAUSE 10 OF THE AGREEMEN T BETWEEN THE ASSESSEE AND M/S. ROOFIT INDUSTRIES LTD. LICENSE FEE SHALL START ACCRUING TWO MONTHS AFTER RESUMPTION OF MANUFACTURING OPERATIONS OF A/C PRESSURE PIPE UNIT. HE OBSERVED THAT THE ASSESSEE RESUMED MANUFACTURING OPERATION OF THE A/C PIPE UNIT ON 3 RD MARCH 2006, AS STATED IN THE NOTES TO ACCOUNT. THEREFORE, AS PER CLAUSE 10 OF THE AGREEMENT, PAYMENT OF LICENSE FEE WOULD ACCRUE ONLY FROM 3 RD MAY 2006, WHICH RELATES TO PREVIOUS YEAR 2006 07 RELEVANT TO ASSESSMENT YEAR 2007 08. AS REGARDS ASSESSEES CLAIM THAT CLAUSE 10 OF THE AGREEMENT WAS AMENDED VIDE LETTER DATED 4 TH JANUARY 2006, THE LEARNED COMMISSIONER (APPEALS) OBSERVED THAT THE SAID LETTER SUBMITTED BY THE ASSESSEE CANNOT BE REGARDED AS CREDIBLE EVIDENCE. ACCORDINGLY, HE SUSTAINED THE ADDITION OF ` 19,74,194. 4 CAPITAL COMMERCE PVT. LTD. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELYING UPON THE OBSERVATIONS OF THE DEPARTMENTAL AUTHORITIES SUBMITTED THAT AS PER THE TERMS OF AGREEMENT, PAYMENT OF LICENSE FEE ACCRUED IN ASSESSMENT YEAR 2007 08, THEREFORE, THE EXPENDITURE CLAIMED BY THE ASSESSEE IN THE IMPUGNED ASSESSMENT YEAR WAS RIGHTLY DISALLOWED. 7 . I HAVE CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, AS PER CLAUSE 10 OF THE AGREEMENT DATED 7 TH DECEMBER 2012, BETWEEN THE ASSESSEE AND M/S. ROOFIT INDUSTRIES LTD., PAYMENT OF LICENSE FEE WILL ACCRUE TWO MONTHS AFTER RESUMPTION OF MANUFACTURING OPERATION OF A/C PRESSURE PIPE UNIT. IT IS A FACT ON RECORD THAT AS PER THE NOTES TO ACCOUNTS OF THE ASSES SEE MANUFACTURING OPERATION OF THE A/C PRESSURE PIPE UNIT COMMENCED ON 3 RD MARCH 2006, THEREFORE, AS PER CLAUSE 10 OF THE AGREEMENT, PAYMENT OF LICENSE WOULD ACCRUE TWO MONTHS AFTER THE COMMENCEMENT OF MANUFACTURING ACTIVITY I.E., FROM 7 TH MAY 2006. THAT B EING THE CASE, SUCH PAYMENT DID NOT ACCRUE IN THE IMPUGNED ASSESSMENT YEAR. AS REGARDS ASSESSEES CLAIM THAT CLAUSE 10 OF THE AGREEMENT WAS SUBSEQUENTLY AMENDED IT IS A CATEGORICAL FINDING OF THE LEARNED COMMISSIONER (APPEALS) THAT EXCEPT LETTER DATED 4 TH JANUARY 2006, ASSESSEE HAS NOT FURNISHED ANY OTHER EVIDENCE TO DEMONSTRATE THAT THE TERMS OF THE WRITTEN AGREEMENT WAS ACTUALLY AMENDED. THE 5 CAPITAL COMMERCE PVT. LTD. AFORESAID FINDING OF THE LEARNED COMMISSIONER (APPEALS) REMAINS UNCONTROVERTED. IN VIEW OF THE AFORESAID, I AM NOT INCLINED TO INTERFERE WITH THE DECISION OF THE LEARNED COMMISSIONER (APPEALS). GROUND RAISED IS DISMISSED. 8 . IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.09.2018 SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 12.09.2018 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. PRIVATE SECRETARY) ITAT, MUMBAI