DAVE & GIRISH & CO., MUMBAI V. ACIT RG 11(2), MUMBAI

ITA 99/MUM/2010

• Counselvise Citation: 9919914 RSA 2010
• Duration Of Justice: 1 year(s) 5 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2002-2003
• Appeal Filed On: 06-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: PATRICK FERNANDES

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: MUMBAI BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.99/MUM/2010 (ASSESSMENT YEAR: 2002-03) DAVE & GIRISH & CO., 1ST FLOOR, SETHNA BUILDING, 55, MAHARSHI KARVE ROAD, MARINE LINES, MUMBAI -400 002 ....... APPELLANT VS ACIT RANGE 11(2), AAYAKAR BHAVAN, MUMBAI -400 020 ..... RESPONDENT PAN: AAAFD 2755 R APPELLANT BY: SHRI PATRICK FERNANDES RESPONDENT BY: SHRI C.G.K. NAIR O R D E R PER R.S. PADVEKAR, JM THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING TH E IMPUGNED ORDER OF THE LD. CIT (A)-3, MUMBAI DATED 5.11.2009 FOR THE A.Y. 2002- 03. THE ASSESSEE HAS TAKEN THE MULTIPLE GROUNDS BUT ONLY ISSUE IN CONTROVERSY IS WHETHER THE A.O. WAS JUSTIFIED IN LE VYING THE PENALTY OF RS 4,83,543/- U/S.271(1)(C) OF THE ACT. 2. BRIEFLY STATED THE FACTS WHICH REVEALED FROM THE RECORD ARE AS UNDER. THE ASSESSEE IS A FIRM OF LAWYERS PRACTICIN G MAINLY IN CORPORATE AND ALLIED LAWS. THE RETURN FILED BY THE ASSESSEE FOR THE A.Y. 2002-03 WAS SELECTED FOR SCRUTINY AND ASSESSME NT WAS COMPLETED U/S.143(3) VIDE ASSESSMENT ORDER DATED 17.12.2004. THE A.O. MADE DISALLOWANCE TOWARDS EXPENDITURE ON PARTNERS FOREI GN EDUCATION. THE ASSESSEE HAS CLAIMED THE EXPENDITURE OF RS 14,50,62 9/- TOWARDS THE ITA 99/MUM/2011 DAVE & GIRISH & CO. 2 PROFESSIONAL DEVELOPMENT. THE ASSESSEE-FIRM IS HAV ING PARTNER NAMELY MRS. MONA BHIDE WHO IS A DAUGHTER OF GIRISH BHIDE, SENIOR PARTNER OF THE ASSESSEE-FIRM. MRS. MONA BHIDE REQUESTED THE A SSESSEE-FIRM TO PROMOTE EXPENDITURE ON HER TO GO FOR THE POST GRADU ATION TO COMPLETE LL.M. WITH NORTH WESTERN UNIVERSITY, CHICAGO, USA, TO SPECIALIZ IN THE SECURITIES REGULATIONS, MERGER, AND ACQUISITION OF INTERNATIONAL BUSINESS ETC. SHE ALSO REQUESTED THE FIRM TO BEAR ALL THE EXPENDITURE FOR UNDERTAKING THE TOUR TO CHICAGO IN CONNECTION W ITH THE POST GRADUATE COURSE. SHE ALSO GAVE THE UNDERTAKING TO THE ASSESSEE-FIRM THAT SHE WILL NOT RETIRE FROM THE ASSESSEE-FIRM FOR THE PERIOD OF 5 YEARS. ACCORDINGLY, MS. MONA BHIDE JOINED WESTERN UNIVERSI TY, CHICAGO. THE EXPENDITURE ON HER EDUCATION TO COMPLETE POST-GRADU ATION WAS CLAIMED BY THE ASSESSEE-FIRM AS PROFESSIONAL EXPEND ITURE BUT THE SAME WAS DISALLOWED. THE A.O. INITIATED THE PENALTY PROC EEDINGS ON THE DISALLOWANCE OF RS 13,54,564/- . THE DISALLOWANCE MADE BY THE A.O. WAS CONFIRMED BY THE LD. CIT (A) AS WELL AS BY THE TRIBUNAL. THE A.O. INITIATED THE PENALTY PROCEEDINGS AND LEVIED THE PE NALTY U/S.271(1)(C) OF RS 4,83,543/-. THE ASSESSEE CHALLENGED THE PEN ALTY ORDER BEFORE THE LD. CIT (A) BUT WITHOUT SUCCESS. NOW, THE ASSE SSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND ALSO PERUSED THE RECORDS. THE LD. COUNSEL TOOK US THROU GH THE PAPER BOOK AND ARGUES THAT MS. MONA BHIDE IS NOT MERELY DAUGHT ER OF THE SENIOR PARTNER BUT SHE IS ALSO A PARTNER IN THE ASSESSEE-F IRM. SHE IS WELL QUALIFIED. HE SUBMITS THAT DUE TO THE CHANGING GLO BAL SCENARIO AND REQUIREMENT OF THE SPECIALIZED LEGAL KNOWLEDGE, THE ASSESSEE-FIRM DECIDED TO SPONSOR HER FOR HIGHER STUDIES. THE LD. COUNSEL TOOK US THROUGH PAGE NO.48, WHICH IS A COPY OF THE WEBSITE WWW.GE300.COM AND SUBMITS THAT AFTER HER POST-GRADUATION SHE HAS BEEN IDENTIFIED AS RECOMMENDED GLOBAL COUNSEL. HE ARGUES THAT DUE TO HER HIGHER EDUCATION, THE FIRM HAS ALSO BEEN BENEFITED AND IT IS CLEAR FROM THE ITA 99/MUM/2011 DAVE & GIRISH & CO. 3 INCREASE IN THE PROFESSIONAL RECEIPTS OF THE ASSESS EE FIRM. HE FURTHER VEHEMENTLY ARGUES THAT THERE IS A DECISION OF THE H ONBLE JURISDICTIONAL HIGH COURT SUPPORTING THE CLAIM OF THE ASSESSEE IN THE CASE OF SAKAL PAPERS LTD. VS. CIT 114 ITR 246. MOREOVER, THERE I S ALSO A DECISION OF HONBLE HIGH COURT OF CALCUTTA IN THE CASE OF HINDU STAN ALUMINUM CORP. LTD. VS. CIT 159 ITR 673 AND ALSO OTHER PLETH ORA OF DECISIONS, WHICH SUPPORTS THE CLAIM OF THE ASSESSEE. THE LD. COUNSEL PLACED HIS RELIANCE ON THE DECISION OF THE HONBLE SUPREME COU RT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD. 322 ITR 158 AND SUB MITS THAT MERELY BECAUSE BONA FIDE CLAIM IS DISALLOWED THAT CANNOT B E BASIS TO LEVY THE PENALTY. PER CONTRA, THE LD. D.R. SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. 4. NOW, SHORT CONTROVERSY TO BE RESOLVED IS WHETHER THERE IS A JUSTIFICATION ON THE PART OF THE A.O. TO LEVY THE P ENALTY MERELY BECAUSE CERTAIN EXPENDITURE CLAIMED BY THE ASSESSEE AS PER HIS VIEW WAS NOT ALLOWABLE. WE FIND FORCE IN THE ARGUMENT OF THE L D. COUNSEL. MS. MONA BHIDE WHEN SHE WENT TO THE CHICAGO FOR HIGHER STUDIES, SHE WAS A PARTNER OF THE ASSESSEE-FIRM AND ALSO QUALIFIED L AWYER. THERE SHOULD NOT BE TWO OPINIONS ON THE FACT THAT IN INDI A, DUE TO THE GLOBALIZATION CHANGES, EXPERT LEGAL KNOWLEDGE IS RE QUIRED AS MULTINATIONAL COMPANIES ARE ENTERING INTO THE INDIA N TERRITORY AND THEY NEED GOOD LEGAL BACK-UPS. WHEN THE ASSESSEE C LAIMED THE EXPENDITURE, AT THAT TIME THERE WAS A DECISION OF T HE JURISDICTIONAL HIGH COURT IN THE CASE OF SAKAL PAPERS P. LTD. (SUP RA) AS WELL AS THE HINDUSTAN ALUMINUM CORP. LTD. (SUPRA). IN OUR OPIN ION, THE EXPENDITURE CLAIM OF THE ASSESSEE WAS ON THE BONA FIDE BELIEF THAT THE SAME WOULD BE ALLOWED BY THE A.O. IN OUR OPINION, EXPENDITURE CLAIMED BY THE ASSESSEE WAS A BONA FIDE ONE AND MER ELY BECAUSE THE SAME IS DISALLOWED THAT CANNOT BE THE SOLE BASIS TO LEVY THE PENALTY U/S.271(1)(C), AS ADMITTEDLY, THE ASSESSEE HAS NOT FURNISHED THE INACCURATE PARTICULARS OF HIS INCOME AS ALL THE PAR TICULARS ARE ON RECORD, NOR THE ASSESSEE HAS CONCEALED THE PARTICUL ARS OF INCOME. IN ITA 99/MUM/2011 DAVE & GIRISH & CO. 4 THE CASE OF RELIANCE PETRO PRODUCTS P. LTD. (SUPRA) , THEIR LORDSHIPS HAVE HELD THAT IF THE ASSESSEE HAS MADE ANY BONA FIDE CLAIM AND SAID CLAIM/EXPENDITURE IS NOT ALLOWED BY THE TAX AUTHORI TY THAT IS BEYOND THE AMBIT OF SECTION 271(1)(C) IF ALL THE PARTICULA RS ARE FURNISHED BY THE ASSESSEE. IN OUR OPINION, THE ASSESSEES CASE IS S QUARELY COVERED BY THE LEGAL PRINCIPLES LAID DOWN BY THE HONBLE SUPRE ME COURT IN THE CASE OF RELIANCE PETRO PRODUCTS P. LTD. (SUPRA). W E, THEREFORE, DELETE THE PENALTY LEVIED BY THE A.O. ACCORDINGLY, GROUND S ARE ALLOWED. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 3 0TH JUNE 2011. SD/- SD/- ( R.S. SYAL ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 30TH JUNE 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)3, MUMBAI. 4) THE CIT-XI, MUMBAI. 5) THE D.R. D BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 99/MUM/2011 DAVE & GIRISH & CO. 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 28.06.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 28.06.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER