The ACIT, Circle-7, Ahmedabad V. Smt. Bhartiben Dax Vakil, Ahmedabad

ITSSA 327/AHD/2011

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0780 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 28-05-2015
• Assessment Year: misc
• Appeal Filed On: 08-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N SOPARKAR
• Assessee Lawyers: DINESH SINGH
• Keywords: Business expenditure

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBE R AND SHRI N.S. SAINI, ACCOUNTANT MEMBER ./ I.T.A. NO.491/AHD/2011 ( / ASSESSMENT YEAR : 2007-08) ADANI RETAIL LTD. ( ESTWHILE KNOWN AS B2C INDIA LTD .) ADANI HOUSE, SHRIMALI SOCIETY NR.MITHAKHALI 6 ROADS NAVRANGPURA AHMEDABAD / VS. THE DCIT CIRCLE-1 AHMEDABAD ./ ./ PAN/GIR NO. :AABCB 5212 H ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S.N. SOPARKAR, A.R. / RESPONDENT BY : SHRI DINESH SINGH, SR.DR / DATE OF HEARING 21/01/2015 !'# / DATE OF PRONOUNCEMENT 29/01/2015 / O R D E R PER SHAILENDRA KUMAR YADAV, JM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED A GAINST THE ORDER OF CIT(A)-IV, AHMEDABAD DATED 13/12/2010 PASSED FOR THE ASST.YEAR 2007-08. THE ASSESSEE HAS RAISED THE FOLLOWING GR OUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN DISMISSING THE ASSESSEES APPEAL AND THERE BY CONFIRMING DISALLOWANCES MADE IN THE ASSESSMENT ORD ER BEING: ITA NO.491/AHD/ 2011 ADANI RETAIL LTD. VS. THE DCIT ASST.YEAR - 2007-08 - 2 - I) FOR ALLEGEDLY DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TO P.F. AND ESI RS.8,83,117/- II) FOR EXPENDITURE INCURRED/REIMBURSED FOR EXPENSES FOR SERVICES RS.3 3,52,859 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AN D/OR WITHDRAW ANY GROUND OR GROUNDS OF APPEAL EITHER BEF ORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE RE TURN OF INCOME WAS FILED BY THE ASSESSEE ON 30/10/2007 DECLARING TOTAL LOSS OF RS.(-) 23,47,88,357/-. THE ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF RUNNING A CHAIN OF SUPER MARKETS OF FOODS, GROCERIE S AND APPARELS. 3. THE FIRST ISSUE IS REGARDING DISALLOWANCE OF EMPLOYEES CONTRIBUTION AMOUNTING TO RS.8,83,117/- TO PF AND ESI NOT PAID WITHIN THE DUE DATE PRESCRIBED IN PF/ESIC ACT. THIS ISSUE IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT R ENDERED IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION RE PORTED AT (2014) 366 ITR 170 (GUJ.). RESPECTFULLY FOLLOWING THE SAID DE CISION OF HONBLE JURISDICTIONAL HIGH COURT, WE CONFIRM THE DISALLOWA NCE MADE BY CIT(A) BECAUSE THERE WAS A DELAY IN MAKING THE PAYMENT FOR EMPLOYEES CONTRIBUTION TO PF/ESI. ACCORDINGLY, THE ORDER OF THE CIT(A) IS HEREBY UPHELD ON THIS ISSUE. ITA NO.491/AHD/ 2011 ADANI RETAIL LTD. VS. THE DCIT ASST.YEAR - 2007-08 - 3 - 4. NEXT ISSUE IS WITH REGARD TO DISALLOWANCE OF RS.33.53 LACS. THE AO DISALLOWED THE AFORESAID AMOUNT BY HOLDING THAT THE SAME WAS NO INCURRED FOR BUSINESS PURPOSE. IN FACT, THE AO HEL D AS UNDER:- IT IS THEREFORE SEEN THAT A CERTAIN INCOME WHICH I S EARNED AND RECEIVED BY ASSESSEE-COMPANY DURING EARLIER YEAR ON ACCOUNT OF SPECIFIC SERVICES PROVIDED TO B2B INDIA P.LTD. HAS BEEN REIMBURSED TO THE CONCERNED PARTY AS THE LATTER DEC IDED NOT TO EXECUTE THE PROJECT FOR WHICH THE SURVEY WAS CONDUC TED. HOWEVER, IT IS NOT CLEAR THAT HAS TO HOW AND UNDER WHAT CIRC UMSTANCES THE SAME WAS CLAIMED AS EXPENDITURE INCURRED FOR THE PU RPOSE OF BUSINESS. VIDE THE ORDER SHEET NOTHING DTD. 29/12/ 2009, THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY THE SAID AMOUN T BE NOT DISALLOWED AS THE SAME HAS NOT BEEN INCURRED IN THE NORMAL COURSE OF BUSINESS. IN RESPONSE THE ASSESSEE MERELY STATE D THAT THE EXPENSES WERE ALLOWABLE AS IT WAS INCURRED AS PART OF THE BUSINESS ACTIVITIES. ------ THE REPLY OF THE ASSESSEE IS NOT ACCEPTABLE. THERE IS NO CLEAR PURPOSE WHY THE SAID EXPENDITURE HAS BEEN INCURRED I.E. WHY THE MONEY HAS BEEN RETURNED BACK WHILE IT WAS RECEIVED EARLIER ON ACCOUNT OF SPECIFIC SERVICES PROVIDED BY THE ASSESS EE. IN VIEW OF THE SAME, THE EXPENDITURE OF RS.33,52,859/- IS DISA LLOWED. 4.1. THE MATTER WAS CARRIED BEFORE THE FIRST APPEL LATE AUTHORITY AND HAVING CONSIDERED THE SUBMISSIONS ON BEHALF OF THE ASSESSEE, THE CIT(A) CONFIRMED THE SAME. SAME HAS BEEN OPPOSED BEFORE U S ON BEHALF OF ASSESSEE AND STAND OF ASSESSEE HAS BEEN THAT THE C IT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE HOLDING THE SAME WAS NOT INCURRED FOR BUSINESS PURPOSE. ON THE OTHER HAND, THE LD.DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.491/AHD/ 2011 ADANI RETAIL LTD. VS. THE DCIT ASST.YEAR - 2007-08 - 4 - 4.2. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND HAVING GONE THROUGH THE MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE RECEIVED INCOME FROM B2B INDIA PVT.LTD. ON ACCOUNT OF CONSULTATION FEE AND STAFF SALARY IN EARLIER YEAR. THE STAND OF ASS ESSEE HAS BEEN THAT CONSIDERING MARKET STRENGTH OF ASSESSEE, THE SAID C OMPANY APPROACHED ASSESSEE TO DO A COMPLETE RESEARCH OF RETAIL AND RE LATED MARKET. ASSESSEE UNDERTOOK A SURVEY OF MARKET AND ADVISED B2B INDIA PVT.LTD. FOR THIS PURPOSE, RS.33.53 LACS WERE RECOVERED TOWARDS EXPEN DITURE INCURRED ON SUCH SURVEY. SUCH RECOVERY OF EXPENSE WAS REDUCED FROM EXPENDITURE CHARGES TO P&LA/C IN THE SAID YEAR. THE STAND OF A SSESSEE BEFORE US HAS BEEN THAT DURING THE YEAR UNDER CONSIDERATION, B2B DECIDED NOT TO EXECUTE PROJECT FOR WHICH SURVEY WAS CONDUCTED AND THEY CLAIMED THE AMOUNT BACK WHICH WAS PAID BY THEM. THE ASSESSEE R EFUNDED THE SAME AMOUNT IN ITS BUSINESS INTEREST AND SAME WAS CLAI MED AS ALLOWABLE DEDUCTION. WE FIND THAT THE ASSESSEE HAS RECEIVED THE REIMBURSEMENT OF EXPENSE INCURRED BY IT AS DISCUSSED ABOVE. THE ASS ESSEE HAS ALREADY RENDERED THE SERVICES BY CONDUCTING MARKET SURVEY A ND SUBMITTING REPORT TO B2B INDIA PVT.LTD. HAVING COMPLETED THIS TRANSA CTION, THERE IS NO LOGIC OR BASIS FOR REFUNDING THE SAME. NON-EXECUTI ON OF PROJECT HAS NOTHING TO DO WITH CLAIMING EXPENSES ALREADY INCURR ED. ONCE THE ASSESSEE HAS RENDERED THE SERVICES, REIMBURSEMENT O F EXPENSES MADE BY OTHER COMPANY CANNOT BE REFUNDED JUST BECAUSE OTHER COMPANY DID NOT EXECUTE THE PROJECT. WHAT THE ASSESSEE RECEIVED I S JUST RE-IMBURSEMENT OF EXPENSES ALREADY INCURRED BY IT. MARKET SURVEY WAS ALREADY CONDUCTED AND REPORT GIVEN, THEREFORE THERE IS NO JUSTIFICATI ON OF REFUND OF SUCH REIMBURSED EXPENSES. EVEN HE HAS REFUNDED THE SAME , IT CANNOT BE SAID ITA NO.491/AHD/ 2011 ADANI RETAIL LTD. VS. THE DCIT ASST.YEAR - 2007-08 - 5 - TO BE ALLOWABLE BUSINESS EXPENDITURE. UNDER THESE FACTS AND CIRCUMSTANCES, THE ORDER OF THE CIT(A) ON THIS ISSU E IS UPHELD. 5. IN THE RESULT, ASSESSEES APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE COURT ON 29.1.2015, THE .. OF JANUARY, 2015 AT AHMEDABAD. SD/- SD/- ( N.S. SAINI ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 29/ 01 /2015 &.., .(../ T.C. NAIR, SR. PS !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-VI, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 28.1.15 (DICTATION-PAD 9-PAG ES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 29.1.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.29.1.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 30.1.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER