NATIONAL REFINERY PRIVATE LIMITED, MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 5(2), THANE

MA 189/MUM/2017

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 6006 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 07-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C NINGSHEN
• Assessee Lawyers: VIPUL B JOSHI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI RAM LAL NEGI (JM) M.A NOS. 189 TO 192/MUM/2017 (ARISING OUT OF I.T.A. NOS. 25 & 7507/MUM/2010, 6114/MUM/2011 & 4834/MUM/2012) (ASSESSMENT YEARS 2005 - 06, 2007 - 08 TO 2009 - 10) NATIONAL REFINERY P. LTD. GROUND FLOOR, MILAN BUILDING, 87, TARDEO ROAD, OPP. AIR CONDITIONED MARKET, MUMBAI 400 034. VS. ACIT, CIRCLE 5(2), MUMBAI. ( APP LICANT ) .. ( RESPONDENT ) PAN NO. AAACN2799J ASSESSEE BY : SHRI VIPUL B. JOSHI DEPARTMENT BY : SHRI M.C. NINGSHEN DATE OF HEARING : 08.12.2017 DATE OF PRONOUNCEMENT : 13 .12.2017 O R D E R PER B.R. BASKARAN, AM : THE ASSESSEE HAS FILED THESE MISCELLANEOUS APPLICATIONS SEEKING RECTIFICATION OF THE COMMON ORDER DATED 28.09.2016 PASSED IN RESPECT OF ISSUE RELATING TO ALLOWABILITY OF EXPENSES INCURRED TOWARDS LEGAL AND PROFESSIONAL FEE IN ALL THE YEARS UNDER CONSIDERAT ION . 2 NATIONAL REFINERY P. LTD. MA NOS. 189 TO 192/MUM/2017 2. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD TO INCUR LEGAL AND PROFESS IONAL FEE IN CONNECTION WITH A COMPLAINT FILED BY A GROUP OF SHAREHOLDERS ON OTHER GROUP OF SHAREHOLDERS. THE ASSESSING OFFICER DISALLOWED THE SAME ON THE REASONING THAT THE EXP ENSES INCURRED IN CONNECTION WITH THE DISPUTE BETWEEN SHAREHOLDERS CANNOT BE ALLOWED AS A DEDUCTION. THE LD. CIT(A) AS WELL AS THE TRIBUNAL CONFIRMED THE SAME. 3. THE LD. AR SUBMITTED THAT THE TRIBUNAL HAS TAKEN THE VIEW THAT THE DISPUTE RELATED TO TWO G ROUPS OF SHAREHOLDERS WITH THE OBJECTIVE TO RETAIN THE CONTROL AND MANAGEMENT OF THE ASSESSEE - COMPANY CANNOT BE ALLOWED AS DEDUCTION . THE LD. AR SUBMITTED THAT THE TRIBUNAL HAS FAILED TO NOTE AN IMPORTANT FACTUAL ASPECT, NAMELY, THE COMPANY, ITS DIRECTORS , COMPANY SECRETARY AND EVEN ITS AUDITORS HAVE BEEN IMPLEADED IN THE DISPUTE AND HENCE THE ASSESSEE HAD TO INCUR THE LEGAL AND PROFESSIONAL EXPENSES IN THE NORMAL COURSE OF CARRYING ON THE BUSINESS IN ORDER TO PROTECT THE INTERESTS OF THE ASSESSEE . THE LD . AR SUBMITTED THAT THE ASSESSEE HAD ALSO PLACED RELIANCE ON CERTAIN CASE LAWS WHEREIN THE EXPENDITURE INCURRED IN RESPECT TO LEGAL DISPUTES BETWEEN SHAREHOLDERS WAS ALLOWED AS A DEDUCTION. THE LD. AR SUBMITTED THAT THE OMISSION TO NOTE AN IMPORTANT FACTU AL ASPECT AND NON - CONSIDERATION OF THE CASE LAWS RELIED BY THE ASSESSEE WOULD GIVE RISE TO A MISTAKE APPARENT FROM THE RECORD AND ACCORDINGLY, PRAYED FOR RECTIFICATION OF THE ORDER PASSED ON THIS ISSUE IN ALL THE FOUR YEARS. 4. ON THE CONTRARY, THE LD. DR SUBMITTED THAT THE TRIBUNAL HAS CERTAINLY TAKEN NOTE OF THE FACT THAT THE COMPANY, ITS DIRECTORS AND AUDITORS HAVE BEEN IMPLEADED IN THE SUIT BY OBSERVING THAT THE SAME IS THE OFF - SHOOT OF THE PRIMARY PURPOSE, I.E. TO ACQUIRE CONTROL OVER THE COMPANY (PAR A 8 OF THE ORDER). ACCORDINGLY, THE LD. DR SUBMITTED THAT THE TRIBUNAL HAS TAKEN A 3 NATIONAL REFINERY P. LTD. MA NOS. 189 TO 192/MUM/2017 CONSCIOUS VIEW ON THE ISSUE BY CONSIDERING THE FACTS AVAILABLE IN THE INSTANT CASE AND HENCE THE PRAYER OF THE ASSESSEE WOULD LEAD TO REVIEW OF THE ORDER PASSED BY THE TRIB UNAL, WHICH IS NOT PERMISSIBLE U/S 254(2) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE NOTICED THAT THERE WERE FOUR GROUPS OF SHAREHOLDERS AND DISPUTE AROSE BETWEEN ONE GROUP, NAMELY, KANTILAL GROUP ON THE ONE SIDE AND THE OTHER THREE GROUPS ON THE OTHER SIDE. T HE TRIBUNAL HAS NOTICED THAT THE DISPUTE WAS PRIMARILY CONNECTED WITH TAKING OVER THE CONTROL AND MANAGEMENT OF THE ASSESSEE - COMPANY. ACCORDINGLY, THE TRIBUNAL HAS TAKEN THE V IEW THAT THE DISPUTE IS PRIMARILY CONNECTED WITH ACQUIRING CONTROL OVER THE ASSESSEE - COMPANY AND NOT ESSENTIALLY CONNECTED WITH CARRYING OVER THE BUSINESS OF THE COMPANY. WE NOTICED THAT THE TRIBUNAL HAS DISCUSSED THE LEGAL PROPOSITION WITH REGARD TO ALLO WABILITY OF LEGAL EXPENSES IN PARA 6 OF THE ORDER AND ALSO TAKEN NOTE OF VARIOUS CASE LAWS RELIED UPON BY THE ASSESSEE IN PARA 7 OF THE ORDER. AFTER DISCUSSING THE FACTS OF THE PRESENT CASE IN PARA 8 OF THE ORDER, THE TRIBUNAL HAS SPECIFICALLY OBSERVED TH AT THE SUIT FILED AGAINST THE COMPANY, ITS AUDITORS, ITS COMPANY SECRETARY ARE THE OFF - SHOOT OF THE PRIMARY PURPOSE, I.E. ACQUIRING CONTROL OVER THE COMPANY. THUS, WE NOTICED THAT THE TRIBUNAL HAS TAKEN NOTE OF ALL THE FACTS SURROUNDING THE ISSUE, AND HAS TAKEN A CONSCIOUS DECISION ON THE ISSUE THAT THESE EXPENSES ARE NOT RELATED TO THE BUSINESS CARRIED ON BY THE ASSESSEE COMPANY . ACCORDINGLY THE TRIBUNAL HAS UPHELD THE VIEW TAKEN BY THE TAX AUTHORITIES. UNDER THESE SET OF FACTS , THERE IS MERIT IN THE CONTENTIONS OF THE LD. DR THAT THE PRAYER PUT FORTH BY THE ASSESSEE WOULD LEAD TO REVIEW OF THE FACTS AS WELL AS THE DECISION TAKEN BY THE TRIBUNAL , WHICH IS NOT PERMITTED U/S 4 NATIONAL REFINERY P. LTD. MA NOS. 189 TO 192/MUM/2017 254(2) OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY MERI T IN THE PETITIONS FILED BY THE ASSESSEE AND REJECT THEM. 6. IN THE RESULT, ALL THE MISCELLANEOUS APPLICATIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 1 3 .12.2017. SD/ - SD/ - ( RAM LAL NEGI ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 1 3 . 12 .201 7 *SSL* COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI