C.U. INSPECTION (I) PVT. LTD, V. ACIT RG 9(1),

MA 25/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7867 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: K
• Assessment Year: 2004-2005
• Appeal Filed On: 11-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P C MAURYA
• Assessee Lawyers: H N MOTIWALLA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH K, MUMBAI BEFORE SHRI R.S. SYAL, A.M. AND SHRI V. DURGA RAO, J.M. M.A NO. 25/MUM/2011 (IN ITA NO. 162/M/2008 ASSESSMENT YEAR: 2004-05) C.U. INSPECTION (I) PVT. LTD., APPLICANT SUMMERVILLE, 8 TH FLOOR, 14 TH ROAD JUNCTION, KHAR (W), MUMBAI 400 052 (PAN AAACH 6784F) VS. ASSTT. COMMISSIONER OF INCOME TAX-9(1), RESPONDE NT MUMBAI. APPLICANT BY : MR. H.N. MOTIWALLA RESPONDENT BY : MR. P.C. MAURYA . ORDER PER V. DURGA RAO, J.M.: THIS MISCELLANEOUS APPLICATION FILED BY THE ASSESSE E ARISES OUT OF THE ORDER OF ITAT K BENCH, MUMBAI BENCHES, MUM BAI, IN APPEAL ITA NO. 162/MUM/2008 DATED 13 TH NOVEMBER, 2009. THE ASSESSEE IN THE M.A., STATED THAT THE FOLLOWING OBSERVATIONS OF THE HONBLE TRIBUNAL IN PARA 3.3 OF THE ORDER PASSED IN THE SAI D APPEAL WERE NOT CORRECT: WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL ON RECORD. THE ASSESSEE WAS RENDERING TWO KINDS OF SER VICES AND ALSO RECEIVING TWO KINDS OF INCOME VIZ., SERVICE CH ARGES AND INCOME FEE. THE ASSESSEE HAD NOT FILED BREAK UP OF SERVICE CHARGES AND LICENSE FEE. THE DETAILS OF BREAK UP OF SERVICE CHARGES AND LICENSE FEE ARE VERY MUCH NECESSARY TO DECIDE THE ISSUE INVOLVED IN THIS APPEAL. THEREFORE, WE SET AS IDE THE ORDER OF CIT(A) ON THIS ISSUE AND REMIT THE MATTER TO THE FI LE OF THE AO. BY REFERRING TO THE ABOVE OBSERVATIONS, THE ASSESS EE IN M.A. STATED AS UNDER: M.A. NO. 25 /M/11 M/S C.U. INSPECTION (I) PVT. LTD. 2 .. THERE WAS NO DISPUTE ABOUT THE SERVICE CHARGES AND LICENSE FEES. IN FACT IN THE BOOKS OF ACCOUNT SERVICE CHARG ES AMOUNTING TO RS. 1,62,44,075/- WERE ACCOUNTED SEPARATELY AND DET AILS WERE FURNISHED TO THE AO. IN THE BOOKS OF THE ACCOUNT SE RVICE CHARGES AMOUNTING TO RS. 1,43,72,064/- WERE ACCOUNTED ON TH E BASIS OF FINANCIAL YEAR I.E. FROM APRIL 01, 2003 TO MARCH 31 , 2004, ON ACCRUAL BASIS ON COMPLETION OF SERVICES. WHILE LICE NSE FEES WERE ACCOUNTED ON TIME/PERIOD BASIS IN SEPARATE DIVISION KNOWS AS SKAL INTERNATIONAL ON CALENDAR YEAR BASIS. AS THE BOOKS OF ACCOUNT ARE MAINTAINED ON THE BASIS OF FINANCIAL YE AR, THE ADJUSTMENT WAS REQUIRED TO BE MADE IN RESPECT OF LI CENSE FEES. HENCE, THE LICENSE FEES BILLED BUT NOT ACCRUED ON MARCH 31, 2003 WERE ACCOUNTED IN THE FINANCIAL YEAR I.E. APRIL 01, 2003 TO MARCH 31, 2004 AMOUNTING TO RS. 71,26,099/- AND INCLUDED IN THE TOTAL LICENSE FEES OF RS. 1,62,44,075/- AS ON MARCH 31, 2 004. SIMILARLY, THE LICENSE FEES BILLED BUT NOT ACCRUED TILL MARCH 31, 2004 WERE ACCOUNTED AS LIABILITY AMOUNTING TO RS. 8 2,60,380/- WHICH HAVE ACCRUED AND DUE ONLY IN THE FINANCIAL YE AR 2004-05 I.E. FROM APRIL 01, 2004 TO MARCH 31, 2005 AND THE SAME HAVE BEEN ACCOUNTED IN THAT YEAR. 2. WITH THE AFORESAID BACKGROUND, THE LEARNED COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE LICENSE FEES BILLED B UT NOT ACCRUED ON TILL MARCH 31, 2004 FROM 01/04/2003 WERE ACCOUNTED AS LIABILITY AMOUNTING TO RS. 82,60,380/- SHOWN IN THE BOOKS OF ACCOUNT, THEREFORE, THE SAME CANNOT BE TAXED. THE LEARNED CO UNSEL FOR THE ASSESSEE, THEREFORE, CONTENDED THAT THERE WAS A MIS TAKE APPARENT ON THE RECORD IN THE ORDER OF THE TRIBUNAL IN REMITTIN G THE MATTER BACK TO THE FILE OF THE AO ON THE GROUND THAT THE ASSESSEE HAD NOT FILED BREAK- UP OF SERVICE CHARGES AND LICENSE FEES, AS THE CIT( A) DELETED THE ADDITION MADE BY THE AO BY HOLDING THAT I AGREE WIT H THE APPLICANTS CONTENTION THAT NO INCOME ARISES IN RESPECT OF LICE NCE FEE RECEIVED IN ADVANCE TILL THE LICENCE FEE ARE DUE AND ACCRUED. 3. ON THE OTHER HAND, THE LEARNED DR HAS CONTENDED THAT THERE IS NO MISTAKE APPARENT IN THE ORDER OF THE TRIBUNAL AS THE TRIBUNAL HAS RIGHTLY RESTORED TO THE FILE OF THE AO WHEN THERE W AS NO BREAK-UP OF SERVICE CHARGES AND LICENSE FEE FILED BY THE ASSESS EE. M.A. NO. 25 /M/11 M/S C.U. INSPECTION (I) PVT. LTD. 3 4. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, IT IS OBSERVED THAT SINCE THE ASSESSEE WAS RENDERING TWO KINDS OF SERVICES AND ALSO RECEIVING TWO KINDS OF INCOME, NAMELY, SER VICE CHARGES AND LICENSE FEE, THE BREAK-UP OF THE SAME ARE VERY MUCH NECESSARY TO DECIDE THE ISSUE, THEREFORE, THE ISSUE RESTORED TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH ON RECEIPT OF THE DETAILS O F BREAK-UP OF SERVICE CHARGES AND LICENCE FEE FROM THE ASSESSEE. THEREFOR E, THERE IS NO MISTAKE APPARENT ON RECORD AS SUBMITTED BY THE LEAR NED COUNSEL FOR THE ASSESSEE AND HENCE, THE OBJECTION RAISED IN THI S REGARD IS REJECTED. 5. AS REGARDS THE GROUND RELATING TO ADMINISTRATIVE EXPENSES, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RE WAS NO REASON TO INCREASE THE ADHOC DISALLOWANCE FROM 10% TO 15% WITHOUT ANY ADDITIONAL MATERIAL/EVIDENCE ON THE RECORD WHEN THE CIT(A) RESTRICTED THE DISALLOWANCE TO 10% FROM 20% MADE BY THE AO. 6. WE FIND THAT THE REVENUE CHALLENGED IN ITS APPEA L THE REDUCTION IN DISALLOWANCE ALLOWED BY THE LD. CIT(A). WHILE DI SPOSING OF THE RREVENUES APPEAL AND CONSIDERING ALL THE RELEVANT FACTS, THE BENCH TOOK A CONSCIOUS DECISION TO SUSTAIN THE DISALLOWAN CE AT 15%. IT IS NOT A MATTER FALLING WITHIN THE DOMAIN OF SECTION 254(2 ) OF THE ACT. 7. IN THE RESULT, THE M.A. FILED BY THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 03/02/2012. SD/- SD/- (R.S. SYAL) (V. DURGA R AO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 03/02/2012 KV M.A. NO. 25 /M/11 M/S C.U. INSPECTION (I) PVT. LTD. 4 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, K BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV