Deputy Commissioner of Income Tax, Davanagere V. M/s Samson's Distilleries P. Ltd., Davanagere

MA 303/BANG/2017

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 6163 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 06-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 30-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIT KUMAR, JUDICIAL MEMBER M.P. NO. 303/BANG/2017 (IN ITA NO .552/ BANG/201 3 ) ASSESSMENT YEAR : 2007 - 08 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1 (3), BANGALORE. VS. M/S. SAMSONS DISTILLERIES PVT. LTD., NO. 627, ANEKONDA, DAVANGERE. PAN; AACCS7708L APPELLANT RESPONDENT APPELLANT BY : SHRI B.R. RAMESH, JCIT (DR) RESPONDENT BY : SMT. SHEETHAL BORKAR , ADVOCATE DATE OF HEARING : 23 .0 2 .2018 DATE OF PRONOUNCEMENT : 06 . 0 3 .201 8 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS M.P. IS FILED BY THE REVENUE STATING THAT THER E ARE CERTAIN APPARENT MISTAKES IN THE IMPUGNED TRIBUNAL ORDER DATED 31.05 .2017. 2. THE CONTENTIONS RAISED BY THE REVENUE IN THE M.P . ARE AS PER PARA NO. 2 OF THE M.P. WHICH IS REPRODUCED HEREINBELOW. 2. KIND ATTENTION IS DRAWN TO THE FACT THAT THE HON'BLE ITAT HASSTATED THAT THE ASSESSEE COMPANY COULD HAVE AT LEAST PRODU CED THE DECISION TAKEN BY THE BOARD OF DIRECTORS, REGARDING THE TECH NICAL CONSULTANCY SERVICES RENDERED BY SRI S.S. MALLIKARJUN TO THE AS SESSEE COMPANY. FURTHER HON'BLE ITAT HAS OPINED THAT MERE COMPETENC E OR QUALIFICATION CANNOT BE A CRITERIA FOR ALLOWING THE PAYMENT MADE BY THE ASSESSEE ON ACCOUNT OF TECHNICAL CONSULTANCY FE E. WHILE THE HON'BLE ITAT HAS RECORDED A FINDING THAT MERE COMPE TENCE OR QUALIFICATION IS NOT THE CRITERIA FOR ALLOWING TECH NICAL CONSULTANCY FEE AS DEDUCTION, IT HAS HOWEVER UPHELD THE DECISION OF THE CIT(A) IN RESTRICTING THE DISALLOWANCE TO 25% (RS.10,50,000/- ) ON THE TECHNICAL CONSULTANCY FEES OF RS.42,00,000/-. M.P. NO. 303/BANG/2017 (IN ITA NO.552/BANG/2013) PAGE 2 OF 3 3. IN THE COURSE OF HEARING OF THE M.P., IT WAS SUB MITTED BY THE LD. DR OF REVENUE THAT IN PARA 6 OF THE TRIBUNAL ORDER, IT IS NOTED B Y THE TRIBUNAL THAT IN THE ABSENCE OF ANY MATERIAL EVIDENCE REGARDING THE SERV ICE ACTUALLY RENDERED BY SHRI S.S. MALLIKARJUN, THE MERE COMPETENCE OR QUALI FICATION CANNOT BE A CRITERIA FOR ALLOWING THE PAYMENT MADE BY THE ASSESSEE ON AC COUNT OF TECHNICAL CONSULTANCY FEE. HE SUBMITTED THAT AS PER THIS FIN DING OF THE TRIBUNAL, THE ENTIRE PAYMENT OF TECHNICAL CONSULTANCY FEE SHOULD HAVE BE EN DISALLOWED BUT CIT(A) HAD EARLIER RESTRICTED DISALLOWANCE TO 25% OF THE T OTAL PAYMENT AMOUNTING TO RS. 10.50 LAKHS AND THE TRIBUNAL HAS CONFIRMED THE ORDER OF CIT(A) BUT IN VIEW OF THIS FINDING OF THE TRIBUNAL THAT IN THE ABSENCE OF ANY MATERIAL EVIDENCE REGARDING THE SERVICE ACTUALLY RENDERED BY SHRI S.S . MALLIKARJUN, THE MERE COMPETENCE OR QUALIFICATION CANNOT BE A CRITERIA FO R ALLOWING THE PAYMENT MADE BY THE ASSESSEE ON ACCOUNT OF TECHNICAL CONSULTANCY FEE, THE TRIBUNAL SHOULD HAVE CONFIRMED THE ENTIRE DISALLOWANCE AND NOT ONLY 25% DISALLOWANCE OF TOTAL FEES. HE SUBMITTED THAT THIS IS AN APPARENT MISTAK E IN THE TRIBUNAL ORDER WHICH SHOULD BE RECTIFIED. AT THIS JUNCTURE, A QUERY WAS RAISED BY THE BENCH AS TO WHETHER ANY GROUND WAS RAISED BY THE REVENUE IN ITS APPEAL IN RESPECT OF RESTRICTING THE DISALLOWANCE TO 25% ONLY BY CIT (A) . IN REPLY, THE LD. DR OF REVENUE FAIRLY CONCEDED THAT THERE IS NO GROUND RAI SED BY THE REVENUE IN ITS APPEAL ON THIS ISSUE. THE LD. AR OF ASSESSEE SUBMI TTED THAT THERE IS NO MISTAKE IN THE TRIBUNAL ORDER. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT PARA NO. 6 OF THE TRIBUNAL ORDER IS IN RESPECT OF DECIDING GROUND NO. 1 IN ASSESSEES APPEAL AS PER WHICH THE ASSESSEE IS CONTESTING THE CONFIRMING OF DISALLOWANCE BY CIT(A) OF RS. 10.50 LAKHS TO THE EXTENT OF 25% OF THE TOTA L PAYMENTS MADE OF RS. 42 LAKHS ON ACCOUNT OF TECHNICAL CONSULTANCY FEES. AS PER THE COMBINED TRIBUNAL ORDER, THE REVENUES APPEAL WAS ALSO THERE FOR THE SAME ASSESSMENT YEAR AGAINST THE SAME ORDER OF CIT (A) BUT THERE IS NO G ROUND RAISED BY THE REVENUE IN ITS APPEAL IN RESPECT OF RESTRICTING THE DISALLO WANCE BY CIT (A) TO 25%. THIS IS SETTLED POSITION OF LAW THAT BY FILING THE APPEA L BEFORE THE TRIBUNAL, THE ASSESSEE CANNOT BE WORSE OF AND SINCE NO GROUND IS RAISED BY THE REVENUE IN M.P. NO. 303/BANG/2017 (IN ITA NO.552/BANG/2013) PAGE 3 OF 3 ITS APPEAL IN RESPECT OF RELIEF ALLOWED BY CIT (A) ON THIS ACCOUNT BY RESTRICTING THE DISALLOWANCE TO 25%, TRIBUNAL COULD NOT HAVE CO NFIRMED THE DISALLOWANCE IN EXCESS OF DISALLOWANCE CONFIRMED BY CIT (A) I.E. 25 % OF TOTAL AMOUNT PAID BY THE ASSESSEE OF RS. 42 LAKHS ON ACCOUNT OF TECHNICA L CONSULTANCY FEES. IN THIS VIEW OF THE MATTER, WE FIND THAT THERE IS NO APPARE NT MISTAKE IN THE IMPUGNED TRIBUNAL ORDER. 5. IN THE RESULT, THE M.P. FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIT KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 06 TH MARCH, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.