Swarovski India Private Ltd., New Delhi V. DCIT, New Delhi

MA 466/DEL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1969 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Assessment Year: 2006-2007
• Appeal Filed On: 11-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M BARNWAL
• Keywords: Revenue expenditure; Capital expenditure
• Section: 254(2)

Judgement Text

1 MA NO. 466/DEL/2018 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: FRIDAY NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER MA NO. 4 66/DEL/2018 IN ( I.T.A. NO.4080/DEL/ 2013 (A.Y 2006-07) M/S SWAROVSKI INDIA PVT. LTD. 1A-1D, VANDHANA BUILDING 11, TOLSTOY MARG NEW DELHI (APPLICANT) VS ACIT CIRCLE-22(2) NEW DELHI (RESPONDENT) PAN: AAGCS4052D APPLICANT BY SH. KOMAL SAWHNEY, ADV SH.PRASHANT MEHARCHANDANI, ADV RESPONDENT BY SH. M. BARNWAL, SR. DR ORDER PER SUCHITRA KAMBLE, JM THIS MISCELLANEOUS APPLICATION U/S 254(2) OF THE IN COME-TAX ACT, 1961 READ WITH RULES 24 & 34A OF INCOME TAX APPELLATE TR IBUNAL RULES, 1963 HAS BEEN FILED IN RESPECT OF ORDER DATED 2/4/2018 IN IT A NO. 4080/DEL/2013 PASSED BY THE TRIBUNAL. 2. THE LD. AR SUBMITTED THAT WHILE ADJUDICATING GRO UND NO. 2, THE TRIBUNAL HAS INADVERTENTLY MISSED TO REACH THE FINAL CONCLUS ION. THE CIT(A) ON THE SAME ISSUE HAS PASSED THE ORDER IN FAVOUR OF THE ASSESSE E FOR SUCCEEDING YEARS BEING DATE OF HEARING 28.02.2020 DATE OF PRONOUNCEMENT 11 .05.2020 2 MA NO. 466/DEL/2018 ASSESSMENT YEAR 2007-08, ASSESSMENT YEAR 2008-09 & 2009-10 AND THE REVENUE HAS NOT FILED ANY APPEAL IN THE SAID ASSESS MENT YEARS. 3. THE LD. DR OPPOSED THE MISCELLANEOUS APPLICATION . 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF THE ORDER, THE LD. AR HAS RIGHTLY POINTED OUT THAT THE FINDING/OPERATIVE PART IS MISSING IN THE PARA-1 1 OF THE ORDER. THUS, THERE IS MISTAKE APPARENT ON RECORD. THEREFORE, THIS MISCELL ANEOUS APPLICATION IS ALLOWED AND PARA 11 OF ORDER DATED 02.04.2018 IS DI RECTED TO BE READ AS UNDER:- 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL THE RECORD. AS RELATES TO GROUND NO. 1, THE SAME IS GENERAL AND TH EREFORE NOT ADJUDICATED HEREIN. GROUND NO. 2 IS RELATING TO DISALLOWANCE O F EXPENDITURE INCURRED ON MANAGEMENT SERVICE FEES AMOUNTING TO RS.18,38,562/- . THE CIT (A) TREATED THE SAID EXPENDITURE AS CAPITAL EXPENDITURE AND NOT ACCEPTED THE CLAIM OF THE ASSESSEE THAT IT IS IN THE NATURE OF THE REVENUE EX PENDITURE. THE LD. AR SUBMITTED THAT IN SUBSEQUENT YEARS AND IN EARLIER Y EARS, THE REVENUE HAS ACCEPTED THIS EXPENDITURE AS REVENUE EXPENDITURE AN D ONLY IN THIS PARTICULAR YEAR, THE SAME HAS BEEN TREATED AS CAPITAL EXPENDIT URE. AFTER GOING THROUGH THE ORDER OF SUBSEQUENT YEAR PASSED BY THE CIT (A) VIDE ORDER DATED 21/08/2017. THERE IS A CLEAR FINDING THAT INCURREN CE OF MANAGEMENT FEE EXPENDITURE IS TO ACQUIRE THE MANAGERIAL SUPPORT SE RVICES FOR THE DAY TO DAY OPERATIONS OF THE ASSESSEES BUSINESS AND ONGOING B ASIS FOR WHICH QUARTERLY PAYMENTS WERE MADE THERE WAS NO ENDURING BENEFIT OR ANY UNDERLINE NATURE OF SERVICE OBTAIN BY THE ASSESSEE WHICH INVOLVES TR ANSFER OF TECHNOLOGY OR ASSET OR TECHNICAL INFORMATION/KNOWHOW IN ANY MANNE R. IT IS PERTINENT TO NOTE THAT THE REVENUE IN PARTICULAR YEARS HAS ACCEP TED THIS EXPENDITURE AS REVENUE EXPENDITURE AND SEGREGATED THIS PARTICULAR YEAR BY DISALLOWING IT AS CAPITAL EXPENDITURE BUT WHILE DOING SO, THE REVENUE HAS NOT GIVEN ANY FINDING 3 MA NO. 466/DEL/2018 TO THE EXTENT THAT AS TO WHY THESE ARE CAPITAL EXPE NDITURE. HENCE, GROUND NO. 2 OF THE ASSESSEES APPEAL IS ALLOWED. THUS, THE MISC. APPLICATION IS ALLOWED. 6. IN RESULT, MISCELLANEOUS APPLICATION FILED BY TH E ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF MAY, 2020 SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL M EMBER DATED: 11/05/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 4 MA NO. 466/DEL/2018 DATE OF DICTATION 28.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02.03.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 1 3 . 5 . 2 0 2 0 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER