VAN OORD INDIA PRIVATE LIMITED, MUMBAI V. ACIT - RANGE 5(3), MUMBAI

MA 504/MUM/2023

AI Insights

Van Oord India Private Limited filed a Miscellaneous Application seeking rectification of an earlier Tribunal order concerning the allocation of Head Office service fees for the Assessment Year 2008-09. The dispute centered on the allocation of \\u20b9.9,70,85,309 in service fees, where \\u20b9.71,82,289 was allocated to non-qualifying activities and subsequently disallowed by the Assessing Officer. The Tribunal initially sustained this disallowance but later acknowledged an error in the order's wording, which led to confusion regarding the extent of the disallowance. The Tribunal's rectification clarified that the disallowance of 50% of the allocated expenses to non-qualifying activities was correct and intended.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 123748 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-10-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 12-10-2023
• Assessment Year: 2008-2009
• Appeal Filed On: 08-08-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “J”, MUMBAI BEFORE SHRI ABY T. VARKEY, HON'BLE JUDICIAL MEMBER & SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER MA.No. 504/MUM/2023 [ARISING OUT OF ITA NO. 6960/MUM/2012 (A.Y: 2008-09)] Van Oord India Private Limited 201, 2 nd Floor, Central Plaza 166, C.S.T. Road, Kalina Mumbai- 400098 PAN: AAACH5430J v. ACIT- Range 5(3) Aaykar Bhavan, M.K. Marg Mumbai (Appellant) (Respondent) Assessee Represented by : Shri Nitesh Joshi Department Represented by : Shri P.D. Chogule Date of conclusion of Hearing : 13.10.2023 Date of Pronouncement : 18.10.2023 O R D E R PER S. RIFAUR RAHMAN (AM) 1. Through this Miscellaneous Application assessee is seeking for rectification in the order passed by the Tribunal in ITA.No.6960/Mum/2012 dated 11.05.2023 for the A.Y. 2008-09. MA.No. 504/MUM/2023 Van Oord India Private Limited Page No. 2 2. At the time of hearing, Ld. AR of the assessee brought to our notice Page No. 22 of the Tribunal Order and brought to our notice that assessee has claimed “Allocation of Service Fees by Head Office” to the extent of ₹.9,70,85,309/- and this allocation of service fee is for qualifying activities and other activities. To the extent of qualifying activities, assessee has allocated the above service fee from Head Office based on the revenue generated by the assessee and accordingly, assessee has allocated ₹.71,82,289/- towards non-qualifying activities. At the time of assessment, Assessing Officer has disallowed 50% of the allocation of Head Office expenses in other activities i.e., on non-qualifying activities. The assessee has challenged the above disallowance before the Tribunal and the Tribunal has rejected the claim of the assessee and sustained the findings of the Assessing Officer. However, he submitted that at Page No.28 of the order the Hon'ble Tribunal has held that “we are inclined to reject the plea of the assessee to allow atleast 50% of the share of Head Office expenses as determined by the Assessing Officer”. This finding creates certain doubts on the allowability of the Head Office expenses and further, he submitted that ITAT has allowed Ground No. 19 and 20 and dismissed Ground No. 21 whereas based on the grounds of appeal raised by the assessee it should have been allowed the Ground No. 19 and dismissed Ground No. 20 and 21. He prayed that the above mistake MA.No. 504/MUM/2023 Van Oord India Private Limited Page No. 3 apparent on record may be rectified. Ld. AR brought to our notice decision of the ITAT in subsequent assessment year i.e., 2009-10 where the assessee itself conceded that the adhoc payment made towards 50% of the expenses pertain to non-qualified activities is not contested. 3. On the other hand, Ld. DR fairly accepted the submissions of the assessee and not made any specific objections. 4. Considered the rival submissions and material placed on record, after considering the submissions of the assessee we observe that the findings in Para No. 28 at Page No. 27 of the order is not clear and not as per the intention of the bench. As per the submissions made before us the Assessing Officer has actually disallowed 50% of the service fees of Head Office i.e., ₹.71,82,289/-. The bench intended to sustain the above disallowance made by the Assessing Officer against which assessee has filed the grounds of appeal before us. Therefore, we intend to modify Para No. 28 as under: - “28. Now, let us deal with the share of the Head Office Expenses relating to other activities, we observe that assessee has remitted various payments towards Personal Cost, I.T. Cost and Administration related expenses. The MA.No. 504/MUM/2023 Van Oord India Private Limited Page No. 4 assessee is relying upon its holding company and receives support services from Head Office. However, we observe that these services rendered by them for the mutual interest. It cannot be denied. At the same time, it is on the assessee to substantiate the same. The Assessing Officer and Ld. DRP has rejected the same for the reason that assessee has not substantiated the same. Therefore, we are inclined to sustain the disallowance made by the Assessing Officer to allocations of Head Office expenses to the non-qualifying activities to the extent of 50% of the allocations of service fee i.e., 50% of ₹.71,82,289/-. Accordingly, we allow Ground No. 19 raised by the assessee and dismiss Ground Nos. 20 and 21 raised by the assessee.” 5. In the result, Miscellaneous Application filed by the assessee is allowed as indicated above. Order pronounced in the open court on 18 th October, 2023. Sd/- Sd/- (ABY T. VARKEY) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai / Dated 18/10/2023 Giridhar, Sr.PS MA.No. 504/MUM/2023 Van Oord India Private Limited Page No. 5 Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// BY ORDER (Asstt. Registrar) ITAT, Mum