ACIT - 9(3), MUMBAI v. M/s. SHIRDI INDUSTRIES LTD., MUMBAI

ITA 2597/MUM/2007 | 2001-2002
Pronouncement Date: 28-01-2010 | Result: Allowed

Appeal Details

RSA Number 259719914 RSA 2007
Bench Mumbai
Appeal Number ITA 2597/MUM/2007
Duration Of Justice 2 year(s) 9 month(s) 24 day(s)
Appellant ACIT - 9(3), MUMBAI
Respondent M/s. SHIRDI INDUSTRIES LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted E
Tribunal Order Date 25-01-2010
Date Of Final Hearing 25-01-2010
Next Hearing Date 25-01-2010
Assessment Year 2001-2002
Appeal Filed On 03-04-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E: MUMBAI BEFORE SHRI J.SUDHAKAR REDDY (AM) AND SHRI R.S. PADVEKAR (JM) ITA NO. 2597/MUM/2007 (ASSTT. YEAR : 2001-02) ACIT 9(3) MUMBAI APPELLANT ROOM NO. 229 2 ND FLOOR AYAKAR BHAVAN M.K. ROAD MUMBAI - 20 V/S. M/S. SHIRDI INDUSTRIES LTD. RESPONDENT 601 VANDANA APARTMENT MALVANI MARVE ROAD MALAD (WEST) MUMBAI PAN : - APPELLANT BY :MR. NAVEEN GUPTA RESPONDENT BY :MR. A.L. SHARMA : O R D E R : PER R.S. PADVEKAR J.M THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE IMPUGNED ORDER OF THE LD CIT(A)- IX MUMBAI DATED 31.1.2007 FOR THE A.Y. 2001-02. 2. THE ONLY SOLITARY ISSUE IS IN RESPECT OF THE PRO FESSIONAL FEES OF RS. 25 LACS PAID BY THE ASSESSEE TO M/S. STANDARD TIN WOR KS (P) LTD. WHICH WAS DISALLOWED BY THE A.O BUT ALLOWED BY THE LD CIT(A) . 3. WE HAVE HEARD THE PARTIES. THE ASSESSEE FILED T HE RETURN OF INCOME WHICH WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT. SUBSEQUENTLY THE CIT IX MUM BAI VIDE HIS ORDER U/S. 263 OF THE ACT DT. 21.3.2005 HAS SET ASIDE THE ASSESSME NT ORDER AND ONE OF THE ISSUE WAS PAYMENT OF THE PROFESSIONAL FEES OF RS. 2 5 LACS TO M/S. STANDARD ITA NO. 2597/MUM/2007 2 TIN WORKS (P) LTD. THE ASSESSEE CONTENDED THAT TH E SAID AMOUNT WAS PAID AS A COMMISSION TO M/S. STANDARD TIN WORKS (P) LTD. F OR INTRODUCTION AND LIASONING WORK WITH M/S. PRASHANT PROJECTS LTD. FOR GETTING THE WORK OF RS. 63 82 985/-. THE ASSESSEE FILED THE DEBIT NOTES A ND COPY OF BALANCE SHEET RECEIVED FROM M/S. STANDARD TIN WORKS (P) LTD. AND ALSO CONFIRMATION LETTER. IN THE CONFIRMATION LETTER GIVEN BY M/S. STANDARD T IN WORKS (P) LTD. IT WAS STATED THAT PROFESSIONAL FEES DUE AND RECEIVABLE FR OM THE ASSESSEE FOR THE ACCOUNTING YEAR ENDING ON 31.3.2001 WAS RS. 25 LACS AND THE SAME WAS PAID BY THE ASSESSEE BY DIFFERENT CHEQUES. THE A.O. WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE AS IN HIS VIEW NO PR UDENT BUSINESS MAN WOULD INCUR AN EXPENDITURE OF RS. 25 LACS TO OBTAIN THE O RDERS OF RS. 63 82 985/-. THE A.O. THEREFORE DISALLOWED THE PROFESSIONAL FE ES OF RS. 25 LACS WHICH WAS CLAIMED AS A DEDUCTION BY THE ASSESSEE. THE ASSESS EE FILED THE DISALLOWANCE BEFORE THE LD CIT(A) AND FOUND FAVOUR. THE LD CIT( A) DELETED THE ADDITION BY GIVING THE FOLLOWING REASONS : 2.3 I HAVE CAREFULLY GONE THROUGH THE ABOVE FACTS OF THE CASE AND I AM NOT CONVINCED WITH THE REASONS GIVEN BY TH E ASSESSING OFFICER FOR MAKING DISALLOWANCES OF THE COMMISSION PAID TO M/S. STANDARD TIN WORKS P. LTD. FOR LIASONING WORK. ITS NOT THE AOS PREROGATIVE TO DECIDE THE RESONABLENESS OF THE EXPE NDITURE INCURRED FOR THE BUSINESS PURPOSE. SUCH ADDITION ON SURMISE S AND CONJECTURE CANNOT BE SUSTAINED. ALL THE PARTIES ARE IDENTIFIA BLE AND ALSO INCOME- TAX PAYEE. THERE IS NO MATERIAL/EVIDENCE BROUGHT O N RECORD BY THE AO TO PROVE THAT IT IS A BOGUS EXPENDITURE OR NO SE RVICES WERE RENDERED. IT MAY BE SEEN THAT IN THE EARLIER YEARS AS WELL AS IN THE SUBSEQUENT YEARS ALSO THE CONSULTANCY CHARGES DISCL OSED (AS PER THE AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT) BY THE APPELLANT HAS BEEN ACCEPTED BY THE DEPARTMENT THEREFORE THERE IS NO COGENT REASON FOR NOT ACCEPTING THE SAME IN THE YEAR UNDER CONSIDERATION. THE APPELLANT HAS ALSO PLACED RELIANCE ON HE HONBL E SC JUDGEMENT IN HE CASE OF LALCHAND BHAGAT AMBIKARAM VS. CIT 37 ITR 288 (SC) DHAKESHWARI COTTON MILLS LTD. VS. CIT 26 ITR 775 O MAR SALAY MOHAMMED SAITH VS. CIT 37 ITR 151 WHEREIN THE HONB LE COURT HAS ITA NO. 2597/MUM/2007 3 HELD THAT ANY FINDING ARRIVED AT ON SUSPICION CONJ ECTURES AND SURMISES AND WITHOUT ANY EVIDENCE IS PERVERSE AND C ANNOT STAND THE TEST OF APPEAL. IN THE APPELLANTS CASE IT IS CLEA RLY ESTABLISHED BY THE APPELLANT THAT SERVICES HAVE BEEN RENDERED PARTIES ARE NOT RELATED AND THEY ARE INCOME-TAX PAYEE THE DIRECTOR OF THE APPELLANT COMPANY IS ALSO WELL QUALIFIED PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUE. THUS THERE IS NO MATERIAL ON RECORD TO PROVE THAT EXPENDITURE HAS NOT BEEN INCURRED FOR THE PURP OSE OF BUSINESS. HENCE THE APPELLANTS CLAIM IS ALLOWED. NOW THE REVENUE IS IN APPEAL BEFORE US. 4. THERE IS NO DISPUTE ABOUT THE FACT THAT THE AS SESSEE COMPANY IS ENGAGED IN PROVIDING THE CONSULTANCY SERVISES TO DI FFERENT PARTIES IN RESPECT OF IMPORT AND EXPORT RELATED MATTER. IN THE PRESENT C ASE IT IS ALSO NOT DISPUTED THAT THE ASSESSEE RENDERED SOME CONSULTANCY SERVICE S TO M/S. PRASHANT PROJECTS LTD. IT IS CLAIMED THAT M/S. STANDARD TIN WORKS (P) LTD. HAS MADE THE LIASONING WORK AND ALSO THE INTRODUCTION OF TH E SAID PARTY FROM WHOM THE ASSESSEE COULD GET AN ORDER FOR CONSULTING WORK OF RS. 63 82 985/-. THE A.O EXPRESSED THE DOUBT ABOUT THE GENUINENESS OF THE SA ID EXPENDITURE. WE ARE ALSO UNABLE TO UNDERSTAND WHAT WAS THE NATURE OF T HE SERVICES RENDERED BY THE ASSESSEE COMPANY TO M/S. PRASHANT PROJECTS LTD. AS NOTHING HAS BEEN FILED BEFORE US IN RESPECT OF THE NATURE OF THE WORK AS P ER THE AGREEMENT/CONTRACT BETWEEN THE ASSESSEE AND M/S. PRASHANT PROJECTS LTD . MOREOVER NOTHING HAS BEEN PLACED BEFORE US TO SHOW THAT M/S. STANDARD TI N WORKS (P) LTD. HAS A MAJOR ROLE IN GETTING THE ORDER FROM M/S. PRASHANT PROJECTS LTD. MERELY STATING THAT M/S. STANDARD TIN WORKS (P) LTD. HAS DONE THE LAISONING WORK FOR OBTAINING THE ORDER FROM M/S. PRASHANT PROJECTS LTD . IS NOT SUFFICIENT. IN OUR OPINION THIS ISSUE NEEDS PROPER VERIFICATION IN R ESPECT OF THE NATURE OF SERVICES RENDERED BY M/S. STANDARD TIN WORKS (P) LT D. TO THE ASSESSEE AS WELL AS THE NATURE OF CONSULTING SERVICES RENDERED BY T HE ASSESSEE TO M/S. PRASHANT PROJECTS LTD. BOTH THE PARTIES AGREED THA T THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE A.O FOR FRESH CONSIDERATION. WE THEREFORE SET ASIDE THE ISSUE TO THE FILE OF THE A.O WITH THE DIRECTION THA T THE A.O SHOULD EXAMINE THIS ITA NO. 2597/MUM/2007 4 ISSUE WHETHER THE PROFESSIONAL FEES PAID BY THE ASS ESSEE COMPANY TO M/S. STANDARD TIN WORKS (P) LTD. IS AS PER THE TERMS OF THE AGREEMENT. THE A.O. ALSO SHOULD EXAMINE THE NATURE OF SERVICES RENDERED BY THE ASSESSEE COMPANY TO M/S. PRASHANT PROJECTS LTD. ACCORDINGLY THE OR DER OF THE LD CIT(A) IS SET ASIDE. 5. IN THE RESULT REVENUES APPEAL IS ALLOWED FOR T HE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH DAY OF JANUARY 2010. SD/- SD/- (J. SUDHAKAR REDDY) (R.S.PADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEM BER MUMBAI ON THIS 28TH DAY OF JANUARY 2010. :US COPY TO: 1. APPELLANT 2. RESPONDENT 3.THE CIT(A)- IX MUMBAI 4.THE CIT -IX MUMBAI 5.THE DR E BENCH MUMBAI 6.GUARD FILE BY ORDER TRUE COPY ASSTT..REGISTRAR ITAT MUMBAI.