Income Tax Appellate Tribunal - Mumbai
Natvar Parikh & Co. P.Ltd, Mumbai vs Cit Cen Iv, Mumbai on 25 February, 2020
IN THE INCOME-TAX APPELLATE TRIBUNAL "A" BENCH MUMBAI
BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND
SHRI PAWAN SINGH, JUDICIAL MEMBER
ITA No.2082/Mum/2015 (Assessment Year 2010-11)
ITA No.5034/Mum/2016 (Assessment Year 2012-13)
ITA No.1400/Mum/2017 (Assessment Year 2013-14)
ITA No.7521/Mum/2019 (Assessment Year 2014-15)
ITA No.7522/Mum/2019 (Assessment Year 2015-16)
Apurva Natvar Parikh & Co. Pvt. DCIT, CC 7(1),
Ltd., 96, Chembur Mankhurd Room No. 653, 6th Floor,
Link Road, Shivaji Nagar, Aayakar Bhavan, M.K.
Mumbai-400043
Vs. Road, Mumbai-400020.
PAN: AAACN2937Q
Appellant Respondent
ITA No.2708/Mum/2015 (Assessment Year 2010-11)
ITA No.5854/Mum/2015 (Assessment Year 2011-12)
DCIT, CC 7(1), Apurva Natvar Parikh & Co.
Room No. 653, 6th Floor, Pvt. Ltd., 96, Chembur
Aayakar Bhavan, M.K. Road, Mankhurd Link Road, Shivaji
Mumbai-400020.
Vs. Nagar, Mumbai-400043
PAN: AAACN2937Q
Appellant Respondent
Appellant by : Shri Madhur Agarwal (AR)
Respondent by : Shri Michael Jerald (DR)
Date of Hearing : 28.01.2020
Date of Pronouncement : 25.02.2020
ORDER UNDER SECTION 254(1)OF INCOME TAX ACT
PER PAWAN SINGH, JUDICIAL MEMBER;
1. These group of seven appeal are directed against the separate order of ld. Commissioner of Income-Tax (Appeals)-49, Mumbai [the ld. CIT(A)] for ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. Assessment Year 2010-11, 2011-12, 2013-14, 2014-15 & 2015-16, out of which two cross appeal by both the parties for Assessment Year 2010-11 & 2011-12 and for Assessment Year 2013-14, 2014-15 & 2015-16 by assessee. In all appeal, the parties have raised certain common grounds of appeal, therefore, all the appeals were clubbed, heard together and are decided by consolidated order for the sake of brevity and to avoid the conflicting decision. With the consent of parties, the fact in appeal for Assessment Year 2010-11 is treated as lead case. The assessee has raised the following grounds of appeal:
1. The learned (IT (A) -Mumbai 49 has erred in confirming the disallowance of Rs. 1,11,30,167/- on account of amortization of the additional premium paid on the leasehold land. The appellant submits that the learned CIT(A) failed to appreciate that the claim made was for its legitimate business expenditure and ought to have been allowed.
2. The learned (IT (A) has erred in confirming the part addition under section 14A of the Income Tax Act after allowing prorata relief on account of investment made in Lift & Shift India Pvt. Ltd.
3. The (CIT (A) has erred in confirming the addition of Rs. 1,20,54, 127/ - under section 40(a)(ia) of the Income Tax Act towards amount paid to Saikrupa Foods Services Pvt. Ltd.
4. The learned (CIT(A)-Mumbai 49 has erred in confirming the disallowance of Rs. 8,20,356/- on account of professional charges paid to Mr. Bhagwan Madhha.
5. The appellant craves leave to alter, amend or add any grounds of appeal as may be necessary.
Relief Claimed:
1. The disallowance of Rs. 1,11,30,167/- on account of amortization of the additional premium laid on the leasehold land be deleted.
2. The addition made of under section 14A of the Income Tax Act be deleted.2
ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd.
3. The addition of Rs. 1,20,54,127 under section 40(a)(ia) of the Income Tax Act be deleted.
4. The disallowance of Rs. 8,20,356/- on account of professional charges be deleted.
2. The revenue in its cross appeal (ITA No. 2708/Mum/2015) has raised the following grounds of appeal:
"Whether on the facts and in circumstances of the case and in law Ld. CIT(A) was justified in deleting the addition made on account of non refundable one time entrance fees collected by the company from members treating it as capital receipt, placing reliance on the case of Diners Business Services P Ltd. without appreciating the fact that the facts of this case are distinguishable from that of Diners Business Services P. Ltd."
3. Brief facts of the case are that the assessee is a company engaged in the construction activity, running Acers Club, Transportation etc, filed its return of income for Assessment Year 2020-11 declaring income of Rs. 5,53,88,980/-. The case was selected for scrutiny. The Assessing Officer after serving statutory notice under section 143(2) and 142(1) completed the assessment on 30.03.2013. The Assessing Officer while passing the assessment order made addition of Rs. 1,11,30,167/- claimed on account of amortization of lease premium, disallowance under section 14A of Rs. 11,09,292/-. Disallowance under section 40A(ia) of Rs. 1,20,54,127/-. Addition on account of membership fees of Rs. 3,11,78,438/-. On appeal before the ld. CIT(A), the assessee was granted partial relief on account of addition made on non-refundable one time entrance fees. Therefore, aggrieved by the additions/deleting the addition on account of non- refundable one time entrance fees, both the parties have filed their 3 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. respective appeal by raising the grounds of appeal which we have referred above.
4. We have heard the submission of ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the revenue and perused the material available on record.
ITA No. 2708/Mum/2015 for A.Y. 2010-11 by revenue
5. At the outset of hearing, the ld. AR of the assessee submits that ground of appeal raised by revenue in its appeal is covered by the decision of Tribunal in assessee's own case for Assessment Year 2006-07 to 2008-09 In ITA No. 2146 & 2148/Mum/2009 & 2283/Mum/2011 dated 20.11.2015. The ld. AR of the assessee further submits that on similar ground of appeal, the Tribunal directed the Assessing Officer to ax 1/25th share of club entrance fees in each year.
6. On the other hand, the ld. DR for the revenue submits that similar direction may be given to the Assessing Officer.
7. We have considered the rival submission of the parties and perused the material available on record. We have noted that during the year, the assessee received one time membership entrance fees of Rs. 3.11 crore (approx) as one time membership fees for life time membership of club (15 years). The Assessing Officer treated the said receipt as revenue receipt against the assessee's treatment for treating it as a capital receipt. We have noted that on similar ground of appeal, the co-ordinate bench of Tribunal in 4 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. assessee's own case for Assessment Year 2006-07 to 2008-09 on similar set of fact passed the following order:
8. We have considered rival contentions and also deliberated on judicial pronouncements cited at bar in the context of factual matrix of the case. From the record we found that the AO has taxed entire entrance fee for giving membership of Club for 25 years, in the year of receipt itself. As per Ld. AR the fee so received was capital in nature as per decision of Dinners Business Services Pvt. Ltd. 263 ITR 1. We found that in case of Dinners Business Services Pvt. Ltd (supra) the membership so received was for whole-life and not for specified period of time, whereas in the instant case after expiry of 25 years, member was to again pay entrance fee, therefore, facts of the instant case are distinguishable from the case of Dinners Business Services Pvt. Ltd (supra). In case where onetime membership is received for a specified period of time, the issue has been dealt by the ITAT Special Bench in the case of Club Mahindra Holidays, 40 DTR 1, wherein after considering the decision of Hon'ble Supreme Court in the case of E.D. Sasoon, 26 ITR 27, Madras Industrial Corporation Ltd., 225 ITR 802, Calcutta Co. Ltd. 37 ITR 1 and in the case of Rotork Controls India Pvt. Ltd., 314 ITR 62, it was held that membership fee received for 33/25 years was liable to spread over the period of time for which such fee is received. Respectfully following the same, we direct the AO to tax 1/25th share of fee in each year, rather than taxing the entire sum in the year of receipt itself.
8. Considering the decision of Tribunal in assessee's own case in earlier years as referred above. We direct the Assessing Officer to follow the order dated 20.11.2015 passed in ITA No. 2146 & 2147/Mum/2009. In the result, the appeal of the revenue is disposed of in the term indicated above.
9. In the result, the appeal of the revenue is partly allowed. ITA No. 2082/Mum/2015 for A.Y. 2010-11 by assessee 5
ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd.
10. At the outset of hearing, the ld. AR of the assessee submits that he is not pressing Ground No. 3. Considering the submission of ld. AR of the assessee, Ground No. 3 of the appeal is dismissed as not pressed.
11. Ground No.1 relates to confirming the disallowance of Rs. 1,11,30,167/- on account of amortization of additional premium paid on lease hold land. The ld. AR of the assessee submits that besides the business of construction, the assessee managing/running (the Acres Clubs) on the plot situated at the survey no. 411B, Chembur. The said plot is owned by Natvar Parikh & Brothers. The assessee obtained the lease of said plot from owner upto 02.02.2013. During the previous year, the assessee paid compensation of Rs. 3,33,90,500/- to the State Government. The State Government demanded this compensation from Natvar Parikh & Brothers for releasing the land from Urban Land Ceiling Authority (ULCA). The assessee claimed 1/3rd deduction paid on account of compensation by amortizing the lease premium for a period of three years. The Assessing Officer treated the leased premium paid by assessee as capital expenditure. The Assessing Officer also concluded that the cost incurred on land is always capital in nature unless assessee's engaged in dealing in land. Further, no depreciation allowable on such cost of land and therefore, no question for allowing amortization of such cost of land. The ld. AR of the assessee submits that the expenses were incurred for business purpose and was admissible under section 37. The utility of leased land prevails on little lease period. No new 6 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. asset was added in the block of asset of assessee. The asset was already held by assessee. The case law relied by lower authorities in Panbari Tea Company Ltd. (57 ITR 400) is not applicable on the facts of the present case. In support of his submission, the ld. AR of the assessee relied upon the decision of Hon'ble Supreme Court in case of Empire Jute Co. Ltd. [1980] 124 ITR 1 and Associated Cement Co. Ltd. [1988] 172 ITR 257.
12. On the other hand, the ld. DR for the revenue supported the order of lower authorities. The ld. DR submits that the payment was made for realization of certain land which was not a part of asset of assessee. The assessee in its reply dated 21.12.2012 filed before the Assessing Officer clearly stated that the owner of land i.e. Natvar Prikh & Brothers, which are related party made an application to Urban Development Authority (UDA) to release the surplus vacant land from ULCA. The UDA ordered for payment of additional premium. Thus, it is clear from the fact that the land against which the alleged premium was paid was not a part of asset of assessee. The case law relied by ld. AR of the assessee is not applicable on the facts of the present case.
13. We have considered the submission of both the parties and perused the material available on record carefully. During the assessment, the Assessing Officer noted that the assessee claimed deduction for amortization of lease premium of Rs. 1,11,30,167/-. The assessee was asked to submit the detailed regarding the claim of said amortization of lease premium. The 7 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. assessee filed its reply dated 21.12.2012. For appreciation of facts the contents of reply as recorded by Assessing Officer in para-4.2 of assessment order, is extracted below:
"The plot of land situated at Survey No. 411 B, Chembur is obtained by us under lease from M/s. Navtar Parikh & Bros and is used by us since 1968for our business purposes. 'The Acres Club' our division is constructed on this same plot. We are also generating 'Go Karting" income from this plot of land. The present 'Lease Deed' is for the period of 10 years ending on 02.02.2013 (Refer copy enclosed as part of 'Annexure 26' of letter dated 29.10.2012).
The owner M/s Natvar Parikh & Bros. had made an application to Urban Development Authority to release the surplus vacant land from Urban Land Ceiling Authority. In response to the same UDA ordered to the owner to pay the additional premium which was calculated by taking into consideration the Ready Recknor 2008-09 rate. Since the said plot was acquired by us under lease from the owner, owner requested us to pay the additional premium on the basis of clause II(1) of the lease deed.
Clause II(1) of the lease deed is reproduced below.' During the said terms to pay the rent hereinabove reserved in manner aforesaid AND ALSO to bear pay and discharge all existing and future rates, taxes, charges assessment duties impositions, outgoings and burdens of every description whatsoever payable by the Lessor to Government or Municipal Corporation in respect of the land, buildings structures and construction erected or to be erected thereon including urban immovable property tax and riot tax if any assessed charged or imposed upon the demised premises or upon the owners or occupiers in respect thereof or in respect of land or building erected thereon. The present taxes payable are Rs. 90,720/- (Rupees Ninety thousand Seven Hundred & twenty only) per year.
In view of the above clause we have paid the additional premium of Rs. 3,33,90,500/- on behalf of the Lessor and amortized the same over the balance lease period of 3 years .8
ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd.
As required by you we enclose herewith, the following documents as required by you pertaining to Payment made of Rs.3,33,90,500/- towards additional premium levied by the competent authority of Urban Land Ceiling Act. a. Application dated 21.06.2008 made by the land owner 'Natvar Parikh & Bros 'for release of surplus vacant land b. Letter dated 17. 02.2009 by Urban Development Authority to Deputy Collector c. Letter dated 31.03.2009 no NOC/ULC/D-5/6(J)/SR-7, 659, 658 addressed to Natvar Parikh & Bros, land owner by Deputy Collector (ULC) for payment of additional premium of &.3,33,90,500/-. d. Copy of challan towards payment of additional premium of &.3,33,90,500/- by Natvar Parikh & co. Pvt. Ltd.
e. Letter no NOC/ULC/D-5/6(1)/SR-7, 659, 658 dated 01.07.2009 for release of surplus vacant land after payment of the additional premium.
14. The reply of assessee was not accepted by Assessing Officer. The Assessing Officer concluded that monthly payment of lease rent is separately payable by assessee. The amount of lease premium cannot be said to be payment of rent in advance such would be in the nature of capital expenditure incurred for obtaining lease hold right where no amortization is allowable. The cost incurred for land always capital in nature unless assessee is engaged in dealing in land, no depreciation is allowable on cost of land and there is no question for allowing amortization of such cost of land. The Assessing Officer further held that expenditure for acquisition of lease or bringing into existence of asset or advantage of enduring benefit is capital expenditure. The ld. CIT(A) by taking view that premium was paid by assessee which was demanded from lesser for the land from ULCA. The assessee capitalized the premium in the books of account. The expenditure was 9 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. amortized for three year and accordingly claimed 1/3rd of Rs. 3,33,90,500/-. The ld. CIT(A) further noted that assessee claimed expenses as business expenditure. The ld. CIT(A) further took the view that assessee is entitled to claim only rent paid for the land taken on lease as revenue expenditure and by relying upon the decision of Hon'ble Supreme Court in Panbari Tea Company Ltd. (supra) wherein it was held that only installment paid as premium was capital in nature. In said case, the rent paid was distinguished from the premium paid. The rent was treated as revenue in nature. However, premium was treated as capital in nature.
15. We have independently examined the facts of the issue under consideration. There is no dispute that plot of land situated on survey no. 411B, Chembur was under the lease of Natvar Parikh & Brothers. The assessee developed its club on this plot. From the reply furnished by assessee, it is clear that lesser of assessee i.e. Natvar Parikh & Brothers, related party of assessee made an application to Urban Development Authority (UDA) to release the surplus vacant land from Urban Land & Ceiling Authority (ULCA). The UDA ordered to the owner/lesser of assessee to pay additional premium on the basis of rate in 2008-09. The assessee claimed that said plot was acquired by the assessee from its owner on lease. Thus, the owner requested the assessee to pay the additional premium on the basis of clause-II(i) of lease-deed. Clause-II of lease-deed is also reproduced by Assessing Officer from the reply of assessee, which we have extracted (supra). We have also perused 10 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. the Clause-II(i) of lease-deed, copy of which is available at page no.8 of Paper Book and the same is correctly extracted by Assessing Officer. Perusal of Clause-II (i) disclosed that assessee to pay rent, to bear, pay and discharge existing and future rates, tax charged, computation, imposition and burden on every description whatsoever payable by lesser to Government or Municipal Corporation in respect of land, building structure and construction erect or to be erected thereon including immovable property tax and Roit Tax, if any imposition on the owner in respect of building thereon. The present tax (prevailing tax) which was specified at Rs. 90,720/- mentioned in the clause itself. There is no condition in the lease- deed to pay any premium for release of surplus or vacant land from ULCA. The payment made for release of surplus land from ULCA is nowhere the liability of assessee. Moreover the said land which was allegedly released after the order of UDA was not the part of business asset and in possession of assessee. The assessee has not proved that the partial of land released by assessee was under the occupation of assessee for the purpose of its business.
16. We have perused the entire deed. The entire lease-deed does not prescribed or put any condition or obligation on the assessee for payment of lease premium on behalf of lesser. In our view, the assessee has paid the premium on behalf of its related party and the same cannot be claimed as revenue receipt. The case law relied by ld. AR of the assessee is not helpful to the 11 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. assessee. In Empire Jute Co. Ltd. (supra), the Hon'ble Supreme Court held that where there is no addition to or expansion of the profit-making apparatus of the assessee. The income earning machine remains what it was prior to the purchase of loom hours. The assessee is merely enabled to operate the profit-making structure for a longer number of hours. And this advantage is clearly not of an enduring nature. It is limited in its duration and, moreover, the additional working hours per week transferred to the assessee have to be utilized during the week and cannot be carried forward to the next week. It is, therefore, not possible to say that any advantage of enduring benefit in the capital field was acquired by the assessee in purchasing loom hours and the test of enduring benefit cannot help the revenue.
17. Further in Associated Cement Co. Ltd. (supra), the Hon'ble Court held that it is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. In the instant case, the advantage which was secured by the assessee by making the 12 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. expenditure in question was the securing of absolution or immunity from liability to pay municipal rates and taxes under normal conditions for a period of 15 years. If the liability had to be paid, the payments would have been on revenue account and, hence, the advantage secured was in the field of revenue and not capital. And as a result of the expenditure incurred, there was no addition to the capital assets of the assessee and no change in its capital structure.
18. With utmost regard to the decision of Hon'ble Supreme Court, in our humble view, the ratio of the decisions are not helpful to the assessee. In the present case, there is no obligation under lease agreement to pay amortization of lease premium by assessee to the super lesser. There is no evidence on record that the land which was released by UDA was under the occupation of assessee or is part of business asset, in other word it was a part and partial of the plot of land leased to assessee. Thus, the ratio of the decision of Hon'ble Apex Court is not applicable on the present case. In the result, ground of appeal raised by assessee is dismissed.
19. Ground no.2 relates to addition/disallowance under section 14A. The ld. AR of the assessee submits that the Assessing Officer while passing the assessment order made disallowance under section 14A r.w.r. 8D of Rs. 1109294/-. On appeal, the ld. CIT(A) directed to delete the investment made in Lift and Shift India Pvt. Ltd. being the investment made in group/subsidiary company while making disallowance under Rule 13 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. 8D(2)(iii). The ld. AR submits that as per the decision of Special Bench of Delhi Tribunal in Vireet Investment Pvt. Ltd. [82 taxmann.com 415 (Del. SB), the investment which generated exempt income during the relevant Assessment Year should be considered for making disallowance. As the revenue has not filed any appeal against the order of ld. CIT(A), the investment made in Lift and Shift India Pvt. Ltd. should not be considered for making disallowance under Rule 8D(2)(iii) and accordingly, the Assessing Officer may be directed to consider only those investment which yielded exempt income during the year.
20. On the other hand, the ld. DR for the revenue supported the order lower authorities.
21. We have considered the submission of both the parties and perused the material available on record. During the assessment, the Assessing Officer noted that assessee has received dividend income of Rs. 2.13 crore from the investment made in equity share, mutual fund which are claimed as exempt under section 10(34). The assessee disallowed only Rs. 1739/- as suo-moto disallowance. The Assessing Officer rejected the suo-moto disallowance by taking view that the same is not in accordance with the provision of Rule 8D(2)(iii). The assessee was asked to justify the allocation of expenses for earning exempt income. The assessee filed reply dated 21.12.2012 and stated that only Rs. 1739/- is incurred for earning exempt income. The contention of assessee was not accepted by Assessing Officer by taking 14 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. view that the assessee has made considerable transaction in mutual fund and transacted in preference share in its wholly owned subsidiary company. The transaction required manpower and other operational expenditure. The Assessing Officer invoked the provision of Rule 8D and made the disallowance of direct expenditure under Rule 8D(2)(i) of Rs. 1739/- (same as disallowed by assessee). No disallowance on account of interest expenses under Rule 8D(2)(ii). However, the Assessing Officer made disallowance under Rule 8D(2)(iii) @ .5% of average value of investment and worked out the disallowance of Rs. 11,10,993/-. On appeal before the ld. CIT(A), directed not to consider the investment made in Lift and Shift India Pvt. Ltd., being made in group companies. And rest of the disallowance under Rule 8D(2)(iii) was affirmed. However, the Assessing Officer wrongly deducted Rs. 1739/- from disallowance of Rule 8D(2)(iii) which was directed to be rectified. Before us, the ld. AR of the assessee vehemently argued that only those investment which yielded the exempt income should be considered for considering the average value of investment for disallowance under Rule 8D(2)(iii).
22. Considering the decision of Special Bench of Delhi Tribunal in Vireet Investment Pvt. Ltd. (supra), we direct the Assessing Officer to re-compute the disallowance under Rule 8D(2)(iii) by considering only those investment which yielded exempt income. Needless to direct that before computing the disallowance, the Assessing Officer shall grant opportunity to the assessee. 15
ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. In the result, this ground of appeal is party allowed. However, we may make it clear that in case any other investment made in group concern and generated exempt income be also considered for taking average value of investment, if those investment yielded exempt income as per the decision of Special Bench of Vireet Investment (supra).
23. Ground No.4 relates to Professional Fees Payment of Rs. 8,20,356/-. The ld. AR of the assessee submits that the Assessing officer made disallowance of professional fees paid to Bhagwan Madhav on the ground that no projects were undertaken by assessee during the Assessment Year under consideration. The ld. AR submits that just because the assessee not commence any project during the Assessment Year, does not mean that expenses should be disallowed.
24. On the other hand, the ld. DR for the revenue supported the order of lower authorities.
25. We have considered the submission of both the parties and perused the order of lower authorities. We have noted that the Assessing Officer disallowed the expenses by taking view that housing project is yet to commence and same should be capitalized at the time of commencement of project. During the first appellate stage, the assessee stated that the professional charges were paid to Bhagwan Madhav, a Civil Engineer engaged in connection with housing projects developed. The assessee developed housing project in past and merely no new project is start, the 16 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. expenses cannot be disallowed. The ld. CIT(A) affirmed the action of Assessing Officer that professional charges paid for housing developed project in the past cannot be accepted for reasons that assessee failed to establish against which professional charges were incurred and that assessee failed to establish the nexus. We have noted that the assessee is engaged in construction activities. The services of Civil Engineer are integral part of civil project construction activities. The Assessing Officer has not made any investigation about the genuineness of payment and services rendered by the Civil Engineer. The Assessing Officer simply disallowed the charges paid to Civil Engineer by taking view that project is yet to start. Similarly, the ld. CIT(A) the action of Assessing Officer holding that assessee failed to establish the nexus between the expenses and corresponding income without disputing the fact that services of Civil Engineer are integral part of civil construction activities. Considering the fact that professional charges paid to Civil Engineer are disallowed without bringing any adverse evidence on record and business of assessee is not in dispute, we direct the Assessing officer to delete the addition. In the result, this ground of appeal is allowed.
26. In the result, appeal of the assessee is partly allowed. ITA No. 5854/Mum/2015 for A.Y. 2011-12 by revenue
27. Ground No.1 relates to one time membership fees. We have noted that this ground of appeal is identical to the ground no.1 in appeal for A.Y. 2010-11 by revenue, wherein we have directed the Assessing Officer to the decision 17 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. in assessee's own case for A.Y. 2006-07 to 2008-09 in ITA No. 2146 & 2148/Mum/2009 and ITA No. 2283/Mum/2011. Thus, the Assessing Officer is directed to follow the same direction.
28. Ground No.2 relates to disallowance under section 14A. This ground of appeal is similar to the ground no.2 in assessee's appeal for A.Y. 2010-11, wherein we have directed the Assessing Officer to make disallowance under Rule 8D(2)(iii) by following the decision of Special Bench of Delhi Tribunal in Vireet Investment (supra). Thus, the Assessing Officer is directed to follow our order on ground no.2 in assessee's appeal for A.Y. 2010-11. In the result, this ground of appeal is partly allowed.
29. In the result, appeal of revenue is partly allowed.
ITA No. 5034/Mum/2016 by assessee for A.Y. 2012-13 ITA No. 1400/Mum/2017 by assessee for A.Y. 2013-14 ITA No. 7521/Mum/2019 by assessee for A.Y. 2014-15 ITA No. 7522/Mum/2019 by assessee for A.Y. 2015-16
30. In all aforesaid appeals except for A.Y. 2012-13, the assessee has raised two set of grounds of appeal. First set of grounds of appeal relates to one time membership fees and second set of grounds relates to disallowance under section 14A. In A.Y. 2012-13, all grounds of appeal relates to one time membership fees.
31. First set of grounds of appeal relates to one time membership fees. We have noted that this ground of appeal is identical to the ground no. 1 in revenue's 18 ITA No. 2082 Mum 2015 & Ors - Apurva Natvar Parikh & Co. Pvt. Ltd. appeal, wherein we have followed the decision of Tribunal for A.Y. 2006- 07 to 2008-09, therefore, our order will apply mutatis mutandi.
32. Second set of grounds relates to disallowance under section 14A. The ld. AR of the assessee submits that he is not pressing the issue on disallowance under section 14A. Considering the submission of ld. AR of the assessee, the ground relates with the disallowance under section 14A in appeal for A.Y. 2012-13 to 2015-16 are dismissed.
33. In the result, appeals of assessee for A.Y. 2012-13 to 2015-16 are partly allowed.
Order pronounced in the open court on 25/02/2020.
Sd/- Sd/-
R.C. SHARMA PAWAN SINGH
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Date: 25.02.2020
SK
Copy of the Order forwarded to :
1. Assessee
2. Respondent
3. The concerned CIT(A)
4. The concerned CIT
5. DR "A" Bench, ITAT, Mumbai
6. Guard File
BY ORDER,
Dy./Asst. Registrar
ITAT, Mumbai
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