Income Tax Appellate Tribunal - Mumbai
Valia Impex P.Ltd., Mumbai vs Department Of Income Tax on 1 May, 2008
IN THE INCOME TAX APPELLATE TRIBUNAL,
MUMBAI BENCH 'F', MUMBAI
Before Shri T.R. Sood, AM and Smt. Asha Vijayaraghavan, JM
I.T.A.No.4812/Mum/2008
Assessment Year :2005-06
Asst. Commissioner of Income-tax, M/s. Valia Impex Pvt. Ltd.,
nd
Range 8(3), Aayakar Bhavan, 2 104/105, 'A' Wing, Kilash Tower,
floor, R.No.204, M.K. Road, Vs. Western Express Road, Andheri (E),
Mumbai 400 020. Mumbai 400 069
PAN : AAACV 1301 L
(Appellant) (Respondent)
I.T.A.No.4213/Mum/2008
Assessment Year :2005-06
M/s. Valia Impex Pvt. Ltd., Asst. Commissioner of Income-tax,
104/105, 'A' Wing, Kilash Tower, Range 8(3), Aayakar Bhavan, 2nd
Western Express Road, Andheri (E), Vs. floor, R.No.204, M.K. Road,
Mumbai 400 069 Mumbai 400 020.
PAN : AAACV 1301 L
(Appellant) (Respondent)
Assessee by : Shri Hiro Rai
Department by : Shri Virendra Ojha
ORDER
PER T.R. SOOD, AM:
These cross appeals by the revenue and the assessee are directed against the order dated 01.05.2008 of the learned Commissioner of Income-tax (Appeals)- XXIX, Mumbai and pertain to the assessment year 2005-06. ITA No.4812/M/08 (Revenue's appeal)
2. In this appeal the revenue has raised the following ground:
"On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting the disallowance of Rs.8,99,539/- paid as retainership fees for which no services were rendered as held by the A.O."
3. At the outset the learned counsel for the assessee submitted that this issue came up before the Tribunal in the assessment years 20033-04 and 2004-05 and the matter was ultimately set aside to the file of the Assessing Officer in ITA 2 ITA Nos.4812 & 4213/M/08 M/s.Valia Impex Pvt.Ltd..
No. 2294 and 7028/Mum/2007 as amended by M.A.No. 770/Mum2009 dated 8th February, 2010.
4. On other hand, the learned Departmental Representative had no objection if the same orders are followed.
5. After considering the rival submissions, we find that originally the issue was set aside to the file of the Assessing Officer vide paras 12 and 13 of the order which read as under:
"A. regarding the genuineness of the transactions, relevant facts are that the payments are incurred by way of cheques and the payees confirmed the transactions. There are no information in the file that the AO examined the bank accounts o the payees to make out that the amounts are finally withdrawn in cash. B. Regarding the issue of business purposes of the expenditure, it is an established fact that the onus is on the assessee to demonstrate with evidence that the claim is allowable u/s.37 of the Act. C. regarding the issue of nature of services rendered by the payees, this is relevant to those payees, who introduced the third parties, group concerns and satellite concerns and not those who made purchases directly from the RIL/IPCL. This is matter of evidence for proving that the services are rendered and onus is entirely on the assessee to discharge to the satisfaction of the AO. In this regard, the assessee need to demonstrate that the parties at Sl.1 to 3 fully and 4 to 8 party (of the table) rendered services for entitled to the retainership charges.
The CIT(A) while calling for a remand report from the AO on the additional evidence in the form of confirmation from the receipts of the payment from the assessee has not directed the AO to examine them. Unless the AO examine these persons, he will not be in a position to come to any conclusion regarding genuineness of the transaction, business purpose of the expenditure and the nature of the services rendered. We are of the view that the matter should be remanded to the files of the AO for fresh examination of the issue. Accordingly, the matter is set aside. The AO is directed to examine the receipt of the commission and establish the case regarding genuineness transactions, business purpose of the payment and nature of services. Accordingly, ground of the revenue in both the AYs is set aside."
6. Further, the directions were amended in the Miscellaneous Application No. 770/Mum/2009 vide para 7 which reads as under:
"We have considered the contentions on behalf of the assessee. We are of the view that directions contained in para 13 of the order of the Tribunal i9n so far as it called upon the Assessing Officer to examine the returns of services rendered with regard to category (a) & (b) of persons to whom retainership fee was paid by the assessee 3 ITA Nos.4812 & 4213/M/08 M/s.Valia Impex Pvt.Ltd..
is erroneous. Aforesaid direction will be valid only with regard to payment of retainership fees to third party concerned categorizes in category (c) above. To this extent, directions contained in para 13 of the Tribunal shall be deemed to have been modified. The other directions of the Tribunal will remain the same."
7. Following the aforesaid directions of the Tribunal, we set aside the order of the learned CIT(A) and remit the issue back to the file of the Assessing Officer with identical directions contained in above paras of the Tribunal order in the case of appeals as well as the Miscellaneous Application.
8. In the result, the appeal is allowed for statistical purposes. ITA No. 4213/Mum/08 (Assessee's appeal)
9. In this appeal, the assessee has raised the following ground:
"The learned CIT(A) has erred in rejecting the ground No.1 of the appeal filed against the order u/s.154 passed by ACIT-8(3) i.e. "The learned ACIT has erred in making disallowance of retainership fees amounting to Rs.36,14,579/- (in order u/s.1453(3) dated 31.10.2007 retainership charges inadvertently taken at Rs.8,99,539/- against which appeal has been filed simultaneously) on the ground that expenditure incurred are not for business purpose" without appreciating the fact that in original order disallowance was of Rs.8,99,539/- and the same was appealed against by the assessee and hence this appeal is also against the additional quantum of disallowance of Rs. 27,15,040/- only and not against the validity of proceedings u/s.154 of the Income Tax Act."
10. After hearing both the parties, we found that originally the Assessing Officer had made disallowance of Rs. 8,99,539/- on account of retainership fees, which was later on increased to Rs. 36,14,579/- by passing order under section 154 of the Act. Since the issue has been set aside to the file of the Assessing Officer while adjudicating the revenue's appeal. Since in the assessee's appeal the issue is same only the amount of disallowance has been enhanced u/s.154. Therefore, the same is also set aside and remit back the matter back to the file of the Assessing Officer with identical directions as given in the revenue's appeal. 4 ITA Nos.4812 & 4213/M/08
M/s.Valia Impex Pvt.Ltd..
11. In the result, the appeal is allowed for statistical purposes.
Order pronounced on this 17th day of March 2010.
Sd. Sd.
(Asha Vijayaraghavan) (T. R. Sood)
Judicial Member Accountant Member
Mumbai dated the 17th March, 2010.
kn
Copy to:
1.
2. The Assessee
3. The Revenue
4. The CIT-VIII, Mumbai.
5. The CIT(A)-XXIX, Mumbai
6. The DR 'F' Bench, Mumbai
By order
/True copy/
Asst. Registrar, ITAT, Mumbai
5 ITA Nos.4812 & 4213/M/08
M/s.Valia Impex Pvt.Ltd..