Indian Kanoon - Search engine for Indian Law

Income Tax Appellate Tribunal - Mumbai

Jsm Corporation P. Ltd, Mumbai vs Asst Cit 6(3), Mumbai on 10 October, 2018

ITA No.3236/Mum/2015 JSM Corporation Pvt.Ltd.

Assessment Year-2010-11 आयकर अपीलीय अिधकरण "बी"

ायपीठ मुं बई म ।

IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, MUMBAI ी श जीत दे , ाियक सद एवं ी मनोज कुमार अ वाल, लेखा सद के सम ।

BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./I.T.A. No.3236/Mum/2015 (िनधा रण वष / Assessment Year: 2010-11) JSM Corporation Private Limited Assistant Commissioner of Todi Estate, 'A' Wing Income Tax-6(3) बनाम/ 3rd Floor, Sunmill Compound Mumbai Sitaram Jadhav Marg Vs. Lower Parel, Mumbai-400 013 थायीले खासं . /जीआइआरसं ./PAN/GIR No. AABCJ-4903-B (अ पीलाथ#/Appellant) : ($%थ# / Respondent) Assessee by : None Revenue by : Chaudhary Arun Kumar Singh, Ld. DR सुनवाई की तारीख/ : 01/10/2018 Date of Hearing घोषणा की तारीख / : 10/10/2018 Date of Pronouncement आदे श / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)

1. Aforesaid appeal by assessee for Assessment Year [AY] 2010-11 contest the order of Ld. Commissioner of Income-Tax (Appeals)-15, Mumbai, [CIT(A)], Appeal No.CIT(A)-15/IT-20/12-13 dated 10/03/2015 qua confirmation of disallowances of expenditure for Rs.192.30 Lacs.

JSM Corporation Pvt.Ltd.

Assessment Year-2010-11 The assessment for impugned AY was framed by Ld. Assistant Commissioner of Income Tax, Circle-6(3), Mumbai [AO] u/s 143(3) of the Income Tax Act, 1961 on 23/01/2013 wherein the income of the assessee has been determined at Rs.493.13 Lacs after certain disallowances as against returned income of Rs.300.83 Lacs e-filed by the assessee on 29/09/2010.

2. None has appeared for assessee and no valid adjournment application is on record despite service of notice. The perusal of order sheet entries reveals that the assessee has remained negligent in attending the hearing on several occasions. It also appears from the record that the name of the assessee has undergone a change from HR Café India P. Ltd. to JSM Corporation Private Limited. However, the change has neither been intimated nor any evidences in that respect have been filed before us. Left with no option, we proceed to dispose-off the same in terms of Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 on the basis of material available on record and after hearing Ld. Departmental Representative, Shri Arun Kumar Singh Chaudhary who has justified the stand of lower authorities in making impugned additions / disallowances.

3. The fact on record reveals that the assessee being resident corporate entity was engaged in the business of Restaurant & Hospitality Services during impugned AY. During assessment proceedings, upon perusal of financial statements, it was noted that the assessee incurred Unit Pre-operative Expenses amount to Rs.255.03 Lacs and wrote-off an amount of Rs.62.77 Lacs in the books of accounts and carried the balance amount in the books of accounts under the head Miscellaneous 3 ITA No.3236/Mum/2015 JSM Corporation Pvt.Ltd.

Assessment Year-2010-11 Expenditure as preliminary & pre-operative expenses. The details of the same have already been extracted in para-4.1 of the quantum assessment order. However, the assessee claimed the expenditure in full in its computation of income. The Ld. AO, treating the same as pre- operative expenditure, disallowed the same.

4. Aggrieved, the assessee agitated the same before Ld. CIT (A) vide impugned order dated 10/03/2015 wherein Ld. CIT(A), after due consideration of factual matrix, confirmed the stand of Ld. AO by observing as under:-

3.8 On these facts, I find that the appellant though have rightly considered all these expenses incurred for the process of set up of unit Hyderabad, New Delhi as pre-

operative expenses in their books of accounts, but wrongly claimed in toto in P& L A/c in A.Y.10-11, the subject matter of this appeal. Thus in this case following the practice of taking such pre-operative expenses by first capitalizing and then writing off proportion expenditure based on expected life of these benefits was rightly done in the books by appellant. Hence, now submission made by the appellant that the method followed by them is not sacrosanct, and the AO is not bound by that, is not supported by given facts and nature of expenses incurred in their case. The only obvious reason I can find for such a claim made by the appellant i.e. deviating from the method of already followed in the books of account while computing the income is that the appellant company have got amalgamated with effect from 1/4/2010 and now known as JSM Corporation Pvt.Ltd and under the scheme of merger, the pre- operative expenses incurred by pre-existing unit then, after amalgamation being not in existence any more after that year i.e. starting of A.Y. 2010-11, cannot be given effect to and thus will not be deductible. Hence the appellant have tried to debit such pre-operative expenses under the u/s 37 as business revenue expenses in this last year of business of pre-existing entity, which is incidentally first year of units at Hyderabad and Pune. As this is settled principle that when specific provisions are available in the statute for certain claims, same cannot be entertained under general provisions of the statute. In the case of the appellant where section 35D is in existence to deal with claim of expenses which are pre-operative expenses; in the manner provided, now the appellant cannot claim them in toto u/s 37 of the Act. Hence the action of the AO to disallow pre-operative expenses debited for an amount of Rs.1,92,30,263/- instead of debiting them as per provisions u/s 35D of the Act, being in order has to be upheld and hence disallowance made by A.O. are upheld. Ground No.1 taken by the appellant is dismissed.

Aggrieved, the assessee is in further appeal before us.

JSM Corporation Pvt.Ltd.

Assessment Year-2010-11

5. After due consideration, we find nothing on record which controvert the findings of both the lower authorities. The pre-operative expenditure could not be allowed to the assessee since it has been noted that the business was not set up by the assessee during impugned AY. Therefore, we find nothing perverse in the findings of lower authorities.

6. The appeal stand dismissed.

Order pronounced in the open court on 10th October, 2018.

           Sd/-                                              Sd/-
      (Saktijit Dey)                                (Manoj Kumar Aggarwal)
 ाियक सद  / Judicial Member                    लेखा सद  / Accountant Member

मुंबई Mumbai; िदनां क Dated :10.10.2018
Sr.PS:-Thirumalesh

आदे श की ितिलिप अ !े िषत / Copy of the Order forwarded to :

1. अपीलाथ#/ The Appellant

2. $%थ#/ The Respondent

3. आयकरआयु (अपील) / The CIT(A)

4. आयकरआयु / CIT- concerned

5. िवभागीय$ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR, ITAT, Mumbai

6. गाड/ फाईल / Guard File आदे शानुसार/ BY ORDER, उप/सहायकपंजीकार (Dy./Asstt.Registrar) आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai