Bajaj Consumer Care Limited (Now Known as Bajaj Resources Limited), Hyderabad v. DCIT., Circle-1(3), Hyderabad, Hyderabad

ITA 114/HYD/2015 | 2010-2011
Pronouncement Date: 29-04-2015 | Result: Dismissed

Appeal Details

RSA Number 11422514 RSA 2015
Assessee PAN AAACD8001D
Bench Hyderabad
Appeal Number ITA 114/HYD/2015
Duration Of Justice 2 month(s) 26 day(s)
Appellant Bajaj Consumer Care Limited (Now Known as Bajaj Resources Limited), Hyderabad
Respondent DCIT., Circle-1(3), Hyderabad, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-04-2015
Assessment Year 2010-2011
Appeal Filed On 02-02-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI G.C. GUPTA VICE PRESIDENT AND SHRI P.M. JAGTAP ACCOUNTANT MEMBER ITA.NO.114/HYD/2015 ASSESSMENT YEAR 2010-2011 M/S. BAJAJ CONSUMER CARE LTD. (NOW KNOWN AS BAJAJ RESOURCES LTD. ) HYDERABAD 500 059. PAN AAACD8001D VS. DCIT CIRCLE 1 (3) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : MR. SANDEEP JHANWAR FOR REVENUE : MR. D. SUDHAKAR RAO DATE OF HEARING : 27.04.2015 DATE OF PRONOUNCEMENT : 29.04.2015 ORDER PER P.M. JAGTAP A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT-I HYDERABAD DATED 26. 12.2004 PASSED UNDER SECTION 263 OF THE I.T. ACT 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WHICH CARRIES ON THE BUSINESS OF MANUFACTURING AND TRADING OF AYURVEDIC MEDICINES AND COSMETIC PRODUCTS. THE RETU RN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y IT ON 12.12.2010 DECLARING A LOSS OF RS.4 03 64 563. IN T HE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE ORDE R DATED 31.03.2013 THE TOTAL INCOME OF THE ASSESSEE WAS COM PUTED BY THE A.O. AT RS.98 58 30 971 AFTER MAKING VARIOUS AD DITIONS/ DISALLOWANCES. THE RECORD OF THE SAID ASSESSMENT CA ME TO BE EXAMINED BY THE LD. CIT AND ON SUCH EXAMINATION HE FOUND THAT THE TRAVELLING AND CONVEYANCE EXPENSES OF RS.4 8 76 531 2 ITA.NO.114/HYD/2015 M/S. BAJAJ CONSUMER CARE LTD. HYDERABAD CLAIMED BY THE ASSESSEE UNDER THE HEAD SELLING AND DISTRIBUTION OVERHEADS WERE WRONGLY ALLOWED BY THE A.O. DESPITE THE FACT THAT THERE WAS NO INCOME OFFERED B Y THE ASSESSEE ON ACCOUNT OF ANY SALES AND THE ONLY INCOM E OFFERED WAS UNDER THE HEAD ROYALTY INCOME. THE LD. CIT NO TED THAT THE OPERATIONS OF THE ASSESSEE COMPANY HAD STOPPED DURING THE YEAR UNDER CONSIDERATION AND THERE BEING NO INC OME FROM SALES THE A.O. OUGHT TO HAVE DISALLOWED THE EXPEND ITURE CLAIMED BY THE ASSESSEE ON ACCOUNT OF TRAVELLING AN D CONVEYANCE. ACCORDINGLY A NOTICE UNDER SECTION 263 WAS ISSUED BY THE LD. CIT REQUIRING THE ASSESSEE TO SHO W CAUSE AS TO WHY THE ASSESSMENT ORDER PASSED BY THE A.O. UNDE R SECTION 143(3) SHOULD NOT BE REVISED TREATING THE SAME AS E RRONEOUS AS WELL AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE . IN REPLY WRITTEN SUBMISSIONS WERE FILED BY THE ASSESSEE THE GIST OF WHICH AS GIVEN BY THE LD. CIT IN PARAGRAPH NO.4 OF HIS ORDER WAS AS UNDER : 4. IN THE WRITTEN SUBMISSIONS IT IS STATED THAT I T IS INCORRECT TO STATE THAT TRAVELLING EXPENSES OUGHT T O HAVE BEEN DISALLOWED FOR THE REASON THAT THE ASSESSEE DI D NOT HAVE ANY SALES DURING THE YEAR. IT IS ALSO SUBMITTE D THAT MORE SALES OF PRODUCTS OF THE BRANDS OWNED BY THE COMPANY RESULTS INTO ACCRUAL OF MORE INCOME BY WAY OF ROYALTY. THE TRAVELLING EXPENDITURE IS INCURRED TO PROMOTE THE BRANDS OF THE COMPANY AND ALSO TO EXPLORE THE N EW MARKETS WHICH IN TURN WOULD RESULT IN MORE SALES OF THE PRODUCTS OF THE COMPANYS BRAND AND CONSEQUENTLY MO RE ROYALTY INCOME. ACCORDINGLY THE EXPENDITURE HAS BE EN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE WHICH IS ALLOWABLE UNDER S ECTION 37(1) OF THE INCOME TAX ACT 1961. THE AUTHORISED REPRESENTATIVE STATED THAT THE A.O. ALLOWED THE EXPENDITURE CLAIMED UNDER THE HEAD TRAVELLING AND CONVEYANCE AFTER THE VERIFICATION OF THE BOOKS OF ACCOUNTS AND VOUCHERS AND REQUESTED TO DROP THE PROCEEDINGS. 3 ITA.NO.114/HYD/2015 M/S. BAJAJ CONSUMER CARE LTD. HYDERABAD 3. THE LD. CIT DID NOT FIND MERIT IN THE ABOVE SUBMISSIONS MADE BY THE ASSESSEE. ACCORDING TO HIM THE ASSESSEE COMPANY HAVING RECEIVED ONLY ROYALTY INCOM E ON THE SALES MADE BY LICENSEE OF ASSESSEES BRAND OF PRODU CTS THE TRAVELLING AND CONVEYANCE EXPENDITURE COULD NOT BE SAID TO HAVE BEEN INCURRED FOR THE PURPOSE OF ITS BUSINESS. HE HELD THAT THE CLAIM OF THE ASSESSEE FOR TRAVELLING AND C ONVEYANCE EXPENDITURE HOWEVER WAS ALLOWED BY THE A.O. WITHOUT CALLING FOR THE RELEVANT DETAILS AND WITHOUT EXAMINING THE CORRECTNESS OF THE SAID CLAIM. ACCORDINGLY THE ASSESSMENT ORDE R PASSED BY THE A.O. UNDER SECTION 143(3) ON THIS ISSUE WAS CON SIDERED ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE BY THE LD. CIT BY EXERCISING THE POWERS VESTED WITH HIM UN DER SECTION 263 AND SETTING ASIDE THE SAME HE DIRECTED THE A.O . TO RE- FRAME IT ON THE ISSUE AFTER MAKING PROPER AND SUFFI CIENT ENQUIRIES. AGGRIEVED BY THE ORDER OF THE LD. CIT PA SSED UNDER SECTION 263 THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. T HE FIRST CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESS EE IS THAT THE LD. CIT IN HIS IMPUGNED ORDER PASSED UNDER SECT ION 263 HAS NOT GIVEN A DEFINITE FINDING THAT THE ORDER PAS SED BY THE A.O. UNDER SECTION 143(3) IS ERRONEOUS AS WELL AS P REJUDICIAL TO THE INTEREST OF THE REVENUE. HE HAS CONTENDED THAT IN THE ABSENCE OF SUCH FINDING THE IMPUGNED ORDER PASSED BY THE LD. CIT UNDER SECTION 263 IS NOT SUSTAINABLE AS HELD BY THE HONBLE UTTARAKHAND HIGH COURT IN THE CASE OF CIT V S. MCDERMOTT INTERNATIONAL INC. (2008) 302 ITR 268. FR OM THE PERUSAL OF THE IMPUGNED ORDER OF THE LD. CIT WE HO WEVER FIND 4 ITA.NO.114/HYD/2015 M/S. BAJAJ CONSUMER CARE LTD. HYDERABAD THAT THERE IS A SPECIFIC FINDING GIVEN BY THE LD. C IT IN PARAGRAPH NO.6 HOLDING THAT THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3) IS CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE CONTENT ION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE ON THIS POINT RELY ING ON THE DECISION OF HONBLE UTTARAKHAND HIGH COURT IN THE C ASE OF CIT VS. MCDERMOTT INTERNATIONAL INC. (SUPRA) THUS IS D EVOID OF MERIT AND WE REJECT THE SAME. 5. THE SECOND CONTENTION RAISED BY THE LD. COUNSEL FOR THE ASSESSEE IS THAT THE ERROR IN THE ORDER PAS SED BY THE A.O. UNDER SECTION 143(3) AS POINTED OUT BY THE LD. CIT IN THE NOTICE ISSUED UNDER SECTION 263 IS DIFFERENT FROM T HE ERROR ON WHICH FINALLY THE ORDER PASSED BY THE A.O. UNDER SE CTION 143(3) HAS BEEN REVISED BY THE LD. CIT. HE HAS SUBMITTED THAT THE ORDER OF THE A.O. UNDER SECTION 143(3) WAS HELD TO BE ERRONEOUS BY THE LD. CIT IN THE NOTICE ISSUED UNDER SECTION 263 ON THE GROUND THAT THE EXPENSES CLAIMED BY THE ASSESSEE ON TRAVELLING AND CONVEYANCE WERE WRONGLY ALLOWED B Y HIM WHEREAS THE ORDER PASSED BY THE A.O. IS FINALLY REV ISED BY HIM BY HIS IMPUGNED ORDER PASSED UNDER SECTION 263 ON T HE GROUND THAT THE CLAIM OF THE ASSESSEE FOR TRAVELLIN G AND CONVEYANCE EXPENSES WAS ALLOWED BY HIM WITHOUT MAKI NG PROPER AND ADEQUATE ENQUIRIES. RELYING ON THE DECIS ION OF DELHI BENCH OF ITAT IN THE CASE OF B.S. SANGWAN VS. ITO WARD-2 SONIPAT (2015) 67 SOT 447 (DEL.) HE HAS CO NTENDED THAT THE ORDER PASSED BY THE A.O. UNDER SECTION 143 (3) IS NOT SUSTAINABLE AS THE ASSESSEE WAS NOT PUT TO NOTICE O N THE GROUND ON WHICH THE ORDER PASSED BY THE A.O. UNDER SECTION 143(3) WAS FINALLY HELD TO BE ERRONEOUS THEREBY G IVING NO OPPORTUNITY TO THE ASSESSEE TO OFFER ITS EXPLANATIO N. AFTER GOING 5 ITA.NO.114/HYD/2015 M/S. BAJAJ CONSUMER CARE LTD. HYDERABAD THROUGH THE RELEVANT RECORD AVAILABLE BEFORE US WE FIND IT DIFFICULT TO ACCEPT THIS CONTENTION OF THE LD. COUN SEL FOR THE ASSESSEE. IT IS OBSERVED THAT THE FACTS INVOLVED IN THE CASE OF B.S. SANGWAN (SUPRA) CITED BY THE LD. COUNSEL FOR T HE ASSESSEE ARE ENTIRELY DIFFERENT INASMUCH AS ERRORS IN THE OR DER OF THE A.O. ON FIVE DIFFERENT ISSUES WERE POINTED OUT BY T HE LD. CIT IN THE NOTICE ISSUED UNDER SECTION 263 AND WHEN THE AS SESSEE OFFERED HIS EXPLANATION ON THESE ISSUES THE LD. CI T SET ASIDE THE ORDER PASSED BY THE A.O. FOR LACK OF PROPER ENQ UIRIES AND DIRECTED HIM TO MAKE THE ASSESSMENT AFRESH AFTER CO NSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE ON DIFFERENT I SSUES. 6. IN THE PRESENT CASE ONLY ONE ISSUE WAS RAISED BY THE LD. CIT IN THE NOTICE ISSUED UNDER SECTION 263 RELATING TO ALLOWABILITY OF ASSESSEES CLAIM BY THE A.O. WRONGL Y ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES AND ALTHOUGH THE COPY OF NOTICE ISSUED BY THE LD. CIT UNDER SECTION 263 I S NOT PLACED ON RECORD BEFORE US THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE IN RESPONSE TO THE SAID NOTICE THE GIST O F WHICH IS GIVEN BY THE LD. CIT IN PARAGRAPH NO.4 OF HIS ORDER CLEARLY SHOW THAT IT WAS STATED ON BEHALF OF THE ASSESSEE B EFORE THE LD. CIT DURING THE COURSE OF PROCEEDINGS UNDER SECTION 263 THAT THE EXPENDITURE CLAIMED BY IT UNDER THE HEAD TRAVE LLING AND CONVEYANCE WAS ALLOWED BY THE A.O. AFTER VERIFICA TION OF THE BOOKS OF ACCOUNTS AND VOUCHERS. IT THEREFORE CANN OT BE SAID THAT THE ORDER PASSED BY THE A.O. UNDER SECTION 143 (3) WAS REVISED BY THE LD. CIT VIDE HIS IMPUGNED ORDER UNDE R SECTION 263 ON THE GROUND WHICH IS DIFFERENT FROM THE ONE G IVEN IN THE NOTICE ISSUED UNDER SECTION 263 AND THE ASSESSEE TH EREFORE HAD NO OPPORTUNITY TO OFFER ITS EXPLANATION. AS A M ATTER OF FACT IT WAS CONTENDED ON BEHALF OF THE ASSESSEE BEFORE T HE LD. CIT 6 ITA.NO.114/HYD/2015 M/S. BAJAJ CONSUMER CARE LTD. HYDERABAD THAT ITS CLAIM FOR TRAVELLING AND CONVEYANCE EXPENS ES WAS ALLOWED BY THE A.O. AFTER THE VERIFICATION OF BOOKS OF ACCOUNTS AND VOUCHERS AND THE SAME WAS SPECIFICALLY REJECTED BY THE LD. CIT AFTER HAVING FOUND THE SAME TO BE NOT ACCEPTABL E ON EXAMINATION OF THE RELEVANT RECORD. WE THEREFORE F IND NO MERIT IN THE PRESENT APPEAL FILED BY THE ASSESSEE AND UPH OLDING THE IMPUGNED ORDER OF THE LD. CIT PASSED UNDER SECTION 263 WE DISMISS THE SAME. 7. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 29.04.2 015. SD/- SD/- (G.C. GUPTA) (P.M. JAGTAP) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD DATED 29 TH APRIL 2015 VBP/- COPY TO 1. M/S. BAJAJ CONSUMER CARE LTD. (NOW KNOWN AS BAJAJ RESOURCES LTD. ) C/O. M/S. O.P. BANG & CO. CHARTER ED ACCOUNTANTS 102 1 ST FLOOR LAXMI ARCADE VITTALWADI X ROAD NARAYANGUDA HYDERABAD 500 029. 2. DCIT CIRCLE 1(3) HYDERABAD. 3. COMMISSIONER OF INCOME TAX-1 3 RD FLOOR ANNEXE AAYAKAR BHAVAN BASHEERBAGH HYDERABAD 500 054. 4. ADDL. COMMISSIONER OF INCOME TAX RANGE-1 HYDER ABAD. 5. D.R. ITAT B BENCH HYDERABAD. 6. GUARD FILE.