WALCHAND NETSOFT P. LTD ( FORMERLY WALCHAND CRICKET NEXT. COM P. LTD), MUMBAI v. ITO WD 2(3)-1, MUMBAI

ITA 1631/MUM/2009 | 2004-2005
Pronouncement Date: 30-04-2010 | Result: Dismissed

Appeal Details

RSA Number 163119914 RSA 2009
Assessee PAN AAACW2997H
Bench Mumbai
Appeal Number ITA 1631/MUM/2009
Duration Of Justice 1 year(s) 1 month(s) 18 day(s)
Appellant WALCHAND NETSOFT P. LTD ( FORMERLY WALCHAND CRICKET NEXT. COM P. LTD), MUMBAI
Respondent ITO WD 2(3)-1, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 30-04-2010
Date Of Final Hearing 21-04-2010
Next Hearing Date 21-04-2010
Assessment Year 2004-2005
Appeal Filed On 12-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI R.S. SYAL (AM) & SHRI VIJAY PAL RAO I.T.A.NO. 1631/MUM/2009 (A.Y. 2004-05)) M/S.WALCHAND NETSOFT P.LTD. (FORMERLY WALCHAND CRICKETNEXT.COM PVT.LTD.) CONSTRUCTION HOUSE 5 WALCHAND HIRACHAND MARG BALLARD ESTATE MUMBAI-400 001. PAN: AAACW2997H VS. INCOME-TAX OFFICER WARD 2(3)-1 AAYKAR BHAVAN M.K.ROAD CHURCHGATE MUMBAI-400 020. APPELLANT RESPONDENT I.T.A.NO. 1647/MUM/2009 (A.Y. 2004-05) ITO WARD 2(3)-1 AAYAKAR BHAWAN MUMBAI -20. VS. M/S WALCHAND NETSOFT P. LTD. BALLARD ESTATE MUMBAI -1 PAN: AAACW2997H. APPELLANT RESPONDENT ASSESSEE BY SHRI SHRIRAM BAJAJ. DEPARTMENT BY SHRI D . SONGATE. O R D E R PER R.S. SYAL AM : THESE CROSS APPEALS ONE BY THE ASSESSEE AND THE O THER BY THE REVENUE ARISE OUT OF THE ORDER PASSED BY THE CIT(A) ON 15- 12-2008 IN RELATION TO THE ASSTT. YEAR 2004-05. 2. THE FIRST GROUND OF ASSESSEES APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.10 LAKHS BEING THE AMOUNT PAID TOWARDS ADMINISTRATIVE AND MANAGEMENT SERVICES RENDERED BY M/S. WALCHAND CAPIT AL LTD. 3. BRIEFLY STATED THE FACTS OF THIS GROUND ARE THA T THE ASSESSEE DEBITED THE ABOVESAID SUM ON ACCOUNT OF ADMINISTRATIVE AND MANA GEMENT EXPENSES. ON BEING CALLED UPON TO FURNISH DETAILS AND COPY OF AG REEMENT IN CONNECTION WITH THE PAYMENT OF SUCH FEES TO M/S.WALCHAND CAPITAL LTD. THE ASSESSEE FURNISHED REPLY WHICH HAS BEEN REPRODUCED ON PAGE 2 OF THE ASSESSME NT ORDER. IN THE ABSENCE OF ITA 1631-1647/M/09 WALCHAND NETSOFT P.LTD. 2 ASSESSEE SUBMITTING ANY COPY OF AGREEMENT WITH M/S. WALCHAND CAPITAL LTD. TOWARDS PAYMENT OF THESE EXPENSES THE AO DISALLOWE D THIS SUM. THE LD. CIT(A) RELYING ON HIS ORDER PASSED IN ASST. YEAR 2002-03 UPHELD THE DISALLOWANCE. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS NOTED THAT THE CASE OF THE ASSESSE E FOR THE ASSTT. YEAR 2002-03 CAME UP FOR ADJUDICATION BEFORE THE TRIBUNAL IN ITA NO.4592/MUM/06. COPY OF THE SAID ORDER DATED 23-09-2009 IS AVAILABLE ON REC ORD AND THE RELEVANT DISCUSSION ON SUCH ISSUE IS MADE IN PARAS 16 TO 19 OF THE ORDER. IN THE SAID EARLIER YEAR THE TRIBUNAL REMITTED THE MATTER TO THE FILE OF AO WITH A DIRECTION TO GIVE AN OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO HIS SATISFACTION THAT THE EXPENSES WERE INCURRED FOR SE RVICES RECEIVED BY THE ASSESSEE COMPANY. IN THE ABSENCE OF ANY CHANGE IN T HE FACTUAL POSITION IN RELATION TO THE FACTS OF THE INSTANT YEAR VIS--VIS THOSE OF ASSTT. YEAR 2002-03 DECIDED BY THE TRIBUNAL WE SET ASIDE THE IMPUGNED ORDER AND SEND THE MATTER BACK TO THE FILE OF AO FOR DECIDING THIS ISSUE AFRE SH IN ACCORDANCE WITH THE DIRECTIONS GIVEN BY THE TRIBUNAL IN EARLIER YEAR. 5. GROUND NO. 2 IS AGAINST THE SUSTENANCE OF PARTIA L DISALLOWANCE OF RS.20 350/- OUT OF TOTAL DISALLOWANCE OF RS.40 705/ - MADE BY THE AO OUT OF TELEPHONE EXPENSES ON ACCOUNT OF PERSONAL USE. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE INCURRED TELEPHONE EXPENSES O F RS.2 03 525/- IN RESPECT OF EIGHT EMPLOYEES AS TABULATED ON PAGE 6 OF THE ASSE SSMENT ORDER. THE AO MADE ADDITION @ 20% ON ACCOUNT OF PERSONAL ELEMENT INVOL VED. THE LD. CIT(A) REDUCED THE ADDITION TO RS.20 350/-. ITA 1631-1647/M/09 WALCHAND NETSOFT P.LTD. 3 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ASSESSEE BEFORE US IS A PRIVATE LIMITED COMPANY. NO DISALLOWANCE CAN BE MADE IN THE CASE OF A COMPANY B Y CONSIDERING THE PERSONAL USE OF FACILITIES OR VEHICLES ETC. THE DELHI BENC H OF THE TRIBUNAL IN DCIT V. HARYANA OXYGEN LTD. (2001) 76 ITD (DEL.) 32 (TO WHI CH ONE OF US NAMELY THE AM IS A PARTY) HAS HELD THAT THERE CANNOT BE ANY D ISALLOWANCE ON ACCOUNT OF PERSONAL USER BY THE DIRECTOR OR EMPLOYEES. SIMILAR VIEW HAS BEEN TAKEN IN SEVERAL JUDGMENTS/ORDERS. FOLLOWING THE PRECEDENTS WE ORDER FOR THE DELETION OF THIS ADDITION. THIS GROUND IS ALLOWED. 7. GROUND NO. 1 OF REVENUES APPEAL IS AGAINST THE DELETION OF DISALLOWANCE OF RS.2 12 461/- ON ACCOUNT OF INLAND TRAVELING EXPENS ES. THE ASSESSEE DEBITED A SUM OF RS.10 62 303/- ON ACCOUNT OF INLAND TRAVELIN G EXPENSES. THE ASSESSEE WAS CALLED UPON TO FURNISH DETAILS OF TRAVELING EXP ENSES. THE REPLY OF THE ASSESSEE HAS BEEN REPRODUCED IN THE ASSESSMENT ORDE R AS PER WHICH THE EMPLOYEES TRAVELLED TO PLACES LIKE DELHI BANGALORE CALCUTTA FOR BUSINESS PURPOSES. THE AO MADE DISALLOWANCE @ 20% OF THE EXP ENSES WHICH CAME TO BE DELETED IN THE FIRST APPEAL. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ASSESSEE FILED THE DETA ILS IN RESPECT OF TRAVELING EXPENSES INCURRED BY THE EMPLOYEES ALONG WITH THE P URPOSE FOR WHICH THE BUSINESS TOURS WERE CONDUCTED. IN THE ABSENCE OF AN Y SPECIFIC INSTANCE CITED BY THE AO ABOUT THE NON-GENUINENESS OF THE EXPENDITUR E OR NON-BUSINESS PURPOSE ITA 1631-1647/M/09 WALCHAND NETSOFT P.LTD. 4 WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT(A ) WAS JUSTIFIED IN DELETING THIS ADDITION. THIS GROUND IS NOT ALLOWED. 9. THE ONLY OTHER ISSUE IS AGAINST THE DELETION OF ADDITION OF RS.8 90 746/-. THE AO OBSERVED FROM THE TDS CERTIFICATES THAT THE TOTAL RECEIPTS WERE TO THE TUNE OF RS.44 84 076/-. AS AGAINST THAT THE ASSESS EE CREDITED ONLY A SUM OF RS.35 29 922/- IN ITS P & L ACCOUNT. ON BEING CALLE D UPON TO EXPLAIN THE DIFFERENCE OF RS.8 90 746/- THE ASSESSEE SUBMITTED RECONCILIATION. THE AO MADE THE ADDITION FOR THE DIFFERENTIAL AMOUNT OF RS.8.90 LAKHS. THE LD. CIT(A) HOWEVER DELETED THE ADDITION. 10. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ASSESSEE SUBMITTED COMPLET E DETAILS OF RECONCILIATION BEFORE THE AO WHICH HAVE BEEN BRUSHED ASIDE WITHOUT GIVING ANY REASON. COPY OF THE RECONCILIATION AS MADE AVAILABLE TO THE AUTHORI TIES BELOW HAS BEEN PLACED ON PAGES 10 TO 13 OF THE PAPER BOOK. FROM SUCH DETAILS IT IS NOTICED THAT THE ASSESSEE DID NOT RECOGNIZE INCOME IN THIS YEAR FOR A SUM OF RS.7 64 445/- WHICH WAS ACTUALLY PASSED OVER TO THE OTHER PARTIES. SI MILARLY A SUM OF RS.30 750/- WAS INCOME OFFERED FOR TAXATION IN THE EARLIER YEAR AND THE REMAINING SUM OF RS.1 02 721/- WAS THE AMOUNT OF SERVICE TAX INCLUDE D IN THE AMOUNT SHOWN IN THE TDS CERTIFICATES. FROM HERE IT BECOMES APPARENT T HAT THE ASSESSEE HAD RIGHTLY CREDITED A SUM OF RS.32.85 LAKHS AS ITS INCOME FOR THE INSTANT YEAR. NO INFIRMITY WAS POINTED OUT BY THE LD. D.R. IN THE SAID RECONCI LIATION. WE THEREFORE APPROVE THE VIEW TAKEN BY THE LD. CIT(A). ITA 1631-1647/M/09 WALCHAND NETSOFT P.LTD. 5 11. IN THE RESULT THE APPEAL OF THE REVENUE IS DIS MISSED AND THAT OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 30TH DAY OF APRIL 2010 . SD/- SD/- (VIJAY PAL RAO) (R.S. SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER * MUMBAI: 30TH APRIL 2010. NG: COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A)XXX MUMBAI. 4 CIT-2 MUMBAI. 5.DR G BENCH MUMBAI. 6.GUARD FILE. (TRUE COPY) BY ORDER ASST.REGISTRAR ITAT MUMBAI. ITA 1631-1647/M/09 WALCHAND NETSOFT P.LTD. 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 21-4-2010 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 22-4-2010 SR.PS/ 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER