RTG EXCHANGE LTD (FORMERLY KNOWN AS GADIYA GLOBAL FOREX LTD), MUMBAI v. ITO 9(1)(4), MUMBAI

ITA 2127/MUM/2010 | 2004-2005
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 212719914 RSA 2010
Assessee PAN AABCG0985A
Bench Mumbai
Appeal Number ITA 2127/MUM/2010
Duration Of Justice 10 month(s) 12 day(s)
Appellant RTG EXCHANGE LTD (FORMERLY KNOWN AS GADIYA GLOBAL FOREX LTD), MUMBAI
Respondent ITO 9(1)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 28-01-2011
Assessment Year 2004-2005
Appeal Filed On 17-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI J. SUDHAKAR REDDY A.M. AND SHRI V. DUR GA RAO J.M. ITA NO. 2127/M/2010 ASSESSMENT YEAR: 2004-05 M/S RTG EXCHANGE LTD. APPELLANT (FORMERLY KNOWN AS GADIYA GLOBAL FOREX LTD.) 3 CHAPEL HOUSE NEAR JEFF CATERERS OFF HILL ROAD BANDRA (W) MUMBAI 400 050 (PAN AABCG0985A) VS. INCOME TAX OFFICER 9(1)(4) RESPONDENT AAYAKAR BHAVAN MUMBAI. APPELLANT BY : MS. RENU CHOUDHARI RESPONDENT BY : MR. R.S. SRIVASTAVA ORDER PER V. DURGA RAO J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- 19 MUMBAI PASSED ON 14/12/2009 FOR THE AS SESSMENT YEAR 2004-05. 2. GROUND NO.1 RAISED IN THIS APPEAL IS IN RESPECT OF DISALLOWANCE OF EMPLOYMENT POLICY PREMIUM OF RS. 4 32 772/-. 3. BRIEFLY THE FACTS OF THE CASE ARE THAT THE AO HA D DISALLOWED THE PAYMENTS MADE IN THE NAME OF THREE EMPLOYEES VIZ. D IVYA PRAKASH GADIYA OF RS. 1 53 685/- CHANDRA P. GADIYA OF RS. 1 55 967/- AND RAKESH H. GADIYA OF RS. 1 23 220/- ON THE GROUND TH AT THE EXPENSES WERE PERSONAL IN NATURE AND HENCE NOT ALLOWABLE U/S 37(1) OF THE ACT ITA NO. 2127/MUM/2010 RTG EXCHANGE LTD.. 2 BY GIVING A FINDING THAT THE ASSESSEE HAD SPENT THE SE AMOUNTS ON FAMILY MEMBERS OF THE EMPLOYEE. ON APPEAL THE ASSE SSSEE FILED A WRITTEN SUBMISSION BEFORE THE CIT(A) STATING THAT T HE ASSESSEE COMPANY HAD PAID INSURANCE PREMIUM IN RESPECT OF EM PLOYEES LIFE INSURANCE POLICIES. IT WAS FURTHER EXPLAINED THAT T HE PAYMENT HAD BEEN MADE IN RELATION TO TERMS OF APPOINTMENT AND N OT ON ACCOUNT OF PERSONAL EXPENSES AND HENCE IT WAS SUBMITTED THAT EXPENDITURE WAS A BUSINESS EXPENDITURE ALLOWABLE U/S 37(1) OF THE A CT. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THE CI T(A) CONFIRMED THE ACTION OF THE AO. 4. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE F ILED APPEAL BEFORE THE ITAT. 5. BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE H AS SUBMITTED THAT THE ASSESSEE COMPANY HAS PAID INSURANCE PREMIU M IN RESPECT OF EMPLOYEES LIFE INSURANCE POLICIES AS PER THE TERMS OF APPOINTMENT AND NOT ON ACCOUNT OF PERSONAL EXPENSES THEREFORE THE EXPENDITURE IS A BUSINESS EXPENDITURE ALLOWABLE U/S 37(1). HE CONTEN DED THAT THE REVENUE AUTHORITIES WERE ERRED IN DISALLOWING THE E XPENDITURE BY TREATING THE SAME AS PERSONAL EXPENDITURE. 6. ON THE OTHER HAND THE LEARNED DR HAS RELIED UPO N THE ORDERS OF THE REVENUE AUTHORITIES. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH ORDERS O F THE AUTHORITIES BELOW. THE ISSUE INVOLVED IN THIS APPEAL IS RELATIN G TO PAYMENT OF LIC PREMIUM IN RESPECT OF EMPLOYEES OF THE ASSESSEE COM PANY. IN THE ASSESSMENT ORDER THE AO HAS OBSERVED THAT THE ASSES SEE COMPANY HAS INCURRED THE DISPUTED AMOUNT ON FAMILY MEMBERS AND ACCORDING TO HIM THESE EXPENSES ARE PERSONAL IN NATURE NOT ALLOW ABLE U/S 37(1) OF THE ACT. THE CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS NOT FILED THE ITA NO. 2127/MUM/2010 RTG EXCHANGE LTD.. 3 TERMS AND CONDITIONS OF CONTRACT OF EMPLOYEES AND THEREFORE HE DENIED THE CLAIM OF THE ASSESSEE. EVEN BEFORE US N O SUCH TERMS AND CONDITIONS OF THE CONTRACT OF EMPLOYMENT FILED EXCE PT STATING THAT THE COMPANY HAS PASSED ON RESOLUTION TO PAY THE PREMIUM TO THESE MEMBERS. IN OUR VIEW TO DECIDE THE ISSUE IT IS NEC ESSARY TO EXAMINE THE TERMS AND CONDITIONS OF THE CONTRACT OF EMPLOYM ENT BETWEEN THE ASSESSEE AND EMPLOYEES. THEREFORE WE SET ASIDE THE ORDER OF THE CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH L AW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF JANUARY 2011. SD/- SD/- (J. SUDHAKAR REDDY) (V. D URGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI DATED: 28 TH JANUARY 2011. COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE D BENCH I.T .A.T. MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR I.T.A.T. MUMBAI. KV