DCIT, New Delhi v. M/s. Emirates Shipping Agencies (India) Pvt. Ltd, New Delhi

ITA 2340/DEL/2010 | 2006-2007
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 234020114 RSA 2010
Assessee PAN AABCE5632L
Bench Delhi
Appeal Number ITA 2340/DEL/2010
Duration Of Justice 1 year(s) 2 month(s) 12 day(s)
Appellant DCIT, New Delhi
Respondent M/s. Emirates Shipping Agencies (India) Pvt. Ltd, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 29-07-2011
Date Of Final Hearing 29-07-2011
Next Hearing Date 29-07-2011
Assessment Year 2006-2007
Appeal Filed On 17-05-2010
Judgment Text
ITA NO. 2340/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 2340/DEL/2010 A.Y. : 2006-07 DCIT CIRCLE 11(1) NEW DELHI C.R. BLDG. NEW DELHI 110 002 VS. M/S EMIRATES SHIPPING AGENCIES (INDIA) PVT. LTD. 232-B FIRST FLOOR PHASE-3 OKHLA INDUSTRIAL ESTATE DELHI 110 0020 (PAN/GIR NO. : AABCE5632L) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. SATISH AGARWAL CA DEPARTMENT BY : SH. ROHIT GARG SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 12.3.2 010 PERTAINING TO ASSESSMENT YEAR 2006-07. 2. THE ISSUE RAISED IS THAT ON THE FACTS AND CIRCU MSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN DELETING THE DISALLOWANCE THE EXPENDITURE OF ` 47 6 6 950/-. 3. IN THIS CASE THE ASSESSEE IS A WHOLLY OWNED SU BSIDIARY OF EMIRATES SHIPPING LINE FZE AND WORKING AS AN AGENT I N INDIA TO OPERATE THEIR BUSINESS IN INDIA. ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAS SHOWN A LOSS OF ` 47 66 950/-. FURTHER ASSESSING OFFICER OBS ERVED THAT ASSESSEE ITA NO. 2340/DEL/2010 2 HAS NOT SHOWN ANY OPERATIVE INCOME. HENCE ASSESS ING OFFICER OPINED THAT BUSINESS OF THE ASSESSEE HAS NOT COMMENC ED. HENCE ASSESSING OFFICER HELD THAT ASSESSEE HAS INCURRED EXPENSES OF ` 25 21 777/- ON STAFF COST AND ` 21 53 227/- ON ADMIN ISTRATIVE AND OTHER EXPENSES. HE CONCLUDED THAT ASSESSEE HAS NOT SHOWN ANY RECEIPT OR OPERATIVE INCOME DURING THE YEAR. HENCE THE BUSIN ESS OF THE ASSESSEE HAS NOT COMMENCED AND THE COMPANY WAS FORME D JUST ONE MONTH PRIOR TO END OF THE FINANCIAL YEAR. HENCE A SSESSING OFFICER HELD THAT EXPENSES CLAIMED BY THE ASSESSEE ARE PRIO R TO COMMENCEMENT OF THE BUSINESS WHICH REQUIRES TO BE C APITALIZED. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE ISSUE AND HELD AS UNDER:- AFTER GOING THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE ASSESSMENT ORDER AND SUBMISSION MADE BY THE APPELLAN T FOLLOWING POINTS ARE NOTICED:- (I) THE APPELLANT HAS SET UP THE BUSINESS OF AGENCY AND RECRUITED 24 EMPLOYEES AT DELHI CHENNAI AND MUMBAI. (II) THE APPELLANT HAS PUT IN PLACE THE INFRASTRUCTURE I N THE FORM OF OFFICES COMMUNICATION AND PERSONNEL TO DELIVER SHIPPING AGENCY SERVICES AND IT WAS IN THE SATE OF READINESS TO CARRY ON THE BUSINESS. (III) THE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. HUGH ES ESCORTS COMMUNICATION LTD. 213 CTR 45 (DEL) AND C.I.T. VS. WHIRLPOOL OF INDIA LTD. 28 DTR 164 ARE DIRECTLY APPLICABLE IN THE APPELLANTS CASE. ITA NO. 2340/DEL/2010 3 THEREFORE THE APPELLANT HAS SET UP HIS BUSINESS AN D IN VIEW OF THE DELHI HIGH COURT DECISION AS MENTIONED ABO VE THE EXPENDITURE INCURRED AFTER THE BUSINESS WAS SET UP DESERVES TO BE ALLOWED AS REVENUE EXPENDITURE. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT ASSESSING OFFICER HAS TAKEN THE GROUND T HAT SINCE THE ASSESSEE HAS NOT SHOWN ANY INCOME THE EXPENSES CAN NOT BE ALLOWED. THIS IN OUR OPINION IS NOT CORRECT LAW BECAUSE ALL THE EXPENDITURE INCURRED AFTER THE BUSINESS HAS BEEN SET UP NEED TO BE ALLOWED IRRESPECTIVE OF THE FACT THAT WHETHER INCOME HAS BE EN EARNED OR NOT. IN THIS CASE WE NOTE THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT GIVEN A DETAILED FINDING AS TO THE PERIOD OF EXPENSES AS TO WHETHER THE EXPENDITURE WAS INCURRED AFTER THE BUSI NESS HAS BEEN SET UP OR NOT. IN THE ASSESSEES PAPER BOOK ALSO WE FIND THAT THE PERIOD OF EXPENDITURE HAS NOT BEEN DETAILED AND PROVIDED. HENCE IN OUR OPINION THIS MATTER NEEDS TO BE SET ASIDE TO THE F ILES OF THE ASSESSING OFFICER TO ENABLE HIM TO EXAMINE THE PERIOD IN WHICH THE IMPUGNED EXPENDITURE WAS INCURRED IF THE SAME WERE INCURRED AFTER THE BUSINESS HAS BEEN SET UP THE SAME HAS TO BE ALLOWED. ACCO RDINGLY THIS ISSUE STANDS REMITTED TO THE FILES OF THE ASSESSING OFFICE R WITH THE ABOVE SAID DIRECTIONS. NEEDLESS TO ADD THAT THE ASSESSEE SHOULD BE GRANTED ADEQUATE OPPORTUNITY OF BEING HEARD. ITA NO. 2340/DEL/2010 4 7. IN THE RESULT THE APPEAL FILED BY THE REVENU E STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29/7/2011 UP ON CONCLUSION OF HEARING. SD/- SD/- [ [[ [C.L. SETHI C.L. SETHI C.L. SETHI C.L. SETHI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 29/7/2011 SRB COPY FORWARDED COPY FORWARDED COPY FORWARDED COPY FORWARDED TO: TO: TO: TO: - -- - 1. APPELLANT 2. RESPONDENT 3.CIT 4.CIT (A) 5. DR IT AT TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT DELHI BENCHES