JUST DIAL PVT LTD, MUMBAI v. D.C.I.T.9(2), MUMBAI

ITA 2450/MUM/2011 | 2007-2008
Pronouncement Date: 22-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 245019914 RSA 2011
Assessee PAN AAACA8049G
Bench Mumbai
Appeal Number ITA 2450/MUM/2011
Duration Of Justice 2 year(s) 6 month(s) 24 day(s)
Appellant JUST DIAL PVT LTD, MUMBAI
Respondent D.C.I.T.9(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted J
Tribunal Order Date 22-10-2013
Date Of Final Hearing 22-10-2013
Next Hearing Date 22-10-2013
Assessment Year 2007-2008
Appeal Filed On 28-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH MUMBAI BEFORE SHRI H.L.KARWA PRESIDENT & SHRI N.K.BILLAIYA AM ITA N O. 2450 / MUM/ 20 1 1 ( ASSESSMENT YEAR : 20 0 7 - 20 0 8 ) M/S JUST DIAL PRIVATE LIMITED M - 501 PALM COURT COMPLEX LINK ROAD MALAD (WEST) MUMBAI - 64 VS. DY.CIT 9(2) MUMBAI PAN/GIR NO. : A AACA 8049 G ( APPEL LANT ) .. ( RESPONDENT ) /ASSESSEE BY : MR. BHUPENDRA SHAH /REVENUE BY : MR. SHISHIR SRIVASTAVA DATE OF HEARING : 22 ND DATE OF PRONOUNCEMENT : 22 ND OCTOBER 2013 O R D E R PER N.K.BILLAIYA AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 20 MUMBAI DATED 14 - 01 - 2011 PERTAINING TO ASSESSMENT YEAR 20 07 - 200 8 . 2 . THE ASSESSEE HAS RAISED EIGHT SUBSTANTIVE GR OUNDS OF APPEAL. AT THE VERY OUTSET LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT UNDER THE INSTRUCTIONS FROM HIS CLIENT HE IS NOT PRESSING GROUNDS NO. 1 TO 3 & 8. THEREFORE GROUNDS NO. 1 TO 3 & 8 ARE DISMISSED AS NOT PRESSED. 3 . GROUND NO. 4 RELATES T O DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D. ITA NO. 2450 /1 1 2 3.1 THE FACTS IN SUCCINCT ARE THAT DURING THE COURSE OF THE ASSES S ME NT PROCEEDINGS THE AO NOTICED THAT THE ASSESSEE HAS RECEIVED DIVIDEND INCOME OF RS.10 235/ - AND CLAIMED THE SAME AS EXEMPT UNDER SECTIO N 10(34) OF THE ACT. THE AO INVOKED THE PROVISIONS OF SECTION 14A READ WITH RULE 8D AND COMPUTED THE TOTAL DISALLOWANCE AT RS. 5 07 520/ - WHICH WAS CONFIRMED BY THE CIT(A) IN APPEAL. 3.2 BEFORE US THE COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RULE 8D I S NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION . 3.3 PER CONTRA THE LEARNED DR RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 3.4 IT IS NOW WELL SETTLED THAT THE APPLICATION OF RULE 8D IS W.E.F. ASSESSMENT YEAR 2008 - 09 AS PER THE DECIS ION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT REPORTED IN (2010) 328 ITR 81 (BOM) . THEREFORE RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT WE RESTORE THIS ISSUE BACK TO THE FILE OF THE AO. THE AO IS DIRECTED TO COMPUTE A REASONABLE DISALLOWANCE WITHOUT INVOKING RULE 8D. GROUND NO. 4 IS ALLOWED FOR STATISTICAL PURPOSES. 4 . GROUND NO. 5 RELATES TO CLAIM OF DEPRECIATION ON GOODWILL. 4.1 DURING THE COURSE OF THE ASSE SSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION ON GOODWILL OF RS. 1 50 000/ - . THE AO WAS OF THE FIRM BELIEF THAT THE GOODWILL IS NOT A ITA NO. 2450 /1 1 3 DEPRECIABLE ASSET AND ACCORDINGLY DISALLOWED THE CLAIM OF THE DEPRECIATION ON GOODWILL. TH E CIT(A) IN APPEAL DECLINED TO INTERVENE. 4.2 BEFORE US LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE IS NOW WELL SETTLED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. SMIFS SECURITIES LTD. REPORTED IN 348 ITR 302 . WE FIND FORCE IN THE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE. G OODWILL HAS BEEN HELD TO BE AN ASSET ELIGIBLE FOR DEPRECIATION BY THE AFORESAID JUDGMENT OF THE HON BLE SUPREME COURT. ACCORDINGLY WE RESTORE THIS ISSUE BA CK TO THE FILE S OF THE AO. THE AO IS DIRECTED TO ALLOW THE CLAIM OF DEPRECIATION ON GOODWILL AS PER THE LAW IN THE LIGHT OF THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF SMIFS SECURITI E S LTD. (SUPRA) . GROUND NO. 5 IS ALLOWED. 5 . GROUND NO. 6 RELA TES TO CLAIM OF REPAIRS AND MAINTENANCE EXPENDITURE AT RS. 11 04 331/ - . 5.1 THIS ISSUE HAS BEEN DISCUSSED BY THE AO IN PARA 9 AT PAGE 8 OF HIS ORDER. THE AO OBSERVED THAT THE ASSESSEE HAS DEBITED RS. 11 04 331/ - ON ACCOUNT OF SCOPE MINAR EXPENSES. THE ASSES SEE WAS ASKED TO FILE NECESSARY DETAILS FOR THE CLAIM OF THESE EXPENSES. THE ASSESSEE FILED A DETAILED REPLY IN RESPONSE TO THE SAID QUERY OF THE AO. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE THE AO OBSERVED THAT THE ASSESSEE COULD NOT OCCUPY THE PREMISES ON WHICH THE SAID REPAIRS AND MAINTENANCE EXPENSES WERE INCURRED AS THE ITA NO. 2450 /1 1 4 ADMINISTRATION OF THE SCOPE MINAR COMPLEX REFUSED TO GRANT PERMISSION TO OPERATE 24X7 CALL CENTRE. ACCORDING TO THE AO SUCH EXPENDITURE IS EFFECTIVELY A CAPITAL LOSS TO THE ASSESSEE AND HENCE DISALLOWED THE SAME. LEARNED CIT(A) HAS CONSIDERED THE GRIEVANCE OF THE ASSESSEE IN PARA 13 AT PAGE 4 OF HIS ORDER. THE CIT(A) OBSERVED THAT THE EXPENSES WERE INCURRED IN RELATION TO THE PREMISES WHICH WAS NEVER TAKEN ON HIRE OR U SED FOR THE PURPOSES OF BUSINESS AND CONFIRMED THE FINDINGS OF THE AO. 5.2 BEFORE US LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXPENSES WERE INCURRED FOR RENOVATION OF THE PREMISES WHICH THE ASSESSEE AGREED TO TAKE ON RENT. DUE TO CERTAIN PROB LEMS THE ASSESSEE COULD NOT OCCUPY THE SAID PREMISES. HOWEVER THE EXPENSES INCURRED WERE IN THE NATURE OF BUSINESS EXPENDITURE AND THEREFORE THE SAME SHOULD BE ALLOWED. 5.3 LEARNED DR RELIED UPON THE FINDINGS OF THE LOWER AUTHORITIES. 5.4 WE HAVE CA REFULLY PERUSED THE ORDER OF THE AUTHORITIES BELOW AND THE DETAILS OF EXPENSES FILED BEFORE US IN THE FORM OF PAPER BOOK. IN OUR CONSIDERED VIEW THESE DETAILS HAVE NOT BEEN CONSIDERED BY THE AO. THEREFORE IN THE INTEREST OF JUSTICE AND FAIR - PLAY WE RES TORE THIS ISSUE BACK TO THE FILE S OF THE AO. THE AO IS DIRECTED TO DECIDE THE CLAIM OF THESE EXPENSES AFRESH AFTER CONSIDERING THE DETAILS IN RESPECT OF THE EXPENSES FILED BY THE ASSESSEE AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THE ASSESSEE IS DIRECTED TO FILE ALL THE ITA NO. 2450 /1 1 5 DETAILS OF EXPENDITURE CLAIMED UNDER THE HEAD REPAIR S AND MAINTENANCE BY SUPPORTING DOCUMENTARY EVIDENCES. THUS GROUND NO. 6 IS ALLOWED FOR STATISTICAL PURPOSES. 6 . GROUND NO. 7 RELATES TO CLAIM OF WEBSITE DEVE LOPMENT EXPENSES. 6.1 THE ASSESSEE CLAIMED THESE EXPENSES BY A LETTER DATED 22 - 12 - 2009 WHICH HAS NOT BEEN CONSIDERED BY THE AO. BEFORE THE CIT(A) THE ASSESSEE REITERATED ITS CLAIM. THE CIT(A) DECLINED TO ENTERTAIN THE CLAIM OF THE ASSESSEE BY HOLDING T HAT THE ASSESSEE SHOULD HAVE CLAIMED THESE EXPENSES BY FILING A VALID REVISED RETURN UNDER SECTION 139(5) OF THE ACT. 6.2 BEFORE US LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE EXPENSES INCURRED FOR WEBSITE DEVELOPMENT ARE DIRECTLY RELATED TO THE B USINESS OF THE ASSESSEE AND THEREFORE THE SAME DESERVE TO BE ALLOWED. 6.3 WE HAVE CONSIDERED THE ORDERS OF THE LOWER AUTHORITIES . E VEN ASSUMING THAT THE AO IS NOT ENTITLED TO GRANT DEDUCTION ON THE BASIS OF A LETTER REQUESTING AN AMENDMENT TO THE RETURN FILED THE APPELLATE AUTHORITIES ARE ENTITLED TO CONSIDER THE CLAIM AND TO ADJUDICATE THE SAME. FOR THIS PROPOSITION WE DERIVE SUPPORT FROM THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PRUTHVI BROKERS & SHAREHOLDERS (P) LTD. REPO RTED IN 349 ITR 336. HENCE RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HONBLE JURISD ICTIONAL HIGH COURT ITA NO. 2450 /1 1 6 AND IN THE INTEREST OF JUSTICE WE RESTORE THIS ISSUE BACK TO THE FILE S OF THE AO. THE AO IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE IN RES PECT OF WEBSITE DEVELOPMENT EXPENSES AMOUNTING TO RS. 20 98 336/ - AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO FILE NECESSARY DETAILS WITH SUPPORTING DOCUMENTARY EVIDENCE. GROUND NO. 7 IS ALLOWED FOR STATI STICAL PURPOSES. 7 . RESULTANTLY THE APPEAL OF THE ASSESSEE IS ALLOWED PARTLY AND PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 2 /10/ 2013 . SD/ - ( ) ( H.L.KARWA ) SD/ - ( ) ( N.K.BILLAIYA ) / PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED : 2 2 /10 /2013 /PKM PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLA NT 2. / THE RESPONDENT. 3. / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER ( ASSTT. REGISTRAR) / ITAT MUMBAI