MADHUKAR N. BHAGWAT, MUMBAI v. ACIT 16(1), MUMBAI

ITA 2719/MUM/2010 | 2005-2006
Pronouncement Date: 25-02-2011 | Result: Allowed

Appeal Details

RSA Number 271919914 RSA 2010
Assessee PAN AAAPB7625F
Bench Mumbai
Appeal Number ITA 2719/MUM/2010
Duration Of Justice 10 month(s) 17 day(s)
Appellant MADHUKAR N. BHAGWAT, MUMBAI
Respondent ACIT 16(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-02-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 25-02-2011
Assessment Year 2005-2006
Appeal Filed On 08-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH: MUMBAI BEFORE SHIR PRAMOD KUMAR ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR JUDICIAL MEMBER ITA NO.2719/MUM/2010 (ASSESSMENT YEAR: 2005-06) MR. MADHUKAR N. BHAGWAT C/O. B.M. GUPTE ADVOCATE 618 BOMBAY MARKET APARTMENT TARDEO ROAD MUMBAI -400 034 .... ASSESSEE VS ASSTT COMM. OF I.T. CIR.16(1) MATRU MANDIR MUMBAI REVENUE PAN: AAAPB 7625 F ASSESSEE BY: SHRI RAJESH B. GUPTE REVENUE BY: SHRI SUNIL KUMAR SINGH O R D E R PER R.S. PADVEKAR JM IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A) 27 MUMBAI DATED 27.1.2010 FOR THE A.Y. 2005-06. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- 1. THE LD. CIT (A) ERRED IN TREATING BUSINESS EXP ENDITURE AS PERSONAL EXPENDITURE. ITA 2719/M/2010 MR. MADHUKAR N. BHAGWAT 2 2. THE LD. CIT (A) ERRED IN STATING THAT BUSINESS E XPENDITURE WAS NOT REQUIRED FOR THE ASSESSEE TO INCREASE HIS CONSU LTANCY BUSINESS. 3. THE LD. CIT (A) ERRED IN ASSUMING THAT THE EXPEN DITURE INCURRED WAS FOR PERSONAL PURPOSE WITHOUT BEING ABL E TO PROVE ANY PERSONAL OCCASION. 2. WE HAVE HEARD THE PARTIES. THE ASSESSEE IS AN I NDIVIDUAL. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF ` 11 10 510/- WHICH WAS SELECTED FOR SCRUTINY. THE A.O. HAS NOTED THAT THE ASSESSEE HAS DECLARED THE INCOME FROM SALARY FR OM M/S. TATA HONEYWEL AS WELL AS PROFESSIONAL RECEIPTS FROM 4 OR 5 CONCERNS WHICH ARE IN THE TATA GROUP. THE ASSESSEE DECLARED THE P ROFESSIONAL RECEIPT TO THE EXTENT OF ` 13 66 743/- AND DECLARED THE PROFIT OF ` 5 14 991/- WHICH WORKS OUT TO 37.68%. THE ASSESSEE HAD CLAIME D THE DIFFERENT EXPENSES IN THE INCOME EXPENDITURE ACCOUNT AND THE MAJOR EXPENDITURE UNDER BUSINESS PROMOTION WHICH WAS TO THE EXTENT O F ` ` 4 32 728/-. THE A.O. ASKED THE EXPLANATION OF THE ASSESSEE IN RESPE CT OF THE SAID CLAIM. THE ASSESSEE CONTENDED THAT THE ASSESSEE IS INDEPEN DENT DIRECTOR OF SOME COMPANIES AND HE IS ALSO CONSULTANT FOR ORPAK INDUSTRIES LTD. THERMO ELECTRON INDIA LTD. ETC. HIS MAIN PROFESSIO NAL ACTIVITIES ARE HOLDING MEETING AND CONSULTING WITH THE CLIENTS BU SINESS DEVELOPMENT ACTIVITIES AND ALSO THE RESPONSIBILITY ASSOCIATED W ITH A THE DIRECTOR ON THE BOARD OF PUBLICLY LISTED COMPANIES. THE ASSESSEE H AS TO UNDERTAKE TRAVEL BOTH DOMESTIC AS WELL AS FOREIGN. THE ASSE SSEE HAS ARRANGED GET TOGETHER AND INCURRED THE EXPENDITURE. THE ASSESSE E ALSO GAVE THE NAME OF THE SOME OF THE INVITEES TO THE SAID GET TOGETHE R AND CONTENDED THAT IT WAS A BUSINESS PARTY AND SAME WAS KEPT TO PROMOTE H IS CONSULTANCY BUSINESS. HE ALSO CONTENDED THAT THERE WAS PERSONA L OCCASION TO ITA 2719/M/2010 MR. MADHUKAR N. BHAGWAT 3 PERSONAL ELEMENT IN GIVING THE SAID LAVISH PARTY. THE A.O. WAS NOT IMPRESSED WITH THE CONTENTION OF THE ASSESSEE AND R EJECTED THE CLAIM SAID EXPENDITURE BY GIVING THE REASON THAT BUSINESS PROM OTION EXPENSES DEBITED TO THE INCOME AND EXPENDITURE ACCOUNT ARE U N-REASONABLE AND NOT IN COMMENSURATE WITH THE PROFESSIONAL NEEDS AND ARE MORE OF PERSONAL IN NATURE. THE A.O. ENTIRELY DISALLOWED T HE BUSINESS PROMOTION EXPENDITURE WHICH IS ` 4 32 728/-. THE ASSESSEE CHALLENGED THE SAID DISALLOWANCE BEFORE THE LD. CIT (A) BUT WITHOUT SUC CESS. 3. WE HAVE HEARD THE PARTIES AND PERUSED THE REASON S GIVEN BY BOTH THE AUTHORITIES BELOW. NOWHERE IT IS DISPUTED BY THE A.O. THAT THE ASSESSEE IS ENGAGED IN MANAGEMENT CONSULTING SERVIC ES. THE ASSESSEE DECLARED THE PROFESSIONAL RECEIPT OF ` 13 66 743/- THE SAME HAS BEEN ACCEPTED BY THE A.O. MOREOVER OTHER EXPENDITURE C LAIMED BY THE ASSESSEE IS ALSO ALLOWED. THE A.O. ONLY DISALLOWED THE BUSINESS PROMOTION EXPENDITURE OF ` 4 37 728/-. ONLY REASONING WE FIND THAT IN VIEW OF THE A.O. THE SAID EXPENDITURE WAS UNREASONA BLE AND NOT IN COMMENSURATE WITH THE PROFESSIONAL NEEDS. IN OUR O PINION THE SAID PRESUMPTION OR ASSUMPTION OF THE A.O. IS NOT SUPPOR TED WITH THE PROPER REASONING. WHEN THE A.O. HIMSELF ACCEPTS AT ONE EN D THAT THE ASSESSEE IS IN THE BUSINESS OF RENDERING OF MANAGEMENT CONSU LTANCY SERVICES ENTIRE CLAIM OF THE ASSESSEE CANNOT BE DENIED. AT THE SAME TIME NO MATERIAL IS PLACED BEFORE US TO CONSIDER CLAIM OF T HE ASSESSEE. WE THEREFORE CONSIDER IT FIT TO RESTORE THE ISSUE TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION. NEEDLESS TO SAY THE A.O. SHOULD GIVE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE PRINCIPLES OF NATU RAL JUSTICE AND RECONSIDERED THE CLAIM OF THE ASSESSEE. 4. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ITA 2719/M/2010 MR. MADHUKAR N. BHAGWAT 4 ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 5TH FEBRUARY 2011. SD/- SD/- ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI DATE: 25TH FEBRUARY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) 27 MUMBAI. 4) THE CIT-CITY-XVI MUMBAI. 5) THE D.R. F BENCH MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T. MUMBAI *CHAVAN ITA 2719/M/2010 MR. MADHUKAR N. BHAGWAT 5 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 22.01.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 23.01.2011 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/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER