BP INDIA SERVICES P.LTD, MUMBAI v. DCIT CIR 8(1), MUMBAI

ITA 3654/MUM/2010 | 2004-2005
Pronouncement Date: 23-09-2011 | Result: Allowed

Appeal Details

RSA Number 365419914 RSA 2010
Assessee PAN AACCB2030Q
Bench Mumbai
Appeal Number ITA 3654/MUM/2010
Duration Of Justice 1 year(s) 4 month(s) 16 day(s)
Appellant BP INDIA SERVICES P.LTD, MUMBAI
Respondent DCIT CIR 8(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted H
Tribunal Order Date 23-09-2011
Date Of Final Hearing 19-09-2011
Next Hearing Date 19-09-2011
Assessment Year 2004-2005
Appeal Filed On 07-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIB UNAL MUMBAI BENCHES H MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI V.DURGA RAO JM ITA NO.3654/MUM/2010 : ASST.YEARS 2004-2005 M/S.BP INDIA SERVICES PRIVATE LIMITED TECHNOPOLIS KNOWLEDGE PARK MAHAKALI CAVES ROAD CHAKALA ANDHERI (EAST) MUMBAI - 400 093. PAN : AACCB2030Q. VS. THE DY.COMMISSIONER OF INCOME-TAX CIRCLE 8(1) MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI APURVA SHAH RESPONDENT BY : SHRI GOLI SRINIWAS RAO DATE OF HEARING : 19.09.2011 DATE OF PRONOUNCEMENT :23.09.2011 O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 09.03.2010 IN RELATION TO THE ASSESSMENT YEAR 2004-2005. 2. THE ONLY GROUND RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.38 43 335 MADE BY THE AO ON ACCOUNT OF RENT A ND HOUSING EXPENSES. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE CLAIMED DEDUCTION ON ACCOUNT OF RENT AND HOUSING EXPENSES. ON BEING CALLED UPON TO FURNISH THE DETAILS OF SUCH EXPENSES THE ASSESSEE STATED THAT MOST OF PAYMENTS WERE MADE TO VARIOUS INDIVIDUALS AND HOTELS SITUATED AT NEW DELHI. THE A SSESSING OFFICER NOTED THAT THE REGISTERED OFFICE OF THE ASSESSEE WAS SITUATED AT M UMBAI AND THE ASSESSEE HAD ALSO STATED THAT IT HAD NO BRANCHES OFFICES GODOWN OR WAREHOUSES ELSEWHERE IN INDIA. IN VIEW OF THESE FACTS THE A.O. INFERRED THAT THE ASSESSEE HAD NO BUSINESS ESTABLISHMENT IN NEW DELHI. THE RENT AND HOUSING EX PENSES CLAIMED AT RS.38 33 345 WERE ADDED BY THE ASSESSING OFFICER. D URING THE COURSE OF FIRST APPELLATE PROCEEDINGS THE ASSESSEE CONTENDED THAT THE A.O. NEVER CONFRONTED WITH ITA NO.3654/MUM/2010 M/S.BP INDIA SERVICES PRIVATE LIMITED. 2 THE DISALLOWANCE ON ACCOUNT OF RENT AND HOUSING EXP ENSES. ADDITIONAL EVIDENCE WAS FILED UNDER RULE 46A. THE LEARNED CIT(A) REMITT ED THE ADDITIONAL EVIDENCE TO A.O. FOR EXAMINATION AND SUBMISSION OF REMAND REPOR T. THE A.O. VIDE HIS COMMUNICATION DATED 19.09.2009 REPORTED THAT THE AS SESSEE ENTERED INTO AGREEMENT FOR THE OFFICE SPACE IN THE MONTH OF MARCH 2004 BUT AS THERE WAS NO EVIDENCE OF HAVING INSTALLED ANY OFFICE FURNITURE AND EQUIPMENT ETC. IN DELHI OFFICE THE ADDITION COULD NOT BE DELETED. HE FURTHER CONSIDERE D THE DETAILS OF RS.38.43 LAKH CLAIMED TO HAVE BEEN PAID ON ACCOUNT OF RENT EXPENS ES FOR DELHI OFFICE WHICH HAS BEEN TABULATED BY THE LD. CIT(A) ON PAGE 30 OF THE IMPUGNED ORDER. IT WAS OBSERVED BY THE A.O. THAT THE ASSESSEE HAD FILED AG REEMENT IN RESPECT OF TWO PARTIES ONLY AND THE REMAINING RENT AGREEMENTS WERE NOT MAD E AVAILABLE. AS THE ASSESSEE ENCLOSED APPOINTMENT LETTERS OF TWO PERSONS WHO WER E POSTED IN DELHI OFFICE THE A.O. IN THE REMAND PROCEEDINGS OBSERVED FROM THESE APPOINTMENT LETTERS THAT THE PERSONS WERE WORKING IN BP INTERNATIONAL LIAISON OF FICE AND HAD BEEN TRANSFERRED TO BP INDIA SERVICES PVT. LTD. I.E. THE ASSESSEE CO MPANY. IN THE LIGHT OF THESE FACTS IT WAS HELD THAT THE DISALLOWANCE WAS MAINTAINABLE. THE LEARNED CIT(A) UPHELD THE IMPUGNED ORDER ON THIS ISSUE. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. OUR ATTENTION HAS BEEN DRAWN TOWARDS PAGE 1 82 OF THE PAPER BOOK BEING LETTER DATED 20.10.2009 WRITTEN BY THE ASSESSEE TO THE LEARNED FIRST APPELLATE AUTHORITY. IN THIS LETTER THE ASSESSEE STATED THAT THE EMPLOYEES NOW WORKING WITH THE ASSESSEE WERE EARLIER WORKING IN BP INTERNATIONAL L IAISON OFFICE AND HAD BEEN TRANSFERRED TO THE ASSESSEE-COMPANY WITH EFFECT FRO M JUNE 2003 AND THE EXPENSES CLAIMED WERE ONLY THOSE WHICH HAD BEEN INCURRED THE REAFTER. IT HAS ALSO MENTIONED IN THAT LETTER THAT THE RENT EXPENSES WERE FOR OFFI CE PREMISES AND ALSO FOR PROVIDING ACCOMMODATION TO THE EMPLOYEES WHO WERE WORKING FOR THE ASSESSEE-COMPANY. APART FROM THAT IT WAS ALSO STATED THAT THE ASSESSE E PROVIDED ADMINISTRATIVE AND BUSINESS SUPPORTS SERVICES TO VARIOUS GROUP ENTITIE S AND THE COST INCURRED BY IT IN ITA NO.3654/MUM/2010 M/S.BP INDIA SERVICES PRIVATE LIMITED. 3 THE SHAPE OF RENT AND HOUSING CHARGES WAS CHARGED O UT TO SUCH VARIOUS GROUP ENTITLES WITH A MARK UP. NOW THE POSITION WHICH EME RGES IS THAT THE ASSESSEE IS CLAIMING TO HAVE INCURRED AN AMOUNT OF RS.38.34 LAK H AS RENT AND HOUSING EXPENSES IN RESPECT OF ITS OFFICE ITS EMPLOYEES AND ALSO TO THE CUSTOMERS TO WHOM THE ASSESSEE PROVIDED SERVICES WITH THE CONTENTION THAT SUCH EXPENSES WERE REIMBURSED BY THE GROUP ENTITIES WITH A MARK UP. ON A PERTINEN T QUERY THE LEARNED A.R. COULD NOT FILE ANY SPECIFIC DETAIL ABOUT THE REIMBURSEMEN T OF SUCH EXPENSES FROM THE CUSTOMERS/GROUP ENTITIES. ON A FURTHER QUERY ABOUT THE INCLUSION OF PERQUISITE VALUE OF THIS RENT FREE ACCOMMODATION STATED TO HAVE BEEN PROVIDED TO CERTAIN EMPLOYEES THE LEARNED A.R. ANSWERED IN AFFIRMATIVE BUT DID NO T HAVE SUCH DETAILS. HE HOWEVER MAINTAINED THAT ALL THESE DETAILS ARE AVAILABLE WIT H THE ASSESSEE AND CAN BE PRODUCED FOR EXAMINATION. NO SERIOUS OBJECTION WAS TAKEN BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IN THIS ISSUE. 4. IN VIEW OF THESE FACTS WE ARE OF THE CON SIDERED OPINION THAT THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE IMPUGNED ORDER ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF A.O. WE ORDER ACCORDINGLY AND DIRECT HIM TO DECIDE THIS ISSUE AFRESH AS PER LAW AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE OBSERVATIONS MADE ABOVE WILL ALSO BE TAKEN INTO CONSIDERATION BY THE A.O. IN THE FRESH PROCEEDINGS. 5. IN THE RESULT THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED ON THIS 23 RD DAY OF SEPTEMBER 2011. SD/- SD/- (V.DURGA RAO) (R.S.SYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : 23 RD SEPTEMBER 2011. DEVDAS* ITA NO.3654/MUM/2010 M/S.BP INDIA SERVICES PRIVATE LIMITED. 4 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XV MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.