ADIT, CHENNAI v. M/s Heat & Control Pvt. Ltd., CHENNAI

ITA 526/CHNY/2009 | 2001-2002
Pronouncement Date: 04-11-2011 | Result: Dismissed

Appeal Details

RSA Number 52621714 RSA 2009
Assessee PAN AAACH8666C
Bench Chennai
Appeal Number ITA 526/CHNY/2009
Duration Of Justice 2 year(s) 6 month(s) 18 day(s)
Appellant ADIT, CHENNAI
Respondent M/s Heat & Control Pvt. Ltd., CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 04-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 04-11-2011
Date Of Final Hearing 02-11-2011
Next Hearing Date 02-11-2011
Assessment Year 2001-2002
Appeal Filed On 16-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI BEFORE SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN JUDICIAL MEMBER .. I.T.A. NOS. 524 525 & 526/MDS/2009 ASSESSMENT YEARS : 1999-2000 2000-01 & 2001-02 THE ASSISTANT DIRECTOR OF INCOME- TAX INTERNATIONAL TAXATION CHENNAI. V. M/S. HEAT & CONTROL PVT. LTD. A-40 (OLD NO. A-26) VI STREET ANNA NAGAR (EAST) CHENNAI-600 012. [PAN: AAACH8666C] (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. ALAMELU LAKSHMINARAYANAN JCIT RESPONDENT BY : SMT. SUMITHRA RAVICHANDRAN CA DATE OF HEARING : 02-11-2011 DATE OF PRONOUNCEMENT : 04-11-2011 O R D E R PER GEORGE MATHAN JUDICIAL MEMBER : THESE ARE THREE APPEALS FILED BY THE REVENUE AGAIN ST THE COMMON ORDER OF THE LEARNED CIT(APPEALS)-XI CHENNAI IN APPEAL NOS. CIT(A)-XI/CHE/ITA NO. 614/06-07 AND 116 & 117/2007-08 DATED 30-01-2009 FO R THE ASSESSMENT YEARS 1999-2000 2000-01 & 2001-02 RESPECTIVELY. I.T.A. NOS. 524-526/MDS/2009 2 2. SMT. ALAMELU LAKSHMINARAYANAN LEARNED SR. DR RE PRESENTED ON BEHALF OF THE REVENUE AND SMT. SUMITHRA RAVICHANDRAN CA REPR ESENTED ON BEHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LEARNED DR THAT THE ASSE SSEE IS A FOREIGN COMPANY WHICH IS DOING THE BUSINESS OF PROMOTION OF FOOD PA CKAGING EQUIPMENTS. IT WAS THE SUBMISSION THAT THE BUSINESS OF THE ASSESSEE COMPAN Y WAS COMMENCED ON 01-01- 1999. IT WAS THE SUBMISSION THAT IN THE COURSE OF ASSESSMENT IT WAS NOTICED THAT THE ASSESSEE WAS IN RECEIPT OF HEAD OFFICE REMITTAN CES WHICH WERE CLAIMED AS RE- IMBURSEMENTS TOWARDS EXPENDITURE INCURRED IN THE AS SESSEES BRANCH. IT WAS SUBMITTED THAT THE AMOUNT WAS SHOWN AS PER SCHEDULE I OF HEAD OFFICE ACCOUNT. THE ASSESSING OFFICER HAD PROPOSED TO TREAT THE REM ITTANCES AS THE INCOME OF THE ASSESSEE TO WHICH THE ASSESSEE HAD REPLIED THAT THE HEAD OFFICE REMITTANCE WAS FOR MEETING VARIOUS INITIAL START UP EXPENSES AND WAS I N THE NATURE OF LONG TERM FUNDS AND EQUITY WHICH THE RESERVE BANK OF INDIA HAD ALRE ADY PERMITTED. IT WAS THE SUBMISSION THAT THE REPLY OF THE ASSESSEE HAD NOT B EEN ACCEPTED AND THE HEAD OFFICE REMITTANCES HAD BEEN TREATED AS THE INCOME O F THE ASSESSEE. IT WAS THE SUBMISSION THAT ON APPEAL THE LEARNED CIT(A) HAD DE LETED THE ADDITION BY HOLDING THAT THE REMITTANCES FROM HEAD OFFICE TO THE BRANCH OFFICE COULD NOT BE TREATED AS INCOME. IT WAS ALSO THE SUBMISSION THAT IN THE ASS ESSMENT YEAR 2001-02 THE LEARNED CIT(A) HAD ALSO ALLOWED THE ASSESSEES APPE AL ON THE GROUND THAT THE RE- OPENING WAS BAD IN LAW. IT WAS THE SUBMISSION THA T THE ORDER OF THE LEARNED I.T.A. NOS. 524-526/MDS/2009 3 CIT(A) WAS LIABLE TO BE REVERSED. SHE VEHEMENTLY S UPPORTED THE ORDER OF THE ASSESSING OFFICER. 4. IN REPLY THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE HEAD OFFICE REMITTANCES WERE FOR THE PURPOSE OF MEETING THE INITIAL EXPENDITURE. IT WAS THE SUBMISSION THAT THE SAME HAD ALSO BEEN EXHIBITE D IN THE BALANCE SHEET UNDER THE HEAD OFFICE ACCOUNT. THE DETAILS OF THE EXPENS ES HAD ALSO BEEN FURNISHED AND THE NET RESULT OF THE PROFIT & LOSS ACCOUNT WAS TRA NSFERRED TO THE HEAD OFFICE ACCOUNT AT THE YEAR END. IT WAS THE SUBMISSION THA T THE REMITTANCES HAD BEEN MADE BY THE HEAD OFFICE ONLY WITH THE PREVIOUS APPR OVAL OF THE RBI AND CONSEQUENTLY THE SAME COULD NOT BE TREATED AS THE I NCOME OF THE ASSESSEE AS IT IS NOT ARISING OUT OF THE BUSINESS OF THE ASSESSEE. I T WAS THE SUBMISSION THAT THE EXPENDITURE BEING FOR MEETING THE INITIAL EXPENDITU RE OF THE ASSESSEE WHICH IS A BRANCH OFFICE THE SAME WAS LIABLE TO BE TREATED ON LY AS A LIABILITY. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ORDER OF THE LEARNED CIT(A) CLEARLY SHOWS THAT ALL THE FACTS IN RELATION TO THE REMITTANCES OF THE HEAD OFFICE WERE BEFORE THE LOWER AUTHORITIES. THE FACTS CLEARLY SHOW THAT THE EXPENDITURE OF THE BRANCH OFFICE WAS BEING PRACTICA LLY REIMBURSED BY THE HEAD OFFICE. THE RECEIPT FROM THE HEAD OFFICE IS NOT IN THE NATURE OF ANY PAYMENT FOR ANY SERVICES OR SALES TO THE HEAD OFFICE. IT IS AL SO NOTICED THAT THE REMITTANCE TO THE BRANCH OFFICE BY THE HEAD OFFICE IS AFTER OBTAI NING THE REQUISITE PERMISSION FROM THE RBI. ALL THE ABOVE FACTS CLEARLY SHOW THAT THE REMITTANCE IS NOT RELATED TO ANY I.T.A. NOS. 524-526/MDS/2009 4 INCOME OF THE ASSESSEE BUT IN FACT IS A LIABILITY. IN THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE ON MERITS IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFERENCE. 6. IN REGARD TO THE RE-OPENING OF THE ASSESSMENT T HE REVENUE HAS NOT BEEN ABLE TO SHOW AS TO HOW THE FINDING OF THE LEARNED C IT(A) IN REGARD TO THE RE- OPENING WAS ERRONEOUS. IN THE CIRCUMSTANCES THE F INDING OF THE LEARNED CIT(A) ON THIS ISSUE STANDS CONFIRMED. 7. IN THE RESULT ALL THE THREE APPEALS OF THE REVE NUE ARE DISMISSED. 8. THE ORDER WAS PRONOUNCED IN THE COURT ON 04/11/2 011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI DATED THE 04 TH NOVEMBER 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE