ACIT, Cir.-1,, Aurangabad v. Greaves Morganite Crucible Ltd.,, Aurangabad

ITA 581/PUN/2010 | 2006-2007
Pronouncement Date: 29-11-2011 | Result: Dismissed

Appeal Details

RSA Number 58124514 RSA 2010
Assessee PAN AABCG0895P
Bench Pune
Appeal Number ITA 581/PUN/2010
Duration Of Justice 1 year(s) 7 month(s) 10 day(s)
Appellant ACIT, Cir.-1,, Aurangabad
Respondent Greaves Morganite Crucible Ltd.,, Aurangabad
Appeal Type Income Tax Appeal
Pronouncement Date 29-11-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 29-11-2011
Assessment Year 2006-2007
Appeal Filed On 19-04-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JUDICIAL MEMBER AND SHRI G.S. PANNU ACCOUNTANT MEMBER I.T.A. NO. 581/PN/2010 : A.Y. 2006-07 ASSTT. CIT CIR. 1 AURANGABAD APPELLANT VS. GREAVES MORGANITE CRUCIBLE LTD. B-11 MIDC WALUJ AURANGABAD PAN AABCG 0895 P RESPONDENT APPELLANT BY: MS. NEERA MALHOTRA RESPONDENT BY: NONE DATE OF HEARING: 09-11-2011 DATE OF PRONOUNCEMENT : ___ -11-2011 ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-AURANGABAD DATED 19-1-2010 FOR A.Y. 2006- 07 ON THE POINT OF DELETION OF ADDITION OF RS. 1 35 312/- ON ACCOUNT OF NON-CONVEYANCE CHARGES. 2. DURING THE YEAR UNDER CONSIDERATION THE ASSESSE E MADE PAYMENT OF RS. 11 35 312/- TO GREAVE COTTONS L TD. (GCL FOR SHORT) FOR NON-CONVEYANCE CHARGES. IT WAS EXPLAINED THAT THE ASSESSEE WAS EXECUTING ALL EXPOR TS THROUGH GCL IN EARLIER YEARS BUT STARTED EXPORTING ITS GOODS THROUGH INDEPENDENT AGENTS SINCE F.Y. 2004-05 WHICH CAUSED LOSS OF MARKET TO GCL AND HENCE NON- CONVEYANCE CHARGES @ 3% OF TOTAL EXPORT WAS PAID TO GCL. 2 ITA NO. 581/PN/2010 GREAVES MORGANITE CRUCIBLE A.Y. 2006-07 THE AMOUNT PAID IN F.Y. 2004-05 WAS DISALLOWED. SIN CE THE ASSESSEE COULD NOT ESTABLISH THAT THE PAYMENT OF RS . 11 35 312/- IS AN ALLOWABLE BUSINESS EXPENSES AND H ENCE THE SAME WAS ADDED BACK TO THE INCOME OF THE ASSESS EE WHICH WAS DELETED BY THE CIT(A). THE SAME HAS BEEN OPPOSED BEFORE US BY THE REVENUE. 3. WE HAVE HEARD THE LEARNED DR. NONE FOR THE ASSE SSEE WAS PRESENT. HENCE WE PROCEED TO DECIDE THIS APPE AL AFTER HEARING THE LEARNED DR AND PERUSING THE MATERIAL ON RECORD. 4. WE FIND THAT THE FACTS CLEARLY INDICATE THAT COMPENSATION OF 3% WAS PAID BY THE ASSESSEE NOT FOR TERMINATION OF EARLIER AGREEMENT BUT FOR ACQUIRING READYMADE EXPORT MARKET DEVELOPED BY GCL. THE ASSE SSEE USED TO SELL THE ITEMS TO GREAVES COTTON LTD. LOCAL LY AND GCL IN TURN USED TO EXPORT THE PRODUCTS MANUFACTURE D BY THE ASSESSEE UNDER ITS OWN BRAND. THE ASSESSEE ACQU IRED THE RIGHT TO SELL ITS PRODUCTS IN INTERNATIONAL MAR KET UNDER THE GCL BRAND WHICH RESULTED INTO HIGHER PROFITABIL ITY AS WELL AS EXPORT EARNINGS IN THE HANDS OF ASSESSEE. BESIDES ASSESSEE HAS ALSO ACQUIRED READYMADE EXPORT MARKET OF ITS PRODUCTS WHICH WAS DEVELOPED BY GCL AFTER MUCH EXPO RT AND INVESTMENT. ON SIMILAR FACTS THE APPEAL OF THE ASSESSEE FOR A.Y. 2005-06 WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ITAT VIDE ITS ORDER DATED 28-2-2011 IN ITA NO. 1075/PN/2009 FOR A.Y. 2005-06 BY OBSERVING AS U NDER: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFULLY . EVEN IF IT IS ASSUMED THAT THE PAYMENT IN QUESTION IS IN THE NATURE OF ROYALTY IT IS EVIDENT THAT THE PROVISIONS OF SECTION 194J CANNOT BE FASTENED ON TH E ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE 3 ITA NO. 581/PN/2010 GREAVES MORGANITE CRUCIBLE A.Y. 2006-07 REQUIREMENT OF DEDUCTING TAX AT SOURCE ON ROYALTY PAYMENT HAS BEEN INSERTED W.E.F. 13-7-2006 AND THEREFORE THE SAME DOES NOT COVER THE PERIOD UNDER CONSIDERATION. AS A RESULT THEREOF INVOKING OF PROVISIONS OF SECTION 40(A)(IA) IN ORDER TO MAKE TH E DISALLOWANCE HAS BEEN RIGHTLY NEGATED BY THE CIT(A) WHICH HAS BEEN EXTRACTED ABOVE CLEARLY BRINGS OUT THE INADEQUACY IN THE CASE SET UP BY THE A.O. NO COGEN T REASONING OR MATERIAL HAS BEEN BROUGHT ON RECORD TO DEMONSTRATE ANY INFIRMITY IN THE CONCLUSIONS DRAWN BY THE CIT(A) AND THEREFORE WE HEREBY AFFIRM THE SAME . THE LEARNED DR HAS NOT BROUGHT ANYTHING ON RECORD T O THE CONTRARY. FACTS BEING SIMILAR SO FOLLOWING THE SAM E WE HOLD THAT THE CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 11 35 312/- MADE BY THE ASSESSING OFFICER ON AC COUNT OF NON-CONVEYANCE CHARGES. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED IN THE OPEN ON 29 TH NOVEMBER 2011. SD/ - (G.S. PANNU) ACCOUNTANT MEMBER SD/ - SHAILENDRA KUMAR YADAV JUDICIAL MEMBER PUNE DATED THE 29 TH NOVEMBER 2011. ANKAM COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT AURANGABAD 4. CIT(A)- AURANGABAD 5. THE D.R ITAT PUNE BENCH PUNE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES PUNE. 4 ITA NO. 581/PN/2010 GREAVES MORGANITE CRUCIBLE A.Y. 2006-07