Chatterjee Management Services Pvt. Ltd., Kolkata v. THE DCIT, CIR-8, KOLKATA, Kolkata

ITA 610/KOL/2016 | 2008-2009
Pronouncement Date: 19-10-2016

Appeal Details

RSA Number 61023514 RSA 2016
Bench Kolkata
Appeal Number ITA 610/KOL/2016
Duration Of Justice 6 month(s) 12 day(s)
Appellant Chatterjee Management Services Pvt. Ltd., Kolkata
Respondent THE DCIT, CIR-8, KOLKATA, Kolkata
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Assessee
Bench Allotted SMC
Tribunal Order Date 19-10-2016
Assessment Year 2008-2009
Appeal Filed On 06-04-2016
Judgment Text
1 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA (BEFORE SHRI N.V.VASUDEVAN J.M. &DR.A.L.SAINI A.M .) ITA NO. 610 /KOL/2016 : A.Y : 2008-09 M/S. CHATTERJEE MANAGEMENT SERVICES PVT. LTD PAN: ABCC4005D 9B WOOD STREET 3 RD FLOOR KOLKATA-700 016 VS THE DEPUTY COMMISSIONER OF TAX CIRCLE-8 KOLKATA (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI: A.K. TIBREWAL FCA LD.AR DEPARTMENT BY: SHRI RAJAT KUMAR KUREEL JCIT LD.DR DATE OF HEARING : 20-09-2016 DATE OF PRONOUNCEMENT :- 19.10. 2016 ORDER PER DR. A.L.SAINI A.M .: THE ABOVE CITED CAPTIONED APPEAL FILED BY THE ASSES SEE PERTAINING TO ASSESSMENT YEAR 2008-09 IS DIRECTED AGAINST THE O RDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-16 KOLKATA IN APPEAL NO. 2 88/CIT(A)-16/KOL/2014-15/C- 8(1) DATED 03-02-2016 WHICH IN TURN ARISES OUT O F THE ORDER PASSED BY THE ASSESSING OFFICER U/S. 143(3) OF THE INCOME-TAX ACT 1961 (I N SHORT THE ACT) DATED 31-12- 2010. 2. THE FACTS OF THE CASE ARE STATED IN BRIEF. THE ASSESSEE COMPANY FILED ITS E- RETURN OF INCOME BELATED ON 31-03-2009 SHOWING TOTA L LOSS OF RS.1 85 90 613/-.THE 2 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD CASE WAS SELECTED FOR SCRUTINY UNDER CASS BY ISSUIN G OF STATUTORY NOTICES. LATER ON THE AO MADE THE ASSESSMENT AT RS.20 57 710/- BY OBS ERVING AS UNDER:- AGAIN ON EXAMINATION OF ACTIVITY OF ASSESSEE COMPA NY IT IS SEEN FROM PROFIT & LOSS A/C THAT ASSESSEE COMPANY RECEIV ED FOLLOWING INCOMES DURING THE YEAR UNDER CONSIDERATION: A. CONSULTANCY INCOME OF RS.16 85 400/- OUT OF WHIC H A SUM OF RS. 15 11 804/- WAS NOT RECEIVED BUT SHOWN AS DEBTOR F ROM GROUP COMPANY CELCIOUS TECHNOLOGIES PVT LTD 9B WOOD STR EET KOLKATA- 16. NO OTHER INCOME WAS RECEIVED BY COMPANY EXCEPT DIVIDEND OF RS.5 OO OOO/- AND INCOME TAX REFUND OF RS.3 72 307 /- WHICH ARE INCOME FROM OTHER SOURCES. B. AGAINST THE AFORESAID ACTIVITY ASSESSEE CLAIMED OPERATING & ADMINISTRATIVE EXPENSE OF RS.1 87 99 058/- INTERES T PAYMENT RS.1 57 070/- FULLY RELATED TO INVESTMENT ACTIVITY BAD DEBTS W/OFF OF RS.6 66 667/-. NO DETAIL OF THE SAME WERE FILED NOR EXPLANATION WAS FURNISHED ON THE NATURE OF DEBT. C. ON EXAMINATION OF BREAK UP OF DETAILS OF SALARY IT IS SEEN THAT SALARY OF RS.29 38 623/- WAS PAID TO PERSON SPECIFI ED U/S.40A{2B) OUT OF TOTAL SALARY PAYMENT CLAIMED AT RS.66 47 086 /-. IT IS SEEN THAT THIS PERSON IS EMPLOYED TO LOOK AFTER THE ACTIVITIE S OF OTHER GROUP COMPANIES AND PROJECTS CARRIED OUT BY DIFFERENT GRO UP ASSOCIATES AS IT IS EVIDENT FROM THE NATURE OF ACTIVITY OF ACCOMM ODATION CARRIED OUT BY ASSESSEE WHEREBY THE ASSESSEE COMPANY MADE A DVANCE FOR PROJECT OF RS.1 73 34 782/- TO GROUP COMPANIES. NO INTEREST WAS CHARGED BY ASSESSEE COMPANY NOR DOES THE PROJECT BE LONG TO THE ASSESSEE. SO THE ENTIRE EXPENSE REIMBURSED AND CLAI MED BY ASSESSEE COMPANY ON ACCOUNT OF SALARY STAFF WELFARE OFFICE MAINTENANCE RENT COMMUNICATION ELECTRICITY TRAVELING REIMBURS ED IS RELATED TO GROUP COMPANIES AND NO SUCH EXPENSES WERE ACTUAL LY INCURRED BY ASSESSEE IN COURSE OF ITS OWN BUSINESS ACTIVITY. THEREFORE THE EXPENSES CLAIMED BY ASSESSEE COMPANY INCURRED ON BE HALF OF RELATED PARTY'S BUSINESS ARE NOT AN ALLOWABLE CLAIM AND HENCE IS DISALLOWED AND NOT CONSIDERED. 3 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD D. ON EXAMINATION OF DETAIL OF CONSULTANCY CHARGES PAID IT SEEN THAT A SUM OF RS. 7 50 000/- WAS PAID TO K. BHATTAC HARYA. ON 31.03.2008 THE SAID CONSULTANCY PAYMENT WAS TRANSFE RRED IN THE NAME OF GROUP COMPANIES VIZ: BIP DEVELOPERS TCG SO FTWARE PARK FOR EXPENSES AMOUNTING TO RS.6 71 OOO/-. FURTHERMOR E IT IS OBSERVED THAT TOTAL CONSULTANCY PAYMENT CLAIMED BY ASSESSEE AMOUNTING TO RS. 24 18 707/- HAS NOT BEEN INCURRED IN CONNECTION WITH EARNING OF INCOME BUT TO MERELY ACCOMMODATE I TS GROUP ASSOCIATES. FROM THE DETAILS FILED IT IS OBSERVED T HAT: (I) CONSULTANCY PAID TO KAUSHIK CHAKRABORTY FOR PUBLIC RELATIONSHIP (2) K. BHATTACHARYA RS.79 OOO/- FOR REAL ESTATE CONSULTANT (3) ANUDEEP RS.5 71 500/- FOR ADVISORY (4) RAJNEESH AGARWAL RS .7 50 842/- FOR TAX CONSULTANCY (5) K: SEKHAR RS.4 22 500/- FOR CO MPANY LAW (6) FOR DATA ENTRY RS.1 75 OOO/-. FROM THE AFOREMEN TIONED DETAILS OF PAYMENTS MADE IT IS CLEARLY EVIDENT THAT VARIOUS GROUP COMPANIES HAVE TAKEN SERVICES OF THESE PROFESSIONAL S IN THEIR PART BUT CONSULTANCY FEE WAS CLAIMED IN THE ASSESSEE COM PANY. THE AFORESAID CONSULTANCY PAYMENT IS NOT RELATED TO ASS ESSEE BUSINESS AND IS HENCE DISALLOWED AND NOT CONSIDERED. E. THE ASSESSEE CLAIMED RENT PAYMENT OF RS.34 15 61 8/- FOR KOLKATA MUMBAI & DELHI OFFICE OUT OF WHICH SUM OF RS.2 16 OOO/- ONLY WAS REIMBURSED FROM ONE GROUP CO MPANY. NO OTHER PAYMENT WAS REIMBURSED BUT THE AFOREMENTIONED OFFICE PREMISES WERE ENJOYED BY VARIOUS GROUP COMPANIES. H ENCE IN ABSENCE OF ANY AGREEMENT ETC. PRODUCED THE SAME IS DISALLOWED AND NOT CONSIDERED. 5. IN VIEW OF AFORESAID FACTS IT IS VERY CLEAR T HAT ASSESSEE COMPANY IS MERELY AN ACCOMMODATING COMPANY FOR ITS GROUP CO MPANIES AND DOES NOT CARRY OUT ANY REAL BUSINESS ACTIVITY. CON SULTANCY CHARGES RECEIVED FROM GROUP COMPANIES AMOUNTING TO RS.16 85 400/- IS INCOME FROM OTHER SOURCES AND ACCORDINGLY ASSESSED. INTEREST ON IT REFUND OF RS.3 72 307/- IS ALSO AN INCOME FROM OTHER SOURCES AND ACCORDINGLY ASSESSED. THE BUSINESS EXPENDITURE AND OTHER CLAIMS IN PROFIT & LOSS A/C ARE MERELY ACCOMMODATIO N EXPENSES ON BEHALF OF THE ASSESSEE'S GROUP ASSOCIATES AND NOT R ELATED TO ASSESSEE'S EARNING OF INCOME. HENCE IT IS DISALLOW ED. 4 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD 3. AGGRIEVED FROM THE ORDER OF THE ASSESSING OFFICE R THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEA LS)-16 KOLKATA WHO ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY OB SERVING THE FOLLOWING:- 5. THE AO HAS MADE THE ADDITION ON THE GROUND THAT AS PER PARA 5 CONSULTANCY INCOME OF RS.16 85 000/- WHICH IS BE ING SHOWN BY THE ASSESSEE. RS.15 11 804/- IS NOT RECEIVED BY THE ASS ESSEE BUT SHOWN AS DEBTS FROM GROUP COMPANY OF THE ASSESSEE. NO OTH ER INCOME EXCEPT DIVIDEND AND INCOME TAX REFUND. ARE RECEIVED . IN PARA 5(0) OF THE ASSESSMENT ORDER THE AO HAS TRIED TO GIVE B REAK- UP AND THE NATURE OF VARIOUS EXPENSES BY THE ASSESSEE. AS PER THE BREAK-UP IT IS CLEAR THAT ALL THE PAYMENTS HAVE BEEN MADE TO THE G ROUP COMPANIES ONLY. HENCE IT IS EVIDENT AS PER THE ORDER OF THE AO THAT CONSULTANCY INCOME IS RECEIVED FROM THE GROUP CONCERNS AND ALL THE EXPENSES ARE ALSO MADE TO THE GROUP CONCERNS ONLY. 6. BEFORE ME THE WRITTEN SUBMISSION HAS BEEN FILED . THE .CASE HAS BEEN MADE OUT THE EXPENSES HAVE BEEN INCURRED AND THEY MAY BE ALLOWED U/S 37(1) OF THE IT ACT. 7. I HAVE GONE THROUGH THE CONTENTION OF THE AR. I FIND NO FORCE IN THE CONTENTION THAT THESE EXPENSES ARE TO BE ALLOWE D U/S 37(1) OF THE IT ACT. THE AO HAS CLEARLY MADE OUT THE CASE THAT N O BUSINESS ACTIVITY IS DONE DURING THE YEAR. CONSULTANCY INCOM E IS RECEIVED FROM THE GROUP CONCERN. IT IS ALSO SHOWN AS DEBTOR. PAYM ENTS ARE MADE TO THE GROUP CONCERNS ONLY. ONLY ARTIFICIAL LOSS IS CR EATED IN THIS YEAR. 8. CONTENTION OF THE A.R THAT THE INCOME HAS INC REASED IN SUBSEQUENT YEARS IS NOT ACCEPTABLE HERE AS INCOME T AX PROCEEDING OF EVERY YEAR IS A DIFFERENT PROCEEDING. TIME AND AGAI N IT HAS BEEN HELD BY VARIOUS COURTS THAT RESJUDICATA IS NOT TO B E APPLICABLE IN THE INCOME TAX PROCEEDINGS. 9. HENCE THE A.O. HAS CLEARLY MADE OUT THE CA SE THAT ARTIFICIAL LOSS HAS BEEN CREATED BY THE ASSESSEE. 10. HENCE THE ADDITION OF THE A.O. IS SUSTAINED AN D THE APPEAL OF THE ASSESSEE IS DISMISSED. 5 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD 4. NOT BEING SATISFIED WITH THE ORDER OF THE COMMIS SIONER OF INCOME-TAX (APPEALS) THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AND HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-16 KOLKATA ERRED IN DISMISSING THE APPEAL OF THE APPELLANT COM PANY BY WAY OF PASSING AN ORDER DATED 3RD FEBRUARY 2016 ON ARBITRARY CONC LUSIONS BASED ON IRRELEVANT CONSIDERATIONS SUSPICION SURMISES AND CONJECTURES AND THEREFORE THE SAME IS ILLEGAL INVALID BAD IN LAW. 2) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-16 KOLKATA ERRED IN DISMISSING THE APPEAL WITHOUT PROPERLY CON SIDERING THE WRITTEN SUBMISSIONS AND VARIOUS EVIDENCES FURNISHED BEFORE HIM IN SUPPORT OF VARIOUS ISSUES RAISED IN GROUNDS OF APPEAL. 3) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-16 KOLKATA ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE AS SESSING OFFICER OF THE ENTIRE BUSINESS EXPENDITURE CLAIMED IN THE PROFIT & LOSS A/C ON THE ALLEGED GROUND THAT THE SAME WERE MERE ACCOMMODATION EXPENS ES NOT RELATED TO EARNING OF ASSESEE'S INCOME. 4) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-16 KOLKATA ERRED IN CONFIRMING THE DISALLOWANCE OF RS.6 66 667 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BAD DEBTS CLAIMED BY THE ASS ESSEE COMPANY IN COMPLETE DISREGARD OF THE BINDING JUDGMENT OF THE H ON'BLE APEX COURT RENDERED IN T.R.F. LTD. VS. CIT [2010] 323 ITR 397 (SC). 5) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-16 KOLKATA ERRED IN UPHOLDING THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF THE DEPRECIATION OF RS.10 97 669 WHICH W AS ADMISSIBLE AS PER THE PROVISIONS OF INCOME TAX ACT 1961 READ WITH IN COME TAX RULES 1962. 6) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-16 KOLKATA ERRED IN UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF THE DEDUCTION OF RS.4 90 000 CLAIMED BY THE APPE LLANT ASSESSEE COMPANY UNDER SECTION 80G OF THE INCOME TAX ACT 1961. 6 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD 7) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-16 KOLKATA ERRED IN CONFIRMING THE ASSESSMENT OF INCOM E OF RS.16 85 400 UNDER THE HEAD OF INCOME FROM OTHER SOURCESAGAINS T THE HEAD BUSINESS INCOME AS CLAIMED BY THE APPELLANT ASSESSEE COMPAN Y. 8) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-16 KOLKATA HAD ERRED IN REFUSING TO ALLOW THE BENEFIT OF CARRY FORWARD OF BUSINESS LOSSES OF RS.1 85 90 613 ON ARBITRARY GROU NDS BEING TOTAL CONTRARY TO THE FACTS AND EVIDENCES ON RECORD. 9) THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS)-16 KOLKATA HAD ERRED IN REFUSING TO ALLOW THE SET OF B ROUGHT FORWARD UNABSORBED DEPRECIATION AGAINST THE INCOME ASSESSAB LE TO TAX FOR THE ASSESSMENT YEAR 2008-09. 10) THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)-16 KOLKATA HAD ERRED IN REFUSING TO ALLOW CREDIT OF TA X DEDUCTED AT SOURCE OF RS.1 69 950 AND ADVANCE TAX OF RS.2 00 000 BEING PR EPAID TAXES CLAIMED BY THE APPELLANT ASSESSEE COMPANY. 5. FIRST THREE GROUNDS OF APPEAL RELATE TO THE DISA LLOWANCE MADE BY THE AO ON ACCOUNT OF ACCOMMODATION ENTRIES AND OBSERVATION OF THE AO THAT THE ASSESSEE DOES NOT HAVE ANY BUSINESS ACTIVITY. BRIEFLY STATED THAT THE ASSESSEE IS A PRIVATE LIMI TED COMPANY ENGAGED IN INVESTMENT ACTIVITIES. THE SAID FIRST THREE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE LIKELY TO BE TECHNICAL IN NATURE THEREFORE WE ARE GOING TO DEAL WITH THEM FIRST. THE MAIN GRIEVANCE OF THE ASSESSEE IS THAT THE OBSERVATION O F THE ASSESSING OFFICER THAT THE ASSESSEE COMPANY ENGAGES IN ACCOMMODATION ENTRIES A ND DOES NOT HAVE ANY BUSINESS ACTIVITIES IS WRONG AND WITHOUT ANY BASE. THE ASSE SSING OFFICER MADE THE ADDITIONS AND DISALLOWED ASSESSEES EXPENSES BASED ON THE FIN DINGS THAT THE ASSESSEE COMPANY DOES FALSE ENTRIES IN ITS BOOKS ( ACCOMMODATION ENT RIES) AND DOES NOT HAVE BUSINESS ACTIVITIES. 7 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD 6. THE LD.AR FOR THE ASSESSEE HAS SUBMITTED THAT TH E AO WAS WRONG IN TREATING THE ASSESSEE COMPANY BEING ENGAGED IN THE TRANSACTI ON OF ACCOMMODATION ENTRIES. THE AO HAS CONSIDERED THAT THE ASSESSEE COMPANY WAS NOT DOING ANY BUSINESS ACTIVITY DURING THE PREVIOUS YEARS. IT WAS ENGAGED IN ACCOMMODATION ENTRY/TRANSACTION DURING THE YEAR WHICH WAS TREATE D BY THE AO AS BOGUS TRANSACTION. THE STAND OF THE AO WAS THAT THE ASSESSEE COMPANY W AS NOT DOING ANY BUSINESS ACTIVITY AND MOTIVE TO EARN PROFIT IS ABSENT THE SE ALLEGATIONS MADE BY THE AO ARE WITHOUT ANY BASIS. IN FACT THE ASSESSEE COMPANY H AS BEEN DOING ITS BUSINESS SINCE LAST SEVERAL YEARS AND FILED ITS RETURN REGULARLY. THE LD.AR FOR THE ASSESSEE FURTHER SUBMITTED THAT FILING OF RETURNS OF INCOME PROVE D THAT THE ASSESSEE COMPANY IN QUESTION WAS IN EXISTENCE AND IT IS NOT A NEW COMPA NY. IN SUPPORT OF THE CONTENTIONS THE LD.AR OF THE ASSESSEE HAS RELIED ON THE FOLLOWI NG JUDGMENTS:- . ITA NO.2940/MUM/2011 AY 2007-08 THE ORDER DATED 27-07-2016 IN THE CASE OF PINEBRIDGE INVESTMENTS CAPITAL (I) P .LTD (FORMERLY KNOWN AS AIG CAPITAL (I) P.LTD VS. ITO R ANGE 6(1)(4) MUMBAI WHEREIN ON IDENTICAL ISSUE DISALLOWANCE BE ING CONSULTANCY CHARGES PAID TO THE LEGAL ADVISOR WAS PARTLY ALLOWE D BY THE ITAT. 7. THE LD.DR FOR THE REVENUE PRIMARILY HAS REITERAT ED THE STAND AS TAKEN BY THE COMMISSIONER OF INCOME-TAX (APPEALS) WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA OF THIS ORDER AND IS NOT BEING REPEATED FOR T HE SAKE OF BREVITY. 8. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD WE ARE OF THE VIEW THAT THERE IS MERIT IN T HE SUBMISSIONS OF THE ASSESSEE. AS THE PROPOSITIONS CANVASSED BY THE LD.AR FOR THE AS SESSEE ARE SUPPORTED BY THE JUDGMENT OF THE ITAT (SUPRA) AND FACTS NARRATED ABO VE LD.AR HAS ADDUCED THE PROOF BY SHOWING THE I.T RETURN FOR THE PREVIOUS YE AR THAT THE SO-CALLED ASSESSEE 8 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD COMPANY WAS IN EXISTENCE. THE ASSESSEE ALSO PRODUCE D BEFORE US THE OBJECT CLAUSE OF THE MEMORANDUM OF ASSOCIATION DATE OF INCORPORATIO N COMPARATIVE CHART OF REVENUE EARNED BY THE COMPANY AND LEASE AGREEMENT WHERE THE REGISTERED OFFICE OF THE COMPANY IS SITUATED. ALL THESE EVIDENCES SHOW THAT THE COMPANY WAS IN EXISTENCE. THEREFORE WE ALLOW THE GROUND NO. 1 2 AND 3 RAIS ED BY THE ASSESSEE. 9. IN THE RESULT THE GROUND NOS. 1 2 AND 3 ARE ALL OWED. 10. THE LD. CIT(A) HAS DISALLOWED/CONFIRMED THE FOL LOWING EXPENSES OF THE ASSESSEE BASED ON PRESUMPTION THAT THE ASSESSEE EN GAGED IN ACCOMMODATION ENTRIES AND NO ANY BUSINESS ACTIVITIES ARE CARRIED ON BY HI M. THE DETAILS OF DISALLOWANCES CONFIRMED BY THE LD.CIT(A) ARE AS UNDER:- A. DISALLOWANCE OF RS.6 66 667/- MADE ON A/C OF B AD DEBTS B. DISALLOWANCE OF RS.10 97 669/- MADE ON ACCOUNT OF DEPRECIATION C. DISALLOWANCE OF RS.4 90 000/- MADE U/S. 80G OF THE ACT D. AO ASSESSED INCOME OF RS. 16 85 400/- UNDER THE HEAD INCOME FROM OTHER SOURCES AGAINST THE HEAD OF BUSIN ESS INCOME AS CLAIMED BY THE ASSESSEE E. DISALLOWANCE OF RS.1 85 90 613/- BEING CARRY FO RWARD OF BUSINESS LOSS AND F. DISALLOWANCES OF RS.1 69 950/- AND RS.2 00 000/ - MADE ON A/C OF TDS AND ADVANCE TAX THE LD.AO HAS DISALLOWED/MADE THE ABOVE CITED EXPEN SES WHICH ARE NARRATED BYTHE ASSESSEE IN THE FORM OF GROUNDS OF APPEAL. AS WE EX PLAINED IN EARLIER PARA THAT AO HAS DISALLOWED THESE EXPENSES OBSERVING THAT NO BUS INESS ACTIVITY WAS CARRIED ON BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. T HE LD. CIT(A) HAS CONFIRMED THIS ACTION OF THE AO. 9 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD 11. THE LD.AR FOR THE ASSESSEE HAS SUBMITTED THAT T HE ASSESSEE HAS BEEN CARRYING ON ITS BUSINESS DURING THE PREVIOUS AND SUBSEQUENT YEARS. THE LD.AR OF THE ASSESSEE HAS SHOWN BEFORE US BY FILING THE INCOME & EXPENDI TURE BY WAY OF P & L ACCOUNT. HE HAS ALSO SHOWN TO US THE MAIN OBJECT OF THE ASSE SSEE COMPANY BY FILING THE COPY OF MEMORANDUM OF ASSOCIATION WHICH SHOWS THAT THE ASSESSEE COMPANY WAS ENGAGED IN THE ACTIVITY OF BUSINESS AS PER ITS OBJE CT. THE LD.AR FOR THE ASSESSEE EXPLAINED THE ENTRIES MADE IN THE P & L ACCOUNT WH ERE IT IS NOTICED THAT THE ASSESSEE COMPANY IN QUESTION RECEIVED CONSULTANCY FEES DURIN G THE PREVIOUS YEAR ENDING ON 31-03-2007 OF RS.47 91 526/-. THE ASSESSEE HAS RECE IVED CONSULTANCY FEES OF RS.16 85 400/- AS ON 31-03-2008. THE CONSULTANCY FE ES ARE SUBJECT TO DEDUCTION OF TAX AT SOURCE. THE ASSESSEE COMPANY HAS INCORPORATE D ON 11-11-1994. THE ASSESSEE HAS SHOWN A COMPARATIVE CHART OF INCOME BEING CONSU LTANCY CHARGES RECEIPT DURING THE PREVIOUS YEARS ENDING IN 2008 2013 2014 AND 2 015. THE LD.AR ALSO DEMONSTRATED BEFORE US THE LEASE AGREEMENT OF THE B UILDING WHERE THE ASSESSEE COMPANY IS SITUATED/REGISTERED OFFICE OF THE COMPAN Y IS SITUATED. HE HAS ALSO EXPLAINED THAT THE ASSESSEE COMPANY HAS BEEN DOING ITS BUSINESS CONTINUOUSLY SINCE ITS INCEPTION/INCORPORATION. IT IS NOT NECESSARY FO R A BUSINESSMAN THAT HE SHOULD EARN ALWAYS PROFIT. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS SHOWN LOSS BY WAY OF HEAVY INCURRED EXPENDITURE. LOOKING TO THE F ACTS AND NATURE OF HEAVY EXPENDITURE WHICH OCCURRED HEAVY LOSS THE AO PRESU MED THAT THE ASSESSEE COMPANY HAS NOT BEEN DOING ANY BUSINESS ACTIVITY. IT ENGAG ED IN PROVIDING ACCOMMODATION ENTIRES. THE AO IN HIS ORDER FINALLY MENTIONED THAT THE ASSESSEE COMPANY IN QUESTION WAS ENGAGED IN THE BUSINESS OF PROVIDING OF ACCOMMO DATION ENTRY. IN THIS REGARD THE LD.AR OF THE ASSESSEE HAS SUBMITTED THAT THE AO DID NOT BRING ANY COGENT MATERIAL/EVIDENCE ON RECORD TO SHOW THAT THE ASSES SEE COMPANY WAS ENGAGED IN THE BUSINESS OF PROVIDING ACCOMMODATION ENTRY AND DID N OT DO ANY BUSINESS. THE AO 10 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD WITHOUT EXAMINING THE DETAILS OF INCOME AND EXPENDI TURE AS FILED BEFORE HIM CAME TO A CONCLUSION THAT THE ASSESSEE COMPANY WAS NOT DOIN G ANY BUSINESS DURING THE PREVIOUS YEAR. THEREFORE THE AO WAS OF THE VIEW TH AT THE ENTIRE EXPENDITURE ON VARIOUS HEADS AS CLAIMED BY THE ASSESSEE BEFORE HIM WAS BOGUS AND INGENUINE. 12. THE LD.DR FOR THE REVENUE HAS STATED THAT NO DO UBT THE ASSESSEE COMPANY HAS ITS OWN MEMORANDUM OF ASSOCIATION. THE OBJECT AND F UNCTION OF THE ASSESSEE COMPANY WAS MENTIONED IN THE SAID MEMORANDUM OF ASS OCIATION. BUT THE ASSESSEE COMPANY WAS NOT DOING ANY BUSINESS DURING THE PREVI OUS YEARS AND THE YEAR UNDER CONSIDERATION. MERELY BECAUSE THE OBJECT MENTIONED IN THE MEMORANDUM OF ASSOCIATION ABOUT THE BUSINESS ACTIVITY IT IS NOT M EAN THAT THE ASSESSEE COMPANY HAS DONE ITS BUSINESS ACTIVITY DURING THE PREVIOUS YEAR S. THE ASSESSEE HAS NOT DISCHARGED ITS PRIMARY ONUS BEING BUSINESS CARRIED ON BY IT. T HE AO HAS NOT NOTICED ANY BUSINESS ACTIVITY OF THE ASSESSEE COMPANY. 13. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD WE ARE OF THE VIEW THAT THERE IS MERIT IN T HE SUBMISSIONS OF THE ASSESSEE. AS THE PROPOSITIONS CANVASSED BY THE LD.AR FOR THE ASS ESSEE ARE SUPPORTED BY THE FACTS NARRATED ABOVE HE ADDUCED THE PROOF BY SHOWING THE I.T RETURN FOR THE PREVIOUS YEAR THAT THE SO-CALLED ASSESSEE COMPANY WAS IN EXISTENC E. WE DO NOT FIND ANY FORCE IN THE SUBMISSIONS OF THE LD.DR. WE FIND THAT THE MEMORAND UM OF ASSOCIATION OF A COMPANY IS MANDATE. WE FIND THAT THE AO MADE THE SA ID DISALLOWANCES ON HIS PRESUMPTION ONLY ON THE GROUND THAT THE ASSESSEE CO MPANY WAS NOT ENGAGED IN ANY ACTIVITY. THE ASSESSEE HAS SHOWN BEFORE US THE OBJE CT OF THE COMPANY BY WAY OF ITS MEMORANDUM OF ASSOCIATION. THE ASSESSEE HAS ALSO DE MONSTRATED BEFORE US THE PREVIOUS YEARS FIGURES OF INCOME AND EXPENDITURE BY WAY OF ITS P & L ACCOUNT. THE 11 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD ASSESSEE COMPANY SINCE ITS INCEPTION/INCORPORATION I.E ON 11-11-1994 HAS BEEN DOING ITS BUSINESS. BEFORE US THE ASSESSEE HAS ALSO FILED THE COMPARATIVE CHART OF THE REVENUE RECEIPTS DURING THE PREVIOUS AND SUBSEQUENT YEARS. THE LD.AR OF THE ASSESSEE HAS ALSO SHOWN BEFORE US THE COPY OF LEASE AGREEMEN T OF THE BUILDING WHERE THE COMPANYS REGISTERED OFFICE IS SITUATED. ON VERIFI CATION OF THE DOCUMENTS/EVIDENCES AS SUBMITTED BY THE ASSESSEE BEFORE US WE ARE OF T HE VIEW THAT THERE IS BUSINESS ACTIVITY. WE FIND THAT THE MATTER IN HAND REQUIRES FURTHER EXAMINATION BY THE AO. THEREFORE IT IS APPROPRIATE TO REMIT THE MATTER/CA SE TO HIS FILE TO EXAMINE THE DETAILS OF EXPENDITURE AND RECEIPTS AFRESH AS SUBMITTED BY THE ASSESSEE BEFORE US. THEREFORE WE SET ASIDE THE CASE TO THE FILE OF THE AO TO MAKE THE ASSESSMENT AFRESH AFTER CONSIDERING THE DETAILS OF BILLS VOUCHERS EVIDENC ES AGREEMENTS ETC. AS SUBMITTED BY THE ASSESSEE. WE HAVE CONFIRMED THAT THE ASSESSEE H AS BEEN DOING BUSINESS ACTIVITIES DURING THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE AO AGAIN NEED NOT TO EXAMINE IT. WE DIRECT THE AO TO MAKE THE ASSESSMENT AFRESH BASED ON THE EVIDENCES/DOCUMENTS AS AVAILABLE/ FILED/SUBMITTED B Y THE ASSESSEE. 14. IN THE RESULT THE APPEAL FILED BY THE ASSESSE E FOR THE AY 2008-09 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19.10-2016 SD/- SD/- (N.V.VASUDEVAN) (DR. A.L.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 19/10/2016 *PRADIP (SR.PS) 12 ITA NO. 6 10/KOL/2016 M/S. C HATTERJEE MANAGEMENT SERVICES PVT.LTD COPY OF THE ORDER FORWARDED TO: 1. REVENUE 2 ASSESSEE 3. THE CIT-I 4. THE CIT (A)-I 5. DR KOLKATA BENCHES KOLKATA TRUE COPY BY ORDER ASST. REGISTRAR ITAT KOLKATA BENCHES