Harrison Malayalam Ltd., Cochin v. ACIT, Cochin

ITA 704/COCH/2008 | 2001-2002
Pronouncement Date: 20-01-2010 | Result: Dismissed

Appeal Details

RSA Number 70421914 RSA 2008
Bench Cochin
Appeal Number ITA 704/COCH/2008
Duration Of Justice 1 year(s) 7 month(s) 18 day(s)
Appellant Harrison Malayalam Ltd., Cochin
Respondent ACIT, Cochin
Appeal Type Income Tax Appeal
Pronouncement Date 20-01-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 20-01-2010
Date Of Final Hearing 13-01-2010
Next Hearing Date 13-01-2010
Assessment Year 2001-2002
Appeal Filed On 02-06-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORE SHRI N.VIJAYAKUMARAN & SHRI SANJAY ARORA I.T.A.NO S . 703 TO 705/COCH/2008 ASST. Y R S : 2000 - 01 2001 - 02 & 2003 - 04 HARRISONS MALAYALAM LTD. KOCHI. PA NO.AAACH 6769C VS. THE ASSIST. COMMR . OF INCOME-TAX CIRCLE-1 ERNAKULAM. (APPELLANT) ( RESPONDENT ) APPELLANT BY NONE RESPONDENT BY SHRI T.J. VINCENT JR. DR O R D E R PER N.VIJAYAKUMARAN J.M: THESE HREE APPEALS ARE BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2000-01 2001-02 AND 2003-04. SIN CE ALL THESE APPEALS ARE PERTAINING TO ONE AND THE SAME AS SESSEE AND ON THE COMMON ISSUE THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2. IN SPITE OF SERVICE OF NOTICE NONE APPEARED ON BEHALF OF THEE ASSESSEE PARTICULARLY THIS HEARING WAS GIVEN AT THE REQUEST OF THE LD. AUTHORIZED REPRESENTATIVE IN THE PREVIOUS HEARING I.E. ON 12-11-2009. HENCE WE PROCEED TO DISPOSE ITA NOS. 703 TO 705/COCH/2008 2 OF THE APPEAL EX PARTE AFTER HEARING SHRI T.J. VINC ENT LD. DR. 3. THE FACTS RELEVANT ARE THAT THE ASSESSEE IS A CO MPANY AND ORIGINALLY THE ASSESSMENT WAS COMPLETED U/S.143 (3) ON 31-01-2003 FOR THE ASSESSMENT YEAR 2001-02. THE CB DT VIDE ITS LETTER DATED 18-11-2005 CAPTIONED AS ENQU IRY IN RESPECT OF ENTITIES MENTIONED IN THE VOLCKER COMMIT TEE REPORT DEALT WITH ILLICIT PAYMENTS/KICKBACKS PA ID TO IRAQI REGIMENTS BY PARTICIPATING CONTRACTORS WHO HAD SUP PLIED HUMANITARIAN GOODS UNDER OIL FOR FOOD PROGRAMME MONITORED BY THE UNITED NATIONS SECURITY COUNCIL (U NSC) DIRECTED TO VERIFY THE NATURE OF PAYMENTS. THE CASE WAS REOPENED AND THIS ASPECT WAS ALSO ENQUIRED AND EXAM INED BY THE ASSESSING OFFICER. ASSESSING OFFICER FOUND TH AT FOR THIS THE ASSESSEE HAD ONE QUALIFYING CONTRACT UNDER WHIC H IT HAD EXPORTED BLACK TEA TO IRAQ UNDER OIL FOR FOOD PROG RAMME MONITORED BY THE UNITED NATIONS. THE ASSESSEE HAD PAID TO THE TUNE OF RS.3 86 044/- AS COMMISSION. THE ASSE SSING OFFICER WAS OF THE VIEW THAT THE PAYMENTS WERE DUBI OUS AND THESE EXPENSES WERE NEITHER AUTHORIZED NOR LEGAL. THEREFORE INVOKING THE EXPLANATION TO SECTION 37 ASSESSING OFFICER MADE THE ADDITION OF THE ABOVE AMOUNT OF ITA NOS. 703 TO 705/COCH/2008 3 RS.3 86 044/- AND COMPLETED THE ASSESSMENT U/S.143( 3) R.W.S. 147 OF THE ACT. 4. FOR THE OTHER TWO ASSESSMENT YEARS THE FACTS AR E SIMILAR AS ABOVE. 5. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(APPEALS) WHO UPHELD THE FINDINGS OF THE ASSESSING OFFICER AND DISMISSED THE APPEALS OF THE ASSESSEE. HENCE THE ASSESSEE IS ON SECOND APPEAL BEFORE US O N THIS ISSUE FOR ALL THE THREE YEARS UNDER CONSIDERATION. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AT LENGTH AND CONSIDERED HIS SUBMISSIONS CAREFULLY. WE HAVE GONE INTO THE STATEMENT OF FACTS FILED BY THE ASSES SEE INCLUDING THE GROUNDS OF APPEAL FILED BY THE ASSESS EE BEFORE THE LD. CIT(APPEALS) AND THE GROUNDS OF APPEAL BEFO RE US ALSO. THE ASSESSEES CONTENTION WOULD BE AS PER T HE GROUNDS OF APPEAL THAT THE EXPENSES INCURRED WERE O NLY AFTER THE RECEIPT OF APPROVAL FROM THE UNITED NATIONS AND AGAINST CONFIRMED LETTER OF CREDIT. THEREFORE IT IS AN AL LOWABLE BUSINESS EXPENDITURE IS THE CONTENTION OF THE ASSES SEE BEFORE THE LOWER AUTHORITIES. THE LD. D.R. RELIED ON THE ORDER OF THE TRIBUNAL DATED 07-08-2009 IN THE CASE OF SARAF ITA NOS. 703 TO 705/COCH/2008 4 TRADING COMPANY IN ITA NOS.320 TO 322/COCH/2008 FOR THE ASSESSMENT YEARS 2001-02 TO 2003-04. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D. R. AND THE CONTENTION OF THE ASSESSEE BEFORE THE AUTHORITI ES BELOW AND CAREFULLY PERUSED THE MATERIALS AVAILABLE ON RE CORD INCLUDING THE PRECEDENTS. EXPLANATION TO SECTION 3 7 WAS INTRODUCED W.E.F. 1-4-1962 I.E. THE DATE OF COMING INTO FORCE OF THE INCOME-TAX ACT 1961. THE EXPLANATION CLARIFIES THAT ANY EXPENDITURE INCURRED BY AN ASSESSEE FOR AN Y PURPOSE WHICH IS AN OFFENCE OR WHICH IS PROHIBITED BY LAW SHALL NOT BE DEEMED TO HAVE BEEN INCURRED FOR THE P URPOSE OF BUSINESS OR PROFESSION AND NO DEDUCTION OR ALLOW ANCE SHALL BE MADE IN RESPECT OF SUCH EXPENDITURE. THE FACTS AVAILABLE ON RECORD CLEARLY FIND THAT IT IS AN EXPENDITURE WH ICH WILL HIT UNDER THE EXPLANATION TO SECTION 37. THE FINDINGS OF THE AUTHORITIES ARE TO THAT EXTENT AND THEREFORE WE SE E NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD . CIT(APPEALS) WHO FOUND THAT THE PAYMENTS MADE AS COMMISSION OR SERVICE CHARGES ARE NOT FOR THE PURPO SE OF BUSINESS AND THEY ARE NOT REQUIRED OR NECESSITATED NOR AUTHORIZED. HENCE WE ARE OF THE VIEW THAT THE AP PEALS OF THE ASSESSEE ARE LIABLE TO BE DISMISSED. ITA NOS. 703 TO 705/COCH/2008 5 8. IN THE RESULT ALL THE THREE APPEALS ARE DISMISS ED. SD/- SD/- (SANJAY ARORA) (N.VIJAYKUMARAN) ACCOUNTANT MEMBER JUDICIAL M EMBER ERNAKULAM DATED THE 20 TH JANUARY 2010. PM. COPY FORWARDED TO: 1. HARRISONS MALAYALAM LTD. BRISTOW ROAD W/ISLAND K OCHI. 2. THE ASSIST. COMMR.OF INCOME-TAX CIRCLE-1 ERNAKULA M. 3. CIT(A)-II KOCHI 4. CIT KOCHI 5. D.R.