9911796707
TMI Blog2012 (7) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before us. 4. Ground No.1 and 1.1 read as under: "1. Whether on the facts and in the circumstances of the case, and in law the CIT(A) erred in deleting the addition of Rs. 4,36,93,000/- made u/s. 69 of the Income Tax Act, 1961. 1.1 Whether on the facts and in the circumstances of the case, and in law the CIT(A) erred in admitting the additional evidence in violation of provisions of Rule 46A of Income Tax Rules 1962". 5. The brief facts of the above issue are during the course of assessment proceedings, the AO observed that in Annexure-2 to the balance sheet under the head "Fixed Assets", assessee has shown capital work in progress being advance for construction of Vessel amounting to Rs. 18,85,31,320/-. The assessee was asked to furnish complete details of the said expenses with supporting evidences. In response, the assessee filed Xerox copies of invoice copies of correspondence made for remittance with bank and remittance certificates. The AO also made an effort to gather the details of transaction from holding company of the assessee i.e., M/s. Coeclerici Logistic S.P.A. of Italy from their official web site. The A.O. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying on the order of the learned CIT(A) submits that no additional evidence was filed before the learned CIT(A) and the learned CIT(A) on the basis of material evidence filed before the AO including the reconciliation, Supervision and Technical Management Agreement and the balance sheets of the respective companies has deleted the addition made by the AO. He further submits that in the subsequent years, the assessee has shown the full value of the said Vessel in the balance sheets for the years ended on 31-03-2008 and 31-03-2009 on which the AO has also allowed depreciation. He further submits that the assessee has also filed confirmation letter dt. 16-02-2010 from M/s. Coeclerici Logistic S.P.A. of Italy to show that construction work was done upto 31st March 2009 which tallies with the figure appearing in the respective balance sheets. He further submits that the said letter was filed after the assessment but during the course of stay of demand proceedings before the AO. He further submits that in any case that letter is confirmation letter from M/s. Coeclerici Logistic S.P.A. of Italy which is as per Supervision and Technical Management Agreement which is already on record, ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant assessment years, therefore, there is no difference and hence no addition is called for. The learned CIT(A) after considering the assessee's explanation and the material available on record, however, deleted the addition made by the AO vide finding recorded as under: "8.7 I have taken note of the AO's order as well as Appellant's A/R written submissions. I have also taken note of the documents and copy of agreement and relevant paper book submitted before me during the appellate proceedings. Having considered the same I find that the Operation Date as well as the Scope of Services and also the Payment terms have been very well defined in the agreement entered into between the Appellant company and its holding company 'Coeclerici Logistic S.P.A' in the agreement dated 11-12-2006 and the same are depicted as above in para - 8.4 of this order. As per the Scope of Services the holding company Coeclerici Logistic S.P.A. was supposed to procure the different equipments as per Annexure-I of the agreement dated 11th December, 2006 and the same was supposed to be provided and get fitted on the vessel which was under Shipbuilding contract at China. 8.8 Further to that as per para-3.4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of the resources embodying economic benefits". Thus, it is evident in clear term that the Appellant company has denied any payment from its side to the holding company. 8.10 In addition to this I also find that the AO's action of rejection of books of accounts under section 145(3) of I.T.Act was not at all justified as mentioned by the AO in para - 5.6 of his order which is depicted in para - 7.1 of this order. The AO has recorded that the Appellant company has failed to maintain the books disclosing true and complete facts as per prescribed norms. The AO recorded that the Appellant company has omitted in arriving the correct value of the assets in its books of accounts and hence the AO considered appropriate to reject the books of accounts as per Section 145(3) r.w.s. 144 of the Act and he concluded that the amount of Rs. 4,36,93,000/- as not accounted in the books of accounts of the Appellant is brought to tax in the hands of the appellant company invoking the provisions of Section 145(3) r.w.s. 144 of the Act as an unexplained and unrecorded investment in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. in point No. 4 of para 5.5 appearing at 7 of the assessment order, the A.O. has mentioned about the said agreement as under:- "A separate supervision agreement dated 04.07.2006 and 11.12.2006 was also entered into between M/s CGU Logistics Ltd., i.e. the assessee company as the "owner" and M/s Coeclerici Logistics S.P.A. as the 'Supervisor'. This agreement forms part of the share holder's agreement of even date." We further find that the assessee has also filed a copy of Invoice raised by M/s Coeclerici Logistics S.P.A. dtd. 25-3-2008 for an amount of US $ 1,25,00,000/- and the same has been recorded by the A.O. vide Point No. 10 of the same para 5.5 of the assessment order as under:- "10. As per the above referred agreements, the assessee company has to reimburse or pay all the expenses incurred by M/s Coeclerici S.P.A. and its group entities toward the vessel being built. The assessee's representative vide submissions dated 20.11.2009 filed a copy of Invoice raised by M/s Coeclerici Logistics S.P.A. dated 25.03.2008 for an amount of US $ 1,25,00,000/-." We further find that the assessee has also filed reconciliation statement appearing at page 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the terms of the agreement the assessee was not required to make the payment upto 31.12.2006 and the same was to be paid by the assessee before taking delivery of the vessel. Since the assessee has not taken the delivery of the vessel upto 31-3- 2007 and explained that he has not made any payment of Rs. 4,36,93,000/- to M/s Coeclerici Logistics S.P.A. upto the financial year 2006-07 relevant to A.Y. 2007-08 and proved that the above payment was made in subsequent assessment year which has also been accepted by the A.O. in the said subsequent assessment year, we are of the view that the A.O. was not justi fied in making the addition of Rs. 4,36,93,000/ in the year under consideration and the same has rightly been deleted by the ld. CIT(A). 12. As regards the application of the provisions of section 69 of the Act, we find that under the provisions of section 69 of the Act it has been provided that the value of investments made by the assessee in a financial year immediately preceding the assessment year may be deemed to be income of the assessee of such financial year if (i) such investments are not recorded in the books of accounts, if any, maintained by him for any source of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nary expenses and need to be treated as such and are allowable u/s 35D of the Act after commencement of the business as per the provisions of that section and accordingly the A.O. disallowed deduction u/s 35D of the Act amounting to Rs. 4,40,568/- and preliminary expenses of Rs. 5,02,240/-. 15. On appeal, the ld. CIT(A) observed that as per the certificate of commencement of business issued by the Registrar of Companies the date of commencement of business is 18th July, 2006 and the assessee carried out the agreement with the holding company i.e. M/s Coeclerici Logistics S.P.A. for erection of respective vessel vide contract dtd. 11-12- 2006 and accordingly held that the A.O. was not justified in not allowing the claim made by the appellant as per section 35D of the Act and directed the A.O. to allow the same. With regard to the denial of deduction of Rs. 5,02,240/- as revenue expenditure, the ld. CIT(A) following the decision of Hon'ble Delhi High Court in CIT vs. ESPN Software India (P) Ltd. (2009) 184 Taxman 452 (Del) : (2008) 301 ITR 368 (Del) directed the A.O. to allow the said expenditure as revenue expenditure. 16. At the time of hearing, the ld. D.R. supports the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
