TMI Blog2015 (7) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... n between the relatives and associates is concerned, the same shall be treated as bona fide case unless the officer finds it that one of them is trying to evade payment of tax. Considering the overall facts of the case and the ratio laid down by the Hon’ble Apex Court in the case of Commissioner of Income Tax vs Excel Industries Ltd, [2013 (10) TMI 324 - SUPREME COURT] we are of the opinion that the appeals are meritless and the same deserve to be dismissed and accordingly dismissed. - Decided in favour of assessee. - Tax Appeal No. 428 of 2015, Tax Appeal No. 431 of 2015 - - - Dated:- 7-7-2015 - A. J. Desai And A. G. Uraizee,JJ. For the Appellant : Mr M R Bhatt, Ld Senior Adv. With Mrs Mauna M Bhatt, Adv. For the Respondent : Mr S N Soparkar, Ld Senior Adv. With Mr B S Soparkar, Ld. Adv. JUDGMENT (Per : Honourable Mr. Justice A. J. Desai) 1. By way of filing four different tax appeals under Section 260A of the Income Tax Act, 1961, the revenue has challenged the Order dated 5.12.2014, passed by the Income Tax Appellate Tribunal, Ahmedabad as well as the Order dated 15.10.2009 passed by the Assistant Commissioner of Income Tax (Appeals), Ahmedabad, by which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure claimed by the Assessee company is excessive and unreasonable. The assessee company through its responsible officer appeared before the Assessment Officer and supplied the details as asked for by the the Assessment Officer. 4.4 The Assessment Officer considered the submission of the assessing company with regard to the expenditure unreasonable and held that since the assessing company is using some space of the parent company, the expenditure claimed by the assessee is much on higher side. The officer also held that the office occupied by the assessing company, considering the infrastructure provided by the parent company to the assessing company, the same can be treated at the rate of ₹ 10 lacs per month i.e. ₹ 1.2 crore for an assessment year and, therefore, he deducted the said amount from the total expenditure of ₹ 5, 82,89,335/- and asked the assessee to pay the tax accordingly. The said decision was challenged by the assessee by way of an Appeal No. CIT(A) VIII/AC-4/240/08-09 before the office of the Commissioner of Income Tax (Appeals), Ahmedabad. The Commissioner of Appeals by its Order dated 15.10.2009 allowed the appeal and held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the case of the revenue that the assessee has tried to evade any tax liability. He would further submit that the assessee and the parent company have agreed to enter into a contract, by which it was agreed that the assessee company has to pay ₹ 3,205/- towards service charges which was accepted by the department itself for the last two consecutive years and, therefore, there was no reason for the assessment officer to disallow the claim made by the petitioner by exercising power under Section 400-A of the Act. By taking us through the observations made in the order of the Commissioner of the Income Tax (Appeals) as well as the Tribunal, he would submit that both the lower authorities have dealt with the case in detail and have rightly passed the order, which does not call for any interference under Section 260A of the Act. He would submit that the specific contention was raised by the assessee before the Assessment Officer about the contractual relationship between the parties and, therefore, in absence of any cogent evidence or material, the Assessment Officer could not have fixed or assessed the case as if the same relates only for the accommodation and infrastructure pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch practice adopted by the Assessment Officer is required to be deprecated. 8 By relying upon a decision of the Bombay High Court in the case of Commissioner Of Income Tax vs Indo Saudi Services (Travel) P. Ltd. as reported as (2009) 310 ITR 306 (Bom), he would submit that the Central Board of Direct Taxes had issued a Certificate Non.6P dated July 6, 1968, which debars the Assessment Officer from not allowing such payments made to the relative and sister concern where there is no attempt to evade the tax. 9. He, therefore, would submit that the appeals are meritless and the same are required to be dismissed in limine. 10. We have heard learned Advocates appearing for the parties. 11. It would thus be clear from the above observations of the Hon ble Supreme Court that the principle of res judicata does not apply to income tax proceedings and each assessment year is considered as a separate unit. Still, however, the Hon ble Supreme Court has held that in absence of any material or substantial change justifying the revenue to take a different view than the view it had taken in the preceding assessment years, it should not have reopened the issue in the subsequent assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Apex Court in the case of Commissioner of Income Tax vs Excel Industries Ltd, as reported at 295 ITR has held in paragraphs 28, 29, 30 and 31 which reads as under: 28 Secondly, as noted by the Tribunal, a consistent view has been taken in favour of the assessee on the questions raised, starting with the assessment year 1992-93, that the benefits under the advance licences or under the duty entitlement pass book do not represent the real income of the assessee. Consequently, there is no reason for us to take a different view unless there are very convincing reasons, none of which have been pointed out by the learned counsel for the revenue. 29. In Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) this court did not think it appropriate to allow the reconsideration of an issue for a subsequent assessment year if the same fundamental aspect permeates in different assessment years. In arriving at this conclusion, this court referred to an interesting passage from Hoystead v. Commissioner of Taxation (1926) AC 155 (PC) wherein it was said (page 328 of 193 ITR): Parties are not permitted to begin fresh litigation because of new views they may entertain of the law of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een found by us in the preceding para of this judgment that the respondent company as well as the parent company, both are assessed to income tax at the maximum marginal rate and, therefore it cannot be said that the service charge is paid to the respondent company at a unreasonable rate to evade income tax. Even the learned Counsel Mr. Bhatt for the revenue does not dispute this fact. 14. We are in agreement with the observations made by the Tribunal as well as the ratio laid down by the coordinate Bench of this Court in the case of (1) Commissioner of Income Tax-I vs Enviro Control Associated (P) Ltd., as reported at (2014) 43 Taxmann.com 291 (Gujarat); (2) Commissioner of Income Tax-III vs Ashok J Patel, as reported at (2014) 43 Taxmann. com 227 (Gujarat) and (3) Commissioner Of Income Tax vs Indo Saudi Services (Travel) P. Ltd. as reported as (2009) 310 ITR 306 (Bom). 15 It is pertinent to note that so far as the Circular dated 6.7.1968 is concerned, it makes clear that the provisions under Section 40A (2) and particularly with regard to the transaction between the relatives and associates is concerned, the same shall be treated as bona fide case unless the officer finds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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