GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (5) TMI 964 - ITAT MUMBAI

2016 (5) TMI 964 - ITAT MUMBAI - TMI - Disallowance of Service Charges paid - where professional services were not rendered by ‘Nova’ or whetger any money in respect of the payments to ‘Nova’ had flown back to the assessee - Held that:- Respectfully following the decision of the Hon'ble Bombay High Court in the case of CIT vs. Nikunj Eximp Enterprises (P) Ltd. (2013 (1) TMI 88 - BOMBAY HIGH COURT ) and CIT vs. Mundra Port and Sez Ltd. (2014 (1) TMI 1594 - GUJARAT HIGH COURT ) we hold in favour o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the case of Anjum H. Ghaswala (2001 (10) TMI 4 - SUPREME Court ) and we therefore uphold the action of the AO in charging the said interest - ITA No. 8501/Mum/2010 - Dated:- 13-4-2016 - Shri Jason P. Boaz, Accountant Member and Shri Sandeep Gosain, Judicial Member For The Assessee : Shri Naresh Kumar For The Revenue : Shri Sandeep Goel ORDER Per Jason P. Boaz, A.M. This appeal by the assessee is directed against the order of the CIT(A)-30, Mumbai dated 20.10.2010 for A.Y. 2007-08 for A.Y. 2007- .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ccounts of certain parties in ICICI Bank and ABN Amro Bank, Mumbai the DDIT (Inv.), Unit VIII(1), Mumbai conducted a survey under section 133A of the Act on 24.06.2008 in the case of M/s. Nupur Management and Consultants P. Ltd. In the course of these investigations, the Department found that Mr. Sandeep Sitani, C.A. was controlling about 20 concerns which were allegedly used to provide accommodation entries. One of such concerns was M/s. Nova Corporate Service Pvt. Ltd.; whose two Directors Mr. .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nsideration: - S. No. Date of Payment Amount Paid (Rs. ) Type of Services 1 20.02.2007 17,35,568 Professional or Technical Services 2 09.03.2007 31,54,058 Professional or Technical Services The above payments were made against 11 bills raised by Nova for liasoning services rendered by Nova . The AO called upon the assessee to establish the genuineness of these expenses and in this regard required the assessee to provide various details in this regard like; (i) copies of TDS certificates, (ii) co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

m, was the person interacting with Nova in respect of all work taken up by them. By this letter, the assessee also furnished details in respect of documents showing project-wise requirement of parties, copies of bills raised by Nova for services provided by them, copy of certificate of Nova showing that Nova is eligible to carryout and provide such consultancy/ professional services; copies of bills issued by the assessee to the owners of project, etc. The AO, however, was not satisfied with the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t genuine and disallowed the expenditure claimed in this regard observing that hence, the entire amount of Rs. 48,49,624/- is added to the total income of the assessee as unexplained and unproved purchase/investment as per section 69 of the I.T. Act. The assessment was accordingly completed under section 143(3) of the Act vide order dated 31.12.2009 wherein the income of the assessee was determined at ₹ 70,86,390/- as against returned income of ₹ 21,96,770/-, in view of the disallowa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ers and receipts thereof have been accepted by the AO. It was further submitted that Nova had shown/declared above receipts from the assessee in its return of income. It was also submitted that statutory dues like service tax, etc. have been paid in relation to these transactions. The learned CIT(A), however, did not accept the arguments put forth by the assessee and proceeded to confirm the AO s order vide the impugned order dated 20.10.2010. 3. Aggrieved by the order of the CIT(A)-30, Mumbai d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

been subject to TDS and through cheque payments and the party is identified, the disallowance u/s. 69 is uncalled for and may be deleted. b) The Id CIT (A) ought to have appreciated that when the recipient is assessed to tax with its PAN (AACCN3660Q) and services rendered had been proved beyond doubt by furnishing the supportings and the recipient company is not a related concern within the meaning of Sec. 40A2)(b), disallowance made out of surmises and conjectures is not justified and the same .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y be deleted. e) Without prejudice to the above, as the alleged deficiency has not prompted the Assessing Officer to invoke Sec 145, on merits, the disallowance has no base. The same should be deleted 2. LEVY OF PENAL INTERESTS The appellant, on merits, denies its liability to penal interest. 3. The Appellant craves leave to add, amend or alter all or any of the above Ground of Appeal. 4. Ground No. 1(1) to (e) - Disallowance of Service Charges paid - Rs. 48,89,624/- 4.1 This is the only substan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

eared that neither the AO nor the learned CIT(A) are clear as to under which section to impugned disallowance of professional fees of ₹ 48,49,624/- paid to Nova has been made, since it is held to be unexplained/unproved purchase/ investment, when the legal requirements of each of them is quite different. The learned A.R. for the assessee contended that the provisions of section 69 of the Act could not have been invoked in the case on hand because there are no investments outside the assess .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

services amounting to ₹ 48,49,624/- as unproved purchases contending that the AO s conclusion was not supported by facts. It was submitted that the AO had not rejected the assessee s books of account, that all payments are made by cheque to Nova who is not a related party; that the existence of Nova has been proved beyond doubt; that Nova has filed confirmation for having received the above amounts totalling ₹ 48,49,624/- and also declaring these amounts as receipts in its return of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the issue of unproved purchases. 4.2.3 The learned A.R. for the assessee submitted that the AO himself agrees that the work carried out by the assessee for its clients could not have been done by one person and that the assessee had employed only one person in this regard, viz. Shri Shoaib Mulla. It was submitted by the learned A.R. for the assessee that it was precisely for this reason that the assessee required the professional services of Nova to carry out the work on its behalf for its var .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

leting the disallowance on account of consulting charges. The learned A.R. for the assessee prayed that in the light of the above factual and legal situation, the disallowance of the assessee claim for payment of professional charges of ₹ 48,49,624/- to Nova for services rendered made and confirmed by the authorities below ought to be deleted as it is based only on suspicions and surmises being factually and legally unsustainable. 4.3 Per contra, the learned D.R. for Revenue strongly suppo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rendered. It was therefore placed that the orders of the authorities below be upheld. 4.4.1 We have heard the rival contentions and perused and carefully considered the material on record; including the judicial pronouncements cited. Admittedly Nova exists and is assessed to tax. There is also no dispute that all the payments, made by the assessee to Nova for professional services rendered, are by cheque and that Nova has shown all these receipts from the assessee in its return of income and ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

so not rejected. On an appreciation of the material on record, we are of the considered view that the AO has disallowed the amount of ₹ 48,49,624/-, paid by the assessee to Nova for professional services rendered merely only on suspicion that Nova may not have rendered the concerned services since the employees of Nova were not produced for examination. We find that a similar factual situation, as in the case on hand, has been held in favour of the assessee in the case of Nikunj Eximp Ente .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

een rejected. Similarly, the sales have not been doubted and it is an admitted position that substantial amount of sales have been made to the Government Department i.e. Defence Research and Development Laboratory, Hyderabad. Further, there were confirmation letters filed by the suppliers, copies of invoices for purchases as well as copies of bank statement all of which would indicate that the purchases were infact made. In our view, merely because the suppliers have not appeared before the Asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

was not bogus. No fault can be found with the order dated 30.04.2010 of the Tribunal. 4.4.2 A similar issue had come up before the Hon'ble Gujarat High Court in the case of CIT vs. Mundra Port and Sez Ltd. (2014) 45 taxmann.com 381 (Guj.), wherein the Mundra Port had paid consultancy charges to various parties which were disallowed by the AO for want of confirmation. At paras 5 to 7 thereof the Hon'ble Gujarat High Court, after reproducing the findings of the learned CIT(A) (at para 5) .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version