TMI Blog2019 (4) TMI 1506X X X X Extracts X X X X X X X X Extracts X X X X ..... same income cannot be assessed in two assessment years. Taxability of reversal of professional fee - Failure on the part of the assessee to co relate the reversal of entries - HELD THAT:- Assessee has filed fresh material reconciling the differences pointed out by the AO and the CIT(A) after considering the observations of the AO in the remand report, the submissions made by the assessee and evidences filed was satisfied that the assessee has properly reconciled / co related the reversal of entries. The learned Departmental Representative has not brought before us any material to controvert the factual finding of the CIT(A) insofar as it relates to the amount of ₹ 17,66,393. Therefore, to that extent we uphold the decision of CIT(A) Ground raised is dismissed. Admission of additional evidence - violation of rule 46A - HELD THAT:- It is evident from the impugned order of the CIT(A), every single piece of evidence furnished by the assessee in the course of appeal proceedings were sent for verification / examination of the AO and the AO after verifying these evidences has furnished a remand report. The remand report furnished by the assessee was taken note of by the learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Revenue : Shri D.G. Pansari ORDER PER SAKTIJIT DEY, J.M. Aforesaid cross appeals by the assessee and the Revenue are directed against order dated 6th August 2014, passed by the learned Commissioner of Income Tax (Appeals) 4, Mumbai, pertaining to the assessment year 2007 08. ITA no.6489/Mum./2014 Revenue s Appeal 2. In ground no.1, the Revenue has challenged deletion of addition of ₹ 47,92,500. 3. Brief facts are, the assessee company, as stated by the Assessing Officer, is engaged in the business of providing consultancy services relating to operations, finance, human resource and information technology. For the assessment year under dispute, the assessee filed its return of income on 6th November 2007, declaring nil income. In course of assessment proceedings, the Assessing Officer on verifying the audited financial statements of the assessee noticed that against professional fees shown of ₹ 31,84,59,835, the assessee has incurred substantial expenses on account of salary, bonus, etc., amounting to ₹ 16,37,40,274, compared to preceding yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 2008 09. He observed, since the rate of tax on the income assessed at the hands of the assessee is same both for assessment year 2007 08 and 2008 09, it will not affect the interest of Revenue. Further, he observed, if the income of ₹ 47,92,500, is assessed in the impugned assessment year, the said amount has to be excluded from the income of the assessee in assessment year 2008 09. Therefore, following the decision of the Hon'ble Supreme Court in CIT v/s Excel Industries Ltd., [2013] 358 ITR 295 (SC) and the decision of the Hon ble Delhi High Court in CIT v/s Vishnu Industrial Gasses Pvt. Ltd., ITR no.229/1988, daed 6th May 2008, as well as the decision of the Hon'ble Jurisdictional High Court in CIT v/s Nagri Mills Co. Ltd., [1958] 33 ITR 681, learned Commissioner (Appeals) deleted the addition made by the Assessing Officer. 5. The learned Departmental Representative relying upon the observations of the Assessing Officer submitted, since the major portion of the work was completed in the impugned assessment year, it should have been shown as work in progress in the accounts of the assessee and offered as income. He submitted, without offering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffered as income by the assessee in assessment year 2008 09, but it was also assessed at the hands of the assessee in the said assessment year. This fact has not only been verified by the learned Commissioner (Appeals) in course of proceedings before him but on a query from the Bench, the learned Authorised Representative has furnished before us relevant documentary evidences which demonstrate that not only the assessee has offered the disputed amount as income in assessment year 2008 09, but has also claimed the corresponding TDS in the said assessment year. It is also a fact on record that the tax rate for assessment year 2007 08 and 2008 09 are the same. That being the case, whether the amount is taxed in the impugned assessment year or in assessment year 2008 09, will have no effect on the Revenue. On the contrary, if the amount is taxed in the impugned assessment year, it has to be excluded from the income of the assessee in assessment year 2008 09, since, it has already been assessed in that assessment year. This is due to the settled legal principle that the same income cannot be assessed in two assessment years. 8. One more interesting fact rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of submissions made and evidences filed, learned Commissioner (Appeals) called for a remand report from the Assessing Officer. After verifying the remand report and considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner (Appeals) observed that out of the difference of ₹ 80,94,715, pointed out by the Assessing Officer, the assessee could reconcile / co relate the difference of ₹ 17,66,983 and could not co relate / reconcile the reversal of entries for an amount of ₹ 54,00,000 in respect of Ruchi Soya Industries Ltd. Thus, he sustained disallowance to the extent of ₹ 63,28,322. 12. The learned Departmental Representative submitted, since the assessee could not reconcile the differences pointed out by the Assessing Officer, the addition made should have been sustained. In this context, he relied upon the observations of the Assessing Officer in the assessment order as well as in the remand report. 13. The learned Authorised Representative submitted, the Department should not have any grievance since learned Commissioner (Appeals) after verifying the factual detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account of disallowance of Deloitte Touche Tohmatsu (DTT) subscription. 18. Brief facts are, in the course of assessment proceedings, the Assessing Officer noticed that the assessee has debited an amount of ₹ 72,34,000 to the Profit Loss Account on account of payment towards DTT subscription. When the Assessing Officer called upon the assessee to explain the nature of expenditure and justify the claim of deduction, it was submitted by the assessee that the said amount representing DTT subscription was assessee s share in the expenses comprising of ₹ 55,75,396, being DTT subscription and ₹ 16,59,189, being DTT technology subscription. It was submitted, there are several advantages if one becomes member of the said subscription as it can use the Deloitte brand, hence, helps in developing in good brand image and consequently getting more business. It was submitted by the assessee that since the expenditure incurred was wholly and exclusively for the purpose of business it has to be allowed as expenditure under section 37(1) of the Act. The Assessing Officer, however, did not find merit in the submissions of the assessee. He observed, by contributing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any case of the matter, the assessee has not acquired any brand but has made subscription for utilizing it. Therefore, it cannot be said that the amount paid by the assessee is a capital expenditure incurred for acquiring a brand for goodwill. In support of such contention, he relied upon the following decisions: i) DCIT, v/s Hindustan Zinc Ltd., [1972] 84 ITR 277 (SC); and ii) Harrisons Malayalam Ltd. v/s ACIT, [2008] 19 SOT 363 (Cochin) 22. We have considered rival submissions and perused material on record. It is observed that the assessee has been paying the DTT subscription annually for utilizing the Deloitte brand along with certain technology. There is nothing on record to suggest that assessee has acquired the brand or the technology for good. Therefore, it cannot be said that the assessee has incurred the expenditure for acquiring an asset of enduring benefit. On the contrary, as rightly observed by the learned Commissioner (Appeals), the assessee has paid the subscription to run and manage its business activity more effectively, efficiently and profitably. Moreover, it is a fact on record that similar subscription was pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon the observations of the Assessing Officer on this issue. 27. We have considered rival submissions and perused materials on record. It is evident, aforesaid addition was sustained by learned Commissioner (Appeals) basically for the reason that the failed to lead proper evidence to reconcile the reversal of entries. It appears, before learned Commissioner (Appeals) also assessee had pleaded that due to typographical error the amount of ₹ 6,00,000 was mentioned as ₹ 60,00,000 by putting an extra zero. It also needs to be observed, the assessee has enclosed in the paper book a credit note issued in favour of Ruchi Soya Industries ltd for ₹ 67,34,400 as well as bill raised subsequently for ₹ 6,73,440 to prove its claim. However, the assessee has not brought on record any account confirmation from Ruchi Soya Industries ltd. Therefore, in our view, the claim of the assessee has to be cross verified by making necessary enquiry with Ruchi Soya Industries ltd. That being the case, without expressing any opinion on the merits of the issue, we restore it to the Assessing Officer for fresh adjudication after providing due opportunity of being h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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