Om Shipping Agencies P.Ltd, Mumbai vs Department Of Income Tax
- CitationITA no.4931/Mum./2012
Ratio decidendi
The rule this decision rests on
Where a question of deductibility of business expenses under a manifest-based cost-sharing arrangement has already been decided in favour of the assessee by a Tribunal decision for an earlier year, and that decision has been upheld by the High Court, the same issue is concluded in the assessee's favour for the later year; the Tribunal follows that earlier decision on the basis of the same facts and the same treatment of the expenses, and the Revenue's appeal is dismissed on that ground. Expenses incurred by the assessee which are not reimbursable under the terms of the manifest between the parties are business expenses incurred wholly and exclusively in the course of business and are therefore revenue in nature and allowable, where the books have been accepted, supporting vouchers produced, the expenses found genuine, and no cash receipts or non-banking transactions alleged.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
श्री आय.पी बंसऱ, न्याययक सदस्य, एवुं श्री राजेंद्र, ऱेखा सदस्य के समक्ष
BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER
आयकर अऩीऱ सं. / ITA no.4931/Mum./2012 (ननधधारण वषा / Assessment Year : 2009-10)
Dy. Commissioner of Income Tax ................. अऩीऱधथी / Range-5(2), Aayakar Bhavan 101, M.K. Road, Mumbai 400 020 Appellant
बनधम v/s
M/s. Om Shipping Agencies Pvt. Ltd. Affinwala Building, 3rd Floor, Flat no.1 ................... प्रत्यथी / 292, Shahid Bhagat Singh Road, Fort Mumbai 400 001 Respondent PAN - AAACO0504A
रधजस्व की ओर से / Revenue by : Shri Premanand J. ननधधाररती की ओर से / Assessee by : Shri Hari S. Raheja
सन ु वधई की तधरीख / आदे श घोषणध की तधरीख / Date of Hearing - 07.05.2015 Date of Order - 07.05.2015
ORDER
आय.पी बंसऱ न्याययक सदस्य के द्वारा / PER I.P. BANSAL, J.M.
This appeal is filed by the Revenue and is directed against the
order dated 7th May 2012, passed by the Commissioner (Appeals)-9, M/s. Om Shipping Agencies Pvt. Ltd.
2 Mumbai, for the assessment year 2009-10. Following grounds have
been raised by the assessee:-
"Whether on facts, circumstances and in the law, the learned CIT(A) has erred in deleting the addition of ` 39,06,006 out of various expenses like cargo, brokerage and commission, business promotion, insurance and legal expenses, etc.?
2. At the outset, it was submitted by the learned Counsel that this
issue is covered by the earlier order of the Tribunal which has been
followed by the learned CIT(A) and the relief has been granted.
Reference was made to the order of the Tribunal which is dated 15 th
July 2011, passed in ITA no.16/Mum./2009 and ITA no.952/Mum./
2009, in respect of the assessment year 2005-06 and a copy of which
is filed at Page-1 to 12 of the paper book. The same order was followed
in respect of the assessment year 2007-09 vide order dated 22nd
February 2012 in ITA no.5765/Mum./2010 and ITA no.6202/Mum./
2010 and copy of this order is placed at Page-13 and 14 of the paper
book. It was further submitted that the aforementioned order of the
Tribunal was upheld by the High Court vide order dated 19th March
2014 in ITA no.397/Mum.2012, a copy of this order was placed on our
record and was also given to the learned Departmental Representative.
3. It was further submitted that in respect of the assessment year
2011-12, the Assessing Officer himself has accepted such claim of the M/s. Om Shipping Agencies Pvt. Ltd.
3 assessee and did not make any addition. Reference in this regard was
made to the assessment order dated 30th January 2014, passed under
section 143(3) of the Act. A copy of the order was placed on our record
and was also given to the learned Departmental Representative.
4. The learned Departmental Representative did not controvert to
the aforementioned position explained by the learned Counsel.
5. In this view of the situation, after hearing both the parties, we
find that this issue is covered in favour of the assessee by the
aforementioned decision of the Tribunal which was approved by the
Hon'ble Bombay High Court and the Assessing Officer himself has
admitted this issue in favour of the assessee as no addition has been
made by him in respect of the assessment year 2011-12. For the sake
of completeness, Para-10, 11 and 12 of the aforementioned order of
the Tribunal dated 15th July 2011 is reproduced below:-
"10. We heard both the parties. We find that the assessee has regularly been following the Method of Accounting from 1998-99 and by the scrutiny assessments in the two assessment years in the past the department has accepted the claim of the assessee. We also find that the expenses of Concord are fixed as per the manifest signed between the two parties and therefore the assessee's share of expenses is also be to determined by the terms of the manifest from which it clearly shows that other expenses are borne by each party independently. We also find that all supporting vouchers have been produced and copies have been filed by the A.O. and no income has been estimated though books were rejected which shows that the accounts of the assessee and Concord have been accepted. Further, the Ld. M/s. Om Shipping Agencies Pvt. Ltd.
4 CIT(A) allowed the part of the expenses to the extent of reimbursement.
11. Further more both the A.O. and the Ld. CIT(A) have not stated that the expenses are not genuine and there is no allegation as to any cash receipts. All receipts are through proper banking channels. The accounts are audited the method of accounting certified as proper as per Accounting Standard. The only point of consideration is whether while interpreting the clauses of agreement it should be taken as "All" the expenses and not only those expenses as per the manifest. The very fact that the entire expenses have not been claimed by the assessee would show that the assessee has gone by the terms of the agreement and claimed as reimbursement only expenses of ` 10830728/-. With respect to all other expenses which the assessee has to bear it by himself, we are of the opinion that they are business expenses which would be necessary in the course of the business and therefore revenue in nature and is allowable.
12. In the result, the appeal filed by the assessee is allowed and the Revenue's appeal is dismissed."
6. It will be also relevant to reproduce the observations of their
Lordships of the Hon'ble Bombay High Court in the aforementioned
decision dated 19th March 2014.
"The Commissioner of Income Tax (Appeals) had allowed the respondent assessee's appeal in part. The respondent assessee appealed to the Tribunal and urged that the expenses are fixed as per the manifest signed between the two parties. Therefore, the assessee's question of expenditure is also to be determined by the terms of this manifest. The other expenses are borne by each party independently. It is only such expenses which have been incurred and for which reimbursements have been claimed with supporting documents that the assessee approached the Tribunal. For the reasons that are assigned by the Tribunal at paragraphs 10 and 11 of the impugned order and relying on the factual matters, we are of the opinion that this appeal does not raise any substantial question of law. The appeal is, therefore, dismissed."
M/s. Om Shipping Agencies Pvt. Ltd.
5
7. ऩररणधमतः रधजस्व की अऩीऱ खधररज की जधती है ।
7. In the result, appeal filed by the Revenue is dismissed.
Order pronounced in the open Court on 07.05.2015
Sd/- Sd/-
राजेंद्र आय.पी बंसऱ ऱेखा सदस्य न्याययक सदस्य RAJENDRA I.P. BANSAL ACCOUNTANT MEMBER JUDICIAL MEMBER
MUMBAI, DATED: 07.05.2015
Copy of the order forwarded to:
(1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary
Assistant Registrar ITAT, Mumbai
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