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2019 (5) TMI 546 - AT - Income TaxUnaccounted value of work in progress - year of assessment - double taxation - AO made addition purely on the reasoning that the bill dated 18th April 2007, raised by the assessee on Diageo India Pvt. Ltd., for the amount should have been accounted for by the assessee as work in progress for the impugned assessment year and offered to tax - HELD THAT - As in assessee's own case 2019 (4) TMI 1506 - ITAT MUMBAI AO has not disputed the fact that the aforesaid amount remained unbilled in AY 2007 08 and bill for the said amount was raised by the assessee on 18th April 2007, i.e., in the financial year relevant to assessment year 2008 09. It is also not disputed by the Department that the amount in dispute was not only offered 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 Commissioner (Appeals) in course of proceedings before him but on a query from the Bench, AR 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. 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. Since the amount in dispute has already been offered as income by the assessee in assessment year 2008 09 and assessed to tax, we do not find any reason to interfere with the decision of the first appellate authority on the issue. - Decided against revenue Admission of additional evidence - violation of rule 46A - Disallowance due to failure on the part of the assessee to co relate the reversal of entries - fresh evidences were admitted and considered without giving opportunity to the AO - assessee has filed fresh material reconciling the differences pointed out by AO and the Commissioner (Appeals) 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 for an amount - HELD THAT - As decided in assessee's own case 2019 (4) TMI 1506 - ITAT MUMBAI 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 learned CIT(A) while disposing off the appeal of the assessee. CIT(A) has strictly complied to the provisions of rule 46A of the rules insofar as it relates to admission of additional evidence. Assessee has filed fresh material reconciling the differences pointed out by the Assessing Officer and the learned Commissioner (Appeals) after considering the observations of the Assessing Officer 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 for an amount - Decided against revenue Disallowance on account of Deloitte Touche Tohmatsu (DTT) subscription - HELD THAT - As decided in assessee's own case 2019 (4) TMI 1506 - ITAT MUMBAI the assessee has paid the subscription to run and manage its business activity more effectively, efficiently and profitably - similar subscription was paid by the assessee in the preceding as well as succeeding assessment years. Notably, on verifying the scrutiny assessment orders passed u/s 143(3) for the assessment years 2006 07, 2009 10 and 2010 11 and 2011 12, copies of which have been submitted before us, it is observed that no such disallowance was made by the Assessing Officer in the aforesaid assessment years - applying the rule of consistency also, the expenditure claimed by the assessee has to be allowed, since, the nature of expenditure as revenue has been accepted by the Department in all other assessment years except the impugned assessment year. - Decided in favour of assessee.
Issues Involved:
1. Deletion of addition of ?46,00,000. 2. Deletion of addition of ?13,28,205. 3. Deletion of disallowance of ?11,60,000 on account of Deloitte Touche Tohmatsu (DTT) subscription. Issue-wise Detailed Analysis: 1. Deletion of Addition of ?46,00,000: The central issue was whether the CIT(A) was justified in deleting the addition of ?46,00,000. The tribunal noted that this issue was previously decided in favor of the assessee for the assessment year 2007-08. The Revenue had challenged the deletion of an addition of ?47,92,500, arguing that the unbilled portion of work should be accounted for as work-in-progress. The CIT(A) found that the amount of ?47,92,500 was billed in April 2007 and offered as income in the assessment year 2008-09. The tribunal upheld this view, emphasizing that the same income cannot be taxed in two assessment years. The tribunal dismissed the Revenue's ground, following the principle that the tax rate was the same for both years, and taxing the amount in the impugned year would not affect the Revenue. 2. Deletion of Addition of ?13,28,205: The Revenue contended that there was a violation of Rule 46A of the Income Tax Rules by the CIT(A) in admitting fresh evidence without giving the Assessing Officer (AO) an opportunity to respond. The tribunal noted that this issue was also covered in favor of the assessee for the assessment year 2007-08. The AO had disallowed ?80,94,715 due to unreconciled reversal entries. The CIT(A) found that the assessee had reconciled ?17,66,393 of the difference, leaving ?63,28,322 as disallowed. The tribunal upheld the CIT(A)'s decision, noting that the Department could not provide evidence of fresh submissions that were not considered by the AO. Therefore, the tribunal dismissed the Revenue's ground, affirming that no additional evidence was submitted without due process. 3. Deletion of Disallowance of ?11,60,000 on Account of Deloitte Touche Tohmatsu (DTT) Subscription: The Revenue challenged the deletion of ?11,60,000, arguing that the DTT subscription was a capital expenditure providing enduring benefit. The tribunal found that the assessee paid the DTT subscription annually to utilize the Deloitte brand and technology, which did not constitute acquiring an asset of enduring benefit. The CIT(A) observed that similar payments were allowed in previous and subsequent years without disallowance. The tribunal upheld the CIT(A)'s decision, noting that the expenditure was for running the business efficiently and profitably, and applying the rule of consistency, the expenditure should be allowed as revenue expenditure. Conclusion: The tribunal dismissed the Revenue's appeal on all grounds, affirming the CIT(A)'s decisions. The tribunal emphasized the principles of consistency, the correct accounting of income, and the non-capital nature of the DTT subscription expenditure. The order was pronounced in the open court on 03/05/2019.
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