HANSA RESEARCH GROUP PRIVATE LIMITED,MUMBAI vs. ACIT CORPORATE CIRCLE 2(2), CHENNAI

The assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-13 in 13/2012-13 dated 08.02.2018 for assessment year 2012-13-.

M/s. Hansa Research Group Pvt. Ltd., the assessee is engaged in market research work. While making the assessment for assessment year 2012-13, the Assessing Officer, inter alia, examined the assessee’s transaction with M/s. Hansa Vision India Pvt. Ltd and found that Shri Krishnaswamy Srinivasan and Shri Krishnaswamy Narasimhan, directors of the assessee company, each holding 33% stake in the company which has got accumulated reserves and surplus. Both of the directors were stakeholders with M/s. Hansa Vision India Pvt. Ltd. After examining the transactions he invoked section 2(22)(e) and added Rs. 50,00,000/- to the returned income. Further, the AO found that the assessee claimed depreciation at 10% under the head temporary structures. After examining the documents filed by the assessee, he held that the assets purchased are of a permanent structure giving enduring benefits to the assessee. Therefore, he treated the expenditure claimed by the assessee as capital expenditure and allowed the depreciation at applicable rate and disallowed the balance sum and added to the returned income.

The Ld. AR inviting our attention to page 26 of the paper book, where details of shareholders and debentures at the date of AGM i.e., 24.09.2012 is placed, submitted that the Ld. CIT(A) erred in confirming the addition u/s. 2(22)(e) by completely misunderstanding the facts.

On the issue of depreciation on temporary structure claimed by the assessee, the Ld. AR inviting our attention to the particulars filed in the paper book in page 68 & 69 etc., submitted that the invoices indicated that the assets acquired were for temporary structure and installed in a rented premises. When the bench asked as to what happened in the subsequent assessment year, the Ld. AR submitted that they vacated the premises and allowed these structures to remain as such. Per contra, the Ld. DR submitted that from the orders of the lower authorities, it is clear that the assessee has furnished only one voucher and not the entire particulars. Therefore, he submitted that the details placed before the paper book were not examined by the lower authorities. Therefore, the Ld. DR pleaded that the facts associated circumstances needs examination at lower level.

We heard the rival submissions. It is clear from the above that the assessee has not furnished the relevant material before the lower authorities for due examination. Therefore, we are of the view that these issues require a fresh examination and hence set aside the orders of the lower authorities for a fresh examination. The assessee shall lay relevant materials in support of its contention before the AO and comply with the requirements of the AO in accordance with law. The AO is free to conduct appropriate enquiry as deemed fit, but he shall furnish adequate opportunity to the assesssee on the material etc to be used against it and decide the matter in accordance with law.

In the result, the assessee’s appeal is partly allowed for statistical purposes.