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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals)-15, Chennai, dated 15.02.2016 and pertains to assessment year 2004-05.
Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that the first issue arises for consideration is disallowance of `9,17,500/- said to be paid to M/s PriceWaterhouseCoopers.
According to the Ld. counsel, the assessee has paid a sum of `21,92,500/- to M/s PriceWaterhouseCoopers towards professional fees. The assessee was able to produce bills for `12,75,000/-. However, the balance amount of `9,17,500/- was not substantiated, therefore, according to the Ld. counsel, the Assessing Officer disallowed the claim of the assessee and the CIT(Appeals) has confirmed the same. The Ld.counsel further submitted that the assessee could not produce evidence to the extent of `9,17,500/-, therefore, he leaves the matter to the discretion of the Tribunal.
On the contrary, Shri V. Sreenivasan, the Ld. Departmental Representative, submitted that even though the assessee claimed the payment of professional fees paid to M/s PriceWaterhouseCoopers, the assessee could not produce bills for `9,17,500/-, therefore, the Assessing Officer restricted the allowance only to the extent of the amount for which the bills were produced. According to the Ld. D.R., the balance amount of `9,17,500/- was rightly disallowed by the Assessing Officer, therefore, the CIT(Appeals) confirmed the same.
We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessee could not produce bills for payment of `9,17,500/- to M/s PriceWaterhouseCoopers. In the absence of any supporting bills to prove the payment of `9,17,500/-, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly confirmed the disallowance made by the Assessing Officer.
Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
The next ground of appeal is with regard to disallowance of `10,80,000/- towards payment made to Dawn Consulting.
6. Sh. R. Vijayaraghavan, the Ld.counsel for the assessee, submitted that M/s Bangalore Genei Pvt. Ltd., a subsidiary company, was merged with M/s Sanmar Electronics Corporation Limited on 01.04.2003 as per the order of the High Court dated 21.02.2005. According to the Ld. counsel, the expenditure claimed by the assessee was in the nature of amalgamation expenses covered under Section 35DD of the Income-tax Act, 1961 (in short 'the Act'). The Assessing Officer found that 1/5th of the amount can be allowed this year, that too in the hands of amalgamated company, namely, Sanmar Electronics Corporation Ltd. and not in the hands of the assessee. The Ld.counsel further submitted that when the assessee incurred expenditure for amalgamation, it can be claimed proportionately in the hands of amalgamating company as well as amalgamated company as revenue expenditure. The expenditure has been incurred by both the companies proportionately, therefore, according to the Ld. counsel, the Assessing Officer is not justified in disallowing the claim of the assessee. The Ld.counsel placed his reliance on the judgment of Apex Court in CIT v. Bombay Dyeing And Manufacturing Co. Ltd. (1996) 219 ITR 521.
On the contrary, Shri V. Sreenivasan, the Ld. Departmental Representative, submitted that he is placing reliance on the observation made by the CIT(Appeals).
We have considered the submissions made by the Ld.counsel for the assessee and the Ld. Departmental Representative and perused the relevant material available on record. The Assessing Officer disallowed the claim of the assessee on the ground that expenditure incurred by the assessee was not for earning of income. The Assessing Officer has also found that it can be allowed only in the hands of amalgamated company and not in the hands of assessee-company. M/s Bangalore Genei Pvt. Ltd. was said to be merged with M/s Sanmar Electronics Corporation Ltd. Therefore, even if the claim of the assessee was accepted, it has to be allowed only either in the hands of M/s Bangalore Genei Pvt. Ltd. or in the hands of M/s Sanmar Electronics Corporation Ltd., being the amalgamating company and amalgamated company respectively. It is not known how the expenditure was claimed in the hands of the present assessee. We have also carefully gone through the judgment of the Apex Court in Bombay Dyeing And Manufacturing Co. Ltd. (supra). In the case before the Apex Court, a company, namely, Nawrosjee Wadia Ginning and Pressing Company was amalgamated with assessee-company before assessment. Therefore, the Apex Court found that the expenditure incurred towards professional charges of the solicitors firm for services rendered in connection with amalgamation was in the course of carrying on the assessee’s business and therefore, deductible as revenue expenditure. In the case on our hand, admittedly Bangalore Genei Pvt. Ltd. was said to be merged with M/s Sanmar Electronics Corporation Ltd. Therefore, the expenditure if any has to be claimed in the hands of M/s Sanmar Electronics Corporation Ltd. and not in the hands of the assessee- company. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced on 7th July, 2017 at Chennai.