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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Joginder Singh, & Shri Sanjay Arora
आदेश / O R D E R
Per Joginder Singh (Judicial Member) The assessee is aggrieved by the impugned order dated 29/02/2012, of the ld. First Appellate Authority, Mumbai. The assessee has raised the following grounds:-
1. Expenditure on trademark and professional fees a. The learned CIT(A) erred in not allowing depreciation on expenditure incurred on trademark registration amounting to Rs.2,70,390 under section 32 of the Income-tax Act, 1961.
Without prejudice to the above, the learned CIT(A) erred in not allowing deduction for such expenses under section 37(1). b. The learned CIT(A) erred in not allowing deduction for expenditure on professional fees amounting to Rs. 1,55,000 under section 37(1).
C. The learned CIT(A) erred in rejecting the above claims of the appellant on the basis that the same were made for the first time before him and not taken before the Assessing Officer and' that the appellant had not filed a revised return in this regard .
2. General and administrative expenses and personnel expenses a. The learned CIT(A) erred in confirming the action of the Assessing Officer of disallowing an amount of Rs. 1,12,13,534, being 50% of the general and administrative expenses and personal expenses. b. The learned CIT(A) erred in observing that the expenses were not supported by proper bills and vouchers and same were not incurred wholly and exclusively for the business purposes. c. The learned CIT(A) erred in observing that the appellant has claimed expenses of Rs. 7,22,226 twice in the books of accounts under the head 'general and administrative expenses' and 'incorporation expenses' . d. The learned CIT(A) erred in stating that the provision for bonus of Rs. 11,17,500 was made without any basis and no details of the provision were submitted. e. The learned CIT(A) erred in observing that travelling expenses are incurred in the name of Executive Access Limited for travelling of Rakesh Sapru, who is not an employee of the appellant company.
So far as, ground with respect to expenditure on trademark on professional fee is concerned, the ld. counsel for the assessee, Shri Girish Dave alongwith Ms. Kadambari Dave, advanced arguments, which are identical to the ground raised by contending that, if the relief u/s 32 is not granted then alternatively, it is to be allowed u/s 37(1) of the Act as the assessee has already made a claim by further submitting that the assessee company was incorporated in May 2007 and it is the first year of incorporation/business. On the other hand, the ld. DR, Shri Sanjeev Jain, contended that the claim was made for the first time before the ld. Commissioner of Income Tax (Appeals), therefore, the ld. Assessing Officer could not get the opportunity to examine the facts and the genuineness of claim. The ld. counsel for the assessee fairly agreed that the claim was made before the ld. First Appellate Authority.
2.1. We have considered the rival submissions and perused the material available on record. The facts, in brief, are that the assessee company, as per the assessee, was incorporated in May 2007, under the Companies Act 1956. The assessee is a wholly owned subsidiary of EAL India Holdings Ltd., Hongkong. As per the claim of the assessee, the incorporation as well as operation of the assessee company is for the accounting period started from 4th May 2007. The assessee is engaged in the business of rendering HR services including manpower (skilled and managerial) on contractual basis, executive search, recruitment, placement, manpower resources and management consultancy, etc. The grudge of the assessee is that depreciation on expenditure of Rs.2,70,390/-, incurred on trademark registration, was not allowed u/s 32 and without prejudice it has to be allowed as a deduction u/s 37(1) of the Act including professional fee amounting to Rs.1,55,000/-. It is noted that the ld. Commissioner of Income Tax (Appeals) dismissed this ground on the plea that it was raised, for the first time, before him and was not taken before the ld. Assessing Officer and further the assessee had not filed a revised return. Considering the totality of facts, and specifically, the issue was not raised before the ld. Assessing Officer, therefore, considering the totality of facts, principle of natural justice and the mandate of the Constitution as due taxes has to be levied/collected, we remand this issue, as agreed by both sides, to the file of the ld. Assessing Officer to examine the claim of the assessee afresh and after providing due opportunity, decide in accordance with law, this ground is, consequently, allowed for statistical purposes.
The next ground raised by the assessee pertains to administrative expenses/personal expenses. The crux of argument on behalf of the assessee is that the ld. First Appellate Authority wrongly affirmed the action of the Assessing Officer disallowing the amount of Rs.1,12,13,534/-, being 50% of general administrative expenses/personal expenses. It was also contended that the observation of the ld. Commissioner of Income Tax (Appeals) that the claim was not supported by proper bills and vouchers and further that the expenses were not incurred wholly and exclusively for business purposes is also contrary to facts. It was also explained that M/s Executive Access is a Hongkong based company and is having no branch/office in India. The observation made at page-5 of the assessment order with respect to incorporation was claimed to be wrong. Our attention was invited to page 468 of the paper book along with pages 249 to 278 and more specifically page 250 by asserting that factually no enquiry was made by the Assessing Officer. However, the ld. DR, defended the conclusion arrived at in the impugned order by defending that finding recorded in the assessment order. 3.1. We have considered the rival submissions and perused the material available on record. Considering the totality of facts and the material available on record, including the assertions made by the ld. respective counsel, we are in agreement with the arguments at least to the extent that neither the facts were properly explained by the assessee before the lower authorities nor proper enquiry was made by the ld. Assessing Officer. The ld. Assessing Officer was handicaped in the absence of proper facts to be explained by the assessee. Therefore, considering the totality of facts, we direct the assessee to produce documentary evidence, for its claim, before the ld. Assessing Officer, who will examine the facts/claim afresh and after providing due opportunity of being heard to the assessee shall decide in accordance with law. The assessee is at liberty to furnish evidence, if any, in support of its claim, consequently, this ground is also allowed for statistical purposes. Finally, the appeal of the assessee is allowed for statistical purposes. This order was pronounced in the open court in the presence of ld. representative from both sides at the conclusion of the hearing on 01/03/2016.