Pr.Commissioner Of Income ... vs Layer Exports Pvt.Ltd
2022 Latest Caselaw 1827 Bom

                                                                                   915-itxa-80-2018.doc




                                IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                   ORDINARY ORIGINAL CIVIL JURISDICTION

                                      INCOME TAX APPEAL NO.80 OF 2018

                   Pr. Commissioner of Income Tax,
                   Central-2, Mumbai                                        ...Appellant
                              vs.
                   Layer Exports Private Limited                            ...Respondent

                   Mr. Sham Walve, for the Appellant
                   Mr. P.C. Tripathi a/w. Mr. Sashi Tulsiyan, for the Respondent.
VISHAL
SUBHASH
PAREKAR                                  CORAM :          K.R. SHRIRAM &
                                                          N. J. JAMADAR, JJ.

Digitally signed by VISHAL

DATE : FEBRUARY 23, 2022 SUBHASH PAREKAR Date: 2022.02.25 10:24:42 +0530

P.C.:

1. The Revenue has preferred this Appeal being aggrieved by the

judgment and order of the Income Tax Appellate Tribunal "A"

Bench, Mumbai in Income Tax Appeal Nos. 3019, 3020, 3021, 2985

and 2986/Mum/2011 (A.Ys.:2004-05, 2005-06, 2008-09, 2006-07

and 2007-08) and Income Tax Appeal Nos. 1097 and 5613/Mum/

2013 (A.Y. 2009-10 and 2010-11).

2. The Revenue has proposed the following substantial question

of law.

"Whether on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was right in deleting the addition made by the AO of Rs.

7,86,65,205/- without appreciating the fact that the

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commercial expediency was not proved with respect to compensation and interest paid to the Videocon Group by the assessee, as per the provisions of sec.37(1) of the I.T.Act, 1961 ?

3. The Respondent/Assessee is engaged in the business of

construction of buildings. In the assessment proceeding under

section 153A of the Income Tax Act, 1961 (the Act) consequent to a

search under section 132 of the Act, it was found that the assessee

had paid a sum of Rs. 6,50,00,00,000/- towards compensation and

Rs. 1,36,65,205/- towards the interest to Videocon Group persuant

to the consent terms executed in the suit before this Court, dated 8 th

December, 2005. The Assessing Officer disallowed the expenses

under section 37(1) of the Act on the ground that those expenses

were not made wholly and exclusively for the purpose of business

and had nothing to do with commercial expediency. In an Appeal

preferred by the assessee, the Commissioner(A) directed the

Assessing Officer to allow the said expenses under section 37(1) of

the Act, but towards work in progress account as the assessee was

following the project completion method of accounting. By the

impugned order the Tribunal allowed the Appeal of the assessee and

dismissed the Appeal preferred by the Revenue. It was, inter alia,

observed that there was no justification to frame assessment under

section 153A of the Act as no new material had surfaced as regards

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the compensation and interest expenses. Being further aggrieved

the Revenue is in appeal.

4. We have heard Mr. Walve, the learned counsel for the

Appellant.

5. From the perusal of the observations in paragraph Nos. 54 to

58 of the impugned order it becomes clear that the Tribunal has

properly appreciated the issue as to the allowability of the expenses

incurred towards the compensation and interest pursuant to the

settlement of the dispute between the assessee and Videocon Group.

The Tribunal did not find any infirmity in the finding of the

Commissioner (A) that the compensation and interest was paid for

the purpose of resolving a genuine dispute and the said decision was

driven by commercial expediency. In the backdrop of concurrent

findings of fact as regards the payment of compensation and

interest towards settlement of a genuine dispute, we do not find any

justifiable reason to entertain the Appeal. In addition, the view of

the Tribunal that there was no new material to frame assessment

under section 153A of the Act as regards the allowability of

expenses towards compensation and interest appears will merited.

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                                                         915-itxa-80-2018.doc

6. For the foregoing reasons, in our view, in the facts and

circumstance of the case, the proposed question of law (extracted

above), does not warrant consideration. Resultantly, the Appeal

does not deserve to be admitted.

7. The Appeal thus stand dismissed.

            (N. J. JAMADAR, J.)              (K. R. SHRIRAM, J.)




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