Delhi High Court
Multiplex Trading & Industrial ... vs Income Tax Officer on 26 July, 2010
Author: Manmohan
#16
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 762/2010
MULTIPLEX TRADING & INDUSTRIAL CO. LTD. ..... Appellant
Through: Mr. M.S. Sayal, Senior Advocate
with Mr. Mayank Negi and
Mr. Sumit Kumar Singh and
Ms. Husnal Syali, Advocates
versus
INCOME TAX OFFICER ..... Respondent
Through: Mr. Sanjeev Sabharwal,
Advocate
% Date of Decision: 26th July, 2010
CORAM:
HON'BLE THE CHIEF JUSTICE
HON'BLE MR. JUSTICE MANMOHAN
1. Whether the Reporters of local papers may be allowed to see the judgment?No
2. To be referred to the Reporter or not?Yes
3. Whether the judgment should be reported in the Digest?Yes
JUDGMENT
MANMOHAN, J
CM 11183/2010
Allowed, subject to all just exceptions.
CM 11184/2010
This is an application for condonation of delay of 59 days in re-
filing the appeal.
For the reasons stated in the application, delay of 59 days in re-
filing the appeal is condoned.
Accordingly, application stands disposed of.
ITA 762/2010
1. The present appeal has been filed under Section 260A of Income
Tax Act, 1961 (for brevity "Act, 1961") challenging the order dated 5th
June, 2009 passed by the Income Tax Appellate Tribunal (in short
"ITAT") in ITA No. 863/Del of 2006, for the assessment year 2001-
2002.
2. Briefly stated the relevant facts of the present case are that during
the year 1999, appellant was appointed as handling agent by Gujarat
Electricity Board (in short "GEB") for settlement of its quality claims
with South Eastern Coal Fields Ltd. (in short "SECFL") in respect of
coal supplies received by GEB during the period 1993 to 1999 on a
success linked service charge basis. GEB had agreed to pay service
charges vide works order dated 22nd December, 1999 at prefixed
percentage of the amounts of claims settled with SECFL.
3. To fulfill its contractual obligations with GEB, appellant entered
into a joint venture agreement dated 22nd November, 1999 with M/s.
Mahan Enterprises Ltd. (in short "Mahan"). Under the joint venture,
appellant was to pay 2.8% of the claim amount settled between GEB
and SECFL to Mahan as Mahan's share. In view of the said settlement,
GEB disbursed service charges of Rs. 2,12,01,307/- to appellant. Out
of this amount, appellant booked Rs. 1,48,40,915/- as expenses on
account of monies payable to Mahan as per Clause 5 of the joint
venture agreement.
4. The Assessing Officer disallowed Rs. 83,30,111/- out of
Rs. 1,48,40,915/- as according to him, by virtue of Clause 6 of the joint
venture agreement only surplus, if any, which remained after meeting
cost/expenses is to be paid to Mahan, subject to 2.8% of claim amount
settled.
5. On an appeal being filed by the appellant, Commissioner of
Income Tax (Appeals) [in short "CIT(A)"] allowed the said appeal
partly. However, the CIT(A) rejected the appellant's appeal regarding
disallowance of Rs. 83,30,311/-. It is pertinent to mention that it was
contended before the CIT(A) that Clause 5 provided the basis for
accrual and sharing between appellant and Mahan and Clause 6 merely
provided for disbursement modalities of the accrued share in revenue
payable to Mahan. But the CITA(A) concurred with the Assessing
Officer holding that Clauses 5 and 6 were to be read together.
6. The ITAT vide the impugned order has set aside the order of
Assessing Officer and CIT(A) on this issue and directed the Assessing
Officer to re-determine the share of revenue payable in the light of
provisions of Clauses 5 to 8 of the joint venture agreement.
7. Mr. M.S. Syali, learned senior counsel for appellant submitted
that ITAT had erred in law in remanding the matter relating to
disallowance of expenditure payable to Mahan for de novo
consideration instead of deciding the matter itself when all the relevant
facts were on record and were not disputed. He further submitted that
ITAT's reliance in the impugned order on Clauses 7 and 8 of the joint
agreement was highly misplaced as the said Clauses were to be invoked
if the contingency referred to therein took place. According to him,
Clauses 7 and 8 had no relevance to the issue in question.
8. Mr. Sanjeev Sabharwal, learned counsel for Revenue submitted
that the impugned order caused no prejudice to the appellant as the
matter had only been remanded to the Assessing Order for deciding the
same de novo.
9. Having heard the parties we are of the opinion that ITAT by
remanding the matter to the Assessing Officer for deciding the said case
de novo has, in the process, even set aside the expenditure allowed by
the Assessing Officer and CIT(A). We are of the view that ITAT has
no power of enhancement of disallowance of expenditure made by the
Assessing Officer and CIT(A) especially when no appeal had been filed
by the Revenue.
10. Consequently, the impugned order to the extent it remands the
matter to the Assessing Officer for deciding the same de novo is set
aside and the matter is remanded back to the ITAT for deciding the
issue at hand.
11. We, however, make it clear that we have not expressed any
opinion with regard to the disallowance of expenditure of
Rs. 83,30,111/- incurred by the appellant. With the aforesaid direction,
present appeal stands disposed of.
MANMOHAN, J
CHIEF JUSTICE
JULY 26, 2010
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