itxa-279-2013 IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.279 OF 2013 Commissioner of Income Tax 8 .. Appellant. V/s. M/s. Kayfab Enterprises Pvt. Ltd. .. Respondent. Mr. Arvind Pinto, for Appellant. CORAM: M.S.SANKLECHA, & G.S.KULKARNI, JJ. DATE : 16th FEBRUARY, 2015. P.C: Mr. Pinto, learned Counsel appearing for Revenue states that Respondents has been served. He undertakes to file affidavit of service in that behalf by tomorrow i.e. 17th February, 2015. 2 This Appeal under Section 260 of Income Tax Act, 1961 (the Act), challenges order dated 20 th June, 2012 passed by Income Tax Appellate Tribunal (the Tribunal) for Assessment Year 2007 08. 3 Revenue has formulated following questions of law for our consideration: (a) Whether on facts and in circumstances of case and in law, ITAT was justified in deleting disallowance of Rs.1,62,56,364/ being project management fees accrued in preceding assessment year i.e. 2006 07 which was not allowable to assessee in A. Y. 2007 08 under mercantile system of accounting? S.R.JOSHI 1 of 4 ::: Uploaded on - 18/02/2015 ::: Downloaded on - 10/04/2020 10:07:46 ::: itxa-279-2013 (b) Whether on facts and in circumstances of case and in law, ITAT was justified in ignoring fact that assessee being company, is required to follow mercantile system of accounting as per Section 145; accordingly project management fees accrued in A. Y. 2006 07 as per contract and therefore upholding of decision of CIT(A) was not justified? 4 Respondent Assessee had entered into agreement on 22nd August, 2002 with one M/s. Kumar Builders. In terms of agreement, M/s. Kumar Builders who were to plan, manage, supervise and execute construction of project in Pune, were to be paid remuneration at 13.50% gross sale proceeds received from prospective buyers of flats/ shops in said project. 5 For Assessment Year 2007 08, Respondent Assessee has received gross sale payments in respect of sale of flats/ shops of Rs.2730.92 lakhs. amount of Rs.339 lakhs as paid to M/s. Kumar Builders as project management fees was claimed as expenditure. Assessing Officer disallowed deduction to extent of Rs.162 lakhs out of Rs.339 lakhs on basis that same related to flats/shops sold in preceding Assessment Year i.e. A. Y. 2006 07. 6 On appeal, Commissioner of Income Tax (Appeals) [CIT(A)] by his order dated 29 th July, 2010 recorded finding of fact that Appellant had not claimed any project management fees for preceding Assessment Year 2006 07. project management fees of Rs. 339 lakhs claimed is expenditure was only in respect of amounts received on sale of flats/shops during Assessment Year 2007 08, aggregating to Rs.2730.32 lakhs. S.R.JOSHI 2 of 4 ::: Uploaded on - 18/02/2015 ::: Downloaded on - 10/04/2020 10:07:46 ::: itxa-279-2013 7 CIT(A) also observed that Respondent Assessee had deducted and paid into treasury Tax at Source (TDS) on fees of Rs.339 lakhs paid to Ms/s. Kumar Builders in respect of sale of flats/ shops which had taken place during Assessment Year 2007 08. 8 On further appeal by Revenue, Tribunal by impugned order recorded finding of fact that Appellant had not claimed any project management fees relating to Assessment Year 2006 07. entire amount of Rs.339 lakhs which was paid by Respondent Assessee to M/s. Kumar Builders was in respect of amount received on sale of flats/ shops in project during subject Assessment Year 2007 08. Thus, no occasion to disallow any part of Rs.339 lakhs paid as project management fees, can arise. 9 We find that authorities namely CIT(A) and Tribunal have reached concurrent finding of fact that amount claimed as expenditure of Rs.339 lakhs being paid as project management fees to M/s. Kumar Builders was only in respect of amount received for sale in Assessment Year 2007 08. Consequently, no occasion can arise to disallow any part of expenditure of Rs.339 lakhs on assumption that some amount thereof is attributable to earlier Assessment Year. questions of law as formulated by Revenue would not in our view arise as deduction is being claimed on amount paid as project management fees on amounts received for subject Assessment Year and not for earlier Assessment Year. 10 In view of fact that two authorities have came to concurrent finding of fact that Rs.339 lakhs was paid as project management fees, is relate able only to sale flats/shops made in S.R.JOSHI 3 of 4 ::: Uploaded on - 18/02/2015 ::: Downloaded on - 10/04/2020 10:07:46 ::: itxa-279-2013 subject Assessment Year, no occasion to disallow any part of Rs.339 lakhs paid as project management fees for Assessment Year 2007 08 can arise. finding of fact arrived at by CIT(A) and Tribunal is not shown in any manner to be perverse and/or arbitrary. Thus, no substantial questions of law arises for our consideration. 11 Accordingly, Appeal dismissed. No order as to costs. (G.S.KULKARNI,J.) (M.S.SANKLECHA,J.) S.R.JOSHI 4 of 4 ::: Uploaded on - 18/02/2015 ::: Downloaded on - 10/04/2020 10:07:46 ::: Commissioner of Income-tax-8 v. Kayfab Enterprises Pvt. Ltd