Claim of Legal and Professional Expenses Rejected on ground of Non Existence of Taxable Business in form of PE : ITAT Directs Re-adjudication [Read Order]

The New Delhi bench of the Income Tax Appellate Tribunal ( ITAT) directed re-adjudication to the assessing officer for rejecting the claim of legal and professional expenses on grounds of the nonexistence of taxable business in the form of permanent establishment (PE). 

SIS Live, the appellant assessee was a non-resident partnership firm incorporated under the laws of the United Kingdom (UK) and was a tax resident of the UK. The assessee claimed forward business loss and the assessing officer does not allow the claim due to the nonexistence of taxable business in India. 

Thus the assessee appealed against the order passed by the assessing officer for the rejection of the claim of legal and professional expenses and the forwarded business loss. 

Kamal Sawhney, Nikhil Agarwal, Nishank Vashisht, and Arun Bhadauria, the counsels for the assessee contended that the assessing officer had accepted the assessee’s claim by not only allowed the business expenses connected to the PE and had also allowed set off of such expenses against interest income. 

It was also submitted that even in the immediately preceding assessment year the assessing officer had accepted the assessee’s claim of set-off of business expenses against the interest income. Thus, without any change in the factual position, the assessing officer cannot alter the position taken by him in the preceding assessment years, as, the rule of consistency had to be applied. 

GangadharPanda and Virendra Singh, the counsels for the revenue contended that except for the arbitration proceedings, the assessee had no other activities in India in the relevant assessment years and was not carrying on any business operations or activities in India after the conclusion of Common Wealth Games in the year 2010. 

It was also submitted that the assessee’s claim of the existence of PE in India was unacceptable and not as per the law. 

The two-member bench comprising G.S. Pannu(President )and Saktijit Dey (Judicial) directed re-adjudication to the assessing officer to decide the assessee’s claim of disallowance of brought forward loss and set off the current year’s loss against the current year’s income while allowing the appeal filed by the assessee. 

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