DEPUTY COMMISSIONER OF INCOME TAX, GWALIOR V. MANISH GOYAL, GWALIOR

ITA 451/AGR/2024

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax, Gwalior against Sh. Manish Goyal for the Assessment Year 2009-10. The primary issues revolved around the disallowance of certain expenses and additions to income made by the Assessing Officer under various sections of the Income Tax Act. The Assessing Officer had disallowed a significant portion of wages, fuel expenses, and added certain amounts under Section 68 for unexplained loans. However, the CIT(A) reversed these decisions, which led to the revenue's appeal to the Tribunal. The Tribunal's decision affirmed the CIT(A)'s findings, emphasizing the business nature of the expenses and the adequacy of the assessee's explanations and documentation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473834 (ITAT-AGRA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Other Referred Cases: Mazda Ltd. (250 Taxman 510)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAILENDRA SHRIVASTAVA LD.
• Assessee Lawyers: S.C. JAIN LD
• Keywords: Business expenditure; Commercial expediency
• Section: 143(3)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “DB” BENCH, AGRA BEFORE HON’BLE SHRI SATBEER SINGH GODARA, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं. / ITA No.451/Agr/2024 (िनधाŊरणवषŊ / Assessment Year: 2009-10) DCIT Gwalior MP 474 011 बनाम/ Vs. Sh. Manish Goyal 228 B&C, Patel Nagar City Center, Gwalior ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. ACDPG-2015-J (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Shri Shailendra Shrivastava – Ld. Sr. DR ŮȑथŎकीओरसे/Respondent by : Shri S.C. Jain (CA) – Ld. AR सुनवाईकीतारीख/Date of Hearing : 20-02-2025 घोषणाकीतारीख /Date of Pronouncement : 28-03-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by revenue for Assessment Year (AY) 2009-10 arises out of an order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 13-09- 2024 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 13-12-2011. Having heard rival submissions and upon perusal of case records, the appeal is disposed- off as under. The assessee being a contractor derived income from civil contract business & transport etc. 2. The assessee earned contractual receipts of Rs.10.66 Crores. It was noted by Ld. AO that during the course of execution of construction 2 contracts, the assessee paid wages to the labour. Finding discrepancies in the same, Ld. AO disallowed 60% of the wages which came to Rs.38.87 Lacs. Similarly, on certain observations, the fuel expenses were considered to be high and accordingly, 50% of these expenses was disallowed. The assessee claimed delay in completion charges for Rs.34.95 Lacs which was disallowed for want of sufficient explanation. The Ld. AO, invoking the provisions of Sec.40A(3), added sum of Rs.10.23 Lacs, Rs.7.34 Lacs & another sum of Rs.7.17 Lacs to the income of the assessee. The assessee could not file loan confirmations for Rs.25.32 Lacs and therefore, the same were added u/s 68. 3. During appellate proceedings, the assessee demonstrated that the labour expenses and fuel expenses were 18.42% & 22.61% of contractual receipts in this year as against 18.13% & 29.47% in immediately preceding year. The Ld. CIT(A) accepted the explanation of the assessee and observed that books of accounts were duly audited and the expenditure was incurred for business purposes. Accordingly, both these additions were deleted. 4. The liquidated damages as paid by the assessee for Rs.34.95 Lacs were held in in the nature of contractual impost. Going by the decision of Hon’ble Gujarat High Court in the case of Mazda Ltd. (250 Taxman 510), the damages so claimed by the assessee were allowed. 5. On disallowance u/s 40A(3), it was stated by the assessee that the payments were made in cash directly to the workers at site at the instance of sub-contractors. The payment was subsequently adjusted in sub-contractors’ account. The same was out of business expediency. Finding the explanation to be acceptable one, the impugned addition was deleted. 3 6. The Loans to the extent of Rs.4.30 Lacs was accepted since the assessee filed PAN, account confirmation and bank statement of lenders. Aggrieved as aforesaid, the revenue is in further appeal before us. 7. We find that the factual findings as rendered by Ld. CIT(A) in the impugned order remain uncontroverted before us. The fuel expenses and labour expenses are in line with the expenditure incurred in immediately preceding year. The books of accounts have been subjected to audit and the same has been accepted by Ld. AO. The liquidated damages as paid by the assessee are not penal in nature and therefore, the same are to be allowed as business expenditure only. The commercial expediency of cash payment to sub-contractors has duly been established by the assessee. The adjudication of issue of loan creditors is based on documentary evidences. Therefore, we find no reason to interfere in the impugned order, on any of the issues. 8. The appeal stands dismissed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. (SATBEER SINGH GODARA) (MANOJ KUMAR AGGARWAL) Ɋाियक सद˟ /JUDICIAL MEMBER लेखा सद˟ / ACCOUNTANT MEMBER Dated: 28-03-2025 आदेश की Ůितिलिप अŤेिषत / Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF 4 ASSISTANT REGISTRAR ITAT AGRA "