Pravinbhai Tribhovandas Patel, Surat V. The Income Tax Officer ,(OSD-III)Range-2, Surat

ITA 1/AHD/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7386 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 10-01-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 01-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Fair market value

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. K. GARO DIA, AM) ITA NO.1/AHD/2010 A. Y.: 2006-07 PRAVINBHAI TRIBHOVANDAS PATEL, PROP. RAJ CORPORATION, 197, BHATHENA 2, BAVAJI NI WADI, UMIYA MATA ROAD, SURAT PA NO. ABBPP 1934 G VS THE INCOME TAX OFFICER(OSD-III), RANGE-2, SURAT, AAYAKAR BHAVAN, MAJURA GATE, SURAT (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RAJESH UPADHYAY, AR RESPONDENT BY SHRI B. L. YADAV, SR. DR DATE OF HEARING: 10-01-2012 DATE OF PRONOUNCEMENT: 10 -01-2012 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II , SURAT DATED 22 ND OCTOBER, 2009, FOR ASSESSMENT YEAR 2006-07 CHALLENG ING THE DISALLOWANCE U/S 40A (2) (B) OF THE IT ACT OF RS.4, 12,566/- BEING TWISTING MAJURI PAID TO M/S. SHIV TWISTER, PROPRIE TOR SMT. RAMILABEN A. PATEL. 2. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE WAS CONSIDERED IN THE CASE OF THE SAME ASSESS EE IN ITA NO.935/AHD/2009 IN ASSESSMENT YEAR 2005-06 AND THE TRIBUNAL DELETED THE SIMILAR ADDITION VIDE ORDER DATED 22-07 -2011. COPY OF THE SAME IS FILED AT PAGE 65 OF THE PAPER BOOK. THE LEA RNED DR DID NOT ITA NO.1/AHD/2010 TRIBHOIVANDAS PATEL, PROP. RAJ CORPORATION VS ITO ( OSD-III), SURAT 2 DISPUTE THE ABOVE AND SUBMITTED THAT THE ISSUE IS C OVERED IN FAVOUR OF THE ASSESSEE. 3. ON CONSIDERATION OF THE SUBMISSIONS OF THE PARTI ES WE ARE OF THE VIEW THE ISSUE IS COVERED BY EARLIER ORDER OF THE T RIBUNAL IN THE CASE OF THE SAME ASSESSEE IN ASSESSMENT YEAR 2005-06 IN WHICH THE TRIBUNAL IN PARA 8 OF THE ORDER HELD AS UNDER: 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ACCOR DING TO SECTION 40A (2) (A) OF THE IT ACT WHERE AN ASSESSEE INCURS ANY EXPENDITURE IN RESPECT OF WHICH PAYMENT HAS BEEN MA DE OR TO BE MADE TO ANY PERSON REFERRED TO IN CLAUSE (B) OF THIS SUB- SECTION (RELATIVE OF THE ASSESSEE) AND THE AO IS OF THE OPINION THAT SUCH EXPENDITURE IS EXCESSIVE OR UNREASONABLE HAVING REGARD TO THE FAIR MARKET VALUE OF GOODS, SERVICES OR FACILITIES FOR WHICH PAYMENT IS MADE FOR NEED OF BUSINESS, SO MUCH OF THE EXPENDITURE AS IS CONSIDERED BY THE AO TO BE EXCESS IVE OR UNREASONABLE SHALL NOT BE ALLOWED AS DEDUCTION. THE REFORE, BEFORE APPLYING SECTION 40A (2) (B) OF THE IT ACT, THE AO SHALL HAVE TO GIVE SPECIFIC FINDING AS TO HOW THE PERSON TO WHOM PAYMENT HAS BEEN MADE WAS RELATED TO THE ASSESSEE I N THE CASE OF INDIVIDUAL. THE AO HAS NOT GIVEN ANY FINDIN G AS TO HOW SMT. RAMILABEN AMRUTHBHAI PATEL WAS RELATED TO THE ASSESSEE. IN ANY CASE, EVEN FOR APPLYING THE PROVISIONS OF SE CTION 40A(2) (B) OF THE IT ACT, IT IS FOR THE AO TO MAKE OUT A C ASE THAT THE EXPENDITURE INCURRED IS EXCESSIVE OR UNREASONABLE H AVING REGARD TO THE FAIR MARKET VALUE OF SUCH SERVICES. N O EFFORT IN THIS REGARD HAS BEEN MADE BY THE AO. THE HONBLE SUPREME COURT IN THE CASE OF UPPER INDIA PUBLISHING HOUSE PVT. LT D., 117 ITR 569 HELD THAT BEFORE SECTION 40A (2) IS APPLIED, THE AO SHOULD HAVE PROVED EXPENDITURE IS EXCESSIVE OR UNREASONABLE. HOWEVER, THE AO IN THIS CASE HAS FAILED TO GIVE ANY SUCH FINDING AND HAS ALSO FAILED TO PROVE AS TO HOW SMT. RAMILABEN AMRUTHBHAI PATEL WAS RELATED TO THE ASSESSEE. IN THE ABSENCE OF ANY SUCH FINDINGS ON RECORD, THE AO WAS NOT JUSTIFIED IN APPLYING THE PROVISIONS OF SECTION 40A (2) (B) OF THE IT ACT. SINCE THE CONDITIONS OF THIS SECTION ARE NO T SATISFIED IN ITA NO.1/AHD/2010 TRIBHOIVANDAS PATEL, PROP. RAJ CORPORATION VS ITO ( OSD-III), SURAT 3 THIS CASE, WE ARE OF THE VIEW AUTHORITIES BELOW WER E NOT JUSTIFIED IN MAKING THE DISALLOWANCE UNDER THE ABOVE PROVISIO NS. IN VIEW OF THE ABOVE FINDING, THERE IS NO NEED TO GIVE FURT HER FINDING ON MERIT. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. GROUND NO.2 OF THE A PPEAL OF THE ASSESSEE IS ALLOWED. THE ISSUE IS, THEREFORE, COVERED IN FAVOUR OF THE A SSESSEE. BY FOLLOWING THE ORDER OF THE TRIBUNAL IN THE EARLIER YEAR THE ADDITION IS DELETED. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD