The DCIT(OSD)Circle-8, Ahmedabad V. Sahajanand Laser Technology Limited, Gandhinagar

ITA 1000/AHD/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0443 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-03-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 01-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SANKAR SRDR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI, A.K.GARODIA, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER ITA NO.1000/AHD/20010 ASSESSMENT YEAR :2006-07 DCIT (OSD), CIRCLE-8, AHMEDABAD V/S . SAHJANAND LASER TECHNOLOGY LTD., E-30, GIDC, ELECTRONICS ESTATE, SECTOR 26, GANDHINAGAR [ PAN NO. AAGCS 1983B ] / APPELLANT .. / RESPONDENT) /BY APPELLANT SHRI T SANKAR, SR-DR /BY RESPONDENT NONE /DATE OF HEARING 06-03-2013 /DATE OF PRONOUNCEMENT 22-03-2013 / // / O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD (CIT(A) FOR S HORT) DATED 02-12-2009 FOR THE ASSESSMENT YEAR (AY) 2006-07. 2. NONE APPEARED ON BEHALF OF ASSESSEE ON THE APPOI NTED DATE OF HEARING ALTHOUGH NOTICE OF HEARING WAS DULY SERVED ON THE A SSESSEE AS PER THE ITA NO.1000/AHD/010 A.Y.2006-07 DCIT (OSD), CIR-8 ABD V. SAHJANAND LASER TECHNOL OGY LTD. PAGE 2 ACKNOWLEDGEMENT AVAILABLE ON RECORD AND HENCE, WE P ROCEED TO DECIDE THE APPEAL OF REVENUE EX PARTE QUA THE ASSESSEE. LD. DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER. 3. GROUND NO. IS AS UNDER:- 1) THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV, AHM EDABAD HAS ERRED IN LAW AND ON FACTS IN GIVING RELIEF OF RS.96399/- OUT OF RS.1622285/- BEING DISALLOWANCE U/S. 36(1)(VII). 4. THIS CLAIM OF THE ASSESSEE REGARDING WRITE OF BA D DEBT WAS REJECTED BY THE ASSESSING OFFICER ON THIS BASIS THAT THE ASSESS EE-COMPANY HAS NOT TAKEN ANY PLAUSIBLE ACTION AGAINST DEBTOR AND HAS SIMPLY WRITTEN OFF THE DEBTS WITHOUT REASONS. HENCE, THIS IS ADMITTED POSITION OF THE FACT THAT DEBT IN QUESTION WAS WRITTEN OFF BY THE ASSESSEE IN THE BOO KS OF ACCOUNT AND THIS IS ALSO NOT AN OBJECTION OF THE ASSESSING OFFICER THAT THE AMOUNT IN QUESTION OR PART THEREOF WAS NOT OFFERED TO TAX BY THE ASSESSEE AND THEREFORE, AS PER THE PROVISIONS OF SECTION 36(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) THE ASSESSEE IS NOT ELIGIBLE FOR DEDU CTION U/S. 36(1) (VII) OF THE ACT. UNDER THESE FACTS, THIS ISSUE IS SQUARELY COVERED I N FAVOUR OF ASSESSEE BY THE JUDGMENT OF HONBLE SUPREME COURT RENDERED IN THE C ASE OF TRF LIMITED V. CIT (2010) 323 ITR 397 (SC) AND HENCE, WE DECLINE TO I NTERFERE IN THE ORDER OF LD. CIT(A) ON THIS ISSUE. THIS GROUND OF REVENUES APPEAL IS REJECTED. 5. REGARDING GROUND NO.2, WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN PARA-8.2 OF THE ASSESSMENT ORDER THAT IT WAS SUBMITTED BY THE ASSESSEE BEFORE HIM THAT ASSESSEE HAD SURPLUS FUND IN THE CAPITAL ACCOUNT AND RESERVE AND SURPLUS ACCOUNT AND THEREFORE, THE ASSESSEE HAD NOT DIVERTED ANY INTEREST BEARING BORROWED FUNDS BY WAY OF INTER EST FREE ADVANCES. THIS SUBMISSION OF THE ASSESSEE WAS NOT FOUND TO BE FALS E BY THE AO. NOW THIS IS AN ADMITTED POSITION OF LAW AS PER THE JUDGMENT OF HONBLE SUPREME COURT ITA NO.1000/AHD/010 A.Y.2006-07 DCIT (OSD), CIR-8 ABD V. SAHJANAND LASER TECHNOL OGY LTD. PAGE 3 RENDERED IN THE CASE OF MUNJAL SALES CORPORATION V. CIT AND ANOTHERS (2008) 298 ITR 298 (SC) AS WELL JUDGMENTS OF VARIOUS HONB LE HIGH COURTS INCLUDING THE JURISDICTIONAL HIGH COURT THAT IF THE OWN FUNDS AND OTHER INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE ARE MORE THAN INTEREST FREE ADVANCES, THEN THE PRESUMPTION HAS TO BE ACCEPTED THAT SUCH INTEREST F REE ADVANCES WERE GIVEN OUT OF OWN FUNDS OR INTEREST FREE FUNDS AVAILABLE W ITH THE ASSESSEE UNLESS THE AO HAS ESTABLISHED ANY DIRECT NEXUS BETWEEN THE INT EREST BEARING BORROWED FUNDS AND INTEREST FREE ADVANCES GIVEN BY THE ASSES SEE. IN THE PRESENT CASE, NO SUCH DIRECT NEXUS HAS BEEN ESTABLISHED BY THE AS SESSING OFFICER AND HENCE, ON THIS ISSUE ALSO, WE DO NOT FIND ANY REASO N TO INTERFERE IN THE ORDER OF LD. CIT(A). HENCE GROUND NO.2 OF THE REVENUES APPE AL IS ALSO REJECTED. 6. REGARDING GROUND NO.3, WE FIND THAT IT WAS NOTED BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS THA T THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.7,86,219/- FOR ITS GANDHINA GAR UNIT TOWARDS TRANSPORTATION EXPENSES. THE ASSESSING OFFICER ASKE D THE ASSESSEE TO FURNISH DETAILS IN RESPECT OF SUCH EXPENSES ALONG WITH EVID ENCES. THEREAFTER IT IS NOTED BY THE AO THAT FROM THE DETAILS SUBMITTED BY THE ASSESSEE, IT IS SEEN THAT ASSESSEE-COMPANY HAS PAID IN CASH IN ALMOST AL L CASES AND THE SAME IS NOT VERIFIABLE IN NATURE. ON THIS BASIS, AO MADE DI SALLOWANCE TO THE EXTENT OF 1/5 TH OF SUCH EXPENSES AND COMPUTED THE DISALLOWANCE AT RS.1,57,244/-. THIS DISALLOWANCE WAS DELETED BY LD. CIT(A) ON THIS BASI S THAT ASSESSEE HAS SUBMITTED COMPLETE DETAILS OF TRANSPORTATION EXPENS ES ALONG WITH COPIES OF BILLS AND VOUCHERS RELATING TO SAME. IT IS ALSO NOT ED BY LD. CIT(A) THAT EXPENDITURE ON OCTROI AND PETTY TRANSPORT ARE INCUR RED IN CASH BUT NONE OF THE TRANSACTION IS MORE THAN RS.10,000/-. THIS ALSO NOT ED BY LD. CIT(A) THERE ARE TRANSPORTATION PAYMENTS TO M/S KAMALDEEP ROADLINES ON DIFFERENT DATES. IT IS ALSO NOTED THAT ALL SUCH DETAILS WERE BEFORE THE AS SESSING OFFICER AND HE HAS NOT DISCUSSED ANY DIVERSITY IN SUCH DETAILS EXCEPT THAT PAYMENT IS MADE IN CASH AND HENCE NOT VERIFIABLE. IT IS ALSO NOTED BY LD. CIT(A) THAT ABOUT 80% OF TOTAL PAYMENT IS MADE BY ASSESSEE TO M/S. KAMALDEEP ROADLINES, 84, HARIHAR ITA NO.1000/AHD/010 A.Y.2006-07 DCIT (OSD), CIR-8 ABD V. SAHJANAND LASER TECHNOL OGY LTD. PAGE 4 PARK, MAHADEV NAGAR, VASTRAL ROAD, ODHAV, AHMEDABAD . THEREAFTER IT IS NOTED BY LD. CIT(A) THAT VERIFICATION OF THE PARTY AND PAYMENT COULD NOT DONE BY AO. THIS IS ALSO NOTED BY LD. CIT(A) THAT SINCE MANY YEARS THE ASSESSEE IS INCURRING THIS EXPENDITURE BUT NO SUCH DISALLOWANCE WAS MADE. THESE FINDINGS OF LD. CIT(A) COULD NOT BE CONTROVERTED BY LD. DR O F THE REVENUE AND CONSIDERING THESE FACTS, WE DO NOT FIND ANY REASON TO INTERFERE IN THIS ORDER OF LD. CIT(A) ON THIS ISSUE ALSO. THIS GROUND OF REVEN UES APPEAL IS REJECTED. 7. REGARDING GROUND NO.4, WE FIND THAT THIS ISSUE W AS DECIDED BY LD. CIT(A) AS PER PARA-10.2 OF HIS ORDER WHICH IS REPRO DUCED BELOW:- 10.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, T HE APPELLANT HAS ALMOST REITERATED THE SAME ARGUMENTS AS WERE RAISED IN THE GROUNDS EARLIER DISCUSSED. IT WAS FURTHER SUBMITTED THAT SU CH EXPENDITURE INCLUDES FOR SEZ UNIT FOR WHICH TOTAL INCOME IS EXE MPT FROM TAX AND HENCE WITHOUT APPRECIATING THE FACTS AND CIRCUMSTAN CES OF THE APPELLANT, THE AO MADE THE DISALLOWANCE. IT WAS FUR THER SUBMITTED THAT THE EXPENDITURE WAS INCURRED DURING NORMAL ROUTINE BUSINESS AND THE SAME IS OF REVENUE IN NATURE. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS AS MADE BY THE APPELLANT. I AM INCLINED TO ACCEPT THE CONTENTION OF THE APPELLANT. THE AO HAS NOT POI NTED OUT ANY SPECIFIC INSTANCE IN WHICH THE DETAILS ARE NOT VERIFIABLE. T HE DISALLOWANCE OUT OF SUNDRY AND MISCELLANEOUS EXPENDITURE ON ACCOUNT OF BEING PERSONAL EXPENDITURE IS DULY TAKEN CARE OFF BY FRINGE BENEFI T TAX FOR THE YEAR UNDER CONSIDERATION AND, THEREFORE, IN ANY DISALLOW ANCE HAS TO BE CONSIDERED THEN THE SAME HAS TO BE MADE IN THE ASSE T OF FRINGE BENEFIT TAX AS PER THE PROVISIONS. SUCH AD HOC DISALLOWANCE S ARE NOT TENABLE IN THE EYE OF LAW. IT IS, THEREFORE, THE SAME ARE DIRE CTED TO BE DELETED. THE APPELLANTS GROUND IS ALLOWED. IT IS SEEN FROM THE ABOVE THAT LD. CIT(A) HAS GIVEN THIS FINDING THAT ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC INSTANCE I N WHICH THE DETAILS ARE NOT VERIFIABLE. HE HAS ALSO GIVEN A FINDING THAT THE DI SALLOWANCE OUT OF THESE EXPENSES ON ACCOUNT OF BEING PERSONAL EXPENSES IS D ULY TAKEN CARE OF BY FRINGE BENEFIT TAX FOR THE YEAR UNDER CONSIDERATION AND THEREFORE, NO SUCH DISALLOWANCE IS CALLED FOR. NO SPECIFIC DEFECT COUL D BE POINTED OUT BY LD. DR OF ITA NO.1000/AHD/010 A.Y.2006-07 DCIT (OSD), CIR-8 ABD V. SAHJANAND LASER TECHNOL OGY LTD. PAGE 5 THE REVENUE IN THIS ORDER OF LD. CIT(A) AND HENCE, WE DECLINE TO INTERFERE IN THIS ORDER OF LD. CIT(A) IN THIS ISSUE ALSO. GROUND NO.4 IS ALSO REJECTED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE. SD/- SD/- (A.K.GARODIA) (KUL BHARAT) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, *DKP !' #- 22/03/2013 )*+ , --. --. --. --. /. /. /. /. / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '+'-1 2 / CONCERNED CIT 4. 2- / CIT (A) 5. .56 ---1, -1 , )*+ / DR, ITAT, AHMEDABAD 6. 69: ;< / GUARD FILE. BY ORDER/ , /TRUE COPY/ =/) '> -1 , )*+ , STRENGTHEN PREPARATION & DELIVERY O F ORDERS IN THE ITAT 1) DATE OF TAKING DICTATION 21/03 2) DIRECT DICTATION BY MEMBER STRAIGHT ON COMPUTER/LAPTOP/DRAGON DICTATE NO 3) DATE OF TYPING & DRAFT ORDER PLACE BEFORE MEMBER 21/03 4) DATE OF CORRECTION 21/03 5) DATE OF FURTHER CORRECTION -- 6) DATE OF INITIAL SIGN BY MEMBERS 21/03 7) ORDER UPLOADED ON - - 8) ORIGINAL DICTATION PAD-PART HAS BEEN ENCLOSED IN THE FILE YES 9) FINAL ORDER AND 2 ND COPY SEND TO BENCH CLERK ON 22/03