M/s Kapsons Agencies Pvt. Ltd., Chandigarh V. ACIT, C-2(1), Chandigarh

ITA 1012/CHANDI/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1963 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-08-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 16-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Depreciation; Business expenditure; Opportunity of being heard; Corroborative evidences; TDS; Set aside
• Section: 12; 2; 40(a)(ia)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A CHANDIGARH !, ' # , $ % & ' ( , )* # BEFORE: SMT. DIVA SINGH, JM & SMT.ANNAPURNA GUPTA, AM ./ ITA NO. 1012/CHD/2017 ASSESSMENT YEAR : 2012-13 M/S KAPSONS AGENCIES P.LTD., SCO 104-105, SECTOR 17-C, CHANDIGARH. VS THE ACIT, CIRCLE- 2(1), CHANDIGARH. PAN /TAN NO: AACCK3368C APPELLANT RESPONDENT ! ASSESSEE BY : SHRI JASPAL SHARMA, ADVOCATE ' ! REVENUE BY : SMT. CHANDERKANTA, SR.DR # $ % DATE OF HEARING : 06.08.2019 &'() % D ATE OF PRONOUNCEMENT : 05.09.2019 )-/ ORDER PER DIVA SINGH THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE WHEREIN THE CORRECTNESS OF THE ORDER DATED 07.03.20 17 OF CIT(A)-1 CHANDIGARH PERTAINING TO 2012-13 ASSESSMEN T YEAR IS ASSAILED ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORD ER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A )] IS BOTH AGAINST FACTS AND ERRONEOUS IN LAW . 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED C\T(A) HAS ERRED , BOTH ON FACTS AND IN LAW IN HAVING CONFIRMED THE AD DITION OF RS.48,128/-- MADE TO THE INCOME OF THE APPELLANT BEING THE DIFFERENCE IN THE AMOUNTS OF RECEIPT AS PER FORM NO. 26AS AND AS ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT{A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE DISALLO WANCE OF AN AMOUNT OF RS 93,225/- ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 2 OF 12 UNDER SECTION 36(1)(III) BEING THE AMOUNT OF INTERE ST PAID ON BANK LOAN FOR ACQUIRING ASSETS NOT PUT TO USE IN THE YEAR UNDER R EFERENCE . 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN CONFIRMING THE DISALLO WANCE OF AN AMOUNT OF RS 7,40,819/-UNDER SECTION 36(1)(III)BEING THE AMOUNT OF INTEREST PAID ON LOANS THAT SHOULD HAVE BEEN CAPITALIZED ON CAPITAL WORK IN PRO GRESS IN THE HANDS OF THE APPELLANT AT THE END OF THE YEAR .FURTHER THE CIT(A ) HAS ALSO ERRED IN HAVING CONFIRMED THAT THE ABOVE INTEREST SHOULD HAVE BEEN DISALLOWED @ 15 % WHICH WAS BEING PAID TO THE DIRECTORS ON UNSECURED LOANS INSTEAD OF 13% PAID TO BANK. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED, BOTH TIN FACTS AND IN LAW, IN CONFIRMING THE DISALL OWANCE OF AN AMOUNT OF RS 6016/-UNDER SECTION 36(1 )(III) BEING THE AMOUNT OF INTEREST PAID ON ACQUIRING ASSETS NOT PUT TO USE IN THE YEAR UNDER REFERENCE. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(A) HAS ERRED, BOTH ON FACTS AND IN LAW, IN HAVING CONFIRMED THE A LLOWANCE OF DEPRECIATION ON ELECTRICAL INSTALLATIONS AND FITTINGS AT 10% INSTEA D OF 15% AS CLAIMED BY THE APPELLANT THEREBY CONFIRMING AN ADDITION OF RS. 8,0 4,342/-TO THE INCOME OF THE APPELLANT. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT (APPEALS) HAS ERRED IN HAVING CONFIRMED DISALLOWANCE OF AN AMOUNT OF RS. 23,46,570/- BEING THE AMOUNT OF EXPENDITURE INCURRED ON FOREIGN TRAVE L OF THE DIRECTORS BY TREATING THE SAME AS NON BUSINESS EXPENDITURE, 8. (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT (APPEALS) HAS ERRED IN HAVING CONFIRMED AN ADDITION OF RS . 26,37,466/- BEING THE EXPENDITURE INCURRED BY THE APPELLANT TOWARDS PACKING MATERIAL BY HOLDIN G THAT AS THE EXPENDITURE INCURRED RELATED TO EARLIER ASSESSMENT YEAR, THE SA ME COULD NOT BE ALLOWED IN THE YEAR UNDER REFERENCE AS THE APPELLANT WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. (II) IN ANY CASE, THE APPEAL OF THE APPELLANT FOR T HE EARLIER ASSESSMENT YEAR WAS SIMULTANEOUSLY BEING DISPOSED OFF BY THE LEARNED CI T(A), NECESSARY DIRECTIONS SHOULD HAVE BEEN ISSUED FOR THE ALLOWABILITY OF THE SAME IN THE PRECEDING ASSESSMENT YEAR. 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT(APPEALS) HAS ERRED IN HAVING CONFIRMED DISALLOWANCE OF AN AMOUNT OF RS. 1,53,562/- MADE BY THE ASSESSING OFFICER BY TAKING RESORT TO THE PROVI SIONS OF SECTION 40(A)(IA) BY HOLDING THAT AS NO TDS WAS DEDUCTED OUT OF THE AMOU NT PAID TOWARDS SUMMER BOOKING EXPENSES, THE SAME WAS NOT AN ALLOWABLE EXP ENDITURE. 10. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A NY OF THE GROUNDS OF APPEAL BEFORE THE SAME ARE HEARD AND DISPOSED OFF. 2. THE LD. AR RIGHT AT THE OUTSET INVITED ATTENTIO N TO APPLICATION DATED 18.03.2019 AND SUBMITTED THAT THE ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 3 OF 12 ASSESSEE DOES NOT WISH TO PRESS GROUND NO. 3 AND PR AYS FOR PERMISSION TO WITHDRAW THE SAID GROUND. AFTER HEARI NG THE LD. SR.DR PERMISSION TO WITHDRAW THE GROUND GRANTED. G ROUND NO. 3 DISMISSED AS NOT PRESSED.. 3. ADDRESSING THE ISSUES ARISING IN THE PRESENT APP EAL, IT WAS THE SUBMISSION OF THE LD. AR THAT MORE OR LESS, THE ARGUMENTS ADVANCED IN THE GROUP OF APPEALS PERTAINI NG TO 2010-11 TO 2-13-14 ASSESSMENT YEARS IN ITA 1010/CHD /2017 HEARD ON 18.07.2019 WOULD ADDRESS THE ISSUES ARISIN G IN THE PRESENT APPEAL. IT WAS SUBMITTED THAT SINCE FACTS R EMAIN THE SAME, NO NEW ARGUMENTS NEED TO BE ADVANCED. IN THE SAID BACKGROUND, ATTENTION WAS INVITED TO GROUND NOS. 1 AND 10 RAISED IN THE PRESENT APPEAL. THESE GROUNDS, IT WAS SUBMITTED WERE GENERAL IN NATURE AND REQUIRED NO SP ECIFIC ADJUDICATION. 4. INVITING ATTENTION TO GROUND NO. 2 IT WAS SUBMIT TED THAT THE ISSUE HAD ARISEN IN IDENTICAL GROUND NO. 2 IN I TA 1013/CHD/2017 (2013-14 ASSESSMENT YEAR) HEARD ON 18.07.2019 WHEREIN THE ISSUE HAD BEEN AGREED TO BE REMANDED FOR VERIFICATION. SIMILAR DIRECTION WAS S OUGHT IN THE PRESENT APPEAL ALSO. REFERRING TO THE RECORD, IT WAS SUBMITTED THAT THERE WAS A DIFFERENCE IN THE AMOUNT S OF RECEIPT AS PER FORM NO. 26AS AND AS ACCOUNTED FOR I N THE BOOKS OF ACCOUNT OF THE ASSESSEE. IN THE FACTS OF THE PRESENT ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 4 OF 12 CASE ALSO, THE ASSESSEE HAS PLACED RE-CONCILIATION ON RECORD WHICH HAS NOT BEEN CONSIDERED BY THE AO AND IN THE PROCEEDINGS BEFORE THE CIT(A), THE SUBMISSIONS ADVA NCED BEFORE THE AO WERE REITERATED AND THESE HAVE ALSO A S IN THE EARLIER YEAR HAVE REMAINED NOT CONSIDERED. ACCORDIN GLY, IN TERMS OF THE PRAYER MADE IN ITA-1013/CHD/2017 IT WA S HIS PRAYER THAT IN THE YEAR UNDER CONSIDERATION ALSO, T HE ISSUE MAY BE SENT BACK TO THE AO FOR CARRYING OUT THE RE- CONCILIATION. 5. SAID REQUEST WAS NOT OPPOSED BY THE LD. SR.DR. 6. ACCORDINGLY, IN THE LIGHT OF THE ARGUMENTS OF TH E PARTIES BEFORE THE BENCH WHEREIN ON SAME SET OF FACTS, THE ISSUE HAS BEEN REMANDED BACK TO THE AO FOR CARRYING OUT RE- CONCILIATION, THE ISSUE IS REMANDED BACK WITH A SIM ILAR DIRECTION. 7. ADDRESSING THE ISSUES RAISED BY THE ASSESSEE IN GROUND NOS. 4 AND 5, IT WAS THE SUBMISSION OF THE LD. AR T HAT THE ASSESSEE HAS APPLIED THE INTEREST CHARGED BY BANKS ETC. WHICH IS 13%, AS OPPOSED TO THIS THE AO HAS APPLIED RATE OF INTEREST AT 15% THEREBY RESULTING IN AN ADDITION BY WAY OF A DISALLOWANCE OF INTEREST CLAIMED. THE ISSUE, IT WA S SUBMITTED, HAS BEEN CONSIDERED IN PARA 7 BY THE CIT (A) ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 5 OF 12 WHEREIN WITHOUT ASSIGNING ANY REASON THE ADDITION H AS BEEN SUSTAINED. 8. THE SPECIFIC DISCUSSION CARRIED OUT IN THE IMPUG NED ORDER IS REPRODUCED HEREUNDER FOR THE SAKE OF COMPL ETENESS : 7. GROUND OF APPEAL NO. 4 : THE ASSESSING OFFICER DISALLOWED INTEREST CLAIM OF RS. 7,40,819/- U/S 36(L)(III) OF THE ACT. AS HAS BEEN DISCUSSED IN PARA 6 ABOVE, THE ASSESSEE HAD USED BORROWED FUNDS FOR CAPITAL WO RK IN PROGRESS IN NEW STORES AND CAPITALIZED THE INTEREST @13% PER ANNUM WHILE T HESE WERE PRIVATE BORROWINGS ON WHICH INTEREST @15% WAS PAID. THE ASS ESSING OFFICER ARGUED THAT WHEN INTEREST @15% WAS BEING PAID ON THESE BORROWIN GS, INTEREST @ 13% COULD NOT BE USED TO CALCULATE THE INTEREST AND THEREFORE MADE ADDITION OF RS. 7,40,819/- ON INTEREST RATE DIFFERENCE OF 2%. 7.1 IN APPEAL NO EXPLANATION WAS OFFERED BY THE APPELLA NT. 7.2 I AGREE WITH THE ADDITION MADE BY THE ASSESSING OFF ICER. INTEREST RATE PAID TO DIRECTOR IS @15% WHILE THE APPELLANT HAS CA PITALIZED THE INTEREST @13%. THE DIFFERENCE HAS RIGHTLY BEEN ADDED BY THE ASSESS ING OFFICER. I, THEREFORE, CONFIRM THE ADDITION AND GROUND OF APPEAL NO. 4 IS DISMISSED. 9. BOTH THE PARTIES WERE HEARD AND THEY AGREED THAT THEY WOULD BE SATISFIED IF THE AVERAGE OF 15% AND 13% IS APPLIED I.E. 14%. IN VIEW OF THE CONCESSION OF THE PARTIES , THE ISSUE IS RESTORED BACK TO THE FILE OF THE AO TO CARRY OUT AND MAINTAIN A DISALLOWANCE @ 14% AS THE FACTS ARE NOT DISPUTED BY THE PARTIES. NO OTHER ARGUMENT WAS ADVANCED ON BEHALF OF THE ASSESSEE. 10. ADDRESSING THE ISSUE RAISED IN GROUND NO. 6 IT WAS SUBMITTED BY THE LD. AR THAT THE SAID GROUND IS IDE NTICAL TO AN IDENTICAL GROUND NO. 3 IN ITA 1010/CHD/2018. ACCORDINGLY, REPEATING HIS PRAYER MADE, IT WAS HIS SUBMISSION THAT IN CASE THE ADDITION MADE BY WAY OF ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 6 OF 12 DISALLOWING DEPRECIATION HAS BEEN SUSTAINED IN THE EARLIER YEARS, THEN THE AO MAY BE DIRECTED TO INCORPORATE T HE CORRECT AMOUNTS IN THE VALUE OF THE WRITTEN DOWN VALUE OF T HE ASSET BY CARRYING OUT NECESSARY RECTIFICATIONS IN TERMS O F THE ORDERS OF THE ITAT. 11. THE LD. SR.DR CONSIDERING THE FACTS SUBMITTED T HAT SHE WOULD HAVE NO OBJECTION TO THE SAID PRAYER. 12. WE HAVE HEARD THE SUBMISSIONS. WE FIND THAT TH E RATE OF DEPRECIATION @ 10% IS NOT DISPUTED AS THE ASSETS IN QUESTION ADMITTEDLY WERE FURNISHINGS AND FITTINGS. THE CONSEQUENTIAL DIRECTIONS WHICH THE AO ANYWAY IS BOU ND TO CARRY OUT IN ACCORDANCE WITH LAW IS NOT OPPOSED BY THE LD. SR.DR ALSO. THE AO ANYWAY IS DUTY BOUND TO INCLUDE THE CORRECT AMOUNTS IN THE WDV OF THE ASSETS AS A RESUL T OF THE ORDERS OF THE ITAT PASSED IN THE EARLIER YEARS. TH E PRAYER MADE IN THE SAID GROUND IS, ACCORDINGLY, ALLOWED. 13. ADDRESSING THE ISSUE RAISED IN GROUND NO. 7, LD . AR SUBMITTED THAT HEREIN ALSO IN THE CLAIM OF EXPENSES PERTAINS TO FOREIGN TRAVEL BY THE DIRECTORS, THE ASSESSEE AP ART FROM THE SUBMISSIONS ADVANCED BEFORE THE TAX AUTHORITIES HAS NO OTHER EVIDENCES. IT WAS SUBMITTED THAT THE EXPENSE S PERTAIN TO THE FOREIGN TRAVEL OF THE DIRECTORS, SHRI DARPAN KAPOOR AND SHRI VIPIN KAPOOR AND THEIR WIVES SMT. NISHI KA POOR AND ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 7 OF 12 SMT. DOLLY KAPOOR FOR THE TRAVELS MADE TO HONG KONG AND EUROPE. IT WAS STATED THAT THESE WERE FOR BUSINES S PURPOSES WHERE THE DIRECTORS WITH THEIR WIVES HAD VISITED TH ESE COUNTRIES TO KEEP THEMSELVES APPRAISED OF THE LATES T FASHION TRENDS. IN THE ABSENCE OF ANY EVIDENCE EITHER OF A NY FASHION EXHIBITION OR SHOWS ATTENDED, THE ENTIRE EXPENSES W ERE DISALLOWED. THE LD. AR SUBMITTED THAT IN LINE WITH THE ARGUMENTS ADVANCED IN THE EARLIER YEARS, HE WOULD B E SATISFIED BY PARTIAL RELIEF WHEREIN ESTIMATE ARRIVE D @ 50% OF THE EXPENSES CLAIMED WOULD BE ACCEPTED BY THE ASSES SEE. IT WAS HIS SUBMISSION THAT ENTIRE EXPENSES CANNOT BE DISALLOWED. 14. THE LD. SR.DR AGREED THAT THE SAID ESTIMATE WOU LD BE FAIR TO ALL PARTIES CONCERNED. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE ARE OF THE VIEW TH AT IN THE YEAR UNDER CONSIDERATION, THE ISSUE IS BEING DECIDED BY WAY OF AN ESTIMATE, HOWEVER, CONSISTENTLY WE HAVE NOTICED THA T ASSESSEE HAS FAILED TO PRODUCE SUPPORTING EVIDENCES. ADMITT EDLY THE ASSESSEE ALSO AS NOTED BY THE AO, HAS NO EXPORT BUS INESS. ACCORDINGLY, WE MAKE IT CLEAR THAT THE RELIEF GRANT ED ON AN ESTIMATE BASIS IN THE LIGHT OF THE SUBMISSIONS OF THE PARTIES BEFORE THE BENCH SHALL NOT CONSTITUTE A PRECEDENT E ITHER FOR SIMILAR CASES OR FOR THE ASSESSEE TO BE FOLLOWED IN SUBSEQUENT ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 8 OF 12 YEARS. THE LAW REQUIRES THAT THE ASSESSEE NECESSAR ILY NEEDS TO ENSURE THAT RELEVANT AND SUPPORTING EVIDENCES ARE R ETAINED AND PRESENTED WHEN CALLED FORTH. THE ADHOC RELIEF SOUGH T FOR BY THE ASSESSEE IN THE PRESENT PROCEEDINGS WHICH IS NOT DI SPUTED BY THE REVENUE FOLLOWING THE PAST PRACTICE, WITH THE ABOVE OBSERVATIONS IS ALLOWED. ACCORDINGLY, PART RELIEF IS GRANTED TO THE ASSESSEE IN TERMS OF THE PRONOUNCEMENT M ADE IN THE COURT. 16. INVITING ATTENTION TO THE IMPUGNED ORDER, THE L D. AR SUBMITTED THAT THE ISSUE RAISED IN GROUND NO. 8 (I) (II) HAS BEEN ADDRESSED BY THE CIT(A) IN PARA 11 AND 11.1 AT PAGE 7 OF HIS ORDER. FOR READY REFERENCE, THE SAME IS REP RODUCED HEREUNDER : 11. GROUND OF APPEAL NO. 8: THE ASSESSING OFFICER DISALLOWED RS. 26,37,466/- OUT OF EXPENSES INCURRED ON PACKING MATERIAL. THE A SSESSING OFFICER EXAMINED THE TOTAL PACKAGING EXPENSES AND NOTICED THAT THERE WAS A SHARP INCREASE IN THESE EXPENSES. ON DETAIL EXAMINATION IT WAS FOUND THAT T HESE EXPENSES DID NOT RELATE TO THE F.Y. 2011-12 (RELEVANT TO A.Y. 2012-13) BUT TO EARLIER FINANCIAL YEARS. THESE EXPENSES WERE MOSTLY RELATED TO M/S BENETTON INDIA PVT. LTD (BIPL). ON BEING CONFRONTED BY THE ASSESSING OFFICER REGARDING THEIR ADMISSIBILITY IN THE CURRENT ASSESSMENT YEAR, THE ASSESSEE REPLIED THAT THE MATE RIAL WAS SUPPLIED BY BIPL BUT LIABILITY WAS THAT OF THE ASSESSEE. THE ASSESSEE FU RTHER STATED THAT IT HAD SOME DISPUTE REGARDING THE PAYMENTS WITH BIPL WHICH WERE SETTLED IN THE CURRENT YEAR SO PAID AND CLAIMED IN CURRENT YEAR. THE ASSESSEE STAT ED THAT HE WOULD SUBMIT EVIDENCES RELATING TO THE DISPUTE BUT DID NOT SUBMI T ANY EVIDENCE BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER DID NOT AL LOW THE EXPENSES AS THESE WERE PERTAINING TO EARLIER YEARS.' 17. IN THE CONTEXT OF THE ABOVE FINDING ARRIVED AT IN PARA 11.1, LD. AR WAS REQUIRED TO ADDRESS HOW THE GRIEVA NCE WAS MAINTAINABLE. 18. THE LD. AR IN REPLY INVITED ATTENTION TO PAPER BOOK PAGE 3 WHICH WAS THE COPY OF THE MINUTES OF MEETING HELD ON ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 9 OF 12 19.04.2012 BETWEEN UCB AND THE ASSESSEE. ON THE BA SIS OF THE SAID DOCUMENT, IT WAS CLAIMED THAT THE DISPUTE WAS FINALLY RESOLVED ON THE SAID DATE. INVITING ATTENT ION TO ASSESSMENT ORDER PARA 8 PAGES 7 AND 8, IT WAS SUBMI TTED THAT THE ASSESSEE VIDE HIS LETTER DATED 24.12.2014 ( REFERRED TO IN PARA 8.1 OF THE ASSESSMENT ORDER) RELYING UPO N THE AGREEMENT WITH UNITED BENETTON INDIA DATED 15.03.20 10 REFERRED TO IN PARA 8.2 OF THE ASSESSMENT ORDER HAD DEMONSTRATED HIS CLAIM BEFORE THE AO. IT WAS SUBMIT TED THAT THOUGH THE AO EXTRACTED SOME PARAS FROM THE AGREEME NT, HOWEVER, HE DISCARDED THE CLAIM HOLDING AS UNDER : 8.3 THE ASSESSEE CANNOT CLAIM PRIOR PERIOD EXPENSES IN THE RELEVANT P.Y. AND THE ASSESSEE VERY WELL KNEW AT THE TIME OF MAKING T HE AGREEMENT ON 15/03/2010 THAT IT WAS SUPPOSED TO BEAR THESE EXPENSES AS PER THE COMMERCIAL TERMS OF THE AGREEMENT. 8.4 CONSEQUENTLY, PRIOR PERIOD EXPENSES RELATING TO PAC KING MATERIAL AMOUNTING TO RS. 26,37,466/- ARE DISALLOWED AND ADD ED TO THE RETURNED INCOME OF THE ASSESSEE. 19. THIS ISSUE, IT WAS SUBMITTED, WAS CARRIED IN A PPEAL BEFORE THE CIT(A) WHO IGNORING THE FACTS UNILATERAL LY CONFIRMED THE ORDER. IT WAS HIGHLIGHTED THAT THE F ACTS WERE NOT ADDRESSED BY THE CIT(A) AT ALL. ACCORDINGLY, IT WAS HIS PRAYER THAT THE AGREEMENT ENTERED INTO BY THE ASSES SEE THOUGH READILY WAS NOT AVAILABLE TODAY, HOWEVER, TH ERE IS NO DISPUTE THAT IT WAS MADE AVAILABLE TO THE AO AND IT IS NEITHER AN AFTER THOUGHT AND NOR CAN IT BE DISCARDED HOLDIN G THAT THERE WAS NO VALID EXPLANATION. COPY OF THE MINUTES RECORDED ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 10 OF 12 OF THAT DATE BETWEEN THE TWO PARTICIPANTS WAS FILED AND AVAILABLE BEFORE THE CIT(A). NONE OF THESE, IT WAS SUBMITTED, HAVE BEEN DISCUSSED IN THE ORDERS. IN THE CIRCUMST ANCES IT WAS HIS SUBMISSION THAT THE ISSUE MAY BE REMANDED. 20. CONSIDERING THE FACTS, EVIDENCES AND MATERIA L AVAILABLE ON RECORD, LD. SR.DR DID NOT OBJECT TO TH E SAID PRAYER. 21. WE HAVE PERUSED THE RECORD. CONSIDERING THE F ACTS AND THE SUBMISSIONS, AS HAVE BEEN SET OUT IN DETAIL IN THE EARLIER PART OF THIS ORDER, WE ARE OF THE VIEW THAT RELEVAN T FACTS HAVE NOT BEEN ADDRESSED. THE IMPUGNED ORDER, ACCORDINGL Y, IS SET ASIDE BACK TO THE FILE OF THE AO WITH THE DIRECTION TO ADDRESS THE RELEVANT FACTS AND PASS AN ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 21.1 THE SAID DIRECTION ADDRESSES THE GRIEVANCE POS ED IN GROUND NO. 8.1 AND IN CASE THE CLAIM IS NOT ALLOWED , THE AO SHALL ADDRESS THE ALTERNATE PRAYER WHICH WILL THEN BECOME ALIVE IN CASE PRAYER MADE IN GROUND 8.1 IS NOT ALLO WED. 22. ADDRESSING GROUND NO. 9 LD. AR SUBMITTED THAT T HE PAYMENT WAS MADE TO A CATERER AND THE CALCULATIONS WERE ON PER PLATE BASIS AND THUS THE DISALLOWANCE MADE WAS NOT MAINTAINABLE AS THE INCURRING OF EXPENDITURE WAS FO R THE ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 11 OF 12 WELFARE OF THE ASSESSEE'S EMPLOYEES DURING A SUMMER BOOKING SALES AND THESE EXPENSES, IT WAS HIS PRAYER, MAY BE ALLOWED. 23. THE LD. SR.DR IN REPLY SUBMITTED THAT THESE FA CTS MAY OR MAY NOT BE IN DISPUTE, HOWEVER, THESE ARE NOT RE LEVANT FOR REFERRING THE ISSUE. IT WAS ARGUED THAT THE FACT IS THAT PAYMENTS HAVE BEEN MADE WITHOUT DEDUCTION OF TDS AN D THE ASSESSEE IS NOT IN A POSITION TO SHOW WHETHER THE C ONCERNED CONTRACTOR HAS RETURNED INCOME BASED ON THESE PAYME NTS. ACCORDINGLY, RELYING UPON THE ORDERS OF THE AO AND THE CIT(A), THE ADDITION MADE BY WAY OF DISALLOWANCE WA S HEAVILY RELIED UPON. THE RELEVANT FINDING OF THE CIT(A) IN PARA 12.3 RELIED UPON IS EXTRACTED HEREUNDER FOR READY REFERE NCE : 12.3 I HAVE CONSIDERED THE ISSUE. THE PAYMENTS MADE WERE IN THE NATURE OF SUMMER BOOKING EXPENSES ON WHICH THE APPELLANT WAS LIABLE AS PER LAW TO DEDUCT TDS IRRESPECTIVE OF THE FACT THAT THESE EXPE NSES WERE PAYABLE. THE ASSESSING OFFICER HAS CORRECTLY RELIED UPON THE JUDGEMENTS AND CLARIFICATION ISSUED BY THE CBDT ON THIS ISSUE. THE DISALLOWANCE U/S40{A)(IA) IS TO BE MADE EVEN IF THE AMOUNTS (ON WHICH TAX WAS DEDUCTIBLE) HAVE BEEN PAID DURING THE YEAR AND THE DISALLOWANCE IS NOT TO BE R ESTRICTED TO THE AMOUNT OUTSTANDING AS ON THE DATE OF THE BALANCE SHEET. HON'BLE CALCUTTA HIGH COURT AS WELL AS HON'BLE GUJARAT HIGH COURT RESPECTIVELY IN THE CASES OF M/S CRESENT EXPORT SYNDICATE (216 TAXMAN 258) AND M/S SIKANDARKHAN N. TUNVAR (35 7 ITR 312) HAVE TAKEN THIS VIEW, OVERRULING THE DECISION OF HON'BLE SPECIAL BE NCH OF IT AT, VISHAKHAPATNAM IN THE CASE OF M/S MERILYN SHIPPING 86 TRANSPORTS ( 70 DTR 81). THE ADDITION IS THEREFORE UPHELD AND THE GROUND OF APPEAL NO. 9 IS DISMISSED. 24. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTEDLY ADDITION MADE BY WAY OF A DISALLOWANCE HAS NOT BEEN MADE ON THE GROU NDS OF LACK OF GENUINENESS OR BUSINESS NECESSITY. ADDITION HAS BEEN ITA 1012 /CHD/2017 A.Y. 2012-13 PAGE 12 OF 12 MADE IN VIEW OF THE FACT THAT THE ASSESSEE HAS FAIL ED TO DEDUCT TDS FOR PAYMENTS MADE TO THE CATERER. NO PERMISSIBLE ARGUMENT WARRANTING A DELETION OF THE A DDITION HAS BEEN MADE BY THE LD. AR. PLEADING OF FACTS NOT RELEVANT OR GERMANE TO THE ISSUE DO NOT WARRANT A CHANGE IN THE ORDER PASSED. SATISFIED BY THE CONCLUSION, WE DISMISS TH E GROUND OF THE ASSESSEE AND UPHOLD THE ADDITION MADE. 25. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH SEPTEMBER,2019. SD/- SD/- ( $ % & ' ( ) ( ! ) (ANNAPURNA GUPTA) (DIVA SINGH) )* #/ ACCOUNTANT MEMBER ' #/ JUDICIAL MEMBER POONAM '+ ,- .- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. # / / CIT4. # / ( )/ THE CIT(A) 5. -01 2 , % 2 , 34516 / DR, ITAT, CHANDIGARH 6. 15 7$ / GUARD FILE '+ # / BY ORDER, 8 ' / ASSISTANT REGISTRAR