Durga Bhavani Motor's India Pvt. Ltd., Hosur V. ACIT, Salem

ITA 1019/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96035 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 18-09-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-04-2014
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNANJCIT
• Assessee Lawyers: T VASUDEVAN
• Keywords: Depreciation; Revenue expenditure; Capital expenditure
• Section: 40A(3); 194C

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHENNAI . , , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1019 /MDS./2014 ( / ASSESSMENT YEAR :2007-08) M/S.DURGA BHAVANI MOTORS INDIA PVT. LTD., NH-7,KRISHNAGIRI MAIN ROAD, SEETHARAM NAGAR, HOSUR 635 109 VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE III, SALEM. PAN AACCD 2781 J ( / APPELLANT ) ( / RESPONDENT ) ! ' / APPELLANT BY : MR.T.VASUDEVAN,ADVOCATE #$ ! ' / RESPONDENT BY : MR.P.RADHAKRISHNAN,JCIT, D.R % & ! ' ( / DATE OF HEARING : 18.09.2015 ) ! ' ( /DATE OF PRONOUNCEMENT : 18.09.2015 / O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGGRIEVED B Y THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A), SALEM DA TED ITA NO.1019 /MDS/2014 2 31.01.2014 IN ITA NO.116/2009-10 PASSED UNDER SEC.1 43(3) READ WITH SECTION SEC. 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED TEN ELABORATE GROUNDS I N ITS APPEAL, HOWEVER THE CRUX OF THE ISSUE IS THAT:- 1. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE L D. CIT (A) WHO HAS CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICE R FOR DISALLOWING AN AMOUNT OF ` 2,00,642/- INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT. 2. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE LD . CIT (A) WHO HAS CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICE R WHO HAD MADE ADDITION OF ` 80,000/- INVOKING THE PROVISIONS OF SECTION.40A(3) BEING 20% OF CASH PAYMENT OF ` 4/- LAKHS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS A PRIVATE LIMITED COMPANY, ENGAGED IN THE BUSINESS AS DEALER IN TWO WHEELERS, FILED ITS RETURN OF INCOME ON 27.10.2007 ADMITTING NIL INCOME. INITIALLY ITA NO.1019 /MDS/2014 3 THE RETURN WAS PROCESSED U/S.143(1) OF THE ACT AND SUBSEQUENTLY THE RETURN WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT U/S .143(3) OF THE ACT WAS COMPLETED ON 30.11.2009 WHEREIN THE LD. ASS ESSING OFFICER INVOKED PROVISIONS OF SECTION 40A OF THE ACT AND DI SALLOWED THE EXPENDITURE INCURRED TOWARDS RENT, INTERIOR DECORAT ION AND ADVERTISEMENT AGGREGATING TO ` 14,05,927/- AND FURTHER DISALLOWED ` 80,000/- BEING 20% OF THE EXPENDITURE INCURRED IN C ASH FOR ` 4 LAKHS INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE AC T. 4.1 GROUND NO. 1 DISALLOWANCE ON ACCOUNT OF SECTION-4 0(A)(IA) OF THE ACT FOR ` `` ` 2,00,642/- AT THE OUTSET, THE LD. A.R. SUBMITTED THAT THE AS SESSEE HAD MADE PAYMENT TO VARIOUS PARTIES BEING EXPENDITURE I NCURRED TOWARDS ADVERTISEMENT DETAILED AS FOLLOWS:- 1. NATIONAL COLOR GRAPHICS 49,302 2. ARAVINTH CONSULTANCY 46,695 3. KAVITHALAYA ARTS 20,764 4. SRI ARTS 29,000 5. SRI ARTS 37,881 6. NATIONAL COLOR GRAPHICS 17,000 TOTAL 2,00,641 ITA NO.1019 /MDS/2014 4 HE FURTHER SUBMITTED THAT THE AGGREGATE PAYMENT TO EACH OF THE PARTIES IS WITHIN THE LIMIT OF ` 50,000/- AS STIPULATED UNDER THE PROVISIONS OF SECTION 194C OF THE ACT AND THEREFORE , PROVISIONS OF SECTION 40(A)(IA) OF THE ACT CANNOT BE INVOKED. L D. D.R AGREED THE MATTER TO BE REMITTED BACK TO THE FILE OF THE LD. A SSESSING OFFICER TO EXAMINE THE DETAILS FURNISHED BY THE ASSESSEE HEREI N ABOVE BECAUSE THE SAME WAS NOT CLEAR FROM THE ORDERS OF THE REVEN UE AUTHORITIES. THEREFORE IN THE INTEREST OF JUSTICE WE HEREBY REMI T THE MATTER BACK TO THE FILE OF LD. ASSESSING OFFICER FOR DENOVO CONSID ERATION IN THE LIGHT OF THE DETAILS OF EXPENDITURE FURNISHED BY THE LD. A.R. BEFORE US AND ALSO TO VERIFY THE LIMIT PRESCRIBED UNDER THE ACT A ND PASS APPROPRIATE ORDER AS PER LAW AND MERIT. 5.1 GROUND N0.2 ADDITION OF ` `` ` 80,000/- BY INVOKING THE PROVISIONS OF SECTION 40A(3) OF THE ACT BEING 20% OF CASH PAYMENT OF ` `` ` 4 LAKHS MADE TOWARDS INTERIOR DECORATION. THE ASSESSEE HAD INCURRED EXPENSES TOWARDS INTERI OR DECORATION OF ` 9,26,983/-. SINCE THE ASSESSEE HAD PAID ` 4 LAKHS BY CASH, THE LD. ASSESSING OFFICER INVOKED THE PROVISI ONS OF SECTION- ITA NO.1019 /MDS/2014 5 40A(3) OF THE ACT. THE LD. CIT (A) ALSO CONFIRMED T HE ORDER OF THE LD. ASSESSING OFFICER. BEFORE US THE LD. A.R. EXPLAINED THAT THE PAYMENT OF THE AGGREGATE AMOUNT OF ` 9,26,983/- WAS MADE TOWARDS INTERIOR DECORATION WHICH WAS TREATED AS AN ASSET IN THE BAL ANCE SHEET OF THE ASSESSEE AND ACCORDINGLY DEPRECIATION WAS CLAIMED. LD. A.R. FURTHER POINTED OUT THAT SECTION-40A(3) OF THE ACT DEALS WI TH ONLY REVENUE EXPENDITURE AND NOT CAPITAL EXPENDITURE, THEREFORE THE PROVISIONS OF SECTION 40A(3) OF THE ACT CANNOT BE INVOKED. THE LD . D.R RELIED ON THE ORDERS OF THE REVENUE. WE AGREE WITH THE VIEW EXPRESSED BY THE LD. A.R. THAT SECTION-40A(3) DEALS ONLY WITH REVENU E EXPENDITURE AND NOT CAPITAL EXPENDITURE. THEREFORE THE MATTER IS R EMITTED BACK TO THE FILE OF LD. ASSESSING OFFICER TO EXAMINE WHETHER TH E CASH PAYMENT OF ` 4 LAKHS IS TREATED AS REVENUE EXPENDITURE OR CAPITA L EXPENDITURE IN THE BOOKS OF THE ASSESSEE AND IF THE SAME IS CLAIME D AS CAPITAL EXPENDITURE, DELETE THE DISALLOWANCE OF ` 80,000/- MADE BY THE LD. ASSESSING OFFICER. IT IS ORDERED ACCORDINGLY. ITA NO.1019 /MDS/2014 6 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AS INDICATED HEREINABOVE. ORDER PRONOUNCED ON 18 TH SEPTEMBER, 2015 AT CHENNAI. SD/- ( . ) ( A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER CHENNAI, K S SUNDARAM. * ! #'+, -,' /COPY TO: 1. /APPELLANT 2. #$ /RESPONDENT 3. % .' () /CIT(A) 4. % .' /CIT 5. ,1 2 #'3 /DR 6. 2 4 5 & /GF