T & B International Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1055/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86245 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 21-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: M KARUNAKARAN
• Keywords: Depreciation; Opportunity of being heard

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI .. , ! , ' #$ BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ./ ITA NO.1055/MDS/2014 ' % &% / ASSESSMENT YEAR : 2008-09 M/S T&B INTERNATIONAL PVT. LTD., 22, NUNGAMBAKKAM HIGH ROAD, CHENNAI - 600 034. PAN : AAACT 6100 D V. THE ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE III(2), CHENNAI - 600 034. (!(/ APPELLANT) (*+!(/ RESPONDENT) !( , - / APPELLANT BY : SHRI M. KARUNAKARAN, ADVOCATE *+!( , - / RESPONDENT BY : SHRI A.V. SREEKANTH, JCIT . , / / DATE OF HEARING : 21.01.2015 01& , / / DATE OF PRONOUNCEMENT : 21.02.2015 / O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING T HE ORDER DATED 31.12.2013, PASSED BY LD. COMMISSIONER OF INC OME TAX (APPEALS)-III, CHENNAI AND IT RELATES TO ASSESSMENT YEAR 2008-09. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD. CI T(APPEALS) WITH REGARD TO APPORTIONMENT OF COMMON EXPENSES BETWEEN TWO BUSINESS ACTIVITIES CARRIED ON BY IT. 2 I.T.A. NO. 1055/MDS/2014 2. THE LD.COUNSEL APPEARING FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE IS CARRYING ON TWO TYPES OF BUSINESS A CTIVITIES, NAMELY, WEB PORTAL BUSINESS AND MANUFACTURING AND SALE OF A TM MACHINES. HE SUBMITTED THAT, DURING THE YEAR UNDER CONSIDERAT ION, THE ASSESSEE DID NOT START THE BUSINESS OF MANUFACTURIN G AND SALE OF ATM MACHINES. HENCE, DURING THE COURSE OF ASSESSME NT PROCEEDINGS, THE ASSESSEE AGREED FOR APPORTIONMENT OF COMMON EXPENSES AT THE RATE OF 1/3 RD TOWARDS THE WEB PORTAL BUSINESS AND 2/3 RD TOWARDS ATM BUSINESS AND ACCORDINGLY, IT AGREED FO R DISALLOWANCE OF EXPENSES RELATING TO ATM BUSINESS. HOWEVER, THE ASSESSING OFFICER HAS CONSIDERED FOLLOWING EXPENSES ALSO AS COMMON EXPENDITURE AND ACCORDINGLY DISALLOWED 2/3 RD OF THE SAME:- A) MANUFACTURING EXPENSES : ` 5,60,403 B) REPAIRS & MAINTENANCE : ` 7,23,779 C) MARKETING EXPENSES : ` 1,12,060 D) DEPRECIATION : ` 25,93,943 E) EMPLOYEE EXPENSES (PART) : ` 1,05,24,637 3. THE LD. CIT(APPEALS) HAS CONFIRMED THE DISALLOWA NCE ON THE REASONING THAT THE ASSESSEE HAD AGREED TO THE ADDIT ION. THE LD.COUNSEL SUBMITTED THAT THE ASSESSEE HAD AGREED F OR APPORTIONMENT OF COMMON EXPENSES AND DISALLOWANCE O F EXPENSES RELATING TO ATM BUSINESS. HOWEVER, THE ABOVE SAID EXPENSES CANNOT BE CONSIDERED AS COMMON EXPENSES AND HENCE, THE ACCEPTANCE OF THE ASSESSEE WOULD NOT COVER THE ABOV E EXPENSES. 3 I.T.A. NO. 1055/MDS/2014 THE LD.COUNSEL SUBMITTED THAT THE MANUFACTURING EXP ENSES, REPAIRS AND MAINTENANCE EXPENSES AND MARKETING EXPENSES WER E EXCLUSIVELY INCURRED FOR THE PURPOSE OF WEB PORTAL BUSINESS. HE FURTHER SUBMITTED THAT THE DEPRECIATION RELATING TO ASSETS PERTAINING TO WEB PORTAL BUSINESS CAN BE EXACTLY DETERMINED. HE SUBMITTED THAT THE EMPLOYEE EXPENSES CAN ALSO BE DETERMINED I N SIMILAR MANNER AND HENCE THE RATIO OF 1:3 NEED NOT BE APPLI ED FOR DEPRECIATION AND EMPLOYEE EXPENSES. ACCORDINGLY, H E PRAYED THAT THIS ISSUE CAN BE RESTORED TO THE FILE OF THE ASSES SING OFFICER FOR EXAMINING THE SAME AFRESH. 4. THE LD. D.R. DID NOT OBJECT FOR THE FACTUAL DETA ILS SUBMITTED BY THE LD.COUNSEL. 5. HAVING HEARD THE RIVAL CONTENTIONS, WE ARE OF TH E VIEW THAT THERE IS A MERIT IN THE SUBMISSIONS OF LD.COUNSEL. AS CONTENDED BY HIM, THE ACCEPTANCE OF THE ASSESSEE BEFORE THE ASSE SSING OFFICER PERTAINED TO COMMON EXPENSES WHICH HE CANNOT IDENTI FY WITH A PARTICULAR BUSINESS OF THE ASSESSEE. THE CONTENTIO N OF THE ASSESSEE IS THAT THE MANUFACTURING EXPENSES, REPAIR S AND MAINTENANCE EXPENSES AND MARKETING EXPENSES ARE FUL LY RELATED TO WEB PORTAL BUSINESS. WITH REGARD TO DEPRECIATION A ND EMPLOYEE EXPENSES, THE CONTENTION OF THE LD.COUNSEL IS THAT THERE IS NO NEED 4 I.T.A. NO. 1055/MDS/2014 TO MAKE APPORTIONMENT BUT RELATED EXPENSES CAN BE A SCERTAINED. WE AGREE WITH THE SAID SUBMISSIONS OF THE LD.COUNSE L. HOWEVER, THE CLAIM OF THE ASSESSEE REQUIRES EXAMINATION AT T HE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE O RDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER T O THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THI S ISSUE AFRESH BY DULY CONSIDERING THE INFORMATION AND EXPENSES OF TH E ASSESSEE AND TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW AF TER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSI ON OF HEARING ON THE 21 ST DAY OF JANUARY, 2015 AT CHENNAI. SD/- SD/- ( ! ) ( .. ) (VIKAS AWASTHY) (B.R. BASKARAN) ' /JUDICIAL MEMBER /ACCOUNTANT MEMBER /CHENNAI, A /DATED, THE 21 ST JANUARY, 2015. KRI. 5 I.T.A. NO. 1055/MDS/2014 B , *'/C D &/ /COPY TO: 1. !( /APPELLANT 2. *+!( /RESPONDENT 3. . E/ () /CIT(A)-III, CHENNAI-34 4. . E/ /CIT, CHENNAI-III, CHENNAI-34 5. FG *'/' /DR 6. GH% I /GF.