M/s Dhruv Chemicals And Pharmaceuticals, Chandigarh V. ACIT, Chandigarh

ITA 1066/CHANDI/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60878 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 04-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1066/CHD/2011 ASSESSMENT YEAR: 2007-08 M/S DHRUV CHEMICALS & V ACIT, CIRCLE 3(1), PHARMACEUTICALS, SCF 287, CHANDIGARH. MOTOR MARKET, MANI MAJRA CHANDIGARH. PAN: AAEFD-9704E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ATUL MANDHAR RESPONDENT : SMT. JAISHREE SHARMA DATE OF HEARING : 07.06.2012 DATE OF PRONOUNCEMENT : 21.06.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 03.08.2011 PASSED BY THE LD . CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'TH E ACT'). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL: 1. THAT THE ORDER OF THE LD. CIT(A) CHANDIGARH IS DEFECTIVE BOTH IN LAW AND FACTS OF THE CASE. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOT BEEN JUSTIFIED IN UPHOLDING ADDITION OF RS. 5,16,257 /- MADE BY THE LRD. ASSESSING OFFICER ON ACCOUNT OF DISALLOWA NCE OF EXPENSES INCURRED BY THE ASSESSEE FIRM ON ACCOUNT OF OFFI CE RENT AND EXPENSES INCURRED ON ACCOUNT OF GENERATOR RUNNING AND MAINTENANCE, TELEPHONE. ELECTRICITY AND OTHER OFFICE EX PENSES. 2 3. THAT ANY OTHER GROUND WHICH MAY BE TAKEN UP A T THE TIME OF HEARING WITH THE KIND PERMISSION. 3. GROUND NO. 1 & 3 OF THE APPEAL ARE GENERAL IN NA TURE AND NEED NO SEPARATE ADJUDICATION. THE SAME ARE DISMISSED. 4. IN GROUND NO.2, ASSESSEE CONTENDED THAT CIT(A) E RRED IN UPHOLDING ADDITION OF RS.5,16,257/- MADE BY THE AO, ON ACCOUNT OF DISALLOWANCE OF EXPENSES INCURRED BY THE FIRM ON ACCOUNT OF OFFICE RENT AND EXPENSES, INCURRED ON GE NERATOR RUNNING AND MAINTENANCE, TELEPHONE, ELECTRICITY AND OTHER EXPENSES. 5. LD. 'AR', AFTER NARRATING THE FACTUAL MATRIX OF THE CASE, CONTENDED THAT SCF 287, MANI MAJRA, CHANDIGARH IS U SED ONLY BY THE ASSESSEE AND ADDRESS IN RESPECT OF OTHE R CONCERN IS GIVEN FOR THE PURPOSE OF CORRESPONDENCE ONLY. I T WAS FURTHER ARGUED BY THE LD. 'AR' THAT THE SAME AO DID NOT MAKE ANY ADDITION ON THIS GROUND, FOR THE ASSESSMEN T YEAR 2006-07, WHILE PASSING THE ORDER DATED 12.12.2008 U /S 143(3) OF THE ACT. HE WAS OF THE OPINION THAT THE A O, SHOULD MAINTAIN CONSISTENCY OF APPROACH, ON A SIMILAR SET OF FACT- SITUATION OF THE CASE. 6. LD. 'DR' PLACED RELIANCE ON THE ORDER OF THE AO AND CIT(A). 7. THE AO RECORDED HIS FINDINGS IN PARA 4.4 OF THE ASSESSMENT ORDER AND THE SAME IS REPRODUCED HEREUND ER: 4.4 IN LIGHT OF ABOVE OBSERVATIONS, IT CAN BE ARGU ED THAT ,DURING THE PREVIOUS YEAR , PREMISES OF SCF- 3 287,MM.MANIMAJRA.CHANDIGARH WAS NOT ONLY USED BY THE ASSESSEE FIRM ,BUT WAS EQUALLY USED BY ITS SIST ER CONCERNS & OTHER PERSONS FOR THEIR BUSINESS PURPOSE ALSO. THUS OFFICE EXPENSES DEBITED BY THE ASSESSEE WERE NOT INCURRED WHOLLY & EXCLUSIVELY FOR THE BUSINESS PURPOSE OF THE ASSESSEE. THEREFORE 3/4 TH OF OFFICE RENT OF RS. 600000/- I.E. AN AMOUNT OF RS.450000/-IS DISALLOWED U/S 37(1) OF I.T.ACT,1961,ON ESTIMATED B ASIS, AFTER TAKING INTO CONSIDERATION THE TURNOVER/ GROSS RECEIPTS ,NATURE OF BUSINESS OF THE ASSESSEE AND IT S SISTER CONCERNS & OTHER PERSONS. SIMILARLY 1/4 TH OF EXPENSES OF RS. 265031/- ON A/C OF GENERATOR RUNNIN G & MAINT, TELEPHONE, ELECTRICITY & OTHER OFFICE EXPE NSES DIRECTLY ATTRIBUTABLE TO THE RUNNING OF THE SAID OF FICE PREMISES I. E. RS. 66257/-IS ALSO DISALLOWED , ON ESTIMATED BASIS, AFTER GIVING DUE CONSIDERATION TO ASSESSEE'S EXPENSES ATTRIBUTABLE TO ITS OTHER BUSIN ESS PREMISES AT PACL COMPLEX NANGAL, PUNJAB. IN TOTAL A SUM OF RS. 5,16,257/- IS DISALLOWED AND ADDED BACK TO THE ASSESSEE'S INCOME. 8. LD. CIT(A), UPHELD THE FINDINGS OF THE AO, AFTER REJECTING THE EXPLANATION FILED BY THE ASSESSEE BEF ORE HIM. THE AO DISALLOWED 1/4 TH OF THE EXPENSES INCURRED ON GENERATOR RUNNING AND MAINTENANCE, TELEPHONE, ELECT RICITY AND OTHER OFFICE EXPENDITURE, ATTRIBUTED TO THE RUN NING OF SAID OFFICE. SIMILARLY, AO HELD THAT THE PREMISES SCF 287 MANI MAJRA, CHANDIGARH WAS NOT WHOLLY AND EXCLUSIVE LY USED FOR THE BUSINESS PURPOSE OF THE APPELLANT, AND HENCE, HE DISALLOWED 3/4 TH OF THE OFFICE RENT U/S 37(1) OF THE ACT ON ESTIMATE BASIS. SUCH FINDINGS OF THE AO WERE UPHELD BY THE CIT(A). 9. WE HAVE CAREFULLY PERUSED THE RIVAL SUBMISSIONS, FACTS OF THE CASE AND RELEVANT RECORD. WE ARE OF THE OPI NION THAT 4 IN VIEW OF THE SUBMISSIONS FILED BY THE ASSESSEE BE FORE CIT(A) AND ALSO HAVING REGARD TO THE FACTUM THAT TH E SAME AO DID NOT MAKE ANY ADDITION, IN RESPECT OF SUCH IS SUE, IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, WHICH WA S FRAMED U/S 143(3) OF THE ACT, NO ADDITION CAN BE SU STAINED. THEREFORE, WITH A VIEW TO UPHOLDING THE SANCTITY OF CONSISTENCY, WITHOUT THERE BEING ANY CHANGE IN THE FACT- SITUATION OF THE CASE, NO ADDITION IS WARRANTED, WI THOUT BRINGING ANY FRESH AND RELEVANT MATERIAL ON RECORD. THEREFORE, FINDINGS OF THE CIT(A) CANNOT BE SUSTAIN ED. ACCORDINGLY, THE GROUND OF APPEAL OF THE ASSESSEE I S ALLOWED. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST JUNE,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH