Suresh Pharmaceuticals Agencies, CHENNAI V. ACIT, CHENNAI

ITA 1086/CHNY/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8852 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 17-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 22-04-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Assessee Lawyers: D ANAND

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL SMC-B BENCH : CHENNAI . . . , [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER ] ./ I.T.A.NO.1086/MDS/2016 / ASSESSMENT YEAR : 2007-08 M/S SURESH PHARMACEUTICALS AGENCIES NO.20, VAIDYANATHA MUDALI STREET CHENNAI - 1 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX BUSINESS CIRCLE IX CHENNAI [PAN AACFS 4756 K] ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI D. ANAND, ADVOCATE /RESPONDENT BY : SHRI SUPRIYO PAL, JCIT / DATE OF HEARING : 17 - 0 6 - 2016 / DATE OF PRONOUNCEMENT : 15 - 0 7 - 2016 / O R D E R THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-13, CHENN AI, DATED 27.1.2015 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2. SHRI D. ANAND, LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT THE ASSESSING OFFICER MADE A DISALLOWANCE OF ` 50,000/- UNDER THE HEAD SALARY AND BONUS, ` 40,000/- UNDER THE HEAD POSTAGE AND TELEGRAM. THE ASSESSING OFFICER HAS ALSO DISALLOWE D A SUM OF ` 15,000/- TOWARDS PACKAGING MATERIALS AND ` 25,000/- UNDER THE HEAD CARRIAGE INWARD. REFERRING TO THE ASSESSMENT ORDER , THE LD. COUNSEL ITA NO. 1086/16 :- 2 -: SUBMITTED THAT WHEN COMPARED TO THE EARLIER YEAR, T HE EXPENDITURE CLAIMED BY THE ASSESSEE UNDER THE HEAD SALARY AND BONUS, POSTAGE AND TELEGRAM, PACKAGING MATERIALS ETC. WERE NOT ON THE HIGHER SIDE. THE LD. COUNSEL FURTHER SUBMITTED THAT THE DISALLOW ANCE MADE BY THE ASSESSEE WOULD COME ONLY TO THE EXTENT OF ` 4,30,000/-. HOWEVER, THE ASSESSING OFFICER ERRONEOUSLY DISALLOWED A SUM OF ` 6,80,000/-. ACCORDING TO THE LD. COUNSEL, MOST OF THE EMPLOYEE S ARE COOLIES AND DAILY LABOURERS. THE ASSESSEE HAS PRODUCED THE CO PY OF SALARY LEDGER ALONGWITH VOUCHERS BEFORE THE ASSESSING OFFICER FOR EXAMINATION, THEREFORE, NO DISALLOWANCE IS CALLED FOR. REFERRI NG TO THE DISALLOWANCE TOWARDS POSTAGE AND TELEGRAM, THE LD. COUNSEL SUBMI TTED THAT THE CUSTOMER BASE OF THE ASSESSEE IS ABOUT 500 CLIENTS AND THE ASSESSEE HAS TO NECESSARILY SEND PURCHASE ORDERS, INVOICES, COPY OF BILLS ETC. THESE ARE ACTUAL EXPENDITURE INCURRED BY THE ASSES SEE FOR EFFECTIVELY RUNNING THE BUSINESS. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION MADE BY THE ASSESSING OFFIC ER. SIMILARLY, CARRIAGE INWARD EXPENDITURE TO THE EXTENT OF ` 25,000/-, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON T HE GROUND THAT THERE WAS NO VOUCHERS. THE LD. COUNSEL SUBMITTED THAT TH ESE ARE ALL PAYMENTS MADE TO RICKSHAW PULLERS FOR BRINGING GOOD S FROM THE TRANSPORT OFFICE, THEREFORE, EXPECTING A VOUCHER F ROM THEM IS NOT JUSTIFIED. THE ASSESSING OFFICER HAS DISALLOWED ` 50,000/- TOWARDS ITA NO. 1086/16 :- 3 -: COOLIE AND CARTAGE. THESE PAYMENTS WERE MADE FOR L OADING AND OFFLOADING THE GOODS FROM THE VEHICLE. ACCORDING T O THE LD. COUNSEL, THESE ARE ALL DAILY LABOURERS AND OBTAINING NECESSA RY VOUCHERS IS VERY DIFFICULT. HOWEVER, THE PAYMENTS WERE ACKNOWLEDGED BY THE RECIPIENT WHICH WAS PRODUCED BEFORE THE AUTHORITIES BELOW. H ENCE, THE CIT(A) IS NOT JUSTIFIED IN DISALLOWING THE CLAIM OF THE A SSESSEE. 3. ON THE CONTRARY, SHRI SUPRIYO PAL, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS ENGA GED IN THE BUSINESS OF COMMISSION AND FORWARDING AGENT. THE ASSESSEES MAIN SOURCE OF INCOME IS COMMISSION. DURING THE YEAR UN DER CONSIDERATION THE ASSESSING OFFICER FOUND THAT THE EXPENDITURE C LAIMED BY THE ASSESSEE TOWARDS SALARY AND BONUS, POSTAGE AND TELE GRAM, COOLIE, PACKAGING MATERIAL ETC. ARE ON THE HIGHER SIDE WHEN COMPARED TO EARLIER ASSESSMENT YEARS. THE ASSESSING OFFICER HA S ALSO FOUND THAT AS PER THE AGREEMENT, THE ASSESSEE WILL GET REIMBURSE MENT OF THE EXPENSES LIKE FREIGHT, POSTAGE, TELEPHONE, ELECTRIC ITY BILL ETC. THE ASSESSEE HAS NOT ADMITTED THE REIMBURSEMENT OF ANY EXPENDITURE SEPARATELY. EVEN THOUGH THE ASSESSEE CLAIMS ` 5.45 LAKHS IN THE PROFIT & LOSS ACCOUNT, THE ASSESSEE HAS ADMITTED THE REIM BURSEMENT ONLY TO THE EXTENT OF ` 1.12 LAKHS. IN THE ABSENCE OF ANY DETAILS, THE ASSESSING OFFICER FOUND THAT THE EXPENDITURE CLAIME D BY THE ASSESSEE CANNOT BE ALLOWED WHILE COMPUTING THE TAXABLE INCOM E. THE LD. DR ITA NO. 1086/16 :- 4 -: VERY FAIRLY SUBMITTED THAT IF THERE IS ARITHMETICAL ERROR IN COMPUTATION AS POINTED BY THE ASSESSEE, THE SAME WOULD BE LOOK ED INTO BY THE ASSESSING OFFICER. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER S IDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE SAME WAS ON THE HIGHER SIDE WHEN COMPARED TO THE EARLIER ASS ESSMENT YEAR. THE ASSESSEE CLAIMS THAT THE PAYMENTS WERE MADE TO DAILY LABOURERS AND COOLIES AND THE ASSESSEE HAS TO NECESSARILY CO MMUNICATE TO THE CLIENTS BY INCURRING THE EXPENDITURE. THE ASSESSE E CLAIMS THAT SOME OF THE PAYMENTS WERE MADE TO RICKSHAW PULLERS FOR B RINGING THE GOODS FROM/TO TRANSPORT OFFICE. THE LD. COUNSEL FOR THE ASSESSEE HAS ALSO POINTED OUT THAT THE DISALLOWANCE MADE BY THE ASSES SING OFFICER TO THE EXTENT OF ` 6,80,000/- IS NOT CORRECT EVEN IF IT IS ADMITTED. THERE IS AN ARITHMETICAL ERROR IN COMPUTATION. ACCORDING TO TH E LD. COUNSEL, THE DISALLOWANCE WOULD BE ` 4,30,000/-. AFTER CONSIDERING THE NATURE OF THE BUSINESS ACTIVITY, THE ENTIRE CLAIM OF THE ASS ESSEE CANNOT BE DISALLOWED MERELY BECAUSE THE ASSESSEE COULD NOT M AINTAIN PROPER VOUCHERS. THE PAYMENT MADE TO RICKSHAW PULLERS, DA ILY LABOURERS NEEDS TO BE CONSIDERED WHILE MAKING THE DISALLOWANC E. HOWEVER, WHEN THE ASSESSEE IS ELIGIBLE FOR REIMBURSEMENT, T HE SAME HAS ALSO TO BE BROUGHT ON RECORD. THE ASSESSEE EVEN THOUGH CL AIMED THE ITA NO. 1086/16 :- 5 -: EXPENDITURE OF ` 5,45,000/-, IT ADMITTED REIMBURSEMENT ONLY TO THE EXTENT OF ` 1,12,000/-. THEREFORE, IT NEEDS TO BE VERIFIED WH ERE THE BALANCE AMOUNT HAS GONE. THE ARITHMETIC ERROR ALSO NEEDS TO BE RECTIFIED. ACCORDINGLY, THE ORDERS OF THE LOWER AU THORITIES ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE O F THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL REEXAMINE THE ISSUE AFRESH IN THE LIGHT OF THE MATERIAL AVAILABLE ON RECORD AND THERE AFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONAB LE OPPORTUNITY TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JULY, 2016, AT CHENNAI. SD/- ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 15 TH JULY, 2016 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF